Philippines Mining Journal - 2006 Opportunities in the Resurging

Philippines

● ● ● ● ●

Mining industry being revitalised Government fully supportive Foreign investors welcome Rich geological tapestry Vast exploration potential

PHILIPPINES

Mining: a wealth of history and experience

35

Value of mineral production and GDP, 2004

30

T

HE Philippines is well endowed with mineral resources, and its long history and experience in mining has demonstrated its very rich potential for copper, gold, nickel, chromite and other metallic minerals. It also has abundant industrial minerals, such as marble, limestone, clays, feldspar, rock aggregates and dolomite. Annual mineral sales are currently worth almost US$1 billion, similar to Malaysia and Papua New Guinea, but lagging behind Indonesia (US$3.6 billion), Chile (US$13 billion) and Western Australia (US$26 billion). To make greater use of its mineral resources, the Philippines needs far more investment in the sector but local funding is limited and even at the exploration stage funds have come substantially from foreign investors through foreign direct investments. The Philippines has to compete with other mineral-producing countries to attract funding to develop its mineral resources and during the period 1995-99, the majority of the exploration funds went to Indonesia, Chile and Peru. The Philippines received foreign direct investments similar to the amounts received by PNG and Tanzania. Over the past decade, and despite stiff competition from other countries for the exploration dollar, the Philippines has progressed significantly, and exploration activity has resulted in the discovery of a new generation of potentially world-class deposits, such as Tampakan (copper), Far Southeast (copper-gold), Boyangan (copper) and many others. They can be differentiated from previous discoveries that were of low-grade and shallow-seated. They are relatively higher in value and have the potential better to absorb the social and environmental costs of mining. The Philippines covers some 30 Mha but only about 1.5% are presently covered by mining permits, and some 30%) of the remaining area is regarded by the Mines and Geosciences Bureau to be geologically prospective for metallic minerals. With continuing exploration and geological mapping, this potential is expected to increase further. There are an estimated 9 Mha where there are potential additional sites for metallic minerals

Mineral production value, 1979-2003

% GDP

25

20

15

10

5

0 Philippines

PNG

Peru

Indonesia

Chile

South Africa Australia

The Philippine offshore area, including the Exclusive Economic Zone (EEZ), covers about 2.2 million km2. By law, it is classified as a mineral reservation area by virtue of the 1987 Constitution. It is known to be potentially rich in placer minerals such as gold, chromite, magnetite and silica; polymetallic sulphide deposits containing gold, copper, cobalt, and other minerals; manganese nodules and encrustrations with associated copper, gold, zinc, cobalt; and construction aggregates such as sand and gravel.

MINERALS AND THE ECONOMY Historically, the local mining industry’s highest contribution to the gross national product (GNP) was 2.2%, in 1985. This percentage decreased steadily until 2000. Since then there has been a modest recovery and today, mining contributes 1.5% of the GNP. Growth in the value added contribution of mining started in 2002 and 2003. Excluding the value added contribution of crude oil and natural gas, the increases were 21% and 13% respectively. Since then, the growth trend has continued.

OPERATING MINES AND QUARRIES NONMETALLICS 39%

METALLICS 61%

Metallic mineral production value, 1979-2003 NICKEL 4%

COPPER 32%

Non-metallic production value 1979-2003

OTHER 3%

OTHER 17%

LIMESTONE 5%

GOLD 60%

COAL 11%

SALT 27%

In December 2004, the number of operating mines and quarries totalled 2,311. Operations included: two large-scale gold mines, Victoria and Teresa (Lepanto Consolidated Mining Corp); one large-scale copper mine, Padcal (Philex Mining Corp); four medium-scale nickel mines, Palawan (Rio Tuba Mining Corp), Cagdianao (Cagdianao Mining Corp), South Dinagat (Hinatuan Mining Corp) and Taganito (Taganito Mining Corp); four medium-scale chromite mines, Masinloc (Benguet Corp), Omasdang (Crau Minerals), Homonhon (Heritage Resources Mining Corp) and Dinagat (Krominco.); and four medium-scale gold mines, Canatuan (TVI Resources Philippines, Inc), Acupan (SSM Operations and Benguet Corp), Diwalwal (NRMDC, a direct state development project) and Banahaw ( Philsaga Mining Corp). The number of existing metal mines is small compared with the 58 mines that operated in the 1980s, when the industry accounted for over 20% of total Philippine exports. The progressive drop in the number of metallic mineral producers was caused principally by a combination of economic, technical and financial reasons. Under the government’s revitalisation programme, the number of mines should increase but the emphasis is on developing a ‘lean and mean’ industry, with a few large mines.

MINING TENEMENTS ISSUED

SAND & GRAVEL 40%

As of December 31, 2005, the total number of mining rights issued by the national government was 762. The total area covered by mining rights is only 1.9% of the total land area of the Philippines.

SILVER 1%

Contents Mining: a wealth of history and experience New Mines Minister Revitalising the minerals industry Major types of mining rights Landmark legal ruling National Policy Agenda Mineral map Philippine geology and mineralisation Country profile

3 4 5 5 5 7 8 9 9

Crew Minerals and Apex Mining Benguet Corp Climax Mining Coral Bay Nickel Corp Indophil Resources Lafayette Mining Mindoro Resources SyCip Salazar Key contacts

10 12 13 14 15 16 17 17 18

Mining Journal special publication, London, March 2006 3

PHILIPPINES Number of non-metal mines other than sand and gravel, 1990-2002

Number of metals mines, 1970-2002

MINERAL PRODUCTION During the past 25 years, metallic minerals accounted for 61% of the country’s mineral production. Gold contributed 36%, followed1 by copper, with 21%.

55

800

45

600

35

400

25

200

15

MINERAL EXPORTS In the 1970s, the mineral industry’s contribution to exports averaged about 20% but declined to about 10% in the late 1980s, and to about 2% in the 1990s. In 2003, the industry contributed just 1.78% to total Philippine exports.

5

0 1990

1993

1996

1970

1999

1977

1984

GNP and mining value-added growth rates, 1993-2004

GNP growth rate Mining growth rate

30.0

EQUITY INVESTMENT IN MINING

10.0

MINING REVENUE

0.0 (10.0) 1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Production of gold and silver, 1970-2004 70 60

Production (kg)

EMPLOYMENT

Mining investment follows the cyclical fluctuations in metal prices but the highest infusion of equity capital was during 1996-99, just after the introduction of the 1995 Mining Act.

20.0

GOLD

50

SILVER

40

The minerals industry is a contributor to the financial coffers of government through taxes, fees and royalties from mining and minerals-related activities in the country. Excise tax alone, currently 2% of the gross value of mineral products, is a major tax paid by mineral producers to the government. Summary of economic contributions of the minerals industry in 2004 Production value P43 billion Value-added contribution P19 billion (1.6 % of GDP) Mineral exports US$817 million (2.1 % of total exports) Paid-up equity investments P141 million Employment 118,000 Wages and benefits P4-5 billion Estimated taxes and fees P3.7 billion Multiplier effect For each mining job, five allied jobs are created upstream and downstream

30 20

New Mines Minister fronts Philippine investment drive

10 0 1970

1980

1990

2000

Production of copper, chromite and nickel, 1970-2004 1,400 COPPER

1,200

CHROMITE NICKEL

1,000 Production in dmt

1998

The mining industry is never considered as a big employer owing to its equipment-intensive nature. In 2004, the large-scale mining and quarrying sector accounted for 118,000 employees, but it is safe to assume that for every job in the industry, about five indirect jobs are generated in the upstream and downstream sectors.

50.0 40.0

1991

800

600

400

200

0 1970

1980

1990

4 Mining Journal special publication, London, March 2006

2000

ANGELO Reyes has been appointed the new Minister for Natural Resources and the Environment of the Philippines, replacing Michael Defensor who has been appointed Chief of Staff to President Gloria Macapagal-Arroyo. Mr Reyes enjoyed a distinguished career with the Philippine military before filling a number of governmental positions, most recently Secretary of the Department of Interior and Local Government. Mr Reyes says the government has targeted 24 major minerals projects for development over the next five years, at a total investment of over US$8 billion. “My mandate is to ensure the full potential of our country’s mining industry is realised as soon as possible,” said Mr Reyes. “We have the mineral resources, we have a strategic geographical location for those looking to sell into Asian markets, and we have a prime national resource in the Filipino people.”

