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Market:	TSX
Sector:	General Mining
Epic:	TSX-MIO
News:	Latest news
Web Site:	Mindoro Resources
Other Articles:	03-10-200817-09-200830-04-2008

Mindoro Resources - A player in an emerging mining destination

by Sam Kiri

In a mining world dominated by regions such as Africa and Latin America, the Philippines emerges as a largely under-explored and yet a mineral rich mining destination. More than any lack of mining potential, it was years of mismanagement, poor commodity prices in 1980s and more importantly, the country’s volatile politics that dampened the Philippines’ mining fortunes. Within its 30 million ha, in which only 1.5% is covered by mining permits, there are rich gold, copper, nickel and many other base metal and non-metallic mineral resources. Not surprisingly, mining investors are now viewing the Philippines with renewed interest.

Recent exploration efforts have led to many world class deposits
Rising metal prices and improved local politics have prompted mining companies to revisit the Philippines and the sector has started attracting investments again. These new investments and concerted attempts by exploration companies, have led to the discovery of several of potentially world-class deposits, such as Tampakan (copper), Far Southeast (copper-gold), Taysan (porphyry copper-gold deposit) and Boyangan (copper-gold). Brisk exploration and development are currently underway in developing these deposits.

….and Mindoro is in the thick of the action
Amongst many mining companies with assets in the Philippines, Toronto (MIO-V) and Frankfurt listed (OLM) Mindoro Resources Limited (Mindoro) presents a resounding investment opportunity. Mindoro has been operating in the Philippines since 1996 and currently has several promising assets in its Batangas, Surigao and Pan De Azucar projects in Luzon, Mindanao and Pan De Azucar provinces respectively. Mindoro holds 22 identified porphyry copper-gold prospects in the Philippines as well.

With assets flanked by producing properties of mining heavy weights
The investment case of Mindoro rests on the exposure it provides to unexplored mineral riches in the Philippines which is in close proximity to resource hungry China, Japan and Korea. Its diverse prospect portfolio, which boasts an assortment of minerals comprising gold, copper, silver and nickel, further underpins its investment case. More importantly, its assets are flanked by producing properties of other mining heavy-weights in the Philippines such as Anglo American, Anglo Ashanti and Phelps Dodge. Mindoro is set to take off and its ongoing exploration programmes are expected to provide considerable impetus.

Philippines gold-copper systems are attractive exploration targets because they are characterized by the telescoping of high-level epithermal gold deposits into the top of porphyry copper-gold systems, which are generally low-grade, but large-tonnage deposits. They provide over 50 percent of the world's copper production. While productive porphyry systems average about 0.5 percent copper and 0.30 g/t gold, the Philippines porphyry deposits are believed to hold higher gold contents. Porphyry deposits often occur in clusters, such as the Anglo-Philex Boyongan and Bayugo porphyry deposits in the Surigao Gold District. Mindoro also has assets in this region and may well be exploring epithermal gold prospects.

 
 
Mindoro Assets
Mindoro’s Batangas projects (32,292 ha), which contain Kay Tanda, Calo, Lobo, El Paso and Talahib prospects, are in a well mineralized copper-gold belt. This belt includes the Taysan porphyry copper-gold deposit of Phelps Dodge, which is adjacent to the Mindoro projects, as well as the Dizon, San Antonio and Mogpog porphyry copper-gold deposits. Mindoro has earned a 51% interest in the property and may earn an additional 24% interest in the entire land package by taking any one deposit to feasibility.

NI 43-101 is underway at Kay Tanda
Drilling at Kay Tanda has so far defined a gold zone of one kilometre by one kilometre. Based on drill results, Mindoro has announced an Exploration Target for this area of 860,000 to 1,000,000 ounces of gold and 2.7 million to 3.6 million ounces of silver at 0.76 to 0.80 g/t gold and 2.4 to 2.8 g/t silver. The Company is in the process of completing a NI 43-101 compliant resource estimate on the Kay Tanda prospect followed by a scoping study and an economic evaluation. Gold mineralization has already been traced on surface another kilometre beyond the current drill boundaries. As such the potential to significantly expand the resource remains high.

