http://www.tribune.net.ph/business/20060721bus5.html
07/21/2006

Mining firm Benguet Corp. is looking to set up special purpose vehicles (SPVs) to raise funds for its water and mining projects.

In an interview with reporters, Benguet president Benjamin Philip Romualdez said the SPVs can raise money through public listing, debt issues and strategic partnerships with potential investors.

“The company has a high value basket of mining properties containing various metals including gold, copper, nickel and chromite,” he said. “The plan to create SPVs is still under study. I can’t give a timetable at this point.”

Benguet has also contracted Deutsche Bank to be its financial advisor for the Bulk Water Supply Project (BWSP) in Baguio City, even as the contract for the project has yet to be delivered.
The BWSP was bid out by the Baguio Water District to develop a water reservoir in Baguio City for 25 years. It requires Benguet to deliver 50,000 subic meters of treated water per day to Baguio City in accordance with Philippine Drinking Water Standard. The project has an initial capital requirement of P2.8 billion with a contract duration of 25 years, renewable for another 25 years.

Romualdez said Benguet has limited cash now and will be banking on its spent open pit mine which it will be using as water reservoir.

Aside from looking at the possibility of debt and equity issues, Romualdez said they are also talking to several prospective strategic investors including a Korean and a Danish firm. He said they are open to having several partners for the project.

In the company’s prevailing bid, it will source the raw water from a proposed 7 million cubic meters capacity reservoir to be converted from its mined-out open pit in Antamok, Itogon, located seven kilometers from Baguio City.

Benguet will then construct a water treatment plant near the reservoir in order to provide potable water and develop the surrounding area into a protected watershed.

Benguet said earlier that aside from being a viable business undertaking, the bulk water project is a superior mine rehabilitation solution.

“The open-pit Antamok gold mine was operated by the company for six years until its suspension in 1998 due to uneconomic reasons. Instead of the original plan of back filling the open pit, the entire mining area will be re-engineered and converted to alternative land use,” the company told the Philippine Stock Exchange.

The conversion of the open pit to water reservoir and development to watershed of the adjacent area are consistent with the policy of the Department of Environment and Natural Resources for sustainable management of resources.

In the certificaton letter issued on July 31, 2004 by then director Horace Ramos of the DENR-Mines and Geosciences Bureau (MGB), the project was endorsed as a preferred mine rehablitation option which is in consonance with the policy of the MGB that “land disturbed by mining be rehablitated to a more productive and beneficial land use.”

“This is the first time that a novel approach to mine rehabilitation and decommissioning is being applied to mined-out areas. This activity is a part of the company’s commitment to corporate social responsibility and sustainable development,” Benguet said. “Once fully operational, the company’s bulk water project will supply not only the water requirement of Baguio City, but more importantly it will first meet the need for safe and potable water of the surrounding communities of Itogon, its host municipality.”

Benguet also mentioned that its long term plan is to develop its other permitted water sources in the region to be able to service the water needs of other BLIST (Baguio, La Trinidad, Itogon, Sablang and Tuba) towns.