PHILIPPINES

Prospective ground for epithermal gold on Mindanao Island

Revitalising the minerals industry THE 1995 Mining Act aims to: develop the country’s mining industry and make use of the potential US$840 billion in mineral wealth; jump-start the economy; enhance nationalistic aspirations; protect indigenous communities; and prevent irreversible ecological damage. The act regulates mineral resources development, and a primary objective is to revitalise mining by providing fiscal reforms and incentives. It also aims to maintain a viable inventory of mineral reserves to sustain the industry, and encourage the infusion of fresh capital through direct investments in mineral exploration and/or development activities. The original implementing rules and regulations of the 1995 act were revised in 1996. The act takes into consideration the following: ■ Local government empowerment ■ Respect and concern for indigenous cultural communities ■ Equitable sharing of benefits and natural wealth ■ Demands of the present while providing the foundation for future generations ■ Worldwide trend towards globalisation ■ Protection for, and wise management of, the environment The law contains social and environmental safety nets far stronger than previous mining laws, rules and regulations. It has: ■ Built-in protection for the indigenous peoples through the prior informed consent requirement – possibly the only mining law in the world that contains such a requirement. ■ Competitive fiscal regime. The key concern of investors is not the fiscal regime per se, but the overall profitability of the project after considering the taxes. The fiscal regime of the Philippines is considered competitive not only in Asia but throughout the world. ■ Equitable sharing of the benefits of mining

Major types of mining rights THE Mining Act declares mineral resources as being owned by the state, and their exploration, development, utilisation, processing and conservation are under its full control and supervision. The act empowers the government to directly undertake these activities, grant mining permits, or enter into mineral agreement with contractors. Consistent with the 1987 Constitution, it provides for a new mode of mining rights acquisition (departing from the old leasehold system) in the form of Exploration Permit, Mineral Agreement and Financial or Technical Assistance Agreement (FTAA). Exploration Permit (EP): grants the right to explore in specified areas and has a term of two years, renewable for a maximum of eight years for metallic minerals and six years for non-metallic minerals.

Landmark ruling IN 1997, a group of NGOs petitioned the Supreme Court to invalidate the 1995 Mining Act and the Financial or Technical Assistance Agreement (FTAA) of Western Mining Corp, on the grounds that the act’s provisions, allowing the direct participation of foreign-owned corporations in the Philippine mining industry, are unconstitutional. In a resolution promulgated on December 1, 2004, the Supreme Court “decided for the greater good of the greatest number,” and upheld the constitutionality of the act, stressing that the “the benefits to be derived from mining activities must ultimately serve the great majority of our fellow citizens”. The Supreme Court affirmed the prerogative of the President and Congress to enter into FTAAs with foreign corporations for the exploration, development and utilisation

Mineral Agreement: may be in the form of Mineral Production Sharing Agreement (MPSA), CoProduction or Joint-Venture Agreement and grants the contractor the right to conduct mining operations within a contract area and share in the gross output. These agreements have terms of 25 years, renewable for another 25 years and are open to Filipinos or to corporations with 60% Filipino equity. Financial or Technical Assistant Agreement (FTAA): a contract involving financial or technical assistance for large-scale exploration, development and utilisation of mineral resources. This type of contract is open to Filipinos and foreign corporations with up to 100 % foreign equity and has a term of 25 years, renewable for another 25 years. One of the major features of the Mining Act is the annual mandatory relinquishment of areas granted to the contractor. After the exploration stage, the Philippine Government allows a final mining area of 5,000 ha for metals and 1,000 ha for non-metals

of the country’s vast natural resources. Accordingly, the Highest Tribunal expressed that the President and the Congress should be granted a maximum discretion in “securing the expertise and assistance of foreign groups to eradicate poverty and to create viable employment opportunities in the country”. The landmark ruling reflects a strong consensus among the executive, legislative and judicial branches to promote responsible exploration, development, and utilisation of mineral resources to enhance economic growth, fight poverty and achieve lasting prosperity for the country. “The High Court has spoken with wisdom and joins the other great powers of government to do what is best for the nation and people at this time of challenge and opportunity,” President Gloria Macapagal Arroyo said. President Arroyo has shifted government policy from tolerance to active promotion of mining. Mining Journal special publication, London, March 2006 5

PHILIPPINES

The Dinkidi copper-gold porphyry deposit in northern Luzon contains a resource of 121 Mt at 0.39% Cu and 0.97% g/t Au

among the major stakeholders – the national and local government, the communities and the mining company. The benefits of mining are approximately shared 50:50 between the government and the contractor. The government share is further divided into 50% for the national government, 10% for the provincial government and 20% each for the municipality and host communities. ■ Environmental and social provisions are comparable, if not better than similar provisions in mining laws of established countries. The revised implementing rules and regulations of the Mining Act provides strict adherence to the principles of Sustainable Development which should encompass the economic, social and environmental aspects of human development.

ROLE OF LOCAL GOVERNMENTS Local governments are both beneficiaries and active participants in mineral resources management in accordance with the Constitution and local autonomy and empowerment. They have a share (40%) from the gross collection of the national government from mining taxes, royalties and other fees. In the case of occupation fees, the province gets 30% and host municipalities get 70%.

�� Toledo Mining Corporation, listed on London’s AIM Market, has entered into sev eral substantial joint v enture agreements ov er identif ied mineral deposits in the Republic of the Philippines.

�� Long Pt : 120M @1.25% Ni Co [56.1% ownership]

Together with Atlas Consolidated Mining and Dev elopment Corporation, Toledo has embarked on two nickel laterite projects, both located on the island prov ince of Palawan on the western side of the Philippine archipelago. Another joint v enture agreement has also been entered with Brooks Nickel Ventures Inc. and Celestial Nickel Mining Exploration Corporation f or a third nickel laterite project, also located in Palawan. These three projects are the high-grade Berong Project with already delineated direct shipping Quezon Municipality ; the adv anced Celestial Project in Brooke's Point Municipality , and the Nickel Project in Puerto Princesa City .

Nickel ore in Nickel Ulugan

Celestial : 77M @1.25% Ni 0.10% Co [52% ownership] Berong : 140M @1.41% Ni 0.07% Co [56.1% ownership] Ground Floor, 11 Albemarle Street, London W1S 4HH T: +44 (0) 20 7514 1480

F: +44 (0) 20 7514 1486


E: [email protected] I: www.toledomining.com

PHILIPPINES

In accordance with the People’s Small Scale Mining Law, local governments are responsible for the issuance of permits for small scale mining and quarrying operations, and actively participate in the process by which the communities reach an informed decision on the social acceptability of a project. They also participate in the monitoring of mining activities, and can also mediate between the indigenous cultural communities and the mining contractor if the need arises. Local governments are also recipients of social infrastructure and community development projects for the utilisation and benefit of the host and neighbouring communities.

Photo: Bloomberg News

Old and new: the Manila skyline

ANCESTRAL LANDS AND INDIGENOUS CULTURAL COMMUNITIES The Mining Act fully recognises the rights of indigenous peoples and respects their ancestral lands. No mineral agreements, Financial or Technical Assistance Agreements and/or any mining permits are granted in ancestral lands or domains except those with prior informed consent. When written consent is granted by the Indigenous Cultural Communities (ICC), through the National Commission on Indigenous Peoples (NCIP), a royalty payment shall be negotiated which shall not be less than 1% of the gross output from the mining operations.

��

��

�

�

��

��

��

GOVERNMENT SHARE Minerals development generates wealth for local and national governments. Taxes and fees are the most common imposts collected from mining and mineral processing activities and are paid: directly to the national government (eg, corporate tax, excise tax, royalties etc; directly to local government (eg, local business tax, community tax etc; or directly to other Filipinos (eg, as royalties to land-owners, claim-owners or indigenous peoples. There also indirect payments in the form of fuel tax, tariffs on imported fuels and withholding taxes. The rate of taxes and fees are guided by the National Internal Revenue Code, the Customs and Tariff Code of the Philippines, the Mining Act of 1995 and the specific tax code of local government units. Administrative fees and charges are governed by the government agency concerned.

