August 15, 2014 / 3:13 PM / 5 years ago

Canada's Imperial Metals raising money to clean up mine waste spill

(Reuters) - Imperial Metals Corp (III.TO), the company behind last week’s major spill of mine waste in Western Canada, is raising C$100 million ($92 million) in debt to cover cleanup costs and finish building its newest mine.

“While the precise costs of remediation and repair are presently unknown, the company believes that the costs can be managed over time, given the underlying value of the company’s assets and by the resources provided by the additional financing,” Imperial said in a release late on Thursday that boosted investor confidence in the company’s prospects.

Shares of Imperial, which have fallen sharply since the spill, rose 15.3 percent to C$10.37 in Toronto on Friday.

The tailings dam burst at Imperial’s Mount Polley copper and gold mine in British Columbia, a spill that analysts say could cost between C$50 million and C$500 million to clean up. The mine has been closed indefinitely, costing Imperial a key source of cash.

The Canadian company said it would issue C$100 million worth of convertible debentures.

Top Imperial shareholder N. Murray Edwards, the billionaire chair of oil and gas giant Canadian Natural Resources (CNQ.TO), is stepping in to help Imperial.

His Edco Capital and affiliates have committed to buy C$40 million of the issue, and Edco has committed to buying more if needed to ensure Imperial raises the full C$100 million.

Imperial said the Fairholme Partnership has also committed to buy C$40 million. Fairholme is a hedge fund launched in 2013 by Bruce Berkowitz’s Miami-based Fairholme Capital Management.

Imperial’s new Red Chris mine, also in British Columbia, is almost fully built, but it needs one more permit approved before it can start production, said Steve Robertson, vice president of corporate affairs, in a message on Wednesday.

The permit is required before Imperial can deposit tailings into a storage facility at Red Chris, he said, adding that the process of obtaining the approval is under way.

Chad Day, the president of Tahltan Nation, the aboriginal group that has been negotiating an impact benefit agreement with Imperial for Red Chris, has said he now has new questions and concerns about the mine’s tailings pond.

British Columbia’s minister of energy and mines, Bill Bennett, has been in discussions with Imperial and the Tahltan Nation, said ministry spokesman David Haslam in a statement.

As a result, “Imperial Metals has agreed that it will not begin operations at Red Chris until the Tahltan can undertake an independent engineering review of the facility,” he said. Imperial will cover the cost of the review.

On Thursday, British Columbia’s Information and Privacy Commissioner said she will investigate whether the province’s government should have warned the public about risks posed by Mount Polley.

“In the aftermath of the breach, concerns are being raised about what government knew about the condition of the Mount Polley mine and whether the public should have been notified of potential risks before the disaster occurred,” said Commissioner Elizabeth Denham in a release.

Reporting by Allison Martell; Editing by Steve Orlofsky

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