SMC's due diligence audit on Indophil extended by 1 month

MANILA, Philippines - Indophil Resources NL has agreed to extend by a month the exclusivity period for San Miguel Corp. to complete its due diligence on the Australian mining firm that controls a third of the $5.2-billion Tampakan copper-gold project in Mindanao.

In a disclosure to the Philippine Stock Exchange, San Miguel said the exclusivity period was extended to Feb. 10, 2011.

San Miguel is currently conducting a due diligence audit of Indophil to decide whether to submit a control proposal.

“The binding exclusivity agreement means that until Feb. 10, Indophil will not, among other things, initiate control proposal discussions with any interested third parties,” Indophil said in a statement.

“Extension of the exclusivity period does not represent a statement of intention on the part of San Miguel to submit a control proposal for Indophil, and there is no assurance that any proposal will be submitted.”

San Miguel completed in October last year its purchase of a 10.1-percent stake in Indophil for $41.29 million.

Ramon S. Ang, president and chief operating officer of San Miguel, earlier said the diversifying conglomerate was keen on acquiring up to 100 percent of Indophil.

Indophil owns 37.5 percent of Sagittarius Mines Inc., the local company that operates the Tampakan mine which is touted to become the country’s largest mining project.

London-based global mining giant Xstrata Plc. previously tried to acquire Indophil but abandoned its bid in 2008. It owns 62.5 percent of the Tampakan project located in South Cotabato.

If the deal works as planned, San Miguel said it would make a tender offer to buy 100 percent of Indophil.

Discovered in 1992, the Tampakan mine is considered the largest untapped gold and copper deposit in Southeast Asia and now ranks as the fifth largest known undeveloped copper-gold deposit. It is estimated to contain 13.5 million tons of copper and 15.8 million ounces of gold, at a grade of 0.6 percent copper and 0.2 grams per ton of gold.

San Miguel has been aggressively expanding into power, oil refinery, telecommunications, infrastructure and mining after dominating the local food and drinks industry for decades.

Analysts said San Miguel’s acquisition of full control of the Tampakan mine would put the diversifying conglomerate in the same league as Philex Mining Corp. and Atlas Consolidated Mining Corp.

China’s Zijin Mining Co. earlier tried but failed to buy out Indophil with its $500 million offer. It terminated talks after it failed to convince the Chinese government to approve the deal.