Lafayette Mining confirms big gold, silver deposits

Australian mining company Lafayette Mining Ltd. has confirmed the presence of significant recoverable gold and silver reserves at the Hixbar mine site within its Rapu-Rapu mining area in Albay.

"Exploration drilling at the Hixbar mine area has proven to be successful, with the initial program providing results that have enabled the definition of an inferred resource of 1.3 million tons grading 1.7 grams per ton gold and 15.4 grams per ton silver,"said Lafayette’s chief executive officer Andrew McIlwain in a recent disclosure to the Australian Stock Exchange.

The Hixbar deposit is located less than three kilometers west of Lafayette’s Rapu Rapu project and was previously an open cut and underground mine that was commercially developed in the 1930s, producing copper and pyrite until the early 1960s.

"We have always seen Hixbar as a great opportunity once production capacity had been established at the Rapu Rapu project," said McIlwain.

McIlwain said the mineralization at Hixbar is a repetition of what the mining firm is currently doing in the Ungay orebody.

"This drilling has concentrated on the gold oxide potential surrounding the old mine. Encouragingly, these results are all from within a maximum depth of around 20 meters from surface and mining will be simple. Additionally, previous work has identified the continuation of deeper sulphide mineralization and we will work towards confirming this into resource status as well," he said.

Last month, Lafayette commissioned its gold plant at the Rapu-Rapu polymettalic project and will begin its production phase in the fourth quarter this year.

McIlwain said the company poured its first gold in the plant and the next step would be to continue with the commissioning of the base metals plant toward the fourth quarter when it starts to produce copper and zinc concentrates.

"This is a significant event in the company’s history, transforming the company from a junior explorer to a producer," McIlwain said.

The Rapu-Rapu polymettalic project is the first foreign-funded mine to be commissioned in the Philippines in 30 years.

The project’s mineral resource will support an initial six-year mine life and is projected to yield 10,000 metric tons (MT) of copper concentrates, 14,000 MT of zinc concentrates, 50,000 ounces of gold and 600,000 ounces of silver annually.

Lafayettte’s local unit Lafayette Philippines Inc. started mining operations earlier this year.

Currently, only about 407 hectares of the approved mining rights of 4,663 hectares are being developed by the mining project.

The development of the Rapu-Rapu mining area is estimated to cost P1.4 billion while the projected taxes for the mine’s planned six-year operation would be about P1.458 billion, with the municipal and barangay levels getting P380 million, the provincial government about P78 million, and the National Government P1 billion.

The project was granted an environmental compliance certificate (ECC) July 2001 with 29 major and 17 sub-environmental and social conditionalities, including the imposition of an Environmental Protection and Enhancement Program (EPEP) and a Social Development and Management Plan (SDMP).

Previously, Lafayette’s Philippine country manager Rod Watt said the company is also undertaking additional exploration activities at the Rapu Rapu site with preliminary results indicating that the life of the mines can be extended.

The project is financed through a syndicate of banks comprising NM Rothschild & Sons (Australia) Ltd., ANZ Investment Bank, ABN Amro Bank NV (Australian Branch), Korea First Bank and Investec Bank (Mauritius) Ltd.

Lafayette made its first drawdown of funds under this facility in September 2004.

Being the first foreign-funded mining project in 30 years, the Rapu-Rapu projects boosts the government’s efforts to sustain the revived interest in the local mining industry.

The Philippine mining sector is getting its second wind after more than a decade in the doldrums.

Prior to the slowdown of mining activities in the last decade, the Philippines was recognized as Southeast Asia’s largest gold producer and is also the region’s most prospective country for gold. The country is still ranked as the world’s eight largest gold producer and has the potential to move up to rank five or more.

The country is now being deluged with inquiries from both local and foreign investors, especially after the approval of the Minerals Action Policy and the favorable ruling of the Supreme Court that now allows a 100 percent foreign participation in the local mining industry.

The Arroyo administration is pinning its hopes of economic salvation from a reinvigorated mining sector and has been encouraging investors to do business in the country by offering investor-friendly incentives packages and other sweeteners.

Recently, the Philippine Stock Exchange liberalized its rule on the three-year track record of profitability as a pre-requisite to listing so that foreign companies could participate in the local bourse.