Australian-listed Spinifex Philippines intends to earn a majority interest in the Rapu Rapu polymetallic property on the Philippine island of Luzon.
To earn a 65% stake in the project, Spinifex must spend US$800,000 on exploration in the first year and US$2.2 million over the following two years. The company is also required to pay the vendor, TVI Pacific (TVI-T), US$200,000 in cash by the end of its 3-month due diligence review.
TVI will retain a 4.5% net smelter return royalty on the Ungay Malobago claims and an option on surface development rights throughout the claim block. Spinifex will manage and operate all future exploration programs.
The property contains two separate gold-bearing massive sulphide deposits, known as Ungay Malobago and Hixbar. Drill-indicated resources at the former deposit are pegged at 3.5 million tonnes grading 1.75% copper and 2.75% zinc, plus 3.42 grams gold and 43.3 grams silver per tonne, while those at the latter stand at 1.36 million tonnes grading 1.25% copper, 1.25% zinc, 2.96 grams gold and 15.5 grams silver.
Mineralization at the western extent of the Ungay Malobago deposit remains open, with an electromagnetic survey suggesting a possible extension of up to 300 metres.
As part of its due diligence review, Spinifex has completed check assays on 118 samples of drill core from the Ungay Malobago deposit and will drill three confirmation holes of its own. Gold grades from check assaying indicate up to a 25% increase over those previously reported, while preliminary results for zinc are described as being notably higher.
A third party has been retained to confirm Spinifex’s results.
Meanwhile, TVI has hired an Australian bank to find a joint-venture partner for its fully permitted Canatuan polymetallic property on Mindanao Island.
Several companies are reviewing the project, and TVI hopes to reach a deal by the second quarter of 1998.
The Canatuan project hosts proven and probable oxide reserves of 1.4 million tonnes grading 3.77 grams gold and 105.66 grams silver, and unoxidized reserves of 1.5 million tonnes grading 2.79% copper, 2.03% zinc, 1.31 grams gold and 62.14 grams silver.
The project’s net present value, after tax, is US$17.1 million at a discount rate of 10% and US$11.1 million at a rate of 15%. The internal rate of return is 32.6%, on an all-equity basis.
TVI based its calculations on metal prices of US$300 per oz. for gold, US$5 per oz. for silver, US85 per lb. for copper and US$55 per lb. for zinc. It also used assumptions made in the original bankable feasibility study and the recent devaluation of the Philippine peso.
Depressed metal prices have rendered uneconomic the continued operation of the 50-tonne-per-day carbon-in-leach pilot plant. As a result, the plant will be shut down at year-end.
TVI explores solely in the Philippines and has various interests in 22 properties, covering 1 million ha. Working capital at the end of September was $3.4 million. Some of these funds will be allocated to the Buenavista property on Luzon, where the company plans to drill-test several gold-bearing quartz vein systems.
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