Philippine Resources Journal-May-July 2013 by angie abeleda

Philippine Resources Mining, Petroleum & Energy Journal Issue 2 2013, May - July

Analysts continue to promote Philippines’ financial turn around

First shipment for OceanaGold

Gas2Grid closes on oil flow on Cebu

Monark is the”King of giant trucks”

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Headlines in this issue

Front cover photo shows drilling activity at Gas2Grid’s operations on Cebu island, where the company is looking to produce an historic oil and gas discovery, and the Philippines’ largest mining truck recently delivered by Monark.

Resources Commentary

Grading the Aquino Administration’s Scorecard on Mining

My Wish List for the 2013 Elections

Extracting Transparency from the Extractive Industries

Resource Stories

Resources News

The Tasmanian Who Fell To Earth...

Philippines chasing funding support for mining in the US

Minerals News

Resources Helping the People

Phil Chamber Welcomes Lifting of Moratorium

US miner donates wheelchairs to kids and elders in Mindanao

Oil & Gas

High flyer KUFPEC now part of Galoc JV

Mining Luncheon

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Resources Commentary

Philippine Resources Mining, Petroleum & Energy Journal Issue 2 2013 May - July 2013

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 greg@philippine-resources.com Journalist/Marketing Steve Hill Steve@philippine-resources.com +63 918 669 8611 Design/Production Elizabeth Galura Editor Colin Sandell-Hay Sales & Marketing Cecilia Pamular: +63 920 967 8342 & Kevin Lewis: +63 928 550 4642 Contributors Fernando Penarroyo & Patricia A O Bunye 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: Derek Mullen derek@philippine-resources.com +63949 782 3999 Philippine Resources Journal is printed in Manila by IPrint. Digital online edition www.Philippine-Resources.com

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Grading the Aquino Administration’s Scorecard on Mining By Fernando Penarroyo

fter almost three years into the Aquino administration, opposition from local government units, civil society organizations, environmental lobbyists, indigenous peoples, and separatists groups remains unabated and continues to hound the mining industry. While the industry looks to the government for much-needed relief, it seems that the efforts exerted by the Aquino administration can be considered as half-hearted. During the run-up to the 2010 presidential elections, Allan and Associates, a Hong Kong-based security risk management consultancy, made an assessment on the implications of an Aquino presidency for the mining industry. The assessment raised the prospect that Aquino would rely heavily on popular support rather than pursue coherent strategies intended to provide long-term economic and social stability because of his  perceived close links with ‘progressive’ elements within the Catholic Church and civil society groups. According to a Green Electoral Initiative survey led by EcoWaste Coalition and Greenpeace in February 2010, Aquino was inclined to review Republic Act 7942 otherwise known, as the “Philippine Mining Act of 1995” particularly the fiscal incentives in order to maximize the economic benefits from the extractive industry. In fact during the Foreign Correspondents Association of the Philippines Presidential Forum on 17 October 2012, Aquino confirmed that he didn’t have the confidence that existing laws adequately protect the environment and the government gets its just share from the mining industry. When asked point blank if he favours mining, Aquino responded that the benefits of mining were one-sided in favor of the mining companies stating that: “Extraction is a one-shot deal with attendant risk, there are several risks. And in terms of revenues generated, it is less than 10%. So our people seem to be getting the maximum risk but the least in terms of benefits. And we want to correct that situation.” Under Aquino’s watch, the Department of Environment and Natural Resources (“DENR”) enacted a use-it-or-lose it policy in 2011 to force inactive permit holders to comply with their submitted work programs or risk voiding their contracts, and implemented a moratorium on new mining applications. The moratorium on new mining applications was lifted and the Mines and Geosciences Bureau (“MGB”) accepted and processed new mining applications starting on 18 March 2013. MGB Administrative Order 2013-10 set the guidelines for the new mining applications and increased the mining application fee from Php60 per hectare to Php300-500 per hectare. Continued on page 8>

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<Continued from page 6 Resource developers are also reeling from the effects of the revised free and prior informed consent guidelines, which the National Commission on Indigenous Peoples published on 16 May 2012 (NCIP Administrative Order No. 3, Series of 2012) prompting the mining industry to air its concerns and argue that the new rules have severe impact on mining investments. Also, despite the administration’s move to address certain loopholes in the Mining Act with Executive Order No. 79, the rules on mining remain unclear according to some industry players and stakeholders. There are indeed concerns that Aquino’s links with civil society groups resulted in an anti-mining administration that has passed regulations hostile to the in-

dustry. Amado Macasaet, writing for the newspaper Malaya, thinks that the fact that Aquino allowed the South Cotabato provincial board resolution to prevent the $5.9 billion gold-and-copper project of Xtrata Plc from starting operations was admission that he is anti-mining.

the Kalikasan People’s Network for the Environment stated that environmental groups are shocked in the series of decisions made by DENR and Malacañang allowing foreign and corporate miners to expand large-scale mining operations in the country.

To Macasaet, the environmental clearance certificate (“ECC”) issued by the DENR is “a useless piece of paper” because the project continues to be stymied by a provincial ordinance banning open pit mining while the governor stands pat on the resolution of the board.

On the other hand, the Alyansa Tigil Mina (“ATM”), an advocacy group on environmental and human rights issues, insists that under EO 79, there is no premium given to the right of local governments and the opposition of mining-affected communities to resist large-scale mining operations in the country.

Nevertheless, following DENR’s decision to issue an ECC to Xtrata’s and allow Philex to resume its operation in Benguet after the mine tailings accident, civil society groups were up in arms against the Aquino administration. In a press release dated 15 March 2013,

ATM is seeking to revise the current mining policy framework, which according to ATM is aggressively promoting liberalization of the mining industry resulting to widespread environmental destruction and violation of human rights.    2013 Midterm Elections President Aquino suggested that the mining industry would have to wait for the amendments to the mining law as a more prudent way to undertake the government’s relationship with the industry in general justifying that he is not risking the environment, the health of Filipinos and the loss of resources for some temporary gain. In light of the 2013 midterm elections, the industry is closely analyzing how senatorial candidates are positioning themselves on mining issues and how interest groups support certain candidates on account of their stand on these issues. ATM is calling on candidates to support the passage of the Alternative Minerals Management Bill that seeks to revise the current mining industry framework. The group declared that it would campaign

Fernando “Ronnie” Penarroyo is the Managing Partner of Puno and Penarroyo Law Offices. 10 Philippine Resources

Continued on page 10 >

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< Continued from page 8 against at least four (4) senatorial candidates – former senator Richard Gordon and newcomer Jack Enrile, son of Senate President Juan Ponce Enrile, who are both from United Nationalists Alliance, and Representatives Sonny Angara, and Cynthia Villar who are now running under Team PNoy. Villar’s family owns Queensberry Mining, which is directly involved in the King-king copper-gold project in Compostela Valley. Angara is a member of the board of directors of Aurora Pacific Ecozone and Freeport Authority, while Gordon is an independent director of Atlas Mining Corp. Enrile hails from Cagayan “where anti-mining advocates are threatened and some killed,” according to the ATM. On the other hand, the Makabayan coalition, made up of left-leaning partylist groups - Bayan Muna, Anakpawis, Gabriela, ACT Teachers, Katribu, Migrante, Courage, Akap Bata, Piston and Kalikasan has also joined the fray in endorsing supposedly anti-mining senatorial candidates.

With Makabayan’s own candidate, Bayan Muna party-list Rep. Teodoro Casiño, the bloc will be supporting the candidacy of Senators Francis Escudero, Aquilino Pimentel III and Loren Legarda, former Las Piñas Representative Cynthia Villar and Grace Poe-Llamanzares. Satur Ocampo, Makabayan President, said that the six candidates have agreed to push for pro-people mining policies and environmental protection.

The petitioners also sought a temporary restraining order that would stop the DENR from acting on MPSA applications, and asked the SC to cancel the MPSAs of Hallmark Mining Corporation and Austral-Asia Link Mining Corp in Davao Oriental.

Jamby Madrigal stands out for having sponsored senate bills on the repeal of the Mining Act. The Catholic Bishops Conference of the Philippines also came out with a list of candidates who are amenable to the passage of an Alternative Minerals Management Bill. Among those in the list are Richard Gordon, Ed Hagedorn, Mitos Magsaysay and Migs Zubiri.

The DENR argued that the petitions should be dismissed outright because the SC had already ruled on the constitutionality of the Mining Act in the December 2004 decision of the High Court in La Bugal-B’laan Tribal Association v. Ramos. Newly appointed Justice Marvic Leonen inhibited from the case because he was a petitioner in the La Bugal case.

Mining Act Revisited

The Next Three Years?

Nine years after the Supreme Court ruled that Mining Act was constitutional, the Court is once again reviewing petitions assailing its legality.

The industry may have been resigned to the fact that it could well be the next President who will be more supportive of mining.

During oral arguments held on 16 April 2013, the SC tackled issues raised by petitioners headed by then Akbayan party list Rep. Risa Hontiveros, Bayan Muna party list Rep. Teddy Casiño and House Deputy Speaker and Quezon Rep. Lorenzo ‘Erin’ Tañada III of the ruling Liberal Party of President Aquino on the validity of sections 80 and 81 of the Mining Act. Surprisingly, feuding party-list groups Bayan Muna and Akbayan set aside their differences and agree to unite in their petition.

Adding to this resignation is the draft order that the administration is considering to tighten mining rules, cut tax breaks, review resource contracts, introduce competitive bidding for mining rights, widen a ban on mining to more areas, mandate downstream processing of minerals, ban direct shipping of raw or unprocessed strategic metallic ores, and demand economic valuations before allowing projects to proceed.

The petitioners argued that both are unconstitutional because they foster inequitable sharing of wealth. Sec. 80 limits the share of the government in Mineral Production Sharing Agreement (“MPSA”) to excise taxes while Sec. 81 confines gov12 Philippine Resources

ernment’s share to taxes, fees and royalties instead of letting it have full control over the exploration, development and utilization of mineral resources.

The draft order reeks of resource nationalism as the Philippine government moves beyond taxation by introducing additional requirements affecting the commercial feasibility of mining projects. Continued on page 12 >

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My Wish List for the 2013 Elections By Patricia A. O. Bunye

s I write this, the May 2013 midterm elections are 15 days away. I have not yet decided on my slate of 12 senators, as I have tried, until this point, to block out from consciousness the singing, dancing and gimmickry that Filipino voters are assaulted with during the campaign period. I have just about given up on coming up with a list of suitable candidates on the basis of their platform as a discussion on platforms or legislative agenda is the last thing that you would hear from them. Philippine political parties cannot be differentiated by their ideology as these are mere groupings according to convenience or self-interest. Rather than discussing specifics, these candidates assume we are naïve (or worse, stupid) and that we believe them when they said that “gaganda ang buhay” (life will be better), “ipagtatanggol ko kayo” (I will defend you), or that they are “mga tunay na tuwid sa daang matuwid” (straight people on the straight path). It is utterly tempting to skip the polls on May 13 and take the long weekend off as elections in the Philippines have rarely

The is much at stake for the mining industry form this year’s elections.

resulted in any fundamental change, only changes in names and faces. For the mining industry, however, there is much at stake as those elected this year have the potential to either shape a clear, stable and sustainable mining policy or to dash whatever hope remains that mining can still become one of the strongest drivers of the economy. While Executive Order No. 79, Series of 2012 (“EO 79”) is touted as addressing gaps in the current system, much will depend on the legislative branch of government, particularly with respect to rev-

<<Continued from page 10 It is no consolation too that Aquino may justify his tightening on the industry knowing fully well that the impressive growth rates in the economy recently affirmed by the much-coveted and long-awaited investment grade rating was made possible even without the contribution from big ticket mining projects. As the nation goes to the polling booths for the mid-term elections with certain candidates having an alternative mining bill limiting foreign ownership in their platforms of government and the SC reexamining the Mining Act, the industry waits with bated breath the outcome of these developments. ■

enue sharing, considering that Section 4 of EO 70 provides that “no new mineral agreements shall be entered into until a legislation rationalizing existing revenue sharing schemes and mechanisms shall have taken effect.” Trade Secretary Gregory Domingo recently announced that the Minerals Industry Coordinating Council (“MICC”), which was created under EO 79, is expected to complete this May its draft bill defining the revenue sharing scheme between the government and mining companies. He was quoted in a news report that “By mid-May, there will be a more defined formula. A draft bill for mining will be finished by mid-May or sometime in June”. He further said that the MICC would not hurry to finish the draft to ensure that the government gets the best deal possible, which is consistent with pronouncements of the President himself that such a bill would not be certified as urgent. In any event, given the significance of the Continued on page 14 >

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<<Continued from page 12 proposed legislation on revenue sharing, my wishes for the elections would be for the electorate to choose legislators who are capable of championing a bill that results in a win-win for the government and the mining industry, and who are competent, diligent, and who would devote time to studying the issues. Without going into a whole discussion on political dynasties in the Philippines, we all know what damage can be done by electing those with no credentials other than being the spouse, child, grandchild or in-law of an incumbent. Considering, further, that the proposed legislation on revenue sharing requires thorough study, number crunching and modeling, the elected legislators must not only show up at work (don’t get me started on legislators who only show up once a year during the State of the Nation Address to flaunt their expensive ternos and jewelry), but also put in the required time and effort to actually understand the proposed revenue models and project how these would impact

the lives or real people and companies, as well as marshal the proposed bill through the arduous legislative mill.

