Indophil seeking A$189.5-M mostly for Tampakan project counterpart fund

GENERAL SANTOS CITY (MindaNews/09 June) — Australian firm Indophil Resources NL is seeking to raise A$189.5 million mostly to cover its counterpart fund in the massive Tampakan copper-gold project in Mindanao through to 2012.

Brian Phillips, Indophil Resources chairman, said they are offering 471 million new shares at a price of A$0.35 per share to raise the amount.

“The purpose of this offer is to provide sufficient funds for Indophil to contribute to its share of joint venture costs for the progression of environmental, regulatory and technical works at Tampakan,” he said in a prospectus released on Wednesday.

“To the extent the full amount is raised under the offer, Indophil expects it will provide sufficient proceeds to fund the company for the remainder of CY2011 and a significant portion of CY2012,” he added.

Indophil Resources owns 37.5% of the 40% controlling equity at Sagittarius Mines, Inc, the Philippine company pursuing the Tampakan project. It is the Australian company’s flagship asset in its portfolio.

Xstrata Copper, the world’s fourth largest copper producer, exercises management supervision at Sagittarius Mines through its 62.5% controlling interest.

Philips said that under the offer, eligible shareholders will have the opportunity to subscribe for one new share for every existing share held 7:00pm (Melbourne time) on June 14, 2011, with the ability to apply for additional new shares in excess of the shareholder’s entitlement.

The offer will close at 7:00pm Melbourne time on July 7, 2011.

Based on the prospectus, Indophil’s share of approved Sagittarius Mines’ budget for the remainder of CY 2011 is A$25.7 million

Indophil’s share of the anticipated budget of Sagittarius Mines for CY2012 is currently A$159.6 million, it added.

The rest of the amount that will be raised will go to Indophil’s corporate and other expenses.

In announcing the new share offering, Phillips reiterated the potentials of the Tampakan project, describing it as “one of the world’s largest, low-cost and long-life undeveloped copper deposits.”

On the latest estimate, the Tampakan project is a 2.4 billion ton mineral resource containing 13.9 million tons of copper and 16.2 million ounces of gold, he noted.

The resources are best extracted through open-pit mining method due to the deposits’ shallow location, early company studies showed.

The Tampakan project, however, is facing a problem in the open-pit mining ban imposed by South Cotabato. Recently, Phillips criticized the National Government for its failure to thresh the issue which is now about a year old.

Phillips said the world-class nature of the asset has also seen a number of parties expressing an interest in a corporate acquisition of Indophil or its interest in Tampakan, including most recently Philippine conglomerate San Miguel Corporation.

San Miguel had entered into exclusive discussions with the Australian company after acquiring a 10.2% shareholding in Indophil.

The Tampakan project is potentially the largest foreign direct investment in the Philippines with its development cost pegged at $5.9 billion.

The Mine Project Feasibility Study of the company, which targets to start commercial operation in 2016, is being reviewed by the Mines and Geosciences Bureau.

The Environmental and Social Impact Assessment (ESIA) studies being conducted by Sagittarius Mines are expected to be completed within the year. The ESIA is one of the requirements in the acquisition of an environmental compliance certificate, a government clearance for the company to operate commercially.

South Cotabato Gov. Arthur Pingoy, Jr. said early this week the provincial government is expecting Sagittarius Mines to present its environmental impact assessment study anytime soon.

Pingoy said they are curious to know the environmental impact of the Tampakan project, noting the negative track record of the country’s mining industry. (Bong Sarmiento/MindaNews)