Although the Philippines is the fifth most resource-rich country in the world, it is home to some of the world’s biggest under-exploited deposits of gold and copper. It also benefits from one of the most liberal mining regimes in Southeast Asia, with the Mining Act of 1995 allowing for 100 per cent of foreign-equity participation through Financial and Technical Assistance Agreements (FTAAs) with local miners.

In addition, the Filipino government has in recent years sought to promote foreign mining investment by providing various tax and non-tax incentives and has established the Mineral Development Council to assist foreign investors in expediting access to mining projects.

As a result, Filipino mining investment has steadily increased, with the Filipino Chamber of Mines estimating US$1.55 billion of mining investment in 2008 and US$2.76 billion in 2009, up from US$350 million in 2007. The Chamber, the Department of Environment and Natural Resources and the Mines and Geosciences Bureau predict the contribution of mining exports to the total export figures of the Philippines will continue to increase year-on-year over at least the next three to five years.

Mankayan Project

The Guinaoang porphyry copper/gold deposit (the Mankayan Project) is situated in the Mankayan-Lepanto mining district, an area considered to be one of the country’s most established porphyry copper belts. It is located 240km north of the capital and six kilometres east of the copper/gold mine owned and operated by Lepanto Consolidated Mining, and is accessible by both road and air.

Since its discovery in the early 1970s, extensive drilling (more than 45,000 metres in 48 holes) and metallurgical work has been undertaken on the site by Goldfields Asia Ltd., Pacific Falkon and others, and based on historical analysis of 33,000 metres of drilling in 2007, the resource was estimated to be more than 166 million tonnes, with 1.9 billion pounds of copper and 2.9 million ounces of gold.

Upon acquisition of the Mankayan deposit by the Company, our initial two-year drilling programme contributed a further nine diamond drill holes, or an approximate increase of 9,800 metres of core in total, being available for further independent laboratory assay.

During this time the Company also completed the digitisation of the historical data and duly received our first independent audited resource estimate, reported by Snowden Mining Industry Consultants Pty. Ltd (“Snowden”) in accordance with the 2004 JORC Code. This estimate related to approximately 277 million tonnes, with an Inferred Resource of 3.1 billion pounds of copper and 3.8 million ounces of gold at a 0.4 per cent copper cut-off.

At the completion of our initial drilling programme, Snowden reported a further upgrade of our resource estimate to approximately, in aggregate, 2.9 billion pounds of copper (1.1 million tonnes) and 4.3 million ounces of gold, within an Indicated Mineral Resource of 221.6 million tonnes and an Inferred Resource of 36.2 million tonnes at a 0.4 per cent copper cut-off.

The new resource estimation therefore represents an approximate 1 billion pounds (52 per cent.) increase in the copper content and a 1.4 million ounce (48 per cent.) increase in the gold resource since the acquisition of the Mankayan Project by the Company, with approximately 86% of the entire resource in the Indicated Resource JORC compliant classification.

Independent laboratory testwork has been conducted on core samples from the Mankayan deposit by AMMTEC laboratories in Perth, Western Australia. The testwork indicated that excellent copper and gold recoveries of around 94 per cent and 74per cent respectively could be anticipated. The high copper and gold recoveries are expected to produce a saleable concentrate with a grade in excess of 30 per cent. copper. The metallurgical testwork also showed all impurity elements were below penalty levels commonly quoted by smelters.

The Company is delighted that it was able to announce the positive results of an independent Conceptual Scoping Study on the 19th January 2011. A copy of this Announcement is available here and a copy of the Executive Summary on this Study is also available here.

On 26 October 2011 at a duly convened General Meeting, shareholders approved an Option Agreement entered into by the Company for the potential disposal of its wholly owned subsidiary, Asean Copper Investments Limited ("Asean"), to Gold Fields Netherlands Services BV ("Gold Fields"). Under the terms of the Option Agreement, Gold Fields paid a non-refundable upfront cash payment of US$7 million, with a further cash sum of US$63 million becoming payable, should the Option be exercised prior to its scheduled expiry on 31 January 2013.

For recent announcements and other news in relation to the Mankayan Project, click here.