Phil Resources Issue 5 August-October 2011

Is Philippinemining still

competitive?

Go-ahead forBHP farm-in

with Otto

Philippine ResourcesMining, Petroleum & Energy Journal Issue 3 2011, August-October

Winning theirhearts and minds

Brimo challengesthe oppositionThe miners

fight back

Oil and gasbeneath anocean storm

Case studies:Two good

mine projects

Insurance isa must fortravelers

Around theworld with

solar energy

Headlines in this issue

Current Resources

Resources Viewpoint6 The miners fight back

Oil & Gas Resources8 Political storms threatening South China Sea oil and gas18 Philippines ‘a core area’ for Otto20 Doubts hang over Palawan partnerships20 Malampaya gas expansion confirmed22 Pitkin raises its bet on Palawan22 Philex: Recto Bank is worth a gamble22 Interest in new licenses is ‘overwhelming’

Resources Events24 Miners watch defenders fight back

Mineral Resources26 The public face of the Bre-X scandal ‘broke but happy’ in the Philippines30 OceanaGold’s Didipio on the way30 More nickel soon in Palawan32 Restructuring and profit for Medusa32 Big boost for Atlas and Carmen Copper34 Mill hitch mars Masbate outlook35 More gold in the Padcal mountains

Renewable Resources36 Geothermal: Full steam ahead37 Around the world on solar power

Travel Resources38 Insurance is a must for travelers

Supply Resources39 Major expansion for supplies firm42 Mill liner major is going global44 Blast expert perfecting an even better bang46 Driller on the move with expansion48 Matching the right people with the right jobs50 Cardno wants to make a social impact50 Use it, then trade in the Cat52 Best environmental practices: A tale of two good projects

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4 Philippine Resources

August-October 2011www.philippine-resources.com

Philippine Resources Journalis published independently forexecutives in Philippine mining,

petroleum and energy andassociated business sectors.

PublisherElizabeth GaluraCharismatic (WA) Pty Limited

Consulting PublisherGreg Brimble

EditorSimon Halley

Sales ManagerCora A. Laureano

Design/ProductionEdrick Bruel

ContributorsMars BuanPatricia A.O. BunyeFernando Penarroyo___

Manila publishing officeLomar OfficesPaseo de Roxas Bldg, 3rd Floor111 Paseo de RoxasLegaspi Village Makati,Metro Manila, PhilippinesPhone +632 815 8836 or +632 714 0029

___

Individual contacts

Greg [email protected]: +614 172 20759Manila: +63949 338 3664

Simon [email protected] +63917 833 1656

Cora [email protected]+63918 959 3536

Edrick [email protected] +63905 2684656

___

Philippine Resources Journal is printed in Manila by IPrint.

Digital online editionwww.Philippine-Resources.com

Simon HalleyConsulting Editor

Resources Viewpoint

PhilippineResources

Mining, Petroleum& Energy Journal

Issue 3 2011, August-October

Until now, the anti-miners have enjoyed the higher ground most of the time in their war on min-

ing. The more fervent among the envi-ronmentalists, the church, non-govern-ment organizations and local politicians (and more cynical people simply want-ing money) have been ahead on points. It’s easy to hold up photos of ugly holes in the ground, denuded forests, polluted water and poisoned people, and cite data saying “This is what mining does in the Philippines… mining is bad”–even if the photos and data are out context, deceitful or outright lies, they’re easy to believe. Mining is easy to condemn and the miners seem to have had trouble defend-ing themselves. Most of them have in-stead chosen to stay under the radar, qui-etly lobbying key people, trying to win the hearts and minds of affected communities with corporate social responsibility, envi-ronmental best practices and suchlike. The miners haven’t been winning and some believe the battle may be pastthe stalemate stage and swinging in fa-vor of the anti-miners. This is on top of apparent inaction within the government at all levels as the officials deem it not in their best interests to intervene. Now the miners have decided to fight back, to switch from being defen-sive to taking the offensive. The Cham-ber of Mines of the Philippines has been devoting a lot of time and resources to preparing and presenting cases for min-ing, and working on its allies in govern-ment and the media. Individual compa-nies with their future at stake have been following similar courses at a more local level around their mines and projects. Two specific champions of the cause have joined open battle with the anti-miners – Sagittarius Mines which is developing the giant Tampakan open pit copper-gold project in South Cotabatu, and nickel mining veteran Henry Brino of Nickel Asia and other mines particu-larly in Palawan (which is the focus of populist anti-mining champion Gina Lo-pez’s campaign). Sagittarius has spend considerable time and money on a comprehensive study of its Tampakan project (and min-ing in general), going into great detail about the benefits of the project and

how it safeguarding the interests of lo-cal communities and the environment. An “executive summary” of the study was previewed to miners at an Austra-lian and New Zealand Chamber of Com-merce meeting by Sagittarius corporate affairs manager Roy Antonio and at-tracted strong interest. The full study is currently doing the rounds of the stake-holders and others affected by Tampa-kan. The tome runs to about 3,000 pages of data and takes a lot of absorbing, but it is making people think. Henry Brimo is taking a more ag-gressive stance. He has compiled a per-suasive, step-by-step rebuttal of Gina Lo-pez’s anti-mining presentation, which he has taken on the guest speaker circuit in similar fashion to Lopez herself. Brimo doesn’t quite call Lopez a liar. “She has been misinformed by some of her peo-ple,” he remarked in a conversation after his presentation to a recent Philippine Mining Club lunch. Brimo queries Lopez’s use of mining photographs that are many years or de-cades old and often incorrectly labeled; a photo of Nauru island nearly denuded by phosphate stripping, although Nauru is a very long way from Philippines; photos of deforestation that has nothing to do with mining but is instead the work of slash-and-burn farmers; testimony from people who have been bribed to repeat untruths; a photo of a person with severe skin le-sions which cannot have been caused by river mercury poisoning as claimed; and distorted data about fishing in Palawan and the effect of mining on fish catches. The presentations of both Brimo and Sagittarius are well-documented and persuasive. However their audi-ences have been special-interest and re-stricted – unlike the audiences of Gina Lopez with her mass media resources and the other anti-miners with their more populist, easy-to-understand mes-sages. It will be interesting to see how quickly the miners can win back the higher ground. ■

The miners fight back



The ongoing diplomatic rows over the South China Sea between Chi-na and the Philippines and China

and Vietnam have been a focal point of recent developments in the East Asian re-gion. Tension heightened in February this year when a Chinese frigate ordered three Filipino fishing boats near Jackson Atoll to leave the area. When the fisherman refused, the frigate fired three shots near one of the Filipino vessels. The tension escalated a week later when two Chinese patrol boats harassed the seismic survey vessel Veritas Voyager belonging to the British firm Forum Energy – operating in partnership with the Filipino oil and gas firm Monte Oro Resources & Energy – into leaving the Reed Bank off Palawan by threatening to ram the vessel. The Philippines lodged a diplomatic protest against China, ordered its Coast Guard to escort oil and gas explora-tion vessels in the area, and dispatched two military observation planes to keep watch. The Philippines accused China of four subsequent incursions into its terri-tory in May, with a Chinese vessel sighted over the Abad Santos Shoal, two Chinese fighters allegedly flying into Philippines airspace near Palawan, a pair of Chinese ships seen heading toward Southern Bank, and sightings by Filipino fishermen of Chinese vessels unloading steel posts and building material near Likas and Pa-tag on the Amy Douglas Bank.

China has denied the latest reports. Cen-tral to the issue, China also maintains it has never intruded into Philippine waters because the Spratly Islands are part of Chinese territory. Meanwhile, Vietnam accused the Chinese government of cutting the under-sea cables of Vietnamese oil exploration ships twice this year. The cables, allegedly cut on May 26 and June 9, were located within disputed South China Sea terri-tory – 120 kilometers off the south-cen-tral coast of Vietnam and 600 kilometers south of China’s Hainan island. Vietnam promptly filed a diplomatic protest. Rare anti-China street demonstrations took place in Ho Chi Minh City and Hanoi criticizing China’s bullying tactics. China countered by blaming Vietnam for the in-cident, saying Vietnam had undermined Chinese interests and jurisdictional rights over the territory. In mid-July, the Association of South-east Asian Nations released a state-ment expressing “serious concern over the recent incidents” and calling on all parties to exercise self-restraint. ASEAN also called for a multilateral solution to the South China Sea dispute during the recent ASEAN Regional Forum in Bali, a 27-member grouping led by ASEAN and regional players the United States, China, Japan and South Korea. At the end of the five-day forum, officials from China and ASEAN tentatively agreed to a general set of guidelines for cooperation in the dis-puted South China Sea. While Vietnam hailed this as a sig-nificant step towards dialogue, the Phil-ippines said it would push through with plans to raise the dispute to the United Nations International Tribunal for the Law of the Sea. The Philippines asserted that it was determined to do so with or without the support of ASEAN and its re-gional partners. On July 20, high-ranking military officials and five Philippine law-makers arrived at Philippine-occupied Thitu Island (called Pag-Asa Island in the Philippines) in the Spratly Islands. The group went there for a symbolic Philip-pine flag-raising ceremony asserting the

country’s claim on the territory involved. China countered the Philippines saying it opposed raising a bilateral dis-pute to a multilateral setting. China also criticized the Philippine visit to Thitu Is-land, warning the move would “sabotage” bilateral ties and renew tension. It also warned the US, which has defense agree-ments with claimant territories the Philip-pines and Taiwan, against interfering in the South China Sea dispute. The alleged Chinese incursions are the latest in a string of aggressive ac-tions by China in the South China Sea since June 2008, when it declared the Vietnamese-claimed Sansha City as part of Hainan province. A month later, Chi-nese envoys demanded that the US oil firm ExxonMobil discontinue initial oil agreements with PetroVietnam. Vietnam protested the move, saying Hanoi’s deal-ings with foreign oil partners fell within Vietnam’s legal rights and sovereignty. The original deal with PetroVietnam was a result of Vietnam’s campaign to lure American corporations to trade and invest in the country. In 2009, China reportedly harassed the American ship Impeccable while it was conducting surveillance activities in the Spratly Islands. That same year, China submitted to the UN its so-called “Nine Dash Line Map” claiming a huge portion of the South China Sea as its in-ternal body of water. China’s territorial claim is the largest in the map, forming a U-shaped area covering almost the en-tire 1.7 million square kilometers of the South China Sea. In 2010, China con-ducted about 17 underwater South China Sea expeditions with a small manned submarine. The Philippines reacted by formally contesting China’s “Nine-Dash Line Map” in the UN and began reviving efforts to promote idle oil and gas areas in the South China Sea. History shows how tension has pe-riodically gripped the South China Sea, especially when a claimant country exer-cises assumed sovereignty over disputed islands. This ranges from simple island

Political storms threateningSouth China Sea oil and gasBy Mars Buan

Continued on page 10 >

Oil & Gas Resources

Mars Buan is manager and senior analyst, business intelligence, with Pacific Strategies & Assessments (www.psagroup.com), based in Manila.



visits by ships or high-level officials to the erection of structures or permanent deployment of troops. In some instances, tension has escalated to armed clashes. Among the claimant countries, China and Vietnam have always been the most aggressive in pursuing their claims. His-torically, recorded violence in the South China Sea also tends to be between China and Vietnam. A brief military engagement between the two countries over the Para-cel Islands in 1974 resulted in the death of 18 soldiers. Initially, both countries exer-cised partial control of parts of the Para-cels, but the armed encounter resulted in China controlling the entire island group. Since then, there have been occasional re-ports of clashes between naval vessels of the claimant countries. The most violent took place in 1988 when the Chinese and Vietnamese navies clashed at Johnson Reef resulting in the death of over 70 Viet-namese sailors. The Philippines’ sovereignty claims over parts of the Spratly Islands and Scarborough Shoal have led to occasional brief encounters with China, as well as with South-east Asian neighbors Vietnam and Malaysia. The 1982 United Nations Conven-tion on the Law of the Sea allowed coastal nations, including those surrounding the South China Sea, to establish sovereignty over territorial seas. Territorial seas were defined as waters located within 12 nauti-cal miles from the coastlines of the states and its offshore islands. The convention also allowed countries to establish sover-eignty in their respective exclusive eco-nomic zones (EEZs) extending 200 miles from a territory’s coast. In the case of the South China Sea, coastal nations in the region had estab-lished conflicting sovereignty claims over the territorial seas. Further complicat-ing the matter, the EEZs of six countries overlapped with one another. Since then, China and countries in the South-east Asian region have been embroiled in a protracted territorial dispute over the five major island chains – the Spratly Islands, Paracel Islands, Pratas Islands, Maccles-field Bank and Scarborough Shoal.

