B.C. Court rules Ghost Town Resort must allow mining exploration

Kitsault, British Columbia, is located near the head of Alice Arm in the northwest corner of British Columbia, about 140 kilometres north of Prince Rupert. It is the site of a former molybdenum mine, known as the Kitsault Mine. Open pit mining began at this site in 1968. Mining operations were suspended in August 1972 due to low molybdenum prices, resumed in April 1981 and were suspended again in November 1982 due to low molybdenum prices.

In 1980, a townsite (“Kitsault Townsite”) was constructed to provide accommodation for those who worked at the Kitsault Mine. The Kitsault Townsite was comprised of approximately 100 houses, seven apartment buildings, a hospital, a school, stores, restaurants, a theatre, a library, a pub, recreation centres and other buildings and utilities to support a population of over 1,200 people.

When the Kitsault Mine shut down in 1982, all of the residents of the town left, leaving it a modern-day ghost town. However, unlike other ghost towns in British Columbia, Kitsault was not left to deteriorate and fall to ruin. The owners of the Kitsault Mine continued to provide heat for the buildings to prevent mould and mildew setting in and hired full-time caretakers to maintain and protect the buildings and maintain the lawns, grounds and roadways.

In 2005, the defendant, Kitsault Resort Ltd. (“Kitsault Resort”) purchased Kitsault Townsite from Aluminerie Lauralco, Inc. (“ALI”), the company that then owned both the mineral properties comprising the former Kitsault Mine and the lands and improvements comprising Kitsault Townsite. At the time it sold Kitsault Townsite, ALI was engaged in the remediation, reclamation and decommissioning of the Kitsault Mine as required by law.

Prior to conveying Kitsault Townsite to Kitsault Resort, and in accordance with the agreement of purchase and sale, ALI granted to itself and to Climax Canada Ltd. (“Climax”) a statutory right of way (the “Right of Way”) across the Kitsault Townsite.  In 2008, ALI sold its mineral tenures and other lands located at Kitsault, including the Right of Way, (collectively referred to as the “Kitsault Property) to Avanti Kitsault Mine Ltd. (“AKM”), a subsidiary of Avanti Mining Inc. (“Avanti”).  Avanti and AKM are currently carrying out exploration activities to support an application to reactivate the Kitsault Mine. AKM, as the registered owner of the Right of Way, claims the right to use the Right of Way, now and in the future for its exploration activities and for its mining activities in the event it re-opens the Kitsault Mine. Kitsault Resort has refused to permit Avanti to cross over Kitsault Resort pursuant to the Right of Way.

AKM and Kitsault Resort went to court to determine the scope and validity of the Right-of-way.  Kitsault Resort argued that, even if the Right-of-way remained in place, it was limited to remediation and decommissioning activities.  The Resort argued that mining activities were not permitted.  The court found that there were three issues to be resolved in the proceeding:

(a) On the proper construction of the Right of Way, are the rights granted by it limited to activities for the remediation, reclamation and decommissioning activities required at the Kitsault Mine only, or do they include the right to use the Right of Way for the purpose of exploration and mining activities? A further matter for consideration under this issue is whether the rights granted by the Right of Way are limited to activities carried out at the actual Kitsault Mine site, or whether they apply to any lands, improvements or works intended to be used in conjunction with the mine site, including the surrounding mineral deposits?

(b) If the rights are not limited to remediation, reclamation and decommissioning, should the Right of Way be rectified to so limit its scope?

(c) Is the defendant entitled to cancellation or modification of the Right of Way under s. 35 of the Property Law Act?

The court found in favour of AKM on all issues and made a declaration that AKM is entited to use the Right-of-way for exploration activities.  The court also found that AKM was entitled to an injunction preventing the Resort from obstructing use of the Right-of-way to carry out mining activities.

Read the decision at: Avanti Mining Inc. v. Kitsault Resort Ltd.