Anglo Wants Controlling Stake In Lepanto Mine

Anglo wants controlling stake in Lepanto mine

Luzi Ann Javier, Bloomberg

17th April 2007

ANGLO American, the world’s second-largest mining company, had offered to buy a controlling stake in Lepanto Consolidated Mining’s copper and gold project in northern Luzon, Lepanto president Bryan Yap said.

Anglo American “is interested in acquiring a majority stake” in Lepanto’s Far Southeast Gold Resources, which has rights to mine the property in the Philippines, Yap said yesterday, without citing a price.

Overseas companies, including Xstrata, the world’s fifth-largest miner, are investing in the southeast Asian nation to tap fresh deposits of copper, nickel and gold to feed rising global demand. The government has said the country may have mineral deposits worth $1-trillion.

“We’re still negotiating the valuations,” Yap said. “No agreement has yet been reached.” Lepanto was also reviewing an offer from China’s Zijin Mining Group, he said.

The Lepanto property has 120-million tons in mineral resources, containing 0,8% copper and 1,5g of gold a ton, based on a study in 1996, Yap said. “We’ve been talking to Anglo for some time now,” Yap said. “We decided to set aside the Far Southeast project until we reach an agreement on the Manila mining project.

“We began serious talks on the Far Southeast project just last year.”

Anglo American agreed last month to spend $20m to explore a copper-gold property of Lepanto’s unit, Manila Mining in southern Philippines, over two to three years, in exchange for a 40% stake in the project.

The London-based miner might spend another $15m-$20m for a final study if the early results were favourable, giving it a further 20% stake in the project and taking its potential holding to 60%, Manila Mining said on March 26.

Manila Mining’s project is located next to a Philex Mining property, also being explored by Anglo American under another joint venture agreement.

The Philex and Manila Mining projects gave Anglo access to a “potential world-class gold-copper prospect”, Natural Resources Secretary Angelo Reyes said in January. Gold mines which are considered world class have at least 1-million ounces of deposits.

Shares in Lepanto, which has been posting annual losses since 2005, were unchanged at 30 centavos in Manila yesterday before the Anglo offer was announced, valuing the company at 9,1-billion pesos (about $190m).