Yukon's government applied with the Ontario Court of Justice to have a receiver appointed to take control of Victoria Gold's assets, including the Eagle mine in Yukon, Canada, under the federal Bankruptcy and Insolvency Act.

Following a hearing on Wednesday, the court granted the order and appointed PricewaterhouseCoopers as the receiver.

The government of Yukon said in a statement that it lost confidence in Victoria Gold's management team's ability to take the health, safety and environmental consequences of the heap leach failure that occurred at its mine seriously.

"Immediate action is required to respond to the heap leach failure and its consequences for the land, water, people and wildlife in the Traditional Territory of the First Nation of Nacho Nyak Dun," Attorney General Tracy-Anne McPhee said. "The Government of Yukon is concerned that Victoria Gold Corp. does not possess the capacity itself and has failed to carry out the work that is required." 

"The company has failed to comply with several formal directions issued by the Government of Yukon that require specific measures to be undertaken to address human health and safety and environmental risks and impacts."

On June 24, a slide of the ore stacked in the heap leach facility caused ore to spill over the dam at the base of the heap facility at the Eagle gold mine.

A month ago, the government of Yukon already said it was ready to step in at the site to protect the safety of people and the environment. It criticised the gold miner for not being publicly transparent about its efforts to clean up the spill and prevent further contamination. 

"It is very unfortunate, and frankly, unhelpful, that the company has been so silent in general, and specifically around the actions that they are taking at the site," deputy mining minister Lauren Haney said at the time.

The government and PricewaterhouseCoopers entered into an agreement to advance the funding required for mitigation work at Eagle. The financing will constitute a debt owed to the government, which will be recovered from Victoria Gold's assets.

"The Government of Yukon has chosen to pursue this course of action for several reasons," McPhee explained. "Following the company's failure to fulfil inspectors' directions, our government has ended reliance on Victoria Gold Corp. to take the appropriate actions in response to the heap leach failure. This legal action provides a pathway for the required costs of mitigation to be recovered from the assets of the company responsible for the damage to the environment." 

"In addition, it provides a clear and public format for all affected parties to register their concerns and interests and to bring them forward in a court-supervised process," she added.

In its latest release, several hours before the Ontario court's ruling, Victoria Gold said it "intends to respond to oppose" the government's application. 

On Tuesday, Victoria Gold's share price closed at C$0.48, down over 90% since the beginning of the year. The company is valued at C$32.53 million.