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Market:	TSX
Sector:	General Mining
Epic:	TSX-MIO
News:	Latest news
Web Site:	Mindoro Resources
Other Articles:	12-08-200807-08-200829-07-2008

Mindoro Resources – assets in China, South Korea and Japan’s backyard

by Sam Kiri

With its relatively under-explored terrain, and close proximity to resource-hungry China, Japan and Korea, the Philippines is well poised to make a mark in the resources space. Although on a lesser scale than those in more established destinations such as Africa and Latin America, the Philippines certainly has considerable precious and base metal resources; continued progress by Toronto and Frankfurt listed Mindoro Resources Ltd (TSX-V: MIO; Frankfurt: OLM) should, therefore, cause little surprise.

Mindoro has been operating in the Philippines since 1996, and holds a significant 60,000 hectares land position in the world-class nickel laterite and copper-gold porphyry districts of the country. The company currently has several promising assets in its Batangas, Surigao and Pan de Azucar projects, which are situated in the Luzon, Mindanao and Pan de Azucar provinces, respectively. The most advanced are the Kay Tanda Gold-Silver and Agata Nickel Laterite prospects; having been extensively drilled, these are being fast-tracked towards economic evaluation and potential near-term development. Initial exploration activity is also underway on other projects, including a further twenty-two porphyry copper-gold and several epithermal gold targets.

The investment case for Mindoro is accentuated by its exposure to diverse mineral resources, its advanced stage properties and their location. As China emerges as the world’s engineering workshop, and South Korea and Japan continue to take huge strides as developed industrial nations, and the economic prosperity of the Asia Pacific region persists, the demand for precious metals and base metals is expected to remain strong. The Philippines’ proximity to these markets makes it a distinctly preferred source. Mindoro’s prospects, meanwhile, are not in some far corner of the Philippines but are flanked by the producing properties of other mining heavyweights, such as Anglo American, Anglo Gold Ashanti, and Phelps Dodge.
 
In response to high demand from the ferro-nickel markets of China, India and Korea, Mindoro has been focussing on its Agata nickel laterite project, in the Surigao district. Phase 1 drilling on the project resulted in an early-stage 43-101 compliant combined Measured and Indicated Resource estimate of 4.40 million wet metric tonnes (WMT) grading 1.25% nickel, 0.063% cobalt and 23% iron, at a cut-off grade of 0.80% nickel (both limonite and saprolite combined). In addition, Agata has an Inferred Resource of 2.45 million WMT grading 1.23% nickel, 0.062% cobalt and 22% iron, also at a cut-off grade of 0.80% nickel.

The first 31 drill holes from Agata’s Phase 2 drill programme have returned an average grade of 1.1% nickel and 42.55% iron, over an average thickness of 4.53 metres from the limonite horizon. The underlying saprolite horizon has averaged 1.16% nickel over an average thickness of 6.66 metres. The programme has confirmed internal continuity of mineralization and continues to expand the resource; Mindoro has hired a new drill contractor, the previous one having been too slow. The release of an updated NI 43-101 resource estimate report is expected during August.

The Surigao Region is emerging as a major nickel-producing district with at least eight nickel laterite deposits, either in production or being developed, shipping ore directly to processing plants in China, Japan, Korea and Australia. Recent market conditions, including high shipping costs and emerging technologies, have led to the development of local processing options. A considerable value addition is anticipated as on-site processing will both improve nickel grades, and allow recovery of associated metals such as cobalt. Mindoro is keen to set up its own processing facility in joint venture with a suitable partner in its efforts to add value for shareholders. Ongoing drill programmes are expected to help establish the size of its resource in order to determine the type and scale of the processing plant.

Mindoro’s other Surigao projects include the Tapian Main and Tapian San Francisco prospects, and the Bolobolo prospect. The Surigao district emerged as a potentially world-class, porphyry copper-gold district in 2000, with the discovery of the Philex Gold/Anglo American Boyongan prospect. 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 0.74g/t gold. Anglo has subsequently announced a series of other porphyry systems, including the even larger Bayugo porphyry copper-gold prospect. Mindoro’s Tapian San Francisco porphyry prospect lies in the same geological trend as Anglo’s Boyongan. Mindoro has earned a 75% interest in most of the Surigao projects, with options to acquire up to 100%, and is developing them in partnership with the Minimax Mineral Exploration Corporation, a private Philippine company.

Mindoro’s Batangas projects (32,292 ha), which contain Kay Tanda, Calo, Lobo, El Paso and the Talahib prospects, are also in a well-mineralized copper-gold belt. This belt includes the Taysan porphyry copper-gold deposit of Freeport McMoRan (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 has signed a letter of intent to acquire the remaining 49% interest in the entire land package. Mindoro expects to develop most of these projects through joint ventures and is already in advanced discussions with several prospective partners.

So far, drilling at Kay Tanda has defined a gold zone of one square kilometre. Earlier this year, Mindoro announced an NI 43-101 compliant Inferred Resource estimate at Kay Tanda of 11,599,000 tonnes at 0.70 g/t gold and 3.0 g/t silver for 262,000 contained ounces of gold; and an Indicated Resource of 3,365,000 tonnes at 0.88 g/t gold and 8.0 g/t silver for 95,000 contained ounces of gold. Many gold mineralized intercepts, including much of the bonanza-grade material, were not included in the resource estimate, due to wide drill spacing and lack of information on geological controls. Gold mineralization has already been traced, on surface, another kilometre beyond the current drill boundaries, making a significantly expanded resource a distinct possibility. Mindoro is in advanced discussions with a gold mining company that has particular expertise in developing this type of deposit.
 
Mindoro also has a 40% interest, with option to earn up to 75%, in the Pan de Azucar Project (535 ha) which contains the 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, where the dacitic-andesitic caldera-fill package hosts pervasive replacement and structurally-controlled alteration and mineralization - dacitic units are the preferred hosts for mineralization. Mindoro has drill-intersected an epithermal, massive pyritic-sulphide deposit with low to moderate grade copper-gold-zinc-silver values (Valderama Zone) and subsequently a porphyry copper-gold target (Asperin Hill).

Meanwhile, the regulatory environment surrounding the Philippines mining sector has improved considerably. Realising the important role the mining sector could play in the local economy, the government issued a decree 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. The Philippines Supreme Court also 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; its close proximity to end-user regions, improved regulatory environment, promising geology and high metal prices have all prompted a plethora of companies to establish their operations in the Philippines. These include London listed Toledo Mining (AIM: TMC) and Metals Exploration (AIM: MTL); Australian listed Rusina Mining (ASX: RML), Indophil Resources (ASX: IRN) and Lafayette Mining (ASX: LAF) and Toronto listed TVI Pacific (TSX: TO), Altai Resources (TSX-V: ATI; OTO: ARSEF) and Sur American Gold Corp (TSX: SUR). Mindoro, with its advanced stage projects in rich mining regions, presents an excellent opportunity to gain exposure to this emerging mining destination.

Mindoro Resources – Vital Statistics

Market: TSX – Venture, Frankfurt
Tickers: MIO.V, OLM
Number of shares in issue: 90.3 million
Share Price: C$0.27
Market Cap: C$24.1 million
1 Year trading range: C$1.10 – C$0.25
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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