In a disclosure to the Philippine Stock Exchange, Atlas corporate secretary and treasurer Noel T. del Castillo said the loan it acquired from TMC which matures in three-years, will be drawn over a period of time to meet the company’s funding obligations in the joint venture Berong nickel project in Palawan. The other investor in the project is Investika Ltd.
Castillo said the loan, which carries an interest rate of 10 percent per annum, is convertible to shares of the company’s stock, subject to regulatory approvals, at par value per share of P10 and secured by an assignment of the company’s share in earnings from the Berong Nickel project.
TMC is engaged in nickel exploration and development. It is scheduled next month to make its first shipment of ore from its nickel mining operations in Palawan to Nippon Metals and Alloy Inc. of Japan.
TMC, whose stock is traded at the London Metals Exchange (LME) market has renegotiated its supply agreement with Nippon Metals.
TMC’s local partner in the nickel ore project in Palawan is Atlas which is preparing to reopen its 400-hectare mining area in Toledo City, Cebu.
Under the new deal, TMC will be increasing its shipment to the Japanese company by 50,000 metric tons (MT) to 350,000 MT per year from the original target of 300,000 MT of ore grading not less than 2.1 percent nickel.
The contract between TMC and Nippon Metals is effective for five years and the base price of the ore will be FOB Berong Port in Palawan on a dry basis and equivalent to 23 percent of the quoted price of nickel on the LME market, the company said in a statement.
TMC said previously that it was in deep negotiations with another major Japanese smelter for the sale of 300,000 MT of direct shipping ore. TMC said it will sell 6,000 MT as bulk sample for testing before the contract is finalized.
At the same time, TMC is studying proposals from several parties that are keen on participating on the development of its extensive nickel resources estimated at 350 million MT of nickel in Palawan.
The TMC site is one of two nickel mining and refinery projects in Palawan. Late last year, the Coral Bay Nickel Corp., a joint undertaking of Sumitomo Metal Mining Co., Ltd. and Rio Tuba Nickel Mining Corp. commissioned the nickel refinery plant in Rio Tuba. The company is investing about $180 million with operations scheduled to continue over a period of 20 years.