• Nueva Vizcaya (HB5900) - pending with the Committee on Natural Resources since 2012-02-29

Countless bills never made it through the mill since their authors lacked the discipline and political will to drive them.

Let us also not forget the many local sanggunian positions being contested this May. There are already 13 provinces that have promulgated anti-mining ordinances or open-pit mining bans:

Apart from the proposed legislation on revenue sharing, there is also a proliferation of anti-mining bills, including those which seek to ban mining in specific areas notwithstanding that the Philippine Constitution clearly allows mining.

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• South Cotabato • Mindoro • Romblon

As of the adjournment of the 15th Congress, the legislators representing the following legislative districts asked for a ban on mining in their respective jurisdictions:

• Antique • Zamboanga Sibugay • Bohol

• Cagayan de Oro (HB1064) - approved by the House on 2011-08-15, transmitted to received by the Senate on 2011-08-18

• Zamboanga del Norte • Samar

• Romblon (HB4415) - substituted by HB04815; Approved by the House on 2011-08-03, transmitted to received by the Senate on 2011-08-10

• Marinduque • Bukidnon

• Catanduanes (HB4915) - approved by the House on 2012-06-04, transmitted to and received by the Senate on 2012-06-06

• La Union

• 2nd District, Sorsogon (HB5114) - substituted by HB06218; Approved by the House on 2012-06-04, transmitted to and received by the Senate on 2012-06-06

• Negros Occidental

• Davao City (HB5684) - approved by the House on 2012-06-04, transmitted to and received by the Senate on 2012-06-06

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.

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• Southern Leyte (HB5855) - pending with the Committee on Natural Resources since 2012-02-28 • E. Samar (HB5898) - pending with the Committee on Natural Resources since since 2012-02-22

• Capiz

A specific wish for those elected to local legislative positions, i.e., to the sanggunians, assuming that we were not able to weed out the incompetents during the polls, is for them to pick up a copy of and read the 1987 Constitution, particularly Article VI, Sec. 1, which provides: “The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives, except to the extent reserved to the people by the provision on Continued on page 16 >

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<<Continued from page 14

initiative and referendum.” They should also read Articles X, Sections 1 and 2 of the 1987 Constitution, which state: “ARTICLE X” LOCAL GOVERNMENT Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter provided. Section 2. The territorial and political subdivisions shall enjoy local autonomy.” In Lina, Jr. vs. Paño, 364 SCRA 76 (2001), the Supreme Court held that local autonomy does not mean that local governments may actually enact ordinances that go against laws duly enacted by Congress:

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“As a policy statement expressing the local government’s objection to the lotto, such resolution is valid. This is part of the local government’s autonomy to air its views which may be contrary to that of the national government’s. However, this freedom to exercise contrary views does not mean that local governments may actually enact ordinances that go against laws duly enacted by Congress. Given this premise, the assailed resolution in this case could not and should not be interpreted as a measure or ordinance prohibiting the operation of lotto.

confined within the extent allowed by the central authority. Besides, the principle of local autonomy under the 1987 Constitution simply means ‘decentralization’. It does not make local governments sovereign within the state or an ‘imperium in imperio.’” [At pages 83 to 85: emphasis supplied] Indeed, local government units are only agents of the national government. Local councils exercise only delegated legislative powers conferred on them by Congress as the national lawmaking body.

xxx In our system of government, the power of local government units to legislate and enact ordinances and resolutions is merely a delegated power coming from Congress. As held in Tatel vs. Virac, ordinances should not contravene an existing statute enacted by Congress. x x x xxx Ours is still a unitary form of government, not a federal state. Being so, any form of autonomy granted to local governments will necessarily be limited and

It is high time for these unconstitutional ordinances to be reversed. Electing rational and reasonable legislators would be the first step to doing so. Being a martial law baby, the first time I voted was in the plebiscite to ratify the 1987 Constitution. I was then filled with so much idealism and hope that my one vote meant something. Many elections later, already somewhat jaded by how the real world works, that hope has still not dimmed. Every election is a chance for a fresh start and finally electing the public servants we deserve. ■

2012 Mining Tax Revenue Up 42% AT P1.5Bbn

he government, through the Mines and Geosciences Bureau (MGB), collected a total of PhP1,567,487,372 in revenues for Fiscal Year (FY) 2012 from mining companies operating within mineral reservation areas. This represents a 42% increase compared to PhP1,103,210,799 earned in 2011 year-on-year. Based on the FY 2012 Budget of Expenditures and Sources of Financing submitted to the Department of Budget and Management, the MGB estimated royalty earnings to reach PhP1,123,811,000.

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However, actual collection exceeded target by 39%, reflective of higher output by mining companies. Of this amount, 10% shall accrue to the MGB to be allotted for “special projects and other administrative expenses related to the exploration and development of other mineral reservations” as provided under Section 5 of Republic Act No. 7942, or the Philippine Mining Act of 1995. The remaining 90% shall be divided between the national government (60%) and the local government (40%).

Under Section 292 of Republic Act No. 7160, or the Local Government Code, where the natural resources are located in the province, the sharing shall be: Province, 20%; Component City/Municipality, 45%; and Barangay, 35%. The guidelines on the release of the share of local government units is provided under Joint Circular No. 2010-1 between the Department of Environment and Natural Resources, Department of Finance, Department of Budget and Management, and Department of the Interior and Local Government. ■

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Extracting Transparency from the Extractive Industry By Pacific Strategies & Assessments (PSA)

n January 2013, Department of Finance (DOF) Undersecretary Jeremias Paul Jr. said that the Aquino administration plans to require companies in the extractive industries, including mining and oil and gas firms, to publish revenue amounts remitted to the Philippine government. The DOF wants to become more transparent regarding the payment of taxes and fees, and it wants to trace how the tax incentives it provides to these companies are allocated.

global standards in ensuring transparency regarding funds coming from exploration and utilization of natural resources. The DOF has proposed the formation of the Philippine Extractive Industries Transparency Initiative Multi-stakeholder Group (EITI) Philippines. The proposed EITI Philippines would be composed of five government agencies: • Office of the Presidential Adviser on Climate Change; • Department of Finance (DOF); • Department of Energy (DOE);

The proposal is part of the Philippines’ campaign to join the Extractive Industries Transparency Initiative (EITI), an international campaign that implements

• Department of the Environment and Natural Resources (DENR); and

The EITI Source: PSA Research, EITI Website

he EITI was launched in 2003 to encourage transparency over national mining revenues and the payments made by mining and oil and gas firms to host nations. The World Bank and the United Kingdom’s Department for International Development (DFID) support the initiative. Eighteen countries – including Timor Leste and Mongolia – are classified as compliant countries, while 19 countries, including Indonesia, are considered as candidate countries. Compliant countries are those that meet the EITI’s six main criteria: • The regular publication of payments by oil and gas and mining companies to the government and all revenues received by the government from mining and oil and gas firms; • An audit of payments and revenues using international standards; • An independent audit that would identify any discrepancies in the records; • The EITI approach’s application to all companies, including state-owned firms; • Civil society participation in the process; and • A work plan developed by the host government.

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• Union of Local Authorities of the Philippines (ULAP). The ULAP would represent the local governments hosting mining and oil and gas companies. The Philippines’ desire to gain EITI membership began in 2005. EITI membership is part of the Philippine Development Plan 2011-2016. The Mines and Geosciences Bureau (MGB), the DENR, and even the Chamber of Mines of the Philippines support the move. For its part, the Chamber of Mines of the Philippines believes that the transparency advocated by the EITI would end corruption and graft related to the issuance of permits and tax payments to the government. Apart from promoting transparency, the proposal could help improve the relationship between mining and oil and gas firms and local host communities. A primary reason for local government opposition to mining projects is that local officials feel the projects generate little direct economic benefit to host communities. Anti-mining advocacy groups routinely argue that foreign mining companies are the only ones that benefit from exploring and utilizing mineral resources. They claim that development does not trickle down to the host communities, many of which reportedly remain impoverished. A number of mining firms have been affected by poor communication with local governments, particularly over the payment of taxes. For example, a 2008 dispute over the payment of sand and gravel taxes – amounting to PhP27 million (US$658,536) – prompted Nueva Vizcaya Governor Luisa Cuaresma to issue a cease-and-desist order against Oceana Gold Philippines Inc.’s Didipio mine site in the Municipality of Kasibu. Continued on opposite page >

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<Continued from opposite page A barricade by protesters prevented the firm’s vehicles from entering and leaving the mine site. Similarly, San Roque Metals Inc. (SRMI) in Agusan del Norte Province faced a closure order from the Municipality of Tubay’s mayor for alleged non-payment of taxes. Under an EITI framework, the transparency of local government revenue shares could increase the social acceptability of, and temper opposition to, mining operations. The EITI framework could also force the Philippine government to more closely scrutinize small-scale and illegal miners. Small-scale and illegal miners are often

involved in smuggling and selling ore in the black market to evade tax payments. The practice has become a major source of lost tax revenue for the government. Under EITI regulations, the government will have to announce its annual revenue targets for small-scale mining. Anomalies in these targets could prompt investigations by the EITI that can lead to expulsion from the group. This might lead to the underreporting of targeted revenues for small-scale mining. At the same time, however, increased scrutiny of small-scale mining could encourage a stronger regulatory environment and more active law enforcement in the long term.

Transparency of extractive industry payments to the state could also reduce tension and prevent possible legal battles among different levels of the government. The division of revenues, and the use of these payments, is often hotly contested. Shares from mining and oil and gas operations have become a major cause of legal disputes among government officials, such as the case of the protracted court case involving the government’s share of the Malampaya natural gas project in Palawan Province. Although the promise of transparency looks good because the activities of both Continued on following page >

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<Continued from previous page private companies and the government would come under closer scrutiny, implementation of the EITI standards is not as easy as it seems. Industry experts have raised concerns that the Philippines may suffer an experience similar to Nigeria’s when it implemented the EITI in 2005. Nigeria required companies to retroactively report their payments to the government for the preceding five years. This resulted in an US$800 million discrepancy between what was reported as paid and what the government said it received. The Philippines may face the same problem should it choose to implement retroactive audits. Critics of the EITI claim that its policies are loosely enforced by member-countries. Critics allege that governments

often pass reforms to meet EITI expectations, but often fail to implement the associated reform programs. EITI critics also claim that in most countries, it is a voluntary program. In other words, mining companies are operating, to some degree, on the honor system. There is no legal remedy if they under-report their payments, although the thinking is that public backlash would be a strong enough deterrent for fudging numbers. Indonesia, the Southeast Asian nation closest to compliance, was named as an EITI candidate country in October 2010. That said, as of end of 2012, only 20 of 71 mining companies operating in Indonesia has complied with EITI’s reporting procedures. In the oil and gas sector, only 39 of 57 companies provided information. Indonesia failed to meet its first dead-

The Malampaya Funds Source: PSA Research

o date, the Malampaya natural gas project is the Philippines’ largest natural gas operation. Located approximately 80 kilometers off the Municipality of El Nido in Palawan Province, the natural gas project currently supplies electricity to three major power plants in Batangas City. Royalties from the project have earned the Philippine Government billions of US dollars, but have been the subject of a protracted legal battle between the national government and the Palawan Province local government. Data from the Department of Energy (DOE) indicates that as of May 2011, the government had received a total of PhP228.5billion (US$5.54 billion) since the Malampaya project began producing natural gas in 2002. The national government is challenging Palawan Province’s claim regarding revenue shares because the project is allegedly outside of the province’s territorial jurisdiction. The protracted tug-of-war over the shares is still pending before the Supreme Court. Portions of the disputed revenues were previously released to Palawan local officials, with a portion spent on corruption-tainted infrastructure projects. Budget monitoring watchdogs, meanwhile, have accused the national government of using its share of the Malampaya revenues on projects that are not allowed by law.

