First Pacific extends $200M loan to Philex Mining

Hong Kong-based First Pacific Co. Ltd. has extended a $200-million loan to Philex Mining Corp. to pave the way for the resumption of mining operations at the Padcal mine in Benguet.

Philex said in a statement that initial rehabilitation work for the tailings pond of Padcal had been completed, enabling preparatory work for resumption of operations by the second half of next year.

“Philex is already rehabilitating and strengthening the existing tailings pond and has commenced the construction of an open spillway, which will replace the existing penstock system for water management,” Philex president and COO Eulalio B. Austin Jr. said in a statement.

Golder Associates Pty Ltd and Snowy Mountains Engineering Corp. are advising Philex on the design and construction of the spillway.

Philex also said it would appoint additional consultants and contractors for the new tailings pond, which it intends to construct while the spillway is being built.

Austin added that Philex planned to resume its regular mining and production operations by the end of the second quarter of 2013, subject to appropriate approvals from the relevant government agencies.

Philex said Penstock A, which drains water to a large tunnel, had been completely plugged. A penstock acts much like a kitchen sink drain.

The large tunnel connected to Penstock A has been sealed as well, Philex said.

Philex said it would now embark on activities that will enable it to resume operations at Padcal by mid-2013.

These include the construction of an open spillway to replace the existing penstock system for water management.

The move will allow excess water to escape from the top of the tailings dam rather than exit through the traditional drain system.

The miner will also rehabilitate one of the tailings ponds to ensure its integrity. However, a new tailings pond will be built as well, Philex said.

Remediation and rehabilitation measures will also be undertaken “in affected areas,” Philex said.

Golder Associates Pty Ltd is studying the possibility of building a cofferdam or enclosure to enhance the integrity and stability of the main dam of the affected tailings pond, Philex said.

“Philex is cooperating fully and working with the Department of Environment and Natural Resources, through its Mines and Geosciences Bureau and Environmental Management Bureau, to adopt and implement a rehabilitation and remediation program to address the effects of the leak. The accident did not result in the release of any toxic, non-biodegradable chemicals, contrary to some inaccurate reports,” Philex chairman and CEO Manuel V. Pangilinan said.

Pangilinan reiterated that, despite the leak being caused by force majeure, Philex is committed to implement a “thorough and comprehensive” remediation program. “Even without any orders from the DENR, Philex has already been working with and already provided financial and other assistance to the families affected by the leak,” Pangilinan said earlier.

Philex voluntarily shut down its Padcal operations on August 1, when an accidental discharge of water and sediment was discovered at its TP3.

Since the initial leak, there have been at least six incidents of discharge, resulting in the spillage of excess water and sediments into the bodies of water adjacent to the site.

Meanwhile, the mining company also reported that part of the $200-million facility will fund some of the requirements of the Silangan mine, which Philex is developing in Surigao del Norte.