Vancouver — The discovery of an exciting new gold-rich copper porphyry system, combined with the expansion of several known deposits, is attracting attention to the Philippines.
Situated in the Ring of Fire (the volcanically active and mineral-rich trend that encircles the Pacific Ocean), the Philippines has long been considered prime hunting ground for gold and base metal deposits. However, years of political instability and a restrictive mining law have caused many international mining houses to shy away from the prospective country.
As a result, the once-major producer of copper, gold, chromite and nickel has seen its mining industry shrink over the past quarter-century.
As one means of bolstering the sagging economy, the Philippine government introduced the New Mining Law of 1995. Moving away from the nationalistic policies that limited foreigners to only a 40% interest in any project, the new law allows mining firms from other countries to hold a 100% stake through approved exploration permits and financial or technical assistance agreements (FTAAs). The change in policy sent large mining companies, such as
By the end of 1997, a second round of foreign explorers started to enter — only this time the companies established ties with local mining firms, which allowed them the right to hold up to a 40% interest in properties through approved mineral production sharing agreements (MPSAs).
In September 2000,
The latest drill results confirm the discovery of a large gold-rich copper porphyry system with localized high-grade zones.
Collared 250 metres west of the discovery hole, hole 10 was drilled at a 60-degree angle to the west. Cutting 106 metres of Quaternary lavas, followed by 328 metres of potassic altered diorite breccia hosting copper oxides and 176 metres of potassic altered diorite porphyry, the hole returned 345 metres grading 0.50% copper and 0.70 grams per tonne gold from 159 metres downhole. This interval included a higher grade section that ran 0.61% copper and 1.1 gram gold over 110 metres.
Some 300 metres northwest of the hot hole at the same site as hole 8, hole 11 was drilled in the east direction at an angle of 60 degrees and hit 280 metres of unaltered cover, followed by mineralized diorite intrusion breccia to the end of the hole at 602 metres. This hole returned 0.41% copper and 0.5 gram gold over 316 metres from 286 metres downhole.
Moving 250 metres to the south, hole 12 was inclined at 60 degrees and drilled to the north. The top 292 metres hit unaltered cover, followed by 97 metres of diorite porphyry with breccia phases that returned 0.28% copper and 0.68 gram gold. The hole was abandoned in mineralization due to ground conditions.
Currently at a depth of 550 metres, hole 13 is collared 120 metres north of hole 6 and is angled at 85 degrees to the east. Mineralized diorite porphyry and breccia was intersected at 80 metres with the intensity of oxide mineralization increasing with depth. Only partial assays were available at press time, yielding 1.1% copper and 0.73 gram gold over 77 metres from 85 metres downhole.
Hole 14 was collared 150 metres north of hole 10 and inclined at 60 degrees to the north. Strongly mineralized diorite breccia containing copper oxides with zones of enargite-bornite mineralization were cut from 53 metres to 258 metres downhole. Partial assay results returned an impressive weighted average value of 1.7% copper and 3.46 gram gold over 205 metres from 53 metres downhole. Included in this interval was a high-grade section running 2.2% copper and 5.11 gram gold over 135 metres. Hole 15 is in progress.
Two rigs are turning on the property with a third slated to be added in the second quarter. The large porphyry system remains open to the north and northeast, as well as at depth.
Since signing the joint-venture agreement with Philex in September 1999, Anglo-American has outlined four induced-polarization geophysical anomalies on the 52-sq.-km project. Initially, the major drill-tested the Bagacay prospect, where the first five holes failed to return any significant mineralization. The rig was then moved 3 km to the northwest to test for a blind copper-gold porphyry under Quaternary lavas and sediments at Boyungan.
The first hole was collared 500 metres east of the discovery hole and drilled in a southerly direction. This hole hit a pyritic zone with no significant mineralization. The second hole was collared from the same site but drilled in a northerly direction. This hole cut 204 metres averaging 0.38% copper and 0.05 gram gold per tonne from a down-hole depth of 134 metres. Included in this intercept was a 93-metre section running 0.57% copper and 0.17 gram gold.
Hole 3 was collared 500 metres north of the discovery hole and inclined 80 to the north. The hole was terminated at 203 metres, having cut 0.18% copper and 0.64 gram gold over 15 metres from a down-hole depth of 168 metres.
Holes 4 and 5 were collared some 900 metres northeast and 1 km east of the discovery hole, respectively, and both cut propylitic alteration with no significant values.
