Giant mine set to reopen as RCMP investigate homicides

The fatal explosion at Royal Oak Mines’ (TSE) Giant mine in Yellowknife, N.W.T., will not close the gold producer, says President Margaret Witte. “We expect to reopen the mine by Sept. 25.”

The Sept. 18 blast killed nine miners instantly as they travelled on a rail tram along the 750-level on their way to work. Six of them were union members. Although the mine is in the fourth month of a bitter strike punctuated by violence, it has been operating at capacity using both replacement workers and union members who have opted to cross picket lines.

“The company is currently working closely with the Northwest Territories government’s mine safety branch to reopen the mine and to ensure the security of all the workers on site,” Witte told The Northern Miner in an interview. She will remain in Yellowknife until the mine is reopened.

Part of the program will include sealing unused openings. Operations at the mine date back to 1948 and there are four or five areas where unauthorized access to the mine could be gained.

“Surface work continues at the mine site and the effluent treatment facility is operational,” the company said, days after the explosion. “Gold is being poured on schedule.”

Damage to the mine’s physical assets, estimated at less than $10,000, as well as any lost production will be covered by insurance, adds Royal Oak spokesman Graham Eacott. He is talking with its insurance company to determine to what extent closure costs will be covered. He says cash operating costs at the mine are currently about $4 million per month, although fixed costs during a shutdown would be less.

Eacott said the Yellowknife mine is expected to produce about 100,000 oz. gold this year. When combined with its Timmins division in Ontario and Hope Brook mine in Newfoundland, total company output should be about 260,000 oz. at an overall cash cost of about US$300 per oz., according to Eacott. Mike Jalonen, gold analyst at Midland Walwyn, is confident the mine will be up and running shortly. He estimates the company will earn about 20 cents per share this year and 25 cents per share in 1993. Jalonen’s cash flow estimates for the company are 38 cents per share this year and 43 cents per share next year based on cash costs of US$300 per oz. and a gold price of US$370 in 1993. The RCMP are treating the underground explosion as a multiple homicide. Their investigation has determined that the blast came from the side of the track and not from within or on the tram itself and that the charge was deliberately set.

“This has been a horrible tragedy,” says Witte. “Executives in the mining business will not be forced to succumb to terrorism as the result of labor dispute.”

Meanwhile, the Canadian Association of Smelter and Allied Workers (CASAW) was trying to fend off murder accusations by the victims’ families. John Smrke, Royal Oak’s vice-president of operations, noted that workers elsewhere in the mine at first took the 8:45 a.m. fatal explosion for normal blasting and did not inform emergency services. He said it was the drop in pressure in the compressed airline to the scene that led workers to discover the tragedy 1.5 hours later.

Corporal Dave Grundy, spokesman for the RCMP, said the post-blast team from Ottawa has definitely ruled out the blast being accidental but said he could not reveal the physical evidence that led the investigators to that conclusion.

Asked if the RCMP expected to lay any charges in the near future, Grundy only stated that the investigation is continuing.

Grundy said 125 criminal and motor vehicle charges have been laid since the start of the strike with the vast majority of them criminal charges against union members.

Grundy said the evening following the blast was extremely violent and the local bars in Yellowknife were closed to prevent an escalation. Since then, he said, the city has been calm with no disturbances reported on the Monday night following the incident.

In the fallout of the mine tragedy, BP Canada announced it will postpone the sale of its Royal Oak shares.

The day before the explosion, BP announced plans for a secondary offering of 5.5 million Royal Oak shares at a price of $2.10 through a syndicate led by Wood Gundy.

BP originally acquired the shares when it sold the Hope Brook mine to Royal Oak in April.