Taseko falls 20% on Prosperity’s environmental review

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 July 5 in Toronto, following the release of the July 2 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 approve the mine.

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

“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 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 the cabinet within 60 days.

“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 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 impact on the fish habitat. The provincial review, however, concluded that the company’s mitigation plan, which includes building 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 lands the project is to be built, challenged the conclusion that the project is justified and argued that it is a destruction of traditional fishing grounds.

The Union of B.C. Indian Chiefs released a statement that “strongly recommends the federal cabinet to reject the Prosperity mine” adding “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 concerns 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 at the lake.

The B.C. business community, meanwhile, is strongly supporting 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 the federal cabinet to support the project.

The residents 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, like the need for jobs in the Cariboo 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 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 on July 6, 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.