Owners of B.C.'s Tulsequah Chief mine site pushed into receivership

Acid tailings continue to drain from the idle mine site near Atlin, B.C., and owner Chieftain Metals owes close to $27 million to its primary lender. 'It's not really a viable mine anymore at this point, so the question is, who's going to end up with it?'

'The real issue is the clean up' of the acid-leaching site, says environmental watchdog

A tailings pond and a disused water treatment plant can be seen at the Tulsequah Chief mine site. The mine is about 100 kilometers south of Atlin, B.C., and about 65 kilometres northeast of Juneau, Alaska. (Rivers Without Borders)

The Tulsequah Chief mine in northwestern B.C. looks set to languish for years to come, after its owner — Toronto-based Chieftain Metals Corp. — collapsed under a $27 million debt.

It's the second company in less than a decade to attempt to revive the historic mine, and fail.

In August, Chieftain's primary lender applied to the Ontario Supreme Court to have a receiver appointed to take over the troubled company. Grant Thornton LLP was named receiver last week. 

According to court documents, Chieftain tried but failed to find enough investors to develop the site. 

Chieftain's departure raises questions about the possible cleanup of the site. It's been leaching acidic discharge into the Taku River system for years.

"At this point, two companies have gone bankrupt," said Chris Zimmer of the environmental group Rivers Without Borders.

"It's not really a viable mine anymore at this point, so the question is, who's going to end up with it and what are they going to do with it?"

No water treatment on site

The base metal mine, about 100 kilometres south of Atlin, B.C., originally operated from 1951 to 1957. It had been idle for more than half a century when Chieftain bought the site in 2010 after the previous owner, Redfern Resources Inc., went into bankruptcy protection.

Chieftain assumed liability for the site with the purchase. One of the first things the company did was build and start operating a water treatment plant to deal with leftover tailings.

That treatment plant operated for less than a year before Chieftain decided it was too expensive. According to B.C. government documents, the plant had not been working properly.

Since 2012, there has been no water treatment at the site.

A B.C. government inspectors' report last year highlighted concerns with acidic discharge from the mine site going into the Tulsequah River. (Government of B.C.)

An environmental inspection by the B.C government last year found that Chieftain was not in compliance with provincial permits. Inspectors also highlighted concerns about ongoing acidic discharge into the Tulsequah River, a tributary of the Taku River. 

'It certainly doesn't look good'

"We get that it's a serious situation, both for B.C. but also for our friends in Alaska," said Bill Bennett, B.C.'s minister of energy and mines.

The Taku River flows into Alaska.

"We want to get some up-to-date information on what is actually going into the water. I've been to the site myself, and it certainly doesn't look good. There's rusty-coloured water coming off a hill, into the river," he said.

Bennett said staff with his ministry will now go to the site to determine what's needed to complete an ecological risk assessment.

Zimmer said he thinks it's time to just clean up the site, and give up any hope that a mine could reopen. 

​"It's a relatively small mine with a short life and it's really basically sucked up a lot of time and energy and angst — far more than it's worth," he said.

"I think at this point the best thing to do is close this thing down, put it to bed, and really end what has been a black eye for B.C., to a lot of people here in Alaska."

with files from Mike Rudyk