Zeev's Turnips Patch-No Politics (ZEEV)

[BREDOB]

He seems to be very familiar with the Phillipeans. Wonderful news for SUR. I cut and pasted this article written by him in 2003 on the Clive Maund site also. We weren't even on the map yet, but I note Philco was, and I believe it's one of SUR's affiliates now. My,my how things change in two years.


PHILIPPINE GOLD - AN OVERVIEW AND THE SITUATION IN 2003

"Major Political - Economic Issues Remain to be Addressed"
Nigel H Maund
BSc (Hons) Lond., MSc, DIC, MBA (Cran), MIMMM, SEG
Economic Geologist - Mineral Consultants International Ltd (New Zealand)

INTRODUCTION

The Philippine Islands comprise a sprawling archipelago of 7,107 islands, situated on the western edge of the Pacific "Rim of Fire". However the bulk of the land area of the country is contained by only 10 of these islands. Of which, Luzon (northernmost) and Mindanao (southernmost) are by far the largest. In geologic terms, the archipelago comprises a structurally complex island arc located at the juncture of two major tectonic plates; the Philippines Plate to the east and Eurasian plate to the west. However, in detail, as Figure 1 shows, the tectonic situation is much more complex. This geologic complexity has resulted in the Philippines being one of the most intensely gold - copper mineralized island arcs on earth. Indeed, on the western half of the Pacific Rim of Fire, only Irian Jaya - Papua New Guinea rivals the Philippines in their prospectivity for gold and copper. The eastern section of the Island of Mindanao ranks as a "World Class Gold - Copper District".

Figure 1 (click to enlarge)
Current Philippine gold production is running at 8.2 tonnes per quarter, or approximately 33 tonnes per annum (1 million ounces). However, given the right political and economic climate, and incentives, this output could probably be increased through exploration and mine development to more than 100 tonnes per annum. Since the overthrow of the Marcos Administration, successive Philippine Administrations have liberalized investment for foreign companies in the mining sector, making such investment very much more attractive than hitherto. Despite substantial problems such as endemic and very serious graft and corruption, grossly disproportionate wealth distribution, and a rickety and crumbling infrastructure, mining companies are exploring with success, and gold, gold - polymetallic projects are moving towards development. Notable amongst these are: LEPANTO CONSOLIDATED MINING COMPANY (Victoria 1 & 2 and Far South East developments); INDOPHIL RESOURCES LTD (Tampakan Porphyry Copper - Gold Project); PHILEX GOLD INC - ANGLO GOLD PLC (Bayongan Porphyry Copper - Gold); TVI PACIFIC INC (Canatuan Polymetallic Gold Mine); LAFAYETTE MINING N.L. (Rapu Rapu Polymetallic Project); THISTLE MINING PLC (Masbate Gold Project); and latterly RED 5 LIMITED (Siana Gold Project) and MINDORO RESOURCES INC (Lobo Gold project). Between these companies and established Philippine Mining Companies such as BENGUET CORPORATION and MARICALUM MINING CORPORATION the bulk of the prospective ground in the Philippines has been pegged or is under application. It has been a quiet gold rush, which has gone largely unnoticed by the world mining press.

Despite almost universal recognition as being SE Asia's largest gold producer and certainly SE Asia's most prospective country for gold, the Philippine Government has never developed a strategy to develop and exploit this potential rich source of revenue. For a country that ranks as the worlds 8th largest gold producer, and has potential to grow to rank 5 or even 4, this fact demands some explanation. No attempt has been made to develop a gold refinery, gold mint, and an indigenous jewelry industry to augment tourist revenues. The majority of the gold exits the Philippines through its hopelessly porous borders generating easy transference of "the universal money" (gold) for criminals and terrorists and traders to purchase drugs, weapons, contraband and other consumable items. However, there are signs that the administration of Mrs. Arroyo (a Harvard University economics graduate) has at last appreciated the Philippines huge gold potential. However, whether the administration has the will, mandate and workable strategy to tackle the country's huge underlying problems remains to be seen. Time for the Philippines to address these vitally important and fundamental issues is rapidly running out.

