Municipal officials in Dawson City, Yukon, have issued a development permit for a controversial gold placer mine inside town limits, but a local dispute over the mine is still far from settled.

Darrell Carey has received a municipal development permit for his Slinky property, which straddles the town's Dome Road.

However, town officials have insisted that Carey cannot mine the ground under the public road — ground that Carey claims has never been mined — until after he has built a bypass road around the property.

"All he has to do is to make arrangements to build a new road to the same standards or better standards than the existing [road], and install that road before the old road is mined away," Mayor Peter Jenkins told CBC News on Tuesday.

To date, Carey has scraped away enough of the road shoulder to raise safety concerns in Dawson City.

Lawyers for the town have filed a lawsuit with the Yukon Supreme Court, demanding repairs to shore up the existing road bed. There is no word on when that case may be heard.

"The miner did want the City of Dawson or the Yukon government to pay to move the road, and that isn't something that's going to happen," Jenkins said.

Yukon government officials insist that the dispute in Dawson City is a municipal issue. They have not commented on its possible role in settling the matter.