Issue 2, May - July 2012 by angie abeleda

Philippine Resources Mining, Petroleum & Energy Journal Issue 2 2012, May - July

Otto and Galoc Continue to Grow

GOLD FIELDS Likes Far Southeast

DOE Helps Light Up Boni Tunnel

Site Group Identifies Philippines Hub

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Current Resources May - July 2012

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Headlines in this issue

Front cover photo shows the reinstatement of the Galoc oil field Float Production, Storage and Offloading off the Philippines coast. Otto Energy and its Galoc partners have had a string of successes in recent months as they look to extend the important field’s producing life. See story page 28.

Resources Commentary

Revised Free and Prior Informed Consent Rules

The long and winding road

Ready Willing and Able on Human Rights

Resources Training

Company’s “site” set on solving training shortage issue

Oil & Gas Resources

Mineral Resources

CDC hits good copper intersections at Basay Project

ENK looking to sell Berong Nickel interest

Gas2Grid acqires rig for Cebu drilling

DOE receives strong interest in coal mining offering

Good news continues to flow at Galoc

Energy Event

Viking enters Philippines oil and gas scene

Philippine Resources to participate at Manila event

4 Philippine Resources

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Philippine Resources

Vale - Simon W. Halley

Mining, Petroleum & Energy Journal Issue 2 2012 May - July 2012

Philippine Resources Journal is published independently for executives in Philippine mining, petroleum and energy and associated business sectors. Publisher Elizabeth Galura Charismatic (WA) Pty Limited Consulting Publisher Greg Brimble Sales and Marketing Cecilia Pamular +63 920 967 8342 Design/Production Elizabeth Galura Contributors Mars Buan Patricia A.O. Bunye Fernando Penarroyo ___ Manila publishing office Lomar Offices Paseo de Roxas Bldg, 3rd Floor 111 Paseo de Roxas Legaspi Village Makati, Metro Manila, Philippines Phone +632 815 8836 or +632 714 0029 ___ Individual contacts Greg Brimble greg@philippine-resources.com Australia: +614 172 20759 Manila: +63949 338 3664

Ad Sales: Cora A. Laureano ads@philippine-resources.com +63918 959 3536

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hilippine Resources regrets to report the passing of its Editor, Simon W. Halley in Auckland New Zealand, after his battle with cancer.

imon played a critical role in the development and growth of this publication and his dedication to his position at this magazine, to the Philippines and to the resources sector in particular, helped the magazine gain the repect of the industry. However, it was not only his work with Philippine Resources that Simon was known for around the country. Simon was also the editor and driving force behind myPH: My Philippines, an online magazine/forum about living in, doing business, working, enjoying and exploring the Philippines. A friend and supporter of many, Simon will be remembered for his honesty, courage and most of all for his love for his adopted country and home - the Philippines. To all his family and friends, our condolences. We at Philippine Resources will miss him dearly. Simon Halley - RIP.

Philippine Resources Journal is printed in Manila by IPrint. Digital online edition www.Philippine-Resources.com

6 Philippine Resources

Resources Commentary May - July 2012

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Revised Free and Prior Informed Consent Rules – New Obstacles for Resource Developers By Fernando Penarroyo

he National Commission on Indigenous Peoples (“NCIP”) is currently revising the rules on

the Free and Prior Informed Consent (“FPIC”) Guidelines of 2006 - also known as NCIP Administrative Order 1, Series of 2006 in accordance with the

Indigenous Peoples Rights Act of 1997 (“IPRA”). In drafting the new guidelines, the NCIP is reportedly being assisted by an antimining interest group. Without the benefit of consultations between the NCIP and private industry, the proposed revised FPIC guidelines are basically part of the three-pronged strategy of antimining advocates to block mining with the amendment of the Philippine Mining Act of 1995 and empowering local government units to assert their autonomy and veto mining operations in their territorial jurisdiction. Initially identified new provisions under the draft FPIC guidelines will definitely be bothersome not only to mining industry but to other resource developers as well. The definition of large-scale activities that need to go through an FPIC process has been expanded to include: exploration, development, exploitation, utilisation of land, covering energy, mineral, forest, water, marine, air, and other natural resources requiring permits, licenses, leases, contracts, concession, or agreements e.g. production-sharing agreements, from the appropriate national or local government agencies, including feasibility studies related thereto; and thre issuance of land tenure instrument or resource use instrument by any government agency and related activities. A new provision concerning areas closed to FPIC applications has been included and these areas are to be unilaterally identified by indigenous peoples (“IPs”).

Fernando “Ronnie” Penarroyo (photo taken at the summit of Mt. Pulag, Benguet) is the Managing Partner of Puno and Penarroyo Law Offices (www.punopenalaw. com). He specialises in Energy and Resources Law, Project Finance and Business Development. 8 Philippine Resources

To process FPIC applications, the proponent is required to submit among Continued on page 10 >

Resources Commentary May - July 2012

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< Continued from page 8 others, documents like budget and latest audited financial statements. During the pre-FPIC conference, the applicant must also submit an undertaking that it shall commit itself to full disclosure of records and information relevant to the plan, program, project or activity, that would allow the community full access to records, documents, material information and facilities. Most importantly, at a very early stage in exploration, the applicant will be required to submit an Environmental and Socio-cultural Impact Statement (“EIS”) detailing all the possible impact of the plan, program, project or activity upon the ecological, economic, social and cultural aspect of the community as a whole. Submitting an EIS during the early stages of an exploration application is clearly impractical. Also there are major problems in communicating scientific studies and financial information to communities where people are not highly educated and where their understandings of their natural environment may not be commensurate with scientific and economic explanations. I also see very contentious provisions related to IP community dynamics, which will practically prevent the FPIC process from proceeding. Representatives of the IPs are already part of the initial fieldbased investigation (“FBI”) team. When the area applied for has an existing boundary conflict with another domain, as determined by the FBI team, the FPIC Process shall be suspended in the conflict area until the boundary conflict is settled or resolved with finality. A group or a community of IPs occupying a portion of public domain, whether as a result of a resettlement or relocation project of the government, or as a result of displacement, has the right not to be treated as migrants and can likewise exercise their right to FPIC. While the identification of the group that will give 10 Philippine Resources

consent is defined in terms of residential status, customary rights and legally recognised rights according to the national law or genealogical connection to the original customary owners, the resource developers have to wait for the outcome of these contentious issues before even commencing their FPIC process. Thus, unnecessary delays are brought about by the failure of IPs to settle leadership and boundary disputes which can be exploited by anti-development groups to prevent IPs giving their consent to natural resources projects, in effect closing the area to resource development Notwithstanding that a Certificate of Non-Overlap has been issued, the applicant shall execute an undertaking for the conduct of FPIC should it be discovered later that there is, in fact, an overlap with an ancestral domain. A provision was likewise added that the content of the Memorandum of Understanding (“MOA”) between the IPs and the applicant must include a clause on the non-transferability of the MOA. Thus, the concerned IPs shall require another FPIC to be conducted in case of merger, reorganisation, transfer of rights, and acquisition by another entity, or joint venture. The proposed rules also call for a deposit of cash or surety bond by the applicant unless the IPs allow a notarised undertaking in writing by the applicant to answer for damages which the former may suffer on account of the plan, program, project or activity in substitute to said bond. The proposed rules also states that Corporate Social Responsibility or Social Development and Management Projects required under existing laws shall not be considered as part of benefits given to IPs. Complaints involving the implementation of the FPIC process or the interpretation or implementation of the MOA shall be resolved using traditional conflict resolution process and all conflicts shall be under the exclusive juris-

diction of the NCIP Hearing Officer. The provisions mentioned are tantamount to exercise by the IPs of ownership over natural resources within ancestral domains, which the Supreme Court declared in Cruz v Secretary of Environment and Natural Resources, et al. [2000], IPRA does not confer or recognize. The Supreme Court further held that the rights given to the IPs regarding the exploitation of natural resources under IPRA only amplified what has been granted to them under existing laws but the State retains full control over the exploration, development and utilization of natural resources. Any provision in the proposed FPIC guidelines that will give veto powers to IPs infringes upon the State’s ownership over natural resources within the ancestral domains. The rights given to the IPs are limited only to the following: ‘to manage and conserve natural resources within territories and uphold it for future generations; to benefit and share the profits from allocation and utilisation of the natural resources found therein; to negotiate the terms and conditions for the exploration of natural resources in the areas for the purpose of ensuring ecological, environmental protection and the conservation measures, pursuant to national and customary laws; to an informed and intelligent participation in the formulation and implementation of any project, government or private, that will affect or impact upon the ancestral domains and to receive just and fair compensation for any damages which may sustain as a result of the project, and the right to effective measures by the government to prevent any interference with, alienation and encroachment of these rights.’ The Court interpreted IPRA as only granting to IPs ‘priority rights’ in the utilisation of natural resources, not absolute ownership nor exclusive rights but Continued on page 14 >

Resources Commentary May - July 2012

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The long and winding road By Patricia A. O. Bunye

retary, who shall then submit it to the President for approval.

Originally expected to be issued as a comprehensive Executive Order, it now appears that the national mining policy will be released as a policy statement which identifies a six-point agenda with corresponding action items.

• the utilisation of mineral resources has the potential to improve the economy and uplift the lives of many Filipinos

s this column is being written, the much vaunted national mining policy is in the process of being finalised and released.

Considering that, within the next few weeks and before the end of May 2012, the Mining Policy Study Group tasked to make recommendations to the President will still undertake consultations with national government agencies and the Chamber of Mines of the Philippines/ large-scale mining companies, particularly on the fair, adequate, and equitably shared economic benefits from mining, it is possible that the national mining policy as currently drafted will still undergo further refinement before it is presented to the Cabinet Clusters on Economic Development and Climate Change. These Cabinet Clusters will, in turn, conduct a final review before the proposed policy is submitted to the Executive Sec-

In any event, the policy statement is expected to emphasize, among others:

• the Government needs the support of various stakeholders, including the private sector, civil society, vulnerable and marginalized sectors, indigenous peoples and local government units (LGUs) to develop and utilize these resources • the ecological richness of the Philippines must be properly valued and protected

6. Deliver efficient and effective management of the mining sector. The action items corresponding to each of the six point agenda items are proposed to be implemented by means of both an Executive Order, with specific tasks being assigned to the relevant government agencies such as DENR, DOF, DBM, DILG, DA, DOT, DOJ, NEDA and others, and the filing within one year of the issuance of the national mining policy of bills covering additional proposed legislation. Some of these action items include: Agenda 1:

• mining must be developed to ensure economic and social growth both at the national and local levels

• Create an inter-agency council on mining and ensure participation and transparency in the mining industry to be modeled on the former Minerals Development Council

• government shall endeavor to provide a good business environment for mining investors

1. Ensure mining’s contribution to the country’s sustainable development (i.e. economic and social growth and environmental protection); 2. Adopt international best practices and promote good governance and integrity in the sector;

12 Philippine Resources

5. Ensure a fair, adequate, and equitably shared economic benefit for the country and the people; and

• responsible mineral resource development, both large and small scale, has a role in sustainable development

The six-point agenda is as follows:

Patricia A. O. Bunye is a senior partner at Villaraza Cruz Marcelo & Angangco (website www.cvclaw.com). Her areas of specialization are mining and natural resources, power and energy and intellectual property (particularly IP commercialization). She may be reached at po.bunye@cvclaw.com.

laws, policies, and regulations;

3. Ensure the protection of the environment by adopting technically and scientifically sound and generally accepted methods as well as indigenous best practices; 4. Enforce the primacy of national laws over local issuances and harmonise

• Conduct public bidding/public auction of mining rights/tenements (abandon “first come, first serve” policy) for areas with known mineral resources, i.e., areas already explored and with value. Agenda 2/Agenda 6: • Creation of a Task Force Against Illegal Mining • Implement a ‘One-Stop-Shop’ process for mining applications The ‘OneStop-Shop’ process for mining applications, which will involve the clustering of similar activities • Determine individual roles of agencies concerned and fix overlapping tasks and functions (i.e., MGB v. NCIP, MGB, Continued on page 14 >

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< Continued from page 12

shall be a requirement for ECC approval.

v. LGUs, etc.). There will be a strong push to create Department of Environment separate from Department of Natural Resources, through legislation.