Mindoro also has a Nickel prospect
Mindoro’s Surigao projects (26,000 ha), add an additional dimension to Mindoro’s prospect mineral inventory. It comprises Agata Nickel Laterite and Epithermal Gold and Porphyry Copper-Gold Prospects, Tapian Main and Tapian San Francisco prospects and Bolobolo prospect.  The Surigao Gold District is a historic gold mining camp with thousands of epithermal gold showings, prospects and small scale artisanal mines.

Prospects of porphyry copper-gold systems in Surigao were confirmed with the discovery of the Philex Gold/Anglo American Boyongan Prospect in 2000. Subsequent drilling outlined a major porphyry copper-gold deposit with a disclosed resource estimate of 219 million tonnes at a grade of 0.51% copper and 0.74 g/t gold. Philex has announced that a second porphyry system has been discovered to the northwest of Boyongan, and possibly, a third porphyry system to the southwest. Several other porphyry copper-gold prospects also occur just to the north of Mindoro's Tapian San Francisco Project. Mindoro has earned 75% interest in most of the Surigao Projects and is developing them in partnership with Minimax Mineral Exploration Corporation, a private Philippine company.

Surigao targets Chinese, Japanese and Korean markets
In response to the very high demand of the ferro-nickel markets of China, India and Korea, Mindoro has focused its efforts in the Surigao district on its Agata nickel laterite project. Currently five drill rigs are operating on the project, with the objective of defining an initial resource of direct shipping-grade material adequate for three to five years of production, at 500,000 to 700,000 wet MT p. a.  Production is expected in 1H 2008 with plans to increase annual production to one million wet metric tones by 2010. The current drill program covers less than ten percent of the area of nickel laterite mineralization mapped to date at Agata.

Mindoro also has 40% interest with option to earn up to 75% in the Pan de Azucar projects (535 ha), which contain Pan de Azucar, Valderama and Asperin Hill prospects (all epithermal, massive pyretic-sulphide, low to moderate grade copper-gold-zinc-silver mineralization ). The Pan de Azucar project is located within a collapsed caldera structure with a dacitic-andesitic caldera-fill package. Dacitic units are preferred hosts to mineralization. An epithermal, massive pyritic-sulphide deposit, with low to moderate grade copper-gold-zinc-silver values was drill-intersected by Mindoro in 2001 and a porphyry copper-gold target located at Asparin Hill in 2002.

Mindoro benefits from its close proximity to China
As China expands its industrial sector on the back of outsourcing story, its insatiable appetite for metals is expected to continue. China also needs metals for its ongoing infrastructure projects including those involving its 2008 Olympic endeavours. Other regional industrial heavy weights such as South Korea and Japan are also keen to establish links with mining companies in the Pacific Rim for their resource requirements. The Philippines is one of the closest mining destinations to these countries and that makes mining companies such as Mindoro with advanced stage projects particularly attractive investments.

Regulatory environment favours mining companies
Meanwhile, the regulatory environment surrounding the Philippines mining sector has also improved considerably. Having realised the important role the mining sector can play in the local economy, the government issued Executive Order No. 270, in January 2004, setting the National Policy Agenda on Revitalizing Mining in the Philippines. Amongst many incentives, the policy permits 100% foreign ownership, numerous tax incentives and guarantees repatriation of the earnings and capital of foreign investors. Providing further support, the Philippines Supreme Court abolished all legal obstacles to the implementation of the Philippine Mining Act of 1995, which is considered to be a mining friendly legislation.  

Mindoro is certainly not alone in the Philippines mining sector. Its close proximity to end-user regions, improved regulatory environment, high metal prices and the promising geology has prompted a plethora of companies to establish their operations in the Philippines. They include London listed Toledo Mining (TMC.L), Metals Exploration (MTL.L), Australian listed Rusina Mining (RML.AU), Indophil Resources (IRN.AU), Lafayette Mining (LAF.AU) and Toronto listed TVI Pacific (TVI.TO), Altai Resources (ATI.V) and Sur American Gold Corp (SUR.V) as well.

Summing up
Despite its vast mineral riches, the Philippines mining sector has witnessed little modern exploration. Its proximity to China, Japan and South Korea where the demand for metals is soaring makes mining projects even more attractive. Mindoro with its advanced stage projects in rich mining regions presents an excellent opportunity to gain exposure to this emerging mining destination.

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