Involvement of German Banks in The Philippine Mining Sector
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Involvement of German Banks in The Philippine Mining Sector

Involvement of German Banks in The Philippine Mining Sector

A Research paper prepared by Profundo for
philippinenbüro e. V. and Misereor

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Involvement of German Banks in The Philippine Mining Sector Involvement of German Banks in The Philippine Mining Sector Document Transcript

  • Involvement of German banks in the Philippine mining sector (Cordillera Region, 1993/M. Kottmeier/ Archiv philippinenbüro) A Research paper prepared by Profundo for philippinenbüro e. V. and Misereor
  • Involvement of German banks in thePhilippine mining sectorA research paper prepared by Profundo for philippinenbüroe.V. and Misereor25 November 2009Jan Willem van GelderDenise KouwenhovenProfundoRadarweg 601043 NT AmsterdamThe NetherlandsTel: +31-20-8208320E-mail: profundo@profundo.nlWebsite: www.profundo.nl
  • ContentsSummary .....................................................................................................................iIntroduction................................................................................................................1Chapter 1 Methodology and selection ............................................................2 1.1 Selection of mining companies...............................................................2 1.2 Data selection...........................................................................................3 1.3 Data analysis ............................................................................................3 1.4 Summary and data presentation .............................................................3Chapter 2 German bank relationships with mining companies....................4 2.1 A3 UNA......................................................................................................4 2.2 Apex ..........................................................................................................4 2.3 Atlas ..........................................................................................................4 2.4 Austral-Asia / Hallmark ............................................................................5 2.5 Benguet.....................................................................................................6 2.6 Buena Suerte............................................................................................7 2.7 Bulawan ....................................................................................................7 2.8 Colossal ....................................................................................................7 2.9 Egerton .....................................................................................................7 2.10 Lepanto .....................................................................................................8 2.11 MacroAsia.................................................................................................8 2.12 Manila Mining ...........................................................................................8 2.13 Metals Exploration ...................................................................................9 2.14 Minimax.....................................................................................................9 2.15 OceanaGold..............................................................................................9 2.16 Pacific Nickel ..........................................................................................10 2.17 Philex ......................................................................................................10 2.18 Philsaga ..................................................................................................11 2.19 Platinum Group ......................................................................................11 2.20 Sagittarius ..............................................................................................11 2.21 Surigao....................................................................................................12 2.22 TVI ...........................................................................................................13Appendix 1 Conversion factors........................................................................14Appendix 2 References .....................................................................................15
  • Summary This study provides an overview of the involvement of German banks in the financing of mining exploration and production in the Philippines during the past five years. This involvement is found to be either direct, through the financing of specific mining projects, or indirect, through corporate financing of foreign mining companies that are active in the Philippines German banks were found to be involved in 8 out of 22 companies and their affiliates researched. The following table provides an overview of which bank is involved in which company. Austral-Asia/ Hallmark Metals Exploration No. of companies Platinum Group Manila Mining Buena Suerte Pacific Nickel OceanaGold Sagittarius MacroAsia Colossal Philsaga Bulawan Benguet Minimax Lepanto Egerton A3 UNA Surigao Philex Apex Atlas TVIGerman bankBaader Bank X X X 3Berenberg X X 2BankBHF Bank X 1Commerzbank X X X X 4DekaBank X 1Deutsche X X 6 X X X XBankHauck & X X 2AufhäuserLampe X X 2LBBW X X X 3Metzler X X 2Tradegate X X 2WestLB X X 2 A total of 12 German banks are involved in the financing of one or more of the researched mining companies, although their involvement often is limited. Only Deutsche Bank and Dresdner Bank (now part of Commerzbank) play an active role as main lenders and as bookrunners in syndicated loan deals. The other German banks mostly finance the mining companies through shareholdings, but on a minor scale. -i-
