Benguet Corp withdraws from Kingking copper-gold project

MANILA, Philippines - Debt-strapped mining firm Benguet Corp. said its board has approved a plan to withdraw from the development of the Kingking copper-gold project in Mindanao.

In a disclosure to the Philippine Stock Exchange, Benguet said it expects to sign a detailed agreement with St. Augustine Mining Ltd., the investment partner of National Development Corp. or Nadecor which holds the mining claim covering the Kingking project.

It would be recalled that Nadecor filed early last year a complaint with the Department of Environment and Natural Resources seeking the removal of Benguet as operator of the project, located in Pantukan, Compostela Valley.

Benguet, the country’s biggest gold miner until the late 1980s, was in talks with nickel producer Jinchuan Group Ltd. for the possible investment by the state-run Chinese firm in Kingking but no agreement had been reached.

Earlier studies showed that Kingking had an estimated mineral resource of 1.04 billion metric tons of resource containing 0.306 percent total copper and 0.410 grams/ton of gold.

Benguet said its board also approved a buyback of debt papers of an undisclosed amount from Strato International Holdings Ltd.

As of March 31 this year, Benguet’s outstanding bank loans (inclusive of interest and penalties) amounted to P3.716 billion, up from P3.694 billion in 2009. 

Benguet’s debt woes started in the late 1980s when it obtained consolidated loans of P4.2 billion to finance mining projects, in particular its Antamok gold project in Itogon, Benguet which turned out to be an unprofitable venture.

The company has trimmed its net loss to P16.5 million in the first quarter this year from P88.8 million the same period in 2009. The significant decline was partly due to a foreign exchange gain of P43.1 million this quarter versus foreign exchange loss of P29.4 million the previous year.

Benguet said it foresees an improvement in its cash flow due to the expected increased gold production, steady market of quicklime and assured market for nickel ores of Sta. Cruz nickel project due to the signing of an off-take agreement with DMCI Mining Corp. and Sino Phil Group Ltd.