MAC: Mines and Communities

Xstrata Takes Another Step Towards Tampakan

Published by MAC on 2006-03-23

Xstrata takes another step towards Tampakan

By Ben Sharples,

23rd March 2006

XSTRATA Copper's chief financial officer Louis Irvine has joined the board of Indophil Resources in a move described by one analyst as a "step on the path" to the major exercising its option to acquire a 62.5% interest in the large Tampakan copper-gold deposit in the Philippines. "I would see this as part of the progression of Xstrata to exercise its option," ABN AMRO Morgan senior analyst Chris Brown told "I think when you look at the size and quality of the Tampakan project, it is almost inconceivable that they wouldn't."

Located on the southernmost island of the Philippines, Mindanao, the Tampakan deposit has a measured, indicated and inferred resource of 1.34 billion tonnes containing 8.9Mt of copper and 11.6Moz of gold.

The Anglo-Swiss company has an option till September 2006 to acquire a 62.5% interest in Tampakan.

What will subsequently happen to Indophil should the option be exercised remains a key question.

"There are benefits for Xstrata in acquiring the whole asset, they would get 100% of the product, but there are negatives in that Indophil has demonstrated it can work very efficiently in the Philippine socio-political environment," Brown said.

"Xstrata can't acquire Indophil cheaply because of the relationships the group has developed and they will be absolutely critical in taking the project forward, so I don't think they [Indophil] are going to get legged over."

Shares in Indophil hit a 52-week low of 31c in June before gaining ground to hit a 52-week high of 75c in January. The stock gained 5.5c (8.8%) during Thursday to close at 68c.

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