The following was written by Dave Jorgenson, a member of Friends of Responsible Economic Development (FRED) in Wells, British Columbia. This article is republished with permission and was originally posted here.
Government seizes Barkerville Gold’s sister operation in Yukon after mis-management and ‘failure to comply’ leads to disaster.
The Government of the Yukon Territories has now seized Osisko Gold’s investments and assets at Victoria Gold/Eagle Mine due to the poor management of the catastrophic cyanide spill at their mine last month. The tie to Barkerville Gold Mine comes through Sean Roosen, chair of Osisko Gold Royalties, who characterized Victoria Gold Corp and the Eagle Mine, and Barkerville Gold and the Cariboo Gold Project as two of Osisko’s “incubator projects”. This directly links the management issues that created the Eagle Mine disaster, with the management strategy at the Cariboo Gold Project. Here’s what we can learn from these flagship strategies.
What’s the problem?
Victoria Gold is a heap-leach gold mine in the Yukon, similar to Osisko Development’s other San Antonio heap leach mine in Mexico. (which is also undergoing developmental problems according to Osisko’s annual reports.) Heap leach occurs when gold ore is simply piled outdoors on the surface, into mountains of material, sitting on a rubber mat and exposed to the elements. Cyanide, (which is highly poisonous) is poured over the pile where it leaks down to the bottom, binding with gold particles in the ore pile. Then it’s collected and refined from sumps in the containment mat. The cyanide is separated from the gold and the process is continuous. If this sounds primitive, it’s because it is primitive. The process is so simplistic, crude and environmentally risky that it has been banned in many countries around the world. https://www.yukon-news.com/news/hard-questions-must-be-asked-about-heap-leaching-hazards-6976487 The Eagle mine demonstrates why.
On June 24 a massive 4 million tonne section of the Eagle Mine heap collapsed in an un-explained landslide, rupturing the retaining membrane and dumping a soup of cyanide and other contaminants in the watershed and water table. The Yukon government estimates that 300 million litres of cyanide solution leaked from the pad.
The inability of the company to react to the disaster, or communicate with the public or government officials in the aftermath has been chronic. Retaining ponds have failed to be effective, the company has withheld information from government, and even denied there is a toxicity problem, and lied about fish deaths. It is expected that cyanide in the remaining pile will continue to leach out of the pad until the unsafe conditions can be moderated. After “failing to comply with several formal directions”, the Yukon government’s and local First Nation’s frustration with the company’s lack of remediation forced action. The Attorney General of the Yukon sought and was awarded the right to put the company in receivership and seize their assets. https://www.yukon-news.com/news/victoria-gold-says-yukon-government-moves-to-put-it-into-receivership-7485105
What is Osisko’s role?
Although heap-leach mining(Eagle Mine) and underground mining (Cariboo Gold Project) are different processes, the management infrastructure is intimately interwoven. The implications for the future of the Cariboo Gold Project and Barkerville Gold are disturbing. All in the same moment, Sean Roosen has sat on each of the boards of Osisko Gold, Victoria Gold, and Barkerville Gold. He has effectively captained each company into similar developmental and strategic paths to make the most money with the least effort for shareholders.
Sean Roosen and Osisko’s background:
In Malartic Quebec, around the years 2008 Osisko disrupted the mining town of Malartic by moving over 200 homes plus government buildings off city streets to build a gold mine. Construction began and by the mid 2010s, the open pit became known as the worst environmental offender in any industry in Quebec, and was ultimately the subject of a citizen court case to force the province to act on the company’s chronic mine offences. When the court ruled in favour of the citizen-group’s demands to enforce the law, the Province of Quebec took the creative step to adapt the mining law to Osisko’s terms rather than look bad ignoring their chronic non-compliance. (see previous blogpost) (To be clear, Quebec mine and environmental protection law was ultimately adapted to conform to the demands of the mining company at the expense of the public.)
This successful mining strategy, (incorporate the monetary expense of non-compliance into your business plan) was repeated again in the Yukon at Victoria Gold (see disputes with the Yukon Water Board in 2020, and 2022)
As the Eagle Mine was being launched in the Yukon (2017-19), Osisko Gold Royalties loaned money to Victoria Gold, Osisko Gold bought controlling shares in the company, and Sean Roosen took a seat on the board. Under his tenure, Victoria Gold took the Yukon government to court to try to reduce the value of their reclamation bond, and refused to post the requested amount. https://www.cbc.ca/news/canada/north/yukon-victoria-gold-security-water-board-1.6573789 (That reclamation bond, posted to reclaim a ‘working mine’, is now dwarfed by the new estimated clean-up costs that the Territory has inherited from taking over a ‘broken’ mine and remediating the disaster.)
