Equity posts $16-million reclamation bond

The costs associated with closing a mine in these environmentally sensitive times have become an important issue for Equity Silver Mines (TSE). The Vancouver-based company posted a $16-million reclamation bond as the first step in dealing with the closure of its silver-copper- gold mine near Houston, B.C. Mining reserves are expected to last until the third quarter of 1992.

The British Columbia government and Equity Silver have been negotiating for some time in an attempt to determine what the cost of reclaiming the mine site will be.

Peter Martin, mine manager, noted that the reclamation cost was made up of two components: onetime costs of reclaiming the site itself, and ongoing costs of treating acidic drainage from waste dumps.

Martin does not expect the onetime costs, which include the removal of structures and the revegetation of the site, to total more than $5 million. Regarding the cost of collecting, treating, and monitoring the seepage from waste dumps, he noted that Equity has submitted to the government a mine closure plan, which estimates the costs at about $1.28 million per year in 1989 dollars.

A study is being undertaken by the Ministry of the Environment to ensure this cost estimate is reasonable. The government is also studying the structuring of a trust that will fund the yearly treatment costs. The principal amount required from Equity Silver will depend on the cost inflation rate and the real rate of return estimated for the fund.

In addition, Equity is petitioning both provincial and federal governments in an attempt to change the tax treatment of reclamation expenditures. Currently, reclamation costs must be paid out of after-tax income. The company feels that if these costs were treated as a pretax expense, it would act as an increased incentive for reclamation.