Philex cancels stock rights offer

MANILA, Philippines - Listed miner Philex Mining Corporation is cancelling its P13.8 billion stock rights offering,citing unfavorable market conditions.

In a regulatory filing, the company said that considering low commodity prices and the current volatility in the local equities market, proceeding with the stock rights offer would significantly dilute the holdings of its stockholders.

“The stock rights, if launched, would have been priced at no more than P5 per share with a 1/3 dilutive effect on the current shareholders,” said the company.

Philex also announced that Pangilinan-led First Pacific Group has agreed to extend access to the $150 million credit facility it made available until March 2013 to support the company and develop its Silangan Gold Project.

It was originally proposed that advances from the credit facility would be repaid by the proceeds from the stock rights offer.

First Pacific has agreed to extend access to the credit facility until March 2014.

To date, $130 million has been withdrawn by Philex from the credit facility.

The facility now provides $20 million of unutilized funding for the Silangan Project, easing pressure on Philex to raise funds outside its cash flows.

Philex said this allows the use of its existing cash flows to fund rehabilitation works for its compromised copper-gold mine in Padcal, Benguet.

“In addition, the company would be in a position to declare dividends to its shareholders should the board of directors deem it appropriate to do so and at the same time pursue to completion of the feasibility study for the Silangan Project,” said the company.

The Silangan gold project in Surigao, which is seen to begin operations in 2017, is meant to provide a continued revenue stream for the company after the lifespan of the Padcal mine in 2020.

The Philex board has also allowed in principle, the subscription of First Pacific to a $150 million direct equity interest in the Silangan project.