Victoria Gold Placed into Receivership After Heap Leach Pad Failure at Eagle Gold Mine

Victoria Gold (TSXV:VGCX,OTC Pink:VITFF), the owner of the Yukon-based Eagle gold mine, has been placed into receivership after the collapse of a heap leach pad at the site in June.

The company said on Wednesday (August 14) that the Yukon government had made a receivership application to the Ontario Superior Court of Justice, and the court granted the application later that day.

According to the Globe and Mail, the Yukon is looking to exert greater control over cleanup and impact mitigation efforts after the heap leach pad incident, which has raised questions about the future of mining in the territory.

About 4 million metric tons of cyanide-laden rock collapsed at Eagle on June 24, releasing around 2 million metric tons of contaminated material into the surrounding environment, extending beyond the mine's containment zone.

The mine, which is situated on the traditional territory of the First Nation of Na-Cho Nyak Dun, has since become the center of a contentious battle between the mining company and the Yukon government. The company has since been managing the cleanup, but its efforts have been criticized by both the government and the First Nation.

The Globe and Mail notes that the government has already stepped in to take over parts of the environmental mitigation process after Victoria Gold failed to meet certain directives, including the construction of a critical safety berm.

Victoria Gold said in Wednesday's press release that it would oppose receivership.

While the company is committed to moving forward at Eagle, stakeholders' frustration is growing.

“The company has lost our confidence and we do not believe they will be able to effectively address this disaster they created in our traditional territory,” said First Nation of Na-Cho Nyak Dun Chief Dawna Hope in an August 1 statement.

The First Nation has requested a public inquiry to investigate the failures that led to the incident, and to ensure similar disasters do not occur in the future; it also wants Victoria Gold leadership to be removed from cleanup efforts.

The environmental impact of the cyanide spill continues to unfold. Last week, Yukon officials reported that dead fish were found in a creek near the mine, likely killed by contaminants released from the site. Additionally, water samples taken downstream from the mine have shown cyanide levels that exceed guidelines for aquatic life.

Groundwater contamination has also been detected, although Yukon’s chief medical officer of health, Dr. Sudit Ranade, has assured the public that the contamination does not pose a threat to drinking water. "These are separate systems, and so at this time, the drinking water system that is regulated is still not at risk," he told the Canadian Press on August 9.

PwC has been appointed the receiver for Victoria Gold, and will now be responsible for mitigation work at Eagle.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.