Receiver asks for another $55M to continue work dealing with failure at Yukon's Eagle mine site

The firm in charge of Victoria Gold's Eagle Gold mine site in the Yukon has requested an additional $55 million to fund its work through to the end of March — money that would come out of the company's posted security, intended for mine reclamation and closure. 

In a report late last month, PriceWaterhouseCoopers (PwC) says the $50 million initially provided by the Yukon government to fund the first 90 days of the receivership is expected to run out by this Friday.

The requested increase, which would more than double the running cost of the receivership but was anticipated based on initial cost estimates, is still subject to a judge's approval, with the Ontario Superior Court of Justice set to hear the matter next Monday. 

The same court, following an application by the Yukon government, initially approved putting Victoria Gold into receivership in August following a catastrophic failure of the Eagle Gold mine's heap leach facility earlier in the summer. An estimated four million tonnes of ore being treated with cyanide solution slid off the heap in the early morning of June 24, with approximately half that material spilling out of containment and into the surrounding environment.  

The Yukon government, according to the report, is on-board with the increase and intends to tap into Victoria Gold's posted security for the Eagle Gold mine —  just less than $104 million —  to provide the money. 

The report notes that the current work is not what the security is earmarked for, and the Yukon government would be out $55 million for the final reclamation and closure activities should the mine never re-open. 

The government gave PwC the initial $50 million from its own funds. While all the money is loaned, the report says that at this point, "the sources that may be available for the repayment of those funds, and the likelihood of full recovery, is not known." 

"There are a number of risks relating to the Eagle Gold Mine site and any potential future restart of operations," the report reads in part. 

"In particular, it is not known at this time whether a restart of operations will be viable, or whether the Eagle Gold Mine site may ultimately be closed due to the Failure Incident and the costs required to remedy the Eagle Gold Mine relative to its potential value, or for other reasons."

However, the report also says the environmental monitoring and protection work that's happened since August, and the work scheduled to take place until at least the end of March, is necessary regardless of the mine reopening. 

Receiver now looking at 'mid-term emergency' work

Besides more money, PwC is requesting, among other things, the authority to sell off up to $1 million of Victoria Gold's assets at a time without court or creditor approval, up from $500,000. Those assets, the report says, could include "ad-hoc pieces of non-core equipment," "redundant furniture, fixtures, vehicles or computers" and gold and silver coins Victoria Gold was storing in a bank safety deposit box as well as at its corporate offices in Vancouver and Toronto.

It's also asking for the court to approve the appointment of three additional technical advisers, to shield those advisers as well as members of the independent review board from litigation, and to sign-off on its receivership activities so far. 

To date, according to the report, PwC has been able to complete a long-awaited safety berm at the Eagle Gold site, dig new temporary containment ponds to store contaminated water, continue upgrading the on-site water treatment plant and build a second camp for workers. It also constructed several new wells to collect, monitor and intercept contaminated groundwater, and winterized the site. 

However, the report also lays out the mountain of work still ahead in what it calls the "mid-term emergency" phase which the increase, if approved, will fund. Those activities include fully upgrading the water treatment plant to effectively treat cyanide-contaminated water, stability evaluations for the heap leach and improving "safety culture" for employees. 

Water storage remains an issue on site even with the additional ponds, according to the report, because the water treatment plant still hasn't been completely reconfigured. PwC has applied for a temporary emergency amendment to the site's water licence that would allow for the discharge of water with higher levels of contaminants than currently allowed, including weak acid dissociable cyanide and copper. The application, which is currently before the Yukon Water Board, warns that storage capacity will be overwhelmed by early January if the discharges aren't allowed and that digging more ponds isn't feasible due to both the volume of water and topography of the site. 

In the longer-term, the report says PwC is working with its advisers, the Yukon government and the First Nation of Na-Cho Nyäk Dun to figure out how to deal with the high volume of meltwater expected in the spring. Environmental monitoring efforts — including testing nearby waterways for signs of contamination — are also ongoing.