Mt Polley & The Global Capital Squeeze: The Other Side Of Dr. Robertsons Declaration That TSF Risk Profile Has Increased 20 Fold Every 1/3 century in the Modern Era

GENERIC CASH FLOW CRUNCHES NOW EXACERBATED BY GLOBAL CREDIT CRUNCH

“Whether a start-up business looking to list; a hapless explorer completing its final drill programme; a company that has been fortunate enough to strike it lucky and turning towards development; or a producer with a depleting ore body, it is critical for a company to move forward or face certain extinction.

To do so, a company needs to be adequately financed,particularly in an industry as capital-intensive as mining – few “people would argue otherwise.”( Sam Jordan Jones, The Global Mining Finance Guide 2014

 http://www.mayerbrown.com/files/Publication/3e2dc5e3-878a-40a2-8b06-b75f8d632ba/Presentation/PublicationAttachment/86b233d1-beb2-4f47-9b85-cd4793b90b92/global_mining_finance_guide_jan14.PDF

Globally the credit and equity markets that have traditionally financed mining explorations development and operation have changed dramatically in recent years. Expectations that have kept miners afloat and moving forward for decades all of a sudden are not supported by equity and credit markets Capital just isn’t there the way it always was. According to The Global Mining & Finance Guide (op cit link above) a major contraction clicked in in 2012 after a steady and significant decline  from 2009. which of course would affect all mining companies globally whose development plans and operations relied on continued access to these markets at the same terms and conditions and in accordance with need. As noted in the introductory quote  above, a sudden and apparently long term change  in finance availability and access is especially challenging in an industry that is as capital intensive as mining.

And that of course puts additional pressure on the chronic and inevitable conflict between TSF safety in design and management and the allocation of scare available resources to production.

Imperial/MPMC was clearly caught in this unexpected crunch in global capital markets when it realized in 2013 that it was now completely dependent on those capital  markets to meet its development and production goals promised to investors.

With that capital crunch, of course generating as much revenue as possible through aggressive production goals moves front and center and doing whatever it takes to achieve those goals takes priority. Surely the profile of the capital crunch since 2010 is a principal driver pushing the  20 fold increase in risk profile Dr. Robertson mapped at his key note 2011 Tailngs Conference even higher. (http://www.infomine.com/library/publications/docs/Robertson2011c.pdf) .

Miners have to work what they have invested in    and committed to developing. They have to make lower grade ores that once seemed financially viable, produce more and more and they have to push existing infrastructure, including TSF’s as far as possible. What other choices are there?     Where else can a company find the revenue it needs to survive.

That is where Imperia/MPMC is hanging.

They are desperately counting on the permit at Red Chris to plug the holes in its leaking financial vessel and trying to convince the public that will spare them the cost of the Mt. Polley TSF failure cleanup.  But how can that be a good deal in terms of public liabilities and  environmental risks when we know the TSF at Red Chris has been designed to keep costs at a bare minimum.  The capital crunch is driving completely against the public interest.  Can we make that bargain when the public risk hasn’t been measured  and Imperial MPMC’s financial capacity to fund its public liabilities and environmental loss exposures has not been fully examined.

As Sam Jones says in the opening quote  it is move forward or perish.

Of course a business that has accumulated almost $1 billion in mineralized   assets, survived for half a century and invested so much for so long will go for survival and of course the other end of that is inevitably  a higher risk and loss profile overall and a greater probability of higher unfundable unmanageable public liabilities and environmental liabilities.

This is the tailspin Imperial /MPMC was caught in at the time of this enormous record breaking TSF failure.

Here are just a few quotes from the Global Mining Finance Guide that flesh out the severity of the current global capital crunch.

“.. in the current environment, where investors are concerned about the level of new supply coming to market and have a smaller appetite for risk, there is less capital available to finance such programmes.Geological expertise is key and those with a successful track record will find iteasier to gain investor confidence. However, even those promising to repeat past performance and offer the highest returns are struggling to raise capital and consequently, we have witnessed a contraction of early stage investors.(emphasis added “

“Historically, exploration activities have been financed by the public equity markets. However, over the past 18 months, capital in its traditional form has all but dried up.Only 17 initial public offerings (IPOs) occurred in the sector globally during the

nine months to September 30, 2013, raising just US$626 million”

“The sell off over the past two years has been severe as shown by EY’s Mining Eye and Canadian Mining Eye indices, which track the performance of junior mining stocks on London’s secondary stock exchange, AIM and Canada’s Toronto Stock

Exchange (TSX) and TSX Venture Exchange (TSX-V), respectively. With share prices depressed, and investors looking to protect investment positions, it is little surprise that new equity is not being attracted into the sector.”

“It has been a difficult year for miners. Metals prices are down significantly, equity values remain under pressure and shareholders have grown increasingly vocal in their demands for fiscal restraint.”

