Chinese gold giant withdraws from Tampakan project

GENERAL SANTOS CITY (MindaNews/25 June) – China’s biggest gold producer today said it was shelving plans of acquiring the stake of Australia’s Indophil Resources NL in the massive Tampakan copper and gold project, in what is apparently a fallout from the Sangguniang Panlalawigan of South Cotabato’s decision to pass the Provincial Environment Code that bans open pit mining.

Zijin Mining Group, also China’s third-largest copper producer, and Indophil issued a joint statement that they have mutually agreed to terminate the Takeover Implementation Agreement between them dated November 29, 2009 (as amended on April 15, 2010).

The termination is effective immediately.

Outgoing South Cotabato Gov. Daisy Avance P. Fuentes last week said she was keen on signing the code, prompting some 3,000 supporters of the Tampakan project to hold pickets at the provincial capitol and outside her residence.

Fuentes, who will reenter Congress as representative of the province’s second district, could not be contacted Friday for an update on the status of the environment code which was submitted to her office by the provincial board last week.

“The mutual decision to terminate the Takeover Implementation Agreement has been arrived at following uncertainties created by unexpected and continuing delays in relation to the fulfillment of certain bid conditions,” Zijin and Indophil said.

After careful consideration, Zijin has determined that it has no current intention of extending the offer period in relation to the off-market takeover bid by its wholly owned subsidiary, Golden Resource Mining (BVI) Limited (Golden Resource Mining), for all of the ordinary shares in Indophil, which is scheduled to expire on 9 July 2010, the statement said.

Zijin earlier offered to purchase all the shares in Indophil at A$1.28 per share, valuing Indophil at approximately A$545 million, which would pave the way for its entry to the Tampakan project.

Indophil holds 37.5% interest in the Tampakan project, its only flagship asset in its portfolio and which is controlled by Xstrata Copper through its 62.5% controlling equity over Philippine affiliate Sagittarius Mines, Inc.

Last month, Zijin executives visited the Tampakan mines development site in what a Sagittarius official said was part of its due diligence. Indophil had hailed the visit as Zijin’s keen intention to be part of the Tampakan project.

“This is very disappointing and a decision that was not made easily by either party. However, given the lengthy delay of some months in Zijin securing Chinese provincial approval for their offer for Indophil, and no clear timeframe forthcoming, both parties agreed to terminate the agreement,” Richard Laufmann, Indophil chief executive officer, said in a separate statement.

Laufmann said that given the world-class nature of the Tampakan Copper-Gold Project in the southern Philippines, and the recently submitted Final Feasibility Study confirming it as one of the largest and most significant undeveloped copper projects in the world, Indophil is reopening discussions regarding the sale of its 37.5% stake in the project.

“Termination of the Implementation Agreement, effective immediately, frees Indophil of any exclusivity provisions and break fees,” he said.

“The ever-increasing global appetite for copper and gold will not be met by known supply. The Tampakan project, clearly a flagship project, has been off the market and locked into an exclusive transaction since December 2009. This new and defining development of termination of the Indophil-Zijin offer has now freed Indophil to re-consider its opportunities,” he added.

Indophil will continue to pursue its strategy of extracting value from its 37.5% interest in the Tampakan project, he said.

“Indophil is reviewing its options and will open or reopen dialogue with interested parties. Given the world-class nature of the Tampakan deposit, Indophil is very confident that there is considerable interest around the globe in acquiring the Company’s interest in Tampakan,” Laufmann said.

Meanwhile, Laufmann said that Indophil will remain in voluntary suspension on the Australian Securities Exchange until no later than July 14, 2010 or to an earlier time when the position in respect of the prohibition of open pit mining under the proposed South Cotabato provincial Environmental Code has been clarified. (MindaNews)