The South China Sea’s approximate-ly 250 islands, atolls and reefs are now claimed almost entirely by China and Taiwan. Their claims overlap with those of Vietnam, the Philippines, Malaysia and Brunei in a six-way dispute. Separately, there are bilateral territorial rows on the fringes of the South China Sea between Cambodia and Vietnam; Singapore and Malaysia; Indonesia and China; and Thai-land and Malaysia. China claims almost the entire South China Sea and all of the Spratly Islands, and has exercised sovereignty over the Paracel Islands since 1974. China lays claim to the Malampaya and Camago gas fields. Its claims are based on its conti-nental shelf, its EEZ and its historical re-cords from the Han and Ming Dynasties. The Chinese military occupies the Paracel Islands and nine islands in the Spratlys. Brunei’s claim is limited to its EEZ but it also extends to the Louisa Reef. It does not occupy any of the islands.

Cambodia claims the island of Phú Quoc, which is also claimed by Vietnam. Vietnam is administering the is-land.Indonesia exercises jurisdiction over the Natuna Island and claims that the marine territory north of this island is within its EEZ. Indonesia’s claim on the waters north of Natuna is being con-tested by China. Malaysia’s claim on the Spratlys is based on its EEZ. It built an airstrip and a resort on Swallow’s Reef. Malaysia had a sovereignty dispute with Singa-pore over three islands – Pedra Branca, Middle Rocks and South Ledge. Malaysia also claims the islands of Ko Kra and Ko Losin in the Gulf of Thailand, an arm of the South China Sea. Malaysia has a na-val base on Swallow’s Reef and occupies the Ardasier Reef, Mariveles Reef, Erica Reef and Investigator Shoal. In 2008, the International Court of Justice ruled that


< Continued from page 8

Oil & Gas Resources

China claims almost the entire sea

A South China Sea oil and gas map.



Singapore has sovereignty over Pedra Branca while Malaysia has sovereignty over Middle Rocks. The decision, how-ever, did not settle the dispute over South Ledge. Malaysia and Thailand are jointly developing the islands. The Philippines’ claim is based on its EEZ, its continental shelf, and Filipino ex-plorer Tomas Cloma’s expedition in 1856. It also claims the Scarborough Shoal and exercises sovereignty over the Malam-paya gas fields. The Philippines occupies eight of the Spratly Islands and treats them as part of Palawan province’s Ka-layaan municipality. The Philippines has been extracting natural gas from Malam-paya since 2001. Singapore had a sovereignty dispute with Malaysia over three islands –Pedra Branca, Middle Rocks and South Ledge. In 2008, the International Court of Justice ruled that Singapore has sovereignty over Pedra Branca while Malaysia has sover-eignty over Middle Rocks. The decision, however, did not settle the dispute over South Ledge. Taiwan claim is similar to China’s and covers all of the Spratly Islands, Par-acel Islands, Scarborough Shoal and the Camago and Malampaya gas fields. Tai-wan occupies Ban Than Reef and Itu Aba island, where it has built an airport. Thailand lays claim to the Ko Kra group of islets and treats this as part of Nakhon Si Thammarat province. It also claims the Ko Losin islet. Thailand and Malaysia have entered into an agreement to jointly develop the disputed areas. Vietnam claims all of the Spratly Is-lands and calls the group Truong Sa. Its claim is based on its EEZ and its continen-tal shelf. Vietnam also claims the Paracel Islands. Vietnam administers the island of Phú Quoc, which is the subject of a ter-ritorial dispute with Cambodia. Vietnam occupies several islands and has built military bases on them. Phú Quoc is treated as part of Kien Gang province. At stake in the disputes is an area cov-ering about 1.7 million square kilometers containing small islands, atolls and reefs.

The South China Sea is surrounded by the Philippines, Vietnam, Malaysia, Brunei, Indonesia, Singapore, China and Taiwan. It is abundant in ma-rine resources and is believed to have rich petroleum and natural gas reserves. Petro-leum industry ex-perts have, in fact, dubbed the South China Sea as the “second Persian Gulf,” saying the region’s potential oil and gas reserves are likely second to the Middle East. The United States Geologi-cal Survey estimates the total oil reserves in the South China Sea could reach 28 bil-lion barrels. The Chinese government es-timates reserves as high as 200 billion bar-rels. The US also estimates as much as 266 trillion cubic feet of natural gas reserves in the area - almost the same amount as that of Saudi Arabia, which has the fourth largest proven natural gas reserves with 275 trillion cubic feet, just behind Russia, Iran and Qatar. Moreover, the South China Sea is one of the busiest shipping lines in the world, connecting the Malacca Strait – the short-est maritime route from the Middle East to China, Japan, South Korea and Pacific Rim countries – with the Pacific Ocean. More than 50 percent of the world’s mari-time trade volume passes through these strategic sea lanes. Significantly, the bulk items of the shipping traffic are crude oil, liquefied natural gas, coal and iron ore. Every year, more than 100,000 oil tankers, cargo ships and other maritime trade ves-sels pass through the sea lanes. Daily, over 9.5 million barrels of oil and three million barrels of crude pass through there. Over 80 percent of the oil imports of Japan, South Korea, and Taiwan in particular are shipped through the South China Sea. The first attempt to prevent an esca-lation of conflict in the area was through the forging of the 1996 ASEAN Code of Conduct over the South China Sea. While

this cited the need for scientific research, anti-drug trafficking and anti-piracy cam-paigns – unhampered by sovereignty is-sues – it was largely brought about by intensifying military tension among the claimant countries. Sino-Philippine ten-sion through 1999, however, proved that the Code of Conduct was futile in solving the problem and that China’s role was cru-cial in peace and stability in the region. In 2002, ASEAN and China signed the Joint Declaration on the Conduct of Parties in the South China Sea. The pact called for restraint in activities that could spark tension and enjoined competing countries to peacefully settle the territorial dispute. This was a welcome development but turned out to be no more than a po-litical statement. The agreement was not a legally-binding document and lacked any mechanism to resolve the conflict. Meanwhile, the Philippines had to put its territorial dispute with China on the back burner while it attended to its Muslim insurgency and Islamic terrorism problem in Mindanao. Then Philippine president Joseph Estrada had launched an all-out-war in Mindanao to eradicate rebel and terrorist training camps used and financed by local insurgents and their foreign terrorist allies. The South China Sea dispute further took a back seat after the September 11, 2001 attacks in the US when Gloria Arroyo, who assumed the presidency after Estrada was deposed in a popular revolt, had the Philippines

Rich petroleum resources at stake



Oil & Gas Resources

China’s so-called Nine Dash Line Map encompasses a huge portion of the South China Sea claiming it as Chinaís internal body of water.



join the US and its allies in the global war against terrorism. Gradually, Sino-Philippine relations seemed to move beyond the South China Sea dispute and eventually took an even more positive turn after Arroyo with-drew Philippine troops from the US-led coalition in Iraq after a kidnapping cri-sis involving a Filipino. The US chided the Philippines for giving in to terrorist demands and threatened to “review” cur-rent bilateral arrangements. Arroyo later said that as a matter of policy the Philip-pines would now be looking to China and its Asian neighbors to revive the country’s beleaguered economy. In furtherance of seemingly improved Sino-Philippines relations, the Philippines and China in 2004 signed a bilateral agree-ment for a joint marine seismic undertak-ing. Signed during a state visit to China by then Philippine president Gloria Ar-royo, the pact between state firms Philip-pine National Oil Corporation and China National Offshore Oil Corporation paved the way for joint research into the South China Sea’s oil potential. Vietnam initially opposed the deal, calling it a violation of the 2002 ASEAN-China – although Viet-nam eventually relented after the Philip-pines and China invited Vietnam’s state-owned oil firm PetroVietnam to join the undertaking in March 2005. In April 2005, then Chinese president Hu Jintao paid a state visit to the Philippines which Arroyo

hailed as the start of the “Golden Age” of Sino-Philippine relations. The tripartite deal allowed the three state oil firms to conduct seismic survey and research from 2005 to 2008. The re-search area spanned 143,000 square kilo-meters in the South China Sea defined by specific geographic coordinates. The pact only provided for pre-exploration activi-ties and did not involve any drillings or actual exploration. The three firms shared equally the cost of the undertaking. The Philippines, for its part, released US$5 million a year as its contribution to the three-year seismic study. The joint marine seismic undertak-ing was wrought with controversy within the Philippines, however. Critics argued that by entering into the tripartite deal, the Philippines had weakened its claim to the South China Sea by opening up portions of its EEZ to China and Viet-nam. Basically, the deal allowed China and Vietnam to explore areas that were supposed to be Philippine territory, and was thus a tacit acknowledgement that portions of its EEZ were indeed disputed territory. In fact, the joint seismic activity site was 80 percent within the Philippines EEZ and included the Reed Bank (called Recto Bank in the Philippines). Legal ex-perts also believed the agreement violated the 1987 Philippine constitution because Congress was never notified by Arroyo about the deal. Then government energy secretary Vince Perez and Philippine National Oil

Corporation president Eduardo Manalac defended the arrangement, arguing that it was a purely scientific undertaking and would not affect Philippine territo-rial claims in the South China Sea. Sup-porters of the agreement added that the findings of the undertaking would even strengthen Philippine territorial claims – notably, the Philippines’ argument that the Kalayaan Islands group of the Spratly Islands is actually an extension of the Palawan province continental shelf, the territory geographically nearest to the disputed island group. Proponents of the agreement said the trilateral seismic sur-vey would provide evidence to support such a claim. In 2008 the joint marine seismic undertaking pact expired and was not renewed. The findings of the project have not been released. Some quarters have asserted that this agreement was actually a precondition set by China in exchange for big loans to the Arroyo administration. While China denied the allegations, it is worth noting that soon after agreement was reached, China provided US$2 billion in loans per year to the Arroyo administration until 2010, when Arroyo stepped down. Following the controversial joint marine seismic undertaking, the Philip-pines in 2009 passed its New Baselines Law defining the country’s archipelagic baseline. The new baseline served as the starting point for the computation of the Philippines’ 12-mile territorial sea, 24-mile contiguous sea, 200-mile EEZ, and continental shelf and extended continen-tal shelf areas. The new law identified the Kalayaan Islands group of the Spratly Islands as well as the Scarborough Shoal as a “Regime of Islands” over which the Philippines will continue to exercise sov-ereignty, while recognizing that the areas remain disputed territories. The law was passed to meet a May 2009 deadline set by the UNCLOS III regime for member-states to draw their baselines. Analysts have pointed out that the new law excluded 1,500 square nauti-cal miles of Philippine territorial waters, thus dismembering the country’s territo-rial integrity. They claimed that the new law effectively abrogated the Philippines’



Oil & Gas Resources

Arroyo deal ‘in return for favors’

China deals between then-president Gloria Arroyo and China’s leader Hu Jin Tao may have been at the heart of a temporary “peace” in the South China Sea squabbles.



claim to South China Sea territories. They further opined that the new baseline law violated the 1987 constitution which de-fined the Philippine archipelago based on the Treaty of Paris, Treaty of Washington, and a 1930 convention between the US and Great Britain in 1930. Significantly, the law also apparently made the waters around and between the islands of the archipelago subject to the use of foreign vessels as well as air space for foreign aircraft. By extension, the Philippine government no longer has full sovereignty and control over the natu-ral resources in the area, as it appears to have made the resources available for all. International law and constitutional law experts said that because the law was of-ficially registered before the UN, it was immediately binding and cannot be ren-dered invalid by any local authority, not even the Philippine Supreme Court. As in the controversial joint marine seismic undertaking, some quarters have alleged that the redefined baseline law was an attempt by the Arroyo administra-tion to appease the Chinese government after cancelation of lucrative contracts with China in 2008. To recall, the Arroyo administration in 2007 signed a contro-versial national broadband network deal with the Chinese state firm ZTE. Congres-sional inquiries showed the $329 million deal was overpriced by $200 million and suggested that the excess funds were used to bribe Arroyo allies and serve Arroyo’s personal interests. The controversy re-sulted in the cancelation of the project and at least 11 of more than 65 other ques-tionable projects forged by Arroyo with the Chinese worth approximately $2.545 billion in all. This included a 683 million Light Railway Transit extension project and a $645.8 million national cyber edu-cation project. The South China Sea’s promise of major petroleum and natural gas re-sources in a key factor compelling claim-ant countries to insist on their territorial claims. Against the backdrop of a grow-ing population and thriving economy, the quest to meet Asia’s energy requirements has become crucial. The potential oil and

natural gas reserves in the South China Sea would be particularly significant in reducing dependence on imported oil from North Africa and the Middle East, which has recently experienced a string of political crises. The tenuous situation in traditional sources of oil combined with Asia’s insatiable demand for energy has also imperiled the stability of global prices and oil supply. The Philippines in particular is heav-ily dependent on oil imports from the Middle East, with around 90 percent of its oil imports coming from the region, par-ticularly Saudi Arabia, the United Arab Emirates and Qatar. Less than 10 percent of its oil requirement comes from domes-tic sources. This has made the Philippines vulnerable to risks relating to volatility in the Middle East. Oil price hikes tend to have a domino effect in the country, pushing up the prices of food, transport, power and other basic commodities. With a population of about 92 million, the Phil-ippines needs around 320,000 barrels of oil a day, and the potential oil and natural gas reserves in the South China Sea could prove to be significant in reducing the country’s dependence on Middle East oil. Despite this, the Arroyo administra-tion’s controversial engagement with Chi-na over the South China Sea showed how Philippine politics can easily undermine the country’s territorial integrity and the people’s interests if and when vested in-terests are at play. Philippine history also highlights the fact that, notwithstanding the opportunities in the oil and gas sector, the level and commitment of government policies and support vacillate depending on the priorities of the incumbent admin-istration. This further adds to the risks for potential and current oil and gas inves-tors to the Philippines. For now, the Aquino administration has indicated a positive push to promote and support the gas and oil potential of the country. The Philippines has already moved over the past year towards this end: from prodding British firm Forum Energy into exploring Service Contract 72 that includes the Reed Bank off Pala-wan province, to launching its latest set of service contract offerings for oil and gas exploration in June.

