Manila says 27 mining firms eyeing Diwalwal gold

Manila says 27 mining firms eyeing Diwalwal gold

Reuters

22nd November 2006

MANILA - The Philippines said on Wednesday at least 27 firms have expressed interest in participating in a February auction to run a gold mine in Mount Diwalwal, a famous gold-rush area in the south.

Competitive bidding for the project would boost Philippine government efforts to attract around $6.5 billion in foreign investment to revive its once lucrative minerals sector.

Despite record high commodity prices, Manila has secured only $500 million in largely foreign funding for the mining industry since last year due to investor concern about regulatory issues and local anti-mining sentiment.

About 40 to 50 percent of the Diwalwal project would be auctioned off to investors depending on the price, Artemio Disini, president of the state-run Natural Resources Mining Development Corp. told reporters.

"We're now going to accept applications from bidding participants," Disini said.

"We're expecting big companies to submit their intention to apply for the project once we begin the process."

Among the companies which expressed interest in the project, which requires an investment of $70 million, were U.S.-based Newmont Mining Corporation and Harmony Gold Mining Company Ltd , the world's second and fifth biggest gold producers.

Sylvania Resources Limited and QNI -- both from Australia, Japan's Sumitomo Metal Mining Co Ltd , and Philippine firm Philex Mining Corp were also planning to bid for the project, Disini said.

Short List

The government is expected to narrow down the list of bidders in January before final bids are submitted on Feb. 16.

The winning bidder, to be announced in March, would develop the Diwalwal project in southern Compostela Valley under a joint venture deal with the government.

President Gloria Macapagal Arroyo's administration has said the Philippines has around $1 trillion worth of unexplored copper, gold and nickel. The cash-strapped government would like to revive the mining industry to help cut its debts.

The project was estimated to have a gold resource of about 2.9 million metric tonnes at six grams per metric tonne and 5.8 million metric tonnes at 9.6 grams per metric tonne in two mineral reserves.

Diwalwal was a mining town with more than 30,000 people operating illegal small-scale mines in the 1980s. In 2002, the government designated the town and its surrounding area as a mineral reservation area.

Production at Diwalwal after a two-year development was earlier estimated at 1,000 metric tonnes per day, which could expand to 2,000 metric tonnes a day over its 15-year mine life.

Disini said the government also wants to list the Diwalwal project at the stock exchange later to raise more funding and allow more Filipino investors into the project.