Victoria Gold, Yukon Water Board argue in court over higher security payment

A court dispute is playing out between the Yukon Water Board and the company behind the territory's largest mine over a higher security payment.

In June, the board ordered the company to post a total of $105 million. That amount is roughly $74 million more than what Victoria Gold — behind the Eagle Gold mine near Mayo — had already put forward, an estimated $31 million.

In what appeared to be an unusual legal manoeuvre, the company brought the board to court last month, alleging the board's decision is unfair. The company is asking for the decision to be stayed, pending appeal, as Victoria Gold is expected to pay security by Sept. 15.

However, the board seems to be unwavering in its decision.

Richard Buchan, the board's lawyer, told the court Friday the company needs to pony up and pay, adding Victoria Gold has breached its water licence for years by, in part, not providing required information needed to assess and calculate security instalments.

"Without information, the board can't do its job property," Buchan said. "The company refuses to provide information and then complains.

"It's not only people at stake — it's the environment, the whole interconnected ball of wax."

Victoria Gold questions evidence behind decision

Victoria Gold, in its petition, claims the board's decision was based on no or irrelevant evidence. It also alleges it wasn't given a proper chance to respond to the board's concerns, some of which it argues could have been easily addressed without increases to the security, and says the board hasn't provided sufficient reasons for exactly how it calculated the new security.

Victoria Gold states it would incur approximately $1.2 million annually in carrying costs associated with the water board's security, or about $400,000 to $500,000 more per year than the security determined by the mineral resources branch, which arrived at roughly $69 million. 

Meagan Lang, who's representing Victoria Gold, told the court these costs will hurt company coffers, noting money won't be recouped. 

As well, she said alleged breaches don't suggest any risk or that the company will abandon the mine and foist hefty clean-up costs on taxpayers. 

"It's not relevant," she said, adding there's no evidence of security needing to be drawn on. 

Water licences are required for most mining operations and typically come with a number of conditions, which may include a requirement to provide a security cash deposit so funds are available for clean-up and remediation efforts should anything go wrong.

Every two years, mining companies are required to submit reclamation and closure plans, to ensure sufficient security. 

Buchan said Victoria Gold hasn't been in compliance with that process, pointing to a lack of information on adjustments to its heap leach pad involving certain recontouring work, and apparent snow removal obligations from that site. 

"Victoria Gold is digging a hole of its own accord," he said, "by continually refusing requirements for more information to support their theories."

'Aggressive partisanship'

A significant portion of the company's arguments seems to rest on the substance of the board's court filings. 

Lang called the tone of them concerning, adding it's indicative of "aggressive partisanship."

She said the board is accusing the company of wilfully resisting handing over required information to avoid making security payments. 

"Impartiality needs to be taken very seriously," she said, adding that the board's neutrality is essential to maintaining an ongoing relationship with mining companies. 

"We need to have confidence in how these bodies operate." 

Buchan said the board has an obligation to provide context on how it operates, along with what it needs to calculate security. 

"If the board doesn't participate, they get their stay," he said, adding that if the board recuses itself, there would be a perception by other companies the board is a "pushover."

Yukon Supreme Court Justice Karen Wenckebach reserved her decision, noting she can't promise one by Sept. 15. 

An interim stay would remain active for 30 days after a decision is made.