A placer gold miner in Dawson City, Yukon, has the legal right to work on his claims, even if those claims are within municipal boundaries, says the town's mayor.

Peter Jenkins said the town has no legal authority to stop Darrell Carey from mining on his Slinky property, located along Dome Road in Dawson City.

Dome Road area residents who want Carey's operation shut down were outraged last week, when the municipal government upheld its decision to grant Carey a development permit.

The issue was rekindled at the town's council meeting this week.

"They were upset, but they've indicated that they might go to a referendum and have it rejected," Jenkins told CBC News on Friday.

"But if that takes place, the city cannot do anything with respects to controlling the Slinky Mine operation."

Has appropriate permits

The mayor said Dawson City is doing all it can to maintain control over what's being done on the Slinky property, but he noted that Carey's claims have existed before the town's boundaries were expanded.

"The mining operator applied for and received the appropriate land use permit. He also applied for and received the appropriate water licence. So he is legally entitled to operate," Jenkins said.

Jenkins said the miner will have to build a new road that meets government standards if he wants to continue operations along the existing Dome Road.

Dawson City's municipal government has already spent thousands of dollars preparing a court case to try to force Carey to shore up the public road through his property.

There is no word on when the Yukon Supreme Court will hear that case.