P7B poured into Nueva Vizcaya gold mine

26/01/2011 23:00

Malaya Business Insights

British firm Metals Exploration Plc., through its local unit FCF Minerals Corp., is investing P7.1 billion in a gold mine in Nueva Vizcaya, documents obtained from the Board of Investments (BOI) show.

FCF, owned 85 percent by Metals Exploration PLC, has sought application for incentives on a pioneer status from the BOI for the project under the "export activities" heading of the Investment Priorities Plan (IPP). Local firm Christian Mining Inc. owns 15 percent.

Mineral products such as gold are among the identified export products under the 2010 IPP.

Based on the application, the project would have an annual production capacity of 115,000 ounces of gold, all for export primarily to Hong Kong.

To qualify for incentives, the company has to export 70 percent of total production.

FCF has a financial and technical assistance agreement (FTAA) for the Runruno gold-molybdenum project but test work for molybdenum reserves of the mining area is ongoing.

FCF also has the option to sell its output to the Bangko Sentral ng Pilipinas as "constructive" exports.

Commercial operation of the mineral processing is set on June 2012 and will employ 426 personnel.

Based on the application, financing will come 100 percent from equity.

FCF?s FTAA, approved in September 2009, covers 3,093.51 hectares in Barangay Runruno, Quezon, Nueva Vizcaya.

The company applied for pioneer status, claiming it will be the first in the Philippines to use biological leaching through the BIOX process instead of the conventional processes of pre-treating refractory gold ore/flotation concentrate.

The management committee of the BOI has endorsed the project for approval by the board on a non -pioneer status with pioneer incentives, it being located in a less developed area, without prejudice to upgrading it to pioneer status once it is officially determined that the proposed process/technology is new and untried in the Philippines.

The documents said that as validated by the Mines and Geosciences Bureau, FCF has been involved with various exploration work over the contract mining area in Nueva Vizcaya but has not started commercial operation yet. FCF?s audited financial statements also showed no sales in 2009, the documents said.

The project?s mine life is estimated at 10.41 years which is more than the 10 years minimum mine life requirement of the 2010 IPP.

Metals Exploration, its website said, will run the Runruno project as an open pit operation. It added that it became involved in the Runruno deposit in 2005 and has undertaken extensive scientific and geological surveys since, with extremely encouraging results.

In May 2010, Metals Exporation announced the results of the Runruno project feasibility study which confirmed the viability of the project, projecting average production of 96,700 oz of gold per annum over a mine life of 10.4 years at an average forecast operating cost of $477/oz gold before any molybdenum credits.

The capital cost is forecast to be $149.3 million, with payback within 3.5 years at $1,000/oz gold.

The website said work to date has defined a resource of 1.42 million ounces of gold, and 25.6 million pounds of molybdenum, with 900,000 oz. of gold reporting to the measured and indicated categories and 780,000 oz. of gold within the proven and probable reserve category.