Lepanto repays in full $3-M loan from Ivanhoe Mines

Lepanto Consolidated Mining Co., has fully repaid the $3-million loan extended by Canada’s Ivanhoe Mines Ltd. in January 2005 in exchange for an option to acquire a stake in any of the Philippine mining firm’s projects.

Ivanhoe granted a six-month loan that carried a three percent annual interest.

Lepanto incurred a net loss of P409.53 million last year, weighed down by a four-month labor strike and lower gold and silver sales.

Mineral production declined 40 percent to 471,710 tons because of the workers’ strike from June to September last year while gold production dropped 42 percent.

As a result, gross revenues fell to P852 million from P2.25 billion in 2004.

From an operating income of P352 million, Lepanto suffered an operating loss of P304 million.

Lepanto reported P51 million in labor retrenchment cost and P114 million in impairment losses, which formed part of its total cost in 2005.

Lepanto earlier said it would continue its action to have its hedging contracts with Rothschild & Sons declared null and void.

In August 2005, Lepanto filed with the Makati Regional Trial Court a case to nullify its hedging transactions with Rothschild.

Subsequently, Rothschild had closed Lepanto’s hedge position under the questioned hedging contracts.

Lepanto had received a notice from the Australian bank that "an event of default exists" in their hedging contracts covering a total of 4,873 ounces of gold after the miner filed a complaint.