Question re: Ketza River mine project - November 24, 2014

Mr. Silver:   Earlier this summer, a company named Veris Gold filed for bankruptcy protection. A subsidiary of Veris Gold owns the Ketza River mine project near Ross River. On October 3, the company issued a news release saying that it would be cooperating with the Yukon government to address certain maintenance and remedial work required at the Ketza River project. This news release was not announced by this government.

The work includes maintenance work on access road bridges and will be funded from a $3-million security fund that the company had established for reclamation. It appears that the government is using the reclamation fund to pay for maintenance at this mine site. Can the minister explain to us why?

Hon. Mr. Kent:    There were a number of steps that were taken by Compliance Monitoring and Inspections branch with respect to the Ketza mine, and accessing the security that the member opposite mentioned was of course one of the last steps that we took. He is indeed correct — there was slightly over $3 million in that fund that was accessed in October of this year. We’ve retained the services of a consulting firm to manage the project. It is more than just simple maintenance, as the member opposite alluded to in his initial question. There are a number of aspects of that project that require this and again we are using a consulting firm to manage the project so that we can bring that site back into compliance.

Mr. Silver:   The government’s decision to spend reclamation dollars on the road and bridge maintenance begs the question: Who will be paying for the actual reclamation?

The October 3 news release goes on to say that the Government of Yukon will undertake the contracting of the required work. Can the minister tell Yukoners if Veris is in fact still owning the company and also how much of the $3 million will be spent?

Hon. Mr. Kent:    These dollars are being utilized to bring the property back into compliance. As mentioned, there is work on the access road and bridges. There is also work with respect to the tailing facility on-site. As mentioned, the Yukon government was named as the beneficiary of the commercial letter of credit in the amount of $3,087,600.

While we are not managing the project, we have enlisted the services of a consulting firm to manage the project. The contractor has been instructed to demonstrate best efforts to employ qualified local individuals and businesses wherever possible, and there are a number of tight controls within that contract with the consultant to ensure that it doesn’t go over the amount of money that we have for the project itself.

Mr. Silver:   So the minister says that the reclamation money is being used to bring this project into compliance. This situation raises a couple of questions. I think the government is setting a precedent when it is using money intended for reclamation instead on upgrading the Ketza mine and bridges. If the government wants to do that, they should maybe find money from Highways and Public Works instead of out of the reclamation bond. That is money that’s actually set aside to be used when a mine is permanently closed.

What is the status of this property? Is it closed temporarily or, now that the owner has gone bankrupt, will it be closed permanently? Is there even a water licence in place to do some of the work that the minister has outlined? Finally, is $3 million sufficient to clean up this site?

Hon. Mr. Kent:    Again, as I mentioned, we’ve accessed the security bond to assist us in bringing the site back into compliance. As mentioned, we’ve retained the services of a local consultant to do so. There were a number of steps, as I mentioned, that led up to this point. Compliance Monitoring and Inspections branch worked with the company to try to bring it back into compliance.

Again, the company still owns the project. We have no interest in owning the project. We just want to make sure that we safeguard the environment and human health and safety, so that’s what we’re doing by accessing these funds to bring that property back into compliance, not only with respect to the road and the bridges in there, but also water treatment, the tailings facilities — those types of issues, as well — that have the potential to have long-term environmental effects.

Again, that’s what we’re doing with the Ketza River mine. We have consultants and people on-site right now working.