National Policy Agenda THE National Policy Agenda on Revitalising Mining in the Philippines was signed by the President in January 2004. The objective is to promote responsible mineral resources exploration, development and utilisation. The guiding principles are summarised as follows: ■ Recognise the critical role of investments in the minerals industry ■ Institute clear, stable and predictable investment and regulatory policies ■ Pursue value-adding of minerals and mineral products ■ Recognise and legalise the small-scale mining sector ■ Adopt efficient technologies in extraction and utilisation of minerals ■ Integrate environmental protection, mitigation and progressive rehabilitation in mining operations ■ Safeguard the ecological integrity of areas affected by mining including biodiversity and small-island ecosystems ■ Pursue mining within the framework of multiple land use and sustainable utilisation of minerals ■ Remediate and rehabilitate abandoned mines ■ Ensure equitable sharing of economic and social benefits from mining ■ Enhance public awareness and respect for the rights of communities ■ Institutionalise a continuous and meaningful consultation process with industry and all other stakeholders

MINERAL ACTION PLAN (MAP) In order to provide guidelines for all concerned agencies on how the guiding principles will be implemented, the Department of Environment and Natural Resources (DENR), the Mines and Geosciences Bureau (MGB) and other government agencies have formulated a Mineral Action Plan (MAP) containing the important issues to be addressed, the strategies adopted, the activities to be undertaken, the implementing agency and the timetable of its implementation. A copy of the detailed MAP is published on the MGB website at www.mgb.gov.ph Mining Journal special publication, London, March 2006 7

PHILIPPINES

Source: Mines and Geosciences Bureau

250 km


PHILIPPINES

Philippine geology and mineralisation THE Philippines may be viewed as a collage of metamorphic terranes, magmatic arcs, ophiolitic complexes, sedimentary basins and a continental block of Eurasian affinity, subjected to tectonic processes such as subduction, collision and major strike-slip faulting. The subduction zones are represented on the east by the west-dipping Philippine Trench, traversing the eastern seaboard of the Philippines from Mindanao, north to a point in Luzon and the East Luzon Trough. East-dipping subduction zones include the Manila Trench, Negros Trench and Cotabato Trench. The southern termination of the Manila Trench is characterised by the transformation of the subduction of the South China Sea Plate into an arc-continent collisional deformation within Mindoro Island.

THE CONTINENTAL BLOCK The continental block is represented by northern Palawan, southern Mindoro, Romblon Island Group and the Buruanga Peninsula in Panay Island, known collectively as the North Palawan Block. Rock suites in this block include schists that are characteristically rich in quartz and chert formations that have been dated Late Permian to Jurassic.

THE PHILIPPINE MOBILE BELT The rest of the archipelago is considered as the Philippine Mobile Belt. Approximately co-axial with the mobile belt is the Philippine Fault, a major strike-slip fault that apparently developed partially in response to the kinematic forces from the subduction from the east and west of the mobile belt.

Many areas of this mobile belt are underlain by ophiolitic complexes. Usually occurring together with pre-Cenozoic schists and phyllites, the ophiolitic rocks represent basement on which magmatic arcs have developed. The ages of the ophiolitic complexes range from Jurassic to early Palaeogene. One of the best studied complete ophiolite sequences is the Zambales Ophiolite where tectonised peridotites progress to layered and isotropic gabbro, a sheeted dike complex, pillow basalts and finally pelagic sedimentary rocks. Other ophiolitic complexes include those in Isabela, Polillo Island, eastern Rizal, Camarines Norte, Caramoan Peninsula, Mindoro, southern Palawan, Panay Island, Bohol Island, Leyte Island, Samar Island, Dinagat Island Group, north-central Zamboanga, Mindanao Central Cordillera and Pujada Peninsula. Ultramafic rocks of these ophiolites host significant deposits of chromite and nickel. Laterites overlying these rocks also contain economic deposits of secondary nickel minerals. On the other hand, massive sulphide and manganese deposits are associated with the volcanic and sedimentary carapace of the ophiolite. Ancient magmatic arcs in the mobile belt are characterised by thick volcanic flows intercalated with pyroclastic and sedimentary rocks and intrusions of diorite, quartz diorite and andesitic to dacitic rocks. Some intrusions, however, have a more alkalic character, such as the syenites in Isabela and monzonites in Quirino and Nueva Vizcaya. The ages of the diorite intrusions vary, from late Lower Cretaceous (Albian) in Cebu to late Miocene-Plio-

cene (Black Mountain Quartz Diorite in Baguio District). Younger volcanics, occurring as flows, intrusions and volcanic edifices disposed in linear belts, are associated with active subduction processes. These are best exemplified by the Bataan volcanic belt and Bicol volcanic chain. Sedimentary basins located between arcs include the Ilocos-Central Valley Basin, Cagayan Valley Basin, southeast Luzon Basin, Visayan Sea Basin, AgusanDavao Basin and Cotabato Basin. Gold and copper deposits in the Philippines tend to be clustered in certain areas such as Luzon’s Central Cordillera, Camarines Norte, Surigao and Davao, although large deposits may also be found elsewhere, as in Zambales (Dizon mine), Cebu (Atlas mine) and South Cotabato (Tampakan project). Many copper-gold deposits are associated with intrusions (mostly diorite and quartz diorite, but also monzonites and syenites, as in the Cordon gold deposit in Isabela and the Didipio copper-gold deposit in Nueva Vizcaya), as well as Pliocene – Pleistocene volcanism (Lepanto mine at Mankayan, Benguet, Dizon gold-copper mine at San Marcelino, Zambales). Iron deposits are associated with Neogene intrusions of diorite and quartz diorite, such as those in Lammin (Ilocos Norte), Santa Ines (Rizal), Larap (Camarines Norte), Kiamba (South Cotabato) and Sibuguey (Zamboanga del Norte). Overall, it can be said that the geological setting of the Philippines to a large extent favours the emplacement of ore deposits. The prospectivity of the country remains high, and deposits are continually being discovered, as new mines are being developed and as exploration reveals the potential of prospects in many parts of the country.

broadcast media. The Philippines is a democratic and republican state. Executive power is vested in the President; legislative power in the bicameral Congress; and judicial power in the Supreme Court and in other courts established by law. The country has a public road network of around 62,000 km. Although less than half of this network is all weather standard, the road network is sufficient to integrate the entire archipelago. The National Power Corp and several independent private power generating companies service the power needs of the entire archipelago. The country still relies mainly on imported crude oil

to meet its energy requirements although indigenous sources of energy such as hydro, geothermal, coal, and natural gas are being developd. There is a well developed network of public land transportation throughout the islands. Buses and jeepneys ply the principal roads of cities and towns. The jeepney, an ubiquitous means of transportation in the Philippines, is a distinctive Filipino invention modeled after the jeeps of Second World War. Railway transportation has limited coverage but the expansion of railroad services in Luzon, the most populous island of the archipelago, is under way. There are several national airports and three international airports, in Manila, Cebu and Davao Cities.

Country profile THE Philippines consists of over 7,100 islands, with a land area of over 300,000 km2. It is situated on the western rim of the Pacific Ocean, between Taiwan in the north and Indonesia in the south. There are three main island groups: Luzon, Visayas, and Mindanao. Manila, the capital city, is only a short plane ride away from Asia’s other business centres. The country has a tropical climate and average annual rainfall is about 305 cm. Temperature ranges from 24°C to 31°C and humidity from 70% to 85%. Over the past decade, the population of the Philippines has grown at an annual average rate of 2.3%. The 2003 population is estimated at 80.5 million. Because of the importance accorded to higher education, the Philippines has one of the highest tertiary education rates in the world. The country is rural, with over 60% of the people living in the countryside although there has been a migration into urban areas as the industrial base strengthens. The culture is diverse. Chinese, Islamic, and Hindu trade dates to as early as the 3rd century AD, Western culture was imported by the Spaniards when they colonised the Philippines for almost 400 years (1521-1898) and later by the Americans who ruled the country for half a century. Religious freedom is guaranteed by the constitution and Christianity is the predominant religion. A minority practise Islam and Buddhism. The national language is Filipino. English, the second language, is the medium of communication in business, government, education, and in the news and


