September 11th: Mining IRR defines ‘no-go’ sticky areas……………………….September 11th: TVIRD reacts to ‘misleading’ media reports………………………..September 11th: Philex to start Silangan mine in 2017…………………………September 11th: Australian firm gets green light for Philippine mines………………………..September 11th: Mining Stocks: From Boom To Bust?……………………….September 11th: Australia Mining Info Drive Set…………………………September 11th: CGA Mining earnings drop by 90.8%.

September 11th: Mining IRR defines ‘no-go’ sticky areas.

Mines and Geosciences Bureau (MGB) director Leo Jasareno in phone interview said that the implementing rules and regulations of Executive Order 79 or the mining policy “defined and made clear” areas that will be banned for mining. These areas include prime agricultural lands and island ecosystems.

A private sector representative to the economic cluster meanwhile said that existing rules will be honored such that the ban on open pit mining by a local government will be honored.

The IRR according to Jasareno would be published today, Tuesday, as the draft has been signed by Environment Secretary Ramon Paje yesterday.

Jasareno declined to give  details  but said   “it is already set for publication” today (Tuesday).

Presidential Communications Development and Strategic Planning Secretary Ramon Carandang said Paje was to sign the IRR yesterday and that it would be published in a  day or two yet.

The IRR operationalizes and provides all the necessary details to the EO,” Carandang said after the meeting of the Mining Industry Coordinating Council (MICC) in Malacanang.

The approval of the IRR comes two months after President Aquino signed on July 6, 2012 EO No. 79 which institutionalizes and implements “…Reforms in the Philippine Mining Sector by providing policies and guidelines to ensure Environmental Protection and Responsible Mining in the utilization of Mineral Resources.

Carandang  said the draft IRR was presented at the MICC meeting for everyone’s inputs and clarification, before it was “wrapped up”.

The IRR was made consistent with the provisions of the EO for smooth implementation.

“It is consistent with the EO, there would be no surprises, no departure from the EO,” said Guillermo Luz, a private sector representative to the economic cluster, which has been consulted by the MIRR in crafting the IRR.

Luz said one of the most sticky items in the IRR involves the identification of areas as “go and no-go zones” based on existing laws, including but  not limited to the National Integrated Protected Area System Act of 1992. Luz said the IRR would itemize which areas are these and would be translated to maps to make them physically visible.

“In the past, mining permits were on areas which turned out to be no-go zones. The IRR would clearly itemize these areas but there should be a legal basis,” he said.

Luz said the IRR also reiterates and reinforces the EO’s provision that national laws take precedence over local laws even as they also streamline the procedures in getting clearances.

“The procedures were eased in such a way that they are predictable by setting timelines and responsibility (for those timelines), said Luz.

The IRR, however, would not lead to the overrule of the ban on open pit mining passed by certain provinces  where the Tampakan mining project is located as the EO is prospective.

“The ban on open pit mining happened in the past. All current and existing contracts will be respected,” Luz added.

The matter of incentives and revenue sharing issues will have to be resolved through legislation, a draft of which is being prepared.

Carandang said some points that were clarified involve the cement industry: if it is  classified as quarrying or manufacturing and on the renewal of their contracts after 25 years.

Carandang  said  in the past,  it is the Department of Environment and Natural Resources (DENR) that determines whether or not  a cement company’s contract could be renewed, but under the IRR, “as long as there is no problem then (the contract) should be extended” by another 25 years.

“So we clarified in the EO that if you’re up for renewal after 25 years, and you basically complied with all the requirements, relatively good track record and there’s no real issue against you, then we would extend,” he added.

Carandang said he expects the cement industry players to be “happy with the results of the MICC-IRR. We don’t anticipate any disruption in their business” Carandang said that after the IRR, the MICC is expected to focus on the crafting of a proposed legislation which they hope to complete by the end of September and eventually submit to the economic cluster or the Office of the President for input and review.

He said the proposed legislation would include the proposed tax rates. He said he is not yet sure if the technical working group that has started crafting the proposed legislation had already settled on a specific rate.

