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Far Southeast, Philippines

Gold and copper deposit in the Philippines

Mineral Resources of

19.8Moz gold and 9,921Mlb copper

  • Large copper-gold porphyry deposit in the Philippines
  • Holding position adopted
  • 40% attributable to Gold Fields

LOCATION

The Far Southeast Project (FSE) is located in the well-known mining district of Mankayan in the Cordillera region of Northern Luzon, approximately 250km north of Manila.

Project ownership and capital expenditure

The project is held by Far Southeast Gold Resources, Inc. (FSGRI), a joint venture company of Lepanto Consolidated Mining Company (LCMC) and Gold Fields. To date, Gold Fields has acquired 40% of FSGRI for payments of US$230m and has the option to acquire a further 20% by paying an additional US$110m and incurring initial development costs totalling US$165m. The tailing facility TSF5A is 50% owned by FSGRI and 50% by Lepanto.

Regional geology

The Mankayan district is underlain by a basement of pre-middle Miocene volcanic and intrusive rocks overlain by an extensive cover sequence of Pleistocene dacitic tuffs and breccias, the eruption of which was accompanied by the intrusion of diorite and dacite stocks and domes. Major north-trending strike-slip faults of the Philippine Fault system dominate the structure of the district and have exerted fundamental controls on igneous activity and mineralisation. The district-scale mineralisation is characterised by intermediate sulphidation veins and fault-controlled high-sulphidation enargite-uzonite deposits that have been mined for precious and base metals principally by the Victoria and Lepanto mines. A number of copper-gold porphyry prospects also exist, which principally include the FSE porphyry deposit itself.

DEPOSIT GEOLOGY

The FSE copper-gold porphyry is a deeply concealed deposit associated with a Pleistocene diorite-dacite intrusion complex intruded into Eocene basaltic country rocks. The intrusion complex is cross-cut by several phreatomagmatic breccia pipes which are pre-, syn- and post-mineralisation. The mineralisation is mostly hosted in the intrusion complex and to a lesser extent the basaltic country rocks and is characterised by disseminated sulphides and multi-phase sulphide-bearing quartz and quartz-anhydrite vein sets and stockworks.

No exploration or additional conceptual mine design studies were conducted on the FSE project during 2016.

Social licence to operate

For Gold Fields to obtain a further 20% interest in the project, a Financial or Technical Assistance Agreement (FTAA) will be required from the Philippines Government. This is dependent on obtaining the Free, Prior and Informed Consent (FPIC) of the local Kankana-ey indigenous people. In mid-2013, the Kankana-ey indigenous people voted in favour of the project and a Memorandum of Agreement was signed with the Council of Elders in February 2015. The Agreement, together with supporting documentation, is currently being considered by the National Commission on Indigenous Peoples (NCIP) before issuance of a formal certification precondition, which will complete the FPIC process.

In June 2014, LCMC and FSGRI jointly applied for the renewal of Mineral Production Sharing Agreement 001 (MPSA 001), which is the mineral tenement jointly held by the two companies in which most of the FSE deposit occurs. The initial 25-year term of MPSA 001 was due to expire in March 2015. In February 2015, LCMC and FSGRI commenced arbitration proceedings against the Philippine Government regarding whether FPIC is also required for the renewal of the MPSA. In November 2015, the arbitration panel issued an award that FPIC may not be imposed as a requirement for the renewal of MPSA 001 and that the MPSA should be renewed under the same terms and conditions. In December 2015, the Republic of the Philippines filed a petition to vacate the arbitral award with the court. The court rendered a decision in May 2016 to vacate the arbitral award. After the court denied a motion for reconsideration, LCMC and FSGRI subsequently filed a petition for review with the Court of Appeals in July 2016.

Environmental baseline monitoring continued throughout the year as part of FSGRI’s Environmental and Social Impact Assessment.

Following a review of the country’s 40 metallic mines by the Environment and Natural Resources department in 2016, operations at ten of the mines have been suspended due to environmental violations. These actions increase the overall risk for any mining operation in the region.

Mineral Resources

The Inferred Mineral Resource for the FSE deposit, first declared in August 2012, is 891.7Mt at 0.7g/t gold and 0.5% copper for 19.8Moz of gold and 9,921Mlb of copper. The resource was reported inside a mining constraint, which assumed an eventual non-selective, bulk underground mining method. The classification of Inferred Resource was applied based on drill hole spacing, estimation quality, geological continuity and geological understanding of the deposit in early 2012 supported by a view on reasonable prospects for eventual economic extraction. The Inferred Resource has a lower confidence than an Indicated Resource and cannot be converted to a Mineral Reserve.

Resource classification Tonnes
(Mt)
    Grade
(Au g/t)
Metal
(Au Moz)
    Grade
(Cu %)
Metal
(Cu Mlb)
 
Inferred 891.7     0.7 19.8     0.5 9,921  
Total 891.7     0.7 19.8     0.5 9,921  
Table: FSE Mineral Resources effective 31 August 2012
Notes:
1 These Mineral Resources are not Mineral Reserves as an assessment to a minimum of a pre-feasibility study is required.
2 The Mineral Resource is reported in accordance with the SAMREC Code.
3 The Mineral Resource is reported within an optimised underground bulk mining shell that is derived using scoping study mining, processing and cost parameters, and commodity prices of US$1,650/oz gold and US$8,600/t copper. All Inferred Resource material within the shell is reported.
4 The Mineral Resource is reported without dilution and ore loss parameters.
5 Rounding off of figures may result in minor computational discrepancies. Where this happens, it is not deemed significant.
6 Lepanto Consolidated Mining Company holds a 60% interest, while Gold Fields holds a 40% interest in the Far Southeast Project. Attributable metal is 11.9Moz gold and 5,953Mlb copper to Lepanto and 7.9Moz gold and 3,968Mlb copper to Gold Fields.

Plan Far Southeast, Philippines

Far Southeast

 

Outlook

The main focus of the FSE project is to ensure that it can be advanced subject to technical and economic constraints once the permitting issues are resolved and once the socio-political environment becomes more conducive to mining licence approvals or new mine development. Thus, the project is assisting its joint venture partner to obtain renewal of MPSA 001 and is completing the process to obtain the FTAA. Community projects, stakeholder engagement, environmental and social baseline data gathering and studies will continue to support the permitting process.

Competent persons

Internal technical reviews have been conducted on the FSE project asset by the Competent Person as listed who is a full-time employee of Gold Fields Limited and works for the Australia region.

A Trueman
Lead Competent Person and Chief Resource Geologist

BSc (Hons) Geology; PGeo, APEGBC 149753; MAusIMM CP (Geo) 110730

He has geology and resource estimation experience spanning 25 years, including more than five years of relevant experience in the estimation of porphyry systems similar to FSE. He has been part of the project since Gold Fields’ first involvement in 2009 and is responsible for the overall accuracy, standard and compliance of this declaration.