• Use the geo-hazard maps/multihazard maps for the country and forecast of climate change impacts to determine “go” and “no-go” areas for mining based on areas reserved by law and executive issuances

Agenda 3: • Identify additional areas closed to mining (i.e., prime agricultural lands as determined by the Depart of Agriculture, priority eco-tourism sites as determined by the National Ecotourism Council, critical areas and island ecosystems, among others). These additional areas include 78 ecotourism sites, whose polygons have been identified, but whose boundaries have not been determined. This identification will be subject to separate consultations. • Adopt Programmatic and Sectoral Environmental Impact Assessment (EIA) in the Philippine Environmental Impact Statement System. In this connection, it appears that the DENR has re-imposed the provision that social acceptability

• Study how LGUs can get direct access to their share (similar to PEZA)

The DENR/MGB have admittedly not proposed or adopted clear and specific measures to implement Agenda 4, “Enforce the primacy of national laws over local issuances and harmonize laws, policies, and regulation”, notwithstanding that challenges to the primacy of national laws strike at the very heart of our Constitution, which provides the framework for the Mining Act, and the Mining Act itself.

Based on the presentation recently made by MGB Director Leo Jasareno to the Philippine Mineral Exploration Association, there are many proposals related to Agenda 5, such as declaring mine sites as the head offices of mining companies and pursuing the Domogan Bill (on the on the direct remittance of LGUs’ shares in mining taxes), to ensure that benefits for LGUs are immediately enjoyed. With respect to mineral reservations which were originally proposed to be declared in earlier versions of the mining policy, Director Jasareno confirmed that these would only apply prospectively and existing FTAA/MPSA will be respected. The declaration of mineral reservations will also be subject to consultations on this matter.

Agenda 5:

Agenda 6:

• Ensure inter-agency coordination relative to Government share in mining revenues

• Establish a public, accessible, and comprehensible database which consolidates all relevant data from all con-

Agenda 4:

Continued on page 16 > Continued from page 10 > only the right of preference or first consideration in the award of privileges provided by existing laws and regulations, with due regard to the needs and welfare of indigenous peoples living in the area. There is also an added provision in the proposed rules to undertake a new FPIC process in case of mining activities after the exploration stage. However, the Supreme Court in Cruz v Secretary of Environment and Natural Resources noted that the right to negotiate terms and conditions granted under IPRA pertains only to the exploration of natural resources, which is merely a preliminary activity and cannot be equated with the entire process of ‘exploration, development and utilisation’ of natural resources which under the Constitution belong to the State. ‘Free and prior informed consent’ in all legal jurisdictions is often very hard to implement faithfully. Needless to say, the implications of a commitment to FPIC are financially costly for the resources company. Providing information is always an expensive operation and assessing whether consent has been given will be similarly difficult and costly. The legal repercussions of the proposed amendments are clear – indigenous communities will now effectively have veto power over resources project design and implementation. Could it be that this proposed amendments are nothing but an unreasonable regulation that would effectively kill the resources industry? Where then is the so-called “systematic, rational, transparent, participatory and fair decision-making process that will result in everyone winning” if the private industry is not allowed to be engaged in the drafting of these new rules. Having been involved in numerous FPIC process for resource companies, I am of the opinion that the proposed rules are impractical and unworkable. Philippine Resources will continue to keep its readers updated on new developments related to these proposed FPIC rules. ■ 14 Philippine Resources

Resources Commentary Training May - July 2012

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Ready, Willing, and Able to Uphold Human Rights through VPSHR By Mars Buan, Business Intelligence Manager and Senior Analyst for Pacific Strategies and Assessments (www.psagroup.com), based in Manila.

he Voluntary Principles on Security and Human Rights (VPSHR) is the only set of security and human rights guidelines designed specifically for extractive companies. The VPSHR recognizes the importance of the promotion and protection of human rights across the globe, alongside the constructive role the business sector and civil society play in achieving these goals. Through the VPSHR, companies in the extractive industries are able to maintain

the safety and security of their business within an operating framework that ensures respect for human rights and fundamental freedoms of the communities where they operate. Since the launch of the VPSHR in December 2000, more and more companies, governments, nongovernment organizations, financial institutions, and development agencies have joined the initiative and committed to apply the VPSHR as their global conduct and performance standard for operations. The VPSHR, however, can be quite challenging to implement, especially for companies that want to apply the guidelines but are not part of the initiative; as well as for companies knowledgeable of the VPSHR but are operating in high-risk environments with weak governance.

Implementation Guidance Tools Through the support and guidance of the International Finance Corporation (IFC), International Council on Mining and Metals (ICMM), the International Petroleum Industry Environmental Conservation Association (IPIECA), and International Committee of the Red Cross (ICRC), a team of VPSHR consultants led by Stratos and supported by Pacific Strategies and Assessments (PSA), the VPSHR Implementation Guidance Tools was officially released in 2011. Continued on page 18 >

Continued from page 14 > cerned stakeholders and sources (which includes maps under the proposed one-map system for government of mining areas, protected areas, ancestral lands and domains, among others With respect to the proposed legislative agenda for mining, the bills to be filed are expected to cover the: •

Enactment of a Comprehensive Mineral Code to cover the mining sector

• Crafting a definition of Medium Scale Mining and the rules that will govern its operations • Amendment of provisions of the Mining Act on incentives for the mining industry in light of alleged abuses by some mining companies Once the national mining policy is finally approved, the MGB, with the approval of the President, is expected to lift the moratorium on the processing and approval of exploration permits. Considering that the moratorium has been in place since 2010 and in light of the reported decrease in mining investments due to the negative signal sent by the moratorium to existing and prospective investors, its lifting is at least one of the anticipated positive effects of the impending issuance of the policy. ■ 16 Philippine Resources

Resources Commentary Training May - July 2012

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Continued from page 16>

The TVI Experience

The reference-guidebook aims to help companies, staff, partners, and contractors ensure that operations are undertaken in a manner that respects human rights and freedoms by providing them with a range of different modules and tools as guidance in decision-making as they operate in various sites across the globe.

On February 11, 2012, 40 managers and officers of Canadian mining firm TVI Philippines’ Balabag project site participated in a VPSHR Seminar-Workshop conducted by Pacific Strategies and Assessments (PSA) in Buug, Zamboanga Sibugay Province. TVI participants included geologists, community relations officers, pre-development managers, and mine site security officers. Team lead-

ers of the Philippine military’s Special Citizen Armed Force Geographical Unit Active Auxiliary (SCAA) unit deployed at the project site were also in attendance. TVI’s Balabag project, which covers 52 square kilometers of land, is currently on the pre-development stage. VPSHR training is crucial for the Balabag project staff as the site is located in a highrisk area in western Mindanao amid the threat of kidnapping and insurgency. There is likewise rampant illegal smallscale mining in the area, the financiers and operators of which feel threatened by the entry of a large-scale mining company such as TVI. The daylong activity included a seminar on the VPSHR and specific discussions on the four modules comprising the VPSHR Implementation Guidance Tools: stakeholder engagement; risk assessment; public security providers; and private security providers.

Philippines Small-Scale Miners Source: PSA Research Small-scale mining accounts for 68% of the Philippines’ total gold production. Small-scale mining across the Philippines, however, is largely unregulated, allowing for the proliferation of illegal and destructive small-scale mining operations. Although there are existing Philippine laws defining the conduct of smallscale mining activities, these are not being properly implemented due to the government’s lack to monitor and enforce these laws and regulations. The Philippines has an estimated 300,000 small-scale miners operating in 30 of the 70 provinces in the Philippines. The Mines and Geosciences Bureau, however, admitted that almost 80% of the country’s small-scale miners are operating illegally. A number of these illegal mining operators are well financed, use heavy equipment and illegal explosives, operate in medium-scale, and are protected by armed goons. There are allegations that some unscrupulous politicians, military officials, and businessmen are protecting these illegal mining operations. Unregulated and illegal small-scale mining activity in the Philippines has been largely responsible for landslides, local conflict, pollution, and mercury poisoning in many mining communities. Due to the considerable number of small-scale miners, these issues have contributed to the overall negative perception of the mining industry in the Philippines. ■ 18 Philippine Resources

PSA discussed the importance of establishing a transparent, cooperative, and two-way working relationship with identified stakeholders of the project site. The participants were also taught to identify and assess risks based on probability and impact; and more importantly, on how to map out appropriate response and risk mitigation measures. In the Philippines, government security forces, particularly the military’s SCAA units, have become part of the defense structure of a number of mining firms operating in the country due to unrelenting NPA attacks. As such, the seminar included discussions on the processes and plans for engagement with government security forces helping protect the project site. The group also tackled ways on how to asses and address gaps arising from the limitations of public security providers in addressing the security requirements of a private entity. In line with this, PSA discussed the guidelines for deployment and conduct of government security forces to ensure that security measures in place do not violate local and international human rights protocols. ■

Resources Training May - July 2012

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Company’s “Site” set on solving future training shortages

n today’s competitive global market, it is a case of survival of the fittest. You need to be a visionary- and Australian company Site Group International has just that vision. It is that vision which saw the company identify the potential in the former Philippines Expo site at Clark and turn it into a state-of-the-art training facility in the Philippines. It is that vision that saw Site Group recognise the Philippines as an ideal hub location to service the training needs of the booming resource industries of the South East Asia Pacific regions. Clark Training Complex Site Group International took a 25+25 year lease over the former Philippine Expo site in 2009 and invested A$10 million transforming the 300,000 sq.m site into a Vocational Education Training (VET) campus with all inclusive on-site living facilities including kitchens, res-

taurant and bar, dining facilities, 24/7 health clinic and library. Site Group registered its first intake of students in mid-2012, with students studying courses covering; Air Conditioning and Refrigeration, HSE, IELTs (English), Camp Services, Welding and Boiler Making, and Auto/Heavy Diesel fitting. The facility can cater for up to 1,300 students at a time. The campus has the capacity to be expanded to house 15,000 students. Site Group International also recently entered an agreement with Monark Foundation allowing full access to the Monark Caterpillar (CAT) heavy machinery fleet to be based at Clark for operator and mechanical training. Under the proposed arrangement, the Clark facility has built the required additional workshops and facilities to provide relevant training and equipment in partnership with industry.