“We’re not settled on any one particular model but we are in the process of looking at how it’s done in other countries. You don’t create these revenue formulas in a vacuum. On one hand if it’s too high compared to everyone else, why would they come here?  In theory, all things being equal, if your royalties are significantly higher than anyone else to the point that it affects their models, then you’re probably not get the kind of investors that you need. If it’s too low, you might a get a lot of investments but you’re not getting the proper compensation for your national patrimony,” he said.

On the appeal sought by Sagittarius Mining Inc. (SMI) on the operation of the Tampakan copper-gold project in South Cotabato, Carandang said there was no update or decision yet by they are still hoping to come up with a decision within the month.

The DENR initially rejected in January the application of SMI citing South Cotabato’s ban on open pit mining.

The DENR upheld its ruling in May after SMI appealed the decision.

With the crafting of the new mining policy, the Aquino administration hopes that the new measure will generate more revenues for the government in the face of a high demand for metallic resources, as ell as to balance out concerns on environment protection and economic gains.

Written by ANGELA DE LEON, JOCELYN MONTEMAYOR and IRMA ISIP. Malaya Business Insight.
September 11th: TVIRD reacts to ‘misleading’ media reports.

ZAMBOANGA DEL NORTE – TVI Resource Development Philippines, Incorporated (TVIRD), appeals to the general public to be cautious of some special interest groups who are now spreading speculation to mislead the public into believing that the ambush of Barangay Captain Timuay Lucenio Manda of Barangay Canacon, Bayog, Zamboanga del Sur on Tuesday, September 4, is attributed to his being an staunch anti-mining advocate.

These are implying that legitimate mining companies present in the area, that include TVIRD, may have a hand in the ambush that resulted in his injury and the death of his 11-year old son.

The truth of the matter is that Timuay Manda survived the ambush and lived to clarify that he is not an anti-mining advocate but a Subanon leader who is against illegal mining in their ancestral domain in Bayog, Zamboanga del Sur.

In his first public appearance after the ambush attempt Friday, Manda issued a statement categorically denying all the slanted news articles by saying, “To set the record straight – I am not anti-mining. I am, instead, an anti-illegal mining advocate. I am a government official – a barangay chairman of Barangay Canacon, Bayog municipality, Province of Zamboanga del Sur – I swore to uphold the law. We have our laws in mining and other environmental laws.”

“While I appreciate the sympathy of some groups of what happened and their condemnation to the assailants, I cannot afford to make this matter as their avenue for expressing their anti-mining advocacy to which I do not subscribe,” Manda said in his signed statement.

Moreover, Manda appealed to President Aquino to stop illegal mining activities in the area. “Let this tragic incident be a wake-up call to all government officials concerned,” he added.

Atty. Eugene T. Mateo, TVIRD President, once more pleads to the law enforcers – the Philippine National Police and the Philippine Army – to restore peace and order and let the rule of law prevail by applying the full force of the law in the said place.

“It is very tragic that atrocities continue to reign in the area. More tragic to see that most of the victims are the local and tribal leaders who are law-abiding citizens, and who are against all sorts of illegalities including illegal mining,” Mateo said. “We strongly condemn the brutal killing of an innocent child in their attempt to silence the father who only wanted peace and prosperity through legal means in their Subanon homeland,” Mateo added.

Timuay Manda is a Subanon Chieftain and a 2-term Barangay Chairman of Canacon, Bayog, Zamboanga del Sur.

On Tuesday, September 4, Timuay Manda and his son Jordan were riding on a motorcycle along Barangay Datagan when fired upon by unknown assailants. Manda was hit in the right shoulder while his son was hit in the head killing him instantly.

On April this year, three barangay officials of neighboring Barangay Depore were also gunned down killing Barangay Captain Francisco Arado and Barangay Secretary Editha Navarro while Councilman Ernesto Mancao survived. They were ambushed on their way home from a meeting with TVIRD officials. Until now, no suspect has ever been hailed to jail for the atrocity.

