Lepanto confirms First Pacific offer

MANILA, Philippines - Lepanto Consolidated Mining Co., one of the biggest mining firms in the country, confirmed yesterday that Hong Kong-based conglomerate First Pacific Co. Ltd. has expressed interest in acquiring the mining unit controlled by businessman-stockbroker Felipe Yap.

Lepanto issued this statement in response to the Philippine Stock Exchange’s request for confirmation of The STAR story that came out last Monday.

“We wish to confirm that FPCL is conducting a due diligence on Lepanto. A due diligence may or may not result in an investment,” Lepanto vice president assistant corporate secretary Odette Javier said.

Lepanto shares have surged the past days on rumors that the listed firm is the subject of a takeover by FPCL, the parent company of Metro Pacific Investments Corp.

From 17 centavos last July 9, Lepanto’s class A shares have risen 44 percent to close at 24.5 centavos yesterday. It’s “B” share, open to foreigners, also went up to 24 centavos.

FPCL is keen on expanding its presence in the Philippine mining sector as it scouts for other mining ventures aside from Philex Mining Corp., the country’s largest mining firm.

First Pacific owns 22 percent of Philex, which owns and runs the Padcal mine in Benguet, the only remaining gold-copper mine operating in the country.

First Pacific managing director Manuel V. Pangilinan earlier said the company would use Philex as its main vehicle for mining investments in the country.

First Pacific also intends to raise its stake in Philex but this would depend on the financial requirements of the copper-gold producer and the approval of other shareholders, including state pension fund Social Security System, the Ongpin bloc and the group led by former Philex chairman Walter Brown.

Lepanto, which operates the Victoria and Teresa gold deposits in Mankayan, Benguet, owns 60 percent of Far Southeast. It has 302 mining claims covering 4,168 hectares.

For this year, Lepanto expects its capital expenditures to reach P540 million, P400 million of which will go to development of mining projects. The remaining P140 million will be used to fund the acquisition of machinery and equipment, Javier noted.

Lepanto forecasts its tonnage production to improve from the present 1,200 tons per day to 1,500 tons per day.

On Jan. 5, 2004, Lepanto was registered with the BOI as a new export producer of copper-gold concentrate on a non-pioneer status for its project also located in Mankayan, Benguet.

Lepanto incurred a net loss of P46.63 million last year as sale of metals dropped to P371.5 million from P411.29 million a year earlier.