Philex Mining loses 12% of market value
Philex Mining Corp. said yesterday it lost R6.4 billion, or over 12%, of its market capitalization yesterday after the environmental agency threatened to cancel its contract with the government for the development and operation of five mining projects.
Philex, the Philippines’ largest copper and gold miner, said its share price fell sharply after Environment and Natural Resources Secretary Regina Lopez warned that 75 mineral production sharing agreements, or MPSAs, including five held by Philex’s units, will be cancelled because the mining claims are within watershed areas.
Philex denied in a statement that the mining claims encroached watershed areas and said it is willing to submit to DENR investigations to prove that claim. The company pointed out that it already went through a rigorous screening process before the MPSAs were granted.
Among the endangered Philex projects is the Silangan claim, a $1 billion undertaking that is supposed to go into production by 2020 and replace Philex’s existing Padcal gold-copper mine. Philex said the Silangan project is expected to generate around 8,000 jobs and pay around 31 billion pesos in taxes in the first 10 years of operation.
Philex said not only did Ms. Lopez’s warning undermine shareholder value, it also “endangered the Silangan project, which is nearing its project implementation, by eroding investor confidence in the midst of a worrisome regulatory landscape that appears to disregard due process and interprets applicable laws as it wishes.”
Philex expects further erosion of shareholder value. (Dow Jones)