Abra Mining takes partners for gold project

Abra Mining and Industrial Corp. (AMIC) has entered into a joint-venture agreement with three companies for a gold exploration project in Abra province.

One of the partners, Toronto-based Olympus Pacific Minerals Inc., said the group had an option to acquire a 60-percent interest in the project.

Abra Mining said in a disclosure to the Philippine Stock Exchange that, through chairman and president Jeremias B. Beloy, it had signed the deal with Jabel Corp., Philearth Mining Corp., Olympus and Kadabra Mining Corp. (a subsidiary of Olympus).

Abra Mining said the joint venture would enable the companies to pool their resources in developing the Capcapo gold property in Licuan-Baay in Abra, which is covered by a mineral production sharing agreement.

In a separate disclosure, Olympus said it had paid Abra Mining $300,000 upon the signing of the joint-venture agreement. It said it was required to pay another $400,000 upon gaining “unencumbered access” to the property.

The Capcapo gold project is located north of the prolific Baguio-Mankayan Gold District that “has combined production, current reserves and resources in excess of 60 million ounces of gold.”

“This acquisition is an integral part of our strategy to become a multi-mine producer and complements our Malaysian property in diversifying our company over three countries in Southeast Asia,” Olympus CEO John Seton said.

Olympus disclosed it was also required to make a “milestone payment” to Abra Mining of $2 million plus 2 million common shares of Olympus or common shares with total value of $5 million “whichever is of lesser value,” each time a specific level of mineral reserves was defined or daily production rates were achieved.

In the meantime, Olympus said Jabel would be paid a royalty based on the calculation that yields the highest payment—either 3 percent of the gross value of production from the Capcapo gold project or 6 percent of the annual profit of the joint venture.

The agreement also granted Olympus a right of first refusal over a mineral production sharing agreement held by Jabel over the Patok property, also in Abra province.

Olympus said it had entered into a memorandum of understanding with Abra Mining and Jabel on Nov. 23, 2006, which provided that, “subject to the entering into a definitive joint venture agreement and compliance with applicable Philippine laws, the company can earn a 60-percent interest in the project, which is assignable in whole or in part to a qualified Philippine affiliate of the company.”—Riza T. Olchondra