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gold mining philippines
Mining for Gold in the Philippines
Amanda Kay – April 23rd, 2018
Gold in the philippines
Mining for gold in the Philippines is not an easy endeavor. Even so, the country is home to many companies that are producing and exploring for the metal.
Mining gold in the Philippines can be difficult. The country’s mining sector remains largely untapped, and much of that has to do with political turmoil and controversy.
As a result, the Philippines is far from the heaviest player in the gold space — read about the top gold-producing countries here — but it’s clear that the nation does play a role in producing gold. The Philippines was ranked 21st in terms of global gold production in 2016, producing 40.2 tonnes with an additional 196.34 tonnes in reserve.
Here’s a look at some of the challenges of mining gold in the Philippines, as well as an overview of the publicly traded companies that are currently mining and exploring for gold there.
Gold in the Philippines: Political challenges
As mentioned, mining for gold in the Philippines is not an easy task. While vast mineral reserves and potential exist, the country holds to strict mining laws, citing environmental impact and worker welfare as key reasons for these rules.
This emphasis on environmental impact has been championed by current president Rodrigo Duterte. Duterte has said that mining companies must “shape up” as they are causing harm to the country’s land and water systems. In 2017, the president even accused Canada-based mining companies of a destabilization plot.
Support for environmental goals was seen in the appointment of Regina Lopez as secretary of the Department of Environment and Natural Resources (DENR) in 2016. Lopez is an environmentalist, and proposed severe mining bans and stricter regulations.
The mining community, including the Philippines’ Chamber of Mines, said the closures and permit denials would cause harm to 1.2 million workers in the industry. Miners also said that they were being treated unfairly because of a lack of due process in these bans.
The situation took a drastic turn when Lopez was rejected by the Congress of the Philippines. Last May, Duterte instead gave her post to Roy Cimatu, formerly of the armed forces. Miners were surprised by the decision, but are more hopeful as Cimatu is expected to take a more balanced approach between the environment and mining industry.
Speaking during a radio interview, Cimatu said he believes “we can allow mining [as long as] it’s responsible, it does not destroy our environment, as long as it is properly handled.” That said, Cimatu hasn’t lifted the bans. Plus, recently he stated that a ban on new open-pit mines could continue on into 2019 if miners do not comply with mandated tree planting.
Gold in the Philippines: Economics
Mining made up 0.6 percent of the Philippines’ GDP and 6.4 percent of its total exports in 2017. The country currently hosts eight operating gold mines. While mining does not make up a large portion of the Philippines’ economy, the effects and benefits are felt strongly in certain parts of the country. Regions like Mimaropa and Caraga disproportionately rely on the value and opportunities produced by mining.
When considering why mining hasn’t yet taken a firm hold in the Philippines, Forbes explains that access to the sector has been “mired since the 1980s in klutzy laws, environmental battles and land rights issues.” The Wall Street Journal corroborates that statement, noting that most indigenous people in the country are not in favor of mining, and have special rights that make gaining their approval essential.
Anti-mining sentiment has only grown stronger with Duterte in power. The president used a 2017 state-of-the-nation address to reinforce warnings to the country’s mining industry saying, “[y]ou have to come up with a substitute, either spend to restore the virginity of the resource or I will tax you to death.” Whether Cimatu will overturn suspensions and closures is currently uncertain, but given the president’s statement, the future of mining for gold in the Philippines could be a little rocky.
Gold in the Philippines: Mining companies
While the political climate of the Philippines has drawn back the confidence of the mining industry, there are still many gold operations investors should know about. Read on to learn more about them.
Apex Mining (PSE:APX)
Apex Mining’s main project is the Maco mine (formerly known as Masara), located on the island of Mindanao. Apex has been operating for 40 years and recently reported that its mining income increased by 33 percent year-on-year in 2017. The company attributes its success to improved operations at Maco — it produced 60,185 ounces of gold in 2017, up from 54,681 ounces the previous year.
