MRC Allied sells 60% stake in Surigao Mines

MANILA, Philippines -  MRC Allied Industries Inc. is selling a 60-percent stake in MRC Surigao Mines, the holding company for its gold mining prospects, for P105 million.

In a disclosure to the Philippine Stock Exchange, MRC said Surigao Mine’s enterprise value is P175 million.

Singaporean firm Mining and Mineral Investment Holdings Pte. Ltd. and an unnamed Filipino investor with a mining background will acquire 40 percent and 20 percent, respectively of Surigao Mines.

Initial payment for the shares is due on Nov. 15 and the balance will be settled three months thereafter.

MRC Surigao will apply for an increase in its capital stock to facilitate the issuance of new shares to the two investor groups.

MRC said the transaction “allows it to partner with an institution that is financially capable and is able to contribute more resources as the need arises.”

The transaction also allows MRC to reallocate its resources to other mining assets in its portfolio, thus spreading its risks among different projects.

MRC said the amount raised would be used to fund Surigao’s gold processing plant in San Miguel, Surigao del Sur and ore purchase agreements with various miners in the area.

The Surigao plant, which requires a total capital outlay of P800 million, is expected to produce a minimum of 2,000 tons of gold a day and would eventually process copper.

To raise additional capital, MRC is undertaking a P720 million stock rights offering. Under the plan, existing shareholders can buy one share for every one share owned at P0.20 each share. The company’s application is pending approval of the PSE.

MRC’s entry into the mining industry started with the acquisition of the 8,200 hectare Kiblawan prospect which straddles provinces of Sultan Kudarat and Davao del Sur.

The Kiblawan mine is adjacent to the $5.2 billion Tampakan copper-gold project.

MRC also acquired a 2,059 hectare gold and copper mining project in Marihatag, Surigao del Sur for about P140 million.