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Dam Burst Won’t Delay Start of New Mine, Imperial Says

Imperial Metals Corp., the owner of a British Columbia mine where a burst dam unleashed a torrent of mine waste, doesn’t expect that the accident will delay the startup of another provincial mine it’s developing.

Imperial is trying to stem the leak from a pond at its Mount Polley mine after the Aug. 4 spill that released an estimated 10 million cubic meters (2.64 billion gallons) of water and 4.5 million cubic meters of ground-up rock. British Columbia investigators are working with the company to find the cause of the breach, while local residents still can’t drink or bathe in water from the area, pending further tests.

The accident, the worst of its kind in Canada in at least two decades, may lead to more regulatory scrutiny of mines such as Mount Polley, where waste is dumped into a lake or pond. British Columbia’s Energy and Mines Minister Bill Bennett said last week that the spill will spur government across the country to re-examine mining policies.

Imperial plans to start operations this year at its C$570 million ($520 million) Red Chris mine in the province which, like Mount Polley, will produce copper and gold and deposit waste in a pond at the site. The accident at Mount Polley, which is about 400 kilometers (250 miles) northeast of Vancouver, may delay Red Chris by a year, Raymond Goldie, a Toronto-based analyst at Salman Partners Inc., said Aug. 5.

‘Human Nature’

“It’s going to be human nature for people to think like that,” Steve Robertson, Imperial’s vice president of corporate affairs, said in an Aug. 9 interview at Mount Polley. “We haven’t received any indication from the government that there will be any change to our ability to go ahead and commission Red Chris.”

The Vancouver-based company plans to start production at Red Chris in late September. It is waiting for approval for a permit to discharge waste from the open-pit mine, Robertson said.

“I can’t predict what people are going to want to say or discuss at that table,” he said, referring to the application process.

Imperial also hopes to sign a so-called impacts and benefits agreement with Tahltan First Nation in relation to Red Chris, though operating the mine doesn’t hinge on an accord with the aboriginal group, Robertson said.

Blocked Access

A Tahltan group has blocked access to Red Chris, and the First Nation wants to have further discussions regarding the tailings facility at Red Chris, said Derek Macpherson, a Toronto-based analyst at M Capital Partners Inc.

Impaired relations with First Nation may affect the mine’s start up and may make it more difficult to complete the impact-benefits agreement, he said in a note today.

A material delay at Red Chris would probably require additional financing by Imperial, as the company needs to generate cash flow to service its debt, Macpherson said.

Investigations at or near the dam breach at Mount Polley are prohibited because of safety concerns, said Amec Plc, the engineering company that has been working on the dam. Construction work was being done to complete Amec’s design for the dam at the time of the accident, Lauren Gallagher, a spokeswoman for the London-based company, said yesterday in an e-mail.

Water Tests

The previous engineering contractor working on the dam, Knight Piesold Ltd., said it told Imperial and the provincial government in 2011 that the mine-waste facility was “getting large” and should be managed properly to prevent future problems. Knight Piesold’s original engineering accommodated a significantly smaller volume of water compared with the amount in the tailings storage facility when the breach occurred, it said an Aug. 8 statement.

Robertson said the pond and dam were operating within the parameters of the original design at the time of the accident.

“There’s a lot of speculation about what happened,” he said. “At this point we cannot speculate.”

Imperial rose 1.5 percent to C$10.52 in Toronto. The stock plunged 39 percent on the day of the spill, wiping C$483 million from the company’s market value. On Aug. 8, Standard & Poor’s cut its credit rating for Imperial to CCC+ from B- with a negative outlook, saying the accident “materially weakened” the miner’s financial flexibility.

Water samples taken from Quesnel River and Quesnel Lake, which lie close to Mount Polley, have met with provincial and federal drinking-water guidelines for the third straight day, the government of British Columbia said yesterday in an update on its website. Still, restrictions on water use remain in place, and portable showers have been installed at a campsite for local residents to use.

(An earlier version of this story corrected the currency in the fourth paragraph to Canadian dollars.)

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