MANILA, Philippines - Property-to-mining firm MRC Allied Inc. has signed an agreement with Australian holding company Capital Gold Pty Ltd. to jointly develop a 3,718-hectare copper-gold prospect in Southern Mindanao.
During the company’s annual stockholders meeting yesterday, MRC president Benjamin M. Bitanga said Capital Gold will issue 40 million of its issued shares to MRC in exchange for 40 percent of MRC Surigao, a local subsidiary that will be established to hold the rights to develop the tenement situated in Marihatag, Surigao del Sur.
The shares to be issued by Capital Gold represent 40 percent ownership and control of a subsidiary to be created in Australia, which will eventually be listed on the Sydney Stock Exchange. The joint venture would have a valuation of $400 million, Bitanga said.
Under the agreement, MRC will be the majority owner and outright retain a minimum 30 percent of the listed company. In the process, the remaining 70 percent will be diluted to Capital Gold and the investment bankers/funders/investing public who will buy into the listed company, thereby making MRC the largest single owner.
Bitanga said the deal is a milestone for the company as not only will it allow MRC Surigao to be the first mining asset to be brought to production, but it also represents a historic entry of MRC into the Australian Stock Exchange.
He said the presence of Australian gold producer Medusa Mining as a neighbor to the Surigao tenement has helped MRC attract foreign investors.
Bitanga said the agreement shall pave the way for Capital Gold to commence a three-month due diligence on MRC and geological exploration in the Surigao tenement.
At the same time, Bitanga announced that the company expects to raise a total of $50 million from a private placement participated in by European investors. He said the company has already received $4.2 million, which the company intends to use for mining exploration and initial operating requirements for its Tampakan-Kiblawan mines.
The initial tranche of $15 million will be used for MRC’s operating expenses, including advances made for the purchase of the tenements, all applicable fees and expenses and the initial phase of mining operations.
The $35 million balance will be held in escrow and will be disbursed according to an approved budget which will be dedicated to MRC’s mining activities.
Bitanga said the European group has also signified its interest to participate in the planned development of its existing 136-hectare township in Naga, Cebu into an integrated resort.
Bitanga said the Kiblawan prospect was the first mining asset acquired by MRC which comprises 8,200 hectares of land and spans two provinces namely, Sultan Kudarat and Davao del Sur.
Since then, the company has acquired three more mining assets that have effectively increased its net asset value to P3.2 billion.
Bitanga also reported that the company has secured from the National Commission on Indigenous People a certificate of precondition for its Kiblawan/Tampakan project on May 27, 2011, allowing MRC to proceed with the exploration phase of the mine.