Boliden denies wrongdoing however, as owner of the mine, Boliden will honor its responsibilities.” Two independent firms are currently attempting to determine the cause of the dyke’s failure, while environmental studies continue. Crews are transporting the solid wastes to the nearby mined-out Aznalcollar open pit. If this task is completed on schedule, mining activities may be able to resume in six months.

Management of Boliden (BOL-T) told shareholders at the company’s first annual meeting as a Canadian-based miner that the tailings spill at its Los Frailes mine in Spain was not the result of negligence.

“The breach in the dyke was a startling occurrence, considering our review and ongoing monitoring of the integrity of the structure,” said Boliden President Anders Bulow. “The tailings dam was inspected by independent consultants in 1996 and has been inspected regularly since that time; no signs of instability were detected prior to the failure.”

Boliden came under international scrutiny on April 25, when a break in the tailings dyke at Los Frailes caused 4 million cubic metres of acidic water (pH 3) and 1 million cubic metres of sand-sized pyritic waste material to pour into a nearby watercourse and onto land surrounding the Guadiamar River. The discharge from the pond was stopped the next day, by which time most of the wastewater had flowed into the Agrio River, which has a natural pH of 4.

Most of the international attention has focused on the potential damage to Spain’s Donana National Park, which lies 45 km downstream, and the long-term effects on local farming and groundwater. On the first issue, satellite imagery shows only 20 sq. km to have been inundated by the spill and it is estimated that 95% of the tailings material was deposited within 10 km of the mine site.

“Because of [the local government’s] quick reaction, there are no signs at this stage of the park being affected,” said Bulow. “As of May 1, water-sample studies revealed near-to-normal pH levels in the affected rivers and, as a result, we’re optimistic that the long-term effects of this spill will not compromise the integrity of the region’s ecosystem.” Regarding agricultural concerns, Bulow says initial reports from independent studies indicate that a large portion of the affected cropland is likely to be suitable for planting as early as next year.

Although Bulow said a price tag cannot yet be placed on the cost of the cleanup, he noted that Boliden has US$66 million in property and business interruption insurance and US$13 million in third-party liability insurance.

“We maintain our position that Boliden has not been negligent in any way . .

On the financial front, Boliden earned US$6.3 million (or 6cents per share) in three months ended Mar. 31, compared with US$17.7 million (or 18cents per share) in the corresponding period of 1997. The difference primarily reflects lower zinc, copper, lead and gold prices, though this was slightly offset by a stronger U.S. dollar and higher silver prices. Revenue was US$279.12 million, up from US$259.13 million a year earlier. Cash flow from operations in the first quarter was US$33.7 million, compared with $32.9 million in first-quarter 1997. Ironically, it was increased output from the Los Frailes mine that enabled Boliden to double zinc and copper production in the first quarter. The company’s aggregate production was 64,519 tonnes zinc, 36,624 tonnes copper, 31,367 tonnes lead, 46,368 oz.

gold and more than 2.2 million oz. silver. Average realized prices were US48cents per lb. zinc, US77cents per lb. copper, US24cents per lb. lead, US$294 per oz. gold and US$6.31 per oz. silver.

New production came from the Myra Falls and Gibraltar mines in British Columbia. Both operations were acquired through the takeover of Westmin Resources, however, the latter mine is scheduled for shutdown at year-end because of its low grade and low copper prices.

Myra Falls is expected to produce upwards of 60,000 tonnes zinc and 15,000-20,000 tonnes copper this year, along with significant gold and silver credits. Minable reserves, calculated at the end of 1996, stand at 9.1 million tonnes grading 6.6% zinc and 1.5% copper, plus 1.4 grams gold and 28.6 grams silver per tonne. These are contained in a proven and probable geological reserve base of 12.3 million tonnes grading 7.8% zinc and 1.8% copper, plus 1.9 grams gold and 40.4 grams silver. A further 2 million tonnes are categorized as a possible resource.

In Chile, construction and development is continuing at the Lomas Bayas mine, which was also acquired through the takeover. Commercial production is scheduled to start in the third quarter at a rate of 60,000 tonnes copper cathode per year, with life-of-mine cash costs projected at US50cents per lb.

Proven and probable reserves at Lomas Bayas stand at 319 million tonnes grading 0.35% copper. These can be mined at a stripping ratio of 0.3 to 1. A further 220 million tonnes grading 02.8% copper are classified as measured, indicated and inferred. The project’s total resources are pegged at 1.5 billion tonnes grading 0.16% copper.

On the neighboring Fortuna de Cobre property, Boliden has begun a feasibility study that will include 60,000 metres of drilling. An independent calculation pegged the property’s total resources at 1.1 billion tonnes grading 0.23% copper, within which 843 million tonnes grading 0.24% copper are deemed measured, indicated and inferred in-pit resources, based on a copper price of US$1 per lb. and unspecified operating costs and recovery rates.

On the exploration front, a zinc-lead-silver prospect was discovered near the company’s Kristineberg mine in northern Sweden. One hole intersected 2.45 metres grading 4.5% zinc, 1.4% lead and 49 grams silver.