PHILIPPINES

Crew Minerals AS

NICKEL RESOURCES

The Mindoro project is a typical high-tonnage, low-grade nickel-laterite deposit, MINDORO NICKEL PROJECT formed as a result of natural weathering The Mindoro nickel project is based on a large nickel processes in ultramafic host rocks. Over laterite resource on Mindoro Island. The deposit, which 1,300 drill holes (totalling 10,000 m) and was discovered and developed by Crew Minerals AS, is test pits have been completed in the included in the Philippine Government’s list of priorconcession area, which exceeds 90 km2 ity mineral projects that enjoy special privileges in the in extent, defining an inferred resource government’s efforts to renew and develop the mining of more than 180 Mt. This resource could industry and encourage foreign investments. host approximately 2 Mt of nickel. Crew has begun work on a definitive feasibility study Only the limonite and soft transitional facies were after a positive prefeasibility study by Kvaerner Metals included in the resources evaluations because the project in 1998, and a review of the most recent technological initially targeted high-pressure acid leaching (HPAL) innovations for processing nickel laterite. processing. All boulders and stones in the limonite were The most significant changes to the earlier plans included, thus the reported grade shows in situ values, are that saprolite resources can now be included in the less the upgrade potential. The average in situ resource leach processing and that the project is proposed to be grades are 0.94% Ni and 0.06% Co (using a 0.7% Ni cut-off established in a staged manner; experience gathered grade). However, significant resources averaging 1.2% during earlier stages can be implemented during the later Ni have been delineated within segments of the Lower stages. This flexibility significantly lowers the financial and Kisluyan area, the most intensely studied area. technical risks associated with the project. Hard nickeliferous saprolite has been identified in all The recently permitted and successfully commisareas from deeper drilling and ground penetrating radar sioned Coral Bay nickel processing facility in the southern profiling and, as new technology now also allows for the Philippines (see p14) has further reduced the technical use of the saprolite in the leach processing, a resource exand legal risks involved in the implementation of the pansion programme has been initiated. Preliminary results Mindoro project. show that a substantial resource, which has been largely excluded in previous THE STAGED PRODUCTION CONCEPT estimates, can potentially Approx Ni production Comments be processed through Stage 1 20,000 t/y Two-autoclave HPAL plant to treat limonite only atmospheric leach (ATML) Acid imported processing. A series of Mixed Ni-Co sulphide product 11 saprolite samples, selected from stored drill Stage 2 35,000 t/y Introduction of saprolite ATML process cores by an independent Acid plant (potentially sourced by own sulphide mine) party for control assay, Mixed Ni-Co sulphide product returned in situ grades of Stage 3 60,000 t/y Additional two HPAL autoclaves 1.3%-2.4% Ni. Mixed Ni-Co sulphide product Crew has recently Stage 4 60,000 t/y Metal circuit to produce LME-grade Ni and Co metal completed the collection By-product of ammonium-sulphate fertiliser of representative bulk-

APEX MINING CO INC

Apex gold project to serve as a role model IN DECEMBER 2005 Crew Gold Corp and Mapula Creek Mining Corp completed the acquisition of Apex Mining Company Inc – a Philippine mining company, with titles to a number of promising gold properties in the Compostela Valley Province of eastern Mindanao The Apex property hosts an assemblage of gold-vein deposits with more than 40 named veins. About 14 of these have been subject to some underground development and mining, however, none of the veins has been exploited more than 200 m below surface outcrops, and most mining has been based on non-mechanised methods. The company estimates that the property hosts a gold potential in excess of 2 Moz. In addition, a cluster of nine porphyry-copper deposits, all located largely in a westerly portion of the property, has been defined and drilled to about 200 m depth. The deposits are estimated to contain over 85 Mt averaging 0.4% Cu and 0.4 g/t Au.

GEOLOGICAL SETTING The Philippine Fault System (PFS) passes through the Apex property. Numerous porphyry-copper-gold deposits and epithermal gold vein systems are found associated with this fault system throughout the Philippine 10 Mining Journal special publication, London, March 2006

archipelago. The main gold-mineralised veins strike NW or WNW, as steeply-dipping tension gashes developed in a left-lateral shear stress regime spatially associated with the PFS. The largest veins appear to form a series of splay structures derived from left-lateral wrench movements along the fault structure. Traditionally, the vein deposits have been classified as ‘clean ore’ or ‘complex ore’. Clean ore is characterised by low sulphide content, occurring generally in clean-walled tensional structures. Complex ore has higher sulphide and, most notably, higher copper content, generally occurring in wider and deeper shear structures along the main Masara trend. Pyrite, chalcopyrite, sphalerite and galena are the predominant sulphides minerals. An independent assessment of the mineralisation was conducted in 1995 by ACA Howe International Ltd, which prepared a reserve and resource evaluation believed to be the only evaluation of the property conducted to internationally accepted industry standards. ACA Howe calculated proven and probable reserves at 1 Mt averaging 6.3 g/t Au, equivalent to 200,000 oz of gold, which Crew has adopted conservatively as representing measured and indicated resources. The ACA Howe report pointed out, however, that the vein structures are usually open-ended in two or more directions parallel to the planes of the veins, and, due to the braided and splayed nature of the vein system, must also be regarded as open to some extent perpendicular to the veins. Importantly, the report did not include all

samples for bench-scale test work at the SGS Lakefield Research test laboratory in Perth. The sampling is complemented by drilling to ensure that representative materials of both the limonite and the saprolite portions of the laterite profile are collected for the test work.

MINING AND PROCESSING The proposed mining method is open pit. After topsoil removal, ore will be mined from horizontal benches and loaded into trucks for haulage to the beneficiation plant. The operation does not require drilling and blasting and will only involve removal of the uppermost 5-15 m of the soil profile. Drilling results indicate that the resource appears to be uniform, allowing for cost-effective mining and less need for complex ore blending and processing control. The processing route selected for the production of nickel is based on HPAL of the limonite ore, and does not involve smelting. The solution from the autoclave stage, containing dissolved Ni and Co, is neutralised and treated to yield a mixed Ni-Co sulphide product that can be sold

The Apex rehabilitation plant

deposits , most notably the Saint Benedict vein. This was discovered subsequently and is considered one of the richest veins in the system.

MINING AND PROCESSING Preparations have begun for trackless mining, starting in the Don Fernando and Saint Benedict veins beneath the historic developments. Ore will initially be sourced from these two separate mines. Two additional mines are being planned, which will allow for further production increases. Ultimately, it is expected that four mines, each providing 500 t/d, will provide the basis for a planned 2,000 t/d capacity mill. The rate of build-up of production will be dependent on a number of factors, including the availability of mining equipment, the rate of underground development and the granting of necessary operational permits.

PHILIPPINES

to a commercial nickel smelter or treated further in a local metals refinery. Although the Mindoro project can be developed using imported sulphuric acid or imported sulphur into a local acid plant, Crew controls a local sulphide deposit on Negros Island. Sourcing sulphur from this site would provide not only additional local employment and earnings opportunities but also provide the nickel plant with a fixed cost for sulphuric acid. (Also, the acid plant would generate electricity.)

Acid

Laterite

Acid

HPAL

AL

The proposed process flow

ENVIRONMENT The environmental risk for the Mindoro project is low because of the inherent benign nature of the ore. Moreover, the mine area is unsuited for agriculture because of the high content of heavy metals (Ni, Co and Cr) in the soil, which are absorbed into grown products and makes them unsuited for food stock. Mining will remove this concern. On completion of mining, the benches will remain as terraces. These can be either smoothed out and returned to their original state, or left intact – all mined areas will be replanted immediately after operation. This option is practised at other mining sites in the Philippines, where rapid growth has demonstrated that reclaimed areas can support various forms of timber and fruit trees. The immature state of the existing vegetation at the Mindoro project provides insufficient production of humus required for a sustainable growth of new forest. The objective of the rehabilitation programme, therefore, will be to generate a more sustainable natural habitat than the one existing prior to mining.

Blending

MX sulphides

New Process Additions Post Pre-Feasibility

THE FUTURE The nickel project has become a unique development opportunity for Crew because of a new technology, which has added the potential of using certain naturally-occurring laterite soils as a source for metals like nickel and cobalt. The project has a very long time line and will exist for well over 50 years, if implemented.

Crew Minerals (Phils) Inc Unit 20B, 20th floor, Wynsum Corporate Plaza F Ortigas Jr Road, Ortigas Centre Pasig City Philippines

Apex owns a gold-processing plant near the mine site and this will be refurbished and modified for a 2,000 t/d operation, thereby substantially reducing the capital requirements of a new plant. Plans for the plant’s rehabilitation are being completed and the company aims for an initial production of 300-550 t/d. The necessary test work to optimise the flow sheet should be completed shortly, and the initial operation will be largely based on existing equipment, modified to meet the new flow-sheet requirements.

ENVIRONMENT Apex has conducted a comprehensive environmental review, including a partial base-line study in connection with its due diligence. Water and sediment samples were collected from a number of pre-determined sites within and in the immediate vicinity of the property to

Saprolite

Saprolite neutralisation

LME Metal

Ammonium sulphate

Experience from operations elsewhere, where the value-added processing is conducted on site, suggests that as much as 70% of the value generated will be retained locally, through corporate and individual taxes, accompanying business activities, new opportunities, spin-offs and generally increased living standards within the province.

