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Yukon Zinc owes $3M in security payments for Wolverine Mine

Yukon Zinc is $3 million behind on payments to its security deposit, the money the territorial government holds for eventual cleanup of the mine site.

Yukon taxpayers could be on hook for eventual mine clean-up costs

The Yukon government says it's hopeful Yukon Zinc, owners of the Wolverine Mine, will catch up on payments to its security deposit. (Yukon Zinc)

Yukon Zinc, the owner of the Wolverine Mine in southeast Yukon, is more than $3 million behind on payments to its security deposit, the money the government holds for the eventual cleanup of the mine site.

The mine has shut down because of a cash shortfall and is laying off about 220 people. The company says the closure is temporary, but acknowledges the mine's future is uncertain.

CBC News has learned the company is also in violation of its agreement to pay money into a security fund to ensure taxpayers aren't left paying for the clean up when the mine closes for good.

Bob Holmes, the Yukon government's director of mineral resources, agreed to a new payment schedule in 2013 when the mine first faced financial troubles, but Yukon Zinc has not met that schedule either. Holmes says it doesn't affect the company's liability.

"Security is just that," says Holmes. "The company is still responsible for doing whatever work they have to do to keep the site in good standing and close the site when they are finished.

"Security is just there, if they do the work they are supposed to do then they can get the money back," he says.

But Lewis Rifkind, with the Yukon Conservation Society, says there are concerns about the overdue security payments at the Yukon Zinc mine.

Lewis Rifkind, with the Yukon Conservation Society, says there are concerns about the government's efforts to protect Yukon taxpayers from paying for mine cleanups. (CBC)

Rifkind points out Yukon taxpayers may be on the hook if the mine can't come up with the funds and questions whether the territory's mining regulations are strong enough.

"There's nothing wrong with mining, as long as we have adequate environmental standards and licensing in place. In this particular case I think very serious questions have to be asked," says Rifkind. 

"Are we doing enough to enforce them?" 

Holmes says the situation hasn't reached that point yet.

"They're out of compliance, sure, but in terms of enforcement action, it wouldn't be normal to shut a site down unless there was some really good reason to do that," he says. 

Holmes says the site is in good shape and there are no concerns about serious risks in terms of environmental issues.

He says the government is in talks with Yukon Zinc and is hopeful the company will be able to catch up on its security deposit. 

Michael Hitch, an associate professor at the University of British Columbia and with many years of experience in the mining industry, says it's not a good sign for the company.

"It's not a good position to be in when you can't satisfy your regulatory obligations," Hitch says.

"I think what that does show is a willingness of the Yukon government to actually stretch and to try and make things work in order to preserve an operation. But from a corporate perspective, it's not a good thing to fall behind on those sorts of things." 

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