Philex needs $800 million to develop Silangan project

MANILA, Philippines - Philex Mining Corp. said it may need around $800 million to develop its Silangan project (formerly referred to as the Boyongan and Bayugo deposits) in Surigao del Norte.

In a disclosure to the Philippine Stock Exchange, Philex said the Silangan project, currently in the pre-feasibilty study stage, “could entail per initial and very rough estimate, the development cost of about $800 million.”

Philex has gained full control over the Silangan project after it bought out partner Anglo American Plc. in the venture in January this year.

The acquisition was done via a share and asset purchase agreement covering the purchase by Philex of the shares of Anglo in the joint venture companies, Silangan Mindanao Mining Co. Inc. and Silangan Mindadao Exploration Co. Inc., as well as the acquisition of various assets, receivables and obligations of Anglo in the project for a total consideration of $55 million

Philex and Anglo American earlier argued about the viability of the Boyongan project. A previous study conducted by Anglo showed the mine would not produce an acceptable rate of return.

The 25,184-hectare Boyongan project was estimated by the government to have ore reserves of 300 million tons. Philex said production at Boyongan could start by 2012.

The Bayugo deposit is now comparable to the Boyongan deposit, which was previously announced at 104 million drymetric tons of measured and 19.8 million dmt of inferred resource.

Philex and its Canadian-based subsidiary Philex Gold have deployed 11 drill rigs in the Bayugo area to hasten the step-out and in-fill drilling to elevate the status of inferred resources to the indicated category which is necessary for the completion of the pre-feasibility study.

Philex is 40.7 percent owned by Hong Kong-based conglomerate First Pacific Co. Ltd