ECONOMIC CONSIDERATIONS


The Government of Mrs. Gloria Macapagal Arroyo has received a lot of positive press following her recent State Visit to the USA, following the Philippines moral support, as a Member of "the Coalition of the Willing" in the recent US led war against the despotic regime of Saddam Hussein. However, despite this, and pledges of US$ 4.5 billion of US combined economic and military aid, the latter largely earmarked for projects in Mindanao still amounts to a mere "drop in the bucket" when compared to the scale of investment required to turn the Philippine economy around decisively. Having said this, the post Marcos Era Administrations of Fidel Ramos, Josef Estrada (despite his impeachment for corruption) and Gloria Arroyo have made great strides in liberalizing and opening up the Philippine Economy. Indeed, Mrs. Arroyo has developed a very special relationship with the current US Administration, which wishes her to gain a second term of office. In the Mining Industry, for example, a major revision of the Philippines Mining Act was undertaken in 1995, in which foreign ownership of a mining operation was increased from a very restrictive threshold of 40% (maximum) to 100%. Furthermore a favorable tax regime was created in which tax holidays are permitted during the project payback period.

It 's clear that the administration of Mrs. Arroyo has recognized that the mining industry could act as a catalyst for growth throughout a significant segment of the economy. The DENR is fully aware of the country's huge gold - copper potential. Three massive hurdles have to overcome before the Philippines have a world competitive mining industry: the environmental lobby post MARCOPPER; the security situation throughout the country and the culture of endemic corruption and graft.

The Philippines has one of most literate and highly educated populations in SE Asia, with American English and Filipino as official languages, and perhaps the best trained mining personnel in all Asia.

The strategic significance of the Philippines to the USA has increased enormously since the emergence of the Peoples Republic of China as a 21st Century superpower which will eventually seriously rival (and perhaps ultimately oppose) the USA in the region. This may mean that the Philippines may get far greater US economic (and military) support than hitherto. There is of course the new (8 billion US$ development costs) gas field being developed by the Shell consortium off Palawan, and the potentially large oilfield's of the Spratly Islands to consider. The Philippines has a rightful claim to the latter. Given the foregoing, the Philippines may now have become a significant piece in "the Great Strategic Game".

MAJOR ECONOMIC POLITICAL ISSUES FACING MINING INVESTMENTS


Among the problems facing foreign mining investors are the following:

A dilapidated and increasingly dysfunctional infrastructure. This feeds through into higher additional costs for utilities, transportation and telecommunications for foreign investors. Anyone who has visited Manila will understand all these problems acutely. Indeed, so bad are the traffic problems in the Makati Business District that the Manila Peninsula Hotel offers a US$ 200 helicopter ride to Ninoy Aquino International Airport located only 4 km to the south!! The investment required to modernize the country will be immense and, of necessity, long term. Furthermore, it will require resolute action, financial resources and a long - term plan, all of which the Government seem to sadly lack. The Philippine Administration frequently overspends owing to serious tax evasion or simple non - payment by prominent Filipino businesses and wealthy businessmen. Indeed, so bad has the problem become that Standard & Poor recently downgraded the Philippines credit rating from BB+ to BB.


Major law and order problems relating to the politico - economic insurgencies of the NPA, MILF and Abu Sayyef "organizations", and general banditry prevalent throughout most of the country. Kidnapping and extortion are, in fact, a business. There are a number of insurgencies, most notably the "communist" New People's Army (NPA) present throughout the Philippines and the Moro Islamic Liberation Front (MILF - an Islamic separatist group largely confined to Western Mindanao and the Sulu archipelago). Of lesser significance, but still a potent force, is the infamous Abu Sayyef Jihad group located in central Mindanao. To a certain degree, these groups are made up of impoverished country people engaged in partially politicized acts designed to bring in easy money. However, any industrial operation "on their patch" is seen as an opportunity for immediate enrichment. Gold exploration and mining definitely comprise a juicy target. "easy -money", such as kidnapping, payment of "revolutionary taxes" or simple banditry. Decades of Government negligence and lack of investment, discrimination against the Muslims plus ceaseless plundering of Mindanao's natural resources by wealthy Filipino businessmen are the root cause of these problems.


