Lepanto, 2 big mining firms in talks on copper-gold project

MANILA, Philippines - At least two major gold mining companies are reportedly in “serious” talks with Lepanto Consolidated Mining Co. for its Far Southeast Gold Resources, Inc. copper-gold project, even as talks with the First Pacific Group continues, according to Bryan U. Yap, president of Lepanto.

During yesterday’s annual stockholders’ meeting at The Peninsula Manila, Yap also reported that for the first quarter of this year, Lepanto posted a net loss of P107 million due to delays in development works and operational problems in its Victoria reserve mine in Mankayan, Benguet Province.

However, Yap said that the company still hopes to post a positive net income for 2010 of P100 million as it intends to spend P600 million to further develop and increase the gold production of its Victoria mine.

For the first quarter, Lepanto managed to produce only 6,176 ounces of gold and 10,278 ounces of silver due to equipment breakdown.

The additional capital expenditure of P600 million, Yap said, would further develop the Victoria reserve and hopefully allow Lepanto to increase its gold production to 40,000 ounces for the whole of this year

Yap, who did not name the two interested firms, assured that the two possible suitors are “respectable companies that are financially and technically capable of developing the Far Southeast copper-gold project.”

He said that the due diligence being conducted by the two mining firms is “going very well” and that an announcement on a possible joint venture agreement to develop and operate the Far Southeast copper-gold project may be made “within the first half of this year.”

Even as Lepanto is in “serious” talks with the two investors, Yap still did not rule out the First Pacific Group which has already completed its due diligence.

If and when Lepanto reaches a deal with any of the interested groups, Yap said that Lepanto would maintain a 40 percent stake in Far Southeast.