Original Published on Sep 10, 2022 at 13:30
By Lawrie Crawford, Local Journalism Initiative Reporter
The Yukon’s mining sector has seen substantial movement in ownership and liability in the past few months.
The News has put together a summary of what’s going on and what to look for as mining in the territory concludes a busy season.
September started off with Victoria Gold challenging the Yukon Water Board in the Yukon Supreme Court, and the acquisition of Alexco Resources by a major United States mining giant. September is also the month when two major security deposit increases were to come due for Minto and Victoria Gold. Canada awarded huge remediation contracts totalling $85 million for the Faro mine over the summer, and two Yukon First Nations are opposing regulatory authorities in court challenges.
Sales and purchases
Alexco Resources’ sale to Hecla Mining becomes a done deal on Sept. 7. Signage signaling the change in ownership is already in place around Keno City. The Yukon government says that the sale is expected to provide financial stability to the project and support long-term development across the Mayo mining district.
The federal government confirmed to the News in August that Elsa Remediation Development Company (ERDC) would continue to carry out the work on the remediation of historic liabilities and to advance the remediation plan for the site. ERDC now becomes a Hecla company, and the historic and costly liabilities across the historic mine sites of United Keno Hill remain with Canada.
The purchase went ahead, even without a current water license. Alexco’s water license expired Aug. 8, as the Yukon Water Board continues to review ERDC’s application for a 20-year license extension for water treatment in perpetuity. The plan involves piping contaminated water from several adits across a broad area to a central pond, and treating all the zinc-laden water in one place.
On Aug. 8, the Yukon Water Board denied ERDC’s request for a license extension, or an emergency license. In the same letter, the vice-chair committed the board to processing the application and scheduling a special sitting to continue deliberations on licensing.
READ MORE: Alexco Resources selling to U.S. company; CEO says silver production falling behind
September is also the month two large companies, Minto Metals and Victoria Gold, were expected to pay tens of millions of dollars on top of their existing security deposits. Minto owed an additional $34 million on Sept. 1 and Victoria Gold was slated to pay another $74 million on Sept. 15.
Minto Metals reported in an Aug. 23 newsletter that their security deposit had been reconsidered by the Yukon government and reduced to $93 million, down from January’s determination of $104 million.
The security was reduced in consultation with Selkirk First Nation and when the company demonstrated it had reduced its environmental liabilities on site, according to the Yukon department of Energy, Mines and Resources (EMR) on Sept. 6.
An additional $5 million in security was deferred until the company starts new development activities at nearby locations.
Minto Metals has already paid $73 million of its security deposit to the Yukon government, according to EMR. The additional $20 million was due on Sept. 1, but only $1 million of that has been paid.
EMR reported that until the remaining $20 million in security has been paid, Minto Metals must follow restricted operating conditions to continuously reduce environmental liability at the mine. The snow and freshnet this winter and spring caused unexpected challenges for water management at the mine.
Inspection reports from May and July indicate the mine is not in compliance with the Yukon Water Act nor with regulations under the Quartz Mining Act. The company must also regularly report progress to the Government of Yukon and Selkirk First Nation. The new restricted operating conditions are designed to improve the storage capacity for contaminated water.
READ MORE: Yukon government restricts Minto Mine’s operations until cleanup security paid
READ MORE: Yukon’s Victoria Gold, Minto mines face increased security deposits after reclamation review
Victoria Gold took a different tact to reducing their additional security and took the Yukon Water Board to court.
Victoria Gold applied for an interim stay of the Yukon Water Board’s security order. The case was heard before Yukon Supreme Court Justice Karen Wenckebach on Sept. 2.
Victoria Gold argued unfair processes and an excessive financial burden from the carrying costs of an increased $74 million in security. Company lawyers stated that the company had complied with requests for more information and that the engineering details [the water board said were missing] could be found in several places within their 400-page report.
The water board’s lawyer responded that the security fees reflected an uncertainty that came as a result of the company not being forthcoming with the board, and that the situation was long-standing.
He said the deposit was not excessive and reflected the cost of doing business and mining in the Yukon. He said concerns have been known for six years, and that Victoria Gold just wants to “kick the can down the road some more.”
At the end of the day, the court stayed the water board’s security order, pending its decision on the interim application.
