Exploration drilling will not be allowed in the area surrounding the Spruce Hill subdivision located at the city's south end, says city manager Dennis Shewfelt.

The area around Spruce Hill is identified in the Official Community Plan as the Wolf Creek Park, he pointed out in an interview Thursday.

He said the zoning bylaw does not allow exploration drilling in parks, and the company proposing to conduct the drill program has been made aware of the restrictions.

Arcturus Ventures Inc., a junior exploration company headquartered in Vancouver, has announced plans to go ahead with drilling along the west side of the Yukon River.

Arcturus has not filed a permit application with the city nor the Yukon Environmental and Socio-economic Assessment Board (YESAB).

On its website, however, the company states:

"Arcturus Ventures Inc. is pleased to announce that the company has signed a contract with Kluane Drilling Ltd. for the drilling program at the Lewes River Project set to commence in March.

"The current level of exploration activity in Yukon has made drill rigs a scarce resource, and Arcturus management is pleased to have signed this contract to ensure the Lewes drilling program proceeds as scheduled.”

Company president Blake Macdonald could not be reached for comment.

Records indicate in 2005 and 2006, Arcturus staked 56 quartz mineral claims on the southern edge of the city and beyond, between the Alaska Highway and the Yukon River.

Maps show most of the claims are within the city limits, though some 24 reach further south into the Golden Horn subdivision, and the area between the subdivision and the river.

The claims staked by Arcturus cover all or a portion of seven residential lots at the south end of the Pineridge subdivision.

All 27 lots in Spruce Hill are covered by four of the company's claims, and 11 of the Golden Horn rural residential lots are covered entirely or partially by the claims.

Arcturus Ventures is a penny stock company whose shares were trading this morning at 11 cents a share, down from a high of 18 cents recently and up from a low of four cents in November 2010.

Under the Quartz Mining Act, companies can do work without applying for a YESAB permit if the level of activity is considered to be at the lower end of the scale, or within the class one category of the four categories.

Class one activity allows for a range of activities from the construction of structures without foundations, to the establishment of helicopter land pads and the use of explosives, provided it's under 1,000 kilograms a month.

Government spokesman Jessie Devost said this morning the government has been in contact with the Arcturus to explain how things work in the Yukon and to sort out exactly what the company is proposing.

A drill program, he said, does not necessarily trigger the need for an enviromental screening. Rather, the level of drilling activity determines whether a project requires screening, and the activity of drilling alone, Devost explained.

Shewfelt, meanwhile, said not only does the Municipal Act establish the city's jurisdiction over land use in the city, but it also pledges the Yukon government's support of the city's authority over such matters.

"We have basically given Arcturus a heads-up that there may be more to this than they think, and they should sit down and have a chat about what they want to do.”

Energy, Mines and Resources Minister Patrick Rouble was unavailable today to discuss whether he supports the city's view on the matter.

Premier Dennis Fentie was also unavailable.

Under territorial regulations, exploration and mining companies planning to work within 300 metres of a dwelling must have the permission of the property owner.

There is currently no land use designation for the vacant area south of the city boundary surrounding Golden Horn, which is occupied by some 21 of the quartz claims.

NDP Leader Liz Hanson raised Arcturus Ventures' drilling plans with Rouble on Monday during question period in the legislature.

She suggested the current system of permitting minerals claims to be staked anywhere has outgrown its time.

The "free entry system” has already brought grief to the residents of Dawson City's Dome Road, and to Whitehorse cross-country skiers, who have seen claims staked under sections of the Mount McIntyre ski trails, Hanson told Rouble.

And now, she said, the residents of Spruce Hill can be added to the list of uneasy homeowners worried about what the future will bring.

"How many more land use conflicts is the minister prepared to tolerate before we look at changing the free-entry approach to something a little more suited for modern times?” she asked.

Rouble said the age-old policies contained in the Yukon Quartz Mining Act and the Placer Mining Act do include some staking prohibitions.

There have, however, been instances where claims existed before municipal boundaries were expanded, he explained.

Rouble said in any case, there are permitting authorities in place like the YESAB, which ensures all proposed work adheres to the standards of the day.

"Additionally, if there is activity that's being looked at within the City of Whitehorse, of course there are municipal bylaws that would come into force and effect,” Rouble told the legislature in response to Hanson's questions.