Hole 6 finally cut the high-grade mineralization below volcanic cover at 57 metres down-hole. The copper-gold mineralization is hosted in a diorite porphyry intrusive with ore-grade material continuing to the end of the hole at 422 metres.
Applying cutoff grades of 0.1% copper and 0.1 gram gold to the hole, the weighted average values of a 329-metre intercept (from 93 to 422 metres) averaged 0.9% copper and 2.07 grams gold.
Hole 7 was collared from the same pad, angled 60 to the south (180 from hole 6) and cut 280 metres grading 0.46% copper and 0.4 gram gold from 128 metres down-hole.
At the same site, hole 9 was drilled at a 60 angle in a westerly direction and returned a robust 421 metres averaging 0.56% copper and 0.9 gram gold from 79 metres down-hole. Included in this interval was a higher-grade section running 0.74% copper and 1.14 grams gold over 338 metres.
Mineralization is hosted in polyphasal dioritic intrusives typical of Southeast Asian gold-rich copper porphyry systems. Despite being capped by 57 to 128 metres of later-staged lavas, Philex reports a deep oxide zone of up to 250 metres consisting of malachite, azurite, cuprite and native copper.
In eastern Mindanao, all the previously discovered copper porphyry deposits are clustered farther to the south in the province of Davao del Norte. Typically, the mineralized district is part of a north-northwest-striking belt of pre-Miocene arc basement that has been severely fractured by multiple splays of the major Philippine fault system. Miocene quartz diorite stocks and later sub-volcanic andesite porphyries invade late Cretaceous and lower Tertiary rocks. Many of these mineralized intrusives are structurally controlled and spatially associated with major high-angle faults.
Mineralization occurs along intensely fractured roofs of the intrusive and is often restricted along the periphery with the upper Cretaceous volcano-sediments contact zone. The five largest known copper porphyries in the area average 69 million tonnes grading 0.45% copper and 0.4 gram gold. The only deposit with a considerable oxide zone is KingKing, which hosts 438 million tonnes grading 0.34% copper and 0.51 gram gold. Of this total, 87.6 million tonnes grading 0.48% copper and 0.74 gram gold are oxide-hosted. Metallurgical tests indicate recoveries, for the oxide mineralization, of 70% for gold and 80% for copper.
Anglo-American can earn a 40% stake in the North property by spending $2.2 million on exploration over five years. The South African-based major can increase this to 70% by completing a bankable feasibility study.
An early player to recognize the potential of the Surigao area was
Sensing that the Boyungan discovery might spark interest in the country, Mindoro recently acquired two new gold projects on the southern portion of the country’s main island of Luzon.
Under the deal, the Tony Climie-led junior picks up a 75% stake in the Lobo and Archangel gold-bearing high-sulphidation systems, some 150 km south of Manila.
In production from 1966-to-1969, the Lobo underground mine has a remaining reserve of 90,700 tonnes grading 20.5 grams gold per tonne. The property hosts a 4-by-2 km area of highly altered volcanics surrounding the old mine site.
The style of mineralization shows a marked similarity to the high-sulphidation enargite-luzonite deposits at Mankayan (northern Philippines where production from 1936 to 1990 was 29.3 million tonnes grading 2.4% copper and 3.82 grams gold) and the El Indio mine in Chile (140 million tonnes grading 0.71% copper and 2.9 grams gold).
With no modern-day exploration completed on the property, Mindoro plans on targeting the bonanza-type veins, as well as testing for an underlying copper-gold porphyry system.
Some 9 km southeast, the Archangel project hosts two gold-bearing zones, known as Kay Tanda and Pulang Lupa, within a 5-by-2 km zone of highly altered volcanics. Previous drilling in the late 1980s and mid-1990s, defined an inferred resource of 8.3 million tonnes averaging 0.68 gram gold at Kay Tanda. Of interest to Mindoro is a strong copper-in-soil geochemical anomaly located 500 metres southwest at the Balibago prospect. “Porphyry-style” alteration and disseminated copper mineralization within a microdiorite stock puts the prospect at the top of Mindoro’s drill target list.
Under terms of the agreement, the Edmonton-based junior can earn a 51% stake in the properties by spending US$1.5 million over three years and issuing 500,000 shares to a privately held Philippine company. Mindoro can then earn an additional 24% by issuing another 500,000 shares and taking the project to the feasibility stage. On completion of a feasibility study, the private company gets a further 500,000 shares.
