SYDNEY (Dow Jones)--The Philippines is expected to host its first new
foreign-owned mine in more than three decades when the Rapu Rapu project pours
first gold in the coming days.
For Australian operator Lafayette Mining Ltd. (LAF.AU), the US$43 million
copper, gold, zinc and silver mine on an island 420 kilometers southeast of
Manila holds the prospect of US$300 million in revenue over six years and a
chance to fund further opportunities.
For the administration of Philippines President Gloria Macapagal Arroyo, it
provides a tangible example to hold up to the global mining community with a
view to attracting much needed royalties and taxes into the ailing economy.
The Philippines' mineral reserves are viewed as world class but the country's
appeal as a mining destination has suffered from the legacy of cronyism
institutionalized during the two-decade long presidency of Ferdinand Marcos.
Subsequent governments have largely failed to re-establish the country as a
mining destination, but President Arroyo is taking up where her predecessor
Fidel Ramos left off by attempting to remove some of the barriers to mine
investment.
Last year's Supreme Court ruling to allow foreign firms to own up to 100% of
mining ventures is seen as an important step in reviving the industry after
investors were further discouraged by native title challenges to land
ownership.
And the Arroyo administration - which wants local and foreign firms to invest
US$6 billion into 23 priority projects - is banking on Rapu Rapu as proof new
mines can be developed in the country.
In fact, environment and natural resources secretary Michael Defensor has
gone on the record as saying: "If something goes wrong with Rapu Rapu, it would
affect the entire mining investment in the country."
Following a ceremonial gold pour slated for this week or early next, Rapu
Rapu plans to ramp up to 50,000 ounces of gold a year and, from the fourth
quarter, add 10,000 tons of copper concentrate, 14,000 tons of zinc and 600,000
ounces of silver over six years.
Lafayette Managing Director Andrew McIlwain said the "trail blazing" rhetoric
surrounding the relatively small-scale project is deserved given it is the
first foreign-funded new mine in the country since 1968.
"A lot of money has gone into exploration and lot of resources have been
identified but until now no one has been able to get their way clear to
accessing those minerals," McIlwain told Dow Jones Newswires in a recent
interview.
One of the ways Lafayette has been able to move the project forward has been
its close relationship with authorities.
"We walk into the secretary's office whenever we need to," he said.
"(However) we've never paid for any of our approvals or any sort of
facilitation along the way. We've done it on merits and that's why it's taken
twice as long as it would anywhere else," McIlwain said.
New Wave Of Prospective Projects
Behind Rapu Rapu is a wave of potential new foreign-owned projects, including
redevelopment of the Tampakan copper mine by joint venture partners Indophil
Resources N.L. (IRN.AU) and Xstrata PLC (XTA.LN)
Majors Placer Dome Inc. (PDG) and Anglo American PLC (AAUK) also have a
presence in the country, while BHP Billiton Ltd. (BHP) and partners are
developing a US$19.2 million nickel mining and processing project on Mindfanao
Island.
Canada's Ivanhoe Mines Ltd. (IVN), which held extensive ground in the
Philippines in the 1980s, is reportedly actively pursuing opportunities again.
While China's Baosteel group and Jinchuan Nonferrous Metals Corp. plan to
invest US$950 million to rehabilitate a nickel plant and China Metallurgical
Construction Corp. is in talks for an US$800 million nickel project.
"So people are starting to say it might be time the tide is turning in the
Philippines mining industry," said McIlwain.
He lists the Philippines' advantages as a mining destination as relatively
cheap transport and labor costs, albeit it with less work force efficiencies
than some other countries, as well as a well-established regulatory
environment.
"One of the advantages at the moment is that there are a fair complement of
skills in the country which you wouldn't find in Australia at this stage," he
said. "The boom you see elsewhere that has created a dearth of engineers and
geologists hasn't found its way over here yet."
Once Rapu Rapu is up and running, Lafayette will turn its attention to
developing other deposits on the island using the same infrastructure, thereby
at least doubling production for a modest capital expenditure.
At the same time, the company is running the ruler over several other
projects in the Philippines that could be advanced to production in the next
five years, leveraging its new found producer status and subsequent cash flow.
"We're looking at a couple of things at the moment. Whether we acquire land
or enter into a merger type of arrangement is what we're reviewing over the
next six months," he said.
-By James Attwood, Dow Jones Newswires; 612-8235-2957;
please do your own research
- Forums
- ASX - By Stock
- LAF
- dj interview
LAF
lafayette mining limited
dj interview
-
- There are more pages in this discussion • 3 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)