Nick Hodge,
Publisher
July 4, 2024
When I arrived in the Yukon there were two operating mines.
There was only one when I left.
Victoria Gold’s (TSX: VGCX)(OTC: VITFF) Eagle Gold Mine endured a rock slide and leach pad failure on June 24, two days after I visited. Thankfully, no one was hurt.
It was the only operating heap leach mine in the Yukon. Operations are now suspended and “there has been some damage to infrastructure and a portion of the failure has left containment.” We don’t know much more than that.
I learned about the event some time after breakfast while at the Yukon Mining Investment Conference on the 24th, while the stock was still trading. Word travels fast in those parts. It was then halted just after 11am PT, and when it resumed some 85% of its value had disappeared.
Five hundred people are now out of work. Early analyst estimates are citing C$75-$100 million in clean-up costs. The suits will now do the math on Victoria’s future given its debt obligations and lost inventory.
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Banyan Gold (TSX-V: BYN)(OTC: BYAGF) owns the AurMac property near the Eagle Mine. And there are several other regional development and exploration projects owned and operated by public corporations.
The mine failure has implications for the entire region in terms of lost trust, delayed timelines, rigorous requirements, and altered exit plans.
Will heap leach operations even be allowed in the area any more? Will they take an additional year — or two, or more — to permit? Will they cost more because of new engineering requirements? Those are questions shareholders of Western Copper & Gold (TSX: WRN)(NYSE: WRN) are likely asking. It hopes to permit the very large Casino copper-gold project with a heap leach plan. Its shares are off 7% since the rock slide.
(View of Casino project from the air.)
And what about Banyan, who many thought would be a takeout target for Victoria, given the close relationship of its geography and executives? That is clearly no longer an option — not in any reasonable timeframe, at least.
There are many other considerations as well, including that Victoria owns a royalty on some of Banyan’s ground and holds a significant amount of Banyan shares. Will Victoria sell those shares given the new financial position in which it finds itself?
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Will Banyan have no choice but to pursue a milling scenario rather than the heap leach option that is currently on the board? If it has to mill and has no other option, does that make it a cheap acquisition target for Hecla, which operates the only other active mine in the region at Keno Hill underground?
Lots of questions remain unanswered.
Editor’s Note: What you just read was an excerpt of the weekly Hodge Family Office premium speculative investment advisory column. It has been published every Thursday for over 15 years, and chronicles how I’m viewing the markets as well as what I’m doing with my speculative capital. You can learn more here.
Call it like you see it,
Nick Hodge
Publisher, Resource Stock Digest