That same litigious non-compliance strategy has also been adapted to the Barkerville Gold Mine here in BC in exactly the same time periods. As happened in Quebec just a couple of years earlier, the most recent fine cycle by the Province of BC acknowledged that not only was Osisko non-compliant but was profiting through ignoring compliance requests. Thousands of pages of appeal documents successfully forced the province to reduce the value of the fine to trivial levels. https://fredinwells.wordpress.com/2024/04/03/osisko-earns-profits-by-killing-fish-says-bc-government/
In that same period, Sean Roosen was named along with Victoria Gold in an investor fraud class action suit. (like Barkerville Gold was in 2015). This suit was eventually settled out of court and may have also precipitated Osisko Gold re-organize its shares so that they were hidden inside a shell company (Orion), while also increased the size of its majority shareholdings in Victoria Gold. (This may have kept Osisko Gold Royalties from being both the lender and the defacto receiver in the same loan transaction.)
Although Osisko Gold Royalties also lends money to the Cariboo Gold Project, and Osisko Gold Development is also the primary shareholder of Barkerville Gold Mine, what adds more to the alarm about the connection between these two mines is with Osisko’s principle contractor, JDS Mining. This mining company was hired in 2016 to complete the feasibility study for Victoria Gold, and then was hired to engineer, build and install the components for the mine feature that subsequently collapsed. JDS is also the primary contractor for operations here at Barkerville Gold. They are currently the underground mining company building the long delayed ‘10,000 tonne bulk sample adit’, which will ultimately also be a major transportation route for the Cariboo Gold Project if it proceeds as designed.
Victoria Gold Mine will be leaking cyanide, possibly for decades. It has already killed fish in the local streams but engineers believe that most of the contamination is seeping into the water table where it will re-emerge over time, polluting the drinking water downstream in Na-Cho Nyak Dun territory. The remaining 15 million tonnes of cyanide soaked material is currently too unstable to mitigate. https://www.cbc.ca/news/canada/north/victoria-gold-mine-experts-1.7264503 Some chemical engineers believe this will be a bigger environmental disaster than Mount Polley (2014), at Likely (which was then one of the biggest mine tailing failures in the world.)
Like the Lhtako Dene at Barkerville Gold, the chief of the Na-Cho Nyak Dunn nation commented in 2018, “We have worked with Victoria[Gold] for many years establishing a mutually beneficial relationship and they have exemplified the ‘model’ for companies wishing to work in our Traditional Territory.” Today, with their fishing and hunting grounds devastated, and their drinking water compromised for the foreseeable future the Na-Cho Nyak Dunn have had enough of exploitation. They also demanded a court request that Eagle Mine be seized and are now demanding an end to all mining on their territory as a result of this failure of management.
Why does this matter?
Osisko has always maintained that the industrial complex wrapped around the concentrator building has to be built in the center of Wells, to make the project viable for its investors. This is based on their economic forecast of gold being worth $1700/oz USD and the cost of production being $961/oz. According to their assessment to shareholders, choosing what they effectively describe as the cheapest possible option, the profit to shareholders would be $1.4 billion dollars.
With the price of gold now holding at $2,500 USD/oz, it has more than doubled the profit margin to almost $3 billion and that’s without the additional proven reserves that will now be recoverable at lower concentrations than the original 4g/tonne feasibility cut-off. Only a tiny fraction of that profit could be spent to make this project better for the community and the environment, or by sticking to the cheapest option, put into shareholders pockets.
Using the least-cost method, the wheel fell off Victoria Gold, but not before Osisko put just enough space to mostly protect itself from litigation. In fact, in a perverse machination of the facts, they were first in line to file a Notice of Default against their own Victoria Gold/Eagle Royalty Agreement for over $14 million. Meanwhile, the people of the Yukon Territory will be paying for the corporate shortcuts taken at Victoria Gold, for decades to come. Is the Cariboo Gold Project next?
Sean Roosen, as the Chair and Chief Executive Officer of both Osisko Gold Development and Osisko Gold Royalties, spun those two companies out of the sale of the Malartic mine, and uses them and the manipulative operational strategy they developed at Malartic to fund and operate these two companies he describes as ‘incubator projects’ – Victoria Gold and Barkerville Gold.
Both mines have been the recent subject of investor fraud. Both companies aren’t only owned by Osisko, but also are funded by Osisko Gold Royalties. They both use the same general contractor, (JDS mining), and they’re both quarrelsome with their respective provincial governments, and both have been chronic environmental offenders under Mr. Roosen’s leadership.
So one might wonder: a) this same company (Osisko) proposes to build an industrial site in the residential area in Wells, (a plan launched without municipal consultation, and in violation of municipal zoning and the Local Government Act), b) has already been investigated for profit-driven non-compliance with BC and Federal Environmental law, c) has already asked for the very noise limits they suggested to be amended and eliminated from their Environmental Certificate, (before they even begin building), and d) the provincial government already acknowledges that the aquifer of the community of Wells is ‘likely’ to be contaminated by the operation of the mine, requiring a new aquifer be ‘discovered’.
Wells thrives on history, and with all that Osisko history; the homelessness and chronic compensation packages created at Malartic, the planning tragedy at Victoria Gold, the recent social and environmental track record at Barkerville Gold staring us in the face, and Osisko’s role woven through them all….well…..what could go wrong?