Bonds: before you start, think of the finish
OceanaGold is required to have in place a rehabilitation bond to cover the cost of closure of the project whenever that may occur, to leave the site in a safe, stable, and self-sustaining rehabilitated state. The quantum of the rehabilitation bond is reviewed annually, and the rehabilitation bond is released once closure of the site is completed. The rehabilitation bond provides certainty in that, even in the unlikely event that mining finishes early, and the Company walks away from the site, funds will be available to ensure that rehabilitation is completed.
A capitalisation bond is also required. This bond ensures that a sum of money will always be available to allow the Trust to carry out its activities, even in the unlikely event that mining finishes early, and the Company walks away from the site.
The residual risk assessment
Once closure is complete, a sum of money will be handed over by the Company to allow the Trust to carry out its functions, and the capitalisation bond will no longer be required. This sum of money will generate interest annually, and this money will be sufficient to allow the Trust to manage, monitor and maintain the site. In addition, the Trust will be able to take out the necessary insurance cover.
In designing the project, the risks have been identified, and where possible, the risks have been minimised by allowing for them in the project design. For example the pit slopes and the tailings storage facilities have been designed to achieve long term stability, and the risk that remains is minimal. It is termed the ‘residual risk’.
A residual risk assessment has been undertaken to determine what risks remain once closure is complete, and to determine the costs of remediation and/or clean-up, in the unlikely event of a problem. Some risks are insurable, and sufficient money has been put aside for insurance purposes. Some risks are not insurable, and the costs of dealing with the consequences of those risks are taken into account in determining the quantum of money that the trust needs to carry out its tasks.
While the bonds are in place to ensure that sufficient funds are always available to cover rehabilitation and closure costs, in practice we do not intend to walk away from the site. Indeed, if we did so, our reputation would be harmed and it is likely that other projects around the world would be detrimentally affected by such a decision. In some cases, it is likely that consents to mine other deposits would be declined.
Waihi Gold will need to pay the costs necessary to carry out rehabilitation, and to fund the Trust. For this reason we set aside an amount of money each year to ensure that the costs at the end of the project are provided for while the mine is operating.
The bonds and financial provisioning are reviewed annually. Up to date information on the bond quantums, and the amount of money set aside for financial provisioning is available.