Yukon judge grants stay to mining company over higher security payment

A Yukon Supreme Court judge has paused part of a security payment contested by the territory's largest mine, ruling the company's bottom line would be adversely impacted.

In June, the Yukon Water Board ordered Victoria Gold — the company behind the Eagle Gold Mine near Mayo — to furnish a total of $105 million by mid-September, arguing security needed to be increased because the company breached its water licence. That amount is roughly $74 million more than what Victoria Gold had already put forward, an estimated $31 million. It's also higher than a Yukon government security calculation of roughly $69 million.

The company brought the board to court last month, alleging the board's decision was unfair and requesting that roughly a third of the security order be waived.

Justice Karen Wenckebach states Victoria Gold would "suffer irreparable harm" if it was ordered to post extra security because it wouldn't be able to recoup added costs.

Victoria Gold has argued it would incur about $1.2 million in annual carrying costs associated with the water board's security, or about $400,000 to $500,000 more per year than the security determined by the Yukon government's mineral resources branch.

Wenckebach also states the board and the territorial government haven't identified any risk of "closure, abandonment, or significant adverse environmental effects that require immediate reclamation."

The water board has requested Wenckebach not consider the company's application because it arrived in court without "clean hands" — a legal tenet created to prevent an applicant from abusing the system and obtaining relief following poor behaviour.

Wenckebach disagrees.

"There must be a clear nexus between the applicant's behaviour and the basis upon which they are seeking relief," she states. "Otherwise, the doctrine of clean hands does not apply. What that means in this case is that Victoria Gold's violation of the water licence, if there was a violation, must have a direct relation to its request for a stay of the security order."

Wenckebach states Victoria Gold is appealing the security order on the basis the board violated procedural fairness it owed to the company, and because there were factual errors "that amounted to errors of law."

Lawyers for Victoria Gold and the board didn't immediately return requests for comment.

Victoria Gold seeks to appeal the board's security order. The temporary hold on security will remain in effect until 30 days after the outcome of the appeal.

Judge grants standing of board 

Victoria Gold opposed the board's involvement in court proceedings, saying it's a regulatory body and, in so being, must remain impartial.

Wenckebach has granted the board standing, however.

The Yukon government and the First Nation of Na-Cho Nyäk Dun, on whose traditional territory the mine is located, took no position on Victoria Gold's court application.

Wenckebach states the application would go unopposed if the board wasn't involved. 

However, she states she will consider the board's submissions going forward with caution because its approach has been "overly adversarial."

"Although the water board claimed to take no position, its submissions amounted to clear opposition to the application," Wenckebach states. "It sought to take on the role it believed Yukon or Na-Cho Nyäk Dun should have played. 

"In doing so, it overstepped its mark and became too partisan. The water board must be careful: it is not an adversarial party and should not act like one."