  • The relative involvement of German banks in the Philippines does not appear to be veryhigh, especially compared to banks from Australia, the United States, the United Kingdomand the Philippines itself. Of all German banks, Deutsche Bank is the main financier of themining companies and their affiliates (6 companies). Other banks with multiple links areCommerzbank (4 companies) and WestLB (2 companies). Bankhaus Lampe, BerenbergBank, Hauck & Aufhäuser and LBBW invest in 2 companies through a mutual investmentfund. Baader Bank and Tradegate act as brokers for 3 and 2 companies respectively. -ii-
  • IntroductionThe objective of this research project is to provide an overview of how German banks – bothpublic and private – are involved in financing the exploration and production of mining in thePhilippines during the past five years. This involvement can be either direct, through thefinancing of specific mining projects, or indirect, through corporate financing of foreign miningcompanies that are active in the Philippines.Chapter 1 of this report explains the methodology and the selection of the mining companiesthat were researched. Chapter 2 then analyses the involvement of German banks in thefinancing of these companies since early 2005.A summary of the findings of this report can be found on the first pages of this report. -1-
  • Chapter 1 Methodology and selection1.1 Selection of mining companiesIn the first phase of this study, twenty mining companies active in the Philippines wereselected in consultation with the Philippinenbüro im Asienhaus. Table 1 provides an overviewof these companies, their mining location in the Philippines, the main mineral and the size oftheir contracted mining area. This area is not always equal to the actual area in operation. Table 1 Mining companies active in the Philippines ContractedCompany Location Main minerals area (in hectares)A3 UNA Santa Cruz, Zambales Chromite 448.9 Gold, copper andApex Mabini and Maco, Compostela Valley 2,237.6 silverAtlas Toledo City, Cebu and Quezon, Palawan Copper and nickel 522.3Austral-Asia/ Governor Generoso, Mati and San Isidro, Nickel 17,215.5Hallmark Davao OrientalBenguet Santa Cruz, Zambales Chromite 1,406.7 San Francisco and San Ricardo, Southern Gold, copper andBuena Suerte 4,192.1 Leyte silverBulawan Jose Panganiban and Labo, Camarines Norte Gold and copper 6,632.7 Several locations in Cagayan, Ilocos Norte,Colossal Magnetite 324.3 Ilocos Sur and La Union Lobo, Rosario, San Juan and Taysan,Egerton Gold and copper 26,111.6 BatangasLepanto Mankayan, Benguet Gold and copper 2,778.3MacroAsia Brooke’s Point, Palawan Nickel and chromite 1,524.0Manila Mining Several locations in Surigao del Norte Gold and copper 2,674.4Metals Bagabag, Dupax, Quezon, Solano and Gold and copper 14,318.2Exploration Villaverde, Nueva Vizcaya Several locations in Agusan del Norte, IlioloMinimax Gold and copper 8,338.2 and Surigao del Norte Several locations in Nueva Vizcaya, QuirinoOceanaGold Gold 21,283.3 and Surigao del SurPacific Nickel Cadianao, Surigao del Norte Nickel 25,000.0 Several locations in Benguet, NegrosPhilex Occidental, Surigao del Norte and Gold and copper 15,975.6 Zamboanga del NortePhilsaga Bunawan and Rosario, Agusan del Sur Gold 2,538.8 Dinapigue, Isabela and Manticao, MisamisPlatinum Group Nickel and ferronickel 2,391.8 Oriental Several locations in Davao del Sur,Sagittarius Sarangani, South Cotabato and Sultun Gold and copper 40,782.6 Kudarat Claver, Surigao del Norte and Carrascal,Surigao Nickel and chromite 8,261.4 Surigao del Sur -2-
  • TVI Siocon, Zamboanga del Norte Gold and silver 508.3 Source: Website Mines & Geosciences Bureau in the Philippines (www.mgb.gov.ph), Viewed in September 2009.1.2 Data selectionInvolvement of German banks – both private and public – in the financing of the twentymining companies or their parent companies as listed in Table 1, was primarily gathered fromannual reports, stock exchange filings and other publications of the companies concerned.Additionally, archives and websites of trade magazines and the financial press (Euromoney,Euroweek, Moscow Times, International Financing Review, Financial Times, Wall StreetJournal, Reuters, Dialog, Factiva, LexisNexis, Highbeam, Northern Light, Project FinanceMagazine, Project Finance International and others), as well as specialised financialdatabases (Bloomberg, Thomson One Banker), were used to collect data.1.3 Data analysisThe data found on the involvement of German banks in the financing of the miningcompanies or their affiliates is analysed and summarised on the first pages in this report.Attention was focussed on German banks playing a role in the financing of the miningcompanies researched, based upon the following criteria: • The bank is providing a loan, where the purpose of the loan is for general corporate use or for specific mining projects in the Philippines; • The bank owns or manages at least 0.01% of the company’s shares; • The bank is underwriting new shares or bonds issued by the company; • The bank acts as a broker at the stock exchange where the company is listed.At least one of these criteria has to be met since the beginning of 2005.1.4 Summary and data presentationFor each significant financing relationship found with a German bank, the followinginformation will be provided: • The company’s name and country of origin; • The company’s mining projects in the Philippines; • Name of the German bank involved; • Type of financing activity; • Amount; • Date; • Purpose (if known); • For loans: Maturity and interest rate (if known).The information sources, on which these data are based, are mentioned in endnotes.The information found on which German banks play a relevant role in the financing of themining companies or their affiliates is summarised on the first pages of this report. -3-