Surveys of SC72 alone indicate 96 bil-lion cubic meters of natural gas potential and 440 million barrels of oil potential. These are greater than the proven natural gas reserves of the $130 billion Malam-paya operation, also located in Palawan province, as well as the proven oil reserves in Thailand. The cash-strapped Philippine government stands to earn billions of dol-lars over the 20-year period just from Malampaya gas. The possibility of earn-ing twice the amount from the combined Malampaya operation and SC72, if and when fully operational, would be a major motivation for the Philippines to remain committed to its territorial claims in the South China Sea. The Philippines’ routine response of increased patrols in the area and diplomatic broadsides against China are certainly not aimed at threatening the Chinese, but are largely symbolic moves . Indeed, the South China Sea’s oil and gas potential is, and will likely continue to be, the greatest incentive for countries in the region to assert their territorial and sovereignty claims. Exploring and devel-oping the area’s petroleum resources will not only be beneficial to the Asian region, but will also benefit oil-importing coun-tries worldwide. At the same time, how-ever, the overarching consequences of a deadly regional military conflict remain the strongest disincentive for the involved countries – including China and the US – to gamble with the projected economic and commercial gains. Past and recent developments in the South China Sea have underscored the fact that a protracted multilateral territo-rial dispute would be the foremost stum-bling block in efforts to commercially develop the oil and gas reserves in the re-gion. The periodic tension also indicates that oil and gas firms with current or pro-jected interests within or near the South China Sea will continue to face serious and costly risks to their assets and opera-tions in the region. And while the likelihood of a high-level military conflict in the region re-mains remote in the foreseeable future, Chinese pressure tactics have shown that the risks faced by non-state oil and gas in-vestors in the South China Sea will clearly not be limited to armed conflict in the region. ■


Oil & Gas Resources

High-risk seas for oil & gas hunters



Philippines ‘a core area’ for Otto

Oil & Gas Resources

Otto Energy hopes to drill up to six exploration wells in three service contract areas of the

Philippines over the next four or five years. It says it now rates the coun-try as a “core focus area for growth” of the company. Otto’s forward planning for its Pala-wan and Visayas exploration includes the drilling of two deep water wells in Service Contract 55 off Palawan. It be-lieves prospects within SC 55 contain an estimated 1.8 trillion cubic feet of gas and 567 million barrels of oil. Two exploration wells are targeted for drilling within SC 51 in the Visayan Basin between late 2012 and mid-2014. This is despite its unsuccessful well there, Duhat 1. Apart from the Duhat prospect, the 332,000-hectare SC 51 includes the Argao and Bahay prospects, among nine other leads which may hold a combined 263 million barrels of oil. SC 69 is the focus of another two wells tentatively programmed from 2013 to early 2015. Otto says a recently completed 3D seismic survey over the Camotes Sea will allow the SC 69 con-sortium to identify drillable prospects there, with a chance of over 700 mil-lion barrels of oil. SC 69 covers an area of 5,280 square kilometers in the central Visayan Ba-sin where the data acquired from a 2D seismic survey last year confirmed the presence of two sizeable reef structures. These structures, Lampos and Lampos South, sit adjacent to the Calamangan Trough. Current “success case” estimates of oil initially in place in the combined structures range between 22 million and 713 million barrels, with a mean in-place volume of 290 million barrels.The Lam-pos and Lampos South prospects are said to indicate seismic character consis-tent with the development of carbonate reef complexes similar to those that host the Malampaya gas field. In the meantime, Otto Energy is taking control of Galoc Production for US$18.7 million, thus hiking its stake in the wider consortium in charge of the Palawan oil field. Otto has sealed a deal with Vitol Group to acquire the remain-

ing 68.82 percent stake in Galoc Produc-tion. It already owned 31.38 percent of the Galoc Production, which shared extraction facilities at the oil field with Nido Petroleum, Oriental Petroleum & Minerals, Linapacan Oil Gas & Power, Philodrill, Forum Energy, Alcorn Gold and PetroEnergy Resources. The deal thus raises Otto’s stake in the Galoc consortium from an indirect 18.78 percent to direct 33 percent under Service Contract 14C, the company said.“Galoc is a proven producing asset that we know well and that complements our high potential Philippines exploration portfolio. The revenue from Galoc con-tinues to provide a valuable source of funds for reinvestment and this is set to grow as we move towards a Phase 2 expansion of the project,” said a state-ment from Galoc. •Ottoisupgradingthemooringandriser system for the floating production, storage and offloading (FPSO) vessel Rubicon Intrepid operating at the Galoc field in the Palawan Basin. The new turret mooring system is being deployed to help increase the reli-ability and uptime of the platform which the company believes is “critical for the progression of the second phase of devel-opment on the oil field.” The upgraded FPSO is scheduled to return to the Galoc field by the close of 2011. “The upgrade of the FPSO system will substantially improve the uptime of the Galoc field, which is an important

revenue-generator for Otto,” said Mat-thew Allen, Otto’s acting chief executive officer. “In addition, it provides a vital platform from which to embark on our planned Phase 2 development of the field, which we expect to approve early next year.” Located in an area frequently threatened by cyclones, the Galoc field was developed with an FPSO that is able to de-moor and move out of the way of oncoming storms. Since start-ing production in October 2008, the Galoc oil field has experienced signifi-cant downtime due to issues with the mooring system. •TheconsortiumledbyBHPBil-liton which has the SC 55 exploration area off Palawan plans to start deep water drilling there with an exploration well scheduled for August 2011. This fourth sub-phase of the exploration is aimed at testing prospects of the con-tract area field where initial estimates are based on 1.8 trillion cubic feet of gas and 567 million barrels of oil. BHP Billiton has a 60 percent stake in the consortium and is designated op-erator of the contract area. Trans-Asia Oil and Energy Development has a 6.82 percent interest and Otto Energy a 33.18 percent stake. BHP Billiton acquired its 60 percent early this year with the acquisition effective following joint venture and regulatory approv-als and upon reimbursement of Otto’s already-incurred costs. ■

Otto is upgrading the mooring and riser system for its floating production, storage and offloading vessel Rubicon Intrepid at the Galoc field.



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Oil & Gas Resources

The future of joint activities by oil and gas major Shell and the Aus-tralia-based companies Nido Pe-

troleum and Kairiki Energy is in jeop-ardy following poor results at projects off Palawan. A flurry of activity in re-cent few weeks has produced little but cautiously optimistic announcements to stakeholders by the companies. Nido says it remains confident in its Philippine exploration portfolio and vows to pursue its five-well drill-ing program even after the failure of its first well, Gindara-1 in Service Con-tract area 54B where its partners are Shell and Kairiki. Kairiki is looking for farm-in part-ners for its SC 54A. It says “a selected farminee party … has completed tech-nical due diligence and is in the pro-cess of working through its legal due diligence.” A condition of the farm-in negotiations requires the identity of the party and the terms of the deal to remain confidential until it is finalized. If it goes ahead, this transaction would result in Kairiki reducing its interest in SC 54A from 30.1 percent to 15.05 per-cent in return for a funded work pro-gram involving drilling. The problems in turn ripple across to SC 55, where BHP Billiton recently took over operations with a participating interest of up to 60 per-cent. Its main partners there are Otto Energy and Trans-Asia Oil and En-ergy Development. Shell has been maintaining its usual corporate si-lence on developments in the ser-vice contract areas it is involved in off Palawan. In associated moves, Nido says discussions are continuing for possible farm-out agreements under SC 58 and SC 63, both 50 percent controlled by the company. These two are included in the four service contract areas where Nido is undertaking its current five-well drill-ing program. After drilling an exploration well within the Gindara site in SC 54B, the company is now focusing on the second well to be drilled within SC 63, sched-uled for December 2011 to March 2012.

Doubts hang over Palawan partnerships“We are also continuing with our work on SC 58, particularly in the northern sector of this deepwater block where a number of interesting new structural leads have been identified,” Nido said in a recent disclosure. Overall, Nido says it remains con-fident in its Philippine exploration portfolio and promises to pursue its five-well drilling program, even after failure with its first well, Gindara-1. “We remain confident in and commit-ted to the pursuit of our strategy in the Philippines and our drilling pro-gram in the Northwest Palawan Basin. Historical exploration success rates in the Palawan have been very high, with 79 percent of the 77 exploration wells drilled to date having encountered at least hydrocarbon shows,” Nido’s dis-closure says. Gindara 1 — which was supposed to give the joint venture an exposure to as much as 1 billion barrels unrisked oil in place — was the first exploration well to be drilled under the company’s five-well program, originally estimated at allowing Nido and its partners ac-cess to over 11 billion barrels of poten-tial oil resources. Apart from the Gindara prospect, the company also plans to drill in two sites within SC 63, in the Aboabo dis-

covery and the Kalapato site, which are estimated to hold 222 million barrels and 239 million barrels of oil, respec-tively; SC 58, which includes the Baly-ena prospect (SC 58); and SC 54A, for the Lawaan discovery. Nido said earlier Shell Petroleum Exploration, operator of the Malampa-ya gas facility, had agreed to shoulder 75 percent of the Gindara-1 explora-tion well cost up to a maximum of $24 million and pay $2.5 million for past seismic costs. The government’s Department of Energy has approved Nido’s applica-tion for a 12-month extension to the current sub-phase six of SC 54A and 54B until August next year. Nido says the extension gives it more time to in-tegrate the results of the 3D reprocess-ing being undertaken in SC 54A, Yakal, Tindalo and North Nido pinnacle reef. Nido is operator of both SC 54A and SC 54B with a 42.4 percent and 44 percent interest in each block re-spectively. In SC 54A the company is partnered by Kairiki Energy with a 30.1 pertcent interest, Trafigura Ven-tures with a 15 percent interest and TG World with 12.5 percent. In SC 54B, Nido is partnered by Shell with a 45 percent interest and Kairiki with the remaining 22 percent. ■

The Philippine government’s Department of Energy has con-firmed a deal to expand produc-

tion capacity at the Malampaya natural gas project off Palawan. The expansion will entail additional investment of US$1.5 billion by the consortium that operates the gas field. It comprises a new platform at an estimated cost of $1 billion that has fa-cilities to inject pressure into the gas reservoir to boost output and a $500 million horizontal drill to determine the extent of reserves at the nearby Camago oil field. The consortium is led by Shell Philippines Exploration and Chev-

ron Philippines, which each own a 45 percent stake in the Malampaya project. Government-owned PNOC Exploration Corporation owns the remaining 10 percent. The consor-tium has the right to operate the project until 2026, although the De-partment of Energy has made it clear the agreement may be extended in consideration of the new invest-ments. The Malampaya field contains an estimated 2.7 trillion cubic feet of nat-ural gas and 85 million barrels of con-densate – gas, oil, naphtha, and other relatively light hydrocarbons – about 3,000 meters below sea level. ■

Malampaya gas expansion confirmed



Oil & Gas Resources

Despite tension between China and the Philippines over the disputed Spratly Islands in the South China

Sea, Philex Mining’s petroleum arm may raise more funds for its work program in the Recto Bank area being undertaken by Forum Energy. Manuel Pangilinan, chairman of Philex Mining, told media the company may par-tially fund the drilling of two wells – one appraisal and one exploratory – in the next sub-phase of Service Contract 72, estimated at US$86 million through to 2013. So far, United Kingdom-based Forum Energy is the only service contractor con-ducting exploration on the Recto Bank. Past surveys in the area, including 3D seismic data across 248 square kilometers in 2006, placed the potential reserves at 3.4 trillion cubic feet of gas in the Sampaguita discovery in the Recto Bank basin. "The seismic survey covered a limited area of the total hectarage," Pangilan said, adding that he believes SC 72's potential reserves may merit its commercial development. Philex Mining holds 64.45 percent of the equity in Forum through its interests

in FEC Resources and Philex Petroleum. Forum has a 70 percent stake in the SC 72 license, covering an estimated 8,800 square kilometers. Since Forum owns 70 percent of the concession, Pangilinan said, the funding would involve two steps – with "Philex Min-ing funding Philex Petroleum and Philex Petroleum funding Forum Energy for its share of the work program." ■

Pitkin Petroleum is acquiring a 70 percent participating interest in Service Contract 6A off northwest

Palawan. Farming out companies involved in the transaction are Trans-Asia Oil and Energy Development, PetroEnergy Re-sources, Alcorn Gold Resources, Philo-drill, Philex Petroleum, Forum Energy and Anglo-Philippine Holding. In separate disclosures to the Philip-pine Stock Exchange, the companies con-firmed that in exchange for the 70 percent stake in the petroleum block, the United Kingdom-based Pitkin will acquire at its own cost, 500 square kilometers of 3D seis-mic data, worth US$5 million. Pitkin, should it exercise its options, is expected to drill up to two exploration wells within the Octon block, still at no cost to the farming out parties.

