The future is looking bleak for the Victoria Gold Corp.

That’s the prediction from a source with knowledge of the situation who spoke to The Yukon Star earlier this week.

The source, who requested anonymity, predicts the company is likely to declare bankruptcy by September, quite possibly sooner.

According to the information provided by the source, the company has $40 million in cash on hand, but is facing debts considerably greater than that.

That includes $70 million in payables, and another $50 million it owes to the Caterpillar company for equipment used at the mine, located 90 kilometres northeast of Mayo.

A heap leach pad landslide struck the Eagle Mine on June 24, paralyzing its production operations.

Energy, Mines and Resources Minister John Streicker told a media briefing Thursday a low amount of cyanide has been found in water samples taken in the region, but the company simultaneously countered that its samples showed no cyanide contamination.

“The company is not producing gold right now,” the source told the Star. “All of its inventory is hidden under the landslide where it can’t be accessed.

“It’s very strange there is no word from the company,” the source added, stressing that company president John McConnell hasn’t been seen or heard from since the slide occurred almost two weeks ago.

Workers at the Eagle Mine were originally told they would be laid off for 13 weeks. The Star has information that the closure could in fact last more than a year.

There has been no official comment on that from the company nor any of the other participants in the investigation into the slide.

The source also said staff at the Eagle Mine might have been aware there was a problem with the heap leach pad. The person suggested there had been an ongoing search for a leak at the site, but no definitive answer was found.

The day of the landslide, there had been a piece of heavy equipment on the top of the heap pad – which should not have happened, the source said.

“The more we learn, the worse it gets,” the source said. “It’s very uncommon to have this happen.”

Rehabilitating the site could mean building a new pad, which would take months.

On March 17, the source said, the site failed an inspection, but it’s unclear whether any action was taken.

So far, there has been minimal comment from mining groups and particularly financial experts because of the amount of money Victoria Gold has borrowed from various sources, the source said.

Several major banking institutions across Canada have done business with the company, the person suggested, and there’s now a lot of nervousness over whether any of that money can be recovered.

“They’re worried about risk and liability.”

Victoria Gold owes territorial businesses and individuals as much as $70 million, according to the source’s knowledge.

It’s possible the bankers could block local people from ever getting paid, the source noted, as they could take their cut first.

“It’s a pretty messy situation.”

Meanwhile, the First Nation of Na-Cho Nyäk Dun is demanding an independent investigation into the scale and scope of the failure.

There is a serious risk of cyanide contamination, said Chief Dawna Hope, and more than one First Nation has lands downstream.

Hope, the first female chief of Na-Cho Nyäk Dun, holds a degree in Northern Environmental and Conservation Sciences from Yukon University and the University of Alberta.

“The severity of contamination from cyanide, as well as other chemicals, has not been publicly conveyed. This event has implications on all life in the region, including salmon stock recovery,” said Hope.

“The elders have always been concerned about the project because it was literally taking down a mountain and filling up a valley,” she said.

Earlier this week, Na-Cho Nyäk Dun demanded an immediate pause to all mining operations in its traditional territory. 

“We would like to see a pause on mining activity to ensure that all the necessary checks and balances are in place to protect lands, waters, wildlife and people into the future,” said Hope.

She notes the mining company’s water tests won’t reveal groundwater contamination immediately.

Her prediction was proved true with Victoria Gold’s statement Thursday that its water tests showed no sign of cyanide contamination – contrary to what tests from the Yukon government showed.

“I don’t really think that we’re going to have a true story with the initial results,” Hope said.

“I think that the story is going to unfold because this is a heap leach. It is that leaching process. That’s not a quick thing.”

Hope expressed concern for neighbouring First Nations downstream. She “made them aware of the situation and have requested that they also ramp up their water monitoring during this period.

“The best-case scenario and my ultimate hope is we’re wrong. I truly hope we’re wrong, and it did not get to the groundwater,” said Hope.

“We’re definitely prepared to take action both on the ground and whatever else we have to do once we get the results to the extent of the damage,” the chief added.

The Yukon NDP is also weighing in on the issue in support of Nacho Nyak Dun.

“The Yukon NDP is calling on the Yukon Liberals to agree to the First Nation of Na-Cho Nyäk Dun’s demand for an immediate halt to all mining activity on their traditional territory and an urgent Independent Investigation and review of the Victoria Gold Eagle Mine heap leach pad failure,” the party said.

“For years, the First Nation of Na-Cho Nyäk Dun has been calling for a pause to mining activity until land use planning can be completed – this government has failed to listen,” said party leader Kate White.

“There must be an independent investigation into this disaster, and all mining in the area must pause until there is a land use plan in place that protects the rights, lands and waters of Na-Cho Nyäk Dun. This government must honour and respect Na-Cho Nyäk Dun’s treaty rights.”

Streicker told Thursday’s media briefing the First Nation’s call for a pause in mining activity will be considered, but suggested that step would affect Victoria Gold’s slide remediation work.

– With files from the Local Journalism Initiative