Platinum questions profit potential of Oriental

Platinum Group Metals Corp. has questioned the ability of Oriental Peninsula Resources Group Inc. to meet the production and earnings targets it had set during its initial public offering (IPO), when neither Oriental nor its operating unit is even in possession of the nickel mine site.

“I think the bottom line is, we continue to be in possession of the mines and this is what the Oriental story is all about,” PGMC chairman Ramon Atayde said.

Atayde, in a statement, said “unfortunately, they went public and they did not disclose one important thing, who is in possession of the mine.”

In support of this statement, the Mayor Clarito Demaala Jr. and Barangay Captain Betty Ignacio of Narra, Palawan issued certifications that “PGMC is the actual occupant of the entire Toronto Nickel Mines since it started its operation in 2004 up to the present.”

They noted that PGMC has a campsite, minesite and stockyards in Toronto Nickel Mines covering 768 hectares while “Citinickel Mines and Development Corp. nor Olympic Mines Development Corp. has no physical presence in the area and never occupied the Toronto Nickel Mines.”

Oriental said during its IPO that it expects to start nickel ore production in the first half of 2008 and projects to ship 600,000 wet metric tons of ore from its Espanola mine in Palawan and eventually raise this to 1.2 million metric tons at the rate of 100,000 MT a month. Full year production starting 2009 is expected to push up output to 1.5 million tons.

Atayde said PGMC remains in control over the nickel mine site in Narra and Sofronio Espanola in Palawan although operations have been halted by pending court cases.

PGMC senior vice president and chief finance officer Raoul Eduardo C. Romulo said Oriental had obtained a restraining order from a local court to silence them and keep them from warning the public so Oriental can push through with raising from the public P800 million from the sale of shares.

He said PGMC is in possession of the mine site and has a valid and effective operating agreement with Olympic Mines and Development Corp. before the latter entered into a deal assigning its rights to Citinickel Mines and Development Corp., the operating unit of Oriental.

“What could be legally assigned to Citinickel was on the right to royalties since we have an operating agreement that has not been cancelled, with whoever that person is, whether its Olympic, CitiNickel and now Oriental,” Romulo said.

He added that this is Oriental’s only source of revenue and “right now, it’s zero because there’s no operation. But assuming we’re operating, they will have a revenue scheme, which is royalty. Now if you are only going to report royalty I don’t think you can go to the market and raise P800 million, they could not have raised it at that price.”