Mount Polley placed on life support

Imperial Metals (IPM-T) will not suspend operations at its 55%-owned Mount Polley mine, 60 km northeast of Williams Lake, B.C.

The decision was reached after shareholders agreed to adopt an economic plan sponsored by the province’s Job Protection Commission. The plan outlines significant cost reductions to be achieved by means of a mixture of supplier discounts, tax and loan deferrals, and temporary wage rollbacks.

The plan will be in effect for two years, and the deferrals will be repaid during the following three years. As a result, the company expects annual operating costs to fall to $5 million from $7 million.

Most of the savings are to stem from the restructuring of Imperial’s US$39.5-million loan from Japan-based Sumitomo, which holds a 45% interest in the Mount Polley mine. Imperial has already deferred $6 million of debt that was scheduled to be paid this year to Sumitomo. Meanwhile, B.C. Hydro, for its part, has granted a deferral in hydro payments.

Imperial agreed to roll back unionized employee wages by 10% for two years.

Currently, 167 people are employed at the mine.

The company was also able to negotiate reductions in suppliers’ costs, and managed to receive a more favorable smelter arrangement based on spot-term, as opposed to long-term, sales.

The open-pit mine entered production last summer and, over its first five months, produced 12,823 tonnes of concentrate containing 17,866 oz. gold and 7.9 million lbs. copper. Recovery rates averaged 67.72% for gold and 61.75% for copper.

Prior to startup, mineable reserves were pegged at 82.3 million tonnes grading 0.417 gram gold and 0.3% copper, with the overall stripping ratio projected at 1.12-to-1.

Average cash costs are estimated at US$225 per oz., using copper as a credit at current prices. The mine has a projected life span of 12 years.