Imperial Metals President Comments on Remediation Costs, Timeline

The Secwepemc Women’s Warrior Society leads a protest against Imperial Metals in Vancouver, BC (August 11, 2014).

It’s been two weeks since the tailings storage facility at Imperial Metals’ (TSX:III) British Columbia-based Mount Polley copper-gold mine was breached, and a lot has happened in that time. 

Unsurprisingly, most developments haven’t been good news for much-maligned Imperial, whose share price has barely recovered from the 42-percent drop it took after the public got wind of the breach. Among other issues, the company is facing a class-action lawsuit from shareholders, protests from First Nations and of course increased scrutiny at its other operations.

Given all that turmoil, it’s interesting to note that this morning’s conference call regarding Imperial’s second-quarter results was relatively run of the mill. Indeed, though Brian Kynoch, president of Imperial, and Andre Deepwell, the company’s CFO and corporate secretary, fielded some questions regarding the breach, for the most part, the call stayed on topic.

That said, the breach did of course come up. Summing up the situation, Kynoch said that since the breach, Imperial has taken three measures to stabilize the site:

  1. It has “begun to collect all the logs and floating debris on Quesnel Lake.”
  2. The company has also started “constructing an upstream dike to contain the tailings spill in the impoundment.”
  3. Finally, Imperial is “pump[ing] water out of Polley Lake to reduce the water level.”

Though Kynoch emphasized that “it’s impossible to quantify the exact cost of remediation,” he did give a rough breakdown of what each of the above items may cost. He noted, “we are thinking it will be a million dollars to clean up the wooden debris on the lake,” adding that getting the dike done will cost “$4 or $5 million.” He estimated the cost of pumping water out of Polley Lake as being “a couple million dollars.”

Those vague figures may be frustrating for investors, but Kynoch noted that Imperial will be able to provide more clarity once the dike is completed, likely in the first or second week of September, and the water level at Polley Lake becomes safe. That’s because at that point two things will happen. First, Kynoch explained, ”an investigation of the cause” will take place, likely involving “drilling to assess the mode of failure,” and second, the company will “go collect information in Hazeltine Creek to see what [it will] need to do to remediate.”

Kynoch concluded by reminding investors, “we have good water, almost drinking-quality water, and Mount Polley’s tailings are relatively benign,” both of which will help with remediation. He added, “we are confident that we will have the financial resources to remediate this over time.”

At close of day today, shares of Imperial were selling for $10.18 each. That’s up from $9.70 directly following the breach, but well below $16.80, the company’s share price before the disaster.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Related reading: 

Imperial Metals Down 42 Percent After Tailings Pond Breach