Manila clears first big foreign copper-gold mining project
Mon Aug 22, 2005 11:33 AM GMT13

By Dolly Aglay

MANILA (Reuters) - The Philippines gave the go-ahead on Monday for Australian firm Climax Mining Ltd. to start commercial production at a copper-gold project, the first large-scale mining venture fully funded by foreign investors.

The Didipio mine in the northern Philippines is one of 23 key projects identified by the government as requiring total funding of $6.5 billion to revive the country's once-mighty mining sector and feed a China-led surge in demand for raw materials.

"The development of the Didipio project is seen to attract more foreign investments in the local mining scene," Environment and Natural Resources Secretary Michael Defensor said in a statement.

He said the Didipio project was the first financial or technical assistance agreement (FTAA) agreed by the Philippine government with a foreign investor since June 1994.

Under an FTAA, the government allows a foreign mining company to explore and later develop up to 81,000 hectares onshore or 324,000 hectares offshore.

Australasian Philippines Mining Inc, the local unit of Climax, has a contract area of 23,895 hectares at Didipio.

In December, the Supreme Court upheld the legality of FTAAs agreed by the Philippine government, allowing foreign investors to hold 100 percent in local mining projects from the previous 40 percent.

The Department of Environment and Natural Resources said Australasian Philippines Mining's plant will have an annual capacity of 94,000 ounces of gold and 10,000 tonnes of copper concentrate.

Australasian Chairman Jose Leviste said his company expected to start construction of the plant in the first quarter of 2006, and commercial production within the first half 2007.

Earlier, the environment department said the plant will be constructed by January 2006.

Leviste said his company will need to spend $115 million to put the Didipio project, on the boundary of Nueva Vizcaya and Quirino provinces, into commercial production.

"We are still studying the funding mix, how much equity and how much loans," he told reporters.

The government said Australasian is now in talks with banks, led by ANZ Investment Bank of Australia, for financing. It said the company also planned to get advance payments from smelters for its copper output to raise funds.

Leviste said the company had so far spent 2 billion pesos exploring the area.

Didipio has total ore resource of 120 million tonnes, with a mineable reserve of 23.8 million tonnes, consisting of 0.61 percent copper and 1.6 gram per tonne of gold, the government said.

Australasian is expected to mine Didipio for 15 years.

The government said the project was expected to bring in total revenues of $783 million.