Site Group identified the old Expo site at Clark as the ideal location for its Philippines campus.

The visionaries of Site Group International have already begun working towards a viable skills training solution for the global shortage of trainees and operators in the heavy machinery sectors and is establishing a Heavy Machinery facility -in partnership with Monark- at Clark. Now, building on the quality Vocational Training reputation it has built up at its Philippines base, Site Group International is progressing into one of the biggest growth areas in the global market at present- specialist oil and gas training. Site Group has recognised the opportunity in the global shortage of skilled oil and gas workers, particularly in the booming LNG projects powered by the Australian market. CybaServices Acquisition Site Group has recently built further on its Philippines offerings with the acquisition of the recruitment specialist CybaServices. Site believes the combination of the two companies will create an increase in customer demand through increased access to appropriately skilled international candidates from jurisdictions such as India, Indonesia, Korea, China, Malaysia and the Philippines, who can be assessed and upskilled through Clark.

The Site Group campus can currently cater for 1300 students at a time. 20 Philippine Resources

Continued on page 22>

Resources Training May - July 2012

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Continued from page 20> “This site offered low political risk, cost competitiveness and proximity to labour markets in Asia,” he said. “We are also available to access experienced local trades personnel to assist Australian instructors to provide Australian and International quality assessment and gap training.” Site Group International has additional Australian facilities in Perth, Gladstone, Landsborough and Darwin. Site Group International is well placed to lead the workforce planning strategies and training initiatives to assist in providing industry solutions. ■

Further Growth Opportunity The acquisition of CybaServices comes hot on the heels of Site Group’s recently completed acquisition of Sun Coast Training and Accreditation- a leading

Registered Training Organisation (RTO) on Australia’s East Coast. Mr Vern Wills, Site Group International’s CEO said that the Clark Freeport Zone was an ideal location for the company’s training facility.

BG Group sells Philippines power plants BG Group has agreed to sell its 40% equity interest in two gas-fired power generation plants in the Philippines to its partner in the facilities, First Gen Corporation, for net cash proceeds of US$360 million. The sale and purchase agreement, completed on signing, covers the 1000 megawatt Santa Rita power plant and the 500 megawatt San Lorenzo power plant, both on the island of Luzon. BG Group Chief Executive Sir Frank Chapman said: “The sale of our interest in these power generation plants in the Philippines is another step to realising the planned release of $5 billion of capital in the next two years. This deal, along with strategic divestments already announced this year, will release some $3.6 billion from BG Group’s balance sheet.” ■

Heavy machinery training is considered a significant growth opportunity. 22 Philippine Resources

Oil & Gas Resources May - July 2012

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Gas2Grid takes Cebu drilling campaign into its own hands

hilippines oil and gas explorer Gas2Grid has reported that it has secured its own rig to help it overcome issues related to its onshore Cebu exploration program. The company said it is taking advantage of the extensive drilling and rig management experience of its Chairman David Munns and drilling engineers Roger Swisher and Jerry Friesen to manage the rig and the ongoing drillng program. Rig acquisition Gas2Grid reported to shareholders that it has experienced extensive delays and cost overruns in Cebu using third party contractors and their equipment and in order to control operations and costs and to avoid unnecessary delays, it has purchased an 800 HP drilling rig (located in Taiwan) with the capacity to drill to 2,750 metres with 114 mm drillpipe. Rig

crews will be sourced locally in the Philippines.

be used for any other drilling opportunities that may arise.

The company has estimated that the total cost for this rig, including refurbishment, will equate to the total cost of engaging an external contractor to drill the 3 exploration wells it has planned on Cebu.

The company’s plan to drill three new exploration wells are at an advanced stage with the first well expected to spud by July 2012. The Philippine Department of Energy (DOE) has granted approval to drill the Jacob-1 well with the two other drilling applications (Gumamela-1 and Ilang-1) currently being processed. Landholder access agreements have been reached and will be signed imminently. A local contractor has been selected for civil works including access roads and site preparations.

In addition, Gas2Grid has acquired a workover rig in the Philippines capable of setting surface conductor and surface casing as well as completing wells for production and conducting and workovers. This rig will be used for the Malolos-1 workover and testing program. Gas2Grid said it will now own two good drilling rigs, worth more than their actual cost. It said this will prove extremely beneficial for appraisal and development drilling of oil/gas discoveries using equipment owned and operated by the company. In addition these rigs can also

Gas2Grid said that once site preparations are complete the company plans on mobilising the workover rig to each site in order to set surface conductor and drill and set surface casing immediately prior to the company’s larger rig being mobilised to drill the wells to the deeper levels. Workover Workover opeations at Malolos-1 were suspended late last year when “junk” was encountered at the bottom of the hole precluding testing of the main oil bearing sandstone intervals.

Gas2Grid has acquired its own rig to undertake work on its oil and gas activities on the island of Cebu. 24 Philippine Resources

The forward plan is to perforate and flow test the lower oil bearing sandstone intervals followed by the shallower sandstone reservoir intervals that have been interpreted as being gas bearing, based on both the cased-hole and open-hole wireline logs. The company said the flow test results will not in any way influence either the well locations or the likely success of the its proposed three exploration wells. It said these three new wells are targeting different play types and the well locations have been determined based on good seismic control. ■

Mineral Resources

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Oil & Gas Resources May - July 2012

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Good news continues to flow for Galoc oil field partners

he good news just continued to flow for Otto Energy and its JV partners in the Galoc oil field off the Philippines coast during the second quarter of 2012. Otto’s wholly owned subsidiary, Galoc Production Company, operator of the Galoc oil field offshore Palawan, announced on April 2 that production had restarted from the field following a planned shutdown for refurbishment of the Floating Production Storage and Offloading vessel (FPSO). The “Rubicon Intrepid” FPSO had undergone planned re-certification, maintenance, inspection and turret installation work during the shut-down period, with the most significant upgrade the installation of a bow mounted, non-disconnectable turret mooring system to replace the previous disconnectable system. The upgrade of the FPSO mooring system is expected to increase the reliability and uptime of the FPSO and is a crucial component of infrastructure to enable the Galoc Joint Venture to move ahead

with a potential Phase II development of the field. The Galoc joint venture commenced engineering design work in late 2011 for the extension of activities at Galoc and Otto says that work remains on schedule for the Final Investment Decision (FID) around mid-2012. The scope of FEED work, to be undertaken prior to FID, includes detailed subsurface modeling of the reservoir, drilling and completion design, subsea engineering and tie-back design for new wells as well as joint venture financing considerations. The FEED work is being undertaken in Perth, Western Australia, primarily, with support from Otto Energy’s Manilabased Galoc Production Company personnel. Acquisition of 3D Seismic In addition to engineering and design works, another critical component of the work to add to Galoc’s field life is the ac-

quisition of 184 km2 of new 3D seismic data, which was completed in late 2011, covering the Galoc field and adjacent Galoc North exploration prospect. The new 3D seismic will support the placement of Phase II wells in the reservoir and de-risk this major capital expenditure. In addition, it will also allow full evaluation of the Galoc North exploration prospect, which may realise further development opportunities for the Galoc field. According to Otto’s Chief Executive Officer, Gregor McNab, the recommencement of production at Galoc was a significant milestone for the field. “Our congratulations to all Otto and Galoc Production Company staff for their countless hours in supporting this achievement, our thanks to all the contractors and their staff and also to the Philippines Department of Energy for their steadfast support.” Continued on page 30>

The refurbishment of the Galoc Floating Production, Storage and Offloading (FPSO) vessel is expected to provide future benefits. 28 Philippine Resources

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November 2011 - January 2012

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Geothermal energy risk management Continued from page 28>

mid May, Otto reported on further ByInFernando Penarroyo good Galoc news when it announced that new studies had led to an important 63 1C@@3=:7B7 increase1/: in the Economic Ultimate :/<2A1/>3 6/A =>3<32 Recov=> ery (EUR) reserves4=@ for 1:3/<3@ Galoc. 3<3@5G >=@BC<7B73A =>B7=<A E67:3 7<D3AB=@A /<2 5=D3@< The 19.7% jump 3<23/D=@ in Galoicâ&#x20AC;&#x2122;sB= Proven (1P) ;3@=D723 and3AA3<B7/: a 3.5 per7<4@/AB@C1BC@3 cent hikie in Proven and B63 A3@D713A Probable (2P) reservesB= is23D3:=> seen as a/<2 sig/<2 :35/: 4@/;3E=@9 nificant <3E benefit3<3@5G in Galoc Production 23>:=G B316<=:=573A Companyâ&#x20AC;&#x2122;s plans forA=;3 the Phase II devel 34=@3 1=<A723@7<5 =4 B63 93G opment of the Galoc oil field. @7A9A E6716 6/D3 /< 7;>/1B =< @3<3E /0:3 3<3@5G >@=831BA /<2 B63 53<3@/: The reserves upgrade came out 7B of 7A an />>@=/16 B= >@=>3@ /AA3AA;3@3D3<B7<5 B63 C>B/93 =4 ' >@=831BA sulting firm, RISC. =@3;=AB =4 B63A3 /@3 0/@@73@A E6716 @3:/B3 B= B63 :=E :3D3: =4 /E/@3<3AA RISC attributed the increases in reserves C<23@AB/<27<5 /<2 /BB3<B7=< /44=@232 to better than expected reservoir perforB= B63 1=;>:3F /@@/G =4 >=:71G @35C:/ mance to date and an extension of field B=@G B316<71/: 47</<17<5 /<2 =@5/<7 life due to higher prevailing oil prices. H/B7=</: 4/1B=@A /4431B7<5 ' >@=831BA The Galoc oil>@=831B field is 47</<17<5 expected to7A remain 3=B63@;/: <=B in production until approximately 2016 B63 BG>71/: 0=7:3@>:/B3 A163;3 E7B6

to 2018 on the basis of the existing two wells alone.

