To understand why RED did not restart the mine requires some background as to what happened with the dam failure event and earlier.
The ROM pad started it all. The ROM pad was originally designed to be significantly larger than it was built over 18 months ago (about 3-4 times bigger or about 4-6 weeks of ore ready to be crushed). The ramp (road) up to the ROM was to start on the other (east) side of a north-south goat trail/track that had been the way the locals had traversed the area between the Siana and Cawilan villages for over 50 years (you can see it on Google Earth). Despite the Company owning all the land, one of the influential locals decided to support about 5 or 6 villagers who objected not being able to traverse through the site (despite the safety and security implications). We had already built the mine, infrastructure and installed the crusher so we couldn’t make a dramatic change to the layout of the area. So in the meantime (and waiting for last May’s elections) any additional ore was to be placed on a pad at ground level in a large area at the start of the ramp, until such time as the ramp could be extended and ROM pad made larger. (you can see it on the 16/10/12 Google Earth image). If we had continued to use this smaller ROM pad and also trammed additional ore with a loader up the ramp we would have added about $250,000 (up to $500,000) per year to the loading cost of feeding the crusher (about 30-50cents/tonne). In the meantime we just had to be patient and there was no other impediment.
Much has been discussed about the tailings dams. Very little of it is accurate except I note that a couple of members of HC are on the right track. The smaller tailings dam was built as an extra tailings storage and also the south-eastern wall was to act as a buttress to the larger main tailings dam since the smaller dam’s foundations were several metres below the existing larger dam (erroneously called the ‘Secondary’ dam by RED). This is also the location of the long-term emergency spillway. The smaller dam was never meant for long-term continuous use and certainly not at an input rate of 3,000 tonnes per day (you don’t fill your bath tub up with a fire hose do you?). The maximum designed input rate of both dams was about 1,600tpd at 32.5% solids at this stage since it would be impossible to maintain the correct water balance in the process plant as some have already surmised. The beach was required to be maintained at over 100m width at all times. Another reason for the smaller dam was to bund the existing old tailings from the 1950’s underground operation (for long-term environmental reasons), use it for a very short time and then use the larger dam when ramping-up production. These are the facts! And contrary to speculations, I was not a tight arse with any of this nor did I direct the consultants in any way except to ensure more safeguards were in place (that seem to have been subsequently removed). Within a day of the smaller dam failure I knew exactly the cause and the effect of the failure (the why and the how). It took me another month to find out the ‘who’.
In my time, with the rising gold price, we realised that we could expand the open pit mine (delaying the start date of the underground mine) and therefore would require additional tailings storage. The Philippines Mines department has some very prescriptive rules (quite rightly in order to protect the environment) and part of the requirement was that all the plans had to be approved and anything that was beyond the current mine plan could not be approved (every year you have to submit a three year mine plan and you can’t just change it without notice and approval). Even the Mineral Resources and Ore Reserves were heavily scrutinised. So as the gold price increased we knew we had the opportunity to expand the open pit mine but it would need to be approved in the future. We had received our approvals for the current mine plan in near record time so expanding the mine was of no concern and in any case we had about three to four years to complete.
Before I left RED the team was to complete (by December 2012) a scoping to pre-feasibility study for additional tailings capacity including the dry stacking, terracing (another method), additional thickening and filtering of the tail in the current plan to give approximately an additional five years of tailing storage. This would have given the team up to the five years to complete the approvals process of a new dam should we need it. For whatever reason after I left, the Company made the decision to abandon the feasibility study work on the various ‘dry stacking’ alternatives and nothing more was done until after the failure of the smaller dam (for reasons I will explain later).
When the new MD came on board he was oblivious to the history of the permitting and (quite reasonably) had no concept of the time required getting approvals in the change of mine plan (obviously because he was not involved in the previous permitting and there was no handover). In Australia, with so much open space and a relatively speedy permitting process we would all expect to have the ability to design, permit and construct a new tailings facility (or any other mining expansion) in a few months, but in the Philippines it is vastly different. In early February the team was directed to make plans for a new dam because the BOD wanted a larger ROM pad (at the same level as the crusher) and could only achieve this if they decommissioned the larger tailings dam (so the ROM pad could be extended further south rather than east as originally planned). If they had been patient for just a few months they might have been able to get the larger ROM pad (as planned) and still have the larger tailings dam for use as it was intended (with or without dry stacking). The BOD’s knew the residual capacity of the smaller tailings dam was only 6 months or less but badly miscalculated the time required to get the approvals. It was only much later (in June but possibly much earlier) that BOD realised the more realistic time to get the approvals was well in excess of 12 months (and probably much longer).
So when the smaller tailings dam failed and with the larger dam decommissioned, initially the senior staff were given the impression the failure had suited the Company’s longer term plan of building a new dam and in a warped, illogical way had given RED the excuse to put the mine on Care and Maintenance. It would seem all staff tried to have the schedule realigned to the original, government approved plan and the mine restarted using the ‘alternative methods’ but it was to no avail. So now the Company has no Chief Operating Officer, no Mining Superintendent, no Maintenance Manager, no mining engineers, no metallurgists and only a part-time Processing Superintendent (for the Care and Maintenance). And it only starts there. When the dam failed NONE of the senior staff were invited to the meetings with consultants and alike and none of them received any of the subsequent consultant reports at the time. Sound a bit strange?????
So during the period from the dam failure through to late May the senior staff were asking advice as to how to get the mine restarted stating they felt the Company had given up. When I went to Surigao in late May to surrender myself for arrest due to a supposed land use violation by the Company (since my name is still on all the records as the Authorised Company Representative after all this time, the CDO included), I was asked to visit the mine to give advice. I immediately sent them my recommendations that were no different to the methods of the abandoned feasibility study above except I added the geotextile tubes method since the normal dry stacking methods would need more time and feasibility and therefore was not applicable. For whatever reason the Company dug their heels in and refused to listen to their more experienced senior staff and use one of the many methods available to restart the operation and it was only much later RED reported the ‘alternatives’ to the ASX that were never going to be seriously considered. Since then I have emailed the Chairman offering to provide information that might help but have never had a reply.
So to answer your last two questions in one sentence, despite my supposedly being a consultant to RED for their permitting and stakeholder relations, they have never asked for advice or help. IMHO the permits could take a very long time!
This whole thing is a stuff-up of monumental proportions! All of this happened for the convenience of saving about $250,000 per annum and having no patience. It’s called a ‘ramp-up’ for good reason and it not supposed to be a train wreck.
(20min delay)