  • Chapter 2 German bank relationships with mining companies2.1 A3 UNAA3 UNA Mining Corporation holds a small-scale mining permit in Santa Cruz (Zambales).Subsequent to residents, fishermen and other mining companies accusing A3 UNA of illegalmining operations and causing nickel ore to leach to the sea due to unstable construction ofthe pier and stockpile area, in January 2008, the Philippine Department of Environment andNatural Resources ordered A3 UNA to stop its operations. Investigation by the Mines andGeosciences Bureau and the Department of Environment and Natural Resources showedthat A3 UNA indeed is to blame for illegal cutting of trees and other environmental damages.1No information was found on German bank involvement in the financing of A3 UNA.22.2 ApexApex Mining Company Inc. is a Philippine company which main project is the Maco minelocated in Maco (Compostela Valley). Since 2005, the majority of Apex’ shares is owned bythe Canadian mining company Crew Gold Corporation (28.03%) and its Philippine affiliateMapula Creek Gold Corporation (44.88%).3 Apex’ remaining shares are listed on thePhilippine Stock Exchange. On 17 September 2009, Crew Gold announced that the sharesin Apex held by Mapula and herself will be fully sold to the private Malaysian companyMindanao Gold Inc.4Until 2009, Apex focused on the development and rehabilitation of the Maco mine, thereforecommercial production was not started until this year. As a result, the company had norevenues in 2008 and made a net loss in the amount of PH$ 344 million (EUR 5.3 million).Apex employs nearly 1,000 staff members.5The following information was found on German bank involvement in the financing of Apex orits (new) parent companies: • Fund manager Metzler Investment GmbH – a fully owned subsidiary of Bankhaus Metzler – was a shareholder of Crew Gold during the second half of 2006, with a stake representing 0.43%. Currently, the fund owns no shares in Crew Gold.6 • Fund manager Universal-Investment-Gesellschaft mbH – held by Landesbank Baden- Württemberg, Bankhaus Lampe, Hauck & Aufhäuser Privatbankiers and Berenberg Bank has been a shareholder of Crew Gold from the second quarter of 2007 until the second quarter of 2008, with a stake representing 0.32%. Currently, the fund owns no shares in Crew Gold.7 • Tradegate AG Wertpapierhandelsbank acts as the lead broker for Crew Gold’s shares listed on the Frankfurt Stock Exchange.82.3 AtlasAtlas Consolidated Mining and Development Corporation was incorporated in the Philippinesin 1935. The company operates several copper and nickel mines in Toledo City (Cebu) andQuezon (Palawan) and employs approximately 6,000 people. In 2008, revenues amounted toPH$ 923 million (EUR 14.3 million) and net income was PH$ 129 million (EUR 2.0 million).As of 1953, Atlas is listed on the Philippine Stock Exchange.9Atlas has a number of participations, most of which are involved in the mining business. Itstwo main participations are:10 -4-
  • • Carmen Copper Corporation, which was incorporated to develop the in-situ mineral resources and ore reserves of Carmen, Lutopan and Biga, collectively known as the Toledo Copper Complex. • Berong Nickel Corporation, which was incorporated to develop mining activities for the Berong mineral properties in Palawan, also known as the Berong Nickel Project.The following information was found on German bank involvement in the financing of Atlasand its participations: • On 25 May 2007, Carmen Copper Corporation entered into a US$ 100 million (EUR 74.4 million) loan agreement with Deutsche Bank, Singapore Branch. The proceeds of the loan were primarily designated for capital expenditure and financing of general working capital requirements. As of 2009, the loan will be repaid in ten equal semi-annually instalments.112.4 Austral-Asia / HallmarkAustral-Asia Link Mining Corporation and Hallmark Mining Corporation are tenement holdersof the 11,799 hectares large Pujada Nickel Mine situated in the Davao Oriental province.Austral-Asia and Hallmark are two Philippine-based companies formed under a joint ventureagreement between Asiaticus Management Corporation (Amcor) and QNI Philippines Inc.,the latter being a full subsidiary of BHP Billiton Ltd – the world’s largest mining company.12The Pujada Project, also referred to as the Hallmark Project, requires estimated investmentsof US$ 800 million to US$ 1.5 billion (approximately EUR 500 million to EUR 1.0 billion),which is financed by BHP Billiton. BHP Billiton plans to start construction of a nickelprocessing plant by 2010.13The following information was found on German bank involvement in the financing of BHPBilliton’s corporate activities. Financing for specific BHP Billiton projects or acquisitions notrelating to the Philippines have been excluded: • In March 2005, BHP Billiton’s existing US$ 2.0 billion (EUR 1.3 billion) multi-currency revolving credit facility (arranged in September 2001 and altered in September 2004) was increased to US$ 3.0 billion (EUR 2.0 billion). maturing in September 2009. This facility matures in September 2009 and can be used for general corporate purposes and is also supporting the issuance of Medium Term Notes (a kind of bonds) in Europe and Australia.14 Deutsche Bank was among the seventeen banks participating in this facility.15 All banks committed US$ 176.5 million (EUR 116.9 million).16 • In December 2006, BHP Billiton altered its Euro Medium Term Note (EMTN) Programme on the European capital market which was arranged in June 2002. Under this programme, the company can regularly issue Medium Term Notes (a kind of short- term bonds) up to an aggregate value of US$ 3.0 billion (EUR 2.0 billion).17 In December 2007, the aggregate value was raised to US$ 5.0 billion (EUR 3.5 billion) and in October 2008, the aggregate value again was raised to EUR 10 billion. Arranger for the programme is Deutsche Bank. The programme includes six dealers.18 • In February 2007, BHP Billiton issued EUR 600 million of one-year floating rate bonds and EUR 600 million of seven-year 4.375% bonds in the framework of its EMTN programme. The proceeds were used to refinance short term debt. Joint bookrunners for this bond issuance were Barclays Bank (United Kingdom) and BNP Paribas (France). Among the seven banks participating in the issuing syndicate was Deutsche Bank.19 -5-
