Question re: Victoria Gold power generation - April 24, 2013

Mr. Silver:    Mr. Speaker, in a recent article in the local newspaper, the Premier was asked about the potential of opening the Victoria Gold mine near Mayo.

The original plan for the mine was to tie into the existing power grid. However, the Premier told the paper that there is now a second option on the table: having the mine generate its own power by burning diesel or possibly a diesel-natural gas mix, and I quote: “Those two options are still on the table and being discussed by the company and officials as well”. The article goes on to say that, according to the Victoria Gold president, the company has no plans to generate its own power, “No, it’s still our intention to tie into the grid. We’re actually not permitted to have our own power system, so we’re working very closely with Yukon Energy Corporation to tie into the grid and have them provide power.”

The company and the Premier seem to be in contradiction with each other here, and I just want to know: Does the Premier stand by his comments, or does he want to correct the public record?

Hon. Mr. Cathers:    I would encourage the member not to assume that every story in the newspaper is always correct. We know the media — we assume they make the best intentions but, in fact, in this case, yes, there have been discussions that have gone on between Yukon Energy Corporation and Victoria Gold. As far as them hooking up to the grid, that has not been determined to be the final option yet, and there has also been discussion between Yukon Energy Corporation and Victoria Gold, as well as the Department of Energy, Mines and Resources and Victoria Gold about the possibility of Victoria Gold choosing to generate its power on-site. No definitive conclusion has been reached at this time.

Mr. Silver:    I guess there is still a contradiction here between the president of Victoria Gold and the Premier regarding the mine’s intention to get power. Victoria Gold wants to hook into the grid. That is what they told the local media and that’s what it says on their website, and I quote: “Grid power currently runs along the highway and Victoria has a letter of intent in place with the Yukon Energy Corp to support grid power via a spur line to be constructed along the existing access road.” This is going to be a very large customer, Mr. Speaker. I’ll move on.

We know our power grid is already stretched to its limit. Does the Energy Corporation have sufficient capacity to serve this mine and what will the source of that power be?

Hon. Mr. Cathers:    The member is trying to create the sense of a contradiction between what the company and government are saying. I think the member is really fishing here. In fact, as we indicated, yes, the company had planned to hook up to the grid. That plan is still a possibility but we have also had discussions with them at a ministerial level, at a departmental level and at a corporation level about the possibility of Victoria Gold doing on-site energy production themselves. As I’ve stated on a number of occasions in the House, before we would give permission for a mine — including Victoria Gold — to tie into the grid, there would be a number of steps that would have to be met and we would have to believe it was in the best interests of Yukoners and ratepayers. Energy projects of that size also require approval by the Yukon Utilities Board before they can commence and before those assets can be added in to the rate base.

So there are a number of tests that have to be successfully met and approvals have to be given not only by the Yukon Energy Corporation and by government, but also by the Yukon Utilities Board, for energy projects of that size if they are to be added on to the public grid.

Mr. Silver:    For the record, I’d much rather be fishing than trying to get answers from this minister.

Maybe the Yukon Energy Corporation appearing in the Legislature this spring, as I’ve requested — and we heard today that they’re going to show up; that’s great — could actually give us some answers about these particular companies attaching themselves to the grid.

The Minister of Energy, Mines and Resources has said in the past that he’s looking forward to development on the Eagle mine site in 2013. He also said that the government has been advised that the Eagle property will be in production by 2014-15. Now, this is a very large project and it involves a great deal of preparation from both the company and the government. At this point, Victoria Gold is focusing on securing its financing and we are very happy to see this project moving forward.

We know the Energy Corporation is working very hard on supplying power and answering the power questions for this particular project. Is the government still anticipating development this summer, and what preparations is it doing to make sure that it’s ready when this comes on to the grid?

Hon. Mr. Cathers:    A few points that have to be said in context — Victoria Gold has gone through the YESAA process. They have successfully received a recommendation from YESAB and a decision document recommending the project proceed. The company has not yet applied for their quartz mining licence, which is another step that must be taken.

It is a very challenging market right now, not just for Victoria Gold but for other companies with large undertakings. If the member follows the news, stock markets are in a period of undervaluing a significant number of opportunities.

I would direct the member’s attention to the protocol that I tabled in the House, between Yukon Development Corporation and me, as well as the letter of expectation, which lays out a number of expectations, including our key expectations that the Development Corporation ensure its subsidiary operates in a manner consistent with the government’s overall requirement that Yukon Energy Corporation provide Yukoners with safe, reliable and cost-effective electrical power — in particular, that Yukon Energy Corporation minimizes financial risk; assists government, as required, with technical information to help government make good decisions, including policy decisions about new energy projects; undertakes new energy projects as directed by government; and performs maintenance on existing assets. The member will also see a number of references to ensure that — I gather I’m out of time, Mr. Speaker, so I will have to provide that information later, but I encourage the member to read the letter.