Otto Energy estimates Contingent Re>@= 4=@;/ /5@33;3<BA CB7:7H32 7< =B6 sources of 1.49 million barrels of oil 3@ @3A=C@13 >@=831B 23D3:=>;3/<73A Galoc Phase 27B7=</: 3<3@5G A3@D713 B6/B II development. 6/D3 B63 /07:7BG B= 47</<13 ' 7<D3AB ;3<BA 7< B316<=:=5G =@ >@=831BA 4C<2 Mr said the Galoc oil0/A7A field con32 =< McNab / <=< @31=C@A3 47</<13 =@ tinues to be a key asset for Otto Energy, A;/::3@ 0CB 3<B@3>@3<3C@7/: 53=B63@;/: delivering A3397<5 valuable 7<D3AB=@A cashflow to 23D3:=>3@A 4=@ fund B316 future growth <=:=5G ' opportunities. /<2 =@ >@=831B 47</<13 =@ B63A3 3<B@3>@3<3C@7/: 53=B63@;/: â&#x20AC;&#x153;These upgrades our 1P 2P re23D3:=>;3<B 47@;A toB63@3 /@3 and 27443@3<B serves confirm our ability to maintain 0CA7<3AA ;=23:A /<2 0/:/<13 A633B A3< production for several years to come and A7B7D7B73A B= 1=<A723@ ahead of the anticipated approval comes ,67:3 47</<17/: 7<AB7BCB7=<A 1/@3 for Galoc Phase II around?C/:7471/B7=< the middle of 4C::G 3D/:C/B3 23D3:=>3@ thisB@/19 year.â&#x20AC;?@31=@2 037<5 / ;/8=@ /<2 /<2 E3:: 9<=E< 23D3:=>3@ 7A <=B @3?C7@32 SC55 update 031/CA3 47</<173@A @31=5<7H3 7<D3AB ;3>=@BC<7B73A 6/D7<5 1=<A723@/0:3 Otto Energy had some3<3@5G good news 3F>3@73<13 7< also 23D3:=>7<5 >@=8 to report on its SC 55 project area, in which 31BA 0G >@=D727<5 3?C7BG =E3D3@ <3E it is in partnership with/@3 the@3?C7@32 worldâ&#x20AC;&#x2122;s big53=B63@;/: 23D3:=>3@A B= gest resources company, BHP Billiton. 23;=<AB@/B3 B637@ 1=;>3B3<1G 0G A3

Otto reported in late May that the Philippines Department of Energy (DOE) had approved an extension to the current Exploration Sub-Phase of SC55 by 12 :31B7<5 3F>3@73<132 /<2 4E3:: @3A>31B32 months. 1=<AC:B/<BA /<2 A>3174G7<5 /<2 CA7<5 3?C7>;3@=D3< B@/19 @31=@2 Billiton, Ottoâ&#x20AC;&#x2122;s joint venture part BHP #=AB 74 <=B /:: 1/>7B/: >@7=@ B= / ner in and >@=831B A Operator >@=D3< of SC55,43/A707:7BG requested 53=B63@;/: the extension in order to secure an ap7A 2=<3 B6@=C56 3?C7BG /<2 <=B 230B 7 propriate ultra deepwater rig with spe</<17<5 =4 3F>:=@/B7=< /<2 1=<47@;/B7=< cialised well control equipment that will 2@7::7<5 CAC/::G 1=;3A 4@=; 1=;>/<G 3? promote safe drilling operations on the C7BG =@ @7A9 1/>7B/: >@=D7232 0G 7<D3AB=@A proposed 7<D3AB;37B/: ultra deepwater rigs in deA332 D3<BC@3 1/>7B/: =@ geat 3?C7BG mand at present and hard to23D3:=>3@ come by, it 47</<17<5 4=@ / 53=B63@;/: was felt an extension was necessary. C3 B= B63 6756 @7A9 7<D=:D32 E7B6 53= B63@;/: 3F>:=@/B7=< 0/<9A 2= <=B >@= Otto said the timing of the commenceD723 4C<27<5 B6@=C56 :=/<A C<B7: B63 :/B3@ ment of drilling operations in SC55 is on AB/53A 7< B63 23D3:=>;3@=13AA until aB63 rig has been@3A=C@13 secured. 723< hold C@7<5 1@7B71/: B7471/B7=< >6/A3 B63 23D3:=>3@ /7;A said it /A maintains its longstanding view B= It=0B/7< ;C16 7<4=@;/B7=< /A >=A that SC55 significant hydrocarbon A70:3 /0=CB holds >=B3<B7/: @3A=C@13A E67:3 potential1=ABA and /@3 the :=E company looks B63 for7<D3AB=@ >@=D727<5 ward to seeing drilling4=C<2/B7=< programme 23D3:=>3@ E7B6 / the AB@=<53@ executed as soon as is safely possible. â&#x2013; Continued on page 32 >

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Renewable Resources Mineral Resources Oil & Gas Resources May - July- 2012 November 2011 -2012 January 2012 February April

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Viking makes foray into the Philippines with SC54A farm-in

government and est program are /0A07:;809? ,> >3:=?0= ;=:50.? ;0=4:/> sector. Philex Mining’s <private Continued from page 32 B:@7/ =0/@.0 @9.0=?,49?D 1:= ;:74.D ,9/ In other Padcal opera:9 , 14C0/ awards for>.30/@70 2011, B4?3 ;0=1:=8,9.0 8,=60? /D9,84.> B309 8:/07492 0.: tions in the me2@,=,9?00> ,9/ 74<@4/,?0/ /,8,20> 1:= 9:84. =0?@=9> safest mine tallic category, ?30 1,47@=0 :1 ,..0;?,9.0 ?0>?> ,9/ ?480 0:?30=8,7 ;=:50.?> ,=0 .3,=,.?0= awards went to Holcim La Union 7D .:884>>4:9492 4E0/ -D >429414.,9? @;1=:9? .,;4?,7 49A0>? TVI Resource plant in the non D e v#=:50.? e l o p m 149,9.0 e n t s 4> ,7>: 34237D /0 809? 1:= 0C;7:=,?4:9 B077 /=477492 ,9/ ?30 metallic categon :9 interesting player,2=00 has 49>?,77,?4:9 The MoA outlines key commercial terms Q2 ;09/09? ?30 ;:B0= new ;@=.3,>0 :1 ;7,9? ,9/ 0<@4;809? @? * Production commencement for surface opry, MRLtarget Gold’s the Philippines oil and :9.0 upon ?30 which a Farm-in Agreement will 2013. 809? ## 0C0.@?0/ -0?B009 ?30 /0A07 20:?30=8,7 ;=:50.?> ,=0 ;7,.0/ eration,entered RepubSurigao-Agusan gas explopration scene with the 49 .:880=.4,7 :;0=,?4:9 ?30 1@07 >:@=.0 be subsequently negotiated by the end :;0= ,9/ ;@=.3,>492 09/ @>0= ?D;4.,77D lic Cement Buprojects in the news that cement little known the 4> >0.@=0 1:= ?30 /0.,/0> :1 0C;0.?0/ 7410 of June. The SC54A JV Participants have * Definitive Farm-in Agreement current,9 070.?=4.,7 @?474?D &30 company, ## ;=:A4/0> lacan for exploration catViking Energy Group, is farming into the ?480 B4?3 , >?0,/D =0A09@0 >?=0,8 agreed to collectively assign a 60% equity ly being negotiated. egory, with spe1:= ?30 >,70 :1 .,;,.4?D ,9/ 090=2D ,? ,9 plant operaTVI Resource Development, represented by 9:?0 its president Eugene Mateo (second from prospective licence. in the ? permit in return for?3,? Viking Energy ,2=00/ ;=4.0 ;=4.0 >?=@.?@=0 ,9/ >;0.4 4> 2::/ ?: ?=,/4?4:9,7 tion, Apo SC54A Land offshore cial awards for right) and chief operating officer John Ridsdel (far right), won the award for the safest mining assuming Operatorship carrying the * Viking financing of allApex required expend140/ ?480 ;0=4:/ 9 ,//4?4:9 ?30 149,9 49>@=,9.0 ;=:/@.?> ,=0 and 9:B -0.:8492 and Quarry for operation as well as safest Mining mine awards for surface operation and mineral processing (concentrator categories). They received the awards fromdevelopPMSEA president Louie Fellow Australian company Kairiki EnerParticipants in three oil field iture associated with bringing the Yakal, .4,7 49>?4?@?4:9 B477 49.7@/0 , .,=01@7 8:=0 ,A,47,-70 ?: ?30 $ 49/@>?=D B3470 quarry operaand Rio Tuba Sarmiento (far left) and Mines and Geosciences Bureau director Leo Jasareno (second gy announced recently that its subsidiary ments up until first oil. Tindalo, and Nido 1X1 undeveloped oil ,9,7D>4> ?30 49?0=.:990.?4:9 >?@/40> 90B 149,9.4,7 =4>6 8,9,20809? 49>?=@ tion, FCF:1 MinerNickel Mining from left), with awards committee member Lita Lee (center) of Rapid City Realty and Yilgarn PtyCorporation. Ltd 809?> ,=0 0A:7A492 !0A0=?3070>> ?30=0 fields into productionfor will include the ,9/ ?=,9>84>>4:9 ,2=00809?> =:8 ?30 als for Petroleum explora- Philippines best nursery Development and SC54A Joint Venture partners, Nido 4> Key, commercial terms agreed under the drilling of one well in and each field; =4>6 ;0=>;0.?4A0 3:B0A0= 4? 4> ;=010=,-70 900/ 1:= .@>?:84E,?4:9 :1 .:A0= tion (category best rehaPetroleum Pty Ltd, Trafigura MoA withService Viking Energy include.: ?3,? 0.:9:84.> ,9/ /08,9/ 1:= ;:B0= A), MRL Philippines Gold Surigao-Agusan for ,20 ,9/ 74960/ ;=:/@.?> ?3,? ;=:A4/0 , Mining for mineral process- bilitation strategy respectively. Ventures III B.V. and TG B), World B.V.I ?:?,7 final investment amount willwas be /=4A0 ;=:50.?> =,?30= ?3,9 .:9?=,.? ;=: >:7@?4:9 1:= ?30 category). =4>6> 4930=09? 49 * The exploration (category Repubing (crushing plant PMSEA’s Pasasalamat Award Corporation signed a Memorandum * Viking to earn 60% equity interest in conferred agreed between andMines the ParticiA4>4:9> 7>: .:9?=,.?> 902:?4,?0/ B4?3 /0A07:;809? lic Cement had Norzagaray for mineral 20:?30=8,7 Carmen Copper was )3470 cited 20: for uponViking former and of Agreement(cement (MoA) with Viking Energy SC54 and assume B477 operatorship. pants on selection of the most appropri04?30= >4/0 -0492 ,? , /4>,/A,9?,20 ,=0 , 090=2D .:9?49@0 ?: 1,.0 Geosciences processing category), TVI ?30=8,7 safest combined operation, Northern Bureau director and Deto develop three oil fields infor SC 54A. The :->?,.70> ?: 2,49 49A0>?809? 8,=60? ,. ate technical and Penarroyo commercial solution; .,@>0 :1 .:9.0=9 1:= 709/0=> Resource Development mineral Cement for most improved safety per- Fernando partment of Environment and Natural “Ronnie” is the partner at Puno and Penarroyo MoA!00/70>> is subject to negotiation and execu* Viking toand finance all expenditure to managing and processing ?: >,D >?=0,8749492 ?30 .0;?,9.0 ,9/ ,;;74.,?4:9 ?30=0 4> =::8 (concentrator category), formance TVI Resource DevelopResources undersecretary Jerry DoLaw Offices (www.punopenalaw.com). He tion ofMining a;=:.0>> formalfor agreement between the 1:= bring the safest Yakal, Tindalo and?34> Nido 1X1 specializes ;0=84? -D 2:A0=9809? =02@7, :;?484>8 ,> mining ?30 @>0 operation. :1 090=2D Apex mineral processing ment for lino for his contributions to uplifting in energy and resources law, parties. undeveloped oilfor fields ?:=> B477 3,A0 ,9 48;,.? :9 20:?30=8,7 (extraction category) and Philippine >:@=.0 4> :97D -02499492 ■ Awardees theinto bestproduction. mining for- project the Philippine mining industry. ■ 32 > finance and business development. Continued on page

