equity raising, page-35

The Philippines political situation is the biggest problem facing MML.

President Noynoy Aquino is strongly opposed to mining. The amount of the royalty increase is still unknown. Up to a 12% royalty has been propounded. The Philippines Congress is well aware that marginal mines could close with a higher royalty so a super-profits tax is being considered. MML is more exposed than most companies to a higher overall tax rate.

Environmental issues are being touted as reason to extract more money from mining. Philex, the biggest Philippines miner, is no stranger to toxic spills and recently had a major tailings dam failure. It refused to pay the fine claiming it to be an act of God. It is doubtful if MML would be allowed the same dispensation. Almost certainly MML's mining licence would be suspended untill money is paid.

Once enacted, the new law should be final, after which the SP will adjust to the new reality.