Contact: Leo Cleto Gamolo (managing director) Tel: (632) 687-4161 / (632) 687-4275 Fax: (632) 687-4299 Mobile: 63918-9111037 Website: crewdev.com

determine the level of effluent Existing plant layout with designation of functions in the final layout concentrations and to identify effluent sources. The work has provided enough evidence to demonstrate that most of the contamination identified comes from small-scale workings and process facilities outside the Apex property. The authorities have been provided with the results of the environmental findings. As part of its rehabilitation programme, the company will provide measures to reduce or eliminate identified sources of unacceptable effluent concentrations in co-operation with national and local agencies. A number of health and safety issues at the current mine site have been identified and revival of a once promising mineral project that had detehave to be addressed. Housekeeping at the existing plant riorated gradually as a result of poor metal prices site needs to be improved along with much improved and lack of investment through the 1990s, combined safety standards and equipment upgrading. There have with the ambiguous implementation of the new mining been positive views on re-establishing mining from the lo- legislation. cal Barangay, both in and around the Apex property, and The company intends to use the Apex project as a role from local politicians and administrators. model for the revival of the country’s gold industry and seeks to develop a long-life operation with sustainable THE FUTURE employment through consolidation of areas surrounding The Apex mining project represents a much-needed the existing plant facility. Mining Journal special publication, London, March 2006 11

PHILIPPINES

Benguet Corporation BENGUET Corporation (Benquet) was established in 1903. The company pioneered mechanised gold mining in the Philippines and ushered in the beginning of the Philippine mining industry. The company opened its first gold mine in 1906 in Antamok. In 1927, it acquired and operated gold mines in nearby Balatoc and Acupan, all in Benguet Province, hence the corporate name. The company expanded into refractory chromite mining in 1934 and copper production in 1971. Until the late 1980s, Benguet Corp was recognised as the biggest gold-mining company in the Philippines and the 16th-largest in the world. Benguet is moving into the 21st century with confident optimism and unrelenting determination to be a leading total natural resources development conglomerate, serving both its host communities and the country. The current focus is on five base and precious metals projects

white quartz with subordinate sulphides, principally pyrite. Assay results have varied from 0.02 to 41.3 g/t Au. Eight of the structures average 4.17-15.37 g/t Au.

SANTA CRUZ NICKEL PROJECT

At Santa Cruz in Zambales Province, a nickel resource of 16.24 Mt averaging 1.56% Ni and 0.05% Co has been identified (based on a nickel cut-off grade of 1%). A preliminary estimate of the ore to waste stripping ratio for an open-pit mine is 1.67:1. The property is underlain by mafic and ultramafic rocks that are part of the Zambales Ultramafic Complex. The main bedrock is harzburgite, which is in gradational contact with dunitic lenses east of the property. The harzburgite is medium to coarse grained and moderately serpentinised. Stress and deformation features are not pronounced but microfracturing is moderate to intense. The dunite is massive, granular, and consists of olivine with disseminated chromite and magnetite. The ultramafics are overlain by gabbro, olivine gabbro, norite and pegmatite. Chromite and nickel sulphide are common in the dunite adjacent to AMPUCAO COPPER PORPHYRY PROJECT pyroxenitic lenses at the eastern contact Ampucao, to the south of the underground Acupan of the ultramafic complex. These lenses mine, is a porphyry-style copper-gold deposit strike north-south, dip steeply east, and related to an epithermal low-sulphidation carbonare 1-25 m thick. Chromite and nickel ate-base metals-gold (silver) system. zones are closely associated but separate The area is underlain by porphyritic andesite bodies, the chromite being older. Nickel flows and aphyric lavas of the Zig-Zag FormaKingking sulphide grades are 0.2-0.8% Ni. (Nickel tion. This volcanic series is intruded by several district geology and chromite have both been mined by igneous phases that have been emplaced over the Acoje Mining Co in an area to the east of past 8 millon years. These intrusions include the the property.) Lucbuban gabbro, the Virac granodiorite, the Ampucao Using Benguet’s optimised model (open pit/flotaThe ultramafics have been lateriitised. And about dacite porphyry, the Hartwell plug, the Itogon plug tion/leach/SX-EW for a 70,000 t/d mill throughput), a 30% of the prospect area is overlain by laterite. The latand the multi-phase Balatoc diatreme. All the intrusives mineable resource has been estimated of 353 Mt at erite occurs above the 250 m elevation on relatively flat, have high-potassium, calc-alkaline affinities, and are 0.38% Cu and 0.44 g/t Au. Over a 14-year mine life, King- smooth plateaux or sub-plateaux, and on gentle ridge grouped together as the Virac Complex. To date, drill king is expected to produce 1.16 Mt of copper metal slopes in areas of moderate relief. In the eastern and intersections at Ampucao have averaged 0.1-0.2% Cu and 3.59 Moz of gold. The project site is close to the southern portions of the prospect area the laterites are and 0.9-1.0 g/t Au. power grid and a deep-sea port. The topography allows thin and uneconomic, owing to the steep topography. for a good tailings disposal system and ample rainfall KINGKING COPPER-GOLD PROJECT guarantees a trouble-free supply of process water. PANTINGAN EPITHERMAL GOLD PROSPECT The gold-rich porphyry copper deposit at Kingking At Pantingan in Bataan, mineralisation is typical of a in Compostela Valley, eastern Mindanao, is spatially KINGKING EPITHERMAL GOLD PROJECT low-sulphidation epithermal vein system emplaced in a related to significant epithermal vein systems and minThe Kingking epithermal project relates to a low sulphicaldera-stratovolcano setting. The generally NW-strikeralised diorite intrusions in volcanics and metasedidation quartz-carbonate-base metal-gold system. ing gold-bearing structures are hosted by andesite, ments. In mid-1997, a previous owner, Kingking Mines Preliminary fieldwork by Benguet has shown that agglomerate and possibly andesite porphyry. Inc, reported a total resource of 1,040 Mt. at least eight of the 14 veins mapped have good The veins and structures are 0.7-20.0 m wide and potential, with consist of chalcedonic vein quartz or silica ± altered average grades clayey material containing significant sulphides (up Benguet Corporation Marcelo A Bolaño (senior vice of 4.17-15.37 g/t to 10 %), notably pyrite, marcasite, ±arsenopyrite, and Au. Initial resource ±chalcopyrite. The sulphides occur as fine dissemina3/F, Universal Re Building president– mining and services) estimates for the tions, blebs, and as minute bands. Vein breccias are also 106 Paseo de Roxas Tel: 632 7520715 same structures present in some of the structures. These characteristics indicate about typify the upper horizon of an epithermal system. 1226 Makati City Fax: 632 7520717 67,000 t averaging Geological mapping and sampling has validated Philippines E-mail: [email protected] 8.02g/t Au. five potentially gold-bearing veins hosted in andesite, Edgar C Tabanda (assistant The gold-bearagglomerate and andesite porphyry. These NW-trending veins are ing structures are 1.5-20 m wide and have potential Contacts: vice president – exploration) generally narrow, strike lengths of up to 1 km. Benjamin Philip G Romualdez Tel: 6374 4472610 ranging in width Anomalous values for gold (0.01 to 1.10 g/t) and from 0.1-1.2 m, silver (0.25 to 9.60 g/t) have been detected. The high (president and chief executive) Fax: 6374 4472626 with strike lengths silver to gold ratio is indicative of low sulphidation-style Tel: 632 8104368 E-mail: [email protected] varying from 200mineralisation. Fax: 632 7520717 1,200 m. The veins Thus, bonanza-style mineralisation that theoretically generally comprise develops just above the boiling zone and below the E-mail: [email protected] Website: www.benguetcorp.com manganiferous current surface could be preserved at depth. 12 Mining Journal special publication, London, March 2006

PHILIPPINES

Climax Mining Ltd DINKIDI – POISED FOR DEVELOPMENT Australian-listed Climax Mining Ltd is poised to start realising the value of its low-cost, long-life Dinkidi copper-gold deposit in the Philippines, with development scheduled to begin in the second half of2006. The Dinkidi deposit, held under the Didipio Financial or Technical Assistance Agreement (FTAA), is in northern Luzon. Additionally, Climax holds one of the largest gold/copper exploration portfolios in the Philippines, covering Luzon and the Surigao Peninsula area of Mindanao. The FTAA covers 21,465 ha and includes the Didipio Valley. The FTAA grants title, exploration and mining rights, with a fixed fiscal regime for a period of up to 50 years from the date of grant (1994).

PROJECT ECONOMICS

Dinkidi proposed open-pit, process facility and tailings dam

THE PROJECT The Dinkidi project is budgeted to cost US$80 million to construct and will be the first major foreign-owned mine to be developed in the Philippines for nearly 60 years. Climax has operated in the Philippines for over 12 years and has spent more than a decade exploring the project and gaining approval to mine. The company has developed an excellent in-country reputation with its very experienced Philippine management team led by chief executive Rob Thomson working closely with Philippine-based local chairman Joey Leviste, and Climax’s chairman Jim Askew. Climax was granted final government approval for the Dinkidi development in October 2005. The company has begun detailed engineering design, appointed a project manager, commenced concentrate off-take negotiations and is engaged in project financing discussions with major financiers. Construction is planned to begin in the second half of 2006, with production following one year later.