Part of Subanon ancestral domain in Bayog particularly in Sitio Balabag, is home to illegal miners who are financed and supported by a group led by identified government officials.

The Mines and Geosciences Bureau of Region 9 has since issued a Cease and Desist Order to stop all illegal mining activities in the area.

Also, the Provincial Mining Regulatory Board (PMRB) of Zamboanga del Sur, in a resolution, has denied the illegal miners of any legal right to mine in the place that is covered under a Mineral Production Sharing Agreement signed between the government and TVIRD. The said agreement has prior consent by the Subanon residents.

Lately, President Aquino has issued Executive Order No. 79, which ultimately gave more teeth to the orders of MGB and the PMRB.

However, despite of all these laws, illegal mining persisted in the area while the orders are still waiting to be enforced by the police authorities.

By The Mindanao Examiner.
September 11th: Philex to start Silangan mine in 2017.

MANILA, Philippines – Philex Mining Corp, the country’s biggest gold producer, reported that it is actually on-track to start production in at least one area of its Silangan gold and copper project by 2017.

In a statement to the Philippine Stock Exchange on September 10, Philex said it is confident “that the Silangan Project will commence production by 2017, as the pre-feasibility study and mine development are being pursued aggressively.”

Philex was responding to reports that it delayed the production schedule at its mine in Surigao del Norte in northern Mindanao, citing regulatory issues.

The firm said the mine and production feasibility study will be completed as scheduled by February 2013.

“We’ve increased the number of foreign consultants involved in the pre-feasibility stud of the project,” Philex added.

“To date, the studies for the Silangan Project have not revealed any obstacles to the commencement of production by 2017 or any reduction in resource estimates of its potential,” said Philex.

The firm says studies for the project show that from their end it is a go, government approval could be a latent obstacle to opening the Bayugo area.

Philex Chairman Manny V. Pangilinan said the Silangan project could be delayed because of the executive order on mining signed by the President in July.

Executive Order No. 79 temporarily blocks the issuance of new mining contracts pending an amendment to the Mining Act’s provision on mineral production sharing agreements (MPSAs) between government and mining firms.

“There are two pieces of property in Silangan – Boyongan and Bayugo properties. Boyongan already has the MPSA, so we have the relevant permits to do that. We don’t have the same for Bayugo since we just have an exploration permit. That might be delayed because of this EO,” Pangilinan said in July.

The mining firm has yet to confirm with Rappler if the 2017 start of production will include both mine areas of Boyongan and Bayugo.

In the meantime, Philex said it is conducting exploration drilling in the neighboring Kalayaan project, which sits beside the Bayugo deposit.

In May 2011, Philex entered into a joint-venture agreement with Manila Mining Corp for a share of the Kalayann project. Philex said it would disclose the resources in the project at the appropriate time.

Philex is eyeing the Silangan mine to help sustain the company’s future operations given that the only operating mine — the Padcal mine in Benguet province — will exhaust its mineral resources by 2020.

Operations at Padcal mine is currently suspended following leaks at its tailings pond. Philex said losses at Padcal will impact on its 2012 bottomline.

September 11th: Australian firm gets green light for Philippine mines.

AUSTRALIA-based Red Mountain Mining Ltd. is expected to complete its acquisition of stakes in two of Mindoro Resources Ltd.’s mining assets in the Philippines by the end of this month, the latter said in an announcement yesterday.

In a statement on its Web site on Monday, Mindoro Resources said that Red Mountain has gained the approval of its shareholders to proceed with the share sale agreement with Mindoro Resources dated July 23.

Red Mountain could not be immediately reached to verify the information.

Under the agreement, Red Mountain will issue Mindoro Resources 100 million of its shares, as well as 50 million performance shares as part of plans to secure a 100% interest in the latter’s Batangas gold project and a 75% stake in the Tapian San Francisco copper-gold venture in Surigao del Norte.

