Update: Great Panther Mining announces Brazilian fines at Tucano mine

Great Panther Mining (TSX: GPR; NYSE-A: GPL) announced today that its Brazilian subsidiary, Mina Tucano, was notified on December 21 by the country’s Amapa State Environmental Agency, that a leak in a reclaimed water pipe at its Mina Tucano mine site in northeastern Brazil, was associated with the death of fish in the Areia and Silvestre Creeks. The state agency is imposing fines of R50 million (US$9 million) that are payable by January 31, the company said.

The  Vancouver-headquartered company said it intends to appeal the “amount of the fines and timing of any payment in its defense statements.”

“Mina Tucano is actively investigating whether there could be any connection between the fish mortality event and the Tucano mine site,” Great Panther Mining stated in a December 30 press release. “Based on its initial investigation, including independent reports on fish toxicology and water quality received by Mina Tucano on December 28 2021, the company has prepared a formal defense against the position taken by the agency.”

The relatively remote Tucano gold mine, about 200 km from Macapa, the state capital, consists of eight open pits, the Urucum North underground project, a processing plant and tailings dam.

The company declined an interview request from The Northern Miner for more details and said it preferred to respond in writing. “The company has now filed its formal defense with SEMA in Brazil, which is available publicly, and has no further comments to the news release issued this morning,” it wrote in an email. Great Panther also stated that the leak was not related to tailings. 

According to information about the mine on Great Panther’s website, production from the pits is the responsibility of a mining contractor, U&M Mineração e Construção S.A., and the existing processing plant was designed by Ausenco.

“After approximately four years of operation, an expansion was planned, also by Ausenco, as part of the original definitive feasibility study to install a 3 MW ball mill,” the website states. “This new secondary grinding mill, alongside the 7 MW single stage SAG mill, was installed in order to maintain 3.1 million tonnes per annum throughput capacity treating 100% of the much harder sulphide ore type.”

It has been a challenging year for the company’s Brazilian mine.

The announcement about the fines today follows an announcement in mid-October that consolidated production from the Tucano mine was expected to be lower than previously anticipated and costs higher, due to remediation work required at the Urucum Central south open pit. The company reported that Tucano’s geotechnical committee had advised the company that additional remediation work was required on the Urucum Central pit to improve safety factors, and mining from the pit had been temporarily suspended.

“Based on preliminary information from the engineers received on October 16, 2021,” the company stated in its October 18 press release, “additional waste material needs to be removed and work has commenced on a new pushback on the west wall of the UCS pit. Further details will be provided once known. Initial estimates indicate that this additional work will take six to eight weeks to complete. As previously disclosed, vertical drains are currently being installed in the west wall of the UCS pit to reduce and mitigate water levels and are expected to be in place by late November.”

“UCS is one of several pits at Tucano and we are considering multiple pathways to accelerate production from other areas,” Rob Henderson, the company’s president and CEO, stated in the press release. “This latest development is indeed a setback and delays our ramp up back to full production, but ultimately we expect to realize the value from the UCS pit once the pushback activity is complete. We continue to mine ore from the Urucum North open pit, and we are moving forward with plans to bring the TAP C open pit back into production and advance the high-grade underground project. Stripping continues on the TAP AB pit, which is scheduled to deliver ore in 2022.”

Production from Tucano in the third quarter of 2021 fell 49% year-on-year to 16,325 ounces of gold, “primarily due to equipment availability issues and the temporary halting in mining activities due to slope instability,” the company stated in a summary of its third quarter results on October 8.

Tucano is an iron formation hosted gold deposit, and sits on a tenement package that is about 90 km long by an average of 20 km wide. 

In other news at year-end, Great Panther announced on December 28 that David Garofalo, chairman of its board of directors, had resigned “effective immediately, in order to focus on other business commitments,” and that Alan Hair, an independent director, will replace him as the new chairman. Hair is a mining engineer and senor executive who has spent almost forty years in the industry, Great Panther said.

In its email, Great Panther noted that “Mr. Garofalo stepped down from the board due to his position as Chairman, President and Chief Executive Officer of Gold Royalty Corp. requiring a significant amount of his time and resources.”