OceanaGold Corp., an Australian mining and exploration company, expects to gain approval to drill new areas this year in the Philippines when a government ban on permits is lifted.
OceanaGold has been unable to start drilling at two locations in the northern part of the country because of government delays, Chief Executive Officer Mick Wilkes said in a phone interview from Melbourne on June 13.
The Philippines, which hasn’t issued new permits for more than a year, in February said it may lift the ban after President Benigno Aquino signed a proposal detailing the nation’s mining policy that may include a cut in tax breaks and tighter rules. Mogambos and another nearby drilling area called MMB will enable Melbourne-based OceanaGold to expand near the main Didipio mine, located approximately 270 kilometers (168 miles) north of the capital of Manila, said Wilkes.
“We are keen and ready to start drilling some of those targets, specifically Mogambos,” Wilkes said. “The permit is being held up and it’s currently sitting with the government pending their mining policy review, which we expect to be finalised in the next couple of months.”
The Philippines’ Mines & Geosciences Bureau is confident the permits ban will be lifted soon, director Leo Jasareno, said in a phone interview from Manila today without giving a date. OceanaGold could have started drilling early in the second quarter if it had the permits, Nova Young, an investor relations officer at the company, said by phone today.
The license renewal applies only to new target areas and won’t affect Didipio’s expansion plans. The $200 million project is on schedule to produce 100,000 ounces of gold a year and 14,000 tonnes of copper when it starts production in the fourth quarter, Wilkes said.
Wilkes said he’s confident the new policy won’t affect the company’s projects and that the government won’t curb foreign investment in the country.
President Aquino is proposing the nation introduce competitive bidding for mining rights, widen a ban on the activity to more areas, and boost state revenue from the industry in what could be the biggest revamp in the industry since a 2004 court ruling supporting foreign investment, according to a draft executive order obtained by Bloomberg News in February.
“We’ve got over 20 years of experience as a company there working in the Philippines and we remain confident in the government’s commitment to promote responsible mining in the country and encourage foreign investment to improve their viability,” he said.
OceanaGold has a target to produce 230,000 to 250,000 ounces of gold at a cost of $900 an ounce to $980 an ounce this year, according to a company presentation on June 7. The Didipio project will allow OceanaGold to cut the cost to less than $500 an ounce, Wilkes said last year.