Philex Mining Corp., the largest publicly-held copper and gold producer in the Philippines, said Tuesday it will start the development of the Silangan mine in Mindanao in the second quarter of 2022.
Touted as the biggest investment in the local mining industry in the last six years, Philex will initially spend $224 million for a starter mine under the development plan for the Silangan Copper-Gold Project to process 2,000 tons of ore a day.
Total project cost was estimated to reach $1.72 billion, including the $1.5-billion sustaining capital expenditure through the project’s mine life of 28 years.
“Philex have invested approximately between P17 and P19 billion to put this project where it is today. We have embarked on land banking activities and acquired 80 percent of the land that we need. The other costs are for engineering studies,” said Philex president and chief executive Eulalio Austin in a news briefing Tuesday.
Silangan Mindanao Mining Co., the wholly-owned subsidiary of Philex that will operate the mine, will gradually develop the project until it reaches 12,000 tons a day, or 4 million tons a year.
Austin said the copper and gold grades in Silangan would be twice as high than the current grades of Padcal, “which for decades has been the life blood of Philex but is now approaching the end of its mine life.”
Phase 1 of the Silangan Copper-Gold Project covers the Boyongan deposit, which has an estimated 81 million tons of mineable ore containing 0.67 percent copper and 1.13 grams of gold per ton.
Silangan has estimated mineral resources of 571 million tons, with 0.52 percent copper and 0.64 percent gold. Annual production could increase to 6.5 million tons once the Bayugo deposit is mined, under phase 2.
“We have secured all the necessary clearances and permits from relevant government units to pursue the Silangan project that we have started more than 15 years ago,” Austin said.
Phase 1 will take two and a half years with projections to commence commercial operation by 2025. The first phase is expected to produce 2.8 million ounces of gold and 993 million pounds of copper throughout its mine life.
Global spot gold price ranges from $1,770 to $1,790 an ounce while copper spot prices ranges from $4.20 to $4.40 per pound. These prices will render the project highly profitable, according to the company.
“Silangan will be a major exporter of metallic minerals for the Philippines, generating in the future, much needed foreign exchange receipts of the country that will augment and increase the country’s foreign currency reserves that can improved the country’s ability to settle foreign currency requirements for economic recovery post COVID-19 pandemic,” said Philex chief operating officer Mike Toledo.
He said Silangan mine would also create thousands of direct and indirect employment, particular in various towns of Surigao del Norte province.
Company chief finance officer and treasurer Romeo Bachoco said the project would be financed by a combination of fresh capital infusion from parent company, Philex, equity via stock rights offer and debt.
Philex said it already filed with the Securities and Exchange Commission and Philippine Stock Exchange an application to raise as much as P3.15 billion through a stock rights offer of up to 842 million common shares.
Austin said the approval of the final plan by the SEC and PSE is expected in the second or third week of January.
The mining firm tapped BDO Capital and Investment Corp. as the issue manager and lead underwriter.