  • • In March 2007, BHP Billiton issued three tranches of bonds on the American capital market with a total value of US$ 2.25 billion (EUR 1.49 billion). Joint bookrunners for this bond issuance were Bank of America (United States) and JPMorgan Chase (United States). Deutsche Bank participated in the underwriting syndicate of seven banks with an amount of US$ 67.5 million (EUR 44.7 million).20 • In December 2008, BHP Billiton started a Medium Term Note (MTN) Programme on the Australian, Asian and European capital markets. Under this programme, the company can regularly issue Medium Term Notes up to an aggregate value of A$ 3.0 billion (EUR 1.5 billion). Arranger for the programme is UBS (Switzerland). The programme has seven dealers, included Deutsche Bank. • In March 2009, BHP Billiton issued US$ 1.5 billion (EUR 1.1 billion) of five-year 5.5% bonds and US$ 1.75 billion (EUR 1.3 billion) of ten-year 6.5% bonds for general corporate purposes. Joint bookrunners for the bond issuance were Barclays Bank (United Kingdom), Citigroup (United States) and Goldman Sachs (United States). Among the sixteen banks that participated was Commerzbank, who severally underwrote US$ 71.5 million (EUR 54.7 million).21 • In March 2009, BHP Billiton issued EUR 1.25 billion of three-year 4.75% bonds and EUR 1.0 billion of seven-year 6.375% bonds in the framework of its EMTN programme. The proceeds were used for general corporate purposes. Joint bookrunners for this bond issuance were BNP Paribas (France), HSBC (United Kingdom) and UBS (Switzerland). Commerzbank was one of the thirteen banks participating.22No information was found on German bank involvement in the financing of Austral-Asia,Hallmark, Asiaticus or QNI Philippines.2.5 BenguetBenguet Corporation was established in 1903, pioneering the first major mining operation inthe Philippines. The company is engaged in chromite, gold, and other metallic and non-metallic mining and production, exploration, research and development. As of 1950, Benguetis listed on the Philippine Stock Exchange. In 2008, the company’s revenues amounted toPH$ 345 million (EUR 5.3 million), however mainly due to large foreign currency exchangelosses, it made a net loss of PH$ 483 million (EUR 7.5 million). Benguet employs about 500people, of whom approximately 50% are involved in mining exploration and operation.23Benguet is the contractor of one mine (Santa Cruz Nickel Project) covering 1,407 hectares inSanta Cruz (Zambales). In addition, Benguet has several operating agreements with othermining companies concerning the following projects:24 • Kingking Copper-Gold Project (1,656 hectares) contracted by the Nationwide Development Corporation; • Pantingan Copper-Gold Project (1,410 hectares) contracted by Balanga Bataan Minerals Corp.; • Boringot Gold Prospect (4,234 hectares) contracted by Pantukan Mineral Corporation; • Surigao Coal Project (12,169 hectares) contracted by the Department of Energy.No information was found on German bank involvement in the financing of Benguet.25 -6-
  • 2.6 Buena SuerteBuena Suerte Mining Corporation was incorporated in 1995 as a joint venture betweenOxiana Philippines Inc. and Orophilippine Ventures Inc. In March 2006, Oxiana Philippineswas sold to Royalco Resources Ltd and changed its name to Royalco Philippines Inc.Pursuant to this sale, Royalco Philippines became the sole shareholder of both BuenaSuerte and Orophilippine Ventures. Royalco Resources Ltd, which is listed on the AustralianStock Exchange, is the ultimate parent company of all entities.26Through Buena Suerte, Royalco is involved in the Malangza Project, situated in the SouthernLeyte province. As this project is still in the exploration stage, no commercial operations andthus revenues have been generated as of yet.27No information was found on German bank involvement in the financing of Buena Suerte orits (ultimate) parents.282.7 BulawanBulawan Mineral Resources Corporation is an affiliate of Coral Resources Philippines Inc.,both held by Coral Resources Ltd, a UK company currently in liquidation.29 Bulawan is theexploration permit holder for a gold and copper deposit located in the province of CamarinesNorte.No information was found on German bank involvement in the financing of Bulawan or itsaffiliates.302.8 ColossalColossal Mining Corporation is a private Philippine company involved in offshore mining. Thecompany holds five individual exploration and mining permits covering approximately 80% ofoffshore magnetite iron ore sites in the identified magnetite iron ore potentials in the NorthWestern Luzon Offshore, Lingayen Gulf and the Cagayan Province.31No information was found on German bank involvement in the financing of Colossal.322.9 EgertonEgerton Gold Philippines Inc. was originally incorporated by the Australian based companyEgerton Gold NL, currently named Aviva Corporation Ltd and listed on the Australian andBotswana Stock Exchanges. In 2008, the entire share capital of Egerton Gold Philippineswas acquired by Mindoro Resources Ltd, a gold and copper mining company located inCanada and trading on the Toronto TSX Venture Exchange and Frankfurt Stock Exchange.33Egerton Gold Philippines is active in exploring and operating several gold and copper minesin the Batangas province.The following information was found on German bank involvement in the financing of EgertonGold Philippines or its (former) parent: • Baader Bank acts as the lead broker for Mindoro’s shares listed on the Frankfurt Stock Exchange.34 -7-
  • 2.10 LepantoLepanto Consolidated Mining Company was incorporated in the Philippines in 1936. Atpresent, it operates the Victoria and Teresa gold deposits in Mankayan (Benguet). In 2008,Lepanto’s mining revenues amounted to PH$ 1.7 billion (EUR 26.5 million) and its net losswas PH$ 763 million (EUR 11.8 million). The company employs approximately 2,000 people.As of 1947, Lepanto’s shares are listed and traded on the Philippine Stock Exchange.35The following information was found on German bank involvement in the financing ofLepanto: • In December 1998, Lepanto entered into a loan and hedging facilities agreement with NM Rothschild and Sons (Australia) and Dresdner Bank – currently owned by Commerzbank – providing for borrowings up to US$ 30 million (EUR 25.7 million) and a hedging facility up to 300,000 ounces of gold. As of 31 December 2004, the loans obtained were fully repaid.36 • On 25 January 2006, due to controversy on the gold hedging facility between Lepanto and Dresdner Bank, a gold delivery agreement was signed by both parties. Under this agreement, a gold loan of approximately US$ 14 million (EUR 11.4 million) would be repaid as of 1 February 2006 up to 30 September 2009 by way of minimum monthly instalments of the cash equivalent in US$ of 200 ounces of gold computed at the spot price in the market. Any remaining balance was to be fully repaid by final delivery on 30 September 2009. An amendment to this agreement signed in 