Premier Ranj Pillai and Energy, Mines and Resources Minister John Streicker stand by the Yukon government’s decision to petition the courts to order Victoria Gold Corporation into receivership and take over management of the Eagle Gold Mine following what the receiver's report calls a “catastrophic failure” of the mine’s heap leach facility.
They indicated an Oct. 1 report filed by Pricewaterhouse Coopers, the receiver, supports their choices.
"They just didn't even have the money," Pillai told reporters on Oct. 3.
Per the report, the receiver obtained a cash-flow forecast that demonstrated Victoria Gold was set to run out of cash by the week ending Nov. 25, 2024. That forecast doesn’t consider emergency works and severance costs, which, had those been included, suggest the company would’ve run out of cash sooner than that.
“[Victoria Gold Corp.] was facing a near term liquidity crisis due to its inability to generate sufficient, regular future cash inflows in a timely manner to continue operations, repay its obligations accruing and address the mounting costs of the environmental remediation of the failure event,” reads the receiver’s report.
The heap, which contained ore mixed with cyanide solution for extraction, collapsed June 24 and released about four million tons of material into the environment, as noted in the receiver's summary report. After the Yukon government and First Nation of Na-Cho Nyäk Dun (FNNND) lost confidence in Victoria Gold’s ability to follow environmental orders and communicate with stakeholders, the court appointed a receiver and lead environmental consultant on Aug. 14.
The report notes the Yukon government has provided $50 million to the receiver to pay for emergency works in the first 90 days of the receivership proceedings, in addition to Victoria Gold’s own cash and available assets.
Pressed in the house
In his opening questions on the first day of question period this fall sitting of the Yukon Legislative Assembly, Yukon Party Leader Currie Dixon tried to press the premier but initially got the minister to respond to the mine slide fallout.
“Can the premier explain how Yukoners can be expected to believe that despite seizing the company's operations, assets, money and the mine itself, that they can say with a straight face, that they had no intention of shutting the company down?” Dixon asked.
In return, Streicker said Dixon was recently “misinforming” listeners on local radio about the Yukon government owning the mine. The Yukon Liberal Caucus issued a press release later Oct. 2 to “fact check” Dixon. The release indicates Yukoners don’t own the Eagle Gold Mine, there is a long-term plan after remediation and Yukoners aren’t “on the hook” to pay for remediation.
Despite the corporation being delisted, its entire board resigning and the president’s firing by the receiver, Victoria Gold still owns the mine, Streicker said. On. Oct. 3, Finance Minister Sandy Silver got called out by the Yukon Party for remarks he made to reporters suggesting that Victoria Gold was still publicly traded. Streicker clarified that while the company isn't being traded, it still exists.
Dixon wants to know if the territorial government plans to bring the mine back into production as a heap-leach gold mine, by when, at what cost and who will pay.
Pillai basically told Dixon to read and analyze the receiver’s report filed Oct. 1 then come back to debate.
“Because I've sat down with financial leaders in the country, mining leaders, and I can tell you, the opposition right now is an outlier,” Pillai said.
Citing a letter to the editor published in the News by Nico Harvey, a former Victoria Gold manager of engineering, Yukon Party mines critic Scott Kent raised more questions on the fallout. (Kent said he hadn't read the full report by the time he spoke with reporters on the afternoon of Oct. 3.)
Kent asked how the government responds to claims about inconsistencies and double standards since the mining company was forced out.
Streicker reiterated that the government had lost confidence in Victoria Gold.
Streicker highlighted work underway, thanks to the receiver and the staff at the mine site, ahead of the freeze up.
Streicker said he and the premier met last week with local Yukon contractors who have been doing the work for the past month and a half.
“They've done improvements to the camp. They've built the road in to get the berm going,” he said.
“We know that when Victoria Gold was there, the water treatment they had in place failed. So, I've been told that we're at the 95-per-cent mark on water treatment.”
As for double standards surrounding the timelines for building of a safety berm that has yet to be complete, Streicker said the government’s role as regulator is to ensure that the receiver is doing its job and following inspectors’ directions.
He blamed daylight for moving the goalposts for completing the berm.
“If the work had started when we first requested it, you could work 24 hours. Now, you can work 12 hours a day,” he said.
Streicker indicated that Victoria Gold had disagreed with the approach.
“They just didn't believe it was the right thing to do, and it's one of the reasons that we started to lose confidence in the company to fulfill the directions that we had issued,” Streicker said.
