Executive Summary: Key Legal and Evidentiary Issues

• PricewaterhouseCoopers Inc., acting as court-appointed receiver-manager and interim receiver of BYG Natural Resources Inc., sought approval of its activities, fees, discharge, and continuation of a sealing order.

• BYG abandoned a contaminated mine site in Yukon in 1999 after multiple water licence violations and regulatory convictions, leaving significant environmental liabilities.

• The Devolution Transfer Agreement designated the site as a Type II contaminated site, making the federal government financially responsible for remediation while Yukon implemented care and maintenance.

• Court approval of receiver activities promotes transparency, accountability, and protection for both the court officer and creditors from re-litigation and indemnity claims.

• Receiver's fees must be fair and reasonable, assessed through factors including asset complexity, time spent, and the receiver's knowledge and diligence.

• A partial sealing order over commercial documents was continued, with the court ordering a review hearing in one year to reassess its necessity.

Background of the mining operation and abandonment

BYG Natural Resources Inc. was a mining company incorporated in Ontario on April 1, 1969, that acquired 264 mining claims and mining leases over 5,300 hectares near Mount Nansen, Yukon, in 1984. The company began production in October 1996, continuing to November 1997. After a hiatus caused by violations of the terms of the water licence, production recommenced in February 1998 and continued to February 1999. During this period, BYG was subject to four separate directions under the federal Yukon Waters Act from the Department of Indian Affairs and Northern Development (Canada). On May 19, 1999, BYG was convicted in the Territorial Court of Yukon of three regulatory charges and received the maximum fine of $100,000 on each charge. The Territorial Court judge in his sentencing decision described BYG as "inept, bumbling, amateurish and possibly negligent." In July 1999, Canada determined that BYG had abandoned the mine site, leaving behind approximately 300,000 m³ of tailings, more than 500,000 m³ of waste rock, approximately 55,000 m³ of contaminated soil, and building and infrastructure requiring demolition.

Government assumption of responsibility and the receivership

Following BYG's abandonment, Canada assumed responsibility under the statute to address environmental and human health and safety concerns. This continued until 2003. On April 1, 2003, the Devolution Transfer Agreement came into effect, transferring governmental responsibilities from the federal government to the territorial government. The mine site was designated a Type II contaminated site, meaning Yukon assumed responsibility for the care and maintenance of the site while Canada remained financially responsible for remediation costs because the environmental damage requiring remediation occurred before April 1, 2003. On April 6, 2004, the Supreme Court of Yukon granted the application of the governments of Canada and Yukon and appointed PricewaterhouseCoopers Inc. as interim receiver and receiver-manager.

Receiver's activities and the Proposal Solicitation Procedure

During the receivership, the Receiver sold BYG assets not required for the care and maintenance of the Mine Site, including publicly traded shares held in unrelated companies, mineral claims and leases on land peripheral to those required for care and maintenance, and mill equipment. Before May 2016, the governments asked the Receiver to develop and implement a process to obtain proposals from qualified parties to purchase the remaining BYG assets and carry out the remediation work. On May 1, 2016, the Court approved the Proposal Solicitation Procedure. Originally expected to be completed over 1.6 years, it took 3.1 years to complete due to various complications including extensions requested by proponents, scheduling difficulties, redesign requirements, and delays in obtaining necessary engineering reports and assessments. Mount Nansen Remediation LP, a joint venture between Ensero Solutions (formerly Alexco Environmental Group) and JDS Energy & Mining Inc., emerged as the purchaser. In 2019, MNR LP signed agreements with the Government of Canada and Little Salmon/Carmacks First Nation to undertake the remediation and environmental monitoring of the Mine Site.

Approval of the Receiver's activities and fees

The Court found that the Receiver acted reasonably, prudently, and not arbitrarily throughout the receivership. The twelfth report, dated March 21, 2025, detailed activities since the eleventh report dated April 24, 2019, including execution of the Proposal Solicitation Procedure, negotiation and execution of lease agreements, and transfer of assets to the purchaser. The Court approved the Receiver's fees of $671,005 and disbursements of $41,113.74, plus applicable taxes, for activities completed since May 2019. The Court found the fees fair and reasonable given the complexity of the assets, their remote location, extensive environmental obligations, and the significant time required to develop and execute the Proposal Solicitation Procedure.

Legal fees and the discharge of the Receiver

Dentons Canada LLP, counsel to the Receiver since their appointment, sought approval of legal fees totaling $500,914.04 for work from April 2016 to March 21, 2025, in addition to the $389,118 in legal fees and disbursements previously approved for the period from March 4, 2004, to March 31, 2016. Dentons also sought an additional $25,428.97 for services from November 2024 to the end of the discharge. The Court approved these fees. The Court also approved the discharge of PwC as Receiver, noting that two assets remained unrealized: Lease #115I03-003, which would become the responsibility of governments outside of the Receivership, and $625,317.71 in cash held in the Receiver's trust account, which the Government of Canada directed be placed into the Remediation Trust established by the Remediation and Security Agreement between MNR LP and the Government of Canada for the purpose of contributing to the cost of ongoing remediation activities.

Ruling on the sealing order and overall outcome

The Court addressed a partial sealing order dated May 6, 2019, granted in the 2020 Decision, covering unredacted versions of the approved Proposal of the Preferred Proponent and the Draft Asset Purchase Agreement. While acknowledging the open courts principle and expressing difficulty understanding the ongoing commercial concerns now that the proponent has been confirmed and the agreement finalized, the Court declined to displace the existing partial sealing order. However, the Court ordered that the matter return to court in one year's time for submissions by counsel for the Government of Canada and counsel for the proponent on why the sealing order should be continued. All orders requested by the Receiver were granted. This was an administrative receivership matter; no monetary award was made to a prevailing party in the traditional sense, though the Court approved the Receiver's fees of $671,005 plus disbursements of $41,113.74 and legal fees of $500,914.04 plus an additional $25,428.97 for the periods specified above.