Imperial Metals drops 42 pct, posts statement

Map showing flow of debris and slurry after tailings pond breach. Image from Cariboo Regional District.

Imperial Metals (TSE:III) says the cause of yesterday’s breach is unknown.

As of 10:53 a.m. EDT the company’s stock is down 42% to $9.68 per share.

A BMO analyst guessed that the clean up could cost $200 million. Potential damages could be in the “same order of magnitude.”

Mount Polley accounts for about 16% of the firm’s $1.6 billion net present value, and the mine contributes about 83% to the firm’s estimated 2014 EPS of 43 cents.

Early Monday morning the tailings dam gave way sending slurry and debris down Hazeltine Creek. A water ban has been implemented for 300 residents.

Here is the company’s statement.

Imperial Update on Tailings Storage Facility Breach at Mount Polley Mine
Vancouver — August 5, 2014 | Imperial Metals Corporation (III-TSX). The tailings dam breach that caused a water and tailings discharge at Imperial Metals’ Mount Polley mine early Monday morning has stabilized.

Our first priority is the health and safety of our employees and neighbours, and we are relieved no loss of life or injury have been reported. We are deeply concerned and are working to mitigate immediate effects and understand the cause.

Exact quantities of water and tailings discharged have yet to be determined. The tailings are alkaline with an average ph of 8.5 and are not acid generating.

The cause of the breach is unknown at this time. The dam is an independently engineered structure that operated within design limits and specifications. Monitoring instruments and onsite personnel had no indication of an impending breach.

Mount Polley mine has been placed on care and maintenance, and business interruption and physical damage insurers have been notified. While the damaged area is relatively small compared to the overall size of the dam, it is not known at this time how long it will take to restore operations.

We are working closely with provincial ministries, local agencies, and emergency response officials. Further updates will be provided as more information becomes available.

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DISCLOSURE: The reporter Michael McCrae is an investor in Imperial Metals.