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line for gaining EITI compliance status, despite a presidential decree mandating all companies in the extractive industry to comply. EITI advocates in the Philippines should take note of these challenging experiences. The global standard also does not expose the contracts and dealings associated with the allocation of exploration and production rights. In addition, it does not address the issue of possible collusion between the government and the companies. For instance, an audit by an independent company for Azerbaijan noted that its audit would be insufficient, as government and company records both omitted important data. Another challenge for the EITI program in the Philippines is the fact that it is still uncertain whether or not all the major mining and oil and gas companies are willing to comply. It is likewise unclear if all companies a full understanding with regards to the implications of the country’s decision to apply as a member of the program. While the EITI program offers the Philippines many benefits, the Aquino administration must carefully structure its framework to avoid the problems other countries have encountered in implementing and enforcing the EITI. ■

Pacific Strategies & Assessments (PSA) conducts specialized industry research and generates customized reports covering a broad range of client interests. PSA also conducts focused security, socio-political, economic, as well as operational and business risk assessments across the Asia-Pacific. For more information, contact PSA at info.services@psagroup.com

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Support for Filipino Mining Sought in US

he Philippines is undertaking an aggressive marketing campaign in the United States to attract new investors into its mining sector. The Philippine Embassy in the US said new funding was necessary to sustain the momentum of the country’s fast expanding minerals sector to allow it to surpass the more than the US$4 billion in revenues it was able to generate last year. It said mining is one of the key sectors that Manila wants promoted during the 2nd Investment Roadshow organized by Ambassador Jose L. Cuisia, Jr. in coordination with the Philippine Consulates

General in Los Angeles, Chicago and New York. “The positive outlook presented by the Chamber of Mines of the Philippines is expected to translate to new investments in our minerals sector,” Ambassador Cuisia said. He said there are more than $20 billion in ongoing mining projects in the Philippines, including a number that require additional investments. In his presentations before American corporate and government executives and Filipino-American businessmen in Los Angeles and Chicago, Chamber of Mines President Benjamin Philip Romualdez disclosed that the positive outlook in the mineral development sector will allow the government to surpass its investment target for 2013 from $718 million to $1 billion. “In 2011, Philippine mines yielded a total gross mineral production of $4 billion with large-scale mines accounting for $2.2 billion and small-scale mines and non-metallic mines producing $1.88 billion,” said Romualdez, who is also Chief Executive Officer of Benguet Corporation.

The Tampakan project has been named a big ticket item. 24 Philippine Resources

“As of October 2012, some 1,600 exploration, mining, and processing applications are currently under process while some $20

billion of permitted projects are now in various stages of development, including a number that need fresh investments,” he added. According to Romualdez, the big-ticket items that are currently in the pipeline are the Tampakan Copper-Gold Project of Sagittarius Mines, Inc.; Far Southeast Copper-Gold Project of Gold Fields/ Lepanto; Boyongan Copper-Gold Project of Philex Mining/Silangan Mindanao Mining; Didipio Copper-Gold Mine of Oceanagold; Balatoc Tailings Project and Greater Acupan Gold Project of Benguet Corporation; and Co-O Gold Project of Philsaga Mining Corporation; Romualdez said the Philippines is ideal for mining investors not only because of its wide selection of brownfield projects in gold, copper, nickel, iron ore, manganese and chromite but also because of the existence of a legal regime that allows for 100 percent foreign ownership of mining projects through Financing or Technical Assistance Agreements (FTAA) or a 60/40 sharing through Mineral Production Sharing Agreements (MPSA). “There is also a strict implementation of a ‘use-it-or-lose-it’ policy to deter speculators in order to allow new opportunities for serious mining players,” he said. “The mining industry also continues to work with government on policy reforms to improve revenue sharing and accountability, as well as enhance the regulation and monitoring of all mining operations.” “Our competitive advantage for the mining sector is not only the strategic location of the Philippines in Southeast Asia but that allows it to be a major center of trade and commerce and the main gateway to major mineral markets in Asia,” Romualdez said. ■

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US Mining Firm Donates 100 Wheelchairs to Young and Old in Mindanao By Ben O. Tesiorna

The King-king Gold and Copper Project on Mindanao, a subsidiary of the St. Augustine Gold and Copper Limited, has partnered with a US-based non-profit organization in distributing wheelchairs to children and elders afflicted with illnesses that limit their mobility. In two separate handovers last April 4, 2013, the Wheelchair Foundation, USA donated 100 wheelchairs to the province of Compostela Valley in Mindanao in partnership with KGCP based in Pantukan. Gordon Holmes, chairman of the Wheelchair Foundation USA, along with St. Augustine Gold and Copper Limited (SAGCL) Director for Environmental Permitting Clyde Gillespie, led the handout of 100 wheelchairs to indigent residents of Pantukan and Nabunturan towns.

Some of the first batch of grateful beneficiaries of the 100 wheelchairs donated by Wheelchair Donation Foundation in partnership with King-king Copper and Gold Project (KCGP) being wheeled by (last row from left) KCGP Country Manager Clyde Gillespie, Governor Arturo Uy of Compostela Province, and Gordon Holmes of the Wheelchair Foundation.

In the morning, Compostela Valley Governor, Arturo Uy, received 50 wheelchairs during a ceremony at the provincial capitol in Nabunturan. Then in the afternoon, Pantukan Mayor Celso Sarenas received a further 50 wheelchairs. The American NGO estimated about 100 million children, teens and adults worldwide need a wheelchair but cannot afford one.

Gordon Holmes, founder of the Wheelchair Foundation and KCGP Country Manager Clyde Gillespie share a light moment with a happy recipient of wheelchair in Pantukan, Compostela Valley. 26 Philippine Resources

Some believe that the number could be as high as 6% of the population of developing countries. The number in Angola is 20% of population of 12 million people. Other â&#x20AC;&#x153;landmineâ&#x20AC;? countries such as Afghanistan, Vietnam, Cambodia, BosContinued on page 26>

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<Continued from page 24 nia, Eritrea, Ethiopia, Sierra Leone and Mozambique also have extremely high physical disability rates. Here in the Philippines, Holmes urged other mining companies to emulate what SAGCL is doing. “The 100 wheelchairs’ only a drop in a bucket in terms of what the country needs. I am hoping to reach out to more mining companies to convince them to be like St. Augustine, to participate and give back to the community,” said Holmes. Holmes is an American philanthropist who founded Streetwise Reports and Buyside Magazine. He also owns Lookout Ridge Winery in California, USA wherein he donates one wheelchair for every case of wine purchased from his winery. A family member also suffered from immobility, thus Holmes’ passion

Grateful beneficiaries of the new wheelchairs with King-king Copper and Gold Project (KCGP) with KCGP Country Manager Clyde Gillespie, Governor Arturo Uy of Co postel Province, and Gordon Holmes of the Wheelchair Foundation.

for the said cause. “I had personal experience with family member who lost her mobility and saw

the devastation not only physically but mentally and emotionally. So when I see people crawling in the ground, my heart goes out to them. “A small gesture such as the donation of a wheelchair can truly change their life. For a child, they can go to school. For an adult, they can go work. Nobody wants to be dependent,” he said. Gillespie said their partnership with the Wheelchair Foundation USA started back in July 2011 when Holmes approached SAGCL regarding his desire to donate wheelchairs to the Philippines. He said that almost two years of joint effort was finally realised last Thursday with the turnover of the 100 wheelchairs.

Aladen Toledo, a polio victim who rides a makeshift mobile car is one of the recipients of the wheelchair from Wheelchair Foundation in partnership with KCGP. He gives a thumbs up sign with (from left, clockwise) KCGP officials led by Country Manager Clyde Gillespie, KCGP Operations Manager Pete Cancino, Gordon Holmes founder of the Wheelchair Foundation, Mayor Celso Sarenas of Pantukan, Compostela Valley, and KCGP Community Relations Manager Jonathan Banez. 28 Philippine Resources

The recipients of the wheelchairs have been selected in conjunction with KCGP through consultation with the medical providers in Compostela Valley. Twenty six people became the first reContinued on page 30>

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The Tasmanian Who Fell To Earth…

ince 2010 GXD (Geological, Exploration and Drilling Supplies) has been one of the most prominent companies in the resources sector in the Philippines, and has a rapidly expanding global reputation, providing equipment in places as diverse as Papua New Guinea, Uganda, Djibouti and the Solomon Islands. Now in new and larger offices, GXD look set to grow unhindered by local issues affecting the mining industry by seeking opportunities worldwide.

Steve Hill of Philippine Resources talks to GXD founder Damien Blyth. Steve: “So Damien, I heard you literally fell out of the sky when you first came to the Philippines – in a Russian helicopter. Was that true?”

Damien: “Yes – it was on ANZAC Day, April 25th, 1997. We were operating a Kamov KA32 heavy-lift choppers in PNG and were asked to help the Benguet Dam project. It went well and later we used a Sikorsky S64 Skycrane to move tun-

neling equipment across a lake.” Steve: “Was y o u r background in aviat i o n then?”

Dami e n : “After school I joined the RAAF (Royal Australian Air Force) as an apprentice mechanic. I trained as an armament fitter, later retraining for airframe work and non-destructive testing. After leaving the airforce I used those skills which took me to PNG and eventually brought me here, which is a much nicer place to live!” Steve: “How did your career progress here?”

Damien: “After the Benguet Dam project I found myself taking it easy when I was offered a job by LOMAR, and later worked for Transfield on the Luzon Hydro project owned by Aboitiz and eventually worked for our late friend Phil Naughton at Leightons.” Steve: “Do you still have ties with flying?”

Damien: “Well my wife, Bayjeen, works for a private aviation company at NAIA, and of course we use all types of aircraft to move ourselves and our equipment to all corners of the globe.” Steve: “How did you come up with the idea of GXD?”

Damien: “After Leightons I found myself taking it easy again! For a while Photos by: Dean Homer / www.chromagraphic-images.com

GXD Founder Damian Blyth has seen a lot of the world on his way to the Philippines. 30 Philippine Resources

Continued from page 30>

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<Continued from page 28

pleasure became business and I got involved in the creation of Murphy’s pub with John Cuthbertson. After this enjoyable career direction, I worked for Carbon Mining Investors and then for Gary Powell at FCF Minerals in procurement. I saw that getting equipment here was both difficult and expensive. We couldn’t buy anything here and if they did the prices were exorbitant. Customs were an issue and you had to bring in a large quantity of items and then use them over a year or two. For example, buying 200 core trays at one time created a financial drain for the smaller companies. So we looked into being a retailer to resource companies here.” Steve: “When did GXD start and what do you supply?”

Damien: “GXD was started in 2010, by my business partner Rory Hume and with the loyal help of Nani Lontok who still works for us. Our main products are core trays, which we designed ourselves, along with a wide range of geological and drilling consumables, safety wear, down hole supplies and we’ve even supply things like armoured vehicles in our more tricky locations! We provide equipment for some of the more remote and dangerous parts of Asia, Africa and the Middle East.”

Damien: “Our business was growing, and we had a new partner to provide some extra capital. Then we found that there was an excellent office and furniture available, and so we took the opportunity. We now have a modern office of 400m2. The new office houses our sales, accounts and finance departments and provides meeting facilities. The bigger space also provides office space for our product representatives when they are in the country, and allows them to operate more effectively here. This is all supported by 1500m2 of warehousing.” Steve: “What’s the size of the GXD team?”

