Filipino equity may ease Tampakan mine tension — official

The participation of a Philippine company in the Tampakan gold-copper project may help ease much of tension and negative perceptions about the project and probably facilitate its success, a mining official said Wednesday. Leo Jazareno, Mines and Geosciences Bureau acting director, told reporters that the entry of San Miguel Corp. into Indophil Resources Inc. could have a positive impact on Tampakan. "The entry of San Miguel — it changes the landscape in Tampakan. Since San Miguel is Filipino, this will probably address the issue about foreign participation. The cultural opposition to mining in Tampakan will be mitigated," Jasareno said, when asked to comment on the 10 percent capital infusion of SMC in Indophil, a company listed on the Australian Stock Exchange. The SMC-Indophil deal would benefit not only the government but also the communities where the projects of the partnership are located, Jasareno said. "The Philippines will get benefits because it will have Filipino participation and profits will stay in the Philippines." he said. "It should benefit [everybody] by tempering the situation because you have Filipino investors. We have always advised foreign investors that the key to successful mining projects is having local partners." SMC is a "very Filipino" company, he added. "We would like to think that this (entry of SMC) would help appease those that are opposing the projects of Indophil," he said. The bureau said that SMC is trying to buy more Indophil shares. "The 10 percent share purchase has already been firmed up as reported to us. However, it looks like that's an initial transaction. SMC is still doing due diligence. Indophil has reported that there's an indication that San Miguel will buy more," saidJasareno. "There's is indication that eventually San Miguel will take the entire 37.5 percent of Indophil in SMI," he added, referring to Sagittarius Mines Inc., the lead operator of the Tampakan project. Indophil is being advised Gresham Advisory Partners Ltd., Baker & McKenzie and Free hills in the dealing with SMC, according to industry sources. San Miguel, on the other hand, is being advised by Bank of America, Merrill Lynch, and Blake Dawson, the sources added. Indophil Resources was incorporated in 1996 to buy, develop, and explore gold and copper mines in the Philippines and elsewhere in South East Asia to enhance and maximize shareholder value. Indophil owns 37.5 percent of the Tampakan copper-gold project in South Cotabato. The remaining 62.5 percent is held by Xstrata Queensland Ltd., the copper unit Xstrata Plc. The $5.2-billion Tampakan project hit a snag after the South Cotabato provincial government issued a rule banning open-pit mining. Environment and Natural Resources Secretary Ramon Paje, however, said the Aquino administration supports the Tampakan project because the mining industry is a significant catalyst for economic growth. "Local government units cannot issue orders that go against national policy," Paje said. To speed up the Tampakan mine operations, Paje said that the DENR has discussed with SMC how to operate the mine as soon as possible. Indophil and Xstrata initially wanted to complete the necessary government permits for the project by 2011 and start the construction phase by 2013. The mine was scheduled to operate by 2016 before it ran a foul with the South Cotabato local government. Once the pre-operation stage is complete, investors in Tampakan are expected to have infused $5.9 billion in the project, Jasareno said. — VS, GMANews.TV