Freezing conditions, plant and pipeline breakdowns, debt and continuing low gold production may have finally closed the book on an Australian company’s involvement in one of Europe’s worst environmental disasters.
Freezing conditions, plant and pipeline breakdowns, debt and continuing low gold production may have finally closed the book on an Australian company’s involvement in one of Europe’s worst environmental disasters.
Romania’s Baia Mare gold mine, previously owned by Perth-based Esmeralda Exploration, has been shut down and is unlikely to reopen.
The mine was first closed in 2000 after a disastrous cyanide spill, caused when heavy rain and snow broke the banks of the tailings pond to send more than 100,000 cubic metres of cyanide-contaminated waste water gushing into the Sasar, Lapus, Tisza and Danube rivers.
The spill killed hundreds of thousands of fish and sparked an international furore that made headlines around the world.
The media spotlight fell on Esmeralda’s Perth directors Peter Gunzburg and Brett Montgomery, who were left to field the threat of multi-million dollar legal claims extending to the Hungarian government, which still has a $190 million damages claim pending.
In October 2004 the company staged a brief, but high-profile comeback, claiming a revitalised investment after listing on London’s Alternative Investment Market as Eurogold Ltd.
However, investor hopes for the mine were short lived and the project has been put to rest.
The mining and toll treating operation is now owned by Transgold SA, which is jointly owned by the Romanian govern-ment and Eurogold.
Eurogold executive chairman Peter Gunzburg said a section of the Transgold tailings pipeline had frozen, causing the shutdown, and further damage had resulted in the entire pipeline being dismantled.
He said reinstallation of the pipeline and recommencement of production would only be warranted by a higher level of feed to the plant.
Eurogold was owed about $4 million by Transgold and did not intend to provide the company with any further funding.
“Given these circumstances, Eurogold believes Transgold will not be able to continue trading without further immediate support from banker and creditor UniCredit or the Romanian government,” Mr Gunzburg said.
Should the disruption result in the sale of Transgold’s assets, Euro-gold’s share would be directed to its Saulyak underground gold project in Ukraine, which has a current resource of 580,000 ounces of gold.
An earlier exit strategy last year failed when UK-based Oxus Gold pulled out of a $40 million deal to buy Eurogold’s gold assets.
Oxus gave no reason for not wanting to proceed with the transaction announced in July. Under the deal, Eurogold shareholders would have received about 10 per cent of Oxus’ issued capital.
