Victoria Gold (TSXV: VGCX) has been placed into receivership, meaning control of the company and its Eagle property in the Yukon are now in the hands of a third party, PricewaterhouseCoopers.
The move by the Ontario Superior Court of Justice came at the request of the Yukon government. The application was heard in court today.
The announcement on Wednesday evening by Tracy-Anne McPhee, minister of justice and Yukon’s attorney general, came several hours after Victoria disclosed the application in a release and said it would oppose the move. Trading of its shares was halted Wednesday morning.
“The government of Yukon has lost confidence in the management team of Victoria Gold Corporation to take the human health and safety and environmental consequences of the June 24 heap leach facility failure seriously or to respond with the urgency the situation demands,” McPhee said.
“Immediate action is required to respond to the heap leach failure and its consequences for the land, water, people and wildlife in the Traditional Territory of the First Nation of Nacho Nyak Dun. The company has failed to comply with several formal directions issued by the government of Yukon that require specific measures to be undertaken to address human health and safety and environmental risks and impacts.”
Victoria halted operations at Eagle after the heap leach pad failure in June caused a landslide that unleashed 4 million tonnes of material, with half leaving the pad’s containment. Between 280,000 and 300,000 cubic metres of cyanide-containing solution left the containment, according to government estimates. Victoria’s share price plummeted more than 85% during the last week of June. Before they were halted, the shares traded for 48¢ apiece. The single-asset company now has a market cap of $32.5 million.
PwC controls assets
PwC is now in charge of administering Victoria’s former assets and liabilities at the direction of the Yukon government, McPhee said. The government and PwC also hired mining environmental management services firm Parsons as the lead environmental consultant to advise PwC.
Yukon will advance payment for the mitigation work, which will constitute a debt owed to the territory. Funding is to be recovered from Victoria’s assets. Repayment to the government will be prioritized over other debts owed by the miner, in line with the court order and costs required for environmental protection under federal bankruptcy law.
McPhee said the move offers a way to recover the mitigations costs from the company responsible for the environmental damage.
PwC was also appointed receiver of the Minto mine, in central Yukon last September, after operations were halted in May that year. Minto was southwest of Eagle.
Government mulled takeover
News about the receivership comes almost one month after the territorial government said it was considering taking over the cleanup effort at Eagle due to Victoria struggling with remediation tasks and treatment of contaminated water. Just over a week later, the government said it had hired contractors to build a protective berm under the unstable slope at Eagle for a safe area to drill groundwater wells.
“It is a result of the company not complying with those directions that we are stepping in to undertake construction of the berm ourselves,” Lauren Haney, deputy minister for Yukon’s Department of Energy, Mines and Resources (EMR), said at the time.
In a rare interview with media since the accident, Victoria CEO John McConnell told CBC last month the company is sound financially for at least four to six months, but would likely need financing after that. The company held $232.5 million in debt as of March 31, according to its first-quarter financials.
Victoria has not responded to multiple requests for comment since the accident.
Haney implied the government has spent its own funds on the cleanup at Eagle, but didn’t given specifics. It holds a $104-million surety bond with Victoria Gold as a potential reclamation fund. Haney said the government was considering its use but didn’t say what would trigger it.
Water woes
Groundwater flowing from Eagle was recently found to be highly contaminated with cyanide, though much of the water is being contained at the site, and the regulated drinking water supply isn’t at risk, Yukon government officials said in a briefing last Friday.
A discharge of water from a treatment plant at Eagle from July 31 to Aug. 2 led to the discovery of 68 dead fish near the mine in Haggart Creek, officials also said at the briefing, the government’s most recent update on the Eagle situation.
Fascinating. PwC like EY or any Big Four entity must sharpen their game to strike the right balance twixt responsible management and The Big Strike!
What a terrible decision by the Yukon Government. The Board and Management team clearly committed to managing this crisis. The Yukon government constantly downplayed the number of water samples that were below the Federal Guideline requirements. This was a major environmental challenge that needed teamwork. The government squashed that