Overall labor costs are not so cheap compared to China, Mongolia and Vietnam. The Philippines still ranks as a "lower - middle income" country, under World Bank Criteria. However, the wealthy (less than 1%) still own 95% of the county's wealth producing capacity. The gulf between rich and poor continues to grow and would have been a matter of great concern were it not for the 6 million OFW's (Overseas Filipino Workers) who support countless millions at home;


Finally, but by no means least, is the culture of graft, corruption and jealousy (so called "crab mentality" because you collectively hold the better men down), Sadly this culture is very deeply rooted in the Philippines, despite its strong Catholicism. This culture grew and became ingrained in the Filipino psyche under a largely corrupt and extremely self - centered (350 year rule) Spanish Administration, and finally exploded under the immensely corrupt Marcos Administration. It is worth noting that the "other great power" in the Philippines, the Catholic Church, has tolerated more than combated this national malaise. Scarcely veiled and sometimes brazen greed is a major problem for Foreign Investors in the Philippines. A "get rich quick" mentality prevails among many Filipino businessmen who are extremely loath to risk their own capital, particularly in mining ventures. Many are also similarly averse to paying taxes and even wages of their employees!! Corruption and graft are not confined to the upper echelons. Several Philippine gold mining operations (notably the Benguet Corporation - Bagiuo Gold Operation) have fallen victim to skillful long - term gold theft by employees, particularly mill operators. The most famous gold mining industry scam of all time, BRE - X, was perpetrated in the field by Filipino geologists and metallurgists (ex BENGUET CORPORATION - Bagiuo Gold Operations).
The following should be borne in mind by investors in gold stocks. In previous gold booms, those companies who have raced to explore or develop existing gold projects in the Philippines have been sadly disappointed that their enthusiastic quarterly announcements based on the "exciting technicals" to the Stock Exchanges in Toronto, Perth and Melbourne fail to impact on their share prices in the manner they had envisaged. The positive technical fundamentals are overshadowed, quite rightly, by the investor's perceptions of business and sovereign risks associated with the investment. Furthermore, investors view exploration and development in the Philippines as a diversion of effort away from exploring in safer parts of the world, where projects may be safely and readily brought on stream, such as Australia, Canada, USA, Kazakhstan, Tanzania, Ghana, Chile, Brazil, Peru and Argentina. Hence such SX announcements often result in a share market decline!! However, it remains to be seen whether this time the Government of Mrs. Arroyo can alter decisively International perceptions of her country for its long term good. However, having said this , the big improvements in the investment regime for the mining industry somewhat counterbalances the negatives.
Other issues worthy of consideration are as follows:

35% of the Philippine's hard currency income, or US$ 8 billion, is provided by remittances from 6 million OFW's (Overseas Filipino Workers). Many (1.9 million) of these workers are employed in the increasingly volatile Middle East. This makes the Philippines the world's largest remittance economy measured as a proportion of GDP. Moreover, it makes the Philippine economy the most vulnerable to threats such as "Saudiization" or "Emiritization" of jobs currently undertaken by OFW's in the Kingdom of Saudi Arabia and the Arab Emirates and / or an increased perception of risks to OFW's by acts of terrorism such as the recent Riyadh bombings


In the last census, the population of the Philippines had reached 80 million and is growing at a rate of 2.34%. Unemployment is currently running at a conservative estimate of 20%.


