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Manila Mining to reopen Placer gold mine, Sees metal prices remaining high

Manila Mining Corp. is moving fast to reopen its Placer gold project in Surigao del Norte to take advantage of the increasing prices of the precious metal.

“We are confident that we are getting closer to our goal of reopening the Placer mine,” said Lepanto Consolidated Mining Corp. chair Felipe U. Yap, who is also chair and CEO of Manila Mining Co.

Manila Mining has completed an exploration program that involved intensive drilling at Placer, where the company had mined close to a million ounces of gold before it was closed eight years ago.

“We now need to convert our resource estimate into (an estimate of) reserves through a study,” Yap said. After that comes the feasibility study.

“These two (studies) together will take about six months, or until just before the end of the year,” Yap said.

He said there would then be a so-called stress test, which gauges the viability of mining the reserve. Yap said it was not yet known how much the studies will cost.

“If the cost of mining the gold would be, say, $500 to $550 an ounce, then anything above that is profit. Now if the price of gold goes below that then we cannot operate because it will be at a loss,” Yap said.

Development will be done in 12 to 18 months.

“Maybe we can reopen around the end of 2010,” Yap said. “I am bullish about gold. Its price, I think, could reach about $850 to $1,200 an ounce,” he said.

Manila Mining suspended operations at Placer in 2001 following the effects of a landslip in the main Heine open pit.

“We also have the Kalayaan mine but we are in a wait-and-see mode because it is in a contiguous area as the mine of Philex (Mining Corp.),” Yap said.

The company drilled 20 holes in 2007 and another 51 holes in 2008. Manila Mining said the 2007 drill holes were positioned to test the continuity of the Placer Mine mineralization into the Kalayaan Corridor copper and gold mineral zone.

Exploration drilling was also independently undertaken by Anglo American Philippines (Kalayaan) Holdings BV in the Kalayaan area, which was the subject of its joint venture with Manila Mining.

Anglo American has exercised its option to terminate the farm-in agreement dated March 2007 for the exploration and potential development of the 286.6-hectare Kalayaan project.

During the joint venture, Anglo American spent $10.82 million for drilling and community projects and the initial entry cost paid to Manila Mining, the local company said.

“There is no other way to move forward on Kalayaan but to have a joint venture or to sell, but nobody is moving right now. We don’t expect any party to go through the trouble because of the market. So our focus will be on Placer because we can readily operate it,” Yap said.

Manila Mining posted a net loss of P132 million in 2008 from a P277-million profit in 2007. (inquirer.net)

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