Mindoro is seeking joint-venture partners for its projects.
On a small island just off the south-eastern tip of Luzon, Australian-listed Lafayette Mining has tabled a positive feasibility study for
The study, led by Signet Engineering of Australia, envisions mining the Ungay Malobago deposit as an open pit, treating 4.9 million tonnes of material grading 1.4% copper, 2.4% zinc, 30.4 grams silver and 2.71 grams gold over a 6-year mine life. On an annual basis, the 820,000-tonne-per-year operation would produce 61,000 tonnes copper and 89,000 tonnes zinc, plus 3.6 million oz. silver and 293,000 oz. gold. Projected capital costs are slated at US$37.8 million, generating an internal rate of return of an impressive 30%.
A “Besshi-type” massive sulphide deposit, the project was originally discovered in the 1960s and reportedly produced some 200,000 tonnes of ore from underground. Mineralization is hosted as bands and lenses conformable to the schistocity of low-grade metamorphosed schists. In 1991, reserves were pegged at 3 million tonnes grading 1.8% copper and 2.5% zinc, plus 40 grams silver and 2-3 grams gold per tonne.
West of the planned open pit, Lafayette is completing a conceptual study of the possible underground exploitation of the old Karogrog mine. Operated by Hixbar Gold Mines from the late 1930s until the 1960s, the mine still holds 1.1 million tonnes grading 1.3% copper and 2% zinc, plus 25 grams silver and 2.7 grams gold per tonne.
Mineral-processing constraints are cited as the main reason for the lack of development in the past. Lafayette is in discussions for project financing.
To earn a 63.75% stake in the project, the Australian junior must spend US$3 million over four years, which would leave TVI with 25% and a private Philippine company with the remainder.
TVI also holds the Canatuan massive sulphide project, on the western side of Mindanao island. The junior is seeking up to US$6 million to expand its existing plant to 500 from 800 tonnes per day. The plant operated in 1997 but was shut down after the company ran out of funds.
Last year, a local uprising resulted in the temporary suspension of drilling. The program went on to confirm previous results and boost confidence in the deposit’s continuity, plus provide metallurgical samples for due-diligence studies by the potential partners.
Proven and probable oxide resources stand at 935,500 tonnes grading 4.12 grams gold and 133 grams silver.
Another company that had to overcome local problems was Australian-based Climax Mining. The junior discovered the high-grade Dinkidi gold-copper deposit some eight years ago, but financing difficulties caused development to be delayed. In 1996, noted Canadian geologist Colin Spence was killed by a local’s bullet while evaluating the property for
“We are aware of how sensitive the area is,” Climax Chairman Terrance Fern told shareholders at their annual general meeting. “We have spent time and money making sure everything we do exceeds environmental standards.”
The Dinkidi project is in the northern portion of Luzon, in the Didipo Valley, 200 km northeast of Manila. Climax has one of only two FTAAs ever granted by the Philippine government and expects development work to begin in April. The company has secured a US$25-million equity and debt financing from Korean multinational LG International and Korea Resources; British funding agency CDC Capital Partners has offered another US$17.5 million; and Standard Bank London is arranging a syndicated US$90-million senior project loan.
Capital costs for the project are pegged at US$132 million, and the operation is expected to produce a total of 1.3 million oz. gold and 250 million lbs. copper from 17.8 million tonnes grading 3.04 gram gold per tonne. The initial mine life of nine years could be extended. The Dinkidi deposit hosts a geological resource of 121 million tonnes averaging 0.97 gram gold and 0.39% copper. Startup is slated for 2003.
The Australian junior also holds the Paco gold property, about 2 km west of the Boyungan discovery, on the Surigao Peninsula. Recent chip sampling returned up to 4.5 grams gold in mineralized float. Several major mining groups have expressed interest in participating in the project.
A long-time explorer of the island nation, Australian-based
The company outlined possibly the second-largest bulk copper-gold resource in Southeast Asia: some 990 million tonnes grading 0.75% copper and 0.27 gram gold. Despite holding the second approved FTAA, the major threw in the towel following trouble with the local indigenous people and pending legal challenges against both its mining application and the validity of the new Philippine Mining Act. The legal challenge stems from the fact that the new mining act allows full foreign ownership, which the group claims is unconstitutional under Philippine Law. The challenge is pending before the Philippine Supreme Court. WMC stated at its 1999 annual general meeting that the project would be abandoned despite “insufficient work (having) been completed to enable a sound estimate of its extent or commercial viability.”
