Editorial: Once more into the breach

It was another week of major developments in the fast-moving story of Imperial Metals and the massive, 15-million-tonne tailings and waste-water breach at its Mount Polley copper–gold mine in central B.C.’s Cariboo region.

One major worry amongst the general population in B.C. is that they’re looking at a Lac-Mégantic rail-disaster type of situation, where the offending company goes bankrupt soon after the incident, leaving local communities reeling and higher levels of government with the task of cleaning up the devastation and a multi-million dollar bill.

That doesn’t appear to be happening with Imperial Metals and the Mount Polley spill, as Imperial was able to flex a little of its financial muscle on Aug. 14 with the announcement that it would raise $100 million in a convertible debenture, with at least some of the funds to be directed towards the clean-up at Mount Polley.

Playing a large and leading role in the financing is Calgary-based oilsands billionaire Murray Edwards, chairman of Canadian Natural Resources and perhaps best known as a co-owner of the Calgary Flames NHL team. Among his many business ventures in Western Canada, he owns a 30% stake in Imperial Metals, which might account for less than 10% of his wealth, which was pegged by Forbes at US$2.2 billion in 2011.

Anyone who owns a major sports team is more concerned than most with their public perception, and that may have played a role in Edwards’ rapid opening of the wallet, especially at a time when Alberta’s oilsands developments are fighting an uphill battle to portray themselves globally as environmentally sustainable businesses.

The $100-million financing is especially critical right now, as Imperial sees major cost increases and construction delays at its Red Chris copper–gold mine nearing completion in northwestern B.C., 80 km south of Dease Lake.

Even before the tailings spill on Aug. 4, Imperial was running on financial fumes, closing out June with $600 million in debt (much of it raised in March 2014), only $7 million in cash and relying heavily on cashflow from Mount Polley to help finish mine construction at Red Chris, which — before the spill — was due for completion in the fourth quarter.

(Imperial also has a half stake in the Huckleberry copper mine near Houston, B.C., but is only taking in about a million dollars per quarter in profit, if anything at all — not enough to help much at Mount Polley or Red Chris. A fourth Imperial asset is the small, 8,000 oz. gold per year Sterling mine in Nevada, which is again too small to make a dent in the company’s larger financial concerns.)

The Aug. 14 financing news was tempered by the surprise announcement that Red Chris was seeing another big jump in its cost estimate to $631 million, up from $571 million three months ago and $530 million six months ago. Some of the cost increase related to hooking up the remote site to the newly expanded provincial electrical grid, specifically the delivery of faulty implosion sleeves, which delayed conductor-stringing activities. On the positive side, mining operations are now underway at Red Chris.

To further complicate matters for Imperial, the provincial government has reasonably ordered that all mine operators in B.C. with tailings dams (There are 98 in the province at 60 metal and coal mines) must carry out independently reviewed audits of their tailings facilities by Dec. 1.

The government has also appointed Norbert Morgenstern, Steven Vick and Dirk Van Zyl to a panel that has been given a powerful and wide-ranging mandate to examine the Mount Polley tailings spill and come back with recommendations by the end of January 2015.

But that’s not the end of Imperial’s headaches, as a small group of the local Tahltan First Nations members called the Klabona Keepers set up a roadblock at Red Chris on Aug. 8 in response to the Mount Polley spill amid concerns a similar event could happen at Red Chris.

Though it is not endorsed by the Tahltan Central Council, the roadblock remains up at press time on Aug. 20. B.C. Mines Minister Bill Bennett flew up to meet with the protesters and Tahltan leadership on Aug. 13, and discussions continue between both parties and Imperial, making many hopeful for a resolution. This resolution may entail new studies and a redesign of the tailings dam, which would translate into further delays in opening Red Chris and a continuing cash crunch. And maybe another phone call to Mr. Edwards.


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