Damien: “GXD’s office has 14 local staff, including Financial Manager Eileen Evasco and Mylene Romano who runs HR and Admin, and we have 3 expats in Manila. In the field we have 12 staff plus 4 contractors.” Steve: “So despite the local difficulties, you’ve taken the mountain to Mohammed and built a your local business into a global one. I take it your happy here and have no plans to go back to Tasmania?”

Damien: “I like it here, the weather, the job, the life and the people. ■

Steve: “Why did GXD move to a new office?”

<Continued from page 26

Jennifer Cañete who suffers from cerebral palsy.

cipients of the wheelchairs which cost roughly about $800.

Aladdin Toledo, a polio victim who rides in his “kariton” (wooden cart) daily, expressed gratitude for the wheelchair donation saying that it will be a big help for him especially on his work as a dispatcher in the overland terminal in Pantukan.

The youngest recipient of the wheelchair was 8-year old

Titing Gucor’s legs were meanwhile amputated after being electrocuted while fixing television antenna in 2009 few minutes before the Pacquiao-Marquez fight. Holmes said their foundation delivers Hope, Mobility and Independence to those who are in need. Wheelchair Foundation is a non-profit organization leading an international effort to create awareness of the needs and abilities of people with physical disabilities, to promote the joy of giving, create global friendship, and to deliver a wheelchair to every child, teen and adult in the world that need one, but cannot afford one. Aladen Toledo, a polio victim who rides in his makeshift mobile car holds on to his new ride, a wheelchair donated by KCGP in partnership with the Wheelchair Foundation. 32 Philippine Resources

To date, the organization had already donated 1million wheelchairs all over the world. ■

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Philippine Chamber welcomes lifting of Exploration permit moratorium

he Chamber of Mines of the Philippines (COMP) has welcomed the news announced in mid-March that the Department of Environment and Natural Resources (DENR) through the Mines and Geosciences Bureau (MGB) will move to lift the moratorium on accepting applications for Exploration Permits (EPs) and Financial or Technical Assistance Agreement (FTAA) on mining. The Chamber stated that in the wake of the Department’s recent decisions allowing Philex to resume operations, and granting SMI’s Environmental Compliance Certificate (ECC) for its Tampakan copper-gold mine project, it saw the lifting of the moratorium as a positive signal for all stakeholders.

“It is indicative that government has laid the groundwork required under Executive Order No. 79 to promote the rational exploration, development, and utilization of the country’s mineral resources. It also shows that government is responding to the mining industry’s call for a stable policy and investment environment needed by investors,” the Chamber said. “Exploration activities are essential in establishing our country’s mineral resource, and are considered the lifeblood of mining operations. It is a continuing activity to sustain mining activities, and helps attract foreign investors and entice companies to provide the capital and modern technologies for large-scale mining projects that can manage environmental protection measures and social

development programmes in the mining communities. “We hope that the lifting of the DENR Memorandum Order No. 2011-01, and the implementation of DENR Administrative Order No. 2013-11 as recommended by the MGB, signals the government’s desire to move forward with a responsible mining industry that the Department endorses and the Chamber advocates. “The Chamber is hopeful that these developments will encourage more direct investments that would ensure the growth of the mining industry for the benefit of the whole country. We will continue to be a partner of the government in developing the mining industry.” ■

ADB puts funds into job improvements

he Asian Development Bank (ADB) is investing more than US$12.5 million into two technical assistance (TA) grants to create more and better jobs in industries driving growth in the Philippines. The focus of projects is a pilot youth job placement programme and to improve skills in the tourism sector. “With the recent upsurge in the Philippine economy, this support will help match job-seekers’ skills with emerging industries to promote growth and ensure that the benefits are more inclusive and reach even more people,” said Neeraj Jain, ADB Philippine Country Director.

A $7.0 million grant to the Department of Tourism, funded by the Canadian government, will test pilot projects in Bohol, Cebu, Davao, and Palawan that aim to reduce regulatory costs for tourism operators, improve hotel accreditation systems, and provide funding for skills development in the industry. Another US$5.5 million grant to the Department of Labor and Employment, also funded by the Canadian government, will connect vulnerable out-of-work youth to a job placement program called MyFirstJob, a pilot program that will provide high school leavers with career counseling, funding for vocational training, and work place experience. At least 1,600 young people – half of them women – are expected to participate in the pilot project.

GDP growth in the Philippines reached 6.6% in 2012, lifted by robust consumption and investments, and was considered one of the strongest economic performances in the region. However, job creation has not kept pace.

The two TAs support implementation of reforms under the Increasing Competitiveness for Inclusive Growth program approved by the ADB Board of Directors in June 2012.

The ADB believes the tourism sector holds great potential for growth, and has benefited from reforms begun in 2011 to open up Philippine airspace.

The program aims to improve competitiveness of the Philippines economy and increase youth wage employment rates to 5% by 2019, up from a baseline of 3.4%. ■

34 Philippine Resources

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Geothermal energy risk management Red Mountain continues to impress with the drill bit in Batangas By Fernando Penarroyo

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63 1C@@3=:7B7 1/: :/<2A1/>3 6/A =>3<32 => >=@BC<7B73A 4=@ 1:3/<3@ 3<3@5G ggressive Western/<2 Australian=>B7=<A E67:3 7<D3AB=@A 5=D3@< based minerals explorer Red ;3@=D723 Mountain Mining Limited is B63 3AA3<B7/: 7<4@/AB@C1BC@3 A3@D713A looking to continue to build more gold /<2 :35/: 4@/;3E=@9 B= 23D3:=> /<2 numbers into its promising Batangas 23>:=G <3E 3<3@5G B316<=:=573A project with the recent start-up a 34=@3 1=<A723@7<5 A=;3 =4 B63 of 93G new drilling campaign. @7A9A E6716 6/D3 /< 7;>/1B =< @3<3E /0:3 3<3@5G >@=831BA /<2 B63 53<3@/: The currentB= campaign focussed on7B the />>@=/16 >@=>3@ is /AA3AA;3@3D3<B7<5 B63 C>B/93 =4 ' >@=831BA five parallel epithermal lodes at the Lobo =@3;=AB =4 B63A3 /@3 0/@@73@A E6716 prospect the:3D3: companyâ&#x20AC;&#x2122;s flagship @3:/B3 B= within B63 :=E =4 /E/@3<3AA Batangas gold project, located 100 kiloC<23@AB/<27<5 /<2 /BB3<B7=< /44=@232 metres south of Manila. B= B63 1=;>:3F /@@/G =4 >=:71G @35C:/ B=@G B316<71/: 47</<17<5 /<2 =@5/<7 A previous (2005) vertical drillhole at H/B7=</: 4/1B=@A /4431B7<5 ' >@=831BA Pica, PC02, produced epithermal7A vein 3=B63@;/: >@=831B 47</<17<5 <=B intersections 1.5m @ 8.5A163;3 g/t Au from B63 BG>71/: of 0=7:3@>:/B3 E7B6

>@= 4=@;/ /5@33;3<BA CB7:7H32 7< =B6 3@ @3A=C@13 >@=831B 23D3:=>;3/<73A B6/B 6/D3 B63 /07:7BG B= 47</<13 ' 7<D3AB ;3<BA 7< B316<=:=5G =@ >@=831BA 4C<2 29.80m and 13.65m @ 2.49 g/t Au 32 =< / depth <=< @31=C@A3 47</<13 0/A7A =@ from 110m depth. A;/::3@ 0CB 3<B@3>@3<3C@7/: 53=B63@;/: 23D3:=>3@A A3397<5 7<D3AB=@A 4=@ B316 Mapping by Red Mountain during Feb- <=:=5G ' /<2 =@ >@=831B 47</<13 ruary and March this year 53=B63@;/: has deter =@ B63A3 3<B@3>@3<3C@7/: mined that these veins outcrop and are 23D3:=>;3<B 47@;A B63@3 /@3 27443@3<B part of a major northeast-southwest 0CA7<3AA ;=23:A /<2 0/:/<13 A633B A3< trending structure of more than 2km A7B7D7B73A B= 1=<A723@ strike length.47</<17/: The new 7<AB7BCB7=<A drillholes are1/@3 ini ,67:3 tially the23D3:=>3@ near surface extent of 4C::G testing 3D/:C/B3 ?C/:7471/B7=< the for@31=@2 open pit037<5 mining /<2 veins B@/19 / potential. ;/8=@ /<2 E3:: 9<=E< 23D3:=>3@ 7A <=B @3?C7@32 Red Mountain is also @31=5<7H3 proposing to drill 031/CA3 47</<173@A 7<D3AB the Japanese Tunnel prospect, located ;3>=@BC<7B73A 6/D7<5 1=<A723@/0:3 150m southwest of the Southwest 3F>3@73<13 7< 23D3:=>7<5 3<3@5G Brec>@=8 cia resource (Indicated and Inferred 31BA 0G >@=D727<5 3?C7BG =E3D3@ <3E Mineral Resources 194,000t @ 7.2 g/t 53=B63@;/: 23D3:=>3@A /@3 @3?C7@32 B= Au) where previous surface trenching 23;=<AB@/B3 B637@ 1=;>3B3<1G 0G A3

:31B7<5 3F>3@73<132 /<2 E3:: @3A>31B32 1=<AC:B/<BA /<2 A>3174G7<5 /<2 CA7<5 3?C7>;3@=D3< B@/19 @31=@2 #=AB 74 <=B /:: 1/>7B/: >@7=@ B= / 53=B63@;/: >@=831B A >@=D3< 43/A707:7BG results of 5m at 10.43g/t Au including 7A 2=<3 B6@=C56 3?C7BG /<2 <=B 230B 7 1m at 25.14g/t Au and 2m at 18.12 g/t </<17<5 =4 3F>:=@/B7=< /<2 1=<47@;/B7=< Au including 1m at 28.69g/t Au were an2@7::7<5 CAC/::G 1=;3A 4@=; 1=;>/<G 3? nounced in January. C7BG =@ @7A9 1/>7B/: >@=D7232 0G 7<D3AB=@A 3<3@/::G 7<D3AB;37B/: D3<BC@3 1/>7B/: =@ trench3?C7BG ing, 20m to4=@ the/ southwest of 23D3:=>3@ the initial 47</<17<5 53=B63@;/: trench, intersected a broad~8m zone of C3 B= B63 6756 @7A9 7<D=:D32 E7B6 53= veining 0.3m0/<9A @ 3.92= g/t<=B Au >@= and B63@;/: including 3F>:=@/B7=< 0.75m @ 2.29 g/t Au before the epitherD723 4C<27<5 B6@=C56 :=/<A C<B7: B63 :/B3@ mal veined zone passes into an area of AB/53A 7< B63 23D3:=>;3@=13AA agglomerate and1@7B71/: limestone cover.723< At C@7<5 B63 @3A=C@13 least three >6/A3 holes are planned to test/7;A the B7471/B7=< B63 23D3:=>3@ Japanese prospect. B= =0B/7< Tunnel /A ;C16 7<4=@;/B7=< /A >=A A70:3 /0=CB >=B3<B7/: @3A=C@13A E67:3 Meanwhile, additional sampling at the 7<D3AB=@ 1=ABA /@3 :=E >@=D727<5 B63 recently Ulupong epither23D3:=>3@ discovered E7B6 / AB@=<53@ 4=C<2/B7=< mal vein, located 1km southeast of the Continued on page 32 > Continued on opposite page>

