Imperial Metals recorded costs of C$67.4 million (C$43.8 million net of tax) during the September period related to the tailings dam breach. These costs include C$20.3 million incurred for response and recovery as well as initial rehabilitation and restoration activities. The C$67.4 million in costs also includes a C$47.1 million provision for future costs related to the tailings dam breach, exclusive of estimated insurance recoveries. Insurance recoveries will be recorded when received.

For the three months ended Sept. 30, Imperial Metals’ revenues were C$22.7 million compared to C$51.7 million in the comparative 2013 quarter. This decrease in revenue for the third quarter of 2014 is primarily due to a lower quantity of concentrate sold from the Mount Polley mine as a result of the tailings dam breach on Aug. 4.

The net loss for the September 2014 quarter was C$49.2 million (C66 cents per share) compared to net income of C$14.7 million (C20 cents per share) during the third quarter of 2013. Imperial Metals attributes the loss largely to the $67.4 million of remediation costs related to the Mount Polley tailings dam breach.

The company completed a C$115.0 million convertible debenture financing on Sept. 4, 2014 to assist with the tailings dam breach remediation costs and the completion and startup of the Red Chris mine.

Mount Polley

The third quarter average mill throughput to Aug. 4 at Mount Polley was 20,315 metric tons per day, at a grade of 0.353 percent copper and 0.283 grams per metric ton gold, and production was 4.3 million pounds copper, 4,503 ounces gold and 15,888 ounces silver.

On August 4 the tailings dam at the Mount Polley mine was breached, and since then the mill has been on care and maintenance. Mining crews and others have been engaged in response and recovery activities, including securing the remaining tailings within the impoundment, collecting contact water, reducing the water level in Polley Lake, and cleaning up woody debris deposited in Quesnel Lake. A program of rehabilitation and restoration in the areas affected by the breach has now begun.

Geotechnical work is currently underway to determine the root cause of the tailings dam breach. The geotechnical work program includes mapping, geophysical surveys, drilling and test pitting, and is expected to be completed in mid-November. The expert review panel established by the Province of British Columbia to investigate the root cause of the dam failure is to issue a report by Jan. 31, 2015.

While the precise costs of rehabilitation and restoration are presently unknown, Imperial Metals believes the costs can be managed over time, given the underlying value of the company's assets, the current sources of liquidity, insurance proceeds and the expected cash flow from the Red Chris mine. The company says it is studying options for the resumption of Mount Polley operations are being studied.

Huckleberry Mine

Throughput at the Huckleberry Mine during the third quarter of 2014 averaged 17,073 metric tons per day, up from the 15,404 metric tons per day achieved during the same quarter of 2013, as softer ores from the Main zone pit are being processed. The mill continues to operate with the damaged SAG mill bull gear, rotating in the opposite direction. Monthly inspections are being performed to monitor the status of the damaged teeth on the bull gear. The replacement bull gear and two pinion gears for the SAG mill are on site and a ten day shutdown is planned in November for the installation of the new bull gear.

As a result of milling time lost with the failure, and the replacement of the bull gear, the 2014 production forecast is 36 million pounds copper and 175,000 ounces silver.

Imperial Metals recorded C$1.9 million as its equity share of Huckleberry’s net income during the third quarter of 2014 compared to C$300,000 equity loss during the same period last year. The higher net income was primarily attributable to higher sales volumes in the 2014 quarter and lower tax expense than in the 2013 quarter.

Red Chris

Imperial Metals reports that the construction of the Iskut extension of the Northwest Transmission Line from Bob Quinn to Tatogga, and the 16-kilometer (10 miles) power line from Tatogga to the Red Chris main substation are both complete and the entire line from Bob Quinn to the main substation at Red Chris is now energized and commissioning of various sections of the site power systems can begin.

The company says this commissioning will begin with the crushing, pit and reclaim water systems, and then work through the grinding and flotation sections of the processing plant. The gyratory crusher, overland conveyors, reclaim apron feeders, reclaim conveyors, reagent building and associated E-houses have been pre-commissioned using generators.

The mining equipment fleet procurement for Red Chris is complete and the mine’s P&H 2800 electric shovel is assembled and ready for commissioning. The diesel fleet has pre-developed the mine. Soil was stripped off the East Zone Starter Pit and non-acid generating rock was excavated and used to construct haul roads or hauled to the rock disposal site. Ore has been stockpiled for plant commissioning. A haul road to the Main Zone Starter Pit has been completed and a bench readied for drilling.

With most of the site infrastructure complete and operational a commissioning team of contractors and employees have been assembled to commission the plant starting in December.

A third party review of the Red Chris tailings dam was completed by consultants reporting to representatives of the Tahltan Nation. The Tahltan Central Council and Imperial are working together to develop a work plan to implement the recommendations contained in the review. Imperial is also working with the representatives of the Tahltan Nation to finalize an impacts and benefits agreement.

To start operations at Red Chris, an environmental management act permit to discharge tailings is required. Imperial Metals says it anticipates the permit will be issued in time to begin tailings discharge to the impoundment in December.