For those just getting up to speed on this story:
From minesite.com
CANADIAN JUNIOR PHILEX MAKES COPPER GOLD PORPHYRY DISCOVERY JOINT WITH ANGLO.
A fascinating story has found its way to us from the Philippines via Canada about a junior producer called Philex Gold which was created in 1996 from the gold assets of Philex Mining Corporation. The company has a number of gold prospects at various stages of exploration throughout the Philippines, but its main asset, until now, has been the Bulawan mine, located on Negros Island, produced over 73,000 equivalent ounces of gold in 1999 (71,000 ounces of gold and 108,500 ounces of silver) at a cash operating cost of US$206 per ounce. At the moment it is suspended while some changes are made to its underground mining operations, but this will not hit revenue too badly as the ore grade should be boosted.
The riveting piece of news is that Anglo American, its joint venture partner on the Boynungan prospect on the Philippine island of Surigao, has just reported uncut average assay values of 0.81% copper and 1.90 grams per tonne gold from its 365 metre discovery hole. Anglo American has the right to increase its interest in the Boyungan prospect from 40% to 70% by delivering a bankable feasibility study.
Most mining market commentators can remember only two orebodies in history that have returned intersections like that: one is Freeport's Grasberg orebody in Indonesia, the other is the notorious Bre-X fraud. Let it be clear at the outset that we are making no comparisons whatever between Philex and Bre-X and the directors of Hilex have the highest reputation.
Clearly investors in Canada saw the potential for Philex as the junior partner in this project as its shares shot up from 13 cents to 80 cents on the announcement, thus proving yet again that mining can provide the most excitement of any form of investment. And the Canadian market certainly needs a shot in the arm. Even at this level , however, it is still only capitalised at less than C$30 million, which is a point for investors in Minmet to take on board.
Apparently a scissors hole to the discovery hole has been drilled, is mineralised and is awaiting assay and a step out hole is currently being drilled 300 metres to the north-northwest. There are only two ways to gain exposure to the Boyungan discovery. The low risk is through Anglo American, but this route also offers minimal reward. The high risk play is Philex Gold, but there is still plenty of room for reward there also.
Porphyry targets are, by their nature, usually large, low-grade systems. The Grasberg mine grades 1.13% copper and 1.05g/t gold so the the Boyungan discovery is slightly lower in copper and double the gold grade. of Freeport's Grasberg project and analysts have been producing back-of-the-envelope calculations which suggest that it might have a value to Anglo and Philex, after smelting charges, of around $35/tonne(1/3 copper, 2/3 gold) and margins of about 50 per cent.
This is exciting stuff, but one hole does not make a mine. More will be known when more results are released in the coming weeks. Confirmation of the discovery hole’s potential will take time but there is the distinct possibility that Boyungan could prove to be one of the world's largest and richest copper-gold orebodies.
21 September 2000 |
