Philex's Silangan project contains gold,copper reserves worth $22 billion

MANILA, Philippines - Philex Mining Corp. said its Boyongan and Bayugo ore deposits, together known as the Silangan project, contain an estimated gold and copper reserve worth at least $22 billion.

In a disclosure to the Philippine Stock Exchange, Philex said an independent resource estimate by mining consultant SRK Perth revealed that the deposits, located in Surigao province, contained an estimated five billion pounds of copper and nine million ounces of gold.

SRK used a cut-off of 0.5 percent grade for copper and a price of $2.75 a pound for copper and $900 per ounce for gold. The cut-off grade indicates the amount of mineral in an ore below which it isn’t economically feasible to mine it.

 “We are excited about the Silangan project and the prospects of further exploration into the Kalayaan tenement,” said Philex chairman Manuel V. Pangilinan. He said the project will cost around $1 billion to develop over three years.

“It will be a significant project and will probably be one of the most important for Mindanao in terms of promoting economic development,” Pangilinan said.

The resource estimates are based on verified drill results from over 80,000 meters of drilling completed by Philex in June 2010.

“In general, there is excellent continuity for both the copper and gold grades with low nugget effects and large ranges. The copper and gold grades are estimated using Ordinary Kriging interpolation method as the mineralization is relatively homogenous,” said Philex.

The Silangan Project is managed and operated by Silangan Mindanao Mining Co. Inc. (SMMCI), which is 100 percent owned by Philex.

SRK’s estimates were made using the standards and guidelines for reporting mineral resources given in the JORC Code, which are consistent with the standards and guidelines under the Philippine Mineral Reporting Code (PMRC).

The term “Mineral Resources” under both the JORC Code and the PMRC refers to resources that are considered to have reasonable prospects for economic extraction.

Recently, Philex entered into a farm-in arrangement with Manila Mining Corp. (MMC) that includes exploration of the Kalayaan mining tenement of MMC, which is adjacent to the Bayugo ore deposit, to determine its resource potential including the extent to which the Bayugo deposit extends to Kalayaan.

It is expected that the exploration work in Kalayaan will further enhance the value of the Silangan project, particularly the Bayugo resource.