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Friday, August 19, 2005
Espinoza: Starting with a clean slate
By Fred C. Espinoza
BREWING. Some thing big may be brewing in the mining sector nowadays.
Reuters has indicated that plans are afoot to restart “what was once Southeast Asia’s largest copper mine,” with respect to the move of Atlas Consolidated Mining and Development Corp. (ACMDC) to raise $125 million by selling its output in advance and listing a new unit on the Philippine Stock Exchange.
In an interview last Tuesday, the foreign news agency quoted ACMDC president Alfredo Ramos as saying that Atlas would revert to a holding company of five entities, one of which—Carmen Copper Corp.—would be listed to revive the Toledo mine, closed in 1994 by a typhoon and a slump in metal prices.
“We have promised President (Arroyo) that we will be operational by next year,” Ramos, who is also chairman of Atlas, told Reuters, adding that President Arroyo supported the restart of the mine in Cebu island.
The IPO would take place this year or in 2006, said Ramos. Recent developments in the company and favorable external factors would be the best assurance that Atlas will experience sustained growth this time besides restoring the country in the world’s mining map.
First, the top honcho of the company spoke about the serious progress towards “a final underwriting agreement and prospects that the Macquarie Bank would probably underwrite $50 million.” He also revealed that Carmen Copper was also likely to be the first Philippine company to benefit from the new policy that exempts mining firms from being profitable in the three years prior to listing on the local stock exchange.
FOREIGN INTEREST. To recall, a Supreme Court ruling last year allowing foreign ownership of mines in the Philippines has sparked new interest in mining firms, which, by nature, must invest heavily in exploration and infrastructure before turning a profit from the soil.
Atlas also plans to start with a clean slate, so to speak. On its own, the company will raise at least $75 million, by wiping out its debts, “by selling output from the Toledo mine to advance,” Ramos said.
To fast-track the resumption of operations, the company executive also cited five or six Asian copper smelters had submitted preliminary bids for the raw material. More detailed proposals were expected by the end of September.
“One of the smelters that’s bidding is Chinese,” Ramos said, adding other bids had come from Japan, South Korea and the Philippines, where Glencore-owned, Pasar, is the only refiner.
Total investment could rise to $170 million, including a power plant for the mine, but Ramos said Atlas was considering several different possibilities for security electricity.
In a related development, Atlas’ bid for a new lease on life could not have come at the most appropriate time in its history, as well as the entire domestic mining industry when the latest report cited this week’s “copper trading at record high.”
A Reuters report, datelined New York City, said that New York copper futures closed at all-time peak levels on Monday with funds and speculators driving the price to uncharted territory on strong technical and fundamental factors.
Also, fresh fund buying of London copper pulled New York prices up with it.
On the London Metal Exchanges, three-months copper advanced to a record $3,633 per ton as the market headed into the close on Monday.
It ended the Monday kerb at $3, 6330 a ton, up from Friday’s close at $3, 597, the report said.
With copper in both markets trading at levels never seen before, and supply-demand fundamentals still bullish, some traders said they think the upscale still has potential.
“It’s a raging bull.
There’s no technical resistance on the chart anymore, so you really have nothing to look at.
There’s no upside targets because we’re in uncharted territory,” the report said.
(August 19, 2005 issue)
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