THE RESOURCE Dinkidi is a gold-copper porphyry deposit with a resource of 121 Mt at an average grade of 0.97 g/t Au and 0.39% Cu, with a contained gold resource of 3.8 Moz of gold equivalent and 470,000 t of copper, for a total resource of 5.8 Moz in gold equivalent terms.

MINE PLAN AND DEVELOPMENT The Dinkidi development comprises four years of open-pit mining and a minimum life of 11 years of underground sub-level caving operations, treating 2 Mt/y of ore. Detailed mine reserve and design reviews completed in October 2005 delineated reserves of 23.7 Mt averaging 1.8 g/t Au and 0.65% Cu. The reserve analysis assumes a gold price of US$400/oz and a copper price of US$1.00/lb. Using these metal prices, reserves equate to 2.08 Moz of recoverable gold equivalent. The mine design review highlighted scope for significant improvement in ore recovery in the underground mine and also demonstrated the viability of a 50% increase in the underground mining rate, which could significantly improve gold and copper output. The detailed mine engineering for Dinkidi indicates that, based on recovered mine reserves of 2.1 Moz of gold equivalent (gold plus by-product copper), the project is expected to yield an average of 200,000 oz/y of gold equivalent for the first 10 years, comprising 110,000 oz of gold and 13,000 t of copper in concentrate, at a cash cost (C1) of US$191/oz Au equivalent. An

DINKIDI RESOURCE

Resource category Mt Au eq (g/t) Au (g/t) Measured 76 1.45 0.88 Indicated 36 1.58 1.15 Inferred 9 1.43 1.06 Total 121 1.49 0.97 Contained gold 3,770,000 oz Contained copper 470,000 t Contained Au equivalent 5,790,000 oz

Cu (%) 0.42 0.33 0.29 0.39

DINKIDI GOLD AND COPPER RESERVES Mt

Au (g/t)

Cu (%)

Open pit Proved 8.1 1.0 0.66 Probable 6.2 0.8 0.62 Total open pit 14.3 0.9 0.64 Ore volume 5.6 Waste volume 9.3 Waste:ore ratio 1.68 Underground (sublevel cave) Proved 6.2 3.0 0.65 Probable 3.1 3.4 0.70 Total underground 9.3 3.2 0.67 Total open pit/underground Proved 14.3 1.9 0.66 Probable 9.4 1.7 0.65 Total ore * 23.7 1.8 0.65 *Assuming a gold price of US$400/oz and a copper price of US$1.00/lb reserves equate to 2.08 million oz of recoverable gold equivalent alternative design indicates a possible 10% increase in annual output, to 220,000 oz/y over the initial ten years of mine life at an average cash cost equivalent of under US$200/oz Au.

Climax Mining Ltd Suite 2, Level 14 BT Tower 1 Market Street Sydney NSW 2000 Australia Website: www.climaxmining.com.au Tel: 61 2 9262 7061 Fax: 61 2 9264 5620 E-mail: [email protected]

The internal rate of return, after tax and the government’s share, will be more than 33% (based on a gold price of US$425/oz and a copper price of US$1.15/lb), achieving payback in under five years. The Philippines Board of Investments (BOI) has registered Australasian Philippines Mining Inc (APMI) as a new export producer of gold and copper concentrates, on a pioneer status. This BOI approval complements the favourable investment benefits within the FTAA agreement and, provided that APMI exports at least 70% of its total production, it becomes entitled to a number of incentives including a six-year income tax holiday, starting in June 2007 or from the start of commercial production. On application, this can be extended for a further two years, subject to meeting certain conditions.

EXPLORATION POTENTIAL Climax is seeking to identify additional mining potential and its exploration team has been re-assigned to focus on FTAA exploration, in particular, on developing resources and reserves able to be utilised at Dinkidi. Initial indications of resources lying adjacent to the planned underground sub-level cave (SLC) developments are estimated to have a potential 7.7 Mt (undiluted) at 2.1 g/t Au and 0.5% Cu, equivalent to 750,000 oz of gold. Climax holds a number of very attractive prospects within the Didipio caldera, where there are a series of major structures that have returned excellent initial drill results. One of the best came from the True Blue prospect adjacent to Dinkidi, which, from a downhole depth of 21 m, returned 183 m at 0.54 g/t Au and 0.22% Cu, including 27 m at 1.2 g/t Au and 0.39% Cu. With all government and environmental approvals now in place, Climax will proceed with construction and operation of Dinkidi as its flagship project. Its development, together with a series of highly prospective exploration targets, should enable the company to unlock significant value for both its shareholders and the Philippines.

Philippine Office Australasian Philippines Mining Inc Climax-Arimco Mining Corp 3 Tolentino Street San Lorenzo Village 1223 Makati City, Philippines Tel: 632 892 6643 Fax: 632 892 8399


PHILIPPINES

Coral Bay Nickel Corp A TECHNOLOGICAL SUCCESS Coral Bay Nickel Corp (CBNC) is a joint venture between the major stockholder Sumitomo Metal Mining Co Ltd and Sojitz Corp, Mitsui and Co Ltd and Rio Tuba Nickel Mining Corp (RTNMC). CBNC operates a hydrometallurgical processing plant that adopts a modified and improved version of the high-pressure acid leach (HPAL) technology to recover nickel and cobalt from low-grade lateritic ores. The hydrometallurgical processing plant (HPP) complex is at Barangay Rio Tuba, municipality of Bataraza, in Palawan Province, within the mine site of RTNMC, which has been mining saprolitic nickel ores since 1977. CBNC was established to process accumulated low-grade lateritic stockpiles, previously considered as mine waste by RTNMC. The total stockpile accumulated over the past 25 years, amounts to about 20 Mt averaging 1.26% Ni and 0.09% Co. The applicability of HPAL technology was proven in several bench and pilot plant studies undertaken between 1996 and 2000, and a successful feasibility study justified the creation of the HPP project. CBNC was established in April 2002 to provide the financial requirements and implement the project. For a plant designed to treat 1 Mt/y yielding 10,000 t of nickel and 750 t of cobalt, the total investment for the project was US$180 million. About 10% of the capital investment was allocated to the construction and installation of environmental protection and pollution

Coral Bay Nickel Corp Principal office address: Bgy, Rio Tuba, Bataraza, Palawan, Philippines Tel: (632) 7502289 to 90 Fax: (632) 7502291 Manila office and mailing address: 24/F Pacific Star Bldg, corner Gil Puyat and Makati Avenues Makati City Philippines 1200 Contacts: Takanori Fujimura (president) Arturo T Manto (environmental management chief) Tel: 632 7501536 to 39 Fax: 632 7501530 14 Mining Journal special publication, London, March 2006

The HPP plant was commissioned in April 2005 control facilities. HPAL processing involves: selective dissolution of nickel and cobalt oxides by sulphuric acid inside an autoclave operated at high temperature and pressure; separation of the pregnant solution from the leached residue by countercurrent decantation; neutralisation of excess acid and precipitation of impurities with limestone slurry; and precipitation of the valuable metals using hydrogen sulphide gas to produce an intermediate product comprising mixed sulphides of nickel and cobalt. This product assays about 53-57% Ni and 4-5% Co. Construction of the CBNC plant started in July, 2002 following receipt of an Environmental Compliance Certificate (ECC), a statutory requisite. Construction was completed in August, 2004. All other government permits and related requirements were secured and the project was commissioned on April 13, 2005. President Gloria Macapagal Arroyo attended the formal inauguration and commercial operation was officially declared. CBNC is committed to the tenets of sustainable development – technological feasibility, social acceptability and environmental protection.

HEALTH AND SAFETY The company conducts its operation with due regard to the health and safety of its workers, its contractors and the community, and comprehensive employee safety and health programmes have been established. These include safety training, the provision of safety facilities and personal protective equipment, and regular emergency response drills and medical examinations. An environmental management system is in place and an environmental management office was created to carry out the environmental management plan. To ensure environmental preservation, various protection and mitigating measures were incorporated in the design of the plant. These include the proper construction of siltation dams, water reservoir and tailings dam following local and international standards, installation

of a waste-water treatment facility and air pollution control facilities. An abandonment plan has been established to ensure that during the ten years following the cessation of operations, the rehabilitation and reforestation of affected lands will be carried out. An environmental monitoring programme, which includes operation of real time detectors/monitors, monthly self-monitoring activity, and quarterly inspection and monitoring is carried out by the multi-partite monitoring team as mandated by law.

