The Yukon government is seeking to up the security requirement for Victoria Gold Corp.’s Eagle Mine by $35 million, bringing it to $103.7 million and making it the largest amount of security ever held by the territorial government for a Yukon mine.

And the government is treating the matter with some urgency, according to a Jan. 2 letter from Patricia Randell, at the time the acting deputy minister of Energy, Mines and Resources, to Piers McDonald, the chair of the Yukon Water Board.

“It is imperative that we expeditiously close the gap between what is currently held in security, and the new determination under the Quartz Mining License,” reads the letter from Randell.

Randell wrote that she understands that this deviates from current plans and timelines, but “it is my view that the risks associated with the current situation are sufficient to warrant such action.”

These types of security funds are held for every hard rock mine in the territory. In the case a mine should close, the money is used for reclamation and closure work.

This new assessment comes less than two years after the Yukon government decided on the current amount for the Eagle Mine.

At that time, the water board had argued for a higher amount, and was taken to court over it by Victoria Gold.

On June 17, 2022, the water board had determined the security needed to be $104.9 million. Just 10 days later, the government came up with a different determination, finding the security fund for the mine needed to be $68.7 million.

A lawsuit was filed in Yukon Supreme Court by Victoria Gold disputing the water board’s determination. The mining company was granted a stay until a judicial review could be completed, which will likely be finished later this year.

Justice Karen Wenckebach had ruled in that case that Victoria Gold would suffer “irreparable harm” if the security fund was increased to the amount sought by the water board.

Because these funds work through reclamation bonds, the cost of the increase in the security fund to the company would be about $400,000 to $500,000 per year in interest, according to court documents.

Since the court ruling, the lower amount assessed by the Yukon government has been held as security for the Eagle Mine.

These security amounts are supposed to be re-assessed every two years.

In an email to the Star, a spokesperson for the government said it is typical for security to rise as the size of the activity of a mine operation increases.

“The new security requirement for the mining operations at the Eagle Gold Mine takes into account the growth of the mine site since 2020, the need for new water treatment infrastructure to manage considerable amounts of cyanide during mine closure, and adjustments for inflation since 2020,” wrote Energy, Mines and Resources spokesperson John Thompson.

He added that the requirements are designed to ensure there is “sufficient security in place to respond to any unforeseen events that should occur.”

A representative for Victoria Gold would not comment on the change, other than to suggest the conversation with the government over the amount is not yet finished.

“As we are currently in discussions with the Yukon government, we refrain from making comments while those discussions are ongoing,” Victoria Gold’s Lenora Hobbis wrote in an email to the Star.

Asked if there is a way for Victoria Gold to challenge this determination, Thompson wrote that there is an opportunity for the company to respond.

“If any company feels that there is new information that hasn’t been previously considered, or activities that have substantially changed, they are always able to request a review of the security held,” he wrote.

Up until now, the largest amount of security held by the territory was for the Minto Mine.

This was at $75.2 million when that mine was abandoned last May, and it is now being used for reclamation and closure at the site while a buyer is sought through a court-appointed receivership process.

The government had actually made a security determination for Minto of $104 million, but that was subsequently dropped to $93 million. Minto Metals still hadn’t fully paid up when the mine shut.

Lewis Rifkind, a mining analyst from the Yukon Conservation Society, gave a bit of analysis as to what is happening here, but was unable to figure out why such a large change is being asked for, and why there is such a rush.

He speculated it could have something to do with the government learning from the experience of Minto and the costs associated with the closure effort there.

He also noted that the number is precise enough that it is likely coming from a detailed estimate of what it could cost to close the mine.

“The amount is quite exact,” Rifkind said.

“Somebody somewhere has arrived at a definitive amount, which means they know exactly what they need.”