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PwC fires Victoria Gold CEO days after taking control BY BLAIR MCBRIDE
V
ictoria Gold (TSXV: VGCX) CEO John McConnell lost his job on Aug. 19, the third event over five days in mid-August that seemed to seal the company’s fate after it was put into receivership and its board resigned. PricewaterhouseCoopers, which was made Victoria’s receiver by an Ontario court order, fired McConnell as it moved to organize a cleanup with the Yukon government of the June 24 landslide that triggered Victoria’s demise. Whitehorse said the mine could potentially restart, and the company might have been part of that process. Victoria Gold declined to comment to The Northern Miner, referring questions to PwC. The accounting firm hadn’t replied to an email by press time and McConnell didn’t respond to a phone message. The financially crippling heap leach pad accident shut operations while the company struggled to pay down some $233 million in debt. Injuries were limited in the accident. But it unleashed 4 million tonnes of material, with half leaving the pad’s containment and contaminating a local stream with cyanide-infused ore. By mid-August, Whitehorse said it didn’t have faith in Victoria to clean the site. “The government of Yukon has lost confidence in the management team of Victoria Gold Corporation to take the human health and safety and environmental consequences of the June 24 heap leach facility failure seriously,” said Tracy-Anne McPhee, minister of justice and Yukon’s attorney general. “Or to respond with the urgency the situation demands.” Contamination Between 280,000 and 300,000 cubic metres of cyanide-containing solution left the containment, according to government estimates. Groundwater flowing from Eagle was found to be highly contaminated with cyanide, though much of the water was being contained at the site. The regulated drinking water supply isn’t at risk, Yukon government officials reported. However, a discharge of water from a treatment plant at Eagle from July 31 to Aug. 2 led to the discovery of 68 dead fish near the mine in Haggart Creek, officials said. Victoria’s share price plum-
VICTORIA GOLD MELTDOWN
2024
2009
Victoria Gold acquires site to become Eagle mine
2019
Board members resign
Yukon threatens Eagle takeover
Heap leach accident, operations stop
Eagle mine starts production
AUGUST 15
JULY 18
JUNE 24
JULY 12
Victoria says it lacks funds
AUGUST 19
AUGUST 14 PwC appointed receiver
PwC fires CEO McConnell
Graphic by James Alafriz. Photo credits: Victoria Gold, Adobe stock, Northern Miner.
“Our intention was absolutely not to put Victoria out of business. The decision by the board of Victoria Gold to resign is their decision.” TRACY-ANNE MCPHEE, YUKON’S ATTORNEY GENERAL
meted more than 90% before its shares were halted in mid-August. They traded for 48¢ apiece at the end. Eagle was the company’s sole asset. McConnell said he was proud of what Victoria Gold had built over the past 15 years, according to the CBC, which cited a letter from the CEO to PwC. In March, McConnell accepted this year’s Viola R. MacMillan Award for innovative financing at the Prospectors and Developers Association of Canada. He’d used a combination of private equity and offtake streams when backers for the low-grade mine in the far north were hard to find. Victoria acquired the site that would become Eagle in 2009 when it took over StrataGold. Production started at Eagle in 2019.
Financing needs McConnell told the CBC in July — in his first interview with media since the accident – that the company was sound financially for at least four to six months but would likely need financing after that. The week before his dismissal, McConnell said he knew his time was short even though he pledged to help with the accident cleanup. He apologized to employees, Yukoners and the Na-Cho Nyäk Dun First Nation (FNNND). When the government in July stepped in with its own contractors to build a protective berm under the unstable slope at Eagle, it was becoming clear Victoria wasn’t willingly following all ministerial directives. The company said at the time it didn’t agree with the plan for safety and operational issues. “The significant health and safety concerns because of stability risks with the heap remain,” Lauren Haney, deputy minister for Yukon’s Department of Energy, Mines and Resources (EMR), said then. “It is a result of the company not complying with those directions that we are stepping in to undertake construction of the berm ourselves.” Then in August the Yukon sought to place Victoria in receivership. A judge denied Victoria’s request to prepare an application under the Companies’ Creditors Arrangement Act. The CEO told the CBC on Aug. 15 that Victoria’s board had resigned and described the company as finished. Future role The government said it didn’t intend to shutter the Eagle mine
permanently, or for the company’s board to resign, despite moving to put it into receivership. “We were very careful to make sure there was a process that would allow a path forward for Victoria Gold and for mining to continue on that site,” McPhee said at an Aug. 16 briefing. “(Our intention was) absolutely not to put it out of business. The decision by the board of Victoria Gold to resign is their decision. They were not directed to resign by the receiver or by the Yukon government.” PwC, which was appointed receiver of the Minto mine in central Yukon last September after it failed, is being advanced $50 million for the Eagle cleanup. It is to be recovered from Victoria’s assets as a priority over other creditors, according to court documents. Full cleanup is expected to cost $100-$150 million, the Yukon says. About $40-$50 million worth of work is needed in the next 90 days. The key immediate tasks include improving water storage capacity at Eagle, assuring geotechnical stability, drilling five groundwater interception wells and installing water treatment systems, Haney said in a briefing. Building the groundwater wells is particularly important because it will help the government to better assess the full extent of contamination, Haney said. She couldn’t say how long it could take until the site is restored to its pre-June 24 state. Water samples collected between Aug. 3 and 8 showed cyanide levels in Haggart Creek, which flows out of the Eagle site, had returned to levels similar to those observed before the
Permit tailwinds push Seabridge Gold’s KSM project towards buyout / 12
discharge. The levels were around the long-term aquatic life guideline of 0.005 mg per litre for cyanide. Officials have emphasized the scale of the cleanup effort at Eagle Victoria Gold 36 >
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