No deal as SMC, Indophil exclusivity period ends

KORONADAL CITY (MindaNews/10 February) — The exclusivity period for Filipino conglomerate San Miguel Corp. to make an offer to fully acquire Indophil Resources NL, minority equity holder at the Tampakan copper-gold project, lapsed today without any substantial development.

The non-extension of the exclusivity period will give the Australian firm the option to talk with other investors to extract maximum value for the shares of the company, whose only flagship asset is its 37.5-percent stake in the Tampakan project.

Richard Laufmann, Indophil chief executive officer, said they are 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.

The exclusivity agreement had been in place for four months, or since October 8, 2010.

“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,” Laufmann said in a statement.

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 added.

He said Indophil 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 the Tampakan project, 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.

The Tampakan project is pursued by Sagittarius Mines, Inc., which is managed by Xstrata Copper through its 62.5-percent controlling equity.

The project, eyed to go on commercial stream by 2016, faces risk from the open-pit ban imposed by South Cotabato. Social opposition, mainly from the local Catholic church, is also high against the project, aside from the threats posed by the communist New People’s Army.

Laufmann said that 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.

Earlier today, San Miguel disclosed to the Philippine Stock Exchange the expiration of the exclusivity period with Indophil.

San Miguel, however, said it will continue its ongoing due diligence on Indophil even without an exclusivity agreement to determine whether a firm offer shall be made with respect to the outstanding shares of Indophil.

Last year, San Miguel acquired a 10.1-percent interest in Indophil for $40 million. (Bong Sarmiento/MindaNews)