Corporate News

Production at Silangan gold, copper mine to start by 2018

Posted on June 25, 2015

PHILEX Mining Corp. expects to pour the first bar of gold from its Silangan mine in Mindanao by 2018 at the earliest, the company’s president said yesterday.

The listed company is investing $1.2 billion to get the new gold and copper mine into commercial operations. So far, it has spent more than P13 billion as of end-2014 for the initial exploration and development works on the site situated in Surigao del Norte.

“We are looking at 2018 or early 2019 for the initial production at the Silangan mine,” Philex Mining President Eulalio B. Austin, Jr. said during the company’s annual shareholder meeting in Quezon City.

Philex Mining shares were unchanged at P6.16 each on Wednesday.

The definitive feasibility study (DFS) for the project is slated for completion in the fourth quarter of 2015, according to Philex Mining Chairman Manuel V. Pangilinan.

“The completion of the DFS will be the basis for the funding program of the mine,” said Mr. Pangilinan.

Philex Mining is looking to fund 70% of the Silangan project through borrowing, with the remaining 30% to be financed by equity, he said earlier.

Mr. Austin’s report showed that the feasibility study has an estimated cost of $80 million and is being undertaken by a team of local and international experts.

Construction of the mine will run from 2016 to 2018, Mr. Austin said.

The Silangan project involves the development of Boyongan and Bayugo mineral deposits comprised of gold, copper, and silver. It has estimated reserves of five billion pounds of copper and nine million ounces of gold in its 25-year mine life.

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.

In another development, the oil and gas unit of Philex Mining -- Philex Petroleum Corp. -- is poised to increase its stake in UK-based Forum Energy Plc through buying out the minority.

In an announcement disclosed by Philex Petroleum yesterday, Forum Energy said “valid acceptances of the offer have been received from qualifying shareholders.”

This covers a total of 2,383,777 ordinary shares equivalent to 6.71% of the entire issued share capital of Forum Energy.

The company said those shares will be purchased by Philex Petroleum at 20 pence each by July 6.

Philex Petroleum formalized its offer to buy out Forum Energy’s minority shareholders last May, ahead of the planned delisting of the shares from the AIM.

The AIM -- one of the four capital markets of the London Stock Exchange -- caters to smaller growing companies that need access to capital.

The offer made by Philex Petroleum -- which currently holds 60.49% interest in Forum -- enabled minority shareholders to sell their ordinary shares prior to the cancellation.

The delisting plan came after a force majeure declared by the Philippines’ Department of Energy on one of Forum’s petroleum contracts hurt the London-listed stock’s price.

Forum has a 70% stake in Service Contract 72, which is located in the Reed Bank that is part of the contested waters of the South China Sea.

First Pacific Co. Ltd., which owns more than a quarter of Philippine Long Distance Telephone Co. (PLDT), is the single biggest shareholder of Philex Petroleum’s parent, Philex Mining.

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