The 50 million performance shares will be converted to full voting shares if Red Mountain’s survey within a year from this transaction raises estimated deposit at the Batangas site to 600,000 ounces of gold from the current 393,000 ounces. “The performance shares will be cancelled after 12 months from completion [of the survey] if the above objectives are not achieved,” Mindoro Resources said in its statement.

Mindoro Resources has been conducting exploration work in Batangas, Panay and Surigao del Norte.

The sale of the two projects is part of plans to restructure its assets in the Philippines to better capitalize on the value of its other ventures, particularly that of its flagship Agata nickel project in Surigao del Norte.

Red Mountain, as a gold-focused miner, is expected to be able to better utilize prospects of the two projects it is acquiring, Mindoro Resources said.

The miner said the assets being acquired are worth $10-15 million.

Red Mountain will proceed with the drilling the Batangas site under a loan facility from Mindoro Resources, which will bring its working capital to about A$4.2 million. — BFVR.
September 11th: Mining Stocks: From Boom To Bust?

MANILA, Philippines — The fortunes of mining companies, and their investors, have seen a meteoric rise in the local stock market; leading the Philippine Stock Exchange on a bull run from 2008 to early 2012.

However, the erstwhile darling of the market has lost its luster, falling 10.32 percent since the start of the year to become the weakest performing sector in the PSE by September.

While mining stocks rode high on a combination of a positive shift in government’s policy in the development of the country’s mineral resources and rising global metal prices, these same factors have been blamed for dragging down the sector.

The Mining Boom.

“The mining sector was all bull from 2008 to 2011, and even through the first half of 2012,” said Accord Capital Equities Corporation analyst Justino Calaycay Jr. who noted that, “following a 234 percent gain in 2008, the mining sector outperformed the entire market in the next two years, averaging an annual advance of nearly 50 percent.”

Seen as the catalyst of this surge is the affirmation by the Supreme Court in 2004 of the Mining Act of 1995 which opened the doors of the mining industry to more foreign investments. Some analysts note that the mini-mining boom started as early as 2005 because of the High Tribunal’s final resolution of the issue.

COL Financial Group Inc. research analyst Edmund C. Lee added that, “coming into 2012, people were bullish particularly on the increasing amount of M&A (merger & acquisitions)” led by Manuel V. Pangilinan’s move to expand its mining investments as well as Goldfield’s plan to acquire a controlling stake in a major gold find owned by Lepanto Consolidated Mining Company.

“The new (Aquino) government regime was expected to promote better visibility in the industry allowing more FDI’s (foreign direct investments) to enter the country,” Lee said explaining that there was “too much corruption and red tape before.”

Lee added that “2011 was the year of the mining sector and a lot of investors expected the positive sentiment to roll over.”

Warning Signs .

However, both Lee and Calaycay pointed out that the euphoria created by these M&A deals overshadowed weakening global metal prices in anticipation of a drop in demand caused by the global economic slowdown in general, especially in China, which consumes about 50 to 60 percent of total demand.

“Ever since China announced the drop in GDP (gross domestic product) forecast in March to 7.5 percent, metal prices have remained weak. Furthermore, the manufacturing index in China hit a 9-month low of 47.6 in August (anything below 50 is a contraction),” said Lee.

Lee noted that, by this time, global mining stocks declined resulting in mid-single digit global valuations.

But, “if you take a look at the biggest listed producing mining companies in the Philippines (Philex, Atlas, Nickel Asia), they are all trading at double digit valuations as opposed to the global’s single digit. Even today, valuations are unattractive as opposed to its global peers.”

Elsewhere, the mining industry which has propelled Australia’s economy even shielded it from the impact of the Asian financial crisis may be off to a pause.

Australia’s Resources and Energy minister Martin Ferguson has declared the end of the country’s mining boom, a day after the world’s biggest miner BHP Billiton (BHP.AX) shelved two expansion plans worth at least $40 billion.

