Joint Venture Firm Buys Option for Rich Mine Claim : Precious metals: The company says action on the Philippines land will raise its ore reserves to more than 10 million ounces of gold.
Two Orange County companies announced Tuesday that their Philippine joint venture firm, Precious Metals Mining and Development Corp., has purchased an option to acquire mining claims in the Philippines.
The companies, VTN Corp. of Orange and Shelly Associates Inc. of Tustin, said Precious Metals is in the process of reopening a pre-World War II mine in Camarines Norte, a province 130 miles southeast of Manila, known as Gold River Claims.
The value of the option, which must be exercised within five months, was not disclosed.
Precious Metals has mining concessions for 250 acres in the town of Paracale, with 350,000 troy ounces of gold in proven reserves worth about $133 million based on current market rates of $380 an ounce. The company claims that the options will raise its concessions to a total of 3,097 acres in the same district and raise its ore reserves to more than 10 million ounces of gold worth some $4 billion in the current market rate.
“Our geologists say we have between 10 million and 15 million ounces of gold in the veins of our claims,” said Daniel Montano, chairman of VTN, an engineering and development concern, and Shelly, an electronic components and systems manufacturer.
“Basically, we have what appears to be one of the largest gold finds in Asia.”
Precious Metals is 40% owned by Gold Properties Restoration Co. of Orange and a group of Filipino and U.S. investors. Among the major shareholders of Gold Properties are Shelly Associates (38%), Carl N. Karcher Trust of Anaheim (14.2%) and Montano Securities Corp. (16.1%), in which Montano is a major shareholder.
Precious Metals has purchased the properties from local Filipino owners, who hold 45-year concessions on the properties. So far, the venture has invested $2.3 million in the last 3 1/2 years in the development of the Philippine mines.
Montano said Gold Properties hopes to raise $5 million to finance the gold mine development through a public offering later this year. Toluca Pacific Securities Corp. in Burbank will underwrite 1 million shares at $5 a share.
In addition, Precious Metals hopes to borrow between $5 million and $6 million from international lending institutions to develop the mine and build a mill to process the ore into bullion. The firm is discussing loans with the World Bank in Washington, Asian Development Bank in Manila and Overseas Private Investment Corp., a U.S. development agency in Washington, company officials said.
Initial estimates of the cost to produce an ounce of gold from the mine are $190, Montano said. He said low labor costs in the Philippines and the high content of gold in the ore body makes this possible.
Montano said the Paracale district concession is just one of several the company is planning to invest in. “We have other companies looking into other gold mining concessions in other parts of the Philippines,” he said.
Although there are concerns that insurgency problems in the Philippines may make the investment risky, Montano said this problem is not prevalent in that particular area in the country.
“It’s not one of the most prosperous areas in the Philippines, but they have no insurgency problems,” said Ray Gorre, the spokesman with the Philippine Consulate General in Los Angeles.
He said, however, that the area is often struck by typhoons, which could make mining activities difficult.
Many foreign companies continue to do business profitably in the Philippines, said Brian Jenkins, managing director of Kroll Associates, a consulting firm in Los Angeles. “Companies can do business profitably so long as they take appropriate security measures,” he said.
The Philippines is the largest gold producer in Asia
