RE:JDS/Hatch - that's where I would start.Exactly, and who is ultimately responsible for the review, approval, and subsequent oversight of the change of the HLF 'design from a Valley-Fill to a Ridge-Top design? None other than YTG, the regulator, that's who. Couple this with YTG's obvious knowledge that once constructed and in an operational status, slides were occurring and other signs began emerging that the Ridge-Top design included added risk (i.e. permafrost, seasonality, weather related, etc.). Now add to this that YTG had 5 years from the time Eagle went into Commercial production to assess things and what did YTG (as the official regulator and overseer) do to mitigate these risks? Where was JDS in all this when issues started to surface?
Clearly FNs and VG would have had to of been involved and agree to the HLF redesign change but FNs and VG agreement to this change was no doubt influenced by the fact that JDS are the 'Experts' and if JDS presented the design change as a feasible solution and YTG was approving this new design then it's logical that FNs and VG would agree to it. In the end, the buck stops with YTG because they are the official government body ultimately responsible for the review, approval, monitoring and regulatory oversight of Yukon mining. So unless it can be proven that VG negligently conducted operations that directly resulted in the Eagle HLF collapse and those negligent operations had nothing to do with the HLF re-design, YTG has a liability issue here that is only made worse by their historial track record of mine failures and poor regulatory oversight.
Excerpts:
SCOPE
JDS completed an updated Feasibility Study in 2016 with many significant new concepts from the previous 2012 FS and showed a significant improvement in economics. The following project enhancements were delivered in the 2016 JDS FS:
· Longer mine life from inclusion of ROM material and the addition of Olive Zone resources;
· Steepening of Eagle pit walls, resulting in an increase of ~10% more gold ounces produced over the LOM;
· Optimization of gold production model, resulting in accelerated gold recovery and earlier revenue generation;
· Replacement of valley-fill heap leach pad in Dublin Gulch by ridge-top design and addition of secondary pad, resulting in significant capital savings; and
· Compression of construction schedule to one year (15 months) due to heap leach re-design - significantly improving project economics.
Overall project economics were improved to an after-tax IRR of 29.5% and an NPV of $509 million.
______________________________________________________________________________
JDS sold this new design based on the improved economics, which according to the attachment included significant addtional work for JDS as follows:
JDS was subsequently engaged to design and construct the Project including the following process facilities; 3 stage crushing plant with a 50" x 65" primary gyratory crusher and secondary and tertiary crushing (4 x MP1250 hp), 1.3 km 42" overland conveyor, Phase I of the Heap Leach Facility (160,000 m2 ), and an 2,000 m3 /hr ADR plant (absorption, desorption and refining). JDS also managed construction of the 46 km 69 kV powerline, substation, access road upgrades, camp expansion to 450 beds, water management structures and site access roads. Construction was completed ahead of schedule and the mine began operations in 2019.
The independent investigative review(s) are going to be critical toward determining where liability ultimately falls and whether VG common shareholders may ever recoup any of their losses. How many more months it will take for the independent investigation(s) to be completed and those reports to be publicly released is anyone's best guess. The truth around the primary cause for the slide will eventually come out and I hope it includes an explanation of what work the dozer operating was doing at or near the toe of the HLP just before the collapse.
My opinion only, DYODD.
HB77