“Growth at the expense of shareholder returns has led to lower investor confidence and areduced appetite for mining equities,” BMOCapital Markets’ Co-Head of Mining Research,Tony Robson, said”

Advertisements

About lindsaynewlandbowker

Bowker Associates, Science & Research In The Public Interest, is an independent non profit providing self initiated pro bono analysis on key issues with a potential for massive adverse environmental impact . Bowker Associates has been an internationally recognized and cited voice in analysis of the Samarco failure, its consequence, and the possibilties for recovery. In 2015 Bowker Associates collaborated with globally respected geophysicist David M. Chambers to recompile global authoritative accounts of significant TSF failures in recorded history and to analyze these data in the context of gloal mining economics 1910-2010 ( Risk, Economics and Public Liability of TSF Failures, Bowker/Chambers July 2015) In 2014 Bowker Associates commissioned globally respected geophysicist and hydrogeologist Dr. David Chambers to undertake two technical works: (1) development of technical go no go criteria for vetting mine applications tp://lindsaynewlandbowker.wordpress.com/2014/01/05/a-new-statutory-regulatory-framework-for-responble-sulfide-mining-should-this-mine-be-built/ and (2) a case study of Maine's Bald Mountain, an un mined low grade high risk VMS deposit demonstrating the efficacy and accuracy of two risk assessment tools in vetting mine proposals https://lindsaynewlandbowker.wordpress.com/2014/02/28/mountain-x-would-you-issue-a-permit-to-this-mine/ In Maine, Bowker Associates has deeply engaged and been a public voice in the Searsport DCP LPG Tank, The Cianbro proposal for a Private East West Toll Road, JD Irvings rolling pipeline of Bakken crude to its plant in St. John and review of Phase II plans at The Callahan Superfund site in Brooksville, Maine, and Maine's revisitation of mining in statute and regulation... Our only “client”: is always “the pubic interest”. Our model is to focus on only one or two issues at a time so that we have a substantive command of the relevant field as our foundation for ongoing engagement. Our core work is in envirommental risk management, science and technology as well as bringing any available “best practices” models to the fore. The legal and regulatory history/best models are also a major thrust of our work in building and evaluating public policy. Director/Principal Lindsay Newland Bowker, CPCU, ARM is a recognized expert in Environmental Risk Management., Heavy Construction Risk Management and Marine and Transit Risks and has more than 3 decades of engagement in buiding public policy. Appointed by Governor Mario Cuomo to New York State Banking Board (served 1986-1996); President New York Chapter Chartered Property and Casualty Insurers; Environmental Committee, Risk and Insurance Management Society; Director, Convenor/Co-Chair Bermuda Market Briefing "From Captive to Cats" Hamilton Bermuda. Published Articles of Significance The Risk Economics and Public Liability of Tailings Facility Failures, co-authored with David M. Chambers, July 2015 Beyond. Polarization: Superfund Reform in Perspective, Risk & Insurance Managing Risk For Loss Prevention & Cost Control (Jan. 24, 1997). Lead Hazards and Abatement Technologies in Construction: A Risk Management Approach CPCU Journal 1997 Employee Leasing: Liability in Limbo Risk Management June 1 1997 Environmental Audit Privilege and the Public interest Risk & Insurance Managing Risk For Loss Prevention & Cost Control, April 1997 Asbestos:Holes In Abatement Policies Need To Be Plugged, Lloyd’s Environmental Risk International, May 1993 Editor Published Letters Evironmental Risk Management Beware of Facile Policies Like Fetal Protection Business Insurance 1995(?) High Court Review May Increase Sale of Bank Annuities Business Insurances August 8, 1995 Professional Profiles Protecting the Big Apple’s Core Managing Risk For Loss Prevention & Control December 1996 Major Career Highlights First rigorous analysis showing Relationship Between declining ore grades and TSF Failures of increasing consequence ( July 2015) FIrst Documentation that Gentrification Has Same Impacts as Unassisted Displacement from Urban Renewal Sites Direted Court Ordered EIS of FHA Mortgage Scandal Created Nation's First Homeownership Program for Low Income People (SHIP) Created Earliest Geographic Information Systems Using Defense Technology Developed By IBM Designed and Conducted Parallel Census Count to Show Systematic undercount in minority neighborhoods Documented Bias in ISO Territory Rating Plans for Private Passenger Auto Insurance Using ISO's own Rating Techniques Demonstrated Inherent Bias in Mortgage Policies of Banks With Inner City Branches Demonstrated that NY Telephones Plan for Area Code Split To accommodate anticipated cell phone demand was not efficient and would exhaust in 5 years ( which it did) Undertook First Systematic Evaluation of Child Protective Services Caseload Using Multi Variate Analyic Techniques Developed Child Protective Caseload Management and Tracking System (CANTS) and directed implementation in 4 client states including Illinois, Florida and New York Created and Ran Office of Risk Management for NYC DEP the Nations largest Water & Sewer Authority . Designed, Created and Administered Nation's First Owner Controlled Insurance Program (OCIP)for High Risk Tunneling Education Masters NYU Graduate School of Public Administration BSC New School For Social Research Maine Public Schools Deering High School
This entry was posted in A. Macg. Robertson, Bowker Associates, Global Capital Squeeze In Mining, Ian Coles, Sam Jones, TSF Failures, TSF Risk Profile. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s