Mining company sues city for $87M

A mining exploration company is suing the City of Whitehorse, claiming the Official Community Plan is keeping it from developing proven resources in the Whitehorse Copper Belt. Lobo Del Norte Ltd.

A mining exploration company is suing the City of Whitehorse, claiming the Official Community Plan is keeping it from developing proven resources in the Whitehorse Copper Belt.

Lobo Del Norte Ltd. filed the suit with the Yukon Supreme Court earlier this month.

The company holds claims for the Gem and Keewenow deposits near Mary Lake. The 2010 Official Community Plan includes this area in the Wolf Creek Park. This means the company can’t do any work there, president Barry Ernewein said in an interview this week.

“It doesn’t take a genius to figure out that greenspace means you don’t mine,” said Ernewein.

The park designation has cost the company millions of dollars, the filings allege. In the suit, the company is asking the city for $87 million to cover the loss of value of mineral resources.

“We’ve had several mining companies approach us (about doing mining exploration work there),” said Ernewein. But the park designation “put the kibosh on any deals that we could cut,” he said.

Lobo Del Norte Ltd. purchased the claims in 1998 from Hudson Bay Mining and Smelting. The claims were staked in the 1960s, and have always been kept in good standing, the court filings say. In the 1980s, the city boundaries were expanded to include the area of these claims.

And the claims have resource potential. The Gem deposit was prepared for mining. The Keewenow deposit was open-pit mined in 1971. In 1984, an estimated reserve of 202,000 tonnes of one per cent copper ore was left in the pit, a 1993 report prepared for the MacBride Museum says.

The park designation in the Official Community Plan came as a shock to the company, said Ernewein.

In January 2009, the city met with various stakeholders when preparing the Official Community Plan. But that didn’t include his company, said Ernewein. There are no mining companies mentioned on the list of consulted groups in the plan.

“We had no idea that they were turning it into a park until after it was turned into a park,” said Ernewein.

But the city knew there was the potential for resource development in the Whitehorse Copper Belt area. The plan includes a category called Natural Resource Land Use. This designation “recognizes the potential for the extraction and management of mineral and gravel deposits,” and includes the Whitehorse Copper Belt in a list of “notable areas of mineral and gravel potential.”

Between June 1996 and June 1998 there was a ban on staking in the city. In October 1997, a panel of geologists met to determine the relative mineral potential value of various tracts. This panel included representatives from mining companies and the government. They produced a map that ranked the potential of the different areas. It listed the Gem and Keewenow deposits as having a “ground of very high mineral potential.”

“Any withdrawal of these tracts from the exploration activities is predicted to meet with resistance and criticism from the mining industry,” a letter accompanying the map says.

In October 2008, Resources Minister Brad Cathers wrote a letter saying the potential of the Whitehorse Copper Belt is well known, and that the area needed to be considered in all discussions involving future planning, the court filings say.

The letter also says that the territorial government and the city are committed to dialogue with mineral rights holders, the filings say. That never happened, the lawsuit alleges.

But that doesn’t mean the company isn’t willing to talk.

Last year, Ernewein had his own study of the area done, he said. He presented the report – totalling over 300 pages – to the city last October, he said.

He’d willingly read any report the city prepares on the area, he said. But he didn’t hear anything from the city.

“I’m not gonna wait forever, so we issued the statement of claim,” he said.

“I’m prepared to sit down and negotiate some kind of a settlement. That’s common,” said Ernewein. “I’ll be reasonable, too. I just want to sit down with them.”

The suit also asks for a declaration that the company’s rights have been wrongfully expropriated or otherwise taken and injuriously affected, and for the city to cover costs related to the loss of opportunity and profit, consultation reports, annual fees and legal costs.

The city has declined to comment on the case because it is before the courts.

A case management conference has been scheduled for June 18.

Contact Meagan Gillmore at

mgillmore@yukon-news.com

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