SOCIAL DEVELOPMENT A Social Development and Management Programme (SDMP) has been established, with the aim of raising the living standards in the host and neighbouring communities. Projects are being funded for educational assistance, improved transport, agricultural assistance, animal husbandry, medical/dental care, better communications, and seed money for legitimate livelihood programmes presented by co-operatives through the Rio Tuba Nickel Foundation Inc, which has been established to ensure the effective and timely implementation of the community projects.

CONCLUSION The design capacity of the HPP plant was deemed to be attainable in the early part of September 2005, only five months after the start of commercial operations, and a successful ramp-up of operations in the initial year has enabled the production of an average of 830 t/mth of nickel for November and December, 2005. The project has added value to material once considered as waste, and has extended the life of the operations at Rio Tuba by 20 years. For the local community, it means that one more generation will benefit from the fruits of a responsible and sustainable mineral operation. In economic terms, the project will generate revenue in terms of foreign exchange, taxes, job creation and improved trade and commerce.

PHILIPPINES

Indophil Resources NL

“To succeed in modern-day minerals development you must have strong public licence to operate from government and local communities, and we have worked hard to secure that support for Tampakan”

TAMPAKAN REVEALS ITS POTENTIAL It’s not unusual for a mining company to announce a 15% increase in a mineral resource, but when that increase amounts to more than 160 Mt averaging 0.9% Cu equivalent, this would be construed by many to be an impressive discovery in its own right. This is what Indophil Resources has achieved in the southern Philippines, with its Tampakan copper-gold project. The deposit already boasts a resource of 8.9 Mt of contained copper and 11.6 Moz of gold, using a 0.3% Cu cut-off grade. The total resource amounts to more than 1,340 Mt at 0.82% Cu equivalent using a copper cut-off grade of 0.3%, and there is further exploration potential that could increase the resource to more than 2,000 Mt. Indophil believes that Tampakan ranks as Southeast Asia’s largest undeveloped copper deposit and one of the world’s top 20 copper deposits – developed or undeveloped – ever discovered. The deposit was discovered in late 1992 and is held by Sagittarius Mines Inc, a Philippines-based affiliate of Indophil Resources NL, an Australian publicly-listed company with a respected history of persistence in the Philippines. Tampakan is the subject of a pre-feasibility study that will be delivered by the end of September 2006. If all things go according to plan, then Tampakan will proceed through a bankable feasibility study, then into development and production by 2010. Working with Sagittarius Mines, Indophil’s team is well regarded for its local knowledge, proven relationships, good reputation and achievements. The company has secure title to the Tampakan deposit, 45 km NNW of General Santos City on the island of Mindanao. Both Indophil and the project have strong support from the national and and local governments as well as local communities.

– Tony Robbins, managing director

Tony Robbins, Indophil’s managing director, says: “We know we have a world-class orebody – we’ve known that for several years – but we also recognise that to succeed in modern-day minerals development you must have strong public licence to operate from

government and local communities, and we have worked hard to secure that support for Tampakan.” Indophil has a formal association with the international mining group Xstrata, which holds an option to acquire a 62.5% beneficial interest in the Tampakan project and the surrounding area known as the Columbio FTAA, exercisable towards the final quarter of 2006. Indophil believes significant potential exists for discovery of additional mineralisation in the area of the Tampakan deposit. Further, the company holds exploration interests in other parts of the Philippines and has a programme in place to advance them. Indophil is also looking to develop new business opportunities in copper, gold and nickel in the Philippines and elsewhere in the south-east Asia region including Australia. With a track record of discovery and achievement, local knowledge and experienced people as well as first class local partners, Indophil is well positioned to play a strategic role in the growth of the minerals industry in the Philippines and beyond.

Indophil Resources NL Level 3, 99 Queen Street Melbourne, Victoria Australia 3000 Postal address: PO Box 600 Collins Street West Melbourne, Victoria Australia, 8007 Philippine address: Level 3, L&F Building,107 Aguirre Street Legaspi Village, Makati City Philippines, 1229 Contact: Gavan Collery Tel: 613 9670 5740 Fax: 613 9670 8538 Mobile: 614 1937 2210 E-mail: [email protected] Website: www.indophil.com Mining Journal special publication, London, March 2006 15

PHILIPPINES

Lafayette Mining Ltd RAPU RAPU BEGINS TO DELIVER The Rapu Rapu mining and minerals processing operations in the central Philippines serve as a reflection of the country’s modern day mineral prospectivity, its attraction for new investment and its challenges. Not only does Rapu Rapu highlight the archipelago’s mineral diversity – the mine produces copper, zinc, silver and gold – it also leads the way as the first foreign-backed new mine start since 1968. Situated south-east of Manila and off the coast of the main island of Luzon, the Rapu Rapu mine is gearing up to deliver full production and – when it does so – can be expected to produce 10,000 t of copper, 14,000 t of zinc, 50,000 oz of gold and 600,000 oz of silver annually. Built at a total cost of approximately US$50 million over the past two years, the operations have had their share of teething problems leading up to and during the commissioning stage, but they are poised to complete commissioning and first-stage multi-mineral production during the first quarter of 2006. Under the guidance of Australian-listed public company Lafayette Mining Ltd, Rapu Rapu poured its first gold and silver in July 2005 and then began preparations for the main game – full-scale and high-return base metals production. As might be expected in any nation where new mines are not an everyday occurrence, Rapu Rapu – with the strong support of government and local community – has faced an array of challenges in the approvals and commissioning phases. The mine continues to make progress. It is working with government and community to achieve the type of production levels that will deliver high levels of sustained local employment, a strong contribution to the local economy, solid operational cash flow, a rate of return of almost 40% and a mine development payback

Lafayette Mining Ltd Suite 1, Level 5, 189 Flinders Lane Melbourne Victoria 3000 Australia Contact: Andrew McIlwain (managing director) Tel: 610 3 9654 6044 Fax: 610 3 9654 6010 Website: www.lafayettemining.com 16 Mining Journal special publication, London, March 2006

The minerals processing plant and open pit at Rapu Rapu

Below right: Chief executive Andrew McIlwain

of just over two years within a mine life that is now measured at better than eight years, and is underpinned by genuine new mineral resource potential. “We have faced and overcome our immediate challenges and yes, being the newest kid on the block we recognise that we are the focus of considerable attention both from the pro and anti-mining lobbies,” admits Lafayette’s chief executive, Andrew McIlwain. “These challenges have ranged from the delivery of infrastructure to a remote island-based facility, to securing government approvals in a period when government was lukewarm on mining, to mistakes during commissioning that have now been rectified, but we have come through them all and delivered what we are confident will be safe and reliable production.” Mr McIlwain points to a recent sea-change in support from government as a crucial boost to progress in the minerals industry in the Philippines. “When the Supreme Court of the Philippines finally gave approval to majority foreign ownership of minerals developments in early 2005, the government was quick in delivering strong support – and that in turn led to progress as well as new investment,” he says. “From a Rapu Rapu perspective, we have weathered

the storm of commissioning. We can now look to working with government and community to deliver reliable full-scale production within a sustainable environmental and community-sharing framework.”