Philippine National Debt is currently running at some US$ 55 billion or 200% of GDP. The economy has little underlying strength and is extremely vulnerable to natural disasters such as crop failures or flooding associated with "El Nino" weather phenomenon or earthquakes and volcanic eruptions.
A SHORT HISTORY OF THE GOLD MINING INDUSTRY


The Philippines has produced alluvial gold prior to the arrival of the Spanish "conquistadors"; i.e., Ferdinand Magellan in 1525. However, production of gold, and to a much lesser extent silver, rapidly accelerated during the 350 years of Spanish rule. However, this production was to receive a massive boost with the arrival of modern American mining expertise following the destruction of the Spanish fleet in Manila Bay by Admiral Dewey during the Spanish - American War of 1898. During the period from 1900 to 1942, when the Japanese invaded the Philippines, the famous gold mining districts of Lepanto, Bagiuo - Acupan - Antamok, Paracale, Masbate, Surigao and NE of Davao were discovered and developed. These mines gave rise to the establishment of the major Philippine Mining Houses, most famous of which were Lepanto Consolidated Mines and Benguet Consolidated Mines Ltd. Indeed, gold production from Lepanto and Bagiuo would rate both districts as "Class 1 deposits".


Figure 2 (click to enlarge)
Throughout the post WW2 period and following Philippine independence gained in July, 1946, little new exploration was undertaken owing to the price of gold being fixed at US$ 35 / ounce. Furthermore, the philosophy of the Directors of the major mining companies had changed with the replacement of American Directors and Management with Filipino's, generally derived from the families of the post war, largely (Fukien Province) Chinese, "Elite Oligarchy", which still preside over the country, and own 95% of the country's wealth production. These people had little or no knowledge of mining and typically "milked the profits" without re - investing in the future.

The Mining industry received a serious "shot in the arm" in the "Porphyry Copper Boom" of the early 1960's till the date of the "1st Oil Shock" in 1974. During this period, once again major American Mining Houses, including such famous industry names as Phelps Dodge, Anaconda, Asarco, Kennecott and Placer Dome discovered some 55 Porphyry copper - gold systems throughout the Philippines. With the exception of the MARCOPPER Mine, Boac, Marinduque Island, the DIZON Mine, Zambales, Luzon and the ATLAS Consolidated Mine at Toledo, Cebu Island, the majority of these copper - gold prospects were just sub economic. However, with the collapse of the Bretton Woods Agreement in 1971, the gold price surged and a re - evaluation of these prospects showed that they were "gold rich" copper porphyries and should be viewed primarily as open pitable, bulk tonnage, low grade gold with subsidiary copper deposits. Although many were extensively drilled, a combination of lack of economy of scale, marginal grades and the ascendancy of the regime of Ferdinand and Imelda Marcos put an end to the majority of investment in the Industry.

Following the overthrow of the Marcos Regime in March 1986 ("EDSA 1"), and the "Gold Exploration Boom" of 1982 - 1988, the new Philippine Government of Mrs. Corazon Aquino sold off many companies and assets held by the Marcos family and their vast and thoroughly entrenched network of cronies. The change of Government and return to "Democracy" prompted a return of the international gold exploration companies. During the period 1987 to 1994, many new prospects were discovered and drilled, such as:

The United Paragon Mine at Longos Point, PARACALE, Camarines Norte Province, Luzon. This project was developed by PARAGON RESOURCES NL of Australia and ABCAR MINING LIMITED of the Philippines, as an open pit and high-grade underground mining operation,


Goldfield's Asia (Philippines) Ltd evaluated the NALISBITAN Epithermal High Sulfidation Gold System near Exciban in Camarines Norte.


Local Miners discovered and exploited the World Class 1 Epithermal Vein gold deposit of DIWALWAL in Central Mindanao, where approximately 250,000 to 400,000 ounces per annum have been produced up to the present day by some 40,000 to 50,000 encamped local miners.


Western Mining Corporation Ltd (WMC) of Australia explored the TAMPAKAN porphyry copper gold prospect, General Santos Province, Mindanao


Benguet Corporation of the Philippines undertook initial evaluation drilling of the KING KING porphyry gold - copper prospect, Pantukan Province, near Davao, Mindanao;
However, the Industry was once again beset by a series of economic, ecological and natural disasters in the period 1991 - 1996, which further stalled development. The first of these was the pre Mt Pinatubo volcanic eruption - Bagiuo Earthquake in 1990. Mt Pinatubo erupted in June 1991. The Bagiuo earthquake was so severe that it effectively ended the life of the Philippines most famous underground mining camp and with it a substantial proportion of the income of Benguet Corporation (BCI).
In 1994, BCI's high-grade porphyry gold - copper open pit operation at DIZON, Zambales Province, Luzon, was finally exhausted. Matters were accelerated by a pit wall collapses during a strong rainy season.

