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Gold Fields faces cut in Philippines mine life

Manila, Philippines — 19 June 2012 – South African miner Gold Fields Limited may have to settle for a shorter than planned mine life for its gold project in the Philippines, according to a government official.

In a report published here, BusinessWorld Online quoted mines and geosciences bureau (MGB) director Leo L. Jasareno as saying: “Right now, we can only promise them up to 29 years.”

Last March, Gold Fields announced its acquisition of a 40% stake in listed miner Lepanto Consolidated Mining Company’s Far Southeast (FSE) project in Mankayan, Benguet through Liberty Express Assets, a private holdings company, for US$220 million. Gold Fields has a remaining option to acquire an additional 20% interest in FSE through Lepanto to hike its stake to 60%.

Lepanto, in turn, filed an application in November to convert the project’s current permit, which is a mineral production sharing agreement (MPSA), to a financial or technical assistance agreement (FTAA) license to make way for the Gold Fields buy-in.

An FTAA is the permit required by the Philippine government of any foreign miner looking to own or control a majority share of any large-scale mineral resource in the country.

In line with this, Jasareno explained that Gold Fields was seeking a “fresh start” to its permit’s term once Lepanto’s MPSA is converted into an FTAA, as it intended to operate the Far Southeast mine for 40 years.

“We can only give them the remaining term of Lepanto’s current MPSA, even after they convert it to an FTAA,” he said.

According to the Mining Act of 1995, a MPSA is valid for 25 years from the date of its execution, and is only renewable for another 25-year term.

The MPSA for the Far Southeast project was granted by the MGB to Lepanto in 1990, according to records on the agency’s Web site.

“One option for them to get their desired ‘fresh slate’ would be to let go of the current permit and apply for a new one,” said Jasareno, “but this would come at the risk of letting other companies apply for a permit as well.”

Gold Fields’ exploration target for the project is 52 million ounces of gold equivalent to be discovered through drilling a total of 900m below surface area. The company currently has eight drill rigs operating at the site.

Source: BusinessWorld Online. For more information, click here.