Juniors advance Philippine projects

Vancouver — Despite an array of political and legal hurdles, a growing number of Canadian and Australian exploration companies are reporting progress at projects in the Philippines.

Among the Canadians are such veteran explorers as TVI Pacific (TVI-T), Philex Gold (PGI-V), and Mindoro Resources (MIO-V).

TVI became active in the region in the mid-1990s, when it inked several property deals with Philippine miner Benguet. These deals included the promising Canatuan polymetallic deposit in western Mindanao.

In February 2003, the junior poured its first gold-silver dor bar at a rehabilitated oxide plant on the Mindanao property. The plant, operating at 60 tonnes per day, is initially using stockpiled tailings as mill feed. So far the amount of feed from previous small-scale mining operations has been higher than expected, with values ranging from 6.5 to 7 grams gold per tonne and 200 to 220 grams silver. The throughput rate is being ramped up in stages, with plans calling for 500-tonne-per-day operation within two years.

Situated in Zamboanga del Norte, the project has long been plagued by local violence. In late December 2002, members of the Canatuan indigenous Subanen community, including women, children and TVI employees, were ambushed on a provincial road linking the Canatuan mine site to the town of Siocon. Thirteen people were killed and 12 others injured in the shooting. It was the second ambush in the area during the year. In March, two security guards employed by TVI were killed near the property.

The project hosts an open-pit reserve of 1.1 million tonnes grading 3.77 grams gold and 105.7 grams silver per tonne in the oxide zone, and 1.51 million tonnes grading 1.31 grams gold and 62.14 grams silver in the sulphide portion.

Meanwhile, farther north in the province of Albay, the Rapu Rapu project is gearing up for production.

TVI dealt the property to Australian-listed Lafayette Mining in 1998 in return for 3.3 million unlisted share options with an exercise price of A20 each, and a 2.5% net smelter return royalty. Lafayette is developing the port facility and access road. “Good progress with the banks, coupled with the improvements in metal prices, has given us sufficient confidence to make an early commitment to construction,” says Lafayette’s managing director, Andrew McIlwain.

Feasibility studies propose a 1-million-tonne-per-year operation. Beginning in 2004, the mine will produce, on an annual basis, 10,000 tonnes copper in concentrate, 14,000 tonnes zinc in concentrate, 50,000 oz. gold, and 600,000 oz. silver.

Construction is expected to last 13 months, with capital costs pegged at US$43 million. Lafayette has all the government approvals in place and has purchased 2.3 sq. km for the project and related infrastructure.

Says TVI President Clifford James: “A construction start for this project brings us much closer to realizing the full value of our 2.5% royalty interest and allows us to forecast cash payments with greater certainty.”

Edmonton-based Mindoro has been exploring in the Philippines since 1996 and recently reported encouraging drill results from the Lobo gold property on the island of Luzon.

The best results have come from the SW Breccia zone (SWB), where hole 7 cut 22.34 grams gold per tonne over 13 metres. Holes 8 and 9 were drilled 172 metres south of hole 7 and intersected, respectively, 3.5 metres averaging 2.4 gram gold, 2.5 gram silver and 0.43% copper, and 4.1 metres grading 2.4 grams gold, 4.84 grams silver and 0.5% copper.

Based on the initial findings, Mindoro has moved the rig back to the central part of SWB. Crews will attempt to delineate the zone at 40-metre spacings and to depths of 150 metres below surface.

The SW Breccia zone appears to be low-sulphidation epithermal mineralization overprinted on to an earlier, copper-gold high-sulphidation style. The zones occur as pods or lenses, so a considerable amount of drilling will be required to define the mineralization. A second drill will soon be added.

North project

In eastern Mindanao, at the North project, scout drilling around the Boyongan copper-gold deposit has so far failed to find additional resources. The project is in Surigao province.

Partners Philex Gold (PGI-V) and Anglo American (AAUK-Q) have seven rigs turning in an attempt to evaluate the property’s economic potential. The latest batch of assay results from four holes returned a best value, in hole 67, of 0.14% copper and 0.18 gram gold per tonne over 420 metres.

“Quite a number of scout holes south of Boyongan have been completed,” says Philex CEO Gerard Brimo. “But unfortunately none of these has given us the results we had hoped for.”

Anglo American discovered the Boyongan deposit in September 2000, when hole 6 returned a 365-metre intercept grading 0.7% copper and 1.9 grams gold per tonne. Subsequent drilling throughout 2001 and 2002 continued to yield impressive numbers, including 393 metres of 1.58% copper and 2.39 grams gold in hole 15, and 896 metres of 0.49% copper and 1.57 grams gold in hole 18. However, results by the end of 2002 indicate that although the deposit contains some high grades, the tonnage anticipated from the oxide zone is unlikely to be sufficient to support a large-scale, long-life operation. Also, the deep-seated sulphide mineralization now appears to have an erratic grade distribution. This finding prompted Anglo American to launch an aggressive regional drill program aimed at finding additional mineralization.

Anglo American intends to drill 28,000 metres this year, with resource estimates for the Boyongan deposit and metallurgical test results expected by year-end.

Currently, Philex and Anglo American each hold a half-stake in the project, and the major can earn an additional 30% by completing a bankable feasibility study.

Adjacent to Boyongan, Perth-based Red 5 is preparing to accelerate exploration of the past-producing Siana gold project. The company has been drilling underneath the open-pit resource, with the second deep hole cutting 128 metres of 2 grams gold, 0.22% lead, 0.3% zinc and 3.7 grams silver at a depth of 265 metres. Included in this section was a higher-grade portion running 5.1 grams gold over 41 metres. The mineralized system extends to a depth of 360 metres below surface and 130 metres below the current open pit.

Tampakan

On the western side of Mindanao island, Aussie junior Indophil Resources has raised A$8 million and resumed drilling on the Tampakan copper-gold project.

Indophil endured three years of legal battles before finally gaining control of the project, which was discovered by WMC Resources (WMC-N) in the mid 1990s.

Faced with legal wrangling over the country’s mining law and a notable lack of local support to develop the project, the major threw in the towel after spending more than US$30 million. Indophil picked up the asset by agreeing to pay WMC US$10 million, payable in stages one and two years after startup.

The deposit, which lies just outside the regional city of General Santos, hosts a global resource of 900 million tonnes grading 0.75% copper and 0.3 gram gold, equivalent to 6.8 million tonnes contained copper and 8.7 million oz. gold (at a cutoff grade of 0.5% copper).

Long known to be prime hunting ground for gold-copper mineralization, the Philippines has been abandoned by most of the major mining companies, owing to a draconian mining law and political instability. The latest problems occurred in late July, when 300 junior officers and soldiers rose up against the national government. The mutineers camped out in the main business district of Manila and laid out explosives as they demanded the resignation of President Gloria Macapagal-Arroyo. The coup was quickly quelled, though the government still has a “declaration of a state of rebellion” in place.