Philippines: Will King-king mining project succeed where SMI failed?By Edwin Espejo Oct 20, 2013 7:41AM UTC
Partners at the King-king Copper and Gold Project recently announced they could start commercial production as early as 2017 at the Pantukan mining development area in the southern Philippines.
In a press conference at Shangri-La Hotel in Makati Monday (October 14), the Nationwide Development Corporation (Nadecor) and St. Augustine Gold & Copper Ltd. also disclosed that they are restructuring their partnership in an bid to attract strategic investors to the project.
Under the new scheme, the Toronto-based St. Augustine will make available 324,568,751 shares, or 39.96 per cent of its outstanding share, to Nadecor shareholders at US$0.10 per share.
St. Augustine will in turn form a milling company that will exclusively process ore extracted from the mine in Pantukan, Compostela Valley.
The Canadian mining firm also committed to raise the capital needed for the project. It has already enlisted the services of Bromius Capital for its financial requirement.
The King-king project will however remain a 60-40 joint venture between Nadecor and St. Augustine, in favor of the former, a wholly owned Filipino mining company.
The joint venture is yet to announce its corporate name.
Nadecor board chairman Roberto Romulo said it is confident of getting the support of the provincial government as well as host Pantukan town.
Romulo declared that they see a more ‘enlightened’ local government unit in Compostela and do not see major obstacles in the operation of the project.
He likewise said the recent announcement of Sagittarius Mines Inc (SMI) to scale down operation in the latter’s beleaguered Tampakan Copper and Gold Project will not in any way affect the Pantukan project.
If anything, Nadecor president Conrado Calalang held that failure of SMI to proceed with its copper and gold project in Tampakan, South Cotabato will make the King-king project the biggest mining undertaking in the country.
But Calalang also added that he sees no rivalry with SMI.
“Both will be good for Mindanao,” Calalang added.
The Glencore-Xstrata controlled SMI decided to pare down its operations after it failed to obtain approval from the provincial government of South Cotabato which, in 2010, passed an ordinance banning open-pit mining in the province.
The recent merger that eventually developed into the takeover of Xstrata by Glencore also affected the future operation of SMI. Glencore-Xstrata recently announced it will cut by half its global operations.
Sources also said Glencore is not particularly aggressive in supporting ‘greenfield’ projects and is instead interested in operational endeavors.
SMI has not gone beyond drilling operations although it already has obtained an environmental compliance certificate from the Mines and Geoscience Bureau (MGB).
$2 billion investment
The King-king Copper and Gold Project is expected “to recover 3.16 billion lbs of copper and 5.43 million ounces of gold over its 22-year mine life.”
The project holders said it will pour in US$ 2 billion in direct investments of which more than US$450 million will go to the construction of a dedicated power plant and port facilities. In addition, the project will also build a four-kilometer overhead conveyor system to transport copper concentrates to its port facilities.
It had already completed its pre-feasibility studies and had also submitted its environmental impact study to the Department of Environment and Natural Resources.
Clyde Gillespe, country manager for St. Augustine, said it is now also completing the free and prior informed consent process with the tribal communities in the host village of King-king and neighboring areas.
According to Gillespe, they are expecting approval of their application for an environmental compliance certificate within the first half of 2014.