According to the Philodrill website, the consortium operating the Octon block plans to spend about $546,000 for its work program this year alone. This involves reprocessing of 3D data to firm up vari-ous exploration prospects including West Malajon, Barselisa and Salvacion. “The whole reprocessing program will be… (the company’s) contractual com-mitment for calendar year 2011 while interpretation and evaluation of the reprocessed data will be the contem-plated work program for calendar year 2012,” Philodrill said. Early estimates put the recoverable natural gas reserves in the Octon block at about three billion cubic feet. Pitkin, which is 18.46 percent owned by Philex through wholly-owned unit

Philex Petroleum, is an international up-stream oil and gas company with interests in the Pacific Rim region. Pitkin owns a stake in Service Con-tract 14C, known as the West Linapacan Block, in the offshore NW Palawan Ba-sin. “This is one of the older exploration blocks. It is under a 15-year extension. We plan to drill new wells but we still don’t know [how many]. We still have to study it,” said Arturo Morado, Pitkin’s managing director and chief executive. He said Pitkin plans to update existing seismic studies in the block, which were last reviewed in the 1990s, before proceeding with further drill-ing activities. Morado expects drilling to begin in 2013 after completion of the seismic studies next year. ■

Pitkin raises its bet on Palawan

Philex: Recto Bankis worth a gamble

The government is hoping for as much as US$7.5 billion in in-vestments in 15 new oil and gas

exploration areas being offered in the fourth Philippine Energy Contracting Round. Department of Energy Secre-tary Jose Rene Almendras said at the recent launch of PECR4 the department is eyeing an investment of about $500 million for each of the service contracts to be auctioned off. The PECR 4 offering comprises three onshore and 12 offshore blocks with a total area of more than 10 million hectares located in Northwest Palawan, East Palawan and the Sulu Sea basins. This year’s contracting round is the big-gest yet offered by the Philippines.Almendras expects to award the SCs early next year after allowing the pro-spective investors time to conduct due diligence studies. He said the department has been “overwhelmed” by the response of po-tential investors, most of whom are interested particularly in areas around Northwest Palawan. ■

Interest in newlicenses is‘overwhelming’

Philex chairman Manuel Pangilinan believes the Recto Bank’s potential gas reserves are worth spending money on a closer look.



Stephan Schmitz (left) of Aboitiz Projects, Crown Relocations’ Ryan Maclang, Miguel Delgado of iPrint and Maccaferri Philippines’ Thomas Wintermahr.

European Nickel’s Ian Moller (left), Roderick Salazar (center) of Fortun Narvasa Salazar Law Offices and CGA Mining’s Johan Raadsma.

Roy Antonio (left) of Sagitarrius Mines gave a full copy of SMI’s 3,000-page study of its controversial Tampakan project to Australian & New Zealand Chamber of Commerce president John Casey of Blue Cross Insurance.

Resources Events

Philippine Mine Safety and Environment Association president Louie Sarmiento of Orica (left) and George Yap of Monark Equipment.

Chamber of Mines of the Philippines chairman Artemio Disini.

The Philippine mining sector has been turning out in force to watch one-time defenders change tactics

and take the offensive against the anti-mining lobby groups. Recent weeks have seen two major occasions – Nickel Asia president Gerard Brimo as guest speaker at a Philippine Mining Club lunch, and then Sagitarrius Mines corporate affairs manager Roy An-tonio who spoke at an evening event of the Australian and New Zealand Cham-ber of Commerce. Brimo came out on the offensive with a step-by-step rebuttal and counter- attack against anti-miner lobby group leader Gina Lopez. SMI has been taking a different tack, devoting substantial time and resources to a major study showing the beneficial effects of its controversial Tampakan copper-gold project and how it is safeguarding the interests of the lo-cal community. Both speakers drew big crowds who mixed the usual networking with some serious business. ■

Miners watch defenders fight back

GXD Supplies’ Jennifer Raposas and Derek Ackary (center) with Rob Gregory of European Nickel.

Philippine Resources Journal sales manager Cora Laureano and Alan Coid of Filglen & Citicon Mining.

ADEN Services’ David Ringholt (left) and Patrice Patrice Baudouin (center) with Philippine Mining Club organizer Kevin Lewis.

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Mineral Resources

John Felderhof was once named “man of the year” by the Canadian mining industry for discovering what once

looked like one of the biggest gold deposits in the world, but that would later turn out to be a fake. Now, 14 years later, former Bre-X Minerals geologist John Felderhof is running a small store and restaurant in the Philippines. Felderhof was back in the headlines in recent weeks, testifying in another after-math of the huge scandal which involved billions of dollars in investors’ money be-ing lost, the mysterious death of a Filipino geologist involved in the affair, and an overhaul of Canadian mining and stock exchange laws. Felderhof was the public face of the scandal. As Bre-X’s former chief geolo-gist, he faced an onslaught of lawsuits and condemnation from shareholders. The en-suing legal battles have dragged on ever since, leaving him basically broke. In 2000, Felderhof was prosecuted for allegedly making illegal insider trades and distributing false information in the Bre-X scandal. He was acquitted in 2007 and he remains the only former Bre-X official ever to stand trial over the company’s collapse, which wiped out $6.1 billion in share-holder value. Now 71 years old, Felderhof has been back in Toronto, giving evidence in a hear-ing room on behalf of well-known Cana-dian lawyer Joe Groia, who secured Fel-derhof’s acquittal on securities charges in the Bre-X affair. Groia was appearing before a three-member panel of the Law Society of Up-per Canada. He faces allegations of profes-sional misconduct during the bitter Bre-X trial, in which he clashed with Ontario Se-curities Commission prosecutors about the production of key documents. Dutch-born Felderhof, who moved to Nova Scotia as a boy with his family, re-called his long career as a geologist work-ing in Africa, Papua New Guinea and Indo-nesia, before joining Calgary-based Bre-X in 1992. Asked about the “Man of the Year Award” he received from the Prospectors

and Developers Association of Canada in 1997, just before Bre-X’s collapse, Felder-hof said: “I’ve still got it. They asked me to return it. I refused.” He told the panel he has not worked as a geologist since resign-ing from Bre-X. Felderhof became rich by selling his Bre-X stock for $40 million in 1996, be-fore the company collapsed. But $15 mil-lion dollars in legal fees and a bitter 2001 divorce settlement have left him broke, though each of his three children have $1 million set aside in a trust. By then, Fel-derhof owned properties in the Cayman Islands and the United States. His assets were frozen and targeted by more than a dozen lawsuits. He says he is now penniless but happy and living “very simply” in the Philippines. He moved there six years ago to the small village where he, his Filipino wife and her four children run a neighborhood shop and restaurant where they serve breakfast and lunch. “Five tables on the veranda,” he says. The menu includes fresh vegetables grown in the garden. They open the bar in the afternoon. Bre-X Minerals was founded by Da-vid Walsh in 1989 as a subsidiary of Bresea Resources, but did not make a significant profit before 1993, when Walsh followed the advice of Felderhof, his geologist, and bought a property in the middle of a jungle near the Busang River in Indonesia. The project manager, Filipino geolo-gist Michael de Guzman, initially estimat-ed the site as having approximately two million ounces. The estimate of the site’s worth increased over time – in 1995 it was 30 million ounces, in 1996 60 million ounc-es, and finally, in 1997, 70 million ounces. Bre-X’s stock price soared to a peak of $4.4 billion, about $6 billion in current terms adjusted for inflation. Some other mineral companies, in-cluding Placer Dome, organized failed takeovers, but the Indonesian government of then-president Suharto also got involved. Stating that a small company like Bre-X could not exploit the site by itself, the In-donesians suggested that Bre-X share the site with the large Canadian mining firm

Barrick Gold, in association with Suharto’s daughter Siti Hardiyanti Rukmana. Bre-X hired Suharto’s son Sigit Hard-jojudanto to handle their side of the affair. Bob Hasan, another Suharto acquaintance, negotiated a deal whereby Bre-X would have a 45 percent share, the American firm Freeport-McMoRan Copper and Gold would run the mine, and Hasan would get a cut as well. Bre-X would have the land rights for 30 years. The deal was an-nounced February 17, 1997 and Freeport-McMoRan began their initial due dili-gence evaluation of the site. The fraud began to unravel rapidly. On March 19, 1997, Bre-X geologist Mi-chael de Guzman died falling from a heli-copter in Indonesia. His body was found four days later in the jungle, mostly eaten by animals and identified only from molars and a thumbprint – although subsequent reports questioned whether de Guzman might still be alive. On March 26, 1997, Freeport-Mc-MoRan announced that its own due dili-gence core samples showed “insignificant amounts of gold.” A frenzied sell-off of shares ensued and Suharto postponed signing the mining deal. Bre-X demanded more reviews and commissioned a review of the test drilling. Finally a third party company, Strath-cona Minerals, was brought in to make its own analysis. It published its results on May 4, 1997: the Busang ore samples had been salted with gold dust. The lab’s tests showed that gold in one hole had been shaved off gold jewelry though it has never been proved at what stage this gold had been added to those samples. ■

The public face of the Bre-X scandal‘broke but happy’ in the Philippines

John Felderhof, who won fame, fortune and then infamy in the Bre-X mining scandal, is now penniless but enjoying life in the Philippines.



Mineral Resources

OceanaGold believes it has overcome obstacles blocking its long-delayed Didipio mine

project and is now on course to start production of copper in concentrate in 2013 at an annual rate of 18,000 tons. Gold production from the mine will ramp up to 100,000 ounces a year by the end of 2014, the company forecasts. OceanaGold's chief executive Mi-chael Wilkes said compensation agree-ments have been reached with local landowners and a trust fund estab-lished, with sponsorship of education-al scholarships. Earlier this year, OceanaGold said it had upheld "ethical, responsible and sustainable" mining, in reaction to a recommendation by the government's human rights body that the govern-ment take back the company's mining rights for violating rights of indigenous people. The company said at the time it was concerned the human rights agen-cy did not formally notify the company of its recommendation before the re-port was made public. Wilkes said strong commodities markets are now working in favor of the project. "What really helps us in the current market is our copper produc-tion as it means we are getting a large portion of our revenue from copper," he said. OceanaGold currently produces in excess of a quarter of a million ounces of gold a year from two mines in New Zealand and is looking to expand into South-east Asia. The company last year raised about $115 million to finance develop-ment of the Didipio mine in Nueva Viz-caya, which was suspended in Decem-ber 2009 amidst rising cost estimates. As of May 31, the company held about $173 million in cash - enough to com-plete construction of the project, ac-cording to Wilkes, who helped develop Laos' first copper and gold mine and has also run mining projects in Austra-lia and Papua New Guinea. "Didipio shows strong economics with cash costs for the first six years averaging negative $79 an ounce, net of by-product copper credits using a $3

per pound copper price," Wilkes said. Enough exploration ground exists around the Didipio site to potentially lift annual output to 200,000 ounces of gold and 30,000 tons of copper, Wilkes estimates. The total capital cost for the proj-ect is $185 million, with approximately $12 million spent as of May 31 this year, leaving $173 million still to be spent to complete the project. Construction will take place over the next 15-18 months. Wilkes said the new reserve model for the project shows a 70 percent in-crease in the reserve tonnage to 50.7 million tons, against 29.7 million tons in the earlier design. This results in a 19 percent increase in gold reserves and a 35 percent increase in copper reserves utilizing a price of $950 per ounce of gold and $2.85 per pound of copper. The project shows an internal rate of return of 48 percent at spot metals prices. The mine life has been shortened to 16 years with the open pit operating throughout and the underground op-eration expected to commence produc-tion in 2020. OceanaGold believes that with the larger open pit design, total material moved over the life of the mine will be 199 metric tons, of which 44.7 metric tons will be ore, resulting in a life of mine strip ratio of 3.45:1. Additional inferred resources amounting to 15 million tons fall within the currently designed open pit. These could potentially add 200,000 ounces of gold and 20,000 tons of copper to the mine plan, according to OceanaGold. The open pit mining at Didipio will be undertaken by a mining contractor and comprise six stages over the next 14 years, taking the open pit to 270 me-ters below the valley floor. "The increased mining rates and larger open pit will allow for quicker access to the higher grade gold than would have been mined via under-ground methods later in the mine life," said Wilkes. "Importantly, the new open pit design allows for high feed rates to the process plant to be sus-tained as well as greater leverage to

strong metal prices by converting more of the resource into reserves." Wilkes said underground min-ing is also expected to take place for at least six years and will run concur-rently with the open pit operation. Meanwhile, OceanaGold has ap-pointed a new chief financial officer. Mark Chamberlain has over 30 years experience covering a broad range of financial disciplines with a particular focus on treasury, capital markets, risk management and mergers and acquisi-tions. Previously with Newcrest Mining, he was general manager - treasury and financial analysis responsible for capital management and funding, leasing trans-actions, financial risks management and project analysis. He also held positions as corporate lawyer and assistant trea-surer at Western Mining. ■

