Snowline Continues Drilling Despite First Nation Opposition

Based on Hunterbrook Media’s reporting, Hunterbrook Capital is short Snowline Gold Corp. (TSX: $SGD). Positions may change at any time. See full disclosures below.

In the wake of a mining disaster that released dangerous levels of cyanide into the land and waterways of Indigenous communities in the Yukon, the First Nation of Na-Cho Nyäk Dun’s government called for a halt to all mining activities in its territory.

Authorities are still struggling to respond to uncontained contamination from the massive June landslide at Victoria Gold Corp.’s (TSX: $VGCX) Eagle Gold Mine, which spewed 4 million metric tons of toxic material into the environment from its failed heap leach pad — a mining process that uses cyanide to extract gold from crushed ore.

But to the southeast of the Eagle mine, another company in First Nation territory, Snowline Gold Corp. (TSX: $SGD), has continued drilling. Ignoring calls for a pause, Snowline is advancing its efforts to establish a gold mine in the region, which includes plans for heap leach extraction, despite First Nation of Na-Cho Nyäk Dun Chief Dawna Hope saying the community could “no longer support … any further heap leach mining on our territory.” 

“The Eagle Gold Mine disaster is a catastrophe that our Nation will need to live with for decades, if not generations,” Chief Hope said in an August 1 press release. “And the cyanide contamination gets worse by the day.”

Chief Hope reiterated “the risks from heap leach mining are no longer acceptable in light of the damage already caused to our lands by this catastrophe.” 

Responding to the First Nation’s requests, Yukon Premier Ranj Pillai said the Government of Yukon “commits to not licensing another new heap leach facility in the Yukon until the outcomes of an Independent Review Board are incorporated, as appropriate, into licensing and enforcement policies and practices.”

Snowline is in the exploration phase of mining, meaning it has yet to commercially produce gold, but it has said in technical reports that it anticipates employing heap leach methods at its Rogue and Einarson sites — tracts on Na-Cho Nyäk Dun territory, around 150 miles from the Victoria Gold disaster. Snowline considers its Rogue site to be its “flagship” project.

“Engineering studies have not been undertaken,” Snowline notes in the technical reports, as to the design or siting of those potential facilities. And in a statement to Hunterbrook, the Yukon government said Snowline hadn’t conducted “either a preliminary economic assessment or a feasibility study for a mine project for any of their projects.” 

Snowline is “authorized to conduct exploration work under their valid approvals,” according to the Yukon government statement, because the company’s “current authorizations were issued well before the heap leach failure event.” 

It remains to be seen how heap leach mining will be permitted on the other side of the government’s independent review.

Asked by Hunterbrook about Snowline’s continued exploration, the First Nation of Na-Cho Nyäk Dun said in an August 23 email: “We will likely be putting out an investors advisory next week for which Snowline’s activities would not be excluded.” 

When Hunterbrook asked the First Nation to clarify the timeline and nature of the possible advisory, it wrote: “The discussion is currently under review and if it’s approved our hope is it goes out sooner rather than later.” 

Snowline did not return Hunterbrook’s repeated requests for comment on how it has changed its drilling program in light of the disaster — but said in a public statement that it had made “adjustments” following discussions with Na-Cho Nyäk Dun leadership.

Eagle mine catastrophe shakes up Yukon’s dominant mining industry

Since the Eagle mine landslide, Chief Hope has asked for time to grieve this most recent tragedy on Na-Cho Nyäk Dun’s traditional land. 

In July, Victoria Gold said it may not “have the financial resources necessary” to respond to the uncontained contamination from its heap leach pad. On August 14, a Yukon court placed the company into receivership — leaving the local government the task of minimizing the impacts of the landslide. 

On August 30, the Yukon government announced an investigation into the heap leach failure at the Eagle mine and an “open invitation” to the First Nation government to join its inquiry. The First Nation government, however, has expressed doubts about the integrity of the investigation and cited concerns that the Yukon government would “erase” its role in the probe. 

The First Nation has advocated, instead, for “an independent public inquiry” — and on August 12, it called the Yukon government’s response to its demands “disappointing and frankly disingenuous,” according to letters from the First Nation government obtained by Hunterbrook.

In a statement to Hunterbrook, the First Nation of Na-Cho Nyäk Dun noted that these letters “are separate from our demands to halt mining in our traditional territory.” 

“The investors advisory is under development, more to come,” added the spokesperson. 

Victoria Gold’s incident wasn’t the first time a mining company extracted resources from the region only to fail to cover their environmental costs. Similar incidents took place in May 2023 and September 2019. 

Yukon government officials warn that they are only in the beginning stages of monitoring and remediation efforts to address the contaminants that are still leaching into the soil and water table.

First Nations community pledges to “pursue every available avenue” 

First Nations have a “high level of input” in the management of their traditional territory in the Yukon but do not own the land. 

Mining exploration is overseen by the Yukon government, whose premier, Pillai, said his administration lacks the authority to declare a full moratorium but agreed to halt staking new mining claims and pause ongoing consultations for pending mining projects for two months. 

As the Yukon and First Nation governments continue to negotiate a path forward, at least one company in the region appears to have heeded the First Nation’s call. Cantex Mine Development Corp. (TSX: $CD), which like Snowline is still in the exploration phase of its efforts, announced a temporary halt to its program following the Indigenous government’s request. 

Since the failure at Eagle mine, the First Nation community has pledged to “pursue every available avenue, including legal options, to protect and preserve our rights and to ensure that this environmental catastrophe is addressed and the lands and waters of our Territory are safe for the fish, wildlife, and people that have relied on them for generations.”

The Yukon Department of Environment announced it is testing dead fish found following the discharge event. It is also monitoring moose and caribou to “develop baseline data for long-term monitoring.” Results from submitted samples of harvested meat aren’t expected until spring 2025.

Geri-Lee Buyck — a Na-Cho Nyäk Dun citizen — told CBC News: “I thought that I was grieving before this disaster took place with how our land is developed.” 

“But my heart and mind have been grieving quite heavily, even more,” she added, “knowing that this is going to be heavy and hard and how there’s almost no return.”

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Hunterbrook Media’s policy is that employees cannot purchase or sell any individual stock for the duration of their employment. Prior to starting at Hunterbrook Media, Daniel Sherwood held shares of Kinross Gold and Perpetua Resources.

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