MAC/20: Mines and Communities

Australia Miner in Philippine Cyanide Leak Probe

Published by MAC on 2005-11-11

Australia Miner in Philippine Cyanide Leak Probe

November 11, 2005

REUTERS NEWS SERVICE (Planet Ark)

SYDNEY - Australia-listed Lafayette Mining Ltd. said on Thursday it was cooperating with environmental agencies after halting operations at its mine in the Philippines following two cyanide spills in less than a month.

Lafayette said the discharges of the toxic chemical, used to segregate gold from ore, into local water systems on remote Rapu Rapu island had had "minimal environmental effects," though authorities are demanding the company draw up plans to rehabilitate the region and compensate local villagers. The most recent spill, on Nov. 1, was caused by heavy rains at the mine site and followed an earlier larger spill on Oct. 11.

Lafayette's shares were down more than 9 percent at A$0.15 on Thursday.

"The company is working closely with the responsible national authority, the Department of Environmental and Natural Resources, the Mines and Geoscience Bureau and the local communities to investigate these events, remediate any adverse impacts and, importantly, ensure there is no re-occurrence," the company said in a statement.

Reynulfo Juan, regional director at the Mines and Geosciences Bureau, told Reuters earlier this week his agency had ordered Lafayette to submit a rehabilitation plan for the affected creeks and to compensate fishermen.

The mine, about 400 km (250 miles) south of Manila, is the first in the Philippines to be developed by a foreign company in almost four decades and has so far yielded 2,500 ounces of gold.

By the end of June 2006, the mine is forecast to yield predominately copper and zinc, though it will also account for 50,000 ounces of gold and a half-million ounces of silver each year as a by-product from the base metals ore.

So far, Lafayette has spent $45 million developing the mine, which is worked by islanders from the nearby barangays, or villages, and expatriates.

South Korea's LG Co. International Ltd. and the Korean government's resources investment arm, called KORES, together hold 26 percent of Lafayette's subsidiary company Lafayette Philippines Inc. and provided $10 million in subordinated debt financing.

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