The Yukon Supreme Court has upheld a decision by the territory's water board not to license a controversial copper mining proposal.

Western Copper Corp. wants to build a copper mine at its Carmacks property, located 38 kilometres northwest of Carmacks, Yukon, but the company was denied a water licence by the Yukon Water Board last year. (Western Copper Corp.)

In a written decision released Friday, Justice Ron Veale said the Yukon Water Board "has acted within its statutory jurisdiction" under the territorial Waters Act when it denied Western Copper Corp. a water licence for its proposed copper mine near Carmacks, Yukon.

When the board issued its decision in May, it said the Carmacks project's proposed heap leach method for extracting copper from ore is unproven and poses too many risks to Yukon's environment.

Under the heap leach method the company proposed, sulphuric acid would be poured onto thousands of tonnes of copper ore that's been piled on a rubber liner.

Vancouver-based Western Copper appealed the water board's ruling a month later, arguing that the water board exceeded its jurisdiction by denying the Carmacks project a water licence, even though the project has other necessary approvals.

Board not exceeding mandate

The project has the approval of the Yukon Environmental and Socio-Economic Assessment Board (YESAB), and a quartz mining licence from the territorial government, but it also needs a water licence in order to operate.

Western Copper argued that the Yukon Water Board's decisions cannot vary or contradict YESAB's decisions.

But Veale disagreed, ruling that YESAB reviews proposals with consideration of "broad environmental and socio-economic consequences," while the Yukon Water Board's mandate is to decide whether a proposed project can be licensed.

"The discretion of the water board to not issue a licence exists even after the issuance of a positive decision document" by YESAB, Veale's decision read in part.

Veale said the water board has jurisdiction over the water that Western Copper proposed to use for its heap leach process and therefore it has the right to make a ruling.

"The viability of the heap leach process is not simply a question of commercial viability," he wrote.

"It goes to the very fundamental question of whether the mine can leach the copper without creating water toxification issues that cannot be managed."

Company reviewing ruling

In a release, Western Copper said it will review Veale's ruling and "engage in discussions with regulators" before it resubmits its application for a water licence.

"This decision affirms significant areas of overlap in the Yukon regulatory system. We'll review our options and move forward appropriately," Western Copper chairman and CEO Dale Corman stated in the release.

Corman said the Carmacks copper project "represents a small portion of Western Copper's assets."

Western Copper's proposal was vigorously opposed by the Little Salmon Carmacks First Nation, the Selkirk First Nation, and the Yukon Conservation Society.

"This decision that the water board ... does have jurisdiction over these mining projects is very important," Lewis Rifkind, the conservation society's mining director, told CBC News.

"It ensures that when projects get developed that they will include adequate water treatment programs and initiatives, and they will not pollute the Yukon environment. And if they don't meet that criterion, they will not get a water licence, and therefore the project cannot proceed."