Brunel loc FP

36 Philippine Resources

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government and est program are /0A07:;809? ,> >3:=?0= ;=:50.? ;0=4:/> sector. Philex Mining’s <private Continued from page 32 <Continued from opposite page now be drill-tested. This is an exciting B:@7/ =0/@.0 @9.0=?,49?D 1:= ;:74.D ,9/ In other Padcal operaSouthwest produced 8,=60? phase of/D9,84.> the Lobo B309 drilling8:/07492 program 0.: that :9 , 14C0/ >.30/@70 B4?3 has ;0=1:=8,9.0 awards forBreccia 2011, trend, tions in the mehigh-grade gold assays including 0.45m 9:84. =0?@=9> will hopefully add further gold resource 2@,=,9?00> ,9/ 74<@4/,?0/ /,8,20> 1:= safest mine tallic category, @ 23.39 g/t Au across in addition to Lobo’s Drift ?30 1,47@=0 :1 ,..0;?,9.0 ?0>?> ,9/ ?480 0:?30=8,7 ;=:50.?> ,=0 West .3,=,.?0= awards went to a vein three metres targets Holcim La Union north along strike from the high grade 4E0/ -D >429414.,9? @;1=:9? .,;4?,7 49A0>? and South West Breccia resources,” Red 7D .:884>>4:9492 TVI Resource plant in the nonvein results March of 19m Mountain Executive Chairman, Neil D 149,9.0 ,7>: 34237D /0 809? 1:= 0C;7:=,?4:9 B077 /=477492 ,9/ ?30 e v#=:50.? e l o p mannounced e n t s 4> in metallic catego@ 9.77 g/t:9 Au including 7m @ 23.58 g/t 49>?,77,?4:9 Warburton, :1 said. ;09/09? ?30 ;:B0= ;@=.3,>0 ,2=00 ;7,9? ,9/ 0<@4;809? @? for surface opry, MRL Gold’s Au. 809? ## 0C0.@?0/ -0?B009 ?30 /0A07 :9.0 ?30 20:?30=8,7 ;=:50.?> ,=0 ;7,.0/ eration, RepubSurigao-Agusan The two drilling rigs defining the West :;0= ,9/ ;@=.3,>492 09/ @>0= ?D;4.,77D 49 .:880=.4,7 :;0=,?4:9 ?30 1@07 >:@=.0 lic Cement Buprojects in the Drift “shoot” have been relocated to test Red070.?=4.,7 Mountain said another newly dis- 4> >0.@=0 1:= ?30 /0.,/0> :1 0C;0.?0/ 7410 ,9 @?474?D &30 ## ;=:A4/0> lacan for cement exploration catthe Pica and Japanese Tunnel surface covered outcropping 1:= ?30 >,70 :1 .,;,.4?D ,9/ 090=2D ,? ,9 plant opera- vein located 300m ?480 B4?3 , >?0,/D =0A09@0 >?=0,8 egory, with speepithermal lodebytargets whileEugene results TVI Resource Development, represented its president Mateo (second from northeast the above trench at Ul,2=00/ ;=4.0 ;=4.0 >?=@.?@=0 ,9/ >;0.4 ? 4> 2::/ ?: 9:?0 ?3,? ?=,/4?4:9,7 tion, Apoof Land cial awards for from West are(far interpreted. right) and chief operating officer JohnDrift Ridsdel right), won Further the award for the safest mining upongQuarry produced of 1m 4.56 140/ ?480 ;0=4:/ 9 ,//4?4:9 ?30 149,9 49>@=,9.0 ;=:/@.?> ,=0 9:B -0.:8492 and foran assay Apex Mining operation as@ well as safest mine awards for surface operation and mineral processing drilling is planned to test potential excategories). They received the awards from PMSEA president Louie g/t Au. Further trenching and , rock chip 8:=0 ,A,47,-70 ?: ?30 $ 49/@>?=D B3470 .4,7 49>?4?@?4:9 B477 (concentrator 49.7@/0 .,=01@7 quarry operaand Rio Tuba toGeosciences the shallowBureau plunging shoot Sarmiento (far left) andtensions Mines and director Leo Jasareno (second sampling will be49?0=.:990.?4:9 carried out in this area. ,9,7D>4> ?30 >?@/40> 90B 149,9.4,7 =4>6 8,9,20809? 49>?=@ tion, FCF:1 MinerNickel Mining testmember for repeats of the gold of shoot from left), with awards and/or committee Lita Lee (center) Rapid City Realty and All veins sampled at Ulupong haveCorporation. pro- 809?> ,=0 0A:7A492 !0A0=?3070>> ?30=0 ,9/ ?=,9>84>>4:9 ,2=00809?> =:8 ?30 als for explorafor best nursery Development at depth. duced high grade gold assays, consistent 4> , 900/ 1:= .@>?:84E,?4:9 :1 .:A0= Red Mountain has beenand busy with drill =4>6 ;0=>;0.?4A0 3:B0A0= 4? 4> ;=010=,-70 tion (category best the rehaA series of epithermal lodes andprocessbreccias bit. with MRL the highly anomalous gold soil sam?3,? 0.:9:84.> ,9/ /08,9/ 1:= ;:B0= A), Gold Surigao-Agusan for ,20 ,9/ 74960/ ;=:/@.?> ?3,? ;=:A4/0 , Mining Service for mineral bilitation strategy respectively. have(crushing now been1:= mapped at Lobo over49 a pling results along a 2km+ corridor. Infill ?:?,7 /=4A0 ;=:50.?> =,?30= ?3,9 .:9?=,.? ;=: >:7@?4:9 ?30 category). =4>6> 4930=09? exploration (category B), Repubing plant PMSEA’s Pasasalamat Award was combined strike length of more than 15 soil Cement samplingNorzagaray and further trenching will 20:?30=8,7 A4>4:9> 7>: .:9?=,.?> 902:?4,?0/ B4?3 lic for mineral Carmen/0A07:;809? Copper was )3470 cited 20: for conferred upon have former and grade gold shoots been Mines identified at kilometres. be carried out(cement to define drilling targets. 04?30= >4/0 -0492 ,? , /4>,/A,9?,20 ,=0 , 090=2D B477 .:9?49@0 ?: 1,.0 Geosciences processing category), TVI ?30=8,7 safest combined operation, Northern Bureau director and DeSouth West Breccia (Indicated Resource .,@>0 :1 .:9.0=9 1:= 709/0=> Resource Development for mineral :->?,.70> ?: 2,49 49A0>?809? 8,=60? ,. Cement most improved partment of Environment and Natural is the Previous for drilling has only safety tested perap- Fernando of 178,000“Ronnie” t@ 7.4Penarroyo g/t Au 42,0000oz Au managing partner at Puno and Penarroyo “The!00/70>> sampling(concentrator and trenching programme processing ?: >,D >?=0,8749492 ?30 .0;?,9.0 ,9/ ,;;74.,?4:9 ?30=0 4> =::8 category), formance and TVI Resource DevelopResources undersecretary Jerry Doproximately a 500 metre strike length of and Inferred Resource of 16,000 tonnes Law Offices (www.punopenalaw.com). He at LoboMining has defined multipleprocessing ‘at surface’ ;0=84? ;=:.0>> -D mineral 2:A0=9809? =02@7, 1:= ,> lode ?30 structures, @>0 operation. :1 ?34> to 090=2D Apex for ment for safest mining lino contributions to uplifting the :;?484>8 interpreted shal- specializes @ 5.3for g/this Au; 3,000and oz resources Au) and the new in energy law, high-grade gold drilling and targets that will >:@=.0 4> :97D -02499492 ■ ?:=> B477 3,A0 ,9 48;,.? :9 20:?30=8,7 (extraction category) Philippine Awardees for the best mining forthe Philippine mining industry. ■ project finance and business development. low depth of less than 200 metres. High- West Drift gold discovery. ■

Brunel Ovs FP

37 Philippine Resources 33 25

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Medusa finds gold even when it is not looking for it

edusa Mining Limited has received a pleasant “golden” surprise in a drilling programme near the Bananghilig Gold Deposit. Medusa’s Philippine’s operating company, Philsaga Mining Corporation, was supposed to be searching for a potential site for a new gold mill, when it struck gold instead. Meduse reports that a six hole sterilisation drilling programme completed southeast of the Bananghilig Gold Deposit to test a possible mill site has encountered significant gold mineralisation in the same host rocks as the adjacent Bananghilig Gold Deposit. All six drill holes intersected numerous zones of gold mineralisation of ≥1 g/t gold over mineable widths. The company said the tenor of mineralisation is, to date, similar to, if not better than, the Bananghilig Deposit, which contains in excess of one million ounces.

“It is quite exceptional to see every drill hole of the sterilisation progamme encounter significant gold mineralisation proximal to the Bananghilig Gold Deposit, which is itself open in all directions”, Peter Hepburn-Brown, Medusa’s Managing Director, said.

gold mineralisation beneath the limestone cover sequence, and if not, would provide suitable location for various infrastructure requirements associated with the development of the Bananghilig Gold Deposit. New sites being sought

“The potential for significantly increasing the resource base for the Bananghilig Project is highly probable based on the number of gold mineralised zones encountered in each hole.” The Tambis Project, which includes the Bananghilig Gold Deposit, is operated under a Mining Agreement with Philex Gold Philippines Inc. over Mineral Production Sharing Agreement (“MPSA”) 344-2010-XIII, which covers an area totaling some 6,262 hectares. The sterilisation drilling programme was initiated in an area located between 400 metres to 1,000 metres to the southeast of the Bananghilig Gold Deposit. The area was selected as possibly hosting

Due to all six sterilisation holes being mineralised, alternative sites for various infrastructure requirements are being investigated. To date, there is no indication as to the limits of mineralisation which is currently open in all directions beneath the overlying limestone sequence, including at depth. Medusa said the diatreme complex appears much larger than initially interpreted and thus constitutes an extensive exploration target for defining additional resources to add to the current Bananghilig Gold Deposit’s resource base. ■

First OceanaGold shipment leaves Luzon

ustralia’s OceanaGold Corporation announced in early April that the first shipment of copper-gold concentrate from its Didipio project in northern Luzon. The first shipment of approximately

38 Philippine Resources

5,000 dry tonnes of copper-gold concentrate left San Fernando port in the Philippines bound for the Japanese port of Hibi.

15,000 dry tonnes of copper-gold concentrate and the first shipment of the Didipio concentrate is another significant milestone for the operations team.

OceanaGold said a further 1,500 dry tonnes of copper-gold concentrate currently at San Fernando port, while 8,800 dry tonnes of copper-gold concentrate was at Didipio mine site. “Commissioning activities continue to progress well at the Didipio mine,” OceanaGold Managing Director and CEO, Mick Wilkes, said.

“The process plant continues to ramp up well and recoveries of copper are approaching steady-state expectations. Gold recoveries are also increasing and will be further boosted as the gold head grade increases. As we further optimise the transportation logistics combined with regular outbound shipments to smelters, we expect to be in a position to announce commercial operations during this quarter.”

“To date, we have produced over

Continued on page 40>

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Metals Exploration hitting funding and construction milestones

K-backed Metals Exploration plc has made significant strides towards funding a start-up of its Runruno gold-molybdenum project.

Other highlights included:

The company announced recently that it had received commitments to raise approximately US$57.7 million via a share placing to fund the development of the Runruno gold project.

MTL to design and construct the processing plant using specialist contractors and sub-contractors after negotiations with Leighton Contractors (Asia) Limited to enter into an EC&P contract were terminated.

Metals Exploration also revealed it would be looking to raise an additional €4.5 million through an offer to shareholders, while discussions are also being held with potential lenders to secure approximately US$70 million in debt funding to allow the full construction of Runruno and the acquisition of the mining fleet for post construction operations. It said the debt facility is expected to be agreed by the end of 2013. In another significant development, Metals Exploration has reported a 78.9% upgrade in the Inferred JORC Resource for the Malilibeg South area to 340,000 ounces of gold at 1.4 g/t Au, with the increased Runruno JORC compliant resource base now containing 1.73 million ounces of gold at 1.63g/t Au (combined Runruno Main and Malilibeg South resources), up from 1.58 million ounces of gold contained at 1.69 g/t Au. Metals Exploration said the bulk of early construction work at Runruno is now complete and within budget, with the outstanding work expected to be concluded by the end of Q2. New work has included the construction of an all-weather road constructed from the national Solano - Runruno road into the project site. While the construction of stage 1 an overhead power line from Maddiangat to Runruno (22 kms) to supply construction power, was almost 60% complete. 40 Philippine Resources

Majority of the mining fleet purchased and is currently at port in Manila.

MTL’s subsidiary, FCF, awarded the Presidential Mineral Industry Environmental Award for the second year running - validates the Company’s commitment to being a responsible miner. Metals Exloration’s Executive Chairman, Ian Holzberger, said the general site works at Runruno continue unabated. “It is satisfying to report that the majority of the key earthworks, infrastructure and access components of the project have are close to being completed. By the middle of 2013 the site infrastructure will be ready for the construction of the processing plant. “With that element in mind, I was buoyed by the support we received from our shareholders in relation to the recent equity raising and we look forward to committing to the full construction phase after the General Meeting in April. “The task now is to obtain debt funding to complete development and move Runruno into production and I am confident that this can be achieved before the end of the year. “The exploration and resource extension work remains promising and it is very welcome to announce a significant upgrade in the Inferred Mineral Resource in the Malilibeg South area.”