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PhilippineResources Resources 33 31 Philippine 25

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Continued from page 31> *Viking will receive a preferential proportion of the net cash flow generated from SC54A until such time as it has recovered in full its capital expenditure in the project.

DEVELOPMENT STRATEGY Kairiki announced that Viking is planning to bring the Yakal and Tindalo discoveries into production in the first instance followed by Nido 1X1 at a later stage. Viking plans to utilise cost-effective offshore production and storage facilities consisting of a mobile offshore production unit (“MOPU”) and a FSO/Storage Tanker moored to a CALM Buoy to commercialise the three oil fields. The SC54A JV Participants and Viking will work in collaboration with Offshore Production Solutions (“OPS”) and Thome Oil & Gas (“TOG”) on the project, whereby OPS will provide offshore production facilities under bareboat charter arrangements on competitive market terms to be agreed; and TOG will provide operation and maintenance services for the offshore production facilities under an operation and maintenance agreement on competitive market terms to be agreed.

It is anticipated that the first field will be brought into production by the second quarter of 2013, subject to relevant approvals from third parties, and the Department of Energy of the Republic of the Philippines; and the availability of rig and production facilities. Viking Energy Viking Energy Group is a private E&P Company focusing on the development and monetisation of offshore oil and gas fields in Africa and Asia using cost-effective offshore production and storage facilities developed and operated in collaboration with the Thome Group. The Viking Energy Group currently has operated interests in two oil fields that will be brought into production at 24,000 bbl/d during 2013. Viking Energy Group is seeking to expand its portfolio of assets with the objective to reach a net production of 50,000 bbl/d in the next three to five years. ■

Contingency Plan in Place During Malampaya Maintenance The Philippines’ Department of Energy (DOE) has moved to assure the public, especially the citizens of Luzon, that there will be no impending brownouts in the said region given the scheduled shutdown of the Malampaya gas plant for seven-day maintenance in July. The DOE has met with the National Power Corporation, National Grid Corporation of the Philippines, and power generators to set up contingency plans that will not affect the power supply situation in Luzon as the plants running on Malampaya gas can also run on alternate fuels. The DOE also started that the shutdown is scheduled in a month when power demand is expected to be at its lowest and other baseload facilities would have already completed their annual maintenance work. The DOE said it is closely monitoring the situation to ensure that power supply will not be affected during the maintenance. The DOE has welcomed the support provided by the Grid Management Committee under the Energy Regulatory Commission, the National Grid Corporation of the Philippines, and all power plants and distribution utilities that have heeded the DOE’s call to come together to establish the annual Grid Operation and Maintenance Program which allows for better coordination and timing for regular maintenance works to ensure continued power supply. This program ensures that there is proper scheduling of all planned activities in generation or transmission guided by practices and structures set by industry players. ■ 32 Philippine Resources

Oil & Gas Resources May - July 2012

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Forum raises funds and receives update for SC72 program UK-headquartered Forum Energy plc’s subidiary Philippines Holdings Limited has reached an agreed on an increase in its existing loan facility agreement with Philex Mining Corporation to help fund new work in its SC 72 oil and gas licence. The Facility has been increased from US$10 million to US$15 million and will assist in funding Forum’s working capital requirements, in particular in the planning stages of the second sub-phase of the work programme for SC72, the company’s principal asset.

Philex Mining Corporation is the parent company of Forum’s two principal shareholders, Philex Petroleum Corporation and FEC Resources Inc, and is therefore a related party of the company. Forum’s Executive Director, Andrew Mullins, said the increase in the Facility to US$15 million was set on the same attractive terms as the original Facility announced on 24 November 2010,. “The Facility will enable the Company to move forward with planning the SC72 drilling programme. As previously an-

nounced, we will continue discussions with our major shareholders, our joint venture partner and our advisors to determine how the full SC72 drilling programme will be funded. We look forward to releasing further updates as appropriate,” Mr Mullins said. Forum Energy plc’s wotk program for Service Contract 72 licence area includes studies on previously acquired seismic data. The company recently reported it had received a report by Weatherford Petroleum Consultants on the interpretation of new 3D and 2D data acquired over SC72 in 2011. During 2011, 2,202 Line-Km of 2D seismic data were acquired over SC72 in order to further define additional leads already identified, and 565 Km2 of 3D seismic data were acquired over the Sampaguita Gas Field in SC72. Better understanding Forum said Weatherford’s interpretation of these surveys has given its directors a better understanding of the Sampaguita Gas Field and identified a prospect in the North Bank which is located to the north of Sampaguita within SC72. In addition, the report has identified a number of potential drilling locations. The company’s chairman, Robin Nicholson, said the Weatherford Report shows an improvement in the resources previously known and supports the case to proceed with the SC72 drilling programme. “We will continue discussions with our major shareholders, our joint venture partner and our advisors to determine how the SC72 drilling programme, which we anticipate will cost a total of US$75 million, will be funded.” ■

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CDCdeal hitsand good copper BHP Galoc keeping Otto busy

<0- 47+)<176 7. ) 6=5*-: 7. :-;7:<; < 1; ,1..1+=4< <7 9=)6<1.A <0- -@)+< ;1/61.1+)6+- 7. )3- )41:)A) <7 )/= 6) ; <7=:1;5 16,=;<:A ,=- <7 <0- 6=5*-: 7. 7<0-: <7=:1;< 16 <0- 8:7> tially increase the )<<:)+<176; reliability and uptime of 16+- 7?->-: +)667< ,1;51;; the FPSO and is a76- crucial component of<0- in;1/61.1+)6+- 7. <0- )5;=: ')<-:;87:<; frastructure to enable the Galoc joint ven 7584-@ <7 ahead <0- 8:7>16+- 7. )5):16-; ture to move with a potential Phase #=: ?0-:- <0- program,â&#x20AC;? 6=5*-: 7. >1;1<7:; II development said a Galoc/:-? Pro*A

8-:+-6< 16 duction statement. ised zonevessel, and;<)3- iswith sub-vertical. The <:)6; shoot 7: <0- 074,-:; The a storage <01; capacity in is largely composed intensely stock 4)<-; <7 <0- .7447?16/ 51616/ +75 excess of 400,000 barrels,of is being upgraded in worked hypothermal quartz host8)6A ; -@+)>)<176 -@8-6;- +)6 <:)6; Singapore and will return to theveins Philippines ed by <7 potassic biotite andesite in4)<- ) end 8:- 78-:)<16/ -@8-6;- )6, towards the of the altered first quarter of 2012. truded by mineralised diorite after dykes. *- +)81<)41B-, .7: ) :-;-:>71: 7: :-;7:< Production at Galoc will resume theFurvesther drilling willreconnection. be+)6 required underneath 8:72-+< ):5-:; *-6-.1< .:75 selâ&#x20AC;&#x2122;s return and The field <0- has and downreserves dip ofofBSM047 to investigate 1::1/)<176 7+)4 .743 )6, <0- 47+)4 /7> estimated about 10 million barrels. this high shoot. -:65-6< ?144 ;<144 *-6-.1< .:75 -5847A Galocgrade started producing crude oil 5-6< 7887:<=61<1-; )6, barrels <)@-; ->-6 ). in October 2008 at 18,000 per day CDC also reported that Hole BSM050 <-: <0- :-<1:-5-6< 7. <0- 516- $01; +)6 to become the first major field since the was from north south beyond )4;7 drilled <:)6;4)<- <7 57:- to .7:-1/6 1990s to come onstream in the <7=:1;<; underthe most sectionIt +=::-6+A ofsuffered the main )6, eastern )6 16.47? 7. .7:-1/6 .7: explored Philippines. a Southeast strikingsome mineralised <0- 6)<176)4 /7>-:65-6< number of ENE disruptions, of them zone to investigate a north-eastern offset triggered '1<0 )44 bad <0-;- 7887:<=61<1-; 1< by weather. of theThe Southeast deposit. The hole inter?7=4, *- 8:=,-6< .7: <0- 7..1+1)4; 67< <7 field life is expected to range from sected 111years metres at 2008, 0.51% Cu,=- from+76 51 *)6 78-6 81< 51616/ ?1<07=< two to six from depending on ;1,-:)<176 <7 <0- 476/ <-:5 *-6-.1<; â&#x2013; the reservoir performance. â&#x2013; Continued on page 38 >

