Main creditor for Banks Island Gold contemplates reopening Yellow Giant mine

June 28, 2016 | Gordon Hoesktra| The Vancouver Sun

The main creditor of bankrupt Banks Island Gold is contemplating reopening the remote Yellow Giant mine, which was shut down last year by the province over environmental and permit violations, according to the B.C. ministry of mines.

The ministry says it has had discussions with the leading creditor, MCC Non-Ferrous Trading, about what it would take for it to reopen the small mine on Banks Island, about 100 kilometres south of Prince Rupert, including applying for permit amendments.

That discussion is taking place after a B.C. Supreme Court-appointed receiver did not receive any successful bids for Banks Island Gold, Ministry of Energy and Mines spokesman David Haslam said in a written response to questions from The Vancouver Sun.

The ministry is interested in securing a new owner for the mine, in part because if none is found, the province will be responsible for cleanup and remediation. The province holds $450,000 in security from Banks Island Gold for the Yellow Giant mine, but that will not cover the full remediation costs, B.C. Chief Inspector of Mines Al Hoffman told a legislative committee earlier this month.

Ministry staff do not yet have a final figure for cleanup and remediation, said Haslam.

White Plains, N.Y.-based MCC Non-Ferrous Trading could not be reached for comment, and its legal representative in Vancouver, Colin Brousson, declined to comment. The former head of Banks Island Gold, Ben Mossman, and directors listed with Banks Island Gold on the province’s corporate registry, could not be reached for comment.

The receiver, FTI Consulting, also declined to comment on the status of the bankruptcy.

Financial statements posted on the receiver’s website show that Banks Island Gold has liabilities of $15.6 million and assets of $11.7 million. MCC Non-Ferrous Trading is owed $8.35 million, which it had advanced in loans to the company. MCC had contracts with Banks Island to purchase gold concentrate.

In the midst of the bankruptcy, questions are being raised about why the B.C. ministry of mines posted public notices last month in northwest B.C. for Banks Island Gold’s application to convert mineral rights to mining licences, which would allow it to mine and mill gold at Yellow Giant. The company previously only held one mine licence and needed more to run the mine.

NDP North Coast MLA Jennifer Rice said she was shocked to see the mine licence application notices since the mine was in bankruptcy. “When I open the paper, and see this ad — I had to do a double-take. Are you kidding me? I couldn’t believe it.”

In response to questions from The Sun, the mines ministry said the company had applied to convert the mineral rights to mine licences on Oct. 7, 2015, before it filed for bankruptcy in early 2016. Nearly six months later, it was the receiver that decided to proceed with the mine licence application, said Haslam.

The application is incomplete and it is uncertain if or when it will be completed, he said. No decision will be made until the process is complete, including consultation with First Nations, noted Haslam.

Gitxaala First Nation chief Clifford White said it has been made clear to the province that the Gitxaala do not want a mine on Banks Island. “It’s a no-go zone for mining,” said White.

He said it was also his understanding the mine was not out for tender.

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