INDOPHIL Resources is continuing to implement a revised work plan for the Tampakan Copper-Gold Project and is continuing discussions on clarification of Glencore’s intent in respect of its ongoing involvement in the project’s development. For the remainder of the year Sagittarius Mines, which is owned by Glencore and Indophil, intends to focus on the Philippine Government’s approval process along with the Indophil-funded Off-Lease Infrastructure - Environmental Impact Assessment (OLIEIA).
The work plan, which has been approved by the Sagittarius Board, is for a program of expenditure of less than US$9 million for the year. The revised work plan has reduced expenditure for the past two years. The budgeted 2013 expenditure was US$54 million and this was reduced to an actual 2013 spend of US$33 million.
The OLI-EIA is in its final draft, pending completion of some regulatory requirements and a decision by Sagittarius and the JV partners to lodge the application for the OLI’s Environmental Compliance Certificate along with a similar power station approval process. Sagittarius continues to engage with the government’s Mining Industry Co-ordinating Council on issues surrounding the approvals process.
In his chairman’s report for the Indophil AGM in May Brian Phillips said: “The purpose of implementing the revised work plan, announced in August last year, was to rein in activity and expenditure while the JV partners seek to secure crucial support for the way forward from our other partner in project development, the Philippine Government, which is guardian to the asset on behalf of the people of the Philippines. This interaction is very much a work in progress, albeit slow.
“We acknowledge that Glencore is well-documented as being wary of ‘greenfield’ projects, and Tampakan is a big ‘greenfield’ project. Strategically, Indophil holds a pre-emptive right over Glencore’s 62.5% share of Sagittarius. This is a valuable advantage should Glencore wish to exit or sell down its equity in Sagittarius.
“Limiting work plan activities and progress in project development, has been overshadowed by conditions included in Glencore’s April 2013 agreement with the Chinese Government’s Ministry of Commerce (MOFCOM), put in place to allow the Glencore and Xstrata merger to proceed. In essence, Glencore’s ownership in Sagittarius was subjected to a requirement which, as a first preference, centred on divestment of Glencore’s interest in the ‘greenfield’ Las Bambas Copper Project in Peru. If the Las Bambas sale process failed to eventuate in a timely manner, a second line of mandated divestment included Glencore’s interest in Tampakan.
“Recently, Glencore announced the divestment of its interest in Las Bambas. In principle, we understand that on closure this frees Glencore and therefore its interest in Tampakan from the MOFCOM conditions. The sale is expected to be completed prior to the end of the third quarter.”