Matachewan awaits day in court

Matachewan Consolidated Mines (TSE) is looking forward to its day in court after the Ontario Ministry of the Environment laid criminal charges against the junior company and two of its officers.

Criminal charges have also been filed against Goldteck Mines (TSE), Royal Oak Mines (TSE) and Royal Oak’s predecessor, Pamour (T.N.M., Oct. 21/91) in connection with last year’s tailings spill at the Matachewan Consolidated property in northeastern Ontario.

On Oct. 17, 1990, thousands of tonnes of gold mine tailings spilled into the Montreal River after heavy rains caused Otisse Lake to overflow into the tailings dam. The companies have since received (and ignored) orders by the Ministry of the Environment to clean up the spill and rehabilitate the site. The criminal charges may be a blessing in disguise, Richard McCloskey, president of Matachewan, told shareholders at a recent annual meeting, because they will finally give the junior access to a fair trial. So far, the Ministry of the Environment has denied all of Matachewan’s requests for a hearing.

But the junior company, which has already spent about $250,000 on legal and consulting fees, is rapidly running out of cash to fight the government order and recent charges. “Matachewan will probably go bankrupt,” McCloskey told shareholders. “We’ll fight as long as we can, and when we run out of money, we’ll give up.”

At what was probably the company’s last annual meeting, Matachewan received approval from shareholders to sell all of its assets, including several exploration properties.

The ministry has spent about $1.5 million cleaning up the site, McCloskey said, and has passed on its bills to Matachewan, Goldteck and Royal Oak. Royal Oak is requesting that an appeal of the order be stayed until the criminal charges are heard. The company said in a prepared release that the charges are “totally without merit.”

“Actions of this nature pursued by ministries of the Ontario government create a severe detriment to companies which create employment and wealth for the province.” Royal Oak has sworn to “vigorously defend itself” against the charges.

Under an agreement with Matachewan, Royal Oak holds the rights to mine the property while Goldteck once held an option to treat the tailings. The Matachewan Consolidated gold mine closed in 1954.

Matachewan has launched a countersuit against the Ontario government, claiming that since the property is on Crown land, it is the government’s responsibility to monitor the stability of the tailings.

“But they’re trying to set a legal precedent,” said McCloskey. “And if we can’t afford to fight them, they might just do it.”