“Those directions are to protect the environment and, in this case, to make sure it's done in a safe way, because it's right at the bottom of the slide where there, we were nervous about the potential of additional slides.”
Kent asked about the directive given to the company to build 50,000 cubic metres of lined water storage facilities within five days, which he said took over a month to do once the receivership took over.
The company didn’t ask for more time; it refused to comply, per Streicker.
Digging into the report
According to the summary report by the receiver, work on the safety berm is coming along, two temporary ponds have been constructed and the installation of on-site water treatment systems has been initiated. A contractor has been engaged to do borehole drilling, which is needed to determine next actions to reinstate the heap leach facility, and a technical consulting firm has been engaged to assess and design work necessary to restore the heap leach facility to a state in which it can operate.
The next steps laid out in the summary report include coming up with a mid to long-term remediation plan to address the impacts from the slide. Per the report, a revised budget for the first 90 days of the receivership proceedings will be paid for by the Yukon government along with available funds from Victoria Gold.
Victoria Gold’s main project was the Eagle Gold Mine about 85 kilometres north of Mayo, as noted in the full report. The property, known as Dublin Gulch, covers about 555 square kilometres on the traditional territory of the FNNND. Victoria Gold also had claims and exploration sites within Gold Dome, Grew Creek and Brewery Creek after acquiring Golden Predator Mining Corp. and held shares in other companies.
On the books, as of June 30, Victoria Gold had $824.9 million in assets including $442.6 million in property, plant and equipment and $224.7 million in inventory. The receiver’s report notes that doesn’t account for the “full financial repercussions” of the slide.
The book value of Victoria Gold’s liabilities was $457.9 million including $236.8 million in long-term debt and $109 million in reclamation and remediation liabilities. Other liabilities include about $60.2 million filed in miners lien claims, which is expected to overlap with the $82.7 million owed to trade creditors, as noted in the report.
Two class-action lawsuits that the receiver is aware of have been filed against Victoria Gold — one in British Columbia and one in Ontario.
The report indicates the company was facing “cash flow constraints” after the slide. For example, that was demonstrated in Victoria Gold press releases that stated there can be “no assurance” that the company will have the “financial resources necessary to repair damage to equipment and facilities or remediate impacts caused by the incident or restart production.”
According to the receiver, Victoria Gold was in the process of liquidating non-core assets, had received notices of default and cross default from its lenders, and had sent a letter to trade creditors advising it couldn’t pay amounts owed prior to the slide.
The receiver notes that in response to the Yukon government’s written requests to Victoria Gold, prior to the receivership application, to confirm it had proper resources to pay for remediation costs arising from the slide, Victoria Gold said it couldn't provide that non-public information to the government.
Prior to the failure, Victoria Gold had 464 employees across offices and at the mine, plus 134 direct-hire contractors, most of which were based at the Eagle Gold Mine site. About 280 workers were temporarily laid off after the slide “in an effort to conserve cash,” the report notes.
The report indicates that a temporary camp had been set up by the company after the slide, made up of tents and trailers, but it was deemed potentially hazardous due to crowded conditions, inadequate heating and other issues.
At the time of the report, building a new camp is “well underway” and is expected to be done in the coming weeks.
The receiver's report acknowledges that progress on some aspects has taken longer than expected because the temporary site accommodations were full and unsafe, it “took time to establish appropriate trading terms between suppliers” and Victoria Gold, supply chain issues, and the technical diligence and planning that went into the emergency works.
Labour concerns
The Yukon Federation of Labour issued a press release on Oct. 2 regarding a looming deadline for Victoria Gold workers who were temporarily laid off following the landslide to file for compensation.
The Oct. 9 deadline for applications within a 56-day window under the Wage Earner Protection Program Act was quickly approaching, as noted in the release.
Teresa Acheson, president of the Yukon Federation of Labour, confirmed to the News on Oct. 3 that an extension has been granted by Service Canada. That means affected former workers have a new deadline of Dec. 26 to apply for compensation, she said by phone.
“Their reason for the extension is due to the volume of employees for whom they have to calculate payments,” Acheson followed up by email.
Acheson said she has been advised that the receiver is updating the website with updated information for former workers.
The News reached out to Pricewaterhouse Coopers to confirm the deadline extension situation but didn’t hear back by the News’ print deadline.
Contact Dana Hatherly at dana.hatherly@yukon-news.com
