PSE approves Lepanto's P3-B stock rights offer

MANILA, Philippines - Lepanto Consolidated Mining Co. has obtained the approval of the Philippine Stock Exchange to undertake a stock rights offering worth around P3 billion.

Lepanto is offering a total of 10.05 billion common shares to its stockholders at a ratio of one new common share for every 3.3 common shares held as of Dec. 3. The shares, with a par value of P0.10, will be sold at P0.30 apiece, which was computed based on a 30-percent discount on the closing price of the company’s common shares on the day Lepanto’s board of directors approved of the stock rights offering on Oct. 18, 2010.

Shares of Lepanto closed unchanged Friday at P0.335.

Multinational Investment Bancorporation was tapped as lead underwriter.

The offer period will run from Jan. 3 to 7 while the listing date will be set upon the Securities and Exchange Commission’s approval  of the company’s increase in authorized capital stock from P 3.35 billion to P 6.64 billion.

Proceeds will be used to fund the development of the company’s Victoria mine in Benguet province as well as pay down loan obligations.

Lepanto is also setting aside a portion of the proceeds for payment of accounts with suppliers and advances from shareholders.

The development of the Victoria reserve is expected to result in the expansion of Lepanto’s gold production to 40,000 ounces this year.

Lepanto also owns 60 percent of Far Southeast Gold Resources Inc., another mining company with resources in Mankayan, Benguet. Last month, Lepanto granted South Africa-based Gold Fields Switzerland Holdings AG (GFS) an 18-month option to acquire one-third of its stake in Far Southeast.

GFS, a wholly-owned subsidiary of Gold Fields Ltd., plans to acquire a total of 60 percent interest in Far Southeast from major shareholders Lepanto and Liberty Express for $340 million. The option requires GFS to solely fund pre-development expenses, including exploration and a feasibility study, of the project and contribute $110 million into Far Southeast Gold.