PHILIPPINES

Mindoro Resources Ltd MINDORO Resources Ltd has nine years of operating experience in the Philippines and has established excellent exploration and discovery exposure, with over 50,000 ha in three well-mineralised copper-gold belts. To date, 21 porphyry copper-gold prospects, five epithermal gold prospects, several of which are at the resource delineation stage, and a nickel laterite prospect have been located. The objectives for 2006 include drilling eight porphyry copper-gold prospects, an epithermal gold prospect and a nickel laterite prospect. Mindoro’s most advanced projects are the Lobo, Archangel, Agata and Tapian San Francisco projects. Other prospects will be advanced to the drilling stage to form a solid, high potential discovery base for testing in subsequent years. Mindoro recently confirmed its first porphyry copper-gold discovery at the Pica prospect on its Lobo project. Drilling intersected significant mineralisation, with 213 m of 0.18% Cu, 0.3 g/t Au and 1.19 g/t Ag. Drilling is continuing, with the objective of locating the highest-grade parts of the system. On the Archangel project, drilling of the Kay Tanda prospect is planned to begin in February 2006. Kay Tanda has epithermal gold mineralisation telescoped into the top of a porphyry copper-gold system. Past drilling intersected extensive low-grade, near-surface

SyCip Salazar to the fore in legal matters SYCIP Salazar Hernandez & Gatmaitan (SyCip Salazar) is the largest full-service law firm in the Philippines. It has its principal office in Makati City, the financial and business center of Metropolitan Manila, and branch offices in Cebu City, Davao City, and in the Subic Bay Freeport Zone. SyCip Salazar has expertise in every significant field of law, and the ‘International Financial Law Review’, an international publication that recognises on an annual basis the accomplishments of local and international law firms practising in Asia, has named SyCip Salazar as Philippine Law Firm of the Year for four consecutive years. The firm maintains close links with established and leading firms in major cities in Asia, Europe, Canada, the US, central and South America, Australia, and New Zealand. The firm represents some of the biggest and most active mining companies operating in the Philippines, and is counsel to Benguet Corp, Western Mining Corp, Climax-Arimco Mining Corp, Anglo American Exploration (Australia) Pty Ltd, Barrick Gold Corp, BHP Billiton and Thistle Mining. SyCip Salazar acted as counsel to the lenders who extended project financing to the Rapu Rapu polymetallic project, and acted as counsel to Benguet Corp when it negotiated with TVI Pacific Inc and Echo Bay Mines Ltd, when the latter acquired an option to develop the Kingking copper-gold project.

gold mineralisation. Recent metallurgical tests have been positive and the potential for an open-pit, heap-leach operation is being evaluated. Beneath the gold zone, drilling intersected porphyry-related phyllic alteration with copper mineralisation. In-fill drilling has the objective of defining a gold resource compliant with NI 43 -101, and will also evaluate the underlying porphyry copper-gold system. In addition, drilling is under way on the company’s Agata project in the Surigao gold district of northern Mindanao, where there have been recent major porphyry copper-gold discoveries. Mindoro has defined a cluster of at least four porphyry prospects at Agata. Drilling is in progress on the first of these, Agata North, to be followed by drilling at Agata South in the second quarter of 2006. Elsewhere on the Agata project, BHP Billiton is funding evaluation of a promising nickel laterite prospect. If evaluations prove positive, the parties will enter into negotiations for the sale and purchase of nickel ore. A cluster of at least four porphyry prospects has also been defined on the Tapian San Francisco project. Strong porphyry-related mineralisation has been located at the Cantikoy and Canaga prospects, where outcrops of porphyry-style mineralisation averaging 1.0% Cu over lengths of 15 m and 25 m occur 600 m apart. Mindoro believes these finds indicate proximity to the main part of a robust porphyry system. Drilling is planned for Tapian San Francisco in the first half of 2006. Mindoro shares are traded in Canada on the TSX Venture Exchange and in Europe on the Frankfurt Stock Exchange.

The law firm also advised Galactic Resources when it sold its interest in the Far-Southeast gold project to CRA Ltd, and assisted Philnico Mining and Industrial Corp in the acquisition of Nonoc nickel refinery. SyCip Salazar negotiated and drafted the first two Financial and Technical Assistance Agreements (FTAAs) granted by the Philippine Government, as counsel to Western Mining and Climax-Arimco for the Tampakan copper project and the Didipio copper project, respectively. The firm is also currently involved in the Philex/Anglo Surigao project and the QNI Carrascal-Cagdianao project. On December 1, 2004, SyCip Salazar, as counsel to intervenor Chamber of Mines of the Philippines, obtained a reversal of the Supreme Court’s adverse decision in La Bugal-B’laan Tribal Association Inc v Ramos, issued less than 12 months earlier in a bitterly contested dispute between the Philippine government and certain non-governmental organisations over the constitutionality of the Mining Act, and Western Mining’s FTAA executed pursuant thereto. SyCip Salazar successfully argued for the constitutionality of the Mining Act and Western Mining’s FTAA. The Philippine Supreme Court’s decision heralded the revival of mining in the Philippines.

Mindoro Resources Ltd Suite 103, 10471-178 Street Edmonton Alberta, Canada T5S1R5 Tel: 1780 413 8187; Fax: 1780 426 2716 Website: www.mindoro.com Contacts: Ms Penny Gould (executive vice president) Mr James Anthony Climie (chief executive Mindoro Resources Ltd; chief executive and president MRL Gold Phils Inc (mobile: 63920 950 6365) MRL Gold Phils Inc 26F Pearl of the Orient Tower 1318 Roxas Blvd, Ermita Manila 1000 Philippines Tel: 632 525 8869; Fax: 632 525 8643 Contact: Edsel M Abrasaldo (vice president) Mobile: 63920 970 4415

SyCip Salazar Hernandez & Gatmaitan SSHG Law Centre, 105 Paseo de Roxas 1226 Makati City Philippines Tel: (632) 8179811 to 20 and (632) 8172001 to 09 Fax: (632) 8173896, 8173567 & 8187562 Contacts: Mining and Natural Resources Partners: Marilyn A Victorio-Aquino, E-mail: [email protected] Hector M De Leon Jr Email: [email protected]


PHILIPPINES

KEY GOVERNMENT CONTACTS Office of Presidential Management Staff Secretary Angelo Reyes Assistant Secretary Jeremias Dolino Department of Environment and Natural Resources (DENR) North Avenue, Diliman, Quezon City Tel: 632 928 0691 Fax: 632 920 4352 Mines and Geosciences Bureau MGB Compound North Avenue, Diliman, Quezon City Secretary Peter B Favila Tel: 632 928 8642; 920 9120 Fax: 632 920 1635 Department of Trade and Industry (DTI) 4/F Industry and Investment Bldg 385 Sen Gil Puyat Avenue, Makati City Undersecretary Elmer C Hernandez Tel: 632 899 7450 Fax: 632 816 1166

PDAC Tuesday, March 7, 2006 Republic of the Philippines: Opportunities in the mining sector Room 201D Time: 9-4pm followed by a cocktail reception from 5-6pm. THE Republic of the Philippines and the Chamber of Mines of the Philippines are pleased to present this special session. It will showcase a range of opportunities in the Philippines, enhanced by the government’s declared policy of actively promoting and supporting the development of the mining industry, and how companies are taking advantage of these opportunities. The session will be opened by Benjamin Philip G Romualdez, president of the Chamber of Mines of the Philippines and of the ASEAN Federation of Mining

Board of Investments Industry and Investment Bldg 385 Sen Gil Puyat Avenue, Makati City Executive director Raul V Angeles Tel: 632 890 9332 Fax: 632 895 3512 Mining, Marine and Natural Resources Based Products Department Board of Investments Industry and Investment Bldg 385 Sen Gil Puyat Avenue, Makati City Tel: 632 895 3701 Fax: 632 895 3980 National Commission on Indigenous Peoples (NCIP) 2/F Dela Merced Bldg, corner West Quezon Avenue Quezon City Minerals Development Council Room 307 Malacanang Palace JP Laurel St, Manila Tel: 632 736 1076 E-mail – [email protected]

Associations. It will feature a presentation by the Republic of the Philippines on the latest government policies implementing its active support for the development of the Philippine mining industry, and presentations by companies successfully engaged in mineral exploration and mining. These will feature their new discoveries and the mining projects they are currently undertaking, including those in partnership with the government.

■ Mindoro Resources Ltd ■ Indophil Resources NL ■ Australasian Philippines Mining Inc ■ ■ ■ ■ ■

(formerly, Climax-Arimco Mining Corp) Benguet Corp TVI Pacific Inc Lafayette Mining Ltd Crew Minerals (Phils) Inc Atlas Consolidated Mining and Development Corp

ACKNOWLEDGEMENTS This supplement is sponsored by the Chamber of Mines of the Philippines. We acknowledge, in particular, the support of the following companies in the preparation of this supplement: Crew Minerals (Phils) Inc Benguet Corporation Climax Mining Ltd Coral Bay Nickel Corp Indophil Resources Lafayette Mining Ltd Mindoro Resources Ltd SyCip Salazar We are also indebted to the Mines and Geosciences Bureau for contributing statistical data.

Published by: Mining Communications Ltd Albert House 1 Singer Street London EC2A 4BQ Tel: +44 (0) 20 7216 6060 Fax: +44 (0) 20 7216 6050 E-mail: [email protected] www.mining-journal.com Supplement editor: Roger Ellis Design and production: Keith Baldock Cover picture taken by Roger Ellis Printed by Stephens and George, Merthyr Tydfil, UK © Mining Communications Ltd 2006

Registration is not required.

��

��

��

� ��

� �� 18 Mining Journal special publication, London, March 2006

��

Philippines Mining Journal - 2006 Opportunities in the Resurging

Recommend Documents