“The resources boom is over,” Ferguson declared over Australian radio. “We’ve done well — A$270 billion ($282 billion) in investment, the envy of the world. It has got tougher in the last six to twelve months.”

Ferguson’s comments came after BHP scrapped plans for a $20 billion-plus expansion of its Olympic Dam copper mine in South Australia and a new harbor, estimated at more than $20 billion, to nearly double its iron ore exports in Western Australia.

BHP blamed soaring development costs, a high Australian dollar and falling commodity prices for pulling the projects.

Rio Tinto admitted that it has to make more tough decisions, invest in fewer projects, to defer other things, and to stage projects.

Mining EO.

“However, the more ‘popular’ view is that the sector is being dragged by the so-called Mining Executive Order which outlined the Aquino government’s policy on mining,” Calaycay said.

He stressed that “all businesses and investments, with no exception, thrive under consistent and predictable policy environment. Needless to say, EO 79 introduced challenges to he status quo, which at that point, was positively biased.”

Calaycay added that, “a fair reading of the EO suggests a status quo, with, borrowing from the language of ratings agencies, a negative outlook.”

He explained that, “the status quo arises from its recognition of the validity and enforceability of mining contracts, agreements and concessions approved BEFORE the EO’s effectivity.”

While the EO reaffirms the areas closed to mining applications, Calaycay noted that it also “provides for an expansion of this area subject to the determination of the Agriculture, Enrivonment and Natural Resources and Tourism Departments.”

He said posing a drag on the sector is the moratorium on granting of mineral agreements pending new legislation; and changes in revenue sharing – the focal point of such new legislation.

“The proposed excise tax increase from 2 percent to 3 percent could be burdensome, particularly for marginal producers, e.g. those with net margins of 10 percent or less,” said a mining investor who requested not to be named. He added that “existing taxes add up to 40 percent already.”

Lee said higher taxes, or plans to increase the government’s mining share from 2 percent to possible 5 to 7 percent is also a negative factor.

“But if you look at Atlas, Philex, and Nickel Asia, the royalty that they pay is already approximately 7.5 percent, 5.8 percent, and 6.0 percent, respectively,” said Lee. However, he said “it is not clear how the revenue sharing will take place and if the 5 to 7 percent excludes the local government taxes.”

The investor also noted that, while the licensing moratorium puts all mining projects awaiting a license on hold, exploration can actually proceed.

However, he said “uncertainty of being awarded a mineral license is a major investment disincentive, a huge cloud over the industry.”

“The sector may be in for some rough sailing in the near to medium term given the need to wait for the Implementing Rules and Regulations of the E.O. and new legislation. Hopefully, the latter can be passed within the year (it only involves a change in rate) or, at worst, before Congress goes into recess for the May 2013 elections,” one observer said.

While some miners hope the proposed tax changes will be passed and take effect on March 2013 and the licensing moratorium lifted shortly after, as promised by President Aquino, one said that he has “no idea which brave congressman has volunteered to sponsor mining industry tax measures.”

They also pointed out that the Mining Act of March 3, 1995 was ruled upon by Supreme Court and implemented December 2004. “That’s nine years and nine months to the day the law was passed,” one miner said.

However, Lee holds the view that, while the public has expressed a negative reaction to the Mining EO especially due to higher taxes, “the overall impact should be positive for the industry and the country.”

Among the positive impact is the reduction of red tape through the creation of one government unit – thus the ability to mine in a certain area will be given by the national government instead of processing through several units including the national government, local government, and barangay.

Lee said an increase in better regulation will likely result in higher foreign investments with the creation of one mining tax regime. “There are three separate mining tax regimes and the plan to create one will give more visibility to the overall country,” he said.

The Mining EO is also seen to reduce small-scale mining which is usually blamed for being less environmentally-responsible. The EO is also seen to promote downstream processing of metal ore.

“The short- to medium-term for the sector may be shaky, more so from an equity investing standpoint.  However, the longer term view depends less on the outcome of the legislation and more on the movement of commodity prices in global markets,” Calaycay concluded.

