Strong reactions to environmental review of Prosperity

Vancouver – The language in the federal review panel’s environmental assessment on Taseko Mines‘ (TKO-T, TGB-N) Prosperity gold-copper project in British Columbia was harsh, and the market reaction equally so.

The company’s stock price fell 84¢ or 20.2% to $3.32 on the first day of trading following the release of the report, which concluded a mine would have “significant adverse environmental effects” and a “high magnitude, long-term and irreversible effect” on a nearby fish habitat. The federal cabinet will use the report, among other sources, to inform its decision on whether to green-light the mine.

A noticeably frustrated Russ Hallbauer, president and CEO of Taseko, expressed his dismay in a conference call at the way the report was released and how it was interpreted by the markets.

“We are extremely disappointed that many people have misinterpreted the panel findings as a result of poorly reading a poorly written executive summary,” said Hallbauer.

The company maintains that the results of the federal assessment were expected and the panel came to much the same conclusions on environmental effects as had the provincial review, which nevertheless approved the project in January after balancing the environmental losses with the economic gains. The federal review panel, however, did not take into account the economic benefit the mine would bring, as it was not mandated to do so.

It now rests on the federal cabinet to consider “all other factors” before deciding the fate of the project. Various reports must be submitted to cabinet within sixty days, but cabinet has no defined timeline on a decision.

“We expect the government of Canada to put this issue on the agenda early; we don’t expect them to delay in any way because of the importance of this project to the people,” said Brian Battison, vice president of corporate affairs at Taseko.

The main area of contention for the project is the need to drain Fish Lake to develop the $800-million open-pit mine. Both the provincial and federal reviews concluded the plan would have a significant negative effect on the fish habitat. The provincial review, however, concluded that the company’s mitigation plan, which includes the building of a new lake and stocking it with fish, along with the economic benefits justify the impact.

First Nations, including the Tsilhqot’in Nation on whose traditional lands the project is to be built, challenge the conclusion that the project is justified and contend that it is a destruction of traditional fishing grounds.

The Union of B.C. Indian Chiefs issued a statement that “strongly recommends the federal Cabinet to reject the Prosperity mine” adding that “It is unfathomable that the federal Cabinet would ignore their responsibilities and the dire warnings of the Federal Review Panel.”

First Nations and environmentalists have also raised issue with the plan to replace the 80,000 rainbow trout in Fish Lake with 20,000 in the new lake, to be named Prosperity. Battison said the lower fish count was set by the province to create a healthier fish population.

The B.C. business community, meanwhile, has come out in strong support of the project. The Mining Association of British Columbia, the B.C. Chamber of Commerce and the Business Council of British Columbia issued a statement urging cabinet to support the project.

The people of Williams Lake, roughly 125 km northeast of the property, have also expressed strong support for the project. Communities in the area have been hit hard by the downturn in the forestry industry.

Bill Bennett, B.C. Minister of Energy, Mines, and Petroleum Resources, wants the federal cabinet to consider everything the province did when approving the project.

“I am hopeful that when it does get to the federal cabinet that they will have a full discussion about the economic factors, things like the need for jobs in the caribou region of our province, the fact that our forest industry in the area is on its knees because of the pine beetle epidemic, the fact that though not being supported by first nations it is supported by all non-first nations communities in the region,” said Bennett in an interview.

Prosperity currently hosts 831 million proven and probable reserve tonnes grading 0.41 gram gold per tonne and 0.23% copper. The late-2009 feasibility update outlined a 33-year mine life at a milling rate of 70,000 tonnes a day.

“There’s a lot at stake here for the mining industry as well,” said Battison. “If you lose another big mine, big opportunity, that’ll send a very strongly negative message to the mining industry and to the mining investment community around the world.”

Taseko’s stock recovered somewhat the next day, up 33¢ or 9.9% to close at $3.65. The company’s stock price has fallen from a 52-week high of $6.19 in mid-April.