Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Trevali Mining (TSX: TV; US-OTC: TREVF) has said that it is yet to locate or communicate with the eight underground miners who went missing on April 16 at its Perkoa zinc mine in Burkina Faso after flooding caused by heavy rainfall disrupted operations, the company said.
The Burkina Faso government is conducting an investigation into the flooding event, Trevali’s director of investor relations, Jason Mercier, told The Northern Miner. The Vancouver-based mining company is also investigating the flooding and has consulted experts in various areas including hydrology, Mercier added.
In a statement on May 9, the company said that it had removed 32 million litres of water from the mine and restored access up to level 550, more than 500 metres below surface. It said that it was working 24 hours a day to locate the missing workers.
“We are working in solidarity with all levels of government… as well as importing additional machinery and equipment to assist with locating our missing colleagues,” the company’s CEO, Ricus Grimbeek, said in a press release.
On Apr. 16, , heavy rains outside the usual rainy season poured about 125 mm of rain in less than an hour, triggering flash floods that breached the open pit at Perkoa, located about 120 km west of the capital of Ouagadougou.
As the water entered the open pit and subsequently, the underground mine, electricity and communications were lost. While most workers escaped, the company hasn’t been able to communicate with the eight missing workers ever since.
Six out of the eight missing men are from Burkina Faso, while the other two are from Tanzania and Zambia.
“The search effort requires the careful rebuilding of the road on more than 5,000 metres of underground decline ramp in order to facilitate the search efforts and safely install and operate pumping and piping infrastructure to remove floodwater,” the company said. The extent of the mine’s repairs will be known once the water is pumped out from the bottom of the mine at level 710.
A McKinsey & Co. report published in 2020 stated that commodities like iron ore and zinc, based on their location, are more exposed than other materials to “extremely high flood occurrence.”
“Flooding affects some commodities more than others, based on their location; in our analysis, iron ore and zinc are the most exposed to extremely high flood occurrence, at 50% and 40% of global volume, respectively.”
The Perkoa mine produced 316.2 million payable lb. of zinc in 2021 and generates the bulk of the company’s revenue. Trevali owns 90% of the mine, while Burkina Faso holds a 10% interest.
Midday Monday, Trevali’s shares were down 11%on the TSX following the company’s updated statement.
