Financial Assurances

Development of a bonding strategy, including the use of quantitative risk assessment to set bond quanta.

Malcolm was part of a team that developed an innovative and leading-edge bonding strategy for Waihi Gold when the regional council, and a Parliamentary Commissioner for the Environment report, required ‘in-perpetuity' financial assurances for the company's tailings storage facility.

The breakthrough came with demonstrating to the lawyers and regulators that the time value of money enabled the establishment of an endowment sufficient to fund the ongoing maintenance and management of the site, appropriate insurances, and a contingent liability fund in perpetuity. A key outcome for the mining company was the ability for it to exit the site without any residual liability once agreed closure criteria were met.

A quantitative risk assessment process was used to define the insurable components of the site aftercare and a rationally-derived contingent liability fund quantum. This method has been broadly adopted throughout New Zealand for establishing bonds for mining operations, and parts of the strategy and method have also been applied to a number of New Zealand landfill bonds. The method has also been introduced in various jurisdictions in Australia.

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Contact Details

Phone:(09) 445 2995
 +64 9 445 2995
Email: 
cherie@laneassociates.co.nz
malcolm@laneassociates.co.nz