2008, has extended final delivery to 30 September 2011 and has increased gold deliveries from 200 to 250 ounces effective 21 October 2010.372.11 MacroAsiaMacroAsia Mining Corporation was incorporated in 2000 by MacroAsia Corporation, acompany active in the aviation business. MacroAsia is the contractor for two mining projects,both situated in Brooke’s Point (Palawan), the largest of which being the Infanta NickelProject. So far, the mining projects are still at an exploration stage without generating anyrevenues.38No information was found on German bank involvement in the financing of MacroAsia.392.12 Manila MiningManila Mining Corporation was founded in 1949 in the Philippines. It operates and controlsmineral lands in Surigao Del Norte and has applied for another 4,850 hectares around itsexisting mines. The company’s shares are listed on the Philippine Stock Exchange and it hasa fully-owned subsidiary named Kalayaan Copper-Gold Resources Inc. In July 2001, ManilaMining suspended its mining and milling operations pending receipt of the permit to furtherelevate and operate its tailings pond by the Department of Environment and NaturalResources. As a result, over 90% of the company’s 540 employees have been on forcedleave and revenues from mining are nil. In 2008, Manila Mining made a net loss of PH$ 132million (EUR 2 million).40No information was found on German bank involvement in the financing of Manila Mining orits subsidiary.41 -8-
  • 2.13 Metals ExplorationMetals Exploration plc is a UK based company listed on the Alternative Investment Market ofthe London Stock Exchange. Its primary mining activities take place in the Nueva Vizcayaprovince. As Metals Exploration has no mines in production, up until today no revenues havebeen realised. In 2008, net loss amounted to GB£ 3.4 million (EUR 4.5 million). Thecompany employs about 300 people, of whom approximately 90% are involved in miningexploration.42Metals Exploration is the owner of two important subsidiaries in the Philippines:43 • FCF Minerals Corporation, which holds the exploration permit for the Runruno Project. In the period 2005-2007, FCF was acquired in stages from Christian Mining Inc. and Filminera Resources Corp. Metals Exploration currently owns 85% of the shares in FCF and has an option over the remaining 15% held by Christian Mining Inc. • MTL Philippines Inc., which was incorporated by Metals Exploration in December 2005 as a trading mining operation. Currently, MTL functions as the regional head office.The following information was found on German bank involvement in the financing of MetalsExploration and its subsidiaries: • Deutsche Bank Private Wealth Management Limited – an affiliated company of Deutsche Bank – has had a minor stake in Metals Exploration in 2006 and in 2009 (varying from 0.01 to 0.15%). Currently, the bank owns no shares in Metals Exploration.442.14 MinimaxMinimax Minerals Exploration Corporation is a private Philippine company having an interestin four mining operations, all located in Surigao del Norte:45 • Agata Nickel, Gold and Porphyry Copper-Gold Prospect (4,955 hectares); • Mat-I Gold Prospect (area unknown); • Tapian Main Copper-Gold Prospects (1,296 hectares); • Tapian San Francisco Copper-Gold Prospects (1,100 hectares).All four projects are owned by Mindoro Resources Ltd (42.5%), Panoro Minerals Ltd (42.5%)and Minimax (15%). Mindoro and Panoro are both Canadian companies trading on theToronto TSX Venture Exchange and Frankfurt Stock Exchange.The following information was found on German bank involvement in the financing ofMinimax or its affiliates: • Baader Bank acts as the lead broker for Mindoro’s shares listed on the Frankfurt Stock Exchange.462.15 OceanaGoldOceanaGold (Philippines) Inc. was originally incorporated in the Philippines as AustralasianPhilippines Mining Inc. by the Australian company Climax Mining Ltd. Subsequent to Climax’merger with OceanaGold Corporation in 2006, Australasian Philippines Mining became asubsidiary of OceanaGold and its name was changed accordingly. OceanaGold (Philippines)is the owner of the Didipio Gold and Copper Project in Nueva Vizcaya.47 -9-
  • OceanaGold Corporation is an Australian company listed on the Toronto, Australian and NewZealand Stock Exchanges. Besides the Didipio project, the company has projects in Australiaand New Zealand. In 2008, revenues amounted to US$ 217 million (EUR 148 million), whilea net loss of US$ 54.7 million (EUR 37.4 million) was realised.48The following information was found on German bank involvement in the financing ofOceanaGold: • Fund manager Universal-Investment-Gesellschaft mbH – held by Landesbank Baden- Württemberg, Bankhaus Lampe, Hauck & Aufhäuser Privatbankiers and Berenberg Bank has been an OceanaGold shareholder from the fourth quarter of 2007 until the second quarter of 2008, with a stake representing 0.03%.492.16 Pacific NickelPacific Nickel Philippines Inc. is contractor for the Nonoc Nickel Project in Cadianao (Surigaodel Norte). In 2006, this project was taken over from the Philippine Nickel Company(Philnico) after this entity declared bankruptcy.50 Pacific Nickel is owned by Philnico, EasternPeninsula Capital Resources and New Manila Properties.51No information was found on German bank involvement in the financing of Pacific Nickel orits parent companies.522.17 PhilexPhilex Mining Corporation was incorporated in the Philippines in 1955. Its shares are listedon the Philippine Stock Exchange. Philex (either directly or indirectly) controls a number ofmining companies in the Philippines, among which Philex Gold Philippines, Brixton Energy &Mining Corporation and Minphil Exploration Company. Philex currently operates the Padcalmine located in Tuba (Benguet), producing copper, gold and silver.53In addition, Philex owns the Boyongan Copper-Gold Deposit under a joint venture with AngloAmerican plc, a UK company listed on the London and Johannesburg Stock Exchanges. TheBoyongan Deposit involves 3,011 hectares in Surigao del Norte and Agusan del Norte. It isalready in the advanced drilling exploration and pre-feasibility and is set to commencecommercial operations in 2010.54Philex employs about 2,200 people of whom 2,000 work in operations. In 2008, Philex’revenues from mining activities amounted to PH$ 9.7 billion (EUR 150 million) and its netprofit from mining activities PH$ 2.9 billion (EUR 45.6 million).55The following information was found on German bank involvement in the financing of Philex,its subsidiaries and its joint venture partner: • In July 2006, Anglo-American plc obtained a one-year revolving credit facility in the amount of US$ 750 million. Bookrunners for this deal were (amongst others) Deutsche Bank, Dresdner Bank – now a subsidiary of Commerzbank – and WestLB Asia – an affiliated company of WestLB.56 • In May 2008, Anglo American plc obtained a syndicated term loan of US$ 4.5 billion with a maturity date in June 2011. Among the participants in this deals were Deutsche Bank and Dresdner Bank – a subsidiary of Commerzbank.57 -10-