ENVIRONMENTAL MISMANAGEMENT AT MARCOPPER AND MARACALUM - SIPALAY


However, by far the most complicated for the mining industry was the now infamous toxic (copper, zinc) mine tailings disaster at MARCOPPER Corporation's (40% held by Placer Dome of Canada) large open pit porphyry copper operation at Tampian Pit, Boac, Marinduque Island., shown on Figure 3. On the 26th March 1996, a total of 1.5 million cubic meters of toxic tailings from the 23 million tonne mine waste dump spilled into the local drainage system. The toxic spills caused flash floods, which buried and isolated local villages. A further 20 villages had to be evacuated and the local ecosystem was polluted with substantial loss of fish and livestock. In addition, prior to this disaster, MARCOPPER had been permitted by the Administration to allow toxic wastes to drain into the Sea of Boac for many years before being forced to prevent such pollution.

The MARCOPPER disaster raised serious issues concerning lax monitoring and controls by the Government DENR and mine development versus ecological issues affecting the wider community. Furthermore, it forced the Philippines to look seriously at the environmental impact of mining operations. In April 1996, MARCOPPER operations were suspended and serious charges were filed against the Company Directors, Mine Management (which included several expatriate employees), and the DNR. The environmental cleanup is still underway.

A further environmental disaster has unfolded at the MARICALUM MINING CORPORATION's SIPALAY porphyry copper - molybdenum mine located in the province of Negros Occidental, on the Island of Negros, shown on Figure 3. Wind blown toxic fine sand and silt particles from the tailings dams have been linked to increased local illnesses in the downwind area near these dumps. In 1998, the DENR closed down the SIPALAY MINE for environmental reasons and the company has been penalized.

In addition to the foregoing, it should be remembered that some 400,000 local gold miners (Abanteros) are recovering gold from some 70 "gold rush" sites around the Philippines using mercury to recover gold from panned concentrates and milled rock. This mercury has been liberally spread throughout the drainage system downstream from the workings. Furthermore, many of these miners will develop the symptoms of mercury poisoning later in their lives. This will put severe strain on the medical resources of the Philippines.

RICHES AND BLOODY CARNAGE AT DIWALWAL


To the south, at the major DIWALWAL gold workings, location shown on Figure 3, another major "cluster mess" was developing on arguably the greatest gold discovery in the Philippines ever, and certainly its bloodiest, at MT DIWATA, Compostela Valley Province, Central Mindanao, when a local tribe known as the "lumads" discovered a zone of rich epithermal gold veins in 1983.

According to most sources within the industry and local newspapers, the deposit has produced at between 250,000 to 400,000 ounces of gold per annum for at least 15 years. This is a phenomenal amount of gold to be won by artisanal miners and dwarfs Papua New Guinea's famous Mt Kari gold rush on the mid 1980's.

Since 1983, the deposit has been the site of the largest gold rush in the whole of Asia. Most Economic Geologists experienced in gold mineralisation of this type, and who have been able to visit the occurrence, would agree that DIWALWAL is a WORLD CLASS GOLD DEPOSIT. Approximately, 40,000 to 50,000 people currently occupy the site. Miner's dwellings, or "Nipa huts", cover the deposit like an allergic rash. The area is the epitome of the adage "gold, guns and goons". Indeed, the local miners sport sophisticated modern weapons far superior to standard equipment in the Philippine Armed Forces (PAF) and almost the equal of the US Marines. The corruption centered on this uncontrolled and rich mining site is of "Himalayan Proportions", with literally everyone "in on the game".