OceanaGold’s Didipio on the way

Macro Asia plans to be back in business at its Infanta nick-el mine project at Brooke’s

Points in Palawan in the second quarter of 2012. It is currently awaiting final government approval and rehabilitat-ing the site. The Infanta surface mine was oper-ating in the 1970s, shipping nickel ore to Japan. It is on a 1,114-hectare site.Macro Asia was granted an explora-tion permit to reevaluate the old mine in 2005 and says it has spent about 240 million on exploration there. A quick start to production is possi-ble at Infanta because roads are already in place, as is a stockpile of ore accumu-lated from previous operations. A company spokesman said Macro Asia already has the consent of the mine’s host indigenous communi-ties and now awaits clearance from the National Commission on Indig-enous People. ■

Morenickel soon in Palawan



Mineral Resources

High demand and soaring prices for gold have pushed up profit – and optimism – at Medusa Min-

ing. Full-year profit for 2010-2011 reached US$110 million, up from $65.8 million the previous year. Last fiscal year the company pro-duced 101,474 ounces of gold, representing a 13 percent increase on the year before. Revenue jumped 58 percent to a record $149.6 million after the company sold 96,217 ounces of gold at an average price of US$1,371 per ounce. The company’s production guidance for the forthcoming fiscal year is between 100,000 to 110,000 ounces, although expects costs to rise from $189 per ounce to $200 due to the costs of development, particu-larly at its Co-O mine. Medusa's underlying strategy is to be-come a mid-tier, 300,000 to 400,000 ounce per year, low-cost gold producer. The company has completed the ex-pansion of its high grade Co-O Mine op-erations to a production level of 100,000 annualized ounces, and is currently con-ducting near mine exploration to assess the possibilities of further expansion to 200,000 ounces per annum. It has updated its Joint Ore Reserves Committee compliant reserve estimate for the Co-O mine. At June 30, probable re-serves for the Co-O mine stood at 502,000

ounces contained in 1.5 million tonnes at 10.1 grams per tonne. The company said underground drill-ing by its Philippine operating company, Philsaga Mining, has confirmed new veins at the Co-O Mine surface. Medusa non-ex-ecutive chairman Geoff Davis commented: "This is a bumper crop of new results from the Co-O Mine totaling over 200 individual vein intersections, and the most ever re-ported for a quarter's drilling to date.” The update coincides with Australia-based Medusa’s announcement that it is delisting from the Toronto Stock Exchange and undertaking a restructuring of its man-agement – including the standing down of chairman Peter Jones. Geoff Davis has stepped down as managing director but has been re-appointed non-executive chair-man - replacing Jones, who was appointed in July last year. Peter Hepburn-Brown replaces Davis as managing director of the company while Roy Daniel retires as finance director and joint company secretary but continues in his role of chief financial officer. Medusa attributed its voluntary del-isting from the TSX to limited trading volume on the TSX compared to the other two exchanges and the cost of maintaining the listing as key factors. Its stock continues to trade on the ASX and the LSE. ■

Restructuring andprofit for Medusa

This 3D model of the Co-O vein system outlines the encouraging “bumper crop” of new veins confirmed by drilling, with over 200 individual vein intersections.

Atlas Consolidated Mining and Development well over doubled its earnings in the first half of

2011 from a year earlier, with the help of higher metal prices and the yield from its Carmen Copper unit. Net income at-tributable to parent company reached 1.075 billion pesos in the January-June half-year, 133 percent higher than the 460 million pesos it reported in the same period of 2010. Carmen Copper, which operates the Toledo mine in Cebu, reported a net income of 2.086 billion pesos during the period, compared with only 1.919 billion pesos a year earlier. Atlas plans to spend US$200 million on increasing Carmen Copper’s output to 100,000 tons per day in three years from the current 42,000 tons. At 100,000 tons daily, the operating life of the mine is estimated at 25 years. Carmen Copper shipped 34.7 million pounds of cop-per in the 2011 first half, 30 percent more than last year, at average price of $9,181 per ton. In June, Atlas raised US$390 million through a four-phase equity and debt is-sue that included the sale of 18 percent of the company to the SM Investments group. Atlas used the proceeds to fully acquire Carmen Copper by acquiring the 45.54 percent stake held by its Singapore-based partners in the copper miner. At-las began recognizing Carmen Copper as a wholly owned subsidiary in late July. Atlas also owns part of Berong Nickel, which resumed nickel mining operations last May. The solid performance is attracting close attention from SM Investments. It bought a 17.9 per cent stake in Atlas and executives there are known to be looking at boosting this stake. SM purchase of 316.2 million shares in Atlas through a private placement for $142.2 million gives it two seats on the Atlas board and signals its entry into the mining business. ■

Big boost for Atlas and Carmen Copper



Mineral Resources

CGA Mining continues to deliver from its Masbate Gold Project, with the company pouring over

190,000 gold ounces during financial year 2010-2011, a 27 percent increase of the previous corresponding period. Spot gold averaged around US$1400 an ounce dur-ing the one-year period, providing gross revenue of $270 million. The production was achieved from a throughput level of almost 6.2 million dry tonnes, a 37 percent boost over finan-cial year 2010. The anticipated upside for Masbate is that these results are likely to be just the beginning, with the company allocating a $20 million exploration budget for fi-nancial year 2012. CGA plans to undertake an extensive 144,000 meters of reverse circulation drill-ing, and 28,000 meters of diamond drill-ing, principally focused on converting inferred resources to reserves. The com-pany also aims to identify new reserves and resources from both extensions to ex-

isting pits and a number of new targets. However, CGA said production for the September 2011 quarter will be im-pacted as mechanical repairs are carried out on the SAG mill. It said it has extensive insurance policies which are available for both re-pairs and loss of profits claims, subject to normal deductibles. After a crack in one

of the segments in the discharge end of the SAG mill was identified earlier in the week, the mill was shut down for disas-sembling and repairs. CGA estimates these repairs will cost in the order of $500,000 million and could take up to three months to complete. Full capacity of the plant will therefore be re-stored during the next quarter. ■

Mill hitch mars Masbate outlook

The usually busy Masbate Gold Project site has been quieter than usual in recent weeks, as mechanical repairs are carried out on the SAG mill.



Mineral Resources

More gold in the Padcal mountainsAfter new evaluation of reserves,

Philex Mining has extended the mine life projection for its Padcal

copper-gold mine in Benguet for another three years, through to end-2020. As at June 30 year, the mine’s total re-sources are estimated at 147 million tons. This means 61.4 million in additional tons of ore have the possibility of being converted into reserves after 2020, raising the possibil-ity of even further extension of the mine life depending on costs and metal prices then. The mine has already been operat-ing for 53 years. In that time, a total of 354 million tons of ore have been mined – compared an original estimate of re-serves 18 million tons. Philex is continuing exploration of surrounding areas around Padcal. It has more than 15,000 hectares of open ground with several areas programmed for drilling to drilling. A discovery of new ore body in the vicinity of the existing mine could fur-ther extend its operating life.

“We are certainly pleased with these recent favorable developments,” said Philex chairman and chief executive Manuel Pan-gilinan. “The rise in the price of gold will further boost Philex’s earnings from this metal. The extension of the Padcal mine’s life will result in the company having more years of revenues coming from two operat-ing mines when the Silangan mine comes into production sometime in 2015.” Philex reported a record net income of 3.22 billion pesos in the first half of 2011, 233 percent higher than the 965 million pe-sos it made in the same period of 2010. Meanwhile, Philex is exploring joint venture possibilities for development of its US$1 billion Silangan project compris-ing the Boyongan and Bayugo copper-gold prospects in Surigao del Norte. It believes Silangan contains five billion pounds of copper and nine million ounces of gold. The project is adjacent to the Ka-layaan copper-gold prospect in the south-ern Mindanao region which Philex plans

to explore with partner Manila Mining. “In the medium term, we will con-tinue to advance the Silangan project and in due course, the Kalayaan project, to put them into commercial operation at the ear-liest possible time,” Pangilinan said. Philex says its latest findings are con-tained in an independent mineral resource estimate by SRK Perth, Australia, for the Silangan project, which is managed by its wholly owned unit Silangan Mindanao Min-ing. The study is based on results from more than 80,000 meters of drilling by Philex. ■

Philex’s Padcal mill operation benefited from the installation of WEMCO Smart flotation cells which increased flotation capacity and retention time, contributing to increased metal recovery.


Philippine Resources 35

Renewable Resources

Parts of Asia, particularly the Phil-ippines and Indonesia, are power-houses in geothermal energy de-

velopment. They are currently the world’s second and third top geothermal electric-ity producers respectively, according to the International Energy Agency. Indonesia, estimated to have about 29,000 megawatts of geothermal generat-ing potential with an installed capacity of 1,189 MW, has the largest potential for geothermal electricity in the world. The Indonesian government has set an ambi-tious goal of 3,977 MW of new geothermal installation by 2014 – although the regu-lations that will impact on private sector geothermal power projects, as well as a decentralized structure for the tender process, are new and untested. The Philippine geothermal electric-ity sector will not be outdone. Having an installed capacity of 1,936 MW in 2010, according to data from the Department of Energy (DoE), the country aims to be-come the number one geothermal energy producer in the world with an additional 1,475 MW capacity, overtaking the United States in the process. The Philippine government has initi-ated major structural reforms in the geo-thermal sector. It has privatized National Power Corporation’s geothermal generat-ing assets such as the Makban steamfield and power plants in Laguna/Batangas, Tiwi steamfield and power plants in Al-bay, Palipinon I and II power plants in Negros Oriental and Tongonan I power plant in Leyte. The Unified Leyte geo-thermal plants and the Mount Apo 1 and 2 plants will likewise be put on the auction block. The government divested its interest in PNOC-Energy Development Corpora-tion, the national geothermal develop-ment company, to the First Gen group of the Lopezes in late 2007, paving the way for the entry of new players in the geother-mal industry. EDC, the country’s largest geothermal producer, is reportedly look-ing at concessions in Chile and exporting its expertise to other countries. The DoE promises the Maibarara geothermal proj-

ect of PetroEnergy Resources will add 20 MW to the Luzon grid by 2013. The Renewable Energy Act of 2008 established an open and competitive se-lection process for geothermal explora-tion projects. More importantly, geother-mal resources were defined under law as mineral resources, opening the way for the entry of 100 percent foreign-owned corporation in geothermal exploration, development and utilization. Fiscal incentives were enhanced when the geothermal industry was de-clared a priority investment sector that will regularly form part of the Philippine Investment Priority Plan. On the regulato-ry aspect, the environmental compliance certificate process was streamlined with the issuance devolved to the DENR-EMB regional offices. Local government share on geothermal development projects was institutionalized, which addresses opposi-tion by local government units. Aside from having low greenhouse gas emissions, geothermal plants provide base-load generation, are safe and reli-able because they are immune to weather effects and seasonal variations, and can be dispatched and used for meeting peak power demand. Direct geothermal use can also be tapped for the benefit of host communities with space heating, heated pools and other industrial and agricul-tural applications. High-temperature conventional geo-thermal energy remains the low-hanging fruit compared to new technologies like enhanced geothermal systems and low enthalpy. While some conventional re-sources are competitive to fossil fuel-fired power plants, emerging geothermal technologies that are currently more expensive than fossil fuel plants may be less expensive than solar and wind generated power. Some unconventional geothermal technologies have yet to be developed and tested commercially so public-private partnerships must foster private sector investments in new technologies. De-velopment of more competitive drilling technology must also be undertaken to bring the down the cost of exploration and development.

