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Imperial has settled for damages incurred after the 2014 tailings dam failure at Mount Polley, with the company pocketing C$108 million.
Canada’s Imperial Metals (TSX:III) has reported that it’s due to receive a hefty payment in relation to the 2014 collapse of the tailings dam at its Mount Polley copper mine in British Columbia.
“An action for damages arising out of the August 4, 2014 failure of the perimeter embankment at the Mount Polley mine has been settled among all parties to the action,” said the company.
Imperial Metals will receive net payments of around C$108 million, after which it said all parties would file to have the action dismissed in court. It added that the settlement didn’t constitute any admission of liability by any parties and was a result of a compromise between disputed claims.
The company did not say when it expected to receive payment, though it will come as welcome news after it recorded losses of over C$28 million in Q3.
Understandably, Imperial said that the settlement would give it liquidity as it was undergoing a process of reviewing strategic alternatives for the company.
Imperial had sold a 0.5-percent net smelter return royalty for its Red Chris mine as part of its restructuring process for C$17 million, but retained a 100-percent buyback option which it exercised its right to on Tuesday (November 27).
The strategic review is broad, including looking into the sale of assets, joint ventures, a recapitalization, and even a sale or merger of the company.
The company enjoyed a jump in value on the Toronto Stock Exchange on Tuesday, reaching C$1.65 in the hours after the news was announced before falling back to a more modest C$1.38 which still represented an 18.97-percent increase.
Year-to-date, Imperial Metals has lost 58.81 percent of its value, and it has never recovered to its pre-tailings failure value of C$16.76 on the day the news broke.
The dam failure saw millions of tonnes of tailings flood into nearby waterways, which a report found was a result of a design flaw in the dam wall, leading to Imperial suing two engineering firms associated with its construction in 2016.
In todays release, the company also announced that as part of its restructuring, it had reorganized the management structure at its second producing mine, the Red Chris mine — also in British Columbia.
Imperial said that it had appointed Randall Thompson, its vice president of operations, as the mine’s general manager.
In its Q3 production report, the company had said that copper and gold production were well down at Red Chris — copper by 31 percent and gold by 4 percent.
The mine, which produced 19.66 million pounds of copper in Q3 2017, was down to 13.55 million pounds in 2018, with the company citing lower recoveries.
A fall at Red Chris came at a bad time, as workers at Mount Polley had been on strike since May 2018 and remained on strike through to August, chewing into the mine’s Q2 production by 31.8 percent and its Q3 production by 34 percent — though the company also reported that in Q3 recoveries were also lower at Mount Polley.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.