Benguet (PSE:BC)
Established in 1903, Benguet is the first and oldest mining company in the Philippines. Its extensive gold and nickel operations include the Acupan gold project, which began operating in 1927. Acupan consists of 223 mineral claims in the province of Benguet. As of 1992, it had produced 5.54 million ounces of gold. The project has a remaining resource potential of 113 million tonnes averaging 2.41 g/t gold.
In November 2017, the company reported quarterly revenue of 291.6 million pesos, according to Reuters. Benguet has put environmental and social development programs in place in the Philippines.
Medusa Mining (ASX:MML)
Medusa Mining operates in the Philippines through its subsidiary Philsaga Mining. The company’s Co-O project is situated on the southern island of Mindanao and produced 80,743 ounces of gold in the 2017 Australian fiscal year.
That represents a steep decrease compared with 2016’s 108,578 ounces of gold produced. Medusa noted that the lower production numbers were the result of unplanned maintenance of the “L8 Production Shaft ‘guide rails’ and the lower than expected development and stoping grades from the inferred mineral resource blocks [which] developed in the upper levels.”
Metals Exploration (LSE:MTL)
Metals Exploration’s main asset is the Runruno gold-moly project on the island of Luzon. The company acquired the project in 2005, and has since increased its ownership to 100 percent. Runruno has a defined mineral resource of 1.39 million ounces of gold and 25.6 million pounds of moly; 1,050,000 ounces of gold are designated as measured and indicated, while 900,000 ounces of gold are listed as proven and probable reserves. In its Q4 report for 2017, the company reported output of 11,236 ounces of gold, up from 9,085 ounces in the previous quarter.
OceanaGold (TSX:OGC,ASX:OGC)
OceanaGold owns and operates the high-grade gold-copper Didipio mine, also located on Luzon. The company achieved commercial production at Didipio in 2013, and over its 16-year life the mine’s nominal production should be 100,000 ounces of gold and 14,000 tonnes of copper.
OceanaGold announced record annual gold production during the latest Australian fiscal year, with 2017 production coming in at 574,606 ounces. In 2018, the company’s guidance is set at between 480,000 and 530,000 ounces of gold.
Philex Mining (PSE:PX)
Philex Mining was incorporated in the Philippines in 1955, and its subsidiaries fall under either Philex Mining (metals) or Philex Petroleum (energy). Philex Mining operates the Padcal mine, which is its largest revenue source. Padcal has been operating since 1958 and is expected to end its life in 2020.
Philex also owns the Silangan copper-gold mine, which encompasses the feasibility-stage Boyongan and Bayugo deposits. The company produced a total of 103,300 ounces of gold in 2016, and has yet to release its 2017 annual report.
St. Augustine Gold & Copper (TSX:SAU)
St. Augustine Gold & Copper is currently developing the King-king project, which it bills as one of the largest undeveloped copper-gold deposits in the world. Mineral reserves at King-king come to 617.9 million tonnes at 0.3 percent total copper and 0.395 g/t gold.
The project is expected to put out 3.16 billion pounds of copper and 5.43 million troy ounces of gold over a 25-year mine life, but may face issues as it is currently on a list of recommended cancellations put forward in February 2017. St. Augustine plans to “resolve the issue favorably regarding the possible cancellation of the MPSA by the DENR,” according to its 2017 MD&A report.
RTG Mining (ASX:RTG)
RTG Mining is an Australian mining and exploration company that is focusing on gold in the Philippines. The company’s key project is the Mabilo gold-copper site, which has an indicated mineral resource of 227,000 tonnes of copper and 762,400 ounces of gold.
Are you interested in gold in the Philippines? What do you think will happen next there?
Did we miss a publicly traded company that’s mining or exploring for gold in the Philippines? Let us know in the comments. All companies included had market caps above $10 million as of April 17, 2018.
This is an updated version of an article first published by the Investing News Network in 2015.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.