The Securities and Exchange Commission (SEC) has approved the P3.15-billion stock rights offering of Philex Mining Corp., the largest publicly-held copper and gold producer in the Philippines.
In its en banc meeting on Thursday, the SEC approved the said rights offering, which gives current shareholders the right to buy shares based on its current shareholdings.
Philex Mining’s stock rights offer covers up to 842 million common shares. The actual number of common shares to be issued will depend on the final offer price.
Philex Mining will offer the shares to eligible shareholders for a maximum offer price of P4.81 per share. Its shares closed Thursday at P5.63 apiece.
Net proceeds from the offer could amount to P3.059 billion, which will be used for the company’s investment in subsidiary, Silangan Mindanao Mining Co. Inc. (SMMCI) through Silangan Mindanao Exploration Co. Inc. (SMECI) mainly for the capital expenditures and development cost of its Silangan project. These include mine development, construction of the mill plant and support facilities and storage tailings facility.
The stock rights offer will run from February 28 to March 10, in time for the listing of the offer shares on the Philippine Stock Exchange on March 21, according to the latest timetable submitted by Philex Mining to the SEC. The company has engaged BDO Capital and Investment Corp. as the issue manager and lead underwriter for the offer.
Philex Mining earlier said will infuse fresh capital into Silangan project and jump start the development of a starter mine in its Silangan Project Phase 1 in Surigao del Norte.
“This is a significant indication that Philex, as parent company of SMECI and SMMCI, is committed to get this project going,” Romeo B. Bachoco, the company’s treasurer and CFO, said.
“This would signal to qualified shareholders, and potential investors alike, who will participate in the stock rights offer as well as the lenders who will join the loan syndication that Philex will infuse fresh capital because it strongly believes in the feasibility of the Silangan Project,” he said.
The Silangan Project will involve the development of a starter mine beginning this year and will go on commercial operation by early 2025. The mine will initially produce 2,000 tons of ore per day or about 700,000 tons a year, and will gradually ramp up to 12,000 tons per year as it invests additional capital for the ramp up of its mining operations.
The Silangan Project has an estimated 81 million tons in mineable reserves that contain around 993 million pounds of copper and 2.8 million ounces of gold. The Silangan mine will produce, throughout its 28-year life, an annual average of 35 million pounds of copper and 100,000 ounces of gold, higher than the current output of Padcal, one of the largest gold and copper producing mines at present.
Padcal has been in production since 1958 and its mine operation has been extended as the company awaits the Silangan Project, whose development has been delayed due to regulatory policies and funding for a bigger development.
For the starter mine of the Phase 1, Bachoco said it would require about P11.2 billion or about $224 million to develop the first phase alone and start commercial production. The initial plan for a grander development would have required about P38 billion or about $760 million but the outcome of the various discussions with potential foreign investors have forced Philex to prioritize and pursue the development on its own under the in-phase mine plan.