Cadia has a LoM of 30+ years. I assume the dam was designed to last for at least 30+ years. A new dam collapsed within three years in service with barely any water in it. Let's say this way, if you build a new multi-million dollar house just to find out that it collapses in the third year. Who are you going to blame? Remind that nearly every mine has at least one tailings dam. There are millions of them, but it is rare to hear a dam wall collapse.
It's understandable for you to wait for the conclusions from NCM and hope it does not blame the global warming for the collapse. I have enough experience to judge with certain that the dam was poorly constructed, either because of design fault or construction/maintenance fault (e.g., did not constructed in accordance to the design specifications). It's simply an engineering problem. Perhaps they are luck to find problem so early, rather than years late. I did not see the mention of the 2.9 earthquake in the announcement as the media report speculated. If they did blame the quake for the collapse, the CEO would be in big trouble because it would be a clear neglegence.
Finally, it is a no-brainier to analogy the 10m-high 'bird-nest' dam in cadia to the hundreds meter high dam in a mountain valley in Samcarco. As you see in the photo at the collapse area, the slur moved not far away from the toe of the original embankment, probably only 20m rather than 200km in the Samarco case. The two dams are in vastly different leagues.
I think it's a buy opportunity.
NCM Price at posting:
$20.20 Sentiment: Buy Disclosure: Held