  • 2.18 PhilsagaPhilsaga Mining Corporation used to be a privately owned Philippine company, operating theCo-O Gold Mine in Agusan del Sur. In 2006, Philsaga was acquired by Medusa Mining Ltd,an entity listed on the Australian Stock Exchange and the Alternative Investment Market inLondon. Besides Philsaga, Medusa controls a number of other companies in the Philippines.In the financial year 2008/09, Medusa’s revenues amounted to A$ 57.2 million (EUR 30.9million), which is nearly fully attributable to resources from the Co-O Gold Mine, and realiseda net profit of A$ 38.1 million (EUR 20.7 million). The company employs over 600 staffmembers at its operations.58No information was found on German bank involvement in the financing of Philsaga or itsparent company.592.19 Platinum GroupPlatinum Group Metals Corporation is a private Philippine company owning the DinapigueNickel Project in Dinapigue (Isabela), which is at an advanced exploration stage, and theManticao Ferronickel Smelter Project in Manticao (Misamis Oriental), which is still at aconstruction and development stage.60The following information was found on German bank involvement in the financing ofPlatinum Group: • In October 2007, Platinum Group signed a US$ 40 million (EUR 27.8 million) deal with Deutsche Bank. The deal is split into tranche A – a US$ 25 million loan with a tenor of 4.5 years, tranche B – a US$ 10 million loan also with a tenor of 4.5 years, and tranche C – a US$ 5 million revolving loan with a tenor of 90 days. The deal’s purpose is to finance the company’s smelting operations and to pre-finance exports of nickel ore.612.20 SagittariusSagittarius Mines Inc. operates the Tampakan Copper-Gold Project as a joint venturebetween Xstrata plc (62.5%), Indophil Resources NL (34.2%) and Alsons Corporation(3.3%). Xstrata is the fifth largest diversified metals and mining company in the world withoperations and projects in 19 countries. Tampakan is Xstrata’s only mining project in thePhilippines. The project is located on the southern Philippine island of Mindanao on theboundary of three provinces: South Cotabato, Sultan Kudarat and Davao del Sur, andrepresents one of the largest undeveloped copper-gold deposits in the South East Asia-Western Pacific region. The project currently employs approximately 447 employees andcontractors, and a further 325 local community members who work weekly rotational shiftson the project’s exploratory drill rigs.62The following information was found on German bank involvement in the financing ofXstrata’s corporate activities. Financing for specific Xstrata projects or acquisitions notrelating to the Philippines have been excluded: • In May 2004, Xstrata entered into a US$ 1.4 billion (EUR 1.1 billion) committed syndicated loan comprising a five-year term of US$ 1.0 billion and a one-year term of US$ 400 million. Among the mandated arrangers of this deal were Deutsche Bank and Dresdner Bank Luxembourg S.A. – an affiliated company of Commerzbank. WestLB was one of the lenders. This facility was refinanced during 2006.63 • In August 2005, Xstrata obtained a one-year fully drawn loan facility in the amount of US$ 600 million (EUR 491 million). Lead arranger and one of the two lenders was Deutsche Bank.64 -11-
  • • In May 2008, Xstrata issued three bonds raising proceeds of US$ 3.1 billion (EUR 2.0 billion). Dresdner Kleinwort Wasserstein – an affiliated company of Commerzbank – was one of the co managers in this bond issue.65 • In October 2008, Xstrata entered into a US$ 5.5 billion (EUR 4.3 billion) revolving syndicated loan facility maturing in October 2011. Commerzbank, its subsidiary Dresdner Bank and Deutsche Bank were bookrunners for this deal, together with six other banks. Deutsche Bank was also one of the two global coordinators.66 • In March 2009, Xstrata issued additional ordinary shares raising proceeds in the amount of US$ 5.8 billion (EUR 4.3 billion). The joint bookrunners Deutsche Bank and JP Morgan Cazenove underwrote the issue, with no other banks in the syndicate.67 • Through several investment funds managed by Deutsche Asset Management – a fully owned subsidiary of Deutsche Bank – this bank has been a shareholder since the fourth quarter of 2005. Currently, Deutsche Bank owns nearly 11.5 million shares, which represents a stake of 0.40%.68 • BHF Trust Management and Frankfurt Trust Investment – subsidiaries of BHF Bank – have been shareholders of Xstrata since the fourth quarter of 2005. Currently BHF Bank owns 3.1 million shares, representing a stake of 0.11%.69 • Deka Investment – a subsidiary of DekaBank – has been a shareholder since before 2005. Currently, Deka Investment owns 2.7 million shares, a stake of 0.09%.70 • Commerzbank International (Luxembourg) – a subsidiary of Commerzbank – has been a shareholder of since the second quarter of 2008. Currently, Commerzbank owns 2.1 million shares, which represents a stake of 0.07%.71 • Fund manager Metzler Investment GmbH – a fully owned subsidiary of Bankhaus Metzler – has been a shareholder since the fourth quarter of 2006. Currently, Metzler owns 0.9 million shares, representing a stake of 0.03%.72 • Landesbank Baden-Württemberg – directly and indirectly – owns 0.7 million shares representing a stake of 0.02%. LBBW has been a shareholder since before 2005.73 • Baader Bank acts as the lead broker for Xstrata’s shares listed on the Frankfurt Stock Exchange.74The following information was found on German bank involvement in the financing ofIndophil: • Tradegate AG Wertpapierhandelsbank acts as the lead broker for Indophil’s shares listed on the Frankfurt Stock Exchange.75No information was found on German bank involvement in the financing of Sagittarius orAlsons.2.21 SurigaoSurigao Integrated Resources Corporation is a private Philippine company operating nickelmines in Claver (Surigao del Norte) and Carrascal (Surigao del Sur).No information was found on German bank involvement in the financing of Surigao.76 -12-
