Crew - UK firm buys option of S. Cotabato coal projectPublished by MAC on 2006-08-21
Crew - UK firm buys option of S. Cotabato coal project
21st August 2006
UNITED Kingdom-based mining company has signed an option agreement to acquire 95 percent of the shares of a coal development project in the hinterland of South Cotabato.
Crew Gold Corp. signed the option agreement recently with Daguma Agro Minerals Inc. through its wholly owned subsidiary Crew Minerals AS.
The project, which is located in Lake Sebu town, is opposed by residents of Barangay Ned, a village affected by the venture.
Jan Vestrum, Crew president and chief executive officer, said the firm secured the option by paying a non-refundable option fee of $150,000 (about P8 million), which entitled it to conduct a due diligence assessment until September.
"This project is strategic as a stand alone project and further strengthens Crew's presence and commitment to the Philippines. A secondary key aspect is that a successful acquisition and ramp up of the Daguma Coal Project will enable Crew Minerals to undertake a phased development of the Mindoro Nickel Project without the need for external partners," he said.
To exercise the option, Vestrum said the firm must pay a total of US$10 million (some P510 million) in cash and equity of Crew.
"We believe the Daguma Coal Project and the Mindoro Nickel project represents major value," Vestrum also noted.
Crew and associated Philippine qualified partners will acquire 50 per cent of Daguma Agro and entitle the company to purchase the remaining equity, he said.
A final payment amounting to US$13.75 million (some P710 million) in cash and equity is to be made 18 months following completion of the due diligence period to acquire the remaining 45 percent of Daguma Agro, he added.
The Daguma coal project holds a 2,000-hectare license area under Coal Operation Contract No 126 and consists of two Coal Blocks No. 380 and 381.
The South Cotabato coalfield, and particularly the Daguma Agro area, is a recent discovery to the Philippines and now considered potentially to host the largest coal deposits in the country according to a comparative report by the Department of Energy.
A detailed resource evaluation by Toquero Geology and Affiliates estimated a measured resource of 28 million tons, an indicated resource of 150 million tons and an Inferred resource of 130 million tons Inferred resource has been delineated within a distance of maximum 1000 meters from last points of observation.