An internal rock collapse at a gold mine in the Yukon was a major factor in the collapse of a gold processing plant operated by Victoria Gold Corp., The Globe and Mail has learned.
Whitehorse-based Victoria Gold on Monday said that its heap leach pad had failed at its Eagle gold mine, and that part of the infrastructure had breached the containment region, raising the possibility of environmental damage from cyanide leaking into the environment.
Heap leaching involves stacking mined ore into giant piles and then sprinkling it with hundreds of litres of water laced with cyanide. Assisted by gravity, the toxic solution causes gold to leach from the ore. The resulting “pregnant” solution then drips into a lined outdoor pond. The solution is finally pumped to an enclosed facility where the gold is collected.
The company did not say what caused its heap leach pad to fail, but images that have circulated online indicate that a significant rock collapse had occurred.
A source familiar with the situation confirmed that a major rockslide had occurred. The source said it wasn’t an external, naturally occurring event, but one that started when the stacked rocks collapsed.
The Globe is not identifying the source because the person was not authorized to speak publicly.
John McConnell, chief executive of Victoria Gold, did not respond to multiple requests for comment.
Heap leach plants must be monitored continuously to make sure that the cyanide solution is percolating through the rock. In the event of a buildup of solution, the weight of the rock can increase exponentially, and it can collapse, causing a rockslide.
Investigators with the Yukon government arrived on site shortly after the heap leach failure and are working to ascertain the extent of the damage.
John Thompson, senior communications analyst, energy, mines and resources with the Yukon government wrote in an e-mail to The Globe that part of the slide spilled outside the heap leach containment area at the base of the facility.
The company has built dams to hold back contaminated water, which is being pumped into storage ponds.
“Site operators are doing everything possible to prevent further environmental contamination and stabilize the slide area,” he added.
The Eagle mine is located roughly 375 kilometres north of Whitehorse, and 85 kilometres north of the village of Mayo in central Yukon. The site employs around 500 people.
Victoria Gold has shut the mine, as it tries to ascertain whether the processing plant can be restarted and if the gold that was in the pond can be recovered.
Alex Terentiew, analyst with Ventum Capital Markets, said in a note to clients that the company had $176-million of “in-process inventory,” meaning gold within the leach pad. He said that much of that gold “may now not be recoverable, at least not within the near or medium term.”
Investors are now concerned that Victoria Gold won’t be able to generate enough cash to service its debt load. The company’s shares lost 81 per cent of their value on Tuesday, and a further 6 per cent on Wednesday to close at $1.28 apiece on the Toronto Stock Exchange.
Victoria Gold was holding more than $230-million in debt at the end of March, with US$16.7-million due in September. A further US$119.9-million is due by the end of next year.
Eagle started production in 2019. It produced just under 30,000 ounces of gold in the first quarter of this year.
The mine is situated in the traditional territory of the First Nation of Na-Cho Nyak Dun.
This is the second time this year that a major rockslide has occurred at a Canadian gold company. Nine people were killed in February after a major slip at SSR Mining Inc.’s heap leach facility at its Çöpler mine in Turkey caused the displacement of about 19 million of tonnes of material.
All operations at Çöpler were suspended after the accident, and the country’s government promptly revoked SSR’s environmental permit.
Niall McGee