  • 2.22 TVITVI Resource Development (Phils.) Inc. is the Philippine affiliate of TVI Pacific Inc., a publiclytraded Canadian mining company. TVIs most advanced project is the Canatuan mine inSiocon (Zamboanga del Norte), which previously produced gold and silver doré from gossanore. Since this gossan ore was mined out, the deposit’s underlying portion was uncovered,exposing the mineralised sulphide zone containing copper and zinc sulphides. TVI depletedthe gossan resource and ceased mining operations early in the second quarter of 2008.Commercial production of the sulphide zone started on 1 March 2009. In addition to theCanatuan mine, TVI is developing the Balabag Gold Project in Zamboanga del Sur andZamboanga Sibugay and exploring several projects in Zamboanga del Norte.77In 2008, TVI Pacific’s revenues amounted to CA$ 6.0 million (EUR 3.8 million), which isnearly fully attributable to the Canatuan mine. Revenues decreased by 83% as opposed to2007 due to the ceased mining operations early in 2008. However, during the nine monthsended 30 September 2009, revenues went up again to CA$ 43.8 million (EUR 27.5 million)and net profit during that same period amounted to CA$ 8.2 million (EUR 5.2 million).78No information was found on German bank involvement in the financing of TVI.79 -13-
  • Appendix 1 Conversion factors• Exchange rates • Exchange rates were based on data from OANDA;80 • Amounts pertaining to the companies’ financing, denominated in foreign currencies, were converted to Euros at the date of the relating agreement or press release; • Amounts pertaining to a period of time (e.g. a year), denominated in foreign currencies, were converted to Euros using the average exchange rate during that period; • PH$ = Philippine Pesos; • US$ = US Dollars; • A$ = Australian Dollars; • CA$ = Canadian Dollars; • EUR = Euros. -14-
  • Appendix 2 References1 Manila Bulletin, “Mining firm blamed for pollution of sea waters in Zambales”, 28 May 2008, LexisNexis Database, Viewed in November 2009; Manila Bulletin, “Benguet Corp. disputes Zambales’ mayor’s claims”, 30 May 2008, LexisNexis Database, Viewed in November 2009.2 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in October 2009.3 Apex, “Annual Report 2008”, 14 April 2009; Website Apex (www.apexmining.com), Viewed in November 2009; Website Philippine Stock Exchange (www.pse.com.ph), Viewed in November 2009.4 Dela Peña, Z.B., “UK firm sells 72.9% stake in Apex Mining”, 21 September 2009, Website The Philippine Star (www.philstar.com), Viewed in November 2009; Thomson One Database, “Deals and League Tables”, Viewed in November 2009.5 Apex, “Annual Report 2008”, 14 April 2009.6 Thomson One Database, “Share Ownership”, Viewed in November 2009.7 Thomson One Database, “Share Ownership”, Viewed in November 2009.8 Website Frankfurt Stock Exchange (www.boerse-frankfurt.de), Viewed in November 2009.9 Atlas, “Annual Report 2008”, 3 June 2009; Website Atlas (www.atlasphilippines.com), Viewed in October 2009.10 Website Philippine Stock Exchange (www.pse.com.ph), Viewed in October 2009; Website Atlas (www.atlasphilippines.com), Viewed in October 2009.11 Atlas, “Annual Report 2008”, 3 June 2009; Thomson One Database, “Deals and League Tables”, Viewed in October 2009.12 BHP Billiton, “Sustainability Summary Report 2009”, 31 July 2009; Pujada (Hallmark) Nickel Laterite Project profile, Website BHP Billiton Watch (bhpbillitonwatch.worldpress.com), Viewed in November 2009.13 AFX News Limited – Forbes, “Philippine govt says Australias BHP to invest 1.5 bln usd in Davao nickel plant”, 23 February 2007, Website MAC (www.minesandcommunities.org), Viewed in November 2009; Website Mining Technology (www.mining-technology.com), Pujada Nickel Mine project specifications, Viewed in November 2009.14 BHP Billiton, “Annual Report 2005”, September 2005.15 International Financing Review, “BHP Billiton PLC”, 9 September 2004; International Financing Review, “BHP Billiton jumbo mandate”, 26 March 2005.16 International Financing Review, “Hammerson returns”, 23 April 2005; BHP Billiton, “Annual Report 2005”, September 2005.17 BHP Billiton, “Offering Circular for U.S.$2,000,000,000 Euro Medium Term Note Programme guaranteed in respect of Notes issued by BHP Billiton Finance Limited and BHP Billiton Finance B.V.”, 9 May 2003; BHP Billiton, “Prospectus for U.S.$3,000,000,000 Euro Medium Term Note Programme guaranteed in respect of Notes issued by BHP Billiton Finance Limited by BHP Billiton Limited and guaranteed in respect of Notes issued by BHP Billiton Finance B.V. by BHP Billiton Plc”, 1 December 2006.18 BHP Billiton, “Prospectus for US$5,000,000,000 Euro Medium Term Note Programme guaranteed in respect of Notes issued by BHP Billiton Finance Limited by BHP Billiton Limited and guaranteed in respect of Notes issued by BHP Billiton Finance B.V. by BHP Billiton Plc”, 18 December 2007; BHP Billiton, “Prospectus for EUR10,000,000,000 Euro Medium Term Note Programme guaranteed in respect of Notes issued by BHP Billiton Finance Limited by BHP Billiton Limited and guaranteed in respect of Notes issued by BHP Billiton Finance B.V. by BHP Billiton Plc”, 7 October 2008.19 BHP Billiton, “Final terms - BHP Billiton Finance Ltd. Issue of €600,000,000 Floating Rate Eurobonds”, 22 February 2007; BHP Billiton, “Final terms - BHP Billiton Finance Ltd. Issue of €600,000,000 4.375% Fixed Rate Eurobond due 26 February 2014”, 22 February 2007.20 BHP Billiton, “Prospectus Supplement (to Prospectus dated 12 March 2007) US$625,000,000 5.125% Senior Notes due 2012, US$750,000,000 5.40% Senior Notes due 2017, US$875,000,000 Senior Floating Rate Notes due 2009”, 26 March 2007.21 BHP Billiton, “Prospectus Supplement (to Prospectus dated 18 March2007) US$1,500,000,000 5.50% Senior Notes due 2014, US$1,750,000,000 6.50% Senior Notes due 2019 issued by BHP Billiton Finance (USA) Limited”, 19 March 2007. -15-