Some 200 km south of Manila, on the island of Mindoro,
Over the next three months, the company hopes to complete the resource evaluation and optimization study for the project. This will entail more than 8,000 metres of drilling.
Meanwhile,
“We want to keep it as simple as possible,” says David Tafel, Mighty Beaut’s manager of corporate development. “That means a mining facility, pre-leaching with a portion going to the autoclave in order to generate a concentrate.”
Test-pitting at Celestial has outlined a total resource of 77.2 million tonnes grading 1.29% nickel and 0.09% cobalt.
A tenuous and time-consuming permitting procedure for exploration in the Philippines has been a major drawback to attracting foreign companies. A position paper tabled by the Australian-New Zealand Chamber of Commerce (Anzcham) concluded that US$59 million worth of potential investments for mining had been lost over the past five years, owing to an unfavourable investment climate in the Philippines. Many companies that had committed to invest in Philippine exploration have left the country and invested their funds elsewhere “due to frustrating delays.”
The report urges the government to “strongly support” foreign mining firms in the Philippines as a way of restoring international investor confidence in the local mineral industry.
Based on the promising geological potential, the position paper sees the Philippines attracting US$3.2 billion worth of new investments in the mining sector with export revenue hitting US$1.2 billion a year over the next five years.
However, action on the permitting front is likely to remain slow as the new president, Gloria Macapagal-Arroyo, recently designated Joemari Gerochi as officer-in-charge of the Department of Environment and Natural Resources (DENR), which oversees the mines and geoscience bureau. Until a new secretary is appointed to the DENR post, the snail-like pace of granting approvals is likely to continue.
There are now about 2,136 exploration and mining-related applications pending approval from the Philippine government. Of these, 1,737 represent MPSAs and 399 are exploration permits. Last year, the country approved a total of 25 mining-related permits, which comprised 18 MPSAs, and seven exploration permits.
An MPSA is a mining agreement between the government and a qualified entity wherein the latter is granted the right to explore, develop and utilize any minerals discovered in the contract area for a period of 25 years; it is renewable for another 25 years. This permit must be held 60% by Philippine interests. The exploration permit grants the holder the right to explore the applied-for area for two years, allows 100% foreign ownership, and is renewable. The FTAA is similar to the MPSA but grants 100% ownership to non-Philippine interests.
The applications for exploration permits pending before the Mines and Geoscience Bureau cover some 32,600 sq. km. A total of 37 of the 60 exploration permits issued since 1995 is still active. The Mining Tenement and Management Division expects to approve about 20 MPSA applications this year.
In the heady days of the late 1970s and early 1980s, more than a dozen Philippine mines cranked out in excess of 1 million tonnes of concentrate, yielding nearly 300,000 tonnes of copper a year. Over the past five years, suspension of operations and outright mine closures have seen the production fall to a static 50-60,000 tonnes of copper per year. Today, only Philex Mining’s Padcal copper mine in northern Luzon can be considered a consistent and dependable producer.
Gold production has fared slightly better. Philippine production of the yellow metal increased by 8.2% for the first nine months of 2000. According to the Philippine Chamber of Mines, production from January to September surged to 11,426 kg, up from 10,556 kg in the corresponding period of 2000. However, only two of the country’s five primary gold producers were able to boost output. Leading the pack was Lepanto Mining’s Victoria mine, near Bagio in northern Luzon, and Manila Mining’s gold project in Surigao del Norte, near Boyungan in northern Mindanao.
The Victoria mine was unaffected by the low prices because of its high-grade ore and low production costs, making it one of the country’s most efficient mines. The operation cranked out 3,722 kg, up 26% from the 2,959 kg produced in the corresponding period a year ago. Manila Mining’s output, meanwhile, surged 134% to 1,096 kg from 469 kg a year earlier.
United Paragon Mining and Philex Gold’s Sibutad project — two other major gold producers — have been shut down since May and September 1999, respectively, owing to low gold prices. Philex’s Bulawan mine, on the island of Negros, meanwhile posted a decreased output.
Nickel ore output over the first nine months plunged to 637,589 dry tonnes from 751,288 last year. The short fall is attributed to a temporary shutdown of the Rio Tuba operation in Palawan.
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