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Philex cancels P14-B rights offer

PHILEX Mining Corp. on Tuesday said it is canceling its planned P13.81-billion stock rights offer of common shares due to “unfavorable market conditions” and instead will seek additional funding from controlling shareholder First Pacific Co. Ltd.

The company said if it pursued the stock rights offer it would have been priced at P5 per share, resulting in a one-third dilutive effect on the current shareholders. The company’s shares were last traded at P8.76 each.

“The price was substantially lower than the underlying value of the company, including its Silangan project and, as such, proceeding with the stock rights would not be in the best interest of the company,” it said.

Philex still has a $20-million in credit facility from First Pacific, which can be used for the Silangan project.

The company was given a $150-million credit line by the Hong Kong-based conglomerate in November last year and Philex already borrowed $130 million from the window.

The stock rights offer was already earmarked to pay that loan from First Pacific.

The Philex board, led by businessman Manuel V. Pangilinan, has approved in principle to grant First Pacific the right to subscribe a $150-million direct equity interest in the Silangan project.

“It is expected that the valuation exercise will be completed within the next 90 days by an independent expert to be appointed by the company,” Philex said.

“The company will revisit its fund raising exercise at the end of 2014. By that time the feasibility study for the Silangan project would be close to completion at which point the company’s long-term funding requirement would have been defined,” it said.

Philex Mining earlier said it is on-track to start production in Silangan by 2017 in Surigao del Norte. The project covers the Boyongan and Bayugo deposits, which are currently under the prefeasibility stage.

In the meantime, the exploration drilling in its Kalayaan project, also in Surigao del Norte, which is adjoining the Bayugo deposit of Silangan, is proceeding on schedule.

The Silangan project aims to produce 35,000 to 60,000 tons per day of minerals such as copper, silver and gold and the firm’s other greenfield projects are seen to produce about another 15,000 tons per day once they start operations.

For the first half of the year, Philex reported a P954.4 million in net income, a drop of 53 percent from last year’s P2.03 billion, after its operations were suspended due to a mine spill in August last year. It was given the green light to operate by the government this March. 

VG Cabuag

 

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