Monday, August 18, 2008 Foreign firms quarrel on copper project marketing rights
KORONADAL CITY -- A fresh rift has flared up between the two foreign companies already at odds with each other due to ownership stakes at the huge Tampakan copper and gold project in South Cotabato, it was learned Tuesday.
This time, Swiss miner Xstrata Copper and Indophil Resources NL, an Australian firm, disagreed over the marketing rights for copper concentrates once the project, pursued through Filipino affiliate Sagittarius Mines Inc., starts commercial operations few years from now.
Earlier, Xstrata Copper attempted a hostile takeover of all Indophil shares at Sagittarius. Indophil rejected the takeover bid of Xstrata.
Sue Sara, Xstrata Copper spokesperson, attacked the recent Target Statement of Indophil, which asserts that there is potential for the Australian miner to control its share of copper concentrate that will be produced from the Tampakan project.
"The rights of Xstrata and Indophil with respect to the Tampakan project are set out in a series of agreements between the parties. Those agreements do not confer any right on Indophil to market concentrate produced from the Tampakan project," Sara said.
Indophil holds a 34.23 percent interest in the Tampakan project that will rise to 37.5 percent as certain project milestones are achieved.
Xstrata is managing the Tampakan project, which is staunchly opposed by the Catholic Church and environmental groups, through its 62.5 percent stake.
Initial company studies showed that the Tampakan project potentially contains 1.6 million tons of copper and 14.6 million ounces of gold at a 0.3 copper cut-off grade. It is said to be the largest undeveloped copper deposit in Southeast Asia.
Sara noted that Indophil does not have the right to separately market its "share" of copper concentrate production without Xstrata's consent.
Xstrata has clearly communicated to Indophil on numerous occasions that it does not intend to provide such consent to Indophil or any other Sagittarius shareholder, she added.
Gavan Collery, Indophil corporate affairs manager, defended its Target Statement, saying that Indophil has a firm view of the commercial realities of the joint venture agreements.
"[The company] maintains that there is potential for Indophil to have the opportunity to enter into commercial arrangements with respect to product marketing from the Tampakan project," he retorted on Monday, a day after Xstrata issued its comment regarding the marketing rights.
Collery said that Xstrata is incorrect to imply that it has unfettered control over the decisions of Sagittarius Mines Inc regarding the marketing of product from Tampakan.
Last May, Xstrata initiated the intra-corporate bidding war by initially offering Au$ 1.00 per share to buy out all the stakes of Indophil in the Tampakan project.
A consortium consisting of Hong Kong-based Crosby Capital Limited and Filipino firm Alsons Corp. later on offered Au$1.28 per Indophil share, which Xstrata eventually decided to match.
Indophil's independent directors have advised its shareholders not to act on Xstrata's bid, saying it is likely that either one or both parties will further increase their offer.
Xstrata's offer is open for acceptance until 7 p.m. (Sydney time) on August 15, unless extended.