  • 22 BHP Billiton, “Credit Summary, Bonds outstanding as at 30 June 2009”, 12 August 2009; Thomson One Database, “Deals and League Tables”, Viewed in November 2009.23 Benguet, “Annual Report 2008”, 24 April 2009; Website Benguet (www.benguetcorp.com), Viewed in October 2009.24 Benguet, “Annual Report 2008”, 24 April 2009.25 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in October 2009.26 Prospectus for an offer of 24,000,000 shares at an Issue Price of $0.50 each to raise $12,000,000, Royalco Resources Limited, Melbourne, 23 May 2006; Website Philippine Mineral Exploration Association (www.pmea.com.ph), Viewed in October 2009.27 Royalco, “Annual Report 2008/09”, 25 September 2009; Website Royalco (www.royalco.com.au), Viewed in November 2009.28 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in October 2009.29 Website Coral Resources (www.coralglobal.com), Viewed in October 2009; Website Companies House UK (www.companieshouse.gov.uk), Viewed in November 2009.30 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in October 2009.31 Website Colossal (www.colossalmining.com.ph), Viewed in October 2009.32 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in October 2009.33 Mindoro, “Annual Report 2008”, 14 May 2009; Thomson One Database, “Deals and League Tables”, Viewed in October 2009.34 Website Frankfurt Stock Exchange (www.boerse-frankfurt.de), Viewed in November 2009.35 Lepanto, “Annual Report 2008”, 16 March 2009; Website Lepanto (www.lepantomining.com), Viewed in October 2009.36 Lepanto, “Annual Report 2008”, 16 March 2009.37 Lepanto, “Annual Report 2008”, 16 March 2009.38 MacroAsia, “Annual Report 2008”, 1 April 2009; Website MacroAsia (www.macroasiacorp.com), Viewed in November 2009.39 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in November 2009.40 Manila Mining, “Annual Report 2008”, 14 April 2009; Manila Mining, “Second Quarter Report 2009”, 14 August 2009; Website Manila Mining (www.manilamining.com), Viewed in October 2009.41 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in October 2009.42 Metals Exploration, “Annual Report 2007/08”, 20 March 2009.43 Metals Exploration, “Annual Report 2005/06”, 29 March 2007; Metals Exploration, “Annual Report 2006/07”, 26 March 2008; Metals Exploration, “Annual Report 2007/08”, 20 March 2009; Metals Exploration, “First Quarter Report 2008/09”, 28 May 2009.44 Thomson One Database, “Share Ownership”, Viewed in October 2009.45 Website Mine & Quarry Data (www.mqdata.com), Viewed in November 2009; Website Mindoro (www.mindoro.com), Viewed in November 2009.46 Website Frankfurt Stock Exchange (www.boerse-frankfurt.de), Viewed in November 2009.47 Website OceanaGold (www.oceanagold.com), Viewed in October 2009; Climax Mining Profile, Sydney, February/March 2006.48 OceanaGold, “Annual Report 2008”, 19 February 2009.49 Thomson One Database, “Share Ownership”, Viewed in November 200950 Serrano, B., “Chinese traders eye $1-B investments”, 19 February 2006, Website Sun.Star Publishing (www.sunstar.com.ph), Viewed in November 2009.51 Mineral Resources Information Centre by the Japan Oil, Gas and Metals National Corporation (www.jogmec.com.jp/mric_web), Viewed in November 2009.52 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in November 2009.53 Website Philex (www.philexmining.com.ph), Viewed in November 2009. -16-
  • 54 Manila Bulletin, “BoI identifies 5 large-scale mining projects”, 21 March 2005, LexisNexis Database, Viewed in November 2009; Website Anglo American (www.angloamerican.co.uk), Viewed in November 2009.55 Philex, “Annual Report 2008“, 10 March 2009.56 Bloomberg Database, “Bank Loans”, Viewed in November 2009.57 Bloomberg Database, “Bank Loans”, Viewed in November 2009.58 Medusa Mining, “Annual Report 2008/09“, 4 September 2009; Website Medusa Mining (www.medusamining.com.au), Viewed in November 2009.59 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in November 2009.60 Department of Environment and Natural Resources, Republic of the Philippines, “Policy Reforms and Initiatives to Revitalize the Philippine Mining Industry”, Manila, September 2009.61 Deutsche Bank supports Philippine nickel industry with landmark deal, Deutsche Bank News Release, 11 January 2008; Manila Bulletin, “Deutche Bank okays mine $ 40-M financing facility”, 3 February 2008, LexisNexis Database, Viewed in November 2009; Trade Finance Magazine, “Platinum Group – nickel pre- export“, 1 March 2008, Website Trade Finance Magazine (www.tradefinancemagazine.com); Viewed in November 2009.62 Website Sagittarius (www.smi.com.ph), Viewed in November 2009.63 Xstrata, “Annual Report 2005“, 10 March 2006; Bloomberg Database, “Bank Loans”, Viewed in November 2009.64 Xstrata, “Annual Report 2005“, 10 March 2006; Bloomberg Database, “Bank Loans”, Viewed in November 2009.65 Xstrata, “Annual Report 2008“, 2 March 2009; Bloomberg Database, “Bank Loans”, Viewed in November 2009.66 Xstrata, “Annual Report 2008“, 2 March 2009; Bloomberg Database, “Bank Loans”, Viewed in November 2009.67 Thomson One Database, “Deals and League Tables”, Viewed in November 2009.68 Thomson One Database, “Share Ownership”, Viewed in November 2009.69 Thomson One Database, “Share Ownership”, Viewed in November 2009.70 Thomson One Database, “Share Ownership”, Viewed in November 2009.71 Thomson One Database, “Share Ownership”, Viewed in November 2009.72 Thomson One Database, “Share Ownership”, Viewed in November 2009.73 Thomson One Database, “Share Ownership”, Viewed in November 2009.74 Website Frankfurt Stock Exchange (www.boerse-frankfurt.de), Viewed in November 2009.75 Website Frankfurt Stock Exchange (www.boerse-frankfurt.de), Viewed in November 2009.76 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in November 2009.77 Websites TVI (www.tvipacific.com and www.tviphilippines.com), Viewed in November 2009; Website Philippine Mineral Exploration Association (www.pmea.com.ph), Viewed in October 2009.78 TVI Pacific, “Annual Report 2008”, 26 March 2009; TVI Pacific, “Interim Consolidated Financial Statements for the nine months ended 30 September 2009”, 12 November 2009.79 Thomson One Database, Bloomberg Database and LexisNexis Database, All viewed in November 2009.80 Website OANDA (www.oanda.com), Viewed in October 2009. -17-