UK firm buys option of coal project in SouthCot

In a statement, Jan Vestrum, Crew president and chief executive officer, said the firm secured the option by paying a non-refundable option fee of $150,000 (about P8 million) which entitled it to conduct a due diligence assessment until September.

 

"This project is strategic as a stand alone project and further strengthens Crew's presence and commitment to the Philippines. A secondary key aspect is that a successful acquisition and ramp up of the Daguma Coal Project will enable Crew Minerals to undertake a phased development of the Mindoro Nickel Project without the need for external partners,” he said.

 

“We believe the Daguma Coal Project and the Mindoro Nickel project represents major value,” Vestrum added.

 

To exercise the option, Vestrum said the firm must pay a total of US$10 million (some P510 million) in cash and equity of Crew.

 

Crew and associated Philippine qualified partners will acquire 50% of Daguma Agro and entitle the company to purchase the remaining equity, he said.

 

A final payment amounting to US$13.75 million (some P710 million) in cash and equity is to be made 18 months following completion of the due diligence period to acquire the remaining 45% of Daguma Agro, he added.

 

The Daguma coal project holds a 2000-hectare license area under Coal Operation Contract No 126 and consists of two Coal Blocks No. 380 and 381.

 

The operation contract was awarded a conversion from exploration phase to a development/production phase by the Department of Energy only last February.

 

An environmental clearance certificate is needed from the Department of Environment and Natural Resources before production can start. Tungko Saikol, regional chief of the  Environmental Management Bureau could not be reached if the agency has granted a clearance to Daguma Agro.

 

The South Cotabato coalfield, and particularly the Daguma Agro area, is a recent discovery to the Philippines and is now considered potentially to host the largest coal deposits in the country according to a comparative report by the Department of Energy.

 

A detailed resource evaluation by Toquero Geol. and Affiliates estimated a measured resource of 28 million tons, an indicated resource of 150 million tons and an Inferred resource of 130 million ton Inferred resource has been delineated within a distance of maximum 1000 meters from last points of observation. 

 

Consultants to Daguma Agro have subsequently defined an open-pitable reserve of 44.1 million tons within the resource.

 

This has formed the basis for a production plan submitted to and approved by the Energy department to move the project to the development and production stage.

 

Vestrum said Crew will independently verify this data as part of its due diligence.

 

South Cotabato Gov. Daisy Avance Fuentes earlier said the provincial government welcomes excavation of coal deposits in Lake Sebu town but noted that production plants should be put elsewhere.

 

Last week, residents of Sitio Kibang, Barangay Ned in Lake Sebu, South Cotabato asked government to stop coal exploration activities by two companies there for fear these would destroy their livelihood.

In a manifesto written in Ilongo, at least 100 residents cited at least eight reasons for opposing the coal exploration activities of MG Mining and Energy Corp. and Daguna Agro Minerals Inc.

They said mining carbon, aside from destroying their livelihood, would cause pollution and diseases, destroy the watershed servicing South Cotabato and neighboring provinces, and defeat government efforts to develop their area.

"It would cause misunderstanding among the people that will lead to a conflict," the manifesto added.

Yellen Yata, a villager, claimed there was no "real consultation"  between the coal firms and the villagers.

"We are opposed to the coal exploration activities because it is not only us from Ned who will be affected but [people] from three provinces. Ned is a watershed area," she said.

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