Global mining giant Gold Fields Ltd. has acquired a 40-percent stake in Far Southeast mining project in northern Philippines but will take more time to exercise its option to purchase another 20-percent block from mining magnate Felipe Yap’s Lepanto Consolidated Mining Co.
In a statement on Thursday, Gold Fields announced that it had made the remaining payment of $110 million needed to complete the acquisition of an initial 40-percent interest in Far Southeast through a transaction with Liberty Express Assets, a privately held offshore holding firm.
But Gold Fields has yet to exercise the option to buy another 20 percent block from Lepanto pending the acquisition of Financial or Technical Assistance Agreement (FTAA) license—which allows a foreign corporation to legally own and control a majority stake of large-scale mineral resources in the Philippines—for the Far Southeast project.
Gold Fields’ statement suggested that it was still keen on exercising this option agreement with Lepanto, which would complete a 60-percent stake in the project, and is expecting this to happen by the second half of this year once the FTAA has been obtained.
The statement said the acquisition of an FTAA license was a contractual condition to the exercise by Gold Fields of the Lepanto option.
In November 2011, Lepanto filed an application for the grant of the FTAA for the Far Southeast project.
“Based on the date of the filing, Gold Fields anticipates the granting of the FTAA in the second half of 2012 with the remaining 20-percent option only being exercised at such stage, whereupon Gold Fields shall have a 60-percent stake in the Far Southeast project,” the Gold Fields statement said.
But even as Gold Fields has yet to close the deal with Lepanto, the exercise of the option deal with Liberty already gives it a sufficient foothold in the project. The exercise to acquire the 40-percent stake from Liberty stemmed from an option agreement signed in September 2010.
Gold Fields has paid downpayments amounting to $44 million and $66 million in September 2010 and September 2011, respectively. The total consideration paid for the 40 percent interest was $220 million.
“Gold Fields recognizes the positive results of the ongoing due diligence studies in the Far Southeast project. Our acquisition of the 40-percent stake, pursuant to the terms of the agreement, reflects our commitment to the project, the Philippines and the host community. Gold Fields looks forward to the acquisition of the remaining 20-percent stake upon the issuance of the FTAA,” said Gold Fields CEO Nick Holland.