Government regulators must de-velop guidelines for the inclusion of non-conventional geothermal technologies in the setting up of feed-in tariff rates. The DoE should also develop publicly avail-able database protocols and tools for geo-thermal resource assessments to facilitate access by developers to risk capital. It is noteworthy that the Philippine Stock Exchange is relaxing the rules for renewable firms seeking to list on the local bourse to fund the development of their expansion, proposing new rules which were drafted with the DoE. Pres-ently, the exchange does not have a spe-cific and separate set of listing require-ments and reporting standards applicable for renewable energy companies similar to the Philippine Mineral Reporting Code for mining companies. While the Philippines still has to prove its worth as a petroleum producer and at the same time traverse the maze of its complicated mineral resource per-mitting process, the country can look for-ward with prudent optimism to the huge potential of its geothermal energy indus-try. Companies with energy-intensive mining operations can likewise consider geothermal plants as potential power sources since prospects are also located in highly mineralized areas and explo-ration is somewhat similar in nature. In the meantime, the geothermal regulatory framework should be long-term, trans-parent, predictable and independently administered. Financial incentives should be made available for new geothermal technologies while costs are not able to compete with fossil fuel plants. ■

Geothermal: Full steam aheadBy Fernando Penarroyo

Fernando “Ronnie” Penarroyo (pictured at the Geysers geothermal field in northern California) is managing partner of Puno and Penarroyo Law Offices (www.punopenalaw.com). He specializes in energy and resources law, project finance and business development.



Renewable Resources

Around the world on solar powerThe Philippines played host brief-

ly in late July to the world’s big-gest and most advanced solar

powered boat, the Turanor PlanetSolar. The craft stopped in Manila as her first Asian port of call in an ambitious bid to sail around the world powered by solar energy. The German-built, twin-hulled cat-amaran measures 31 meters by 15 me-ters and tips the scales at 85 tons. Over 537 square meters of photovoltaic solar panels provide up to 127 horsepower – enough to keep the craft moving at a constant speed of 14 kilometers per hour. PlanetSolar’s power center com-prises 38,000 solar cells that were made in the Philippines at the manufacturing plant of SunPower Corporation. The cells have an efficiency rating of 22 per-cent, the highest that is commercially available at the moment.

The plan is to become the first so-lar-powered boat to circumnavigate the planet, traveling 55,000 kilometers west-ward across the Atlantic and the Pacific and Indian oceans. Turanor SolarPower left Monaco in southern France on September 27, 2010. She has traveled 37,000 kilometers so far with the Philippines her 15th stop after the leg from Australia. She has already set two records – the fastest crossing of the Atlantic by a solar-powered vessel and the longest distance covered by a solar-powered electric vehicle. From Manila, the planned itiner-ary includes Hong Kong, Singapore, the Maldives, Mumbai and Abu Dhabi be-fore returning to Monaco in late April or early May 2012. The catamaran can accommodate up to 13 people — 6 crew members and up to seven passengers. Paying passengers are accepted with the fare depending on the sectors cov-

ered but “quite expensive,” according to a spokesman for the venture. “This is a milestone in the progress of solar mobility,” says German entre-preneur Immo Ströher, owner of Tura-nor PlanetSolar. “It is my vision to see solar power take its rightful place – not only on rooftops, but also on the roads, seas and in the skies of the future.” ■



Travel Resources

Aside from the fact that all Schen-gen area countries* require you to have a Schengen-approved travel

insurance policy before they issue you a visa, the reasons you need travel insurance is simple: when you travel, you deal with increasing uncertainty and your existing insurance often won’t cover all the risks involved. Once upon a time, travel insurance sold by a travel agent was identified as a negative, so much so that it could affect the sale of the travel package. Nowadays, it has become an essential part of travel – whether protection for your health or your belongings. Indeed, the offer of trav-el insurance by your travel agent should be mandatory and an integral part of an agent’s duty of care. Many European countries have reciprocal arrangements for medical emergencies and hospitalization. These arrangements also apply between some European countries and other developed economies around the world. These trav-elers don’t need extra medical insurance if they are covered under their national health scheme. For example, Australia has reciprocal arrangements with some Euro-pean countries. For everyone else, however, inter-national medical insurance containing emergency medical coverage is required as part of the visa requirements for Schengen countries. Without it, a visa will not be issued. The reason for this is obvious. Medi-cal emergencies must be paid for. Many visitors to Europe just don’t have the money to pay for the cost of emergency medical treatment. In the past, the gov-ernment of that country would pay the bills. Not any more. You might think you already have medical insurance. However, does your medical plan cover you overseas? If so, for how much? If basic emergency cover is provided, does it cover medical evacua-tion and repatriation to your home coun-try or to another country for treatment? Many plans do not. Further, while in many countries hos-pitals will provide emergency treatment,

many will not release you from the hos-pital until payment is received or guaran-teed by an insurer – just like here in the Philippines – although this is not enforce-able. You might say, “That’s okay. I have the cash to self-insure.” But what if it’s a major medical emergency? It’s not just the cost of medical care, it’s all the conse-quences of being hospitalized. Allied to emergency medical treat-ment is a range of related emergency as-sistance needs that travelers may encoun-ter. These could involve to emergency services such as evacuation, supervised repatriation to the Philippines, compas-sionate visits to join you, return of mortal remains, and so on. You should plan not just for their costs, but also for the arrangement of these services and the provision of information. Emergencies aren’t always medical in nature. Think of all the circumstances that you would regard as an emergency. What if you lose your travel documents? What if you get into trouble and need legal referral or information about your nearest consulate or embassy. What if you don’t speak the local language? You will need to call someone who can help you dur-ing times like these, and having good travel insurance will ensure you have the assistance you need. Protection against trip cancelation and interruption is also important. These can be costly if you buy an international fare or packaged tour. You may not be able to make your flight for one reason or the other – you or your family member may get sick, or unexpected civil unrest

may break out at your destination. You will have to cancel your trip and forfeit all or part of the money that you have pre-paid for your trip. The increased level of political uncertainty and un-rest outbreaks suggest that insurance should be a part of everyone’s travel preparation. Travel insurance will pay for the non-refundable portions of trip cancelations and interruptions. The loss of baggage and delays of delivery once it is found are major and potentially costly inconveniences to trav-elers. While these are not life- threatening, it is worth having some additional security over your possessions. The relatively low cost of this insur-ance is worth it to address the uncertainty of travel. Yes, there is fine print in all poli-cies so it is important that you look at the details. You should ask your travel advisor to suggest what type of policy matches your travel requirements and then ask your agent to explain the de-tail and any uncertainties. Your insurance provider will usually give you handy documents that you should take with you when you travel. Normally, you will receive a travel insurance certifi-cate or policy and an information booklet containing information about your policy, contact details, etc. ■

* Schengen area countries are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slo-vakia, Slovenia, Spain, Sweden, Switzerland.

Insurance is a must for travelers

Medical emergencies are unfortunate but they happen, and they can be expensive especially when they happen to travelers away from their home base.

Advice from Blue Cross



Supply Resources

Major expansion for supplies firm

GXD is moving the manufacture and storage of its bulk stocks of core trays to the Philippines.

A GXD in-house geologist surveys a drill hole using Reflex Flexit gyro equipment.

The new GXD site services division provides supply and installation of prefabricated camp site buildings and facilities.

The geological, exploration and drilling supplies specialist GXD is going through a major expan-

sion phase. The Manila-based company has opened several new divisions with the accompanying addition of more staff at all levels. Among the new divisions are down-hole services, in which the GXD in-house geologist and surveyor carry out down-hole surveys using equipment provided by the international specialist firm Reflex Instruments. It can survey the normal range of drill holes as well as deep holes with the Reflex Flexit high-temperature gyro. In addition to the new gyro systems, GXD has acquired the latest ALT Instruments acoustic tele-viewer tools, which generate an image of the borehole wall by transmitting ul-trasound pulses from a rotating sensor. GXD provides onsite teams to operate

the equipment in partnership with Re-sources Development Contractors of New Zealand, known as RDCL, which provides specialized professionals for the interpretation of the data generated. This follows the expansion and formalization of the partnership be-tween GXD and Reflex and AMC – part of the Imdex Group – for rep-resentation of AMC and Reflex prod-ucts, equipment and technical support in the Philippines. Another new division, GXD site services, provides supply and installa-tion of prefabricated site buildings and facilities. Part of this is a mobile core management facility which explora-tion companies can move from site to site. There is also an on-site supervisory service with a prefabricated site facility which speeds up work and can also be relocated if necessary.

Further expansion has come with the debut of GXD International and its GXD Manufacturing and Distribution unit. The company is currently building a facility, which will move the design and manufacture of core trays to the Philip-pines – these have been made in a GXD-leased facility in China until now. The company will now be able to produce core trays and hold larger bulk stocks for distribution in the Philippines, and will have additional manufacturing ca-pacity for export markets. Also under GXD Manufacturing and Distribution is a new storage and management facility where GXD clients can store their core samples in a secure location. This will provide onsite ser-vices for companies to access their core samples with private areas provided for




One of the leaders in light detec-tion and ranging technology for surveying and mapping, better

known as LiDAR, is focusing its expan-sion sights on the Philippine market, par-ticularly the resources sector. The McElhanney group, based in British Columbia, Canada, with a South-east Asian headquarters in Jakarta, is keen to widen its client base in the Philip-pines, particularly for LiDAR services – in addition to its established operations in Indonesia, New Guinea and Cambodia. “We have been interested in Philip-pines for many years and believe we can support Philippine growth by providing accurate, efficient and effective mapping related data for infrastructure, mining, for-estry, urban development, environmental and other development programs,” ex-plained McElhanney’s Francisco Gon-çalves during a recent visit to Manila. Gonçalves said McElhanney pro-vides comprehensive LiDAR mapping services, with the ability to acquire both LiDAR and digital aerial photography si-multaneously and process both data sets for delivery to clients. “Our Leica ALS60 LiDAR system can acquire up to eight points per square me-

ter and measure to a high degree of ac-curacy – up to 5,000 hectares per hour. At this stage, the LiDAR data is a collection of millions of precise x, y and z points. But through McElhanney’s classification, editing and attributing allocation of these ‘point clouds’, we become much more than an airborne survey service, we pro-vide LiDAR mapping.” Gonçalves said LiDAR is able to penetrate different types of vegetation to show ground elevation points. It is used by geologists to examine hidden rock features, by archeologists to search for historic sites, by civil engineers to plan infrastructure corridors, and by mining engineers for mine planning, site infra-structure and facilities. Mapping products such as 0.5 or 1.0 meter contours can be derived from high density LiDAR ground points and are vertically accurate up to 7 cm. Digital or-thophoto mosaic (15 cm – 50 cm ground pixel size) can be provided showing all that can be seen from the air. Using the LiDAR point data, 3D mapping features are extracted such as streams, rivers, lakes, roads and buildings. “Because we are also an engineering firm, we understand the end-use needs of

our clients and we are able to tailor our deliverables to provide the best use, best value and best quality,” Gonçalves said. McElhanney’s expansion coincides with the company’s 100th anniversary overall – it has managed projects in over 90 countries and worked in South-east Asia since the 1950s. The company’s first project in South-east Asia involved hydrographic surveys of the Mekong River which began in 1959. This was followed by the opening of a Sin-gapore office in the 1960s to support the oil and gas sector. In the 1980s, it started a multi-million-dollar Canadian surveying and mapping program in Sulawesi and Kalimantan, leading to the establishment of McElhanney Indonesia. ■

LiDAR specialist sets its sights on the Philippines

LiDAR mapping and surveying data is used by mining engineers for mine planning, site infrastructure and facilities.

Supply Resources



PHILIPPINE MINING CLUB FP

The mine equipment giant Metso is taking its expertise in steel linings for grinding mills into the global

marketplace. Enjoying success with the product in South America and after devel-oping the technology for new generations of liners, the company now has centers of technology for grinding mill linings in Aus-

tralia, Brazil, Chile, South Africa and the United States, in addition to its mill linings headquarters in Sweden. “These centers have the knowledge and expertise to meet regional needs. In addition, we also have the support of our process technology personnel, high-fideli-ty simulation software and all the technol-

ogy involved in the supplying of grinding mills,” said Metso prod-uct manager Ro-drigo Gouveia. The company has long been a leader in supply-ing rubber liners in South America, particularly in the mining sector in Brazil. “We can study the custom-

er’s operation and recommend the best lining to be applied in every particular mill,” Gouveia said. “The beginning of our work consists of collecting the infor-mation that will enable us to study the customer’s process as a whole, propos-ing lining that is optimized for the appli-cation. Once the lining is installed, we do all the work of monitoring which serves as the basis for new adjustments, bring-ing the cycle of continuous improvement full circle; not to mention our capacity to handle all the logistics and installation service. In the end, we succeed in lower-ing the customers total operating cost.” The Brazilian grinding mill market has seen major expansion and technologi-cal improvement since Vale inaugurated its Serra do Sossego plant in Pará in 2004. Then followed a large mill at Yamana Maracá, after which Metso moved to Chile – with liners for SAG and ball mills at one of the Anglo-American group’s plants – and other parts of South America. ■

Mill liner major is going global

Technical experts are on hand at Metso’s grinding mill lining regional offices to help customers with their individual requirements.

