To: All shareholders
FENWAY RESOURCES LTD.
Suite 308 - 409 Granville Street, Vancouver, BC V6C 1T2
TEL: (604) 844-2265 FAX: (604) 844-2267
World Wide Web Site: fenwayresources.com or
E-mail: fwy@fenwayresources.com
December 31, 1997
A YEAR-END MESSAGE TO SHAREHOLDERS
As we pass through the Christmas Season and into the New Year, Fenway management would like to express its gratitude to the Company shareholders for their patience and understanding at the sometimes slow progress in achieving some of our goals. In addition, Fenway management wishes at this time to provide an update to shareholders as to the progress in 1997 related to the development of the Palawan Cement Project (PCP). The principal objective of Fenway at this stage is to complete the environmental permitting for the PCP, with the next most important items being the arrangement of the project financing and the return to trading on a recognized stock exchange. Other items important to Fenway and to the development of the cement project are also discussed below.
The shareholders of Fenway have quietly benefited many people in the region of the Palawan Cement Project. Our goodwill, spearheaded by the Company's new officer for Corporate Environmental and Community Relations Dr. Carlos Fernandez and ably assisted by Mr. Jos‚ Fernandez in Palawan, began early in 1997 to provide rice to eat; rice, corn, vegetable seeds and cuttings to plant, and fertilizer, insecticide, spray tanks and hand tools for many of the tribal people of the PCP quarry region. Dr. Fernandez and Jos‚ Fernandez, and a dedicated team of agriculturists provided training and instruction in the techniques of modern agrology. Fortunately, many plantings provided above average crop yields despite the adverse effects of El Ni¤o. Still many of the local inhabitants are starving with some 86% of the population of 25,000 people in the Municipality of Sofronia Espanola living below the regional poverty line. It is said 86% of the population lives on less than CAD $300 per family per year, which is similar in the adjacent Municipality of Quezon.
The grave situation with the people of southern Palawan results from the fact that no major base industry and therefore no tax source now exists to provide funds for social programs. The PCP will be the catalyst to resolve that in our region. From 1980-1984, Dr. Carlos Fernandez, then Undersecretary to the Department of Agriculture saw the problem and the plight of the people. He led the formation of the Domadoway Foundation (named after Mt. Domadoway) and helped secure a Community Forest Stewardship Agreement for the Foundation. The purpose was to develop an organization that tribespeople of the region could use to obtain funds to create sustainable development in a livelihood program within their capabilities. After 1984 Dr. Fernandez was reassigned to another Government responsibility and the Domadoway Foundation received no outside guidance and was deregistered in 1992. During that time the tribespeople, who should not be considered indigenous people as they are migrants from coastal regions, illegally logged the forest, slashed and burned the refuse, cultivated the newly prepared land for one or two years and then abandoned the barren land. This situation is identical to the tropical forest destruction in the Amazon Basin that North Americans witness on television. In the area of the PCP quarry there is no longer any forest! As part of the PCP environmental program the Company will employ local and tribal people to reforest the area.
Fenway and its PCP partner Central Palawan Mining and Industrial Corporation (CPMIC) had initially expected completion of the Environmental Impact Assessment report (EIA) and the Environmental Impact Statement (EIS) by early 1997. In spite of being told many times by our Philippine Environmental Consultants that the Report was adequate, the Project Proponents felt otherwise and demanded the Environmental Impact Statement be upgraded. Only through Company diligence and the professionalism and experience of Dr. Greg Weary of SNC Lavalin Environmental, Inc. of Vancouver and Montreal did we receive a competent EIS Report in May 1997. The documents were then submitted to the Palawan Council for Sustainable Development (PCSD) May 19, 1997 for review, approval if warranted, and transmittal to the Department of Environment and Natural Resources (DENR) for technical review. Approval was granted by the PCSD July 25, 1997 and transmittal of the EIS from the PCSD to the DENR was completed July 28, 1997.
During the preparation of the EIS an unauthorized draft of a chapter of the Report was leaked to the Legal Affairs Undersecretary for the Department of Environment and Natural Resources (DENR). In no way did this section represent an acceptable EIS and it was not presented to the DENR by parties known to the PCP Proponents. The DENR Undersecretary for Legal Affairs however, replied to Fenway's Philippine Environmental Consultants that the Report, as received, was inadequate and even if it was complete, he stated, the DENR would not review the EIS until certain "legal concerns" were addressed.
The "legal concerns" as noted in the Undersecretary's letter were thoroughly and adequately addressed in the EIS presented in May. The legal concerns pertained to outdated environmental laws which have been superseded by more current legislation, which should have been known by the Undersecretary for Legal Affairs for the DENR. The purported "legal concerns" are specifically (1) the NIPAS Law (Republic Act No. 7586) in the Province of Palawan and (2) the applicability and limitations of the SEP law (R.A. No. 7611). Philippine Justice Department written opinion and laws passed subsequent to R.A. No. 7586 and R.A. No. 7611 give clear evidence that mining activity is permitted in the region of the proposed PCP.
Through diligent work by CPMIC President Engineer Fernando B. Esguerra, himself a former high-ranking official in the Philippine Bureau of Mines and Geosciences, another report specific to "legal concerns" was prepared and hand delivered to the desk of the DENR Secretary Victor O. Ramos with no response. Follow up letters also received no response. Finally, in October 1997 Fenway's new Director Mr. Ren‚ Cristobal, himself a prominent businessman, arranged a personal meeting with DENR Secretary Victor O. Ramos to ask why our EIS was not being reviewed and what specifically were the legal concerns. During the meeting Secretary Ramos acknowledged that the PCP had no unfavorable technical factors. The DENR response was a copy of a letter sent much earlier to the Office of the President stating the same "legal concerns" that legally have been shown to be of no force and effect. The PCP proponents have responded to the DENR and the Office of the President and other Federal offices ranking higher than the DENR with favorable reaction. It is anticipated however, that this matter will be resolved in the near future and that the ECC will then be issued.