Uncontrolled and unregulated mining by poorly uneducated and largely unskilled, often inadequately equipped, local miners (known locally as Abanteros) has resulted in an appalling death toll that since 1996 has amounted to 5,500 and may exceed 10,000 since the deposits discovery in 1983. If one counts the frequent murders and undocumented (because they are not so spectacular), but nonetheless frequent, mining deaths, the death toll could be in the region of 15,000. There have been several documented collapses killing upwards of 500 to as many as 1,000 miners in one incident!! These barely make the international press. If this occurred in "the civilized world" it would cause an immediate outcry and a demand for controls and regulation to minimize the loss of human life. Such are the world's double standards!

In summary, the history of this gold mining camp speaks volumes for problems experienced by the Philippine Administration in regulating and invoking the rule of law in Mindanao outside major cities such as Davao, Zamboanga, Cagayan de Oro, General Santos and Butuan City. To date the Government has collected virtually no taxes from this gold production. Furthermore, the deposit has thrown a powerful searchlight on the monstrous and far reaching scale of corruption President Gloria Macapagal Arroyo has to overcome if she, or successive Philippine Administrations, ever hopes to develop a modern Asian State out of this richly endowed but economically fragile country. In May 2003, Mrs. Arroyo made a much-publicized visit to Mindanao to address both the political problems, including the causes of terrorism, and the issue of Diwalwal and other "gold rush sites". It remains to be seen what will now be achieved.

1994 TO 2003 - THE MINERS MAKE A CAUTIOUS COMEBACK
(Refer to Figures 2 and 3 throughout for mine and prospect locations)


Despite the continued downturn in metal prices, in particular the gold price, which bottomed in July 2000, some companies continued to explore in the Philippines. In the early to mid 1990's LAPANTO CONSOLIDATED MINING LTD (Manila Stock Exchange), CLIMAX MINING LTD and WMC PHILIPPINES LTD (who were superceded by INDOPHIL RESOURCES LTD) were the main explorers. However, towards the end of the 1990's new companies started to look at the potential of the Philippines; i.e., TVI PACIFIC INC. (of Canada), LAFAYETTE MINING N.L. (Australia), THISTLE MINING LIMITED (UK) and, latterly, RED 5 LIMITED (Australia) and MINDORO RESOURCES INC (Canada). The activities and nature of individual company prospects are reviewed briefly below.

Operating in a country like the Philippines requires a company to adopt an appropriate strategy to match the business environment. The exploration and development of large porphyry gold - copper deposits, with spectacular resources, is not necessarily the appropriate strategy regardless of how large a company involved.

Large projects take time to evaluate and develop and attract political interest. They become targets in "pioneering country" and the old adage is sometimes true that "pioneers get arrows in the back". In the Philippines, and in particular the politically sensitive provinces of Mindanao, this strategy is potentially fraught with problems. The trouble almost invariably mounts, and becomes focused, as the project approaches feasibility study and construction. Having said this, given the right contacts and approach a project can be steered through to completion, although it is never easy. Therefore, the writer feels that the strategy employed by some of the smaller junior miners is definitely appropriate to their resources and most likely to offer the investor a return on his investment in the near to medium term, rather than in the longer term or never!


Figure 3 (click to enlarge)
Amongst the latter, LAFAYETTE MINING N.L. looks poised to be the first foreign mining company into production with the RAPU RAPU polymetallic - gold project. LAFAYETTE has sensibly chosen to develop a modest sized project in a geographically ideal spot. The Island of RAPU RAPU is a small very peaceful island sitting off the east coast of Albay Province in southern Luzon. LAFAYETTE has quietly proceeded with the evaluation and development of the RAPU RAPU MINE with little or no disturbance, away from the more (technically) glamorous but highly complex problems of Mindanao. Furthermore, the Management has intelligently put together a deal with LG International of Korea and KORES to diversify risk and guarantee off take of all the concentrates throughout the life of mine.

Similarly, a relative newcomer to the Philippine mining and exploration scene, RED 5 LIMITED, has evolved the appropriate strategy for operating in Mindanao. Politically, Mindanao resembles a Parson's egg, i.e., "good in parts". RED 5 has sensibly taