BAGUIO CITY , Philippines – The difficulty in getting investors due to the current regulatory climate is seen to delay the $750-million Silangan copper and gold project, one of the biggest mining investments in the country.
Pangilinan-led Philex Mining Corp. admitted that it is having a hard time getting investors for the Silangan mine even if it has started the groundwork and has shifted to underground sub-level cave mining method.
On the sidelines of the 66th Annual National Mine Safety Environment Conference organized by the Philippine Mine Safety and Environment Association, Philex president and chief executive officer Eulalio Austin said Philex needs to raise at least $350 million by first half of 2020 to get on track with the project.
“As of the moment, we don’t have fixed investors for the project yet. There are some issues being raised because of the regulatory environment, but we are trying to convince them that Silangan is a different story,” Austin told reporters.
“Some investors are telling us that the project is too small for them and the other one is the current climate wherein government is lukewarm to the mining industry. These are some of the feedbacks we are getting,” he said.
The Silangan mine is a large-scale high grade copper-gold development, with a number of greenfield and brownfield components, located in Surigao del Norte. It is one of three big-ticket mining projects seen to propel the Philippines as a major regional copper producer.
Philex plans to raise $350 million in equity and the balance of $400 million can be raised through loans.
Austin said clear-cut rules or policy regulations would help them secure investors.
There are still mining tax proposals that are pending under the second package of the government’s tax reform program.
Under the first package, the excise tax has already been doubled to four percent.
This includes imposing a differentiated royalty for mines inside and outside mineral reservations, windfall profit tax based on profit margin, and registering small-scale mining with the Mining Board and Mines and Geosciences Bureau, among others.
“We support the increase in taxes, but it should be some sort of equitable because the mining industry is so dependent on metal prices that’s why we are proposing tax measures that are linked also to metal prices and margins,” Austin said.
“The tax regime should be structured in such a way that they take into account the volatile metal prices,” he said.
Austin said Philex should be able to bring in Silangan before Padcal mine in Benguet seizes operations by 2022.
Silangan will be developed in phases with the Boyongan deposit to be fully developed within two and a half years. It is expected to commence commercial production by the second half of 2022.
The first phase of the Boyongan deposit has an initial estimated mine life of 22 years. For the initial stage, Silangan is projected to yield high grade mineable ore grades of 0.63 percent for copper and 1.20 grams per MT for gold.
The second phase, which will be comprised of the Bayugo deposit, is scheduled to undergo preliminary feasibility study for underground sub-level cave mining within the year.