Atlas Mining subsidiary issues $300M in bonds

An unrated Cebu copper mining unit of Atlas Consolidated Mining and Development Corp. made a successful $300-million offshore bond debut last Friday—the first ever for a Philippine mining firm—as strong investor appetite prevailed over jitters about an upcoming national framework for mining.

Atlas’ wholly owned subsidiary Carmen Copper Corp. (CCC), which operates the Toledo copper mine in the province of Cebu, is selling fixed-rate notes with a term of five years and five days at an annual interest rate of 6.5 percent payable semi-annually. The notes would be issued at a price of 98.95 percent of face value and give investors a yield to maturity of 6.75 percent, CCC said.

With the notes issue, a curtain-raiser for Philippine mining firms seeking to tap the overseas debt market, CCC is taking advantage of the strong global liquidity and low interest rates to term out its debt maturity profile and raise fresh funds for expansion. CCC debuted on the overseas bond market even amid a national debate on an upcoming mining policy of the Aquino administration.

“CCC is very pleased with the results of its fund-raising efforts. The success of the maiden issue of its debt securities confirms the acceptance by both the local and international investment communities of CCC as an emerging capital markets issuer,” said CCC vice president Adrian Ramos.

BDO Capital and Investment Corp. and Credit Suisse Securities (Europe) Ltd. acted as joint lead managers and joint bookrunners for the offering.

The issue is based on an “unrated Regulation S” offering, which means that they are not registered in the United States and therefore can only be sold to international investors outside the US. The Philippine mining firm has earlier embarked on a road show in Asia and Europe.

The issuer’s parent firm Atlas Mining is a partnership between the group of Alfredo Ramos and tycoon Henry Sy’s holding firm SM Investments Corp. However, the debt notes will be unsecured and will not be guaranteed by Atlas, which has a market capitalization of about P31.9 billion at the stock market.

Based on local reports, CCC is on track with the open-pit development of the higher-grade Carmen ore body and is now planning capacity expansion in its Toledo mining site in Cebu. The initial target is to raise its current capacity of 40,000 tons a day to 60,000 tons.

It was earlier reported that CCC posted a 2011 net income of P2.54 billion, up from only P670 million in 2010. Core income was likewise up 59.5 percent to P2.283 billion. CCC sold its copper output in 2011 at an average price of $8,879 a ton or $4.03 a pound, higher than the average of $7,034 a ton or $3.19 a pound in the previous year.