It is peculiar that the DENR would make reference to "Legal Concerns" with a reference to whether mining should be allowed in southern Palawan, or not. Both legal and physical evidence shows that mining has been permitted in southern Palawan and is currently giving substantial economic return from nickel, chromite, cobalt, silver, gold and silica.
It is a pleasure to acknowledge the positive support and contribution of many of the people who will be affected by the Palawan Cement Project. The Tribal Council for the people (sometimes referred to as Domadoway) of the PCP quarry area elected new members this year and, very capably led by Chairman Lingga Sapit, voted in a notarized Council motion to endorse the PCP. Likewise Barangay captains in the plant site area steadfastly supported the PCP in the face of NGO efforts to direct them to other endeavours. Mayors Iber Chou and Wenceslau (Ben) Delas Alas and their Councils of Sofronia Espanola and Quezon, Palawan respectively went out of their way to attend Provincial and Federal meetings to express complete support for the PCP. Governor Salvador Socrates and the two Palawan Congressmen, Congr. Alfredo E. Abueg and Congr. Vicente Sandoval passed motions in the Palawan Council for Sustainable Development (PCSD) approving of the establishment of the PCP and authorized the issuance of the ECC. Congr. Abueg and Gov. Socrates also wrote letters in support of the PCP to His Excellency President Fidel V. Ramos.
As we pursue the issuance of the Environmental Compliance Certificate, Fenway is coincidentally establishing the necessary branch office in the Philippines. Filing and registration for a Fenway branch office should be completed in January in time to receive the expected ECC.
Construction financing as proposed by Fenway is being arranged in three forms to cover US $400,000,000, the estimated cost to establish a 2,500,000 tonne per year cement plant and quarry at Scott Point, Palawan, as follows:
Suppliers Credit $ 170,000,000
Bank Loans $ 130,000,000
Cash from equity shareholders $ 100,000,000
Total $ 400,000,000
Arrangements for all sums have been discussed with appropriate industry financiers. Efforts to conclude financing will be made subject to receipt of the ECC.
Fenway received a letter of Intent October 1, 1997 from Trump Oil Corporation, a USA company trading on the NASDAQ Bulletin Board (trading symbol TPOC) to acquire all Fenway shares. Fenway directors concurred that the merged companies offered more potential prospect for adequate PCP construction funding than did Fenway on its own. The official Offering Memorandum from Trump is expected in early January 1998. See Fenway's News Release dated October 1, 1997.
During the year Fenway received abuse from three detractors: some Philippine cement manufacturers, the advocacy NGO's of Palawan, and the traders on the Vancouver Stock Exchange who we feel are significantly "short" Fenway shares.
Since our modern US $400,000,000 cement plant operating at 2,500,000 tonnes per year will have operating costs significantly less than that of existing old cement plants in the Philippines, we expected an adverse reaction from the existing Philippine cement producers.
Advocacy, as opposed to developmental, environmentalism is a business which attracts very large sums of money in the form of grants and donations. The bigger the industrial venture they attack and the more publicity they create the more funding they receive. In Palawan, the NGO activity extended to tribes people being told the relief food rations Fenway was providing were poisoned. A usually insignificant local newspaper in Puerto Princesa, The Palawan Sun,
gained notoriety by wrongly and continuously railing against the Palawan Cement Project to the point where their editorials became absurd. It publicly accused the Fenway principals of fraud and misrepresentation. They wrote untrue statements of stock manipulation by Fenway in concert with the Congressmen of Palawan and the Governor.
Certainly, the delisting of Fenway shares from the VSE had a negative impact and gave the Non-Government Organizations (NGO's) who are opposed to the cement plant an issue to publicize (misrepresent). Fenway has filed a Notice of Appeal on the VSE decision to delist with the British Columbia Securities Commission. No hearing has yet been held. Fenway maintains that it acted properly and for the best interests of shareholders at all times and expects a favorable decision to reinstate the Company for trading. Philippine senior Government officials have been given the facts relative to Fenway's delisting and are continuing to work with Palawan Cement Project principals in their quest to establish the cement plant.
Both of the Congressmen for Palawan, Congressman Vicente Sandoval, First District (Northern Palawan) and Congressman Alfredo Abueg, Second District (Southern Palawan, our region) came to Vancouver and visited a modern operating cement plant. They observed and acknowledged Fenway's claim that a modern cement plant can operate very cleanly and without pollution.
Congressman Abueg during his trip to Canada also traveled to Ottawa with Fenway and CPMIC principals to participate in the November 29, 1997 Protocol Endorsement by the partners to the Palawan Cement Project which was witnessed by Canadian Prime Minister Jean Chr‚tien and Philippine President Fidel V. Ramos. The whole ceremony was an immense honour and pleasure for the Palawan Cement Project principals to finally get acknowledgment for the magnitude and importance of our Project.
Fenway management would again like to express its gratitude to the Company shareholders for their patience and understanding at the sometimes slow progress in achieving some of our goals. Should it be any consolation to Fenway shareholders, it has been publicly stated in the Philippines that 61 substantial projects throughout the country have been unreasonably delayed in receiving their ECC by the DENR. As soon as our ECC is received, project financing, engineering and construction can be finalized.
Sincerely,
H. John Wilson
President |
