Canadian-owned mining company and executives found guilty of involuntary homicide after Burkina Faso flood disaster

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A Canadian-owned mining company and two executives at its zinc mine in Burkina Faso have been convicted of involuntary homicide in connection with a flooding disaster that killed eight mine workers.

The flooding, which followed a sudden torrential rainfall at the site in April, trapped the workers underground and led to a 66-day search that eventually found them dead, several hundred metres below ground, after 165 million litres of water had been pumped out of the mine.

The disaster sparked outrage in Burkina Faso and led to charges of involuntary homicide against the mine operator and two executives at the mine, which is owned by Vancouver-based Trevali Mining Corp. TV-T

Trevali says it was caught unawares by downpour that flooded Burkina Faso mine

Mine manager Hein Frey, vice-president of operations at Trevali, was given a 24-month suspended sentence and ordered to pay a fine of about $4,000 in the court ruling on Wednesday. He is South African.

Daryl Christensen, of the Trevali contractor Byrnecut, was given a 12-month suspended sentence and a fine of about $2,000. He is reportedly Australian.

Mine operator Nantou Mining, which is 90 per cent owned by Trevali, was also convicted and fined about $4,000.

In response to questions from The Globe and Mail, a Trevali spokesman did not comment on the court verdict or whether the company would appeal it. Investor relations director Jason Mercier said the company was “hugely grateful” for the support it received from its employees and local communities at the court hearings.

He said the company had worked closely with the authorities to investigate the cause of the flood and was now in the process of receiving approvals that could allow it to restart the mine, although no decision has been made.

Last month, Trevali said its investigation found the flooding was caused by an “extreme weather event,” of the kind that has become less predictable because of climate change. The flood protection system at the mine “did not anticipate the intensity, scale or timing of the rainfall and flooding,” it said.

The company said it is taking steps to minimize flooding risks in the future, including the raising of a flood protection berm, the installation of an early warning system with real-time monitoring of rain and stream levels, and improved emergency management plans.

Analysts said the court verdict on Wednesday was significant. “It is extremely unusual for mining companies and executives to be charged, much less found guilty,” said Jamie Kneen, a researcher at Ottawa-based organization MiningWatch Canada.

He noted, however, that the amount of the court-ordered fines was “trivial” for a mining company. “While I think this case may serve as a warning, I don’t think it will be a real deterrent,” he told The Globe.

In Canada, new rules on criminal liability for workplace deaths and injuries came into force in 2004, but relatively few convictions or charges have been secured under the law, commonly known as the Westray Law.

The legislation was introduced after the 1992 disaster at the Westray mine in Nova Scotia, in which 26 miners were killed in an explosion caused by a buildup of methane gas and coal dust. Workers, inspectors and union officials had raised safety concerns at Westray before the explosion.

Hai Van Le, managing director with Sattva Global Advisors in Vancouver, an international financial advisory firm that focuses on mining, was critical of the speedy judicial process in Burkina Faso. He noted that the trial began just a month after the two executives were detained, unlike in Canada, where a similar trial would wait up to a year to give the defence a fair chance to prepare.

“The trial and the judicial standards in Burkina Faso were really rudimentary, really basic,” he told The Globe.

Trevali filed for creditor protection in Canada in August after missing a US$7.5-million debt payment and failing to line up a critical financing package.

Before the flood, Trevali had been trying to raise US$200-million, with roughly half to go toward a planned expansion of a mine in Namibia, and the rest to refinance debt coming due later this year, including a US$97-million payment this month.

But in the aftermath of the deadly flood, the company’s chances of securing a new financing package largely evaporated, as it was forced to suspend production at the Burkinese mine and shell out tens of millions in cleanup and repair costs. By the end of June alone, the company had spent US$15.2-million on flood-related costs.

The company has also been grappling with operational problems at its Caribou mine in New Brunswick, including issues of equipment and operator availability. Production plummeted and costs spiralled, and last month Trevali halted operations.

At the time of its Companies’ Creditors Arrangement Act (CCAA) filing, the company’s net debt (debt minus cash) stood at US$59.4-million. Trading in the company’s shares was halted on the Toronto Stock Exchange in August and the stock is due to be delisted next month.

Typically during CCAA proceedings, common shareholders are completely wiped out. The court-appointed monitor’s main objective is to gain the best possible financial outcome for debtholders and others who are owed money by the company, all of whom have priority over stockholders. The process may entail selling the company’s assets to a third party, in which case creditors may receive some or all of their money back.

Trevali’s biggest shareholder is Glencore PLC, the Anglo-Swiss mining conglomerate. Glencore is also one of the company’s major creditors, and it has offtake agreements in place to buy Trevali’s metals concentrate production.

Trevali’s biggest creditor is a syndicate of banks that includes Bank of Nova Scotia, HSBC Bank Canada, Bank of Montreal and Toronto-Dominion Bank. The group holds US$84.5-million in debt, according to FTI Consulting, the CCAA monitor.