Court allows Oriental to recover rights over 2 sites

MANILA, Philippines - Publicly-listed mining holding firm Oriental Pensinsula Resources Group said the Palawan Regional Trial Court had issued an order allowing it to recover possession of two nickel mine sites in Palawan, a major victory for the company which has been struggling to conduct mining operations for more than three years.

Oriental Peninsula has been at loggerheads with Platinum Group Metals Corp. (PGMC) over the right to operate the Toronto and Pulot mines in Palawan.

In a disclosure to the Philippine Stock Exchange, Oriental Peninsula said branch 59 of the Palawan RTC had nullified the injunction order dated July 21, 2006 that prevented 94 percent owned Citinickel Mines & Development Corp. from occupying and controlling the mine site, and directed PGMC and all persons acting on their behalf, to immediately vacate the premises.

In issuing the ruling, Palawan RTC judge Bienvenido Blancaflor cited the alleged gross violations committed by PGMC of its contract with Citickel predecessor Olympic Mines and Development Corp.

Blancaflor cited the testimony of PGMC vice-president Ferdinand Pallera that the company had violated the small mining permit by using heavy equipment for mining operations including the use of backhoe and haulers. “To the mind of the court these are heavy equipment that are not supposed to be used in small scale mining operations and consequently extracted minerals beyond the allowable limit set by the small scale mining permits. By this action, Platinum impaired the approval of the earlier MPSA application of Olympic,” he said.

Blancaflor also noted Olympic’s loss of confidence in Platinum because of the latter’s “track record of dishonest actions.”

Blancaflor said the earlier injunctive writs issued in this case are not permanent in nature, citing Sec. 6, Rule 58 of the Rules of Court, which states that “the same may be dissolved if it appears after hearing that although the applicant is entitled to the injunction of the same over the issuance or continuance thereof, would cause irreparable damage to the party or person enjoined while the applicant can be fully compensated for such damages as he may suffer.”

The Palawan court likewise directed the provincial police office to assist the sheriff and Citinickel in the implementation and enforcement of the order.

Citinickel maintains it has the exclusive right and authority to operate the two nickel-rich sites in Palawan which comprise an aggregate 2,176 hectares of land covered by a 25-year mineral production sharing agreement (MPSA) granted by the government. Of the total area, 1,408 hectares are located in Española while 768 hectares are in Narra.

“Being an MPSA holder, Citinickel has superior and clear rights to engage in mining which Platinum continues to thwart to the irreparable damage and prejudice of Citinickel.

The continuance of the injunction would cause Citinickel to violate this provision of the MPSA and therefore unduly place the MPSA in danger of possible cancellation by the State,” Oriental Peninsula said.

Oriental Peninsula said Olympic did not assign its mining claims to PGMC, pointing out that only the state as owner of the mineral resources in the land can grant such rights.

 “The MPSA constituted and appointed Citinickel as the exclusive entity to conduct mining operation in the contract area. Platinum is bound to respect the constitution of Citinickel as exclusive entity authorized to engage in mining in the subject mine site. The execution by the State of the MPSA is a sovereign act which prevails over a purely private operating agreement between Olympic and Platinum,” Oriental Peninsula said.

In its opposition, PGMC reiterated that it was granted exclusive rights to control and conduct mining operations in the two sites, arguing that Citinickel is a mere assignee pursuant to a deed of assignment.

Citinickel has sought as early as June 21, 2006 the rescission of the agreement by filing a complaint with the Parañaque RTC but was dismissed on the ground of forum shopping.