By JAMES A. LOYOLA, Manila Bulliten.
September 11th: Australia Mining Info Drive Set.

MANILA, Philippines — Government economic managers will explain to the Australian mining sector the Aquino’s administration’s new mining policy to allay fears that the Philippines is no longer interested in mining investments.

Finance Secretary Cesar V. Purisima will head the economic managers in conducting a one-day information campaign on Wednesday, September 12, before Australia’s mining investors. The economic managers mass briefing is also part of the activities for President Aquino’s official visit to Australia-New Zealand on October 22 to 26.

“The economic managers will explain to the Australian mining businessmen the Aquino government’s new mining policy under EO 79 and this new policy benefits them,” a DTI official said.

Earlier, Trade and Industry undersecretary Cristino L. Panlilio said that Australian mining investors were also interested in meeting with President Aquino that the country’s economic managers decided to conduct an information campaign ahead of the President’s visit.

Australia is the Philippines’s largest mining investor. Australian mining firms with existing investments in the country include Indophil Resources and Xtrata Copper, investor in Tampakan Copper-Gold project and Oceana Gold; Oceana Gold; BHP Billiton; and Rio Tinto.

Oceana Gold, investor in Didipio Copper Gold, and CGA Mining Ltd., investor in Masbate gold mine.

BHP Billiton and Rio Tinto, two largest company by revenues in Australia. BHP Billiton is also active in petroleum service contract or PSC holders in the country in west Balabac, southwest Palawan.

Australian mining firms are facing cost pressures from low world commodity prices and have become cost sensitive. Said firms are delaying slash/copper/gold projects in Australia.

September 11th: CGA Mining earnings drop by 90.8%.

AUSTRALIAN miner CGA Mining Ltd. saw its earnings for its fiscal year ending June drop by 90.8% year-on-year due mainly to a disruption in its Masbate operations, it said last week.

In a statement on its Web site, the firm said that its net income for the year came in at $5.99 million, reflecting a sharp decline from the $65.08 million it earned in 2011.

Revenues, likewise, dropped by 21.3% to $187.69 million against the $238.48 million recorded last year.

“The results for the period were adversely impacted by the failure in July 2011 of the SAG (semi-autogenous grinding) mill at the company’s operation at the Masbate gold project,” said CGA Mining.

The miner announced that it had discovered a crack in its milling facility in July last year, which had forced the miner to shut it down for repair.

The mill operated at minimal capacity after the incident, stalling production at the Masbate site.

CGA Mining was able to complete the necessary repairs for the mill and resume full production at the project by December 2011.

The repairs for the mill set the firm back by $6.21 million, according to its annual report.

Total expenses incurred in the year were at $27.16 million, 85.27% higher than the $14.66 million recorded in 2011. Despite the incident, however, the miner noted that Masbate project’s milling facility, upon its repair, had enabled the firm to produce a record 100,013 ounces of gold from January to June this year.

“The plant continued to operate above expectations with availabilities for the six months to 30 June 2012 averaging 94.8% [recovery]. Since recommissioning, the SAG mill has consistently operated at/or above 6.6 Mtpa (million tons per annum),” CGA Mining said.

The firm added that its optimization study for the site, which commenced this year, is due for completion soon. The study seeks to identify several options by which it may be able to raise the Masbate venture’s current production rates to more than 10 Mtpa.

CGA Mining also added that it is looking to spend $20 million to undertake 100,000 meters of drilling over the next twelve months as part of its aggressive expansion strategy.

The Masbate gold project began commissioning in 2009 and has a total measured and indicated resource of 5.13 million ounces of gold, and an inferred resource base of 2.8 million ounces of gold.

CGA Mining indirectly owns the venture through its 100% ownership of Philippine Gold Ltd., 40% of Filminera Resources Corp., and 100% of Philippine Gold Processing & Refining Corp.

Filminera Resources holds the permits for the mineral tenements that include the Masbate gold deposit.

By Bettina Faye V. Roc, Business World.












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