Supply Resources



Legal Resources

A nagging issue affecting small-scale mining in the Philippines has been settled in a recent opin-

ion by the Department of Justice. At is-sue was whether small-scale mining was governed solely by Republic Act No. 7076, known as the People’s Small-Scale Mining Act of 1991, or whether Presi-dential Decree No. 1899 (“Establishing small-scale mining as a new dimension in mineral development”) still applied in certain circumstances. Prior to issuance of the DoJ Opin-ion, some believed RA 7076 completely superseded PD 1899, while others as-sumed PD 1899 still applied to areas not declared as people’s small-scale mining areas under RA 7076 pursuant to De-partment of Environment and Natural Resources (DENR) memorandum No. 2007-07 which stated: “PD No. 1899 and RA No. 7076 shall continue to govern small-scale mining operations. For areas not declared as peoples’ small-scale min-ing areas under RA No. 7076, the perti-nent rules and regulations of PD No. 1899 shall apply.” The DoJ has now concluded that RA 7076 completely repealed PD 1899, but qualified this by stating that individu-als remain entitled to pursue small-scale mining, and that small-scale mining is not limited to qualified co-operatives only. The DoJ explained its conclu-sion as follows: •RA7076didnotexpresslyrepealPD 1899, as the former’s repealing clause merely provided that all laws, decrees, letters of instruction, executive orders, rules and regulations and other issu-ances which are in conflict or inconsis-tent with it, were accordingly repealed or modified. This, according to the DoJ, constituted an implied repeal which was not favored by the courts. Notwithstand-ing this, consideration of the two statues showed a clear legislative intent to repeal the earlier law, PD 1899. • TheDoJnoted thatRA7076en-compassed the entire subject matter of PD 1899, including defining small-scale mining, providing norms for identify-ing small-scale mining areas, enacting

rules for the grant of small-scale mining contracts and providing the rights and obligations of small-scale miners. In ad-dition, it said, RA 7076 went beyond the provisions of PD 1899 and replaced these with a set of norms for the regulation of small-scale mining, including estab-lishment of a people’s small-scale min-ing program to be administered by the DENR. According to the DoJ, the “very completeness of the latter law manifests the intention of the legislature to render the provisions of the older statute super-fluous and abrogated.” • A contrary interpretation (to al-low the continued issuance of small-scale mining permits under the old law), according to the DoJ, would defeat the purpose of RA 7076, which was to ra-tionalize viable small-scale mining activities, if some activities would be governed by the old law, while others would be governed by the new law. •Therewasnobasistoconcludethat, under RA 7076, small-scale min-ing could be pursued by qualified co-operatives only as its provisions refer to both individuals and cooperatives, as follows: The DoJ defined small-scale min-ers as Filipino citizens who, individu-ally or in the company of other Filipino citizens, voluntarily form a cooperative duly licensed by the DENR for the ex-traction of minerals. A small-scale min-ing contractor, the DoJ said, is an indi-vidual or a cooperative of small-scale miners, registered with the Securities and Exchange Commission or other ap-

propriate government agency, which has agreed with the state for the small-scale utilization of a plot of mineral land with-in a people’s small-scale mining area. The DoJ said all persons undertak-ing small-scale mining activities shall register as miners and may organize themselves into cooperatives in order to qualify for the awarding of a people’s small-scale mining contract. It said a small-scale mining contract may be awarded to small-scale miners who have voluntarily organized and reg-istered with the appropriate government agency as individual miner or coopera-tive provided that only one such contract may be awarded at any one time to a small-scale mining operation within one year from the date of award. •DoJsaidSection4(d)ofRA7076refers only to encouraging (as opposed to mandating) the formation of coopera-tives, while Section 8 states: “All persons undertaking small-scale mining activities shall register as miners with the board and may organize themselves into co-operatives in order to qualify for the awarding of a people’s small-scale mining contract.” In all instances, the DENR and the Mines and Geosciences Bureau have recourse against undesirable practices connected with small-scale mining, whether undertaken by individuals or cooperatives. The DENR may also issue the rules and regulations for implemen-tation of RA 7076, including guidelines on may be qualified to apply for small-scale mining licenses and contracts. ■

Defining the small-scale mining rulesBy Patricia A. O. Bunye

Patricia A. O. Bunye is a senior partner at Villaraza Cruz Marcelo & Angangco (website www.cvclaw.com). Her areas of specialization are mining and natural resources, power and energy and intellectual property (particularly IP commercialization). She may be reached at [email protected].



Blasting, an integral part of mining and quarrying operations, has seen a steady evolution in blasting tech-

nology through the years – from the use of safety fuses and ordinary blasting caps through to the introduction of the non-electric detonators widely used today. Orica has been one of the leaders in developing the latest technologies in the explosives industry. The company has developed products and services that ad-dress site-specific needs for mining, quar-rying and construction operation – for instance reducing vibration and air over-pressure, wall control, ore-waste separa-

tion blasts and improving blasted mate-rial fragmentation. In the Philippines, Orica has been manufacturing explosives and serving the mining, quarrying and construc-tion industry since 1970, evolving from nitro-glycerine water gel-based products to the new generation emul-sion technology which is more effi-cient and much safer to use. Aside from emulsion products, im-provement in initiating explosives has led to the introduction of the electronic blast-ing system with digital electronic detona-tors which, using a special programmable

computer chip, are much more precise. As mines and quarries become bigger, requirements such as higher fragmentation and better diggabil-ity become more significant. As well, government regulators have increased standards on vibrations and air blast as nearby communities move closer. With the use of electronic detonators, these requirements can be easily met in situ-ations where conventional non-electric systems would not suffice. Blasting software has also advanced substantially. From simple programs that map out blast holes, to prediction of ground vibrations to full-scale blast mod-eling, this software now helps engineers design the perfect blast. Orica also uses the latest tools in blasting technology, the MDL laser pro-filer and MDL bore tracker. The laser pro-filer takes data points out of the scanned face of a bench. These data points are then processed using Orica’s Shotplus-I software to render a three-dimensional plot of the points. With this, blast designs are now generated based on the face pro-file of the bench – thus coming up with the optimum blast pattern. After the holes are drilled, a bore tracker is used to identify any deviation of the holes. Once again, data is trans-ferred to Shotplus-I to be analyzed and rendered. Blast loading will now be based on the deviation data that has been gen-erated to reduce the risk of getting fly rocks and air overpressure for profiles with small burdens, and at the same time provide corrective action on loading for overburdened profiles. Orica believes strongly in the value of dedicated and well-trained people and has training programs for its employees, both technical and non-technical. One such program is the Orica Technical Ser-vices School of Excellence. Established in March 2009, the school currently operates from Orica’s main manufacturing facility in the Philippines with students primar-ily drawn from around the Asia region. So far, 26 students have graduated and are currently deployed to sites across the re-gion. In addition to the technical school, Orica also has training programs for shot-firers and blast crews. ■

Blast expert perfecting an even better bang

Supply Resources



With a fast-growing business requiring more staff, Quest Exploration Drilling has

moved its Manila headquarters to big-ger, better premises. QED managing director Alan Black-ley attributes the move to two main fac-tors — “firstly extra space for the office staff and secondly to accommodate new employees to QED to ensure we remain at the forefront of the industry as the busi-ness expands. We have acquired addition-al professional management in the Philip-pines, including operations and country managers, and in the future the move also gives us room to now recruit senior people for the larger QED group roles.” Blackley said the new headquarters “is light and bright providing an excel-lent environment for our staff, with state-of-the-art communications systems and computer facilities ... having information is useless unless you have effective com-munication systems to be able to deliver the message to your employees. As well as the office upgrades, all our project sites are also undergoing upgrades to ensure the messages are relayed as required back to head office.” The company currently operates in the Philippines, Papua New Guinea, Solo-mon Islands and Indonesia with a fleet of over 60 specialised drilling rigs with plans in place to increase the rig count to 70-plus by year-end. QED’s new headquarters are at Unit 1501, Robinsons Equitable Tow-er, ADB Avenue, Ortigas Center, Pasig City 1605; phone +632 909 7291 to 93, fax +632 909 7294. ■

Driller on the move with expansion

Supplies firm growing

QED’s new headquarter are light and bright providing an excellent environment for staff.

Supply Resources

clients to analyze their samples. It offers security for the samples in a specially de-signed and purpose-built long-term stor-age warehouse.

GXD, meanwhile, is widening its dis-tribution network with a fifth warehouse providing locations in Taguig, Laguna, Negros, Davao and Surigao. The aim is to increase efficiency and lower costs for clients well as reduce project delays. ■




Since the Brunel group’s arrival in the Philippines in the mid-2000s, its two operations - Brunel Technical Services Philippines Inc. (BTSP) and Brunel Technical Services

Manpower Corporation (BTSMC) – have grown to become lead-ers in their specialties, with further expansion coming. However, the group maintains its focus on its core competencies – human resources, recruitment, payrolling and providing white and blue collar professionals for clients. The group’s three key market segments are domestic mar-ket and foreign work permit sponsorship through BTSMC, Phil-ippine Overseas Employment Administration (POEA) ser-vices through BTSP, and international market support. Brunel has acquired work permit sponsorship from the Department of Labor and Employment with a private recruit-ment and placement agency license for BTSMC. This company’s domestic operations provide blue and white collar employees to major oil and gas companies, mining and main contractors, with wide experience in the search, recruitment and hiring/place-ment. Its aim is to ensure that companies with limited resources are able to hire appropriate qualified and experienced person-nel without the worries of employer/employee responsibilities. BTSMC’s policy is to visit its project employees/contractors where they are assigned to ensure that the company is giving them the support they need, and also to have regular meetings with clients for continual assessment of the performance of the personnel it supplies. BTSP acquired a land-based agency license for provision of manpower to international clients which require POEA travel processing, permits, clearances and legal documentation. Manned with POEA-competent professionals, BTSP spe-cializes in overseas recruitment with a large available candidate database which speeds up client selection by meeting their spe-cific requirements and timelines. BTSP has experience in the differing country guidelines and coordinates with government agencies worldwide giving it access to the latest requirements in providing professionals to the international market. The company has a management directive specifying no placement fees for all candidates, and believes it is one of the most reputable placement agencies in the Philippines. BTSMC and BTSP provide full manpower support in-cluding international visa processing and training where nec-essary, with affiliation to an internationally accredited train-ing center in the Philippines. BTSMC and BTSP believe they know the market. The group collates market information from locations around the world for analysis, using their network of clients, contractors and internal Brunel international affiliates. ■

Matching the right people with the right jobs

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The social impact management spe-cialist firm Cardno has opened an office in the Philippines. The com-

pany will concentrate initially on help-ing resources development companies with community development plans and implementation. It has appointed Ian Porter as its representative in the Philippines. Porter, currently vice president of the Australia New Zealand Chamber of Commerce, is a former Australian diplomat serving in Manila as deputy head of mission at the Australian Embassy in the late 1980s and early 1990s and managed a large AusAID-funded governance program in the Philippines. Colin Adams, Cardno’s director for private clients in the Asia-Pacific region, visited Manila to help launch the new office. “Cardno’s vision is to be a world leader in professional services to improve the physical and social environment,” he said. “In the Philippines we have a spe-cial focus on social impact mitigation for resource and other large private sector clients. “Cardno works with our clients to demonstrate a business case for social investments. We believe social impact mitigation measures should be seen as investments rather than expenses, shift-ing from a profit and loss to a balance sheet view. They should demonstrate an appropriate return on investment. “This strategic approach is the first part of the picture. Cardno then uses its extensive global development project ex-perience to implement social investments to ensure they meet strategic goals.” Adams cited a recent Goldman Sachs report which showed that 73 percent of project delays in oil and gas projects are due to “above the ground” issues rather than technical risk, and said similar fig-ures apply in mining. “Cardno’s approach adds value, protects investment, enhances security and delivers social and economic devel-opment plans which are sustainable, co-ordinated and meaningful,” Adams said.

