As it attempts to restructure a looming pile of debt coming due in 2019, cash-strapped Imperial Metals Corp. is set to receive a C$108 million infusion through a settlement connected to litigation over the Mount Polley tailings dam failure in 2014.
Imperial Metals said Nov. 27 that the C$108 million payment was related to "an action for damages arising out of the Aug. 4, 2014 failure of the perimeter embankment at the Mount Polley mine." The copper-gold miner did not name the parties to the settlement in its news release.
Brian Kynoch, the company president, told S&P Global Market Intelligence that he expected the payment to come within a week, saying it would give Imperial Metals some breathing room as it attempts to restructure. Kynoch also declined to comment on the identity of the parties, citing a confidentiality agreement.
Once it receives payment, Imperial Metals said it would file a "consent dismissal order" as part of an agreement in which no party admitted liability.
A lawyer representing Imperial Metals confirmed that the order and settlement was related to ongoing litigation in a case Imperial Metals brought against consultants in 2016 that were involved with work on the tailings dam including Knight Piésold Ltd., BGC Engineering Inc. and certain units of Amec Foster Wheeler, now part of John Wood Group PLC.
The consulting firms could not be reached for comment and it was not known if, or to what degree, they were involved with the settlement.
The Mount Polley tailings dam failure in August 2014 released millions of tonnes of process waste, comprising water and fine sand, into nearby lakes in British Columbia.
In the aftermath of the disaster, Imperial Metals sued consultants involved in the dam design in 2016, seeking damages of more than C$100 million, according to a legal document and media reports.
The C$108 million settlement comes as Imperial Metals pushes through a restructuring process. The company, which in the third quarter reported an C$819.7 million working capital deficiency, faces debt paybacks in 2019 and has needed to secure extensions to some of its credit facilities.
A C$200 million credit facility due Oct. 1 was extended to Feb. 15, 2019, along with a C$50 million loan that was to be due Dec. 1. Meanwhile, a C$26 million bridge loan due Jan. 5, 2019, was extended to Feb. 28, 2019. The company also has US$325 million in senior notes coming due March 15, 2019.
Imperial Metals also outlined plans to buy back a 0.5% royalty, which it sold in September, covering the Red Chris mine in British Columbia for US$17 million.