Indophil project paralysed by open-cut ban...

Indophil project paralysed by open-cut ban threat

http://www.theaustralian.com.au/business/indophil-project-paralysed-by-open-cut-ban-threat/story-e6frg8zx-1225880113566

INDOPHIL Resources may be forced to extend a trading halt today if it is unable to clarify a reported threat to ban open pit mining on the Philippines island of Mindanao, where it owns 37.5 per cent of the $US5 billion ($5.8bn) Tampakan copper and gold project run by Xstrata.

The threat by the local government came as some Indophil shareholders withdrew support for Zijin Mining's $545 million takeover offer as Chinese authorities delayed approval.

Melbourne-based Indophil went into a trading halt on Friday following reports that the local government in the South Cotabato province of Mindanao was planning to ban open pit mining.

Yesterday, an Indophil spokesman said the proposed ban was disappointing, but it was still unclear what the consequences were.

"Indophil and the project managers continue to seek clarity and to work with local authorities," he said.

It is believed such a ban on open pit mining contradicts the Philippines' national mining laws.

Last week, Xstrata copper chief Charlie Sartain told Reuters he believed he had support of the national government.

"It is a serious announcement and we will take it very seriously, but at a national level within the Philippines we understand it is supportive," he said.

But with the government in transition after a May 10 election that saw Benigno Aquino appointed President, getting clarification has not been easy.

Reuters reported that South Cotabato's governor Daisy Avance-Fuentes, who will step down at the end of the month, said she would approve the ban, which had been voted for unanimously by the provincial council.

She said the council's decision would become law within 30 days from June 9 if there was no move from her successor. She also said the legislative council had the power to override her veto.

Zijin, China's biggest gold miner, said the proposed ban added uncertainties to the Tampakan project.

"Since we are waiting for approval for the bid, we can't say what we will do," Zhao Jugang, head of the board secretary office at Zijin, told Bloomberg.

Indophil said acceptances of the Zijin bid had dropped from 39.18 per cent to 34.93 per cent.

Indophil shares last traded at $1.095, down 14 per cent from Zijin's offer of $1.28 a share.