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Until a few days ago, Great Panther’s chairman was well-known Canadian mining executive David Garofalo, who is also the former head of Goldcorp Inc., a onetime high flier in the gold mining industry.DARRYL DYCK/THE GLOBE AND MAIL

A Brazilian state environmental regulator has fined Canadian precious metals producer Great Panther Mining Ltd. $11.4-million, after ruling a cyanide leak at the company’s gold mine in Brazil polluted local rivers and killed a large fish population.

Vancouver-based Great Panther operates the open-pit Tucano gold mine in Amapa state in northern Brazil. Until a few days ago, the company’s chairman was well-known Canadian mining executive David Garofalo, who is also the former head of Goldcorp Inc., a onetime high flier in the gold mining industry.

After complaints in November by residents about dead fish in rivers near Great Panther’s Tucano mine, Brazil’s State Department for the Environment, or SEMA, started an investigation. The regulator analyzed satellite images, collected water samples, compared before and after pictures of waterways, and studied fish populations. SEMA concluded that the Igarape Silvestre and Igarape Areia waterways were contaminated with cyanide and the cause was a leak at Tucano’s tailings dam.

“There was contamination of water bodies, caused by the release of effluents with a high concentration of cyanide, coming from the mining company’s tailings dam causing high fish mortality,” the regulator said in a statement on Dec 28.

The same day SEMA made its ruling public, Great Panther announced the resignation of its chairman, Mr. Garofalo. No mention was made of the leak at the Tucano mine, or the fine. In a statement, Great Panther said Mr. Garofalo was leaving because he needed “to focus on other business commitments.”

Mr. Garofalo did not respond to a request for comment.

In a Dec. 30 release, Great Panther said it intended to appeal the ruling from the regulator, and added it is conducting its own investigation to see whether there is any connection between the death of the fish and its operations.

“Based on its initial investigation, including independent reports on fish toxicology and water quality received by [Great Panther subsidiary] Mina Tucano on Dec. 28, 2021, the company has prepared a formal defence against the position taken by the agency,” Great Panther said in the release.

In an e-mail to The Globe and Mail on Friday, Fiona Grant Leydier, vice-president of investor relations with Great Panther, said the leak originated not from Tucano’s tailings dam, as SEMA alleges, but from a reclaimed water pipe at the mine. She added that Great Panther has since filed its defence with SEMA.

Great Panther’s departing chairman, Mr. Garofalo, is also the former chief executive officer of both Hudbay Mining, a major Canadian base metals miner, and Goldcorp, which was once the most valuable gold miner in the world. Goldcorp under Mr. Garofalo was sold in 2019 to U.S. competitor Newmont Corp. after multiple operational stumbles.

Cyanide, a toxic chemical, is used worldwide in the processing of gold at open pit mines. While generally considered safe to use, it isn’t foolproof, and several accidents have illustrated the potential for great harm if leaks occur.

In the early 1990s, Vancouver-based Galactic Resources Ltd.’s Summitville gold mine in Colorado was the site of a major cyanide leakage that caused significant environmental damage to nearby waterways. The more than 20-year cleanup effort was overseen by the U.S. Environmental Protection Agency and cost in excess of US$200-million.

Galactic’s former chairman and CEO, Robert Friedland, eventually agreed to pay US$27.75-million in a voluntary settlement with the U.S. government and the State of Colorado. A substantial part of the settlement was put toward mitigating damage to the Alamosa River watershed. Mr. Friedland did not admit liability as part of the settlement.

Barrick Gold Corp., the world’s second-biggest gold miner, has experienced several cyanide leaks at its Veladero mine in Argentina’s San Juan province, which it co-owns with China’s Shandong Gold. After a spill in 2017, the Argentine government restricted Barrick’s use of cyanide on-site for three months.

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