Hit by tailings breach costs, Imperial Metals swings to loss in Q3
A catastrophic tailings dam breach at its Mount Polley mine in British Columbia has taken a toll on Imperial Metals' (TSX:III) bottom line.
Reporting its third-quarter results on Friday, the Vancouver-based company said it suffered a $49.2 million quarterly loss, compared to net income of $14.7 million in the third quarter of 2013.
In early August, the tailings dam at the Mount Polley copper and gold mine northeast of Williams Lake collapsed, plugging local creeks and nearby Quesnel Lake with million of cubic metres of water and tailings. The mine has ceased operations since the breach on Aug. 4.
Imperial admitted the failure has played a large role in the company's financial performance. The incident cost Imperial $67.4 million during the quarter, including $20.3 million for response and recovery as well as restoration activities. The company completed a $115 million convertible debenture financing on September 4, to assist with the tailings dam breach remediation costs and the startup of the Red Chris mine, also in B.C., which Imperial is currently developing.
Imperial also saw lower revenues in Q3, due to its inability to ship concentrates from the mine. The company sent one shipment of concentrate during the quarter, compared to two in the year-ago quarter. Imperial brought in $22.7 million in Q3, against $51.7 million revenue earned in the third quarter of 2013.
Imperial is currently looking at ways to restart the mine in an effort to stem its losses. The Vancouver Sun reported last week that Imperial is "reviewing options to use an empty mining pit to store its tailings temporarily as a way of restarting operations and keeping its workforce employed, but hasn’t yet determined if this would be financially viable or acceptable to the provincial government."
The company has started laying off its employees, last week letting go 36 drillers and truckers.
While Imperial would obviously like to rebuild its tailings facility as soon as possible, as The Sun points out, it will not be able to do so until the provincial government completes its investigation into the accident, which would be January at the earliest.
Imperial Metals has lost nearly half of its market cap since the tailings breach occurred. On August 1st Imperial was trading at $16.80 a share. Four days later, the stock slipped under $10. The downward slide continued throughout the summer, and on Friday, III closed up 2 cents, at $8.92.