intersections at Basay Project B

HP Billiton has sealed a deal to acThe Cinco prospect has an estimated oil quire a 60 percent stake in an oil and gas potential of 7.4 million barrels of oil. prospect offshore Palawan from Otto Energy and its partners are also Otto Energy. The giant takes over as operator of eyeing another area in service contract 55, Service Contract 55, which covers 9,000 square ki- the Hawkeye prospect. Drilling costs for lometers in the southwest Palawan basin. the Hawkeye prospect will also be shoulthe high grade zone within the Theopper US$7.3 million dealDevelopment finalizes the tension dered byofBHP Billiton. Corporation (CDC) hastoreported deposit a shallowtoplunge. earlier decision by BHP Billiton exercise Southeast Overall, SC55 isat estimated have a some significant newOtto high grade The hole of intersected metres 0.62% its farm-in option on the block. Energyâ&#x20AC;&#x2122;s potential 19 trillion 174 cubic feet ofatgas and intersections drilling at original its Basay 156barrels metres. stake falls to 33from percent from the 85 Cu 670from million of oil. Southeast Deposit within itsDevelopBasay percent. Trans-Asia Oil and Energy McNab said the area â&#x20AC;&#x153;has seen little The company believes this hole confirms Project on Negros Island.contract. ment hasarea 7 percent of the service historical offshore exploration drilling, thedeepwater high grade zone encountered in The consortium plans to dig an explo- that and no offshore drilling has ocCDC that from drill previous hole BSM041 metres ration said well in theassay area byresults April next year. curred to date. This is anlocated exciting75 new fronholesâ&#x20AC;&#x153;2012 BSM047 to BSM050 at the east, intersected at is an exciting year for OttoBasay Ener- to tierthe that hasthat significant scale 271 andmetres potential Project are extending areas of known 1.0% Cu from 357 metres (0.25% Cu cutgy shareholders as we prepare for drilling sitting between proven oil and gas fields.â&#x20AC;? Lake Caliraya, a man-made lake built in 1940s to supply water to the mineralisation at depth, and is to extendGaloc to theProduction, west and of the Cinco prospect in service contract 55 off) Ă&#x201A; likely Otto Energyâ&#x20AC;&#x2122;s Caliraya Hydroelectric Plant, nowparticularhosts a number of resorts. ly alongthestrike to quarter,â&#x20AC;? the east of major BSM047. during second saidthe Otto En- below operator of the Galoc oil field off Palawan, Southeast deposit. Gregor McNab. â&#x20AC;&#x153;More .7: <0- *-)+0 7: <7 ;-- <0- 7:176-; =< ergy +);- 16 8716< 1; <0- ):+788-: 81< chief executive anticipates a substantial rise in production high gradeupgrade shoot lies at 16 ):16,=9=- 7+)4; .:75 ):16,=9=- 15)/16- 1. <0- 47+)4; +7=4, ;07? <7=:1;<; importantly, there is a depth of opportunity CDC there said after this a three-month of the The reported that portfoHole the intersection of the northwest )4?)A; );3 <7=:1;<; 1. <0-A ?)6< <7 ;-- <0- ;75-<016/ 413- )3- )41:)A) ) strik5)6 beyondcompany this first well in our acreage floating, production, storage and off-loadBSM047 was drilled on section 16925mE Northwest-Central zone C81< E 6, <0)< 1; -@)+<4A ?0)< <0- <7=: 5),- 4)3- *=14< 16 ; <7 ;=884A ?)<-: lio that provides ongoing exploration and ing vessel deployed in themineralised area. toward the south to test the western ex- and the striking Southeastto4)6< 67? mineral1;<; ,7 D ;-- <0- 81< )6, 4-)>- 0-),16/ <7 <0- )41:)A) A,:7-4-+<:1+ development potential,â&#x20AC;? McNab said. â&#x20AC;&#x153;TheENE upgrade... is expected substan-

PAGE 37 MRL HP HORIZONTAL AD

Philippine Resources 37 27

Mineral Resources May - July 2012

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Continued from page 37> metres depth, from a shallow plunging drill-hole. Previous drilling and further recent mapping in this area indicated that a north-south striking fault has offset the Southeast deposit. The company said this hole has intersected significant mineralisation east of the truncating fault and establishes the presence of a new extension of the deposit. Further drilling is now planned to cover the area to the east which may extend for at least 750 metres, based on analysis of the ground magnetic survey. CDC said the drilled portion of the Southeast mineralised zone is now one kilometre in length and remains open at depth and to the west and east. Four drill rigs are now drilling the extensions and depths of the Southeast deposit, which looks highly prospective. “Hole 50 is highly significant, as it is a new discovery of the eastern extension of the Southeast Deposit in an area that had never been previously drilled,” Mitch Alland, CDC’s Executive Chairman stated. “This extension, based on magnetic signature, has the potential to double the resource at the Southeast Deposit. Also, Hole 47 at the Southeast Deposit, with its long, high grade intersection of 0.62% copper, is an important demonstration of the previously unknown extension of this deposit at depth along its western edge, which has the potential to add more substantial tonnage to our resources at Basay. “ Central Deposit However, CDC had far less success at its Central Deposit where Drill hole BSM048 was drilled from north to south in the shallowest part of the Central deposit and failed to intersect any significant mineralisation thus closing off the upper part of the mineralised zone. The company is considering a new interpretation has been developed for the Central deposit which suggests that there is likely to be more mineralisa38 Philippine Resources

tion in the deeper parts of the Central deposit, particularly to the east and subparallel to the Southeast deposit. Further deep drilling has been designed to test at depth this outcropping area of broad phyllic alteration and low grade mineralisation. Northwest Deposit CDC has also reported that additional results have been received for drill hole BSM049, which was drilled in the Northwest deposit. Drill hole BSM049 was drilled within the Northwest mineralised corridor and intersected 150 metres at 0.16% Cu from 207 metres, which appears to close off the significant mineralisation to the northwest in the Northwest deposit. The company said further interpretation of these results is required in context of the widespread phyllic alteration. Ongoing Exploration Programme The company announced it has designed a new step out and exploration drilling programme, within the scope of the 44,000 metres of drilling planned at Basay for 2012, to test several co-incident geochemical and geophysical anomalies, as well as the depth and strike extensions of the known mineralisation. In addition, the company said it intends to twin several shallow historic holes in the Bunkville area, which intersected supergene copper mineralisation, with a view to establishing a resource in this area. The following immediate drill targets have been identified: 1. Northeast Extension - This is the extension of the Southeast deposit, which has been confirmed by the intersection from drill hole BSM050. Initially two step out holes are planned to test the strike extension for another 300 metres. 2. Pipe Target - This prominent IP anomaly, which is coincident with a strong structure identified by magnetic surveys, occurs beneath lateritic cover, which is anomalous in copper and molybdenum, and is located near the most south eastern point of the Southeast deposit. This

is a well-defined, pipe-shaped structure as determined by the IP anomaly and is a priority target for the discovery of previously unknown mineralisation. 3. South Bunkville - This is another prominent IP anomaly similar in shape and size to the Pipe Target and it also occurs under lateritic cover. This target is also coincident with a copper and molybdenum soil anomaly. The target will be tested initially with one diamond drill hole. 4. Bunkville Laterite - Historic drilling at Bunkville encountered several intersections of shallow supergene copper mineralisation, some of which was mined during previous operations. The Company intends to twin these historic holes using reverse circulation (RC) drilling methods to determine rapidly the viability of this supergene copper deposit. If the initial holes are successful then the lateritic cover will be grid drilled at 200 metres spacing in hopes of developing an additional supergene copper resource at relatively low cost. 5. Northwest Extension and other Geochemical Targets - The Company currently has a team of mappers and samplers who are conducting ground verification of the large areas of anomalous copper and molybdenum, particularly the area along strike of the Northwest deposit. Any areas found to contain significant mineralisation or alteration may be drilled in the future. 6. Southeast Depth Extension - The highly successful drill hole BSM041 contains the best and deepest intersection to date at the Southeast deposit and the Company’s strategy is to target this extension as it is the most likely to deliver large tonnages of high grade resources. The mineralisation is still largely contained within potassic altered andesite and narrow quartz diorite dykes. The target is the source intrusive at depth, which feeds the system currently being drilled. Several deep drill holes up to or exceeding 1 kilometre in depth are planned. In addition, the Southeast deposit remains open to the west and this extension will also be targeted at depth.

MIneral Resources May - July 2012

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ENK looking to sell Berong Nickel Interest

NK plc has announced the sale of its 5.01% interest in London AIM listed Toledo Mining Corporation (TMC) for US$698,000 in cash and the conditional sale of its 18.7% interest in Berong Nickel Corporation (‘BNC’) for $6,552,000 in cash to World Fund Pte Limited. Both assets were considered non-core by the Directors. The Company’s interest in BNC was held in the accounts at $3.48 million. The total proceeds from the sale of $7,250,000 will further strengthen the Company’s working capital position. The sale of the BNC shares is conditional upon the other shareholders of BNC, being TMC and Atlas Consolidated Mining Corporation (‘Atlas’) not exercising their pre-emption rights. In the event TMC or Atlas decide to exercise their pre-emption right they have to match the price offered by World Fund Pte Limited. Atlas and TMC have 60 days to exercise their pre-emption rights. Berong Nickel Corporation owns the Berong mining tenement on the island of Palawan, Philippines. It has a JORC resource estimate compiled in June 2007 of 9.92 m. tonnes of laterite ore at a 1.55% nickel grade. The estimate includes ore mined and shipped since the resource was calculated. ■

Continued from page 38> 7. Nabore Depth Extension - The Nabore deposit, which was previously tested by the highly successful drill hole BSM015, encountering 131 metres of 0.95% Cu including 14.3 metres of 5.47% Cu, is still open at depth and to the east and several drill holes are planned to test the extensions of this resource. “Overall, we have completed an in depth review of all new geological information and have used sophisticated techniques to identify new drill targets that show promise to be major extensions at depth and on strike of known resources,” Mr Alland said. “In addition, areas of known supergene copper mineralisation are targeted which may potentially add easily mineable resources to the overall project. With these new targets and ongoing growing knowledge of the geology of Basay, we feel that the next two months of drilling will be highly productive in our goal of realising these deposits as a major, world class copper project.” ■ 40 Philippine Resources

Supply Resources Mineral Resources May - July 2012 November 2011 - January 2012

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Monark boosts support for mining Brunel, Site Works team up DOE strong in 43&70 9-* receives 841* &9*75.11&7 89&'1.8-*) .3 9-* +4:3)& interest

)*&1*7 .3 9-* -.1.55.3*8 .8 .3(7*&8.3, .98 8:55479 (&5&'.1 .9> +47 9-* 2.3.3, 8*(947 <.9- 9-* *89&' 1.8-2*39 4+ & 2.3.3, ':8.3*88 :3.9 !-* 3*< :3.9 .8 -*&)*) '> 11&3 $&7) &3) *3(425&88*8 89&++ .3 8&1*8 &3) he Philippinesâ&#x20AC;&#x2122; Department of 574):(9 8:55479 Energy (DOE) has received strong 43&70 8&>8 9-* 24;* :3)*71.3*8 .98 interest in a new bidding round 7*(4,3.9.43 4+ ;*7> ':11.8- 57485*(98 +47 with 69 bids received for 38 coal areas 2.3.3, &2.)89 +&;47&'1* 2*9&1 57.(*8 &3) across the country. A& ;*7> -.,- .39*7*89 .3 .3;*892*398 .3 9-* 2.3.3, .3):897> C .3 57*5&7&9.43 +47 A*= Headed by the Chairman of the DOE Re543*39.&1 ,74<9- .3 9-* 2.3.3, 8*(947 C view and Evaluation Committee (REC), !-* (425&3> 8**8 9-* :3.9 &8 A& 43* Undersecretary Jay Layug, the DOE 8945 8-45 )*9*72.3*) 94 574;.)* 14>&1 opened 69 bids from various compa8:55479 <.9- 9-* 4'/*(9.;* 4+ *89&'1.8-.3, nies who expressed interest in investing & )**5*7 7*1&9.438-.5 '*9<**3 43&70 in coal exploration in the nation in the &3) .98 2.3.3, (:8942*78 C fourth Energy Contracting !-* Philippine &9*75.11&7 )*&1*7 .8 &184 Round (PECR4) coal that was 97&.3 com897*3,9-*3.3, .98 for &(9.;.9.*8 .3 89&++ pleted on 30 March 2012. .3, <.9- .98 43&70 4:3)&9.43 389.9:9* <-.(- 4++*78 >4:3, .1.5.348 /4' 45547 The DOE the opening of new bids 9:3.9.*8 '> said 574;.).3, 9-*2 <.9- 034<1 has clearly shown increased private com*),* 80.118 &3) ;&1:*8

