Rivers Without Borders

Rivers Without Borders

August 04, 2014 09:00 ET

BC Supreme Court Decision Could Void Major Permit for Chieftain Metals' Tulsequah Chief Mine

BC Must Consult with Taku River Tlingit; Redo Decision on Key Permit's Status

JUNEAU, ALASKA--(Marketwired - Aug. 4, 2014) - The Supreme Court of British Columbia (BC) on July 11 ruled that the BC government erred in its May 30, 2012 decision to make the Environmental Assessment Certificate permanent for the Tulsequah Chief mine. The Court ruled the determination of whether the mine was started must be done again and it must also be done in consultation with the Taku River Tlingit First Nation (TRTFN).

"This is a major legal decision in favor of the Taku River Tlingit, and the Court's decision could also halt the Tulsequah Chief mine," said Chris Zimmer, Alaska Campaign Director for Rivers Without Borders. "The mine cannot proceed without an Environmental Assessment Certificate. If, after consulting with the Taku River Tlingit, the BC government decides the mine has not been started, the Certificate will immediately expire and other approvals and permits for the mine are void, including the permit for the access road. The mine project would need a new environmental assessment process to obtain a new Certificate."

One of the issues in the legal challenge from the TRTFN, represented by Ecojustice, was whether or not the Tulsequah Chief project was "substantially started" within the required time frame. Under BC law, mining projects must be substantially started within five years of issuance of the Certificate, with the possibility of a one-time extension of up to five years. If a project is deemed substantially started, the Certificate becomes permanent for the life of the mine. If a project has not been substantially started within the time limit, the Certificate expires and the project cannot proceed.

Chieftain Metals had until December 12, 2012 to substantially start the Tulsequah Chief. Without notification to or consultation with the TRTFN, the BC Environmental Assessment Office (EAO) deemed the project substantially started in May 2012 despite the fact that very few of the mine's physical components identified in its project description such as the underground mine, waste storage facilities or access road, had been started.

The Court noted that the TRTFN had extensive evidence to offer in the substantially started decision and such evidence was "entirely missing from the record." The Court also noted that the information presented to the EAO for its substantially started decision was "one-sided" and the factual record was "modest." The Court ruled the EAO had a legal duty to consult with the TRTFN and the decision must be done again. The Court also said a substantially started decision should "focus primarily on physical activities, since December 12, 2002, having a long-term impact on the site" and "should focus less on the permits which have been granted, and the money expended."

"This ruling voids the BC government's previous decision and sets standards for a new decision that will be tough for Chieftain to meet," said Zimmer. "I've recently flown over the mine site and there is very little that most people would consider mine site construction. Chieftain tried to claim that its paperwork and non-construction activities contribute to the substantial start of the Tulsequah Chief. But the Court's ruling indicates that the primary focus of any substantially started decision should be long-term, physical works, and there are very few, if any, of these at the mine site."

The legal victory for the TRTFN is one of several recent setbacks for Chieftain Metals and its Tulsequah Chief project.

  • On April 28 the Ontario Securities Commission posted a notice on its Refilings and Errors list that Chieftain Metals had been deficient in its required disclosures and Chieftain had to disclose this in a press release.
  • On July 8 the Supreme Court of BC ruled that Chieftain must pay $200,000 to Tulsequah Wilderness Adventures in a case of disputed property.
  • On July 14 the Toronto Stock Exchange announced it was reviewing Chieftain Metals' stock for potential delisting from the TSX.

Chieftain announced, on July 7, an $18.5 million loan from its largest shareholder, West Face Capital, to update the Tulsequah Chief feasibility study, cover corporate costs and pay debts owed to Royal Gold under a revised agreement.

"This high interest loan from its largest shareholder is the only thing keeping Chieftain afloat," said Zimmer. "Chieftain hasn't been able to entice any major construction investment and is yet again promising to 'optimize' its mine proposal to make it more attractive. But no matter how you look at it, the proposed Tulsequah Chief project is not viable economically, socially or environmentally. This project is the wrong mine in the wrong place."

The proposed Tulsequah Chief mine is located on the banks of the Tulsequah River, a major tributary to the Taku River, and just upstream of the Alaska/BC border. The Taku watershed is the transboundary region's most productive salmon river and of great cultural and economic importance. The proposed mine has the potential to harm downstream commercial, sport and subsistence fisheries and the Tlingit way of life, and has caused controversy for over two decades.

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