MANILA, Philippines—Philex Mining Corp. might be able to mine its Silangan copper-gold project for up to 40 or even 50 years, president and COO Jose Ernesto C. Villaluna Jr. said during the signing of the collective bargaining agreement between the country’s top miner and its employees’ union.
Silangan, which contains the combined Boyongan-Bayugo deposit, is located at the Surigao mineral district in Mindanao.
Villaluna said the initial mine life estimated for Silangan was 25 years based on the current resource estimate of about 400 million tons.
Depending on metal prices and how much of the resources could be converted into reserves, Philex might be able to mine Silangan for 40 to 50 years, Villaluna said in a speech during the signing ceremony in Pasig City.
“If metal prices go up and we convert more of the resource into reserves, it would make sense to mine the lower-grade ore. With that, we can extend the mine life,” Villaluna said. “It really depends on several factors. Padcal mine, for example, was initially thought to have 18 million tons. We have mined a total of 358 million tons since 1958.”
In June, Philex said the combined Boyongan-Bayugo’ measured and indicated resources contained an estimated metal content of 9 billion pounds of copper and 5 million ounces of gold.
The Philippine miner had told the Philippine Stock Exchange that SRK Perth, Australia, prepared the independent mineral resource estimates for Boyongan and Bayugo, which were just one kilometer apart.
The mineral resources were reported at a cut-off of 0.5 percent Cueq (copper equivalent value). Philex said the Cueq cut-off grade is based on $2.75 for copper and $900 for gold and varying recoveries, according to ore types (oxide, enriched and sulfide) established following the metallurgical test works.
Philex also cited estimates showing the Silangan’s gold and copper reserves to be worth at least $22 billion.
Philex estimates that the project cost for developing the Silangan Project will be in the region of $1 billion over a period of three years.
Philex said the term “mineral resources” under both the JORC Code and the PMRC referred resources considered to have reasonable prospects for economic extraction.
Philex posted record earnings for the first half of 2011 on the back of higher metal prices and higher production. Consolidated net income reached P3.22 billion from January to June, up 233 percent from P965 million in the same period last year. Core net income reached P2.84 billion, higher by 188 percent than the P983.9 million a year ago.
Consolidated revenue was also the highest level ever for the period at P8.15 billion, up 68 percent from the revenue of P4.86 billion a year ago.
Philex chairman and CEO Manuel V. Pangilinan said in the financial report that aside from its record first-half performance, the company had significant milestones during the period: the acquisition of a 5-percent equity in Lepanto Consolidated Mining Co., which would enable Philex to invest in the Far Southeast Gold Project of Lepanto; a joint-venture agreement with Manila Mining Corp. on the Kalayaan copper-gold project, which could boost the 393 million tons of resource of the Silangan project.
Philex has entered into a farm-in arrangement with Manila Mining Corporation (MMC) that will include exploration of the Kalayaan mining tenement of MMC, which is adjacent to the Bayugo ore deposit, to determine its resource potential including the extent to which the Bayugo deposit extends to Kalayaan.
Exploration works in Kalayaan have been seen to further enhance the value of the Silangan Project, particularly the Bayugo resource, Philex said.