Shareholders of Imperial Metals Corp. (TSX: T.III, Stock Forum) are mulling legal action following a massive breach of a tailings pond facility at its Mount Polley mine in central British Columbia last week.
Siskinds LLP, a London, Ontario-based law firm, said Monday it represents the plaintiff in a proposed class action suit against Imperial Metals and certain of its directors, officers and related parties in the Ontario Superior Court of Justice.
The plaintiff is a Calgary-based retail investor who suffered signficant financial losses as a result of the tailings pond failure, which sparked a substantial drop in the value of Imperial Metals' shares.
Trading at $10.35 on Monday, the stock lost over 40% of its trading value on August 5, 2015, the day after the breach was reported.
Bill Bennett, B.C.’s Minister of Energy and Mines told CBC last week that Imperial Metals had been warned once about high water levels in its tailing ponds. The company was asked to remove water after a site inspection in May.
The proposed class action is brought on behalf of all person and entities, wherever they may reside, who acquired Imperial’s shares or notes between August 15, 2011 and August 4, 2014, Siskinds said in a statement.
The action relates to the circumstances surrounding the failure of the tailings facilities at the Mount Polley mine near Likely on August 4.
Meanwhile, a report by The Canadian Press said engineers are working to lower the danger level as they pump water from a B.C. lake clogged with debris after a mine tailings pond burst in the Cariboo region last week.
Michael Robb, a partner at Siskinds, said the plaintiff is alleging that those warnings were not properly disclosed by the company.
Imperial Metals, the company that owns the mine, is moving water from Polley Lake into Quesnel (kwih-nel) Lake in order to relieve pressure on a wall of debris that formed after the spill.
The provincial environment ministry said water levels in Polley Lake have risen by about two metres.
It said the newly-formed dam is preventing water from flowing out of the lake and authorities are worried the dam will collapse and cause a wash out if pressure on it is not relieved.
Environment Minister Mary Polak said government authorized the company to start pumping after the latest results from Polley Lake suggested water quality is similar to that of samples taken in the 1980s.
A water-use ban on the lake is still in effect, and authorities will be testing water being pumped into Quesnel Lake daily.
Authorities are also restricting access to the area surrounding Polley Lake because of concerns the wall of debris may be unstable and authorities want to make sure no one is in the area if a washout occurs.
Al Richmond, chair of the Cariboo Regional District, said the restriction does not affect any populated areas and no one is being forced from their home.
People have been visiting the area to get a look at the accident site, and they could be interfering with work in the area while putting themselves at risk, Richmond said.
``We know that some folks have been quite curious and have been going in there,'' he said. ``Some folks don't seem to realize we don't want any activity on Polley Lake that might in fact cause that plug to breach.''
``If there's a potential breach and you're on Polley Lake fishing for example, you could find yourself in Quesnel Lake pretty quick and the outcomes may not be very pleasant,'' said Richmond. ``I would suggest it would be unlikely someone would survive that type of ride.''
Checkpoints and gates have been placed to form a perimeter around the area.
Richmond said it is unclear exactly how much debris is damming Polley Lake, as inspectors have not been able to get close enough to have a look due to fears of getting caught in another washout.
Authorities are not concerned that people exposed to the debris will get sick, he said.
Ten million cubic metres of water and 4.5 million cubic metres of silt was spilled after the Mount Polley tailings pond was breached, raising fears about drinking water, fish stocks and the region's ecosystem.