Development of the Runruno Gold Project The Runruno gold project continues to be actively progressed with significant advances achieved in both the Project funding package and physical construction activities on the ground. Step out drilling activities to further test the potential of the Runruno Financial or Technical Assistance Agreement (“FTAA”) for gold and copper mineralisation were maintained with continued success seen in the upgraded mineral resource estimated for the Malilibeg South mineralisation south of the proposed pit. Funding Package On March 26, the Company announced that it had obtained commitments to raise approximately US$57.7 million (before expenses) via the issue of a total of 545,033,044 new ordinary shares of 1 pence each in the Company at a price of 7 pence per new ordinary share, from certain existing shareholders (the Placing). As a result of reaching agreement with four of its major shareholders for equity funding, the Company has discontinued discussions with Solomon Capital Limited regarding its previously announced debt funding proposal. In addition to proposed equity finance, the Company will seek to raise approximately US$70 million in debt and it is intended that the debt facility will be available by the end of 2013. At completion the combination of these two financing sources, the Company’s current cash reserves and a credit for the Project capital works completed to date will provide adequate funding for the full construction of the Runruno proContinued on page 40>

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<Continued from page 38 under the Open Offer. ject, including working capital through to production and the acquisition of the mining fleet. Previously it had been intended that the mining fleet would be funded using an operating lease structure but it is now planned to fund this US$15 million acquisition using debt. Purchasing the mining fleet outright in lieu of using an operating lease structure will increase the headline capital cost of the project by US$15.0 million from US$167.8 million to US$182.8 million but is estimated to reduce the operating costs by around US$3.5 million per year. Based on the average forecast gold production this equates to a saving of approximately US$35 per ounce, reducing the estimated average operating cost to US$442 per ounce. Approximately US$35.0 million has been spent on Project capital works to date, US$21.3 million on site related works and US$13.7 million on the acquisition of the mining fleet. In the March 26 announcement the Company also advised that it plans to raise up to approximately €4.5 million through an Open Offer to existing shareholders of approximately 55 million new ordinary shares of 1 pence each in the Company at a price of 7 pence per new ordinary share. Those shareholders participating in the Placing have irrevocably undertaken not to take up their respective rights

On approval of the US$57.7 million Placing by its shareholders at the General Meeting to be held on 22 April 2013, the Company will be able to proceed with the full construction of the Runruno project whilst it finalises the US$70 million debt package. Infrastructure Site Works

• Installation of a construction power system; • Construction of the permanent connection to the power grid; • Establishment of the potable water system; • Erection of a concrete batching plant to support construction activities;

A package of early construction works on selected key infrastructure and access components of the project is well advanced and is expected to be completed over the next quarter. This work has been completed within budget with approximately US$21.3 million of the forecast capital expenditure of US$ 182.8 million having been spent to date. The basis has now been established for the Project to efficiently proceed into full construction.

• Rehabilitation of the Solano - Runruno access road;

The current development program has been proceeding on a number of work areas:

The batch plant, accommodation camp and office site pads and foundations have been completed and the infrastructure built.

• General site earthworks including site access roads, river crossings and the development of infrastructure pads; • Processing plant pad earthworks; • Construction of the camp and office facilities;

<Continued from page 36

• Development of the pit access and tailing storage facility haul roads, the run of mine pad area and the heavy equipment workshop pad; and • Acquisition of selected units of the mobile fleet. General site earthworks

A permanent road dedicated to project use has been constructed from the national Solano - Runruno road into the project site. The local access “Barangay” road has been rehabilitated for use by the local residents. Please refer to Image 1 for a view of the Site access road looking towards the campsite and lay-down area. Processing plant earthworks

The Didipio Mine is located in northern Luzon. Once established it is expected to produce 100,000 ounces of gold and 14,000 tonnes of copper per year on average over an estimated 16 year mine life. OceanaGold commenced construction of the high grade gold copper Didipio Mine in June 2011 , while commissioning of the mine commenced in Q4 2012 as planned and first copper concentrate was produced in December 2012. ■ 42 Philippine Resources

The processing plant earthworks are now complete and the site is ready for construction of the processing plant to commence. The pad has been independently verified as having met or exceeded the required design criteria and load bearing capacity. ■

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High flyer KUFPEC now part of the Galoc venture

ne of the region’s most successful but possibly least known oil and gas companies has entered the Philippines energy scene. Kuwait Foreign Petroleum Exploration Company (KUFPEC) an international oil company, engaged in exploration, development and production of crude oil and natural gas outside Kuwait, active in Africa, Middle East, Asia, and Australia and

with annual revenue of over US$1 billion, has officially taken up a large position with the offshore Galoc oil project. KUFPEC has assumed control of a 26.84473% working interest in the Galoc joint venture following the acquisition of Risco Energy Pte Ltd, the ultimate parent of Galoc Production Company No. 2 Pte Ltd. Otto continues to hold a 33% work-

ing interest and remains operator of the Galoc project. The Galoc joint venture partners last year approved the Galoc Phase II development and is due to commence drilling in June 2013 and first oil is expected in Q4 2013. KUFPEC joins the Galoc joint venture during a critical period of investment that will extend production from Galoc beyond 2020. Gregor McNab, Chief Executive Officer of long-time Galoc joint venture partner Otto Energy, said the entry of a high quality partner such as KUFPEC into the Galoc joint venture is a testimony to the strength of the Galoc project overall.

Kuwait Foreign Petroleum Exploration Company (KUFPEC) has joined the Galoc Project.

“KUFPEC brings a wealth of technical and financial experience to the project at an important stage in the long term development of the field. On behalf of the joint venture, we would like to welcome KUFPEC and we look forward to working with them as we progress Phase II and build for the future of Galoc.” ■

Otto receives Galoc II funding support

aloc Project JV member Otto Energy Ltd has been advised by BNP Paribas that all conditions precedent have been met relating to the project financing facility to provide US$37.4 million in project financing for its share of capital expenditure committed to the Galoc Phase II development. To date, Otto has been able to fund its share of the US$188 million capital expenditure (100% basis) for Galoc Phase II through cash flows generated from Phase I field production. The timely

44 Philippine Resources

close of the financing facility allows Otto to fund future capital expenditure with first drawdown expected in Q2 2013. Key terms of the facility are: • 3-year tenor term loan facility expiring 31 December 2015 • Principal repayments commencing Q1 2014. Voluntary prepayments may be made without penalty • A competitive interest margin over USD LIBOR

• Galoc project level security provided as is usual for a loan of this nature The Galoc joint venture took the Final Investment Decision (FID) on Phase II in September 2012. Good progress continues to be made towards achieving safe production start-up from the Phase II wells anticipated in Q4 2013. Most significantly, the drilling rig “Ocean Patriot” is currently in Singapore undergoing planned survey work prior to mobilising to the Galoc filed in late May 2013 and commencing drilling operations in June 2013. ■

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BHP calls force majeure as it tries to sort out SC55 concerns

lobal resources giant BHP Billiton has lodged a formal notice of force majeure with the Philippine Department of Energy in a bid to gain more time to sort out issues with the Service Contract 55 (SC55) petroleum exploration licence off the coast of Palawan.

as the Operator of SC55, of a comprehensive socio-economic development programme for the Province of Palawan prior to recommending endorsement of the SEP Clearance by the PCSD, which is not a requirement under Philippine Law, nor has it been required for exploration approvals in the past.

BHP Billiton Petroleum’s JV’s partner in the SC55, Otto Energy Limited, reported in early May that the declaration of force majeure comes amid delays in receiving the Strategic Environmental Plan Clearance (“SEP Clearance”) for SC55 from the Palawan Provincial Council for Sustainable Development (“PCSD”).

Otto said the effect of issuing the notice of force majeure is to suspend the obligations under the current Fourth SubPhase of SC55, including the drilling of the Cinco-1 well, and to preserve the remaining time under the exploration period of SC55 until the SEP Clearance is received.

Otto said the SEP Clearance would ordinarily have been expected to be received in September 2012 and the notice of force majeure seeks a suspension of permit obligations from this date until the receipt of the SEP Clearance.

“The Operator, the SC55 joint venture and the Philippine Department of Energy will continue to work towards securing the SEP Clearance and in doing so, remove the cause of the force majeure.

According to Otto, the Sangguniang Panlalawigan (Palawan Provincial Board ) has requested the submission by BHPB,

Otto is unable to provide a timeframe in which it expects the SEP Clearance to be received, however the company will continue to keep shareholders informed of

material developments in the process as they occur,” Otto announced to the Australian Securities Exchange (ASX). Otto said that following receipt of the SEP Clearance, BHPB will subsequently finalise securing an appropriate deepwater drilling rig in order to undertake drilling of the Cinco-1 well. “The SC55 Operator, and joint venture partners remain committed to delivering the Cinco-1 well in SC55 in accordance with the contractual work programme commitments to the Philippine Department of Energy,” Otto Chief Executive Officer, Gregor McNab, said. “The Cinco prospect in SC55 is an exciting and material opportunity and we look forward to BHPB concluding final clearance of the SEP and drilling the Cinco prospect. BHPB has reiterated that its objective remains to fulfil its contractual commitment to drill the Cinco-1 well in SC55 at the earliest opportunity and all parties will continue to work towards that goal.” ■

Forum receives DOE support for SC72 extension

K-based Forum Energy has confirmed that the Philippine Department of Energy has granted the company’s request for an extension to the second sub-phase of Service Contract 72 (SC72).

The deadline for completion of the second sub-phase, comprising the drilling of two appraisal wells, has now been extended by two years to 14 August 2015. Forum holds a 70% interest in the SC72 which was awarded in February 2010. SC72 covers an area of 8,800 Km2 and contains the Sampaguita gas discovery which Forum reports has the potential to contain In-Place Contingent Resources of 2.6 trillion cubic feet (TCF) of gas plus another In-Place Prospective Resources totaling 5.4 TCF based on a resource assessment performed in 2012 by Weatherford Petroleum Consultants. The results of the study were used to define the location of two wells, to be named Sampaguita-4 and Sampaguita-5, which if successfully drilled, would be expected to increase the amount of potentially recoverable resources. The drilling of two wells is part of the extended work programme of the company for the second-sub-phase of SC72. ■ 46 Philippine Resources

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Gas2Grid making headway with plan to bring Cebu well on stream

nshore Cebu Island oil and gas explorer Gas2Grid looks to have made significant strides with its plans to bring the historic Malolos discovery into production. The company is currently in the process of flow testing a range of different reservoirs in the Malolos-1 well, in its 100% owned Service Contract (SC) 44, where it has been undertaking workover activities since 2010.

Latest reports from the company are that operations at Malolos-1 have recommenced and that oil has been recovered during swabbing operations. The company reported just prior to this magazine going to press that it had received replacement equipment allowing it to resume operations. Those activities included swabbing fluids from the production tubing in order to lower the fluid level and reduce the back pressure on arecently perforated lower, oil bearing sandstone interval.