Cardo is based in Australia and draws on experience across about 70 countries. It has worked on developing and imple-menting social impact management plans across the world but particularly in Papua New Guinea, Indonesia, Australia and parts of Africa. In Burkino Faso, for example, Cardno was engaged by Gryphon Min-erals to ensure compliance with Interna-tional Finance Corporation performance standards on social and environmental sustainability. This involved conducting a desktop review of secondary data fol-lowed by site visits to collect primary data through stakeholder interviews, community focus groups and house-hold surveys. Cardno also has experience apply-ing the lessons of end-of-mine-life and mine closure to enable better social in-vestment at the start-up of new proj-ects to avoid costly mistakes over the longer term. In Papua New Guinea, it mobilized 70 consultants in Australia, the United States and Papua New Guinea to study the social impacts on the town of Tabu-bil and surrounding communities of the operation and future closure of the nearby Ok Tedi mine. It conducted a detailed assessment of steps required to transition the town of Tabubil from its mining basis to a multi-use college town to ensure Tabubil’s continued prosperity beyond closure of the Ok Tedi mine. It also conducted as-sessments in the fields of governance, health, education, commercial activities, security, law and justice, urban planning, housing, utilities and transportation. Tamzin Wardley, chief operating officer of the PNG Sustainable Devel-opment Program, commented later on this project: “PNGSDP is entering 2011 with a range of initiatives for West-ern Province to ensure the benefits of the Ok Tedi mine are sustained for the community well into the future. Cardno helped translate PNGSDP’s vision into action for the town of Tabubil to thrive

Cardno wants to make a social impact

Cardno’s Ian Porter (left) and Colin Adams, during one of Adams’ recent visits to Manila to open the new Cardno office.

as an educational and service centre post mine-closure. The depth of experience displayed by the Cardno study teams in this extensive study was comprehensive and enabled PNGSDP to make informed choices about the future of the town and its surrounding communities.” Adams said this sort of experience, when combined with Cardno’s commu-nity development work in the Philip-pines with the Asian Development Bank and AusAID, could be applied to the benefit of all companies operating in the Philippines and to the local communities where they operate. ■

The Caterpillar Certified Used & Trade-In program has been for-mally launched by Monark Equip-

ment, aiming to give customers more op-tions with their equipment needs. At the launch event in Manila, Monark’s Cat rental and used represen-tative Garret Tan told key Monark ac-count managers: “With the introduction of Caterpillar Certified Used and the UsedE Trade-In, Monark can now of-fer customers alternatives to meet their unique needs and expectations. If a cus-tomer wants to be successful and profit-able, Monark shall be the ‘Go To’ equip-ment solutions provider.” The company’s allied/used equip-ment sales manager Jessie Balboa and warranty supervisor Melai Alberto ex-plained to account managers the UsedE trade-in policy and the blanket equip-ment protection plan. ■

Use it, thentrade in the Cat

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Responsible mineral development and concern for the environment is presently at the forefront in the

Philippines and is especially a priority of foreign investors in the mining sector. These companies are backed by the ready availability in the Philippines of the latest and world’s best environmental technolo-gies, products and expertise. The strong environmental commit-ment of major foreign mining project investors and developers is clear in proj-ects at various stages of development by Filminera Resources (an associate of CGA Mining) at its Masbate Gold Project in Aroroy in Masbate, and by European Nickel (ENK), at its nickel project under development at Acoje in Zambales. These present excellent case histories and are a story of commitment worth telling in times of often uninformed criticism of

mining from certain quarters in the Phil-ippines. Environmental considerations and compliance embrace virtually all areas of ongoing mineral exploration, mine devel-opment and operation. They are under continual surveillance and over recent decades have become increasingly impor-tant parts of responsible mine manage-ment. Environmental policy planning and decision making require a focused, coor-dinated approach by management over broad areas of activity covering tailings management, process water manage-ment, waste water treatment, ground wa-ter protection, soil erosion control and slope protection/stabilization, silt control, forestation, vegetation and re-forestation, site water control, pollution prevention and control, waste management, dust

control, environ-mentally related community sup-port mechanisms, road rehabilita-t ion/upgrading and maintenance, water supply, river and coastal pro-tection, emission monitoring and control, lightning protection of facili-ties, personnel and local communities, e n v i r o n m e n t a l considerations re-lated to indigenous and community health and safety - the list goes on. Protection of the environment by the mining in-dustry involves thorough planning and the applica-tion of World’s Best Environmen-tal Practice in the selection and use

of geological, geotechnical and engineer-ing design specialists and consultants. It requires an understanding of the environ-mentally critical site locations and process applications that require specific attention and solutions, with extensive consultation and research in making final design selec-tions. Equally important is the selection of technologies from leading suppliers and manufacturers of high quality materi-als, products and equipment. Strict adher-ence to internationally required quality assurance standards both in manufactur-ing and installation, applied and strictly monitored during installation, coupled with testing and ongoing monitoring and surveillance of environmentally critical installations, is essential. Staff training to increase awareness of environmental responsibility amongst management and rank and file is part of the ongo-ing story behind mine development. The following is an illustration of how these two companies, Filminera and ENK, have tackled one aspect of all the challenges – demonstrating commitment and addressing the importance of ground water protection and process water man-agement through the selection, applica-tion and use of the latest design and tech-nologies in environmental containment lining systems for protection of ground water against contamination. Filminera’s Masbate project is cur-rently the largest operating gold mine in the Philippines. It began processing operations in 2009 and expansion of the project continues. The process plant at Masbate is a conventional carbon-in-leach facility. A final detoxification stage treats process plant tailings before disposal to the new tailings storage facility. Wa-ter recycled from the tailings storage facility provides the bulk of the pro-cess plant water supply. ENK / Rusina Mining are developing their Acoje nickel laterite project in Zam-bales. The project, following three years of laboratory testing and on-site trials in both Turkey and the Philippines, will use

Best environmental practices: A tale of two good projects

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Taking good care of their dirty water

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ENK’s own heap leach technology, which the company believes provides significant environmental benefits over conventional nickel laterite operations. ENK is pioneering this technology in the Philippines, which has not been ap-plied previously with tropical laterite ore. Situating the heap leach process in near the mine will minimize transportation distances for the unrefined ore, thereby reducing truck movements on roads. The ENK process involves irrigation of agglomerated ore heaps with diluted sulfuric acid, producing a saleable mixed hydroxide product from a downstream processing plant. The pregnant solution from the leach operation is collected in ponds and recirculated through the heaps to maximize the metal content before be-ing pumped to the precipitation plant. Further processing produces a nickel-cobalt precipitate with a nickel content

in excess of 30 percent that is filtered and packaged in bulk bags for container ship-ment. ENK’s heap leach process also reduc-es the carbon dioxide emissions generated per tonne of nickel produced when com-pared to conventional nickel laterite oper-ations. The company is pursuing options to improve this reduction further through conventional means such as planting trees and carbon dioxide capture. The conversion of sulfur to sulfuric acid at the site’s acid plant releases energy that can be used to create steam and in turn generate electricity for the project, which, if in excess of project needs, can be sold into the local grid, reducing the need for the grid to be supplied with electric-ity generated by burning fossil fuels. The sulfuric acid produced is entirely used up in the heap leaching process. What do Filminera and ENK and their projects have in common? In the planning and ongoing execution of these

projects, both companies were focused on responsible development and protection of the environment, applying best practice in design and execution. High standards were applied during installation, testing and ongoing monitoring and surveillance of environmentally critical installations. For ground water protection and process water management, Filminera contracted the international engineering design specialist Lycopodium to design and specify requirements for process wa-ter handling. This involved the raw water pond, process water pond and event pond – one of a range of design areas handled for the project by Lycopodium. Project construction was undertaken by international contractor Leighton Con-tractors. ENK hired Vector Engineering of the United States for initial design of its trial heap leach pad, pregnant leach solu-tion pond and emergency leach solution





Calling in the experts from the startpond, with subsequent in-house design modification to suit local conditions and ENK’s requirements. These included the addition of a siltation pond, in conjunc-tion with local environmental engineering specialist Infratex Environmental Services (previously the liner and pipe division of Infratex Philippines). In terms of project design, contain-ment facilities at Acoje and process wa-ter control facilities at both projects were engineered to high standards with similar design concepts - compacted clay bases,

double-lined with high density polyethyl-ene (HDPE) geomembranes. The prima-ry base liners were installed, then overlaid with either a geocomposite HDPE geonet (HDPE drainage netting with geotextile bonded to both sides) or a geonet leak detection drainage system, which drain to leak detection sumps for regular monitor-ing purposes. The leak detection drainage systems were overlaid with a secondary HDPE liner. In addition, at the ENK Acoje project a floating cover system for the pregnant leach solution pond was designed, fabri-cated and installed by Infratex, to prevent rain water from mixing with and diluting

the pregnant leach solution, which is sub-sequently recirculated through the heap, while at the same time preventing con-tamination of rain water runoff. The cover system has weighted storm water collection channels and a large-ca-pacity submersible pump incorporated on the cover, which allows the collected rain water to be pumped off into a site drain-age system around the trial heap leach pad and ponds. ENK regularly monitors rain water accumulated on the cover and analyzes it to ensure there is no contami-nation before release into the environ-ment.

Adjacent to and interlinked with the pregnant leach solution pond is a large-capacity emergency pond which is de-signed to cover the unlikely event of any overflow in extreme conditions. In addi-tion, ENK has also built a large HDPE-lined siltation pond immediately below the emergency leach solution pond. All site storm water from the canal drainage system is channeled into this pond, where silt is captured before disposal of silt-free clean water into the environment. This pond is desilted as required, and as it is lined it can double as a second emergency pond if required. ENK also opted to use a biodegrad-

able, reinforced coconut fiber matting known as BioMac C supplied by Mac-caferri Philippines to cover all construc-tion-disturbed surfaces surrounding the trial heap leach pad and ponds, which are located on top of a ridge. This was to ensure that no silt dispersal was possible to lower areas off-site while construction continued and while vegetation with es-tablished root systems grew through the BioMac cover to provide natural soil erosion control. The four-meters-high trial heap leach pad was constructed on an HDPE-lined base covered with a protective MacTex

geotextile, on which was placed an acid resistant gravel layer. There is a double-lined pregnant leach solution collection trench at the low end of the pad, with a geocomposite leak detection drainage layer in between the liners and a leak de-tection sump beneath which is regularly monitored. The heap is uniformly irrigated from the top using drip irrigation with a dilute sulfuric acid solution. Its top and sides are covered with a protective custom-designed HDPE raincoat cover which sits above the irrigation system. This cover

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Infratex’s Peter Heilveil undertaking a liner integrity survey using geoelectric monitoring equipment on the floating cover on the pregnant leach solution pond at ENK’s Acoje project. In the background is the first stage of the irrigated heap with its HDPE raincoat cover.

The pregnant leach solution pond at ENK’s nickel trial heap leach pad project in Acoje incorporates environmental containment design features including; A base primary HDPE liner over A compacted clay base (exposed top right at overflow pipe); A geocomposite leak detection drainage layer folded back with the HDPE geonet drainage net with geotextile bonded to both sides; the second and primary HDPE liner layer on top, folded back; with Infratex technicians installing a monitoring access pipe between the primary and secondary containment liner layers, to leak a detection sump below.





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Case studies: A taleof two good projectsprevents entry of rain water into the heap and further dilution of the sulfuric acid mix used for irrigation of the heap. It also prevents loss into the environment of acidic material through strong winds over the heap. Further expansion of the trial heap leach pad is planned by ENK. For materials and installation, Infratex was selected to provide design solutions as well as HDPE environmental contain-ment lining systems, leak detection drain-age systems and other equipment for both the Filminera and ENK projects, as well as the floating cover at Acoje. Infratex was also contracted to fabricate and install the protective raincoat cover for the Acoje trial heap leach pad. In addition, Infratex is the only com-pany in the Philippines with the equip-ment, expertise and experience to under-take liner integrity surveys using the latest geoelectric leak detection methodology for environmentally critical HDPE liner containment systems. ENK has subse-quently contracted Infratex to conduct post-installation liner integrity surveys to ensure the integrity of its containment systems.

As well as design assistance, HDPE liners and installation at these projects, Infratex and Maccaferri Philippines also supplied the entire HDPE pipe require-ments for both projects, as well as their geotextile, soil erosion control and gabion requirements. In fact, over the past 10 years virtually all HDPE environmental containment lin-ing projects undertaken within the Philip-pines mining industry have been done by Infratex. At Masbate, Infratex also supplied the Butt welding machines used for all HDPE pipe installation and provided training and international certification for 16 local welding technicians who then un-dertook the HDPE pipe installation pro-gram for the Masbate Gold Project. The HDPE containment lining ma-terials used and installed by Infratex are manufactured by the global leader in this field - GSE Lining Technology. With man-ufacturing facilities in the United States, United Kingdom, Germany, the Middle East and Thailand, GSE is the biggest sup-plier of these products in the world and is represented in the Philippines by Infra-tex Environmental Services, a Mac-caferri subsidiary. ■

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ENK’s trial heap leach pad and ponds at the company’s Acoje project site in Zambales incorporate a premium quality GSE HDPE environmental containment lining system. This photo shows the first stage of the trial heap leach pad with its raincoat cover installed; the pregnant leach solution pond double-lined with leak detection system and floating cover; the emergency pond below it, also double-lined with a leak detection system; with the HDPE-lined site siltation pond below the two process ponds.




Documents

Phil Resources Issue 5 August-October 2011