REFILE-UPDATE 2-Imperial Metals' W.Canada mine spills waste into waterways, shares plunge

Tue Aug 5, 2014 4:25pm EDT

(Corrects conversion to billion gallons in paragraph 6)

TORONTO Aug 5 (Reuters) - A large pond holding waste matter at one of Imperial Metals Corp's gold and copper mine in central British Columbia in Western Canada has spilled gray sludge into waterways, sending the miner's shares down more than 40 percent on Tuesday.

Imperial Metals said in a release on Tuesday morning that the breach at the Mount Polley mine on Monday had stabilized, and that no deaths or injuries had been reported. The company said it did not yet know what had caused the break, that also washed out a nearby road.

"We are deeply concerned and are working to mitigate immediate effects and understand the case," the company said.

Imperial shares slumped 42 percent to C$9.75 on the Toronto Stock Exchange on Tuesday afternoon.

Imperial said the dam had been operated within its design limits, and workers on site and monitoring equipment had no indication the breach was coming.

Some 10 million cubic meters (2.6 billion gallons) of water and 4.5 million cubic meters of fine sand spilled into Polley Lake, the province's Minister of Energy and Mines Bill Bennett said in a statement.

Bennett said the flow may have continued into nearby Quesnel Lake. He said the impact on the watershed is unknown, and the ministry has been testing the water.

Hazeltine Creek, which flows out of Polley Lake, had been a 4-foot (1.2-meter) stream, but it is now 150 feet wide, the Cariboo Regional District government said in a separate statement. One road has been washed out. The district government advised nearby residents to use bottled water until further notice.

Cariboo is also home to Taseko Mines Ltd's New Prosperity, a proposed copper and gold mine that Canada's government has blocked twice, citing environmental concerns. Taseko has challenged the decision in court. Its shares were down 3.2 percent at C$2.42 on the Toronto Stock Exchange on Tuesday.

Helicopter footage of Mount Polley posted by the district on Monday showed an expanse of gray sludge outside the waste pond, known as a tailings pond, heaps of uprooted trees and liquid churning out of the pond.

Tailings are the waste left over after ore from a mine has been processed to remove valuable metals. What they contain varies between mines and treatment methods.

Imperial said the mine, its biggest operation, has been put on care and maintenance. In the second quarter, the open pit operation produced 12.0 million pounds of copper, 11,867 ounces of gold and 33,813 ounces of silver.

Overall, Imperial produced 16.6 million pounds of copper, 13,867 ounces of gold and 59,289 ounces of silver. It also operates the Huckleberry open pit copper mine in British Columbia, and Sterling, a gold mine in Nevada.

($1=$1.09 Canadian) (Reporting by Allison Martell; Editing by Nick Zieminski, Peter Galloway and Marguerita Choy)

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