9.43 -&8 *;41;*) +742 /:89 574;.).3, 9*(-3.(.&38 +47 43&70 6:.52*39 94 574;.).3, 9*(-3.(.&38 94 .98 14(&1 .3):8 97> 5&793*78 B .3(1:).3, 4<*7 4<*7 8.& &1*4 6:.52*39 &3) *9&18 paniesâ&#x20AC;&#x2122; interest to invest in exploration 9 8&>8 9-* 5&793*78-.58 <.9- 9-*8* and development indigenous re(425&3.*8 -&;* of 574;.)*) /4' coal 45547 sources from the pre9:3.9.*8 in 94 the

Philippines +4:3)&9.43 8(-41&78 &8 vious years. This development will, once <*11 &8 '4489.3, 9-*.7 2&354<*7 7* commercial production occurs, further 6:.7*2*398 .3 9-* +.*1) 4+ -*&;> *6:.5 reduce the countryâ&#x20AC;&#x2122;s dependence on im2*39 2&.39*3&3(* ported coal and will consequently result $.9- .98 A!*(-3.(.&3 +47 9-* $471) in dollar savings arising from decreased 74/*(9 C !-* +4:3)&9.43 574):(*8 coal importation. 9*(-3.(.&38 +47 43&70 6:.52*39 &3) 49-*7 ! )*&1*78 &74:3) 9-* <471) The DOE there&557*39.(* were multiple 9 :8*8 9-* reported &9*75.11&7 8*7 bids in certain coal areas, particularly Ar;.(* 9*(-3.(.&38 97&.3.3, 574,7&2 &3) eas 18-A &9*75.11&7 and 18-B in &88*882*39 Bislig and Lingig, &551.*8 94418 Surigao del Sur, which the DOE considers &3) 1*&73.3, 89&3)&7)8 94 *38:7* 9-&9 as the most prospective in coal resources. ,7&):&9*8 4+ 9-* 574,7&2 -&;* 9-* 7*6:.7*) 80.118 94 '*(42* &9*75.11&7 The Department said areas that did not 9*(-3.(.&38 94 8:55479 2.3.3, .3):8 receive any bids in PECR 4 will be offered 97> ,74<9- 349 431> .3 9-* -.1.55.3*8 in the next contracting round. ':9 &184 4;*78*&8 â&#x2013;

coal mining offering

-* 7:3*1 ,74:5 -&8 9*&2*) :5 <.9- 9-* :897&1.& '&8*) (425&3> .9* $4708 .3 & 897&9*,.( &11.&3(* !-* 5&.7 <.11 )*1.;*7 (4251.&3(* *):(&9.43 ! &3) !7&)* 88*882*39 +47 9-* Some old and players have submit :897&1.&3 &3) new .39*73&9.43&1 2&70*98 &8 ted applications including PNOC Ex- <*11 &8 97&)* :5 80.11.3, &3) ! ploration Corporation, Semirara Min94 .39*73&9.43&1 (*79.+.(&9.43 +47 9-* -.1.5 ing Corporation, Benguet Corporation, 5.3* )42*89.( 2&70*9 Mineral Resources, Inc., Altu Blackstone .9* $4708 <.11 :9.1.?* .98 1&70 ):(& ra Mining Phils. Inc., South Peak Coal 9.43 .9> (&25:8 .3 1&70 3479- 4+ &3.1& Resources, Inc., Superfine Mines (:7 and 94 )*;*145 & <471) (1&88 *):(&9.43 Minerals, Inc., Empire Asia Mining Corp. 7.(:1:2 )*8.,3*) 94 85*(.+.( (1.*39 7*6:.7* The DOE expects to award the winning 2*398 +47 9-* 438-47* &3) 4++8-47* 4.1 &3) bidders their coal operating contracts ,&8 2.3.3, &3) *3*7,> 8*(9478 150 7:3*1 days from the opening of the within !-* ,74:5 *3(425&88*8 applications. 7:3*1 !*(-3.(&1 *7;.(*8 -.1.55.3*8 <-.(- .8 1.(*38*) +47 9-* *=5479 4+ â&#x20AC;&#x153;The number of applicants is overwhelm .1.5.34 5*78433*1 &3) 7:3*1 !*(-3.(&1 ing and is obviously a testament to the *7;.(*8 &354<*7 <-.(- .8 & (42 confidence of investors in the Aquino 51.&39 (425&3> +47 9-* *2514>2*39 &3) administration,â&#x20AC;? Undersecretary Layug 43 -.7.3, 4+ .1.5.34 5*78433*1 43 '*-&1+ said. 4+ (1.*398 &8 <*11 &8 & +47*.,3 <470 5*72.9 85438478-.5 5&>7411.3, &3) 7*14(&9.43 â&#x2013; Continued on page 38 >

PhilippineResources Resources 49 41 Philippine

Mineral Resources May - July 2012

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Mindoro unveils spin-out of golden Philippines assets

ustralian based miner Mindoro Resources Ltd is planning a major restructure of its Philippines assets, including the spin-out of its key Philipinnes gold and copper-gold assets.

ing and exploration focused Red Mountain. Red Mountain’s mining expertise and funding with the Mindoro team’s exploration and community engagement track record, is a great combination.”

Mindoro’s Batangas gold projects, including Archangel and Lobo, and the Tapian San Francisco (TSF) copper-gold properties near Surigao, will come under the control of ASX listed Red Mountain Mining Ltd. The parties have signed a non-binding, conditional term sheet in relation to these aspects. The consideration for the sale of the assets is shares in Red Mountain payable to Mindoro in two tranches as follows:

Red Mountain had approximately A$5 million in working capital at the end of March 2012.

i) 100 million initially non-voting shares at nominal A$0.10 per share on completion of the transaction; and ii) 50 million “Performance Shares” at a nominal A$0.10 per share to convert to non-voting shares based on upgrading the Indicated Resource at Batangas to 600,000 ounces of gold and completing a scoping study that demonstrates a viable gold project based on over 50% of the indicated resource within 12 months of completing the transaction, which the parties will use their best endeavors to achieve. The Performance Shares are cancelled after 12 months if the above objectives are not achieved. Mindoro President and CEO, Jon Dugdale, said the separation of the key gold and copper-gold assets of the company from the advanced Agata nickel project provides the opportunity for optimal value recognition of these assets in today’s equity marketplace. “This is why the Board and Management of Mindoro supports this proposed spinout of the Batangas and TSF gold and copper-gold projects into the gold min42 Philippine Resources

Upon completion of the transaction Mindoro President and CEO Jon Dugdale will become an Executive Director of Red Mountain and Mindoro’s Vice Chairman Howard Walker will become a non-executive Director of Red Mountain. Red Mountain and Mindoro contemplate that within nine months of completion of the transaction Jon Dugdale will transition to the role of Managing Director of Red Mountain and that Neil Warburton will become a Non-Executive Chairman. It is anticipated that Mindoro will have made the transition to a nickel development company within this nine month period.

Mindoro to commence drilling, focused on delineating the high-grade “feeder” structures below the Kay Tanda resource at Archangel, Batangas. Mindoro and Red Mountain are continuing with a due diligence period and anticipate signing a binding agreement on or before June 15th, 2012

As part of the transaction Red Mountain will provide a secured draw-down facility for up to A$1 million to enable Continued from page 41> “We look forward to harnessing our indigenous coal resources to reduce our reliance on imports.” Currently, the country imports 70% of its coal requirements and only 30% comes from local sources. Coal accounts for 25% of the country’s energy mix. It is perceived that the continuous conduct PECR will optimise the exploration and development of local coal that will contribute to the attainment of the country’s pursuit of 60% energy self-sufficiency. The Philippine government has been encouraging the private sector to participate in its energy independence program that aims to increase the country’s self-sufficiency level to 60%. Through intensive coal exploration, the DOE hopes to find additional reserves to meet growing energy demand. ■

May - July 2012

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Philippine Resources 43

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Gold Fields takes up option on Far Southeast Leading global miner Gold Fields Limited has announced it has exercised its 40% option in the gold-copper Far Southeast Project in the Philippines after recently making a US$110-million payment. On 20 September 2010 Gold Fields entered into two option agreements with Lepanto Consolidated Mining Company

(Lepanto), 60% owner of Far Southeast, and Liberty Express Assets (Liberty), 40% owner of Far Southeast, granting Gold Fields an option to acquire a 60% interest in Far Southeast for a total consideration of US$340-million. After making two down-payments of US$44-million and US$66-million in September 2010 and September 2011 respectively, Gold Fields has decided to bring forward half of the remaining US$220million payment to acquire Liberty’s 40% interest in Far Southeast. Gold Fields said it continues to hold its option to acquire an additional 20% stake in Far Southeast from Lepanto for a further US$110-million, which, if exercised, would increase its total interest in Far Southeast to 60%.

Gold Fields CEO, Nick Holland.

Continued from page 42> The sale of the Batangas and TSF projects to Red Mountain will require approval by Mindoro shareholders. Materials have been dispatched regarding the sale for consideration and vote at the Mindoro Annual General Meeting, to be held June 27th, 2012 in Calgary, Canada, and to be video-linked from Melbourne on June 28th. Red Mountain shareholder approval for the transaction will also be required in addition to various regulatory approvals including by the TSX Venture Exchange. Agata Nickel Project Strategic Partnership Mindoro said it believes the spin-out of Mindoro’s key gold and copper-gold assets will allow the company to focus 44 Philippine Resources

The Liberty and Lepanto options were initially granted to Gold Fields for the

on completing the Agata Nickel Project (ANP) strategic partnership to advance the project to development and production in two stages.

later of 18 months from signature in September 2010 or the date of receiving a Financial or Technical Assistance Agreement (FTAA) for the project. A FTAA licence allows a foreign corporation to control a majority interest in a Philippine mining project. Notwithstanding this provision, Gold Fields has the discretion to exercise either option prior to the FTAA being granted. Gold Fields has decided to exercise the Liberty option earlier than originally planned due to the fact that: Gold Fields’ Chief Executive Officer, Nick Holland, said the due diligence results to date are positive and demonstrate significant upside to the resource potential. The company also stated that by acquiring ownership of 40% it demonstrates its Continued from page 46> duction and complete pilot testing and a DFS into a hydrometallurgical acid– leach processing operation.

