King-king project deemed economically viable

The Calalang-led group in Nationwide Development Corp. (Nadecor), along with American partner St. Augustine Gold and Copper Ltd., on Thursday said the King-king project in Compostela Valley had a pre-tax, net present value of $2 billion.

Joint venture officials said results of the preliminary feasibility study on King-king meant that the planned operation had “favorable economic potential,” with a pre-tax internal rate of return (IRR) of 24.8 percent.

The IRR is a concept used in capital budgeting to compare the profitability of potential investments, and is considered an indicator of the efficiency or yield of an investment.

“The results of this advanced (PFS) confirm that King-king is an attractive project with robust economics that will bring significant value to our shareholders, our partner and the Philippines,” St. Agustine chief executive Andrew J. Russell said in a statement.

“The strong results of the PFS pave the way for St. Augustine and Nadecor to continue the development of King-king, including the remaining technical work and the advancement of project financing,” Russel added.

In a briefing held yesterday, St. Augustine’s Philippine country manager Clyde Gillespie said the two partners aimed to complete the final feasibility study and to secure the regulator’s approval of the declaration of mine project feasibility study (DMPF) on King-king by the fourth quarter of 2014.

He added that Nadecor and St. Augustine could kick off the financing process within eight months from the possible approval of the DMPF, which was submitted in May 2012.

“Based on this timeline, construction work is pencilled in for 2015, with some commercial production through the heap leach process in 2017 and production of concentrate in 2018,” Gillespie said.

St. Augustine said the PFS pegs the King-king mine life at 22 years, with an expected cumulative output of 3.16 billion pounds of copper, 5.43 million ounces of gold and 11.65 million ounces of silver. The estimated capital requirement was placed at $2 billion.

Ruy Moreno, executive vice president of the rival Ricafort-led group in Nadecor, said in an interview that the release of the PFS results seemed to be meant more for investors in Canada rather than the Philippine market.

“We don’t know where these numbers are coming from—some are found in the National Instrument (NI) 43-101 report, which St. Augustine filed as a requirement for listing at the Toronto Stock Exchange,” Moreno said.

He said St. Augustine’s NI 43-101 report was based on a compilation of past exploration data related to King-king from the 1990s or earlier.

He reiterated the Ricafort group statements about their faction being the legitimate leadership of the company and the claim that the agreement with St. Augustine as a partner was rescinded in 2012 “because St. Augustine abandoned the project site.”

“How could they have gone there and confirm the NI 43-101 data when they have no access to the area?” he said.