Centerra copper-gold mine in Canada dodges output cuts after securing water sources

Canada's Centerra Gold (TSX:CG) won’t have to cut output at its central British Columbia-based Mount Milligan copper-gold mine, as it has been granted earlier than anticipated approval to use certain short-term water sources, the company said Friday.

Operations at the mine, which relies on the snowmelt runoff from the surrounding mountains to fill its tailing pond and so use that water to process ore, have been affected by a dry and hot summer. This prompted the company in July to lodge an application with the BC Environmental Assessment Office to get access to short and long-term additional water sources.

The idea was to avoid a fresh round of production cuts such as that seen at the end of 2017, when output was partially curtailed for more than two months after an unusually dry spring and summer left Mount Milligan with limited water supplies in its tailings storage facility.

Permits granted today only provide limited amounts of additional water, said Centerra.

The permits granted today, however, will only provide limited amounts of additional water, Centerra said in the statement. “This will assist with, though not meaningfully reduce, the outstanding water needs of the mine,” it said.

The approvals, a product of discussions with regulators and First Nations, allow the company to pump from groundwater wells within Mount Milligan’s tailings storage facility, as well as from a single groundwater well outside of tailings pond for the entire life-of-mine.

They also let Centerra pump up to 15% of the base flow from the nearby Philip Lake 1 until mid-November. An application to further extend the pumping from that water body during the winter period is currently under review as planned, the miner said.

The Toronto-based company is also preparing applications to access other water sources until 2020. These include access to groundwater wells outside the tailing for the entire life-of the mine as well as to Philip Lake 1 and Rainbow Creek, but at rates deemed safe for the environment.

“The company is still in discussions with regulators, First Nations and other affected stakeholders as to such approvals and expects that access to these sources may be granted as early as December 2018,” it said.

Centerra acquired Mount Milligan in October 2016 as part of its $1.1 billion acquisition of US miner Thompson Creek Metals, which also gave it access to the namesake molybdenum mine in Idaho, US.