However, EMR told the News on Sept. 6 that “the Government of Yukon increased the financial security requirement for the Eagle Gold Mine from $30.8 million to $68.6 million.”
This is considerably lower than the $104 million previously reported in the News and other media outlets.
(Editor’s note: After press deadline, the Yukon government clarified that when two regulatory bodies recommend different security deposits, the larger amount prevails. Thus, the $104 million stands regardless of the government’s recommendation.)
The department’s statement continued saying that “Victoria Gold has provided confirmation of their ability to furnish this security. The Government of Yukon will ensure sufficient security is held, and Victoria Gold fulfills the Yukon Water Board’s security requirements, while the appeal process is being heard or a stay is approved.”
Both the Yukon government and the government of the First Nation of Na-Cho Nyäk Dun declined to intervene or participate in the hearing.
Two other mining properties are caught up in court processes as well — Metallic Minerals and BMC Minerals for its Kudz Ze Kayah mine.
The government’s department of Justice said the First Nation of Na-Cho Nyäk Dun’s application to quash a decision regarding mineral claims by Metallic Minerals in on their traditional territory has had judgment reserved following a hearing on June 28 and 29.
The department of Justice also reported that an application for judicial review was filed in the Supreme Court of Yukon on Sept. 2 regarding the Ross River Dena Council and the Kaska Nation’s case against Canada, Yukon, and BMC Minerals. No dates have been set for the review yet.
READ MORE: Amount held by government for reclamation and cleanup set to increase by more than $74 million
READ MORE: FNNND argues Yukon breached its’ constitutional duty to implement Treaty promises
READ MORE: RRDC seeks judicial review of Kudz Ze Kayah mine approval on behalf of all Kaska Nations
August was busy on the bids and tenders side with Canada awarding $85 million in four different remediation contracts for the Faro mine site. Ensero Solutions, an early spin-off from Elsa Mining and Reclamation (ERDC), was awarded $18 million for environmental monitoring services at the contaminated Faro mine.
Wolverine, a smaller abandoned mine, is on the verge of being transferred back to the care and control of the Yukon government later this fall. A $4-million tender for care and maintenance was issued over the summer. One bid had been received when the process closed on Aug. 3. EMR reported that the evaluation and selection process is proceeding on schedule so that a contractor will be able to take control of the site on behalf of the Government of Yukon for the planned date of Nov. 1.
The Yukon government has spent over $18 million on the receivership and care and maintenance of the mine site since 2019. PricewaterhouseCoopers failed to find a purchaser for the mine despite best efforts. EMR stated that “remediation of Wolverine is a priority and we anticipate the closure and design processes will commence once the Government of Yukon has taken over responsibility of the site from the Receiver later this fall.”
The Yukon government is also looking for a contractor to help with the technical advisory services to review the Quartz Mine License application for Coffee Gold, the Newmont-Goldcorp project near Dawson. That tender closes on Sept. 12. The government is anticipating a quartz mining licence application from the site owner, Newmont, this fall.
Newmont must also obtain a water licence from the Yukon Water Board and receive required federal approvals for the mine site.
Western Copper and Gold have completed their revised feasibility study and it can be found on their website. Casino has a 20-year expected mine life and will be the largest mine in the territory if approved. The Casino project will be the Yukon’s first panel review process under YESAB. The company is expected to file an assessment application in the spring of 2023 and the filing will be informed by the August feasibility study.
The Government of Yukon said they are “actively consulting with affected First Nations and is committed to ensuring the mine is developed and operated in a manner that upholds the environmental and socio-economic values of Yukoners.”
According to Paul Wells, CEO of Western Gold and Copper, and confirmed by Chief Roberta Joseph of the Tr’ondëk Hwëch’in in June, both Casino and Coffee Gold are footing the bill for the affected First Nations to independently assess the impacts the mining projects on their land and citizens of the region.
No companies operating under quartz mining licenses have paid royalities to the Yukon government since 2012, according to government’s website. Minto pays royalities to the Selkirk First Nation. The deadline for 2021 financial information was April 30 and the department expects to have assessed companies by Oct. 1. A spokesperson said there is a 90-day appeal period, and perhaps a period of back and forth on the amounts owed. Yukon’s royalty regime is based on net-profits, rather than on mineral production.