Benguet Corp. insists on Kingking deal with Minmetals International

Benguet Corp. insists it had signed a deal with Minmetals International (HK) Ltd. to fund the development of the Kingking copper and gold mine in Compostella Valley. Answering the denial of China Minmetals Corp. — a Global Fortune 500 miner that Benguet earlier identified as the parent of its new partner — Benguet Assistant Corporate Secretary Reynaldo P. Mendoza said Minmetals International is a Chinese state firm under Minmetals Commodity. Benguet, the country's oldest miner, told the Philippine Stock Exchange on Wednesday that Minmetals Commodity is under the Chinese Ministry of Commodity. "Pursuant to the memorandum of understanding, Minmetals International (HK) Ltd. with its local partners is committed to provide the necessary funding for the development of the Kingking project," it said. Mendoza was also responding to rival contractor Nationwide Development Corp.'s (Nadecor) claim also on Wednesday that it was not aware of any deals on the Kingking project with Minmetals "and has certainly not agreed to have Minmetals take part in the project in whatever way." "We have made our disclosure denying the possibility of the Minmetals deal because it was claimed as factual in a public forum that may create irreparable damage to certain parties," Nadecor financial consultant Raymond H. Ricafort told the stock exchange. The Kingking mine, located in the municipality of Pantukan in Compostela Valley, has reserves of about 353 million metric tons of ore at 0.385 percent copper and 0.439 grams per ton of gold. China Minmetals earlier said MinMetals International is not a subsidiary. “No subsidiary of China Minmetals has signed any agreement with Benguet," it said on its Web site. “China Minmetals will pay close attention to the development of the aforementioned issue, and reserves all its rights to take further legal actions against any organization or entity that conducts commercial fraud in the name of China Minmetals," the state corporation warned. Estranged partners Benguet and Nadecor both claim rights to the Kingking mine, with each claiming to have signed a deal with separate third parties to finance the operations of the copper-gold mine. Nadecor earlier claimed to have signed an operating deal with Rusell Mining and Minerals, Inc. for the Kingking mine, while co-contractor Benguet Corp. has partnered with Minmetals International to finance the project. Benguet, the country’s oldest miner, told the Philippine Stock Exchange (PSE) on December 3 that it was moving forward with Minmetals International to complete a feasibility study and start operations. Benguet claims to be the registered operator of Kingking, with an approved mineral production sharing deal over 1,656 hectares in Pantukan, Compostela Valley, with Nadecor as the “former leaseholder/royalty holder." Over the years, it said, it had drilled the Kingking mine, having logged 276 holes covering 89,599 meters. It needs an initial $1 billion to bring the project to commercial operation. But Nadecor, in a letter to the stock exchange dated Dec. 7, said the Benguet-MinMetals deal is void, noting that it had terminated Benguet as the operator of the Kingking project as early as August 29 last year. This was following Benguet’s alleged failure to complete a feasibility study and its “clear financial incapability to fund the [study] and bring the Kingking project into commercial production." It also said it would separately raise $1.3 billion to start commercial operations. On October 20, Nadecor submitted to the Environment department an amended exploration work program committing to spend $43.5 million to complete the feasibility study. Last month, the PSE and Securities and Exchange Commission suspended the trading of Benguet shares after the miner failed to disclose default notices from creditors. The company has about P1.5 billion in debt. Co-contractors Benguet insists the company and Nadecor are both co-contractors of the government. It also said Nadecor’s unilateral cancellation of the operating agreement last year was illegal since it had performed its obligations under the operating deal. Benguet also said Nadecor’s contract with Russell Mining violates the mineral production and sharing agreement since it “usurps [its right to operate] the Kingking project without the prior consent of Benguet and the government." The company conceded that Nadecor remains a party to the production and sharing deal, and as such, Benguet would pay it royalties. — NPA, GMANews.TV