Aussie operator of stalled mine enlists San Miguel aid

Manila Times.net
BY EUAN PAULO C. AÑONUEVO AND KRISTA ANGELA M. MONTEALEGRE REPORTERS

AN Australian firm whose multibillion-dollar Philippine project has stalled because of an open-pit mining ban imposed by the host provincial government has enlisted the support of San Miguel Corp. (SMC), providing the food-and-beverage conglomerate a chance to hit it big in the minerals sector. In a statement, Indophil Resources NL on Friday said it entered into a share placement deal worth 41.2 million Australian dollars that involves giving SMC a 10.1 percent interest in the Australian miner for 0.86 Australian dollars per share. The transaction is expected to close on October 15.

“Engaging the support of San Miguel—a diversified, global corporation based in the Philippines- is a strategically important and positive outcome for the continued successful development of its mining interests. San Miguel brings significant financial strength and regional relationships, underpinned by 120 years of operational experience in the Philippines,” Richard Lauf-mann, Indophil chief executive officer, said.

Indophil owns 37.5 percent of the world-class Tampakan Copper-Gold Project in South Cotabato. The remaining 62.5 percent is held by Xstrata Queensland Ltd., the copper unit of global miner Xstrata plc.

With 13.5 million tons of copper and 15.8 million ounces of gold at a 0.3 percent copper cut-off grade, the Tampakan project is estimated to contain one of the largest undeveloped copper-gold deposits in the world. 

Considered the Philippines’ biggest mining investment to date, the US$5.2-billion Tampakan Project hit a snag after the South Cotabato provincial government issued a rule banning open-pit mining.

Besides the share placement deal, Indophil and SMC entered into exclusivity agreements, providing the Philippine company the chance to secure control of the Australian miner or of its Tampakan project stake. 
SMC has until January 10, 2011 to complete its due diligence and decide on whether to exercise this control option.

Indophil said it has tapped Gresham Advisory Partners Ltd., Baker & McKenzie and Freehills as advisers for the transaction, while SMC contracted Bank of America Merrill Lynch and Blake Dawson.

SMC has been diversifying into heavy industries, including mining. 

It earlier acquired two coal concessions in Mindanao in line with its plan to put up a mammoth coal-fired power plant in the region.

Part of the Daguma coal reserves is also located in South Cotabato.

SMC shares rose from P73.80 on Thursday to P74.20 each on Friday.