New Gold's Afton mine west of Kamloops, B.C. on Feb. 2, 2021.Dennis Owen/The Globe and Mail
New Gold Inc. NGD-T has suspended mining at its New Afton gold and copper mine in British Columbia because of safety concerns over the site’s tailings dam.
The Toronto-based company said in a statement that during a routine inspection on Wednesday it noticed “geotechnical variances” that require further review by an engineer. As the engineering work gets under way, the company will continue milling ore from stockpiles.
Michael Serpico, an analyst with RBC Dominion Securities Inc., wrote in a note to clients that New Gold has about seven to 10 days worth of stockpiles to keep its mill running. An extended shutdown of mining at New Afton could impact development plans for a new section of the mine called the C-zone, he added.
New Afton is located in southern B.C., about 10 kilometres from Kamloops, a city of about 90,000 people. It started production in 2012, and is an underground extension of an open pit mine called Afton.
In the second quarter, the site produced 15,704 ounces of gold and 12 million pounds of copper. It accounts for about 35 per cent of the company’s forecast production for this year.
Amid the uncertainty, shares in New Gold fell by 7.7 per cent in trading on the Toronto Stock Exchange on Thursday, to close at $1.31 each.
New Afton isn’t the only mine in the company’s portfolio to have issues with its tailings facility. After New Gold’s Rainy River mine in Ontario went into production in 2017, the company faced significant unforeseen costs after an engineering mistake in the design of its tailings dam was discovered.
The integrity of tailings dams, which are supposed to store toxic mining byproducts, has been a focus of concern in the mining industry in recent years, after several high-profile accidents.
In 2014, a tailings dam at the Mount Polley copper and gold mine in B.C. ruptured and spilled more than 20 million cubic metres of waste water into local waterways. The mine’s operator, Imperial Metals Corp. III-T, suspended production at the site for almost a year in the aftermath. In 2019, a tailings dam breach at an iron ore mine operated in Brazil by Rio de Janeiro-based Vale SA killed 270 people and caused an environmental catastrophe. And in 2022, a Brazilian environmental regulator fined Canadian precious metals producer Great Panther Mining Ltd. GPLDF after a cyanide leak at its tailings dam polluted rivers in the country and killed a large fish population.
Since 2020, The Church of England Pensions Board in Britain, a major mining investor, has encouraged the global mining industry to disclose more in-depth information about the safety and integrity of tailings dams. While some of Canada’s biggest miners, including Barrick Gold Corp. ABX-T, release information about their tailings dams that isn’t required by Canadian disclosure laws, many smaller miners, such as New Gold, do not.
The concern about the New Afton tailings dam is the latest setback for New Gold after a turbulent past two years.
In 2021, a mud rush at New Afton killed a contract driller and injured two others. Mud rushes happen when a sudden and uncontrolled deluge of water and debris breaks through cracks in an underground mine.
Late last year, the company abruptly cut ties with Renaud Adams, its chief executive officer of more than four years, and provided no explanation for his exit. He was replaced by Patrick Godin, who had previously been the company’s chief operating officer.
New Gold declined an interview request.