Philex eyes investments in Indonesia

MANILA, Philippines - Philex Mining Corp. is scouring for investment opportunities in Indonesia, the world’s second largest producer of tin and nickel and the fourth largest copper producer.

Philex chairman Manuel V. Pangilinan told reporters the company is in talks with an unnamed Indonesian firm that is engaged in the exploration of coal and gold.

Pangilinan said Philex is looking to expand its presence outside the Philippines to further augment and strengthen its mining portfolio.

Indonesia produces significant quantities of gold, bauxite, phosphates and iron sand and has the potential for alluvial diamond production. The mining industry accounted for an estimated 10.9 percent of Indonesia’s GDP in 2010, with minerals and related products contributing about a fifth of the country’s total exports.

Studies show that Indonesia’s mining industry is poised to grow by 10.9 percent in real terms in 2011 to reach $85 billion, which will represent a slight decline from the recorded growth of 13.1 percent last year.

Indonesia’s mining sector is dominated by Bumi Resources, which owns the country’s largest and fourth largest coal miners, Kaltim Prima Coal (KPC) and Arutmin. State-owned PT Timah is the world’s largest integrated tin mining company. It is the tin-rich Bangka region’s biggest operator, followed by PT Koba Tin. Timah holds a 25- percent share in Koba Tin, while the remaining stake is held by the Malaysian Smelting Corp.

PT Freeport Indonesia and PT Newmont Nusa Tenggara are the only copper mining players in Indonesia, carrying out mining activities at the Grasberg and Batu Hijau mines. Freeport and Newmont are also engaged in the production of gold and silver.

In May, Philex sealed a deal to acquire up to a 60-percent stake in Manila Mining Corp.’s Kalayaan project in Placer, Surigao del Note for a minimum $25 million.

Manila Mining sold to Philex a total of 125,000 shares of Kalayaan, representing a five-percent interest in Kalayaan. On top of this, Philex shall earn a further 55-percent interest in Kalayaan, by sole-funding all pre-development expenses including a final feasibility study for the project.

Prior to this, Philex also acquired a five percent stake in Lepanto Consolidated Mining Co. from First Metro Investment Corp. and the Bank of the Philippines Islands’ Asset Management & Trust Group for P1.43 billion.

Philex earlier reported that the projected operating life of its Padcal mine in Benguet province has been extended from September 2017 to December 2020 or by another three years from the previously declared mine life based on the proved reserves of the mine as of June 30, 2011.

The Padcal mine has reserves of 85.6 million tons at assumed metal prices of $1,000 per ounce of gold and $3 per pound copper. The price of gold has recently risen to set a new record level of $1,816 per ounce.

The reserves form part of the mine’s total resources which are estimated to be 147 million tons as of the same date.

Philex is currently also active in exploring the areas surrounding the Padcal mine as part of its drive to prolong the mine’s life to the optimum extent possible. It has more than 15,000 hectares of open ground in which several areas have been targeted for drilling or are now being drilled.