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TABLE OF CONTENTS Aug 18 - 24, 2014 Volume 100 Number 27 - 0 comments

Questions remain after Mount Polley spill

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By: Salma Tarikh

There have been several developments in the days since Imperial Metals (TSX: III; US-OTC: IPMLF) reported a disastrous tailings spill at its Mount Polley gold–copper mine, near the town of Likely, B.C., which sent nearly 15 million cubic metres of slurry into nearby waterways.

Here’s a summary of the key events that have happened since the tailings pond collapsed on Aug. 4, sending a torrent of muddy water containing traces of arsenic and metals into nearby Polley Lake and  Hazeltine Creek, and then into  Quesnel Lake.

Work underway

Both Imperial and the provincial government maintain they don’t know why the Mount Polley tailings pond failed, and are investigating the cause of the breach. The government is interviewing the mine staff and reviewing all the relevant documentation on the mine site.  

On Aug. 6, B.C.’s Ministry of Environment slapped a pollution abatement order on the company, saying it needed to stop any further release of tailings.

So far, the company has handed in a rough environmental impact assessment and action plan to the ministry. A detailed action plan is due on Aug. 15.

The B.C. government reports sediments and debris have plugged up Polley Lake, warning that the build-up of water could cause a sudden breach that releases more sediments and debris into the surrounding waterways. To stabilize the water levels, it has approved a controlled release of excess water into Hazeltine Creek after which the water will flow downstream into Quesnel Lake.

The company has built the discharge pipe and is currently pumping water from Polley Lake at a rate of 8,000 gallons per minute. It is also pumping water from Polley Lake at that same rate into two pits at the mine. The ministry intends to continue sampling the water in Quesnel Lake.

Initial water results

The Ministry of Environment has been taking daily samples from the Quesnel River and Quesnel Lake since the Aug. 4 breach, to test for pH, alkalinity, dissolved metals and solids, among other things. PH levels for these two areas average 7.8, falling within the Health Canada drinking range of 6.5 to 8.5. (Pure water has a pH level of 7.0. Liquids that have a pH less than 7 are acidic (i.e., vinegar),  and those that have a pH greater than 7 are alkaline and have a slippery feel, such as household ammonia cleaning solution, at pH 12.)

Imperial has collected samples from the shore of Polley Lake and said that the water was “very close to historical levels” before the incident.

The ministry tested two other locations on Polley Lake and noted the pH levels were around 9 — slightly above both the provincial and federal drinking water guidelines. But it has stressed “there are no risks to human health or aquatic life at this time.”

Given the relatively positive results, the regional health authority Interior Health — which originally banned water use in the immediate and surrounding areas — has narrowed the ban to the impact zone. Thiszone includes Polley Lake, Hazeltine Creek and a 100-metre buffer beyond the visible sediment plume in Quesnel Lake.

This reduces the number of people affected by the water restrictions down to a handful, compared to 300 previously. But many Likely, B.C., residents, who are the closest to the spill, are still skeptical about drinking and using the water.

Concerns about fish consumption also remain, despite Interior Health declaring fish from the area were safe to eat.

The First Nations Health Authority, overlooking aboriginal health care in B.C., says it’s creating an independent salmon-tissue sampling program to test the salmon in the confluence areas of the Quesnel and Fraser rivers.

The Ministry of Environment maintains it will continue to test fish in the area, along with the water sources against the provincial and federal drinking water and aquatic guidelines.

While Imperial says it’s too early to estimate the cleanup costs, analysts have pegged the cost at $50 million to $500 million, Reuters reported. (The wide range is likely due to some analysts not including legal costs to defend potential lawsuits in their estimates.)

At the end of March 2014, the company had $1.5 million in cash, $464 million in long-term debt and a $21.7-million working capital deficit.

It purportedly has some property and business interruption insurance coverage, but not enough to cover the hefty environmental damages and expenses.

There’s speculation that the miner could look at selling a royalty or partial interest in its new Red Chris copper–gold mine, which is under construction in northwest B.C.

The company’s largest shareholder, billionaire businessman Murray Edwards, who owns 36% of Imperial, may step in to help. Among many business ventures that include co-ownership in the Calgary Flames, Edwards is chairman of oil and gas producer Canadian Natural Resources (TSX: CNQ).

The Mount Polley mine — which was the company’s largest cash-generator, producing 38.5-million lb. copper and 45,8000 oz. gold last year — has been closed indefinitely.

Imperial hasn’t responded to requests for comment.

Reactions to the breach

While Imperial has apologized and accepted responsibility for the disaster, some observers question the role of the provincial government, and if it could have acted differently to prevent the enormous spill. But with the cause of the breach still under investigation, it is hard to say for sure what went wrong or who’s to blame.

Knight Piésold Consulting, whose engineers originally designed the tailings pond, said it had warned the company and the provincial government that the tailings pond was getting too large. In a 2010 letter to the parties, it said that “the embankments and the overall tailings impoundment are getting large, and it is extremely important that they be monitored, constructed and operated properly to prevent problems in the future.”

The engineering firm withdrew its services in February 2011, and notes the facility underwent substantial engineering and design changes after it left.  

It reports that AMEC Earth and Environmental took over the design, construction and monitoring responsibilities for the tailings pond in March 2011.

In an email to The Northern Miner, Lauren Gallagher, AMEC’s manager of media relations and strategic communications for the Americas, stated the following:

“The performance and stability of a dam is dependent on many factors, including design, construction, operation and maintenance, as well as the potential for unforeseen conditions. Determining which of these factors contributed to the Mount Polley Dam breach requires a thorough investigation.

“While AMEC serves as the engineer of record on the most recent dam raising, implementing the AMEC design has not been completed, and some construction activity was still taking place to complete our design. Investigations at or near the breach are prohibited due to safety concerns, and we are awaiting the results of field surveys by Imperial Metals to determine the status of dam construction at the time of the breach.

“AMEC is deeply saddened and concerned about the damage caused by the Mount Polley dam breach. We are committed to working with Imperial Metals and the local authorities to assist in determining the cause of the breach, and to offer guidance on how best to mitigate impacts to the surrounding communities and environment.”

A few others, including environmental consultant Brian Olding, raised similar concerns about the water levels and monitoring system at the Mount Polley tailings pond.   

In its defense, Imperial said the tailings pond was operating within its design limits, which is an aspect of the story that warrants further examination.

Meanwhile, London, Ont.-based law firm Siskinds LLP has launched an investor class-action lawsuit against Imperial.

“The action is brought to recover losses suffered by persons who acquired common shares or notes of Imperial between Aug. 15, 2011, and Aug. 4, 2014,” the legal firm said in a release announcing the lawsuit.

After the spill, Imperial shares plunged 40% to $9.98, recovering slightly to close Aug. 11 at $10.52.

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Toxic waste flows through the breached wall of the tailings pond at Imperial Metals' Mount Polley gold-copper mine, 140 km southeast of Quesnel, B.C. Credit: screenshot from Cariboo Regional District video.
Toxic waste flows through the breached wall of the tail...

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