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, and that part of the plant had breached its containment region, raising the possibility of environmental damage from cyanide leakage.
The company did not say what caused the heap leach pad to fail, but images circulated online indicated a significant rock collapse in the plant.
A source familiar with the situation said that the rockslide wasn’t an external, naturally occurring event, but one that started when a giant stack of rocks within the heap leach facility containing gold ore collapsed.
The Globe and Mail 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.
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.
Eagle is situated in the traditional territory of the First Nation of Na-Cho Nyak Dun. Dawna Hope, chief of Na-Cho Nyak Dun did not respond to a request for comment.
Heap leaching involves stacking piles of rock containing gold ore in piles and then sprinkling hundreds of litres of water laced with toxic cyanide onto the pile. Assisted by gravity, the solution causes gold to leach from the ore. The ‘pregnant’ solution then drips into a lined pond. The solution is finally pumped to a facility where the gold is collected.
Heap leach plants must be monitored continuously to make sure that the solution is percolating through the rock. In the event of a buildup of solution, the weight of the rock can rise exponentially and collapse, causing a rock slide.
Investigators with the Yukon government are on site and trying to ascertain the extent of the damage.
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 C$176M 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.
Victoria Gold was holding more than $230-million in debt as of the end of March with US$16.7-million due in September. A further US$119.9M 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.
This was the second time this year that a rockslide occurred at a Canadian gold company. Nine people were killed in February after a landslide at SSR Mining Inc.’s heap leach facility at its pler mine in Turkey.