Authorities in Brazil have forced the Canadian precious metals company Jaguar Mining Inc (TSE: JAG) (OTCMKTS: JAGGF) to halt operations at its Turmalina mine. The decision followed a major tailings pile landslide catastrophe that prompted hundreds of residents to evacuate the area.
The incident occurred on Dec. 7 when a “slump in the north wall” containing the mine waste gave out and damaged essential infrastructure at the site, including one of the emergency exits. The hazardous material was dispersed throughout a distance of approximately 250 metres from where the slide originated.
No injuries occurred thankfully, but Brazil’s Ministry of Labor is concerned that additional collapses in the tailings structure may be impending. As mine tailings can contain harmful substances like lead, mercury, cyanide and arsenic, the environmental implications are quite concerning.
On Monday, Jaguar issued a statement on social media explaining that it had “completed the emergency works related to the landslide of the tailings/waste pile” and built a containment dike to trap contaminated rainwater sediments.
Last week, the company said that a total of 255 people from 97 families had to be relocated after the incident and that there are 162 vacant buildings in the neighbouring community.
The damage associated with the failure also prompted the Public Prosecutors Office of Minas Gerais to file a lawsuit against the company for the damage and the perceived negligence causing it. It wants to freeze approximately US$47.25 million in Jaguar’s bank account for the environmental harm and work that will be involved with fixing the issue.
Overhead shot of the damage (top down). Photo credit: Public Prosecutors Office of Minas Gerais
Jaguar shares dropped by over 29 per cent when news of the “Santinoco” tailings pile incident first broke.
The Turmalina operation was an essential section of the company’s broader MTL Complex but that is no longer the case for the time being. The underground mine churned out over 33,000 ounces last year, accounting for approximately 50 per cent of Jaguar’s annual yield.
The MTL Complex Turmalina is situated in contains the Faina, Zona Basal and Pontal deposits.
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Jaguar has its plate full sorting this out
The costs associated with this are currently uncertain, but it is safe to say that the damage will be quite damaging to the company’s balance sheet.
The gold miner will be expected to carefully remove several tons of tailings and waste rock from the adjacent town and surrounding area of Turmalina. It will also need to fix nearby roads.
Additionally, Jaguar is required to pay for accommodation expenses associated with the temporarily displaced townsfolk.
And of course, the sum sought by the Public Prosecutors Office should its lawsuit be successful in upcoming legal proceedings.
It is uncertain when Turmalina will be operational again.
rowan@mugglehead.com
