Eight workers from Trevali Mining's (TSX: TV; US-OTC: TREVF) Perkoa zinc mine in Burkina Faso have been missing for five days as flooding caused by heavy rainfall in Burkina Faso on Apr. 16 disrupted operations, the company said.
In an updated statement on Apr. 21, the company said that the eight workers were yet to be found and that the company had decided to suspend its production guidance for 2022. It also said that the requirements to repair the mine were still not known, as such the company wasn't able to say when the mine would restart.
In the meantime, rescue efforts continue with support from the government, local communities and other mining companies in the area, the company said.
"Our primary focus has been, and will remain, the search and rescue of the missing eight miners and our thoughts are with the families, friends, and colleagues who have been impacted," said the company's CEO Ricus Grimbeek said in a press release on Apr. 21.
"The health and safety of our workers is our top priority, and all efforts are being made to extend the search into the lower levels of the Perkoa Mine. We will not cease our efforts until we have found our missing colleagues," he added.
Located in the Sanguie province, about 120 km west of the capital city of Ouagadougou, the Perkoa mine produced 316.2 million payable pounds of zinc in 2021 and generates the bulk of the company's revenue.
According to Trevali's initial assessment, a heavy rainfall event that occurred outside the usual rainy season and poured about 125 mm of rain in less than an hour triggered flash floods which breached the open pit of the Perkoa mine. As the water entered the open pit and subsequently went into the underground mine, electricity and communications were lost.
While most of the workers managed to escape, the company hasn't been able to communicate with the eight missing workers ever since, the Trevali said.
After flooding stopped, the water level in the mine settled at the mine's Level 520, which is 520 metres from surface. The mine's depth is till Level 710, said Trevali.
"While it is difficult to know the extent of the flooding, potential damage, necessary remediation, as well as a timeline for an appropriate investigation, at this time, we have assumed the Perkoa mine is closed for 30 days," BMO analyst Rene Cartier wrote in a research note sent to clients on Apr. 16 after the incident.
"Perkoa is estimated as over 50% of Trevali's payable zinc production. Added costs and Perkoa not producing could potentially extend pressures."
Scotiabank analyst Orest Wowkodaw echoed a similar sentiment. "We currently forecast Perkoa to yield 72,000 tonnes of contained zinc this year, representing 52% of the company's total output and 0.5% of global mine supply."
A Mckinsey report published in 2020 stated that flooding from extreme rains could cause mine closures, a rise in unsafe water levels in tailing dams and affect commodities like iron ore and zinc due to their location. These metals are the most exposed to extremely high flood occurrence at 50% and 40% of global volume, respectively.
Shares of Trevali Mining fell 23.28% or 44 to $1.45 on Apr.18 after the flash floods. On Apr. 21, the company's shares fell to $1.15, down 17 or 12.8% on the day, following the company's updated statement.