Indophil mulls options for Tampakan project

MANILA, Philippines –  Indophil Resources NL said yesterday it will pursue several options to extract maximum value for its shareholders from the company’s strategic interest in the world-class Tampakan copper-gold project.

This, as diversifying conglomerate San Miguel Corp. (SMC) earlier said it “shall continue its ongoing due diligence on Indophil notwithstanding the lapse of the exclusivity period under the share placement agreement dated Oct. 8, 2010, as amended, which expires Feb. 10, 2011, to enable the company to determine whether a firm offer shall be made with respect to the outstanding shares of Indophil.”

Indophil chief executive officer Richard Laufmann said the company is of the view that it is no longer in the best interests of the relevant parties and Indophil’s shareholders to pursue a further extension of an exclusivity review period.

“Indophil has developed a sound relationship with San Miguel, and we maintain an ongoing dialogue with San Miguel as it continues with its due diligence process. San Miguel is an impressive organization with strong vision and leadership. Ending the exclusivity arrangement with San Miguel does not close out San Miguel’s right to make a control proposal to Indophil or engage in a strategic relationship, but this decision does allow Indophil to pursue its options,” Laufmann said.

SMC has acquired 10 percent of Indophil valued at $40 million, in October last year.

“We won’t rule out sale or partnership possibilities, but we reserve the option to focus on the genuine prospect of continuing to participate vigorously and directly in the development of the Tampakan asset. Given the considerable progress at Tampakan, we believe it is appropriate to allow the market to unlock the added value that is traditionally derived during advanced project development. This, in turn, leads to a significantly higher return to shareholders as a company is re-rated,” Laufmann said.

He said Indophil has long observed that the global reality of copper demand steadily outpacing supply cannot be argued.

“Commodities are being revalued for sound fundamental reasons. This has seen a sustained upward re-rating of the resource sector. By any measure, an ongoing investment in Tampakan is compelling,” Laufmann said.

The Tampakan copper-gold project in South Cotabato is among the most attractive undeveloped long-life, large-scale and low-cost copper deposits in the world.

Indophil’s key asset is its 37.5-percent interest in that project, with the controlling 62.5 percent held by its partner Xstrata Copper. The Tampakan project is being developed, under formal agreement (known as the Columbio FTAA) with the Philippine government.

The Tampakan project is estimated to require a $5.9-billion capital investment, with first production due in 2016. The deposit contains 2.4 billion tons mineral resource with an estimated 13.5 million tons of copper and 15.8 million ounces of gold. Unlike some other undeveloped projects, Tampakan’s minerals resource includes a high degree of confidence with 40 percent in the ‘measured’ category.

Tampakan is projected to produce 370,000 tons of copper and 360,000 ounces of gold per year in the initial mine-life of 17 years, with considerable and realistic potential for mine-life extension.

To date, almost $300 million has been spent on exploration and development at Tampakan.

Its direct contribution to the Philippine economy over the known mine-life is estimated at $37 billion. Estimated direct employment during construction is 10,000 people, with a workforce of 2,000 during the operational period.