Victoria Gold (TSX: VGCX) is grappling with the aftermath of a catastrophic cyanide spill at its Eagle Gold Mine in Yukon, a disaster that has left the company in receivership and cast a shadow over the future of the region’s environment. The spill, which occurred on June 24, involved the collapse of four million tonnes of cyanide-laced rock, with half of it breaching containment zones and spilling into the surrounding environment.
The June 24 incident at the Eagle Gold Mine saw a massive pile of cyanide-laced ore, used in a process known as heap leaching, give way. The heap leaching process involves stacking mined ore into large piles, which are then sprayed with a cyanide solution to extract gold. The cyanide-laden water percolates through the ore, dissolving the gold, which is then collected for further processing. However, this process requires meticulous monitoring to prevent environmental contamination.
John McConnell, Victoria Gold’s CEO, expressed his regret over the incident, acknowledging that an “uncontrolled buildup of fluid” may have caused the rock pile to become unstable.
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“I use the analogy if you had a pile of sand three feet high, and you stuffed a garden hose in at the top, and pushed it down towards the bottom, then turned on the water, it would fluidize some of the sand. It would blow out the side, and above it would collapse into it,” McConnell explained.
He suggested that a broken pipe or an open valve could have been the cause but admitted, “I have no idea” how the water accumulated.
The environmental impact of the spill is already evident, with dozens of dead fish discovered in a nearby creek, raising concerns about the potential contamination of local water sources, including those critical to the survival of salmon fisheries. Groundwater in the vicinity of the mine will now require years of monitoring for toxic cyanide levels. The local First Nation, the Na-Cho Nyäk Dun, has expressed deep concerns that the spill could devastate not only the fish populations but also hunting grounds and other vital natural resources.
Victoria Gold’s handling of the crisis has come under intense scrutiny. The company has been criticized for its lack of communication in the wake of the disaster, with McConnell himself admitting that his decision to stay silent, as was directed by the company’s lawyers, was a mistake.
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“Their advice was, ‘Say nothing, say nothing, say nothing.’ And that’s not my style. So, I regret that I wasn’t out there talking to more people and getting our message out about what our plans were and the success we were having with managing the water and converting the water treatment plant for cyanide destruction,” McConnell said.
The situation reached a critical juncture on Wednesday when Victoria Gold was placed into receivership by the Ontario Superior Court of Justice. Justice Barbara Conway ruled that the company had failed to manage the crisis with sufficient urgency and was unlikely to secure the necessary funds for the extensive remediation efforts required. The cleanup operation is now expected to cost up to $150 million, a sum that Victoria Gold is unable to cover.
The Yukon government, which had already been assisting with the cleanup, has now taken on full responsibility for the remediation. In a written decision released Thursday, Justice Conway confirmed that the Yukon government has advanced $50 million to PricewaterhouseCoopers Inc., the appointed receiver, to cover cleanup efforts over the next 90 days. According to Cord Hamilton, a consulting engineer working with the Na-Cho Nyäk Dun, stabilizing the site may take until next spring.
The financial fallout from the spill has been devastating for Victoria Gold. Trading in the company’s shares was halted on Wednesday by the Canadian Investment Regulatory Organization, and the company announced on Thursday that it expects to be delisted from the Toronto Stock Exchange. Since the spill, Victoria Gold’s stock has plummeted by more than 90%, leaving shareholders facing significant losses.
Victoria Gold last traded at $0.48 on the TSX.
Information for this story was found via The Globe And Mail and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
