The next big thing in Philippine mining
Mining can be a most viable economic driver if allowed to flourish. It has proven itself to be an able partner of government in disaster response, as in the case of the COVID-19 pandemic and, more recently, in the aftermath of Typhoon Odette.
It is good to note that the government of President Rodrigo Roa Duterte has acknowledged this viability, this able partnership.
It was in this vein that Executive Order No. 130 was issued last year, amending Section 4 of Executive Order No. 79, among others, and lifting the moratorium on new mining agreements.
It was also in this same vein that the Department of Environment and Natural Resources (DENR), under the astute leadership of the no-nonsense Secretary Roy Cimatu, and the hardworking Undersecretary for Mining Jim Sampulna, issued Department Administrative Order No. 40, series of 2021 (DAO 21-40), lifting the four-year ban on the open-pit method of mining.
These two issuances somehow revived the industry from the slump it was in and they were timely in the sense that the global market was also at play, where the world under pandemic realized higher metal prices and demand.
The mining industry in the country welcomed these two landmark issuances and hoped that these would create a most favorable climate conducive to investments in the country in general and in the industry in particular.
We all know how much we need such investments to aid in the economic recovery post-pandemic.
The Silangan Copper and Gold Project is one such undertaking that would benefit much from this mining revival and this favorable investment climate.
Silangan is a large-scale, high-grade, and low-cost copper and gold development project that is wholly owned by Philex Mining Corp., one of the oldest and largest gold and copper producers in Southeast Asia and a leader in right and principled mining in the country.
The project is in Surigao del Norte, CARAGA region, and consists of two ore deposits, Boyongan and Bayugo (comprised of Bayugo-Silangan and Bayugo Kalayaan). Boyongan and Bayugo-Silangan are 100 percent owned by Silangan Mindanao Mining Co. Inc. (SMMCI), a 100 percent subsidiary of Philex, while Bayugo-Kalayaan is held under joint venture with Manila Mining Corp.
The Silangan Project anticipates a phased development approach with a long life of mine geared towards 28 years.
In July 2021, the Philex/Silangan board of directors approved the in-phase development of Silangan and has embarked on a fundraising exercise to fund the initial CapEx (capital expenditure).
Development is expected to start early this year and is estimated to be completed by the fourth quarter of 2024. Commercial operations are estimated to start by the first quarter of 2025.
Silangan is one of three big-ticket mining projects in the country — all in Mindanao — and is comparable to the other two in terms of scale (tonnage) but of higher copper and gold grades. These other two projects are the Tampakan Gold Copper Project and the King-king Mining Project.
Philex Mining is currently seeking interest from potential equity investors in SMMCI and is embarking on a fundraising exercise to raise funds to finance the development of the in-phase development plan. It is set to begin development of Phase 1 this year.
Philex will initially spend $224 million for the development of the starter mine set to process at least 2,000 tons of ore a day. The needed funds would be financed by capital infusion from Philex, equity via a stock rights offer (SRO), and by debt.
The SRO is expected to contribute approximately P3.1 billion or $61 million. Philex will infuse between P2.5 billion to P3 billion out of its cash surplus from current operations. Any balance that will be left from the SRO and the Philex cash infusion will be sourced through debts.
Philex has already filed an application with the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) to raise as much as P3.15 billion through an SRO of up to 842 million common shares.
BDO Capital and Investment Corp. has been tapped as issue manager and lead underwriter.
Silangan will be a major exporter of metallic minerals for the Philippines, generating in the future much-needed foreign receipts of the country that will augment and increase the country’s foreign currency reserves that can improve the country’s ability to settle foreign currency requirements for economic recovery post-COVID-19 pandemic.
I iterate here what Philex chairman Manuel Pangilinan or MVP has constantly said: “Mining is not the enemy. Poverty is. The lack of the most basic necessities, the lack of opportunities, the lack of choices — these pernicious deficits have plagued our people for far too long, in far too many places. Yet, the supreme irony is that, in the midst of all this poverty, lie one of the world’s richest natural resources, a gift of providence endowed to our people.”
Here is a rich resource in Silangan that we hope would be tapped soon, for the good not just of the industry, but for the nation as well.
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