Corporate News

Philex unit to raise P7.2B for Silangan mine

Posted on December 11, 2014

A WHOLLY owned subsidiary of listed miner Philex Mining Corp. plans to raise P7.2 billion by issuing convertible notes to partly finance a feasibility study for a mine in Surigao del Norte.

In a disclosure yesterday, Philex said that its board and that of Silangan Mindanao Exploration Company, Inc. (SMECI) “approved the offer and issuance of Convertible Notes (CN) by SMECI (the Issuer) amounting to P7.2 billion.”

SMECI is the holding company of Silangan Mindanao Mining Co., Inc., which in turn develops the Silangan project located in Surigao del Norte.

“The proceeds of the CN [convertible notes] shall be used primarily by the Issuer to finance the project’s Definitive Feasibility Study and repay advances from Philex (Mining),” the statement read.

Philex said it used as basis for the offer size a valuation made by an independent party for the Silangan project.

Philex Mining’s Silangan project involves the development of Boyongan and Bayugo mineral deposits comprised of gold, copper and silver.

The company gained full ownership of the mine site when it consolidated its interest by purchasing the 50% equity interests of Anglo American Exploration BV and Anglo American Exploration (Philippines), Inc. in February 2009 for $55 million.

Shares of Philex Mining shed 18 centavos or 2.1% to close at P8.40 apiece on Wednesday.

Asia Link B.V. - a subsidiary of First Pacific Co. Ltd. - and the Philippine Social Security System (SSS), which are existing shareholders of Philex Mining, will have a say in the terms of the offer.

The notes carry a coupon rate of 1.5%, payable semi-annually every 18th of June and December.

With an eight-year maturity period, the CN has one-time redemption option that can be exercised by the issuer on the first anniversary of the issuance.

“A premium, payable at a rate of 3% per annum, retroactive from issue date and compounded semi-annually, will apply if the Issuer exercises the redemption option,” the statement read.

Under the deal, every P18,000 worth of the CN is convertible into a common share of SMECI starting Dec. 19, 2015.

Upon full conversion, a total of 400,000 new shares -- accounting for 40% of SMECI’s expanded capital - will be issued.

Philex Mining is partly owned by Hong Kong-based First Pacific, a major shareholder of Philippine Long Distance Telephone Co. (PLDT). Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld. -- Claire-Ann Marie C. Feliciano