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Far Southeast, Philippines

Gold and copper deposit in the Philippines

Mineral Resources of 19.8Moz gold and 9,921Mlb copper

Location

The Far Southeast Project is situated in the established mining district of Mankayan in the Cordillera Region of Northern Luzon, approximately 250km north of Manila

 

Project ownership and capital expenditure

Exploration is being conducted 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 the project for payments of US$230 million and has the option to acquire a further 20% by paying an additional US110 million and incurring initial development costs totalling US$165 million.

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 sulphidebearing quartz and quartz-anhydrite vein sets and stockworks.

Exploration and conceptual mine design studies

Conceptual mine design studies were undertaken over the course of the year to investigate a selective mining option for the higher-grade core of the deposit by sub-level open stoping (SLOS). The selective mining option is being considered with a view to exploiting the deposit with minimum environmental and social impact and at the same time taking into account the capacity available potentially using the existing TSF of the Lepanto mine. Further assessment and refining of these studies is continuing. No drilling took place at the FSE project during 2015.

Mineral Resources, Social

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, however, 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, following protracted negotiations, a formal 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 application for renewal was made, given 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 the FPIC may not be validly imposed as a requirement for the renewal of MPSA 001 and that the MPSA should be renewed under the same terms and conditions. However, the risk of not obtaining the FPIC still exists and the Republic of the Philippines has subsequently filed a petition to vacate the arbitral award.

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

Mineral Resources

An Inferred Mineral Resource for the FSE deposit was declared in September 2012, within 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 and is compliant with the SAMREC Code.

Resource classification Tonnes
(Mt)
Grade
Gold
(Au g/t)
Metal
Gold
(Au Moz)
Grade
Copper
(Cu %)
Metal
Copper
(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 Au and US$8,600/t Cu. 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 Au and 5,953Mlb Cu to Lepanto and 7.9Moz Au and 3,968Mlb Cu to Gold Fields.

Outlook

The main focus of the Far Southeast project is to ensure that the project can be advanced subject to technical and economic constraints once the permitting issues are resolved and once the socio-political environment stabilises after the May 2016 national elections. Thus, the project is assisting its joint venture partner to obtain renewal of MPSA001 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. Further testing and refining of the selective mining sub-level open stoping studies will continue.

Competent persons

Internal technical reviews have been conducted on the FSE project asset by the Competent Persons as listed, who are full-time employees of Gold Fields Limited.

A Trueman
Lead Competent Person and Chief Resource Geologist

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

Industry experience: He has geology and resource estimation experience spanning 24 years, including more than 6 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.

P Dunkley
Site Manager FSE

BSc (Geology), PhD (Geology – Geochemistry).

Industry experience: He has 43 years’ experience as a practising geologist, the last nine of which have been with Gold Fields in Venezuela, the Dominican Republic, Peru and the Philippines. He is responsible for the exploration and geological modelling function for the project.