Initially hindered my equipment issues, Gas2Grid has recently been successful in The company said the results it has re-entering the Malolos-1 well which was achieved to date have been encouraging initially drilled in 1960. and the operations will continue to swab fluid from the production tubing in order

to try and establish a commercial rate of oil production from the lower sandstone. Gas2Grid said that once this has been completed the upper oil bearing sandstone will then be flow tested. Oil (39° API) was recovered on several drillstem tests conducted over the gross interval 7,168-7,326 feet (2,185-2,233 metres) when the Malolos-1 well was originally drilled and tested in 1960. Sustained production from these oil bearing sandstones was not established at that time. The company is now attempting to access these same oil reservoirs and conduct flow tests in order to try and establish commercial oil production. ■

Malampaya and DOE hand over US$1.1 billion

he Department of Energy (DOE) together with the Malampaya Joint Venture Partners today turned over a total of US$1.1 billion dollars to the Philippine National Government in a ceremonial check handover held at the Office of the Secretary, Department of Finance Building, Manila. The amount represented the government’s revenue from operations for the year 2012, from the pioneering natural gas project that supplies 2,700 megawatts or up to 45% of Luzon’s power requirements. Department of Finance (DOF) Secretary Cesar V. Purisima received the symbolic check from the Malampaya Joint Venture Partners. “Malampaya continues to benefit the country by providing much needed government revenue, and clean energy to power the lives of millions of Filipinos,”

48 Philippine Resources

Sebastian Quiniones, Shell Philippines Exploration BV (SPEX) managing director said. Prior to the ceremony, Quiniones presented the project’s next phases of development, called Malampaya Phase 2 and 3 (MP2 and MP3). These projects include the drilling of two additional production wells (MP2) and the installation of a second platform to house additional compressors for depletion compression (MP3). He revealed that MP2 and MP3 will continue to deliver these benefits as the country continues on its journey towards energy security. “We proceed with the project’s next phases of development with the same standards of excellence and commitment to safety that we have lived by all these years, as we know the generations of Filipinos who benefit from Malampaya deserve nothing less,” Quiniones shared. Malampaya is one of the largest and most significant industrial endeavors in

Philippine history, heralding the birth of the natural gas industry in the country. A joint undertaking between the Philippine national government and the private sector, the technologically innovative gas project is spearheaded by the DOE, developed and operated by SPEX, in behalf of joint venture partners Chevron Malampaya LLC and the PNOC Exploration Corporation under Service Contract No. 38 (SC 38). As Malampaya operator, SPEX continues to shape the future of energy and gas by using advance technologies and innovation to help deliver cleaner energy and to find ways to use energy more efficiently. “Malampaya is a prime example of what we can do if we work together towards a shared vision,” Secretary Petilla said during the event. “It is proof of what the Philippines is capable of and a testament to the Filipino spirit. It has set the standard for future energy projects to aspire to.” ■

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Austhai and GXD to provide specialised Geophysical service to the Philippines

t the beginning of the year, two companies combined forces to provide one service. Hong Kong registered Austhai Geophysical Consultants Limited, a geophysical consultancy with operations bases in Thailand and Cambodia, combined with the geological and downhole services branch of GXD International, with offices in the Philippines and Dubai, to become Austhai Geophysics and Geotechnical.

surface work.

This new company builds on the experience of the two merged entities to provide the latest in geophysical, geochemical and geotechnical surveying throughout SE Asia and around the globe. Utilising over 30 years of data acquisition and interpretive experience, AGG looks to lead the market in providing a variety of geophysical, geochemical and geological surveying services.

AGG is providing expert advice on survey design, implementation and interpretation of both geophysical and geotechnical data. This is in conjunction with providing high quality geotechnical data acquisition and interpretation.

The merging of the two companies and the development of Austhai Geophysics and Geotechnical will mean expansion across a number of sectors. AGG now have a variety of tools and probes available for a multitude of geological surveys, including both downhole and

The main focus of Austhai Geophysics and Geotechnical is on providing expert advice and guidance for geophysical, geochemical and geotechnical exploration programs being carried out in the mining and metals sector of the materials market as well as the coal sector of the energy market. AGG can also provide a wide range of services to the environmental and engineering industries.

Experienced staff providing expert survey planning and field supervision Experienced in planning and conducting surveys in extreme terrain Experience in conducting, processing and interpreting Induced Polarization, Transient Electromagnetic, Magnetic and Gravity Data.

Experienced in planning, conducting and interpreting Acoustic Televiewer Downhole surveys for highly detailed geotechnical analysis for structural mapping and mine planning. Experienced in conducting and interpreting a variety of borehole deviation probes to ensure ore body targets are met with unparalleled levels of accuracy. Provide quick infield QC as well as 2D and 3D preliminary inversion modelling to determine survey effectiveness Final 2D and 3D inversions carried out in the office using UBC-GIF Inversion Software. Quality interpretation and report compiling based on data collected by previous acquisition contractors, by the client or our own personnel. Having already completed projects in Myanmar and throughout the Philippines already this year, AGG is currently running operations throughout SE Asia. AGG is also currently supporting Austhai Geophysical Consultants projects underway in the Solomon Islands, Papua New Guinea and Indonesia, as well as surveys in Uganda. All of this tied in with active operations in the Philippines means 2013 will be a very busy year for the company. AGG is very happy to welcome on board the latest addition to the team, Mark Reed. His acquisition will bring over 20 years of experience in geophysical data acquisition and interpretation. Mark will be forming part of the management team of the Philippine operations for AGG. Having worked in Europe, the US, Mexico and Papua New Guinea, we are sure Mark will enjoy his time here in the Philippines. We are sure you will join us in giving him a warm “Mabuhay! Mark Reed!” ■

Even this geophyscial crew out in the field is celebrating the amalgamation. 50 Philippine Resources

Resource Investment

Monark the King of mighty mining trucks

ebu-based Monark Equipment has set another milestone in its more than its 25 years as the Caterpillar Heavy Equipment dealer in the country. In March, Monark Equipment, led by Eric Visaya, Vice President for Mining and Service and Jose Antonio Banson, Chairman, turned over four units of Caterpillar 785D Off Highway truck to Galeo Equipment & Mining Co. This is currently the largest operating mining truck in the country. It will be used by Galeo in its operations at the Carmen Copper Mine site and will support its fleet including a previously acquired Caterpillar 6030 Hydraulic Excavator, the largest Cat shovel in the country. “This 150-Ton truck will greatly help Galeo achieve the targets that Carmen Copper Corp. expect them to do,” Eric Cabrera, Mining Business Development of Monark, said. Cabrera added “The acceptance of the Filipino miners and contractors on these mining machines shows that the country is on its way to make mining operations advanced and efficient in terms of lower-

ing the cost-per-ton. The advancement of their approach in mining production might also extend to their commitment to keep their mines safer and more environmentally-sound like the worldclass mines by acquiring machines that are fuel efficient and has very low emissions.” Galeo Equipment is the major mining contractor of Carmen Copper Corp. on its copper-gold project, currently the largest copper mine the Philippines. The mine has operated since 1955. Monark Equipment is the sole authorized dealer of Caterpillar Heavy Equipment and Power System products, and other North American and European brands in the Philippines. The company maintains its goal to be a responsible organization, leading in nation building. ■

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Coffral celebrates 2nd anniversary and special visit

offral Access and Shoring Inc. recently celebrated its second annivarsary since establishing a position for itself in the Philippines. The company is engaged in selling and leasing the best modular scaffolding systems and trench shoring systems from Europe and is steadily and successfully growing its reputation for providing energy and construction companies with quality equipment. Coffral also recently celebrated the hosting a German-Philippine Chamber of Commerce and Industry event. The company elected to hold the event at the Rental Park visit, so it could show off its capabilities in access and shoring. The vistors received a passionate and thorough explanation by Coffral founder Jim Goudsmit on the nature of the equipment and how Coffral is bringing decades of European construction experience to the Philippine market. The guests were also given a real life demonstration of the Krings-Verbau compact shoring boxes . It was a good example of speed, safety and cost-effectiveness. Add to that ‘solutions’ and you get what Coffral is all about. After touring around in the Rental Park, people were able to find some shade and refreshments in the open tent, while enjoying the games that were organised for them. The Coffral family thanked its clients and partners such as RIOFIL, Sta. Clara, JG Summit, Petron, DMCI, Thyssen-Krupp, and its special guests for joining it on a joyful day. ■

A special ceremony was held for the mighty mechanical monster. 52 Philippine Resources

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Driving Compliance Adoption through Social Learning

raining is and needs to be a major component of most organizations’ compliance strategy. As mandates from regulatory agencies become ever more demanding, companies need to dedicate more and more resources to compliance and appropriate training.

is all about managing risk and the risk is huge if the staff aren’t engaged with the organization’s corporate desire for a culture of compliance. So it seems then that compliance is too important to leave to formal learning alone and that social learning and innovative technology has a key role to play.

Whilst companies can use a tick box approach to demonstrate that employees are completing their necessary compliance training, they are still open to massive fines from regulators as tick box measures don’t go far enough and certainly don’t necessarily instill a compliance culture.

So why social learning and how can it help to improve an organization’s compliance?

The fostering of an overall compliance culture by having measures in place such as policies, procedures and training reduces the likelihood of a breach in the workplace and we know regulators view such measures favourably, particularly when training is topped off with quizzes or assessments. In the event of a breach of any laws the impact of such robust measures is that a regulator will be likely to fine/reprimand the individual (especially if it is a director or senior manager depending on the legislation), more so than the organization.

You can see from figure 1, the carriage of compliance training lies with HR and L&D….that’s not to say that they necessarily put the measures in-place initially.

That’s all well and good but compliance training is invariably boring and the perennial battle those charged with forcing staff to complete it, is overcoming this objection! After all, compliance

The biggest challenge organizations face in compliance training and associated reporting are:

nology being a big one of them. Let us first look at the results from a compliance study that SilkRoad has conducted earlier this year on more than 500 professionals.

As you can see from the principal findings found in Fig 2 although more than half of the organizations are regulated by an agency that requires tracking of learning activities, less than half felt that they were prepared for compliance reporting. Not only is it onerous for the end user, it appears to be onerous for those responsible for delivery too!

Think about the two most significant learning experiences you have ever had. Where did they occur? Mostly likely the answer is “Outside of the classroom”. According to the 70:20:10 Model (Fig 3 below) based on research by Michael M. Lombardo and Robert W. Eichinger for the Center for Creative Leadership, 70% learn and develop through experience, 20% learn and develop through others, and 10% learn and develop through structured courses and programs.

• Prioritizing compliance training to be completed in a timely manner and the all-important follow up training.

Traditionally communication, in business, or learning has been formal and hierarchical. However with the new paradigm (driven by new generations), it has shifted to be more informal and less structured. A staggering 90% of people learn through others and experience. It started with news from the media of television, paper and radio, where we learn about news (traditional) but has now shifted to online media and social media.

So what are the solutions available to make this all less painless? There are many for the enlightened HR or L&D professional, with social learning tech-

In a recent State of Social Technology study that SilkRoad conducted, over 50% of organizations indicated Learning and Development as one of the talent man-

• Adequate reporting for an audit • Avoiding the task being manual and likely, onerous

54 Philippine Resources

Social and informal learning is defined as “The learning that occurs (mostly) outside the classes, courses and curriculum model. It’s just in time! It’s relevant and personal!

DON’T MISS OUT!! The next issue(issue 3,2013) of Philippine Resources is a media partner at the

TWO listed Conference/Expos,as well as Philippine Resources being handed out from our stand the magazines will also be in the satchels / show bags, which is a big bonus for all advertisers.

1) Mining Philippines September 10-12 in Manila (Sofitel Hotel)

2) PowerTrends 2013 September 25-27 in Manila (SMX Convention Center)

Advertise in Philippine Resources the country’s Mining Petroleum and Energy Journal. O Philippine Resources is read by the

key decision-makers involved in the oil & gas and mining sectors in the philippines, It’s written by specialists for specialists

O Advertising in Philippine Resources

offers an effective, cost-efficient way to market your company’s brand, products and services to your buyers.

For circulation and advertising details, contact:

Philippine Resources Mining, Petroleum & Energy Journal

Philippines

International

Kevin Lewis Phone:+63928 550 4642 Email: kevin@philippine-resources.com

Greg Brimble Phone: +614172 20759 (Perth) +63920 801 5207 Email: Greg@philippine-resources.com

Cecilia Pamular Phone: +63920 967 8342 Email: cecille@philippine-resources.com

To view your copy of Philippine Resources please go www.philippine-resources.com

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We welcome Kevin Lewis to our team and launch sister publication

evin Lewis has joined the Philippine Resource Journal team as Sales & Marketing Manager, he brings his 12 years’ experience living in the Philippines and mixing with the industry to the Journal, he is a staunch supporter of the mining industry in the Philippines.

for those with an interest in the sector.

Kevin is the founder of the Philippine Mining Club, a Luncheon which is associated with the Globally Recognized Melbourne Mining Club. The Luncheon has been established to form better relationships across all areas of the Philippine mining industry, and provides a professional networking environment in order to promote the minerals industry

Modelled on the highly succesful Philippine Resoutces publication, Indonesian Resources was officially unveiled at the OzMine event in Jakarta.

