Precious Metals

Taseko Mines says Natural Resources Canada used the wrong tailings design in determining the environmental effects of its New Prosperity copper-gold mine.

Taseko Mines (TSX:TKO) is crying foul over a recent decision by a Federal Review Panel that criticized its proposed New Prosperity Mine in northern British Columbia, claiming that the panel based its conclusions on wrong information.

In a news release issued Wednesday, Taseko said that Natural Resources Canada (NRCan), a federal regulatory agency, used the incorrect design in their analysis of seepage rates from the tailings storage facility.

Last week a review by the Canadian Environmental Assessment Agency said the copper-gold mine, located 125 kilometers from Williams Lake, would pose “several significant environmental effects” based on the effects on water quality and fish habitat in Fish Lake; on the use of lands for traditional purposes by Aboriginal groups; and a “significant adverse cumulative effect on the South Chilcotin grizzly bear population,” according to the executive summary.

The review said that Taseko underestimated the volume of tailings water that would seep from the tailings storage facility and would thus impact water quality. It also determined that Taseko’s water quality objectives are “not likely achievable” even with expensive water treatment measures, and that the concentration of contaminants in Fish Lake are likely to be considerably larger than Taseko’s predictions.

In an interview with Gold Investing News, Taseko Vice President Brian Battison said that Taseko’s plan for the tailings storage facility was designed to engineering specifications that would take into account the facility’s water retention characteristics. However, Battison said NRCan “either ignored or did not understand that it was a designed facility,” leading the agency to conclude the facility would seep by a factor of 10 times the seepage potential put forward by Taseko.

The tailings facility was a key element of Taskeo’s revised mine plan for New Prosperity. The original plan was to drain Fish Lake to make way for the tailings impoundment, but when the federal government rejected that plan due to the cultural significance of the lake to local First Nations, Taseko went back to the drawing board. The new plan, which added an extra $300 million to the project cost, would save Fish Lake and build the tailings facility several kilometers away.

Battison noted that the tailings design used at New Prosperity conforms with industry best practices and is similar to tailings storage facilities used at the Mount Polley mine, which he said has no measurable groundwater flow, and the Mount Milligan mine. He added that the Mount Milligan facility was designed by Knight Piesold  — the same company contracted by Taseko — and that the facility recently won an award from the Association of Consulting Engineers of Canada.

“That design is being held up by the Ministry of Energy and Mines as the new standard for mines in BC,” said Battison.

In its news release, Taseko said it has advised the Federal Minister of the Environment that it will challenge aspects of the Federal Review Panel’s findings and requested that the Minister receive additional information before making any determination of “significant environmental effects.”

“If they’re making a determination of significant adverse environmental effects base on flawed information, then that’s a fundamental aspect of what’s at play here,” Battison concluded.

New Prosperity is one of the largest undeveloped copper-gold projects in the world. According to Taseko, the copper-gold porphyry contains 5.3 billion pounds of copper and 13.3 million ounces of gold, with a pre-tax net present value of C$3 billion and a 40 percent internal rate of return.

Taseko Mines closed up 5.16 percent on Wednesday in Toronto at $2.24 per share.

 

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

Related reading:

Environmental Review Critical of Taseko’s Mine

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