The ANP includes a 42Mt @ 1.01% Ni (430,000t Ni) Measured and Indicated Resource and a 35.4Mt @ 1.03% Ni (365,000t Ni) Proved and Probable Reserve.

Mindoro said it believes the demand for nickel laterite DSO from the Philippines has been positively impacted since Indonesia has moved to restrict direct shipping of unprocessed nickel laterite ore from 2013.

The company said it is aiming to establish a strategic funding partnership to accelerate a two-stage development strategy including stage 1 direct shipping ore (DSO) production and stage 2 hydro-metallurgical processing to definitive feasibility study (DFS).

The Agata DSO scoping study will be upgraded to a feasibility study and permitting will be upgraded from the current Environmental Compliance Certificate (ECC) to Declaration of Mining Project Feasibility once strategic partner financing and offtake agreements are finalised.

The company said it is in advanced discussions with a group aiming to secure a strategic stake in the ANP through providing funding to establish DSO pro-

Mindoro is working with its financial advisor,Deloitte Corporate Finance Pty Ltd with the objective of reaching preliminary agreement in the near future. ■

Mineral Resources May - July 2012

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Continued from page 44> commitment to the project and formalises its partnership with Lepanto and that the early exercise of the Liberty option does not affect the remaining 20% Lepanto option, which continues to be exercisable in accordance with the terms of the agreement. The FTAA application for the Far Southeast project was filed in November 2011 and based on the date of the filing Gold Fields expects it could be granted in the second half of 2012. Gold Fields also expects to have a maiden Resource statement for Far Southeast and commence a pre-feasibility study later this year. “We are extremely pleased that we now own a 40% interest in Far Southeast, not just an option. The positive drilling results have given us the confidence to show our commitment to the project and the Philippines,” Mr Holland said. Far Southeast is located in the northern part of Luzon Island. The project is situated in an existing mining camp in close proximity to two other mines historically operated by Lepanto, one

of which is currently in production. Far Southeast has ready access to established infrastructure, including roads, tailings facilities, power and water. The existing workforce on the doorstep of Far Southeast is part of a community established around mining over the past 70 years. FAR SOUTHEAST An intensive underground grid drilling program of a total of 75 drill holes equivalent to 38 kilometers was undertaken until 1986. In addition, underground level drives covering 7.6 kilometers were accomplished for exploration. The results defined the gold-rich porphyry copper deposit. During the same period, extensive metallurgical tests were conducted on the diamond drill core samples. Rock mechanics, hydrogeological and geothermal studies were accomplished. The opening of a test stope was also undertaken. In 1987, the Far Southeast Gold Resources, Inc. was organised as a joint venture company of Lepanto Consolidated Mining Co. and Galactic Resources Ltd. to develop the FSE deposit. A feasibility study by J.S. Redpath Corporation and Kilborn Engineering was completed in March 1988 which yielded positive results. Several updates were done during the succeeding years. However, due to depressed metal prices in the early 1990s, the project did not proceed. An additional 39 holes were drilled from 1987 to 1994 which is equivalent to 14 kilometers of drilling to enhance the mineral resource and ore reserve of the deposit bringing the holes drilled to 114 or an equivalent of 52 kilometers. The Lepanto mine site is located in the municipality of Mankayan, Province of Benguet, in the island of Luzon. It is approximately100 km by road north of Baguio City. ■

46 Philippine Resources

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Philippine Resources 47

MIneral Resources May - July 2012

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OceanaGold MD flies in for Luncheon

he Philippine Mining Club’s February luncheon featured a special presentation from the head of OceanaGold. Mick Wilkes, the company’s Managing Director and CEO, flew in to Manila from Auckland, New Zealand to speak at the Philippine Mining Club Luncheon about OceanaGold’s gold/copper project at Didipio.

In June 2011 OceanaGold commenced construction of the high grade gold copper Didipio Project located in Luzon, northern Philippines. The project is expected to be commissioned in Q4 2012. The February 10th Luncheon attracted 280 people to hear first hand Mr Wilkes description of the progress of the Didipio project. ■

Mining Club Luncheon Key Note speaker, Mick Wilkes, MD & CEO of OceanaGold.

Gil Maglague of OceanaGold Corp and Ian Lewis of QED.

Ian Porter, Country Manager of Cardno with the Mining Engineer students that Cardno Sponsor to the Luncheon. 48 Philippine Resources

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Philippine Resources 49

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Record crowd hears Far Southeast update from Gold Fields ceo

he Philippine Mining Club had a record crowd of 360 in attendance at its April 20th Luncheon when Brett Mattison, President and CEO of Gold Fields Philippines Corporation presented an excellent talk and presentation on the companies JV with Local miner Lepanto Mining corporation.

The JV’s the project, Far Southeast, is located in the northern part of Luzon, the largest island in the Philippines. The project is situated in an existing mining camp in close proximity to two other mines historically operated by Lepanto, one of which is currently in production. Far Southeast has ready access to established infrastructure, including roads, tailings facilities, power and water. The existing workforce on the doorstep of Far Southeast is part of a community established around mining over the past 70 years. ■ Freddie Carlson, Scania, Cecilia Pamular of Philppines Resources.

Brett Mattison provided an interesting update on Gold Fields’ activities.

Rocky, Ronald (COMP), Former Amb. Delia Albert, Agnes, Nyamande-Pito South Africa Ambassadot and Redempta of Philex and friends. 50 Philippine Resources

Ian of Cardno, Gavan Collery, VP Indophil and Johan Raadsma of CGA.

The ladies get on stage with the Ambassador.

Mineral Resources May - July 2012

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Solar Powered LEDs To Light Boni Tunnel Taguig City Motorists are benfitting from the latest in modern, solar-powered lighting technology following the completion of a major Department of Energy (DOE) supported project at the Boni Tunnel. The Department of Energy recently led the inauguration of the installation of solar-powered light emitting diodes (LEDs) along the Boni Tunnel, in a development which is expected to ease the travel of motorists going to and from Boni Avenue via Boni Tunnel. Boni Tunnel is a 297.20 meter-long tunnel that traverses EDSA in Mandaluyong City along Boni Avenue. The area’s old lighting system is composed of a mix of tubular fluorescent lights (T12) and high pressure sodium (HPS) lamps. This was not only dim but also poses security risks to public and private vehicles. It is expected the new lighting system will nmay reduce the utility cost, averaging about PhP 570,640 per annum, and a total power demand of 6.58kW.

Inauguration and Turnover Ceremonies: Boni Tunnel Solar-Powered LED Lighting. New Horizon Hotel, Mandaluyong City). Department of Energy Secretary Jose Rene D. Almendras hands in the Deed of Donation to Mayor Benjamin C. Abalos, Jr. to formally transfer the ownership, maintenance, and administration of the First Solar-Powered LED Lighting System located along the Boni Tunnel, Boni Avenue corner EDSA, to the Local Government of Mandaluyong City.

In declaring that it was high time that the lights in the area were changed, the DOE said the new LEDs are ideal for illuminating roadways inside the tunnel due to their optical efficiency, distributing light in areas where it is most needed, providing an effective tool to eliminate socio-economic hazards such as criminality and vehicular accidents. The service life of the LED Master Lamps is about 30,000 hours and can save up to P240,000 a year in electricity expenditure for Mandaluyong City. The grid-interactive photovoltaic system with a capacity of 6,400 Wp will power the 188 tubular LEDs along Boni Tunnel. Energy Secretary, Jose Rene D. Almendras, said the use of energy efficient lighting systems (EELs) in the local government units (LGUs) created savings on electricity expenditure. “It is very important for us to continuously moderate electricity consumption. In reducing consumption, we also lessen our carbon footprints effectively contributing to the solutions towards the issue of climate change,” he said. In May 2011, a Memorandum of Agreement (MOA) was signed by and among the DOE, Department of Public Works and Highways (DPWH), Metropolitan Manila Development Authority (MMDA), Mandaluyong City LGU, PNOC Renewables Corporation (PNOC RC), and Philips Electronics and Lighting, Inc. (Philips) to showcase a public-private partnership model where the cost and responsibilities for implementation were shared among the partners. The Asian Development Bank (ADB) provided the lithium batteries and other accessories for the solar power assembly. ■ Philippine Resources 51

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Philippine Resources at PEEF event in Manila Philippines Resources will be participating as an exhibitor at the 3rd Philippine Energy Efficiency Forum (PEEF) when it is staged at the SMX Convention Centre in Manila on 10th of July 2012.

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Organisers are forecasting that PEEF will attract at least 500 delegates with upwards of 70 booths showcasing energy efficient technologies and solutions. The 3rd Philippine Energy Efficiency Forum (PEEF) will have a central theme that aims to address the challenges of energy security and climate change via energy savings and decarbonisation of electricity supply. Efficiency improvements in the electricity sector have the potential for big savings in total power use and large reductions in Green House Gas Philippine Resources will be reprsented (GHG) emissions. However, improvements in by Cecilia Pamular at the PEEF event in energy efficiency can be hindered by: lack of Manila. knowhow to recognize and achieve potential savings; low priority relative to other costs for many users; significant upfront cost subsidies and un-priced externalities such as climate change. The 3rd PEEF in Manila will discuss topics on energy efficiency technologies, energy policies and consumer education that need to be integrated across the electric power sector value chain to improve energy security, enhance global competitiveness and accelerate economic growth. The forum gathers business leaders, energy experts and policy makers to share in their insights on the potential as well as identify the key drivers for energy efficiency within the electric power sector value chain- generation, grids, commercial, residential and industrial use of electricity. Now on its third year, PEEF aims to sustain energy efficiency initiatives and activities started during its first two runs, spearheaded by the European Chamber of Commerce of the Philippines (ECCP) together with its partner - the International Finance Corporation (IFC) and founding sponsors Schneider Electric Philippines, Pilipinas Shell Petroleum Corporation, Philips Electronics & Lighting, Inc., First Gen Corporation and Manila Electric Company (Meralco) among others. The format for the PEEF 2012 is designed to be compact and comprehensive, to cover various topics in energy efficiency. It has the following components: Plenary Sessions Energy Efficiency in the Power Generation Sector (Bringing Power Cost Down) Energy Efficiency in the Transmission and Distribution Sectors Energy Efficiency in the Industrial / Commercial Sector Creating and Enabling Environment for Energy Efficiency. â&#x2013; Philippine Resources will be represented by Ma.Cecilia Pamular at the PEEF event in Manila.