<Continued from opposite page

Social Learning is here to increase the efficiency and rate of knowledge absorption in order that more assessments and quizzes show a pass mark whatever that mark is, because the participants have engaged willingly and enthusiastically in the learning process because of the dynamics of Social Learning.

agement process that their organizations supplement or is planning to supplement with internal social networking technology. You may agree that this is exciting and a relief that learning and compliance is finally beginning to be driven by the consumer and not the organization, pull rather than push? Let’s not forget our much maligned regulators however, who were born out of the need to rid society of and capture the poor (corrupt) practices and ill deeds of those before us who raped and pillaged consumers and society with their deliberate and devious actions (albeit sometimes in an innocent quest to conquer their given market) to gain an advantage in business. The regulators still want proof, auditable proof, that people understand how to behave and conduct themselves in accordance with the myriad of workplace regulations that sit across our day to day working life. 56 Philippine Resources

Sister publication The publisher of Philippine Resources are proud to announce it has launched a sister publication, Indonesian Resources.

Kevin and Philippine Resources’ Cecilia Pamular were special guests at Ozmine and helped promote the Philippine mining sector at the event. ■

In conclusion, here are the key takeways: 1. Compliance training is too important to leave to formal learning alone particularly given the struggle organizations have in engaging staff with the traditional methods. 2. Now is the time to embrace Social Learning as: o it allows just in time availability of knowledge that is relevant. o increases knowledge retention due to its relevance and timing. o reacts quickly to compliance changes due to the ‘real time’ nature of it. 3. Given the timing of learning and its

Kevin Lewis.

subsequent relevance to the individual, social learning facilitated by innovative technology has a huge role to play in fostering and embedding a culture of compliance that of which the various regulators are looking for. Author: Tim Hird and Manuel Garcia-Ramos About Tim Hird, Sales Manager, SilkRoad Australia Tim has been in the online learning compliance governance and risk market since early this century, working with Business Leaders developing GRC strategy, framework and execution. He joined SilkRoad Technology earlier this year. About Manuel Garcia-Ramos, Business Development, SilkRoad Manolo, as his friends call him, has spent the last 12 years of his career establishing businesses for local and global companies setting foot-hold in the Philippines. The last 6 years, were dedicated to working with HR organizations in Asia Pacific in the area of talent acquisition and engagement. He joined SilkRoad a year and a half ago, to establish its presence in the Philippines and engage their Philippine clients. ■

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“Indodrill - The Hole Story”

“

Our priorities are safety, environment and production, in that order. I’m proud to say we’ve had over 1.5 million hours without a an LTI since we opened in 2010”

with subsidiaries in Cambodia, Indonesia, Laos, Malaysia and the Philippines.

The company employs 30 staff in Clark, and approximately 200 across the country.

It provides contract drilling services for the minerals, mining, exploration, coal and construction industries. Their skills extend to onshore and offshore geotechnical work, site investigation and stratigraphic drilling, with particular attention to coring and sampling. Drilling services include: Surface Wireline Core Drilling; Surface Directional Drilling; Underground Wireline Core Drilling; Underground Directional Drilling; Multi-Purpose Drilling; Reverse Circulation Drilling; Directional Drilling; WaterWell Drilling; Grade Control Drilling; Environmental Drilling; Geotechnical Drilling; and Coal Bed Methane (CBM) Drilling

The group was formed in Indonesia in 1995, and is now based in Singapore,

The company has over 80 rigs in operation, which they design and make them-

…was virtually the first thing that Andrew Wanstall, Maintenance and Operations Support Manager for Indodrill said to the Philippine Resources team when we visited their Clark headquarters. LTI’s – or “Lost Time Injuries”, are clearly a key measure of success, and this was evident when touring the Indodrill clean and well-equipped facilities.

ManTec delivers improved bottom line profits

selves in Indonesia and in Clark. All Indodrill equipment has a distinctive orange colour and can be man-portable or track mounted. In addition to the selfmade rigs, specialist equipment is purchased as necessary. Indodrill is led by Managing Director John Horne, a veteran of the drilling industry since 1971, and Group General Manager Matt Semmens, who has 22 years in the industry. Each country operation has an expatriate manager with extensive international experience, and a commitment to training local staff that might eventually rise to senior levels. The company’s informative website www.indodrill.com, features their philosophy, product range international network and job vacancies. ■

We are a Change Management consultancy company that through projects p j execute improvements p in efficiency, y, reduction in operating costs, increase in productivity and yield, shorter lead times and throughput times, reduction in intentory and improvement in delivery accuracy, improvements in safety and quality. We do not just give advice – WE IMPLEMENT and DRIVE CHANGE CHANGE. We have a proven track record and experience from most major lines of business. We are pragmatic and goal oriented. Over 400 Clients testify that we do not give up before our committed goals are achieved. achieved We operate in whole Europe, Russia, South East Asia, China and North America. Other territories are considered on individual basis. Our projects generally give a ROI of close to 4 to 1. 1 Be curious, curious give us a call and find out what is YOUR POTENTIAL. You will find case studies and detailed information about us and our methods on our website. C Contact our: Philippines hili i rep: +63 63 918 9 8 933 0001 000 antti.lahtinen@mantec.eu Head Office in Sweden: +46 31 722 69 90

www.mantec.eu 58 Philippine Resources

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Environment and community featured at April luncheon

he Environment and Community – what this means to mining companies today within the Philippines, was the theme for the April 12th Philippine Mining Club Luncheon, Manila Polo Club.

It is certainly subject that is very close to the hearts of all responsible, sustainable mining companies. The April event featured a panel of 4 experts in their fields gave their thought’s and comments on the subject, what it means, how it’s being addressed and what is being done to effectively co-exist and enhance harmony between the mining industry and the community inside a Philippines’ perspective.. The Panel consisted of Dr Keith Halford, Principal Consultant, HSE Asia Pacific; Jane Timbancaya Urbanek, Group Community Relations Manager, Nickel Asia Corporation; and Bradley Norman, Country Director, OceanaGold Corporation ; Alex Raoul Villano, Assistant Secretary General, League of Provinces of the Philippines. ■

The panelists on stage.

Panelist Ma, Jane Urbanek, Nickel Asia.

Panelist Bradley Norman, OceanaGold

Panelist Dr. Keith Halford, HSE Asia Pacific.

Australian Ambassador to the Philippine Bill Tweddell along with Wayne Gibbon, Ligia Oliveria from Business Focus UK, and the Luncheons MC Leo Dominguez. Philippine Resources 59

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Cardno BEC likes Philippine skill base

he Philippines’ skilled work force and supplier base was a positive attraction when Cardno BEC elected to set-up business in the country last year. A leading global engineering and manufacturing firm, Cardno BEC had undertaken a fact finding tour and considered a number of South East Asian countries,

the Australian company chose to open up an office in Manila where English is the primary business language and a good talent pool is readily available. The Philippines is Cardno BEC’s second international operation following the successful opening of the Tanzanian branch in 2007. Cardno BEC believe the Philippines is a perfect complement to the services it provides to its global clientele, while providing a presence in Asia which currently has some of the fastest growing economies throughout the world. The Manila office is currently managed by Mick Fursman who is a long time employee of BEC, with Jayson Fry recruited as BEC’s first Filipino employee.

Members of the local Cardno BEC team.

60 Philippine Resources

Recently Cardno BEC also began sourcing and constructing itsrange of Mill control panels using Philippines suppliers based in Manila. Although it is early days and the full benefits are yet to be realised current estimates show the savings on manufacture and supply to be considerable compared to similar panels constructed elsewhere. Looking to the future BEC has a gradual approach to expansion of the office and assess when to include more engineers and draftspeople. During boom times BEC can call on a huge talent pool of personnel to supplement our business and to be able to respond effectively to our clients’ needs. Early results for the office are very positive. ■

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Philippine Resources to feature at PowerTrends 2013

hilippine Resources is proud to be a Media Partner of PowerTrends 2013, which will be held on September 25-27 at the SMX Convention Centre in Pasay City.

Electech: Presents the latest technologies for power, energy, electrical, electronics and lighting for commerce, infrastructure and homes

officials. Now on its 9th biennial edition, it has proved to be an effective platform for information sharing among the industry and the government.

Established in 1995, PowerTrends biennial energy event is regularly hosted and actively supported by the Department of Energy since that time.

The associated Powertech Business Forum conference provides a powerful link between the government and private, international and local energy

This year’s conference will be structured as an International Business Forum with Round Table Discussions gathering together key players of the industry, relevant government agencies and the business sector. ■

With the Philippine energy sector facing the demands of an expanding market in an upbeat economy, electricity demand in the country is expected to continue to rise strongly. This means that the country will need new power plants to meet the required additional demand. It has been estimated that some P774 billion in fresh investments are needed between now and 2016 to roll out critical infrastructure projects and various programmes needed to ensure national energy security. PowerTrends 2013, the 9th in the series of biennial energy exhibition, provides the platform for companies to showcase their strengths to an audience of decision makers from government, power and energy developers, investors, and industry experts in a high-level business gathering to generate useful inputs for accelerating development of the sector. This year, PowerTrends will continue to highlight new and alternative sources of energy and developments in renewable energy. The event will also feature support technologies for greater efficiency of traditional energy sources and uses. PowerTrends 2013 incorporates two other events: Energy Expo: Features new, renewable and alternative sources of energy, green energy, energy efficiency technologies, as well as coal, nuclear, oil and gas technologies

4th Floor 1677 NEXOR Bldg. 1677 Quezon Avenue, Brgy. West Triangle, Quezon City, Phils., 1104 Tel. Nos.: (632) 927-5441 • (632) 386-8056 Moblie No.: 0922-6712941 Fax No.: (632) 415-0143 Website: www.nexorpipes.com

Philippine Resources 61

Philippine Resources part of the community Advertisers’ Index Aden 49 AGG 21 Austhai Geophysical Consultants 13 Brunel

34 & 35

Chamber of Mines Coffral Deepcore Drilling

45 9 & 31 5

Drillcorp 11 Golden Landrill

GXD

Hansa Meyer

Intertek 25 JCL International

Junni International

King King Copper Gold

Lomar 37 Mantec International McConnell Dowell

56 OBC

metso 3 Monark 15 Orica 2 Pacific Strategies

Paperless Trail

Philippine Mining Luncheon

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PNG Resources

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QED IFC SGS Philippines Site Group

1 43

The National Geothermal Association 51 Weir Minerals 62 Philippine Resources

Sandvik’s new drilling tool system a breakthrough

o match the increased energy output from modern high-power rock drills in drifting and tunneling, Sandvik has made even greater advancements in the Alpha 330 drilling tool system to control power and, most importantly, ensure that it is transmitted into the rock as efficiently, accurately and economically as possible. Designed and dimensionally optimized to replace the R32 connections, the dominant Ø 45 mm system to date, the drill string rod/bit connection now features an entirely new thread design. A shorter thread on the hexagonal rods in the tool system results in a rigid, integrated power pack drill string with superior resistance to bending stresses, securing perfect energy transfer.

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This sturdy thread design is well guided inside the bit skirt, offering higher precision in collaring – even in complex rock formations and uneven surfaces. More steel for higher fatigue strength makes the connection rigid compared to the R32, to give exact collaring and straighter holes and delivering a 30 to 80 per cent increase in rod life. The Alpha 330 system benefits from the inherently stronger and more rigid R33 thread with a significantly larger cross-section than R32, making it proportionately stronger. To further improve rigidity, Sandvik has introduced a new guiding function between the rod and bit-skirt, immediately behind the thread. The rod cross section over the guide is now 36% larger (Alpha vs R32) at the rear of the connection, greatly improving the rigidity of the joint. After the bit skirt, the rod cross-section increases to Hex-35 quickly and smoothly. The sturdy thread is well guided inside the bit skirt, offering high precision in collaring – even in complex rock formations and uneven surfaces. In tests, in varying rock conditions, the new design has been proven to deliver 30 to 80 per cent increase in rod life, more accurate collaring and straighter blast-holes that give greater advancement, improved profile-control and yet again brings down the overall cost of drifting and tunneling. ■

large and small, In urban landscapes and jungles, and our confidence to get the job done and