S African miner sees good signs for Phl proj

MANILA, Philippines - South African miner Gold Fields Limited sees a “significant upside potential” for its Far Southeast project in the Philippines and will be ready to deliver its first resource report in the second half of 2012.

Gold Fields is supposed to make a final decision in March 2012 if it will proceed with its plan to acquire 60 percent of the Far Southeast project from Lepanto Consolidated Mining Co.

In its 3rd quarter financial disclosure to the Johannesburg Stock Exchange and the New York Stock Exchange, Gold Fields announced record net earnings for the September quarter of $293 million, compared with $186 million in the June quarter and earnings of $95 million in the September 2010 quarter.

At the Far Southeast project in the Philippines, Gold Fields reported that “the initial proof-of concept drill results have confirmed our initial understanding of the scale and grade of the deposit and demonstrated significant upside potential at depth and in all lateral directions.

It further disclosed that “on the back of positive drilling results we have made the second down payment of $66 million in terms of the option agreements to acquire a 60 percent interest in the project. We have eight drill rigs on site and plan to deliver a first resource during the second half of 2012.”

In September this year, Gold Fields had hinted that it is coming closer to making an investment in the Philippines following favorable results of its ongoing exploration activities of the Far Southeast ore body of Lepanto Consolidated Mining Co.

In a press statement, Nick Holland, chief executive officer of Gold Fields, said: “We are pleased with the results to date and excited at the prospect of establishing a long-standing mutually beneficial relationship in a promising region in the Philippines.”

Gold Fields is conducting an extensive drilling program for the Far Southeast ore body in the municipality of Mankayan, Benguet. It currently has eight underground drill rigs turning.

Initial results, “support the existence and extent of the known core of mineralisation as well as further extensions both laterally and at depth beyond this core,” Gold Fields said.

“The company is continuing with its underground drilling program and has also commenced with surface geotechnical drilling during this quarter,” it added.

The FSE project is situated in an existing mining camp in close proximity to two other mines historically operated by Lepanto, one of which is currently in production.

The FSE project has ready access to established infrastructure, including roads, tailings facilities, power and water.

The existing workforce on the doorstep of FSE is part of a community established around mining over the past 70 years, Gold Fields pointed out.

Gold Fields Limited last Sept. 20, 2011 made the second down-payment of $66 million in terms of the 18-month option agreements to acquire a 60 percent interest in the undeveloped gold-copper FSE deposit in the Philippines.

The option agreements were entered into with Lepanto, a company listed in the Philippines, and Liberty Express Assets, a private holding company.

The non-refundable down-payment of $66 million to Liberty is the second in a series of three payments.

The first payment of $54 million, comprising $10 million in option fees to Lepanto and $44 million as a non-refundable down-payment to Liberty, was paid with the signing of the option agreement in September 2010.

Should Gold Fields decide to proceed with the acquisition of the 60% interest in FSE, the final payment of $220 million is expected to be paid during the first half of 2012.

The total pre-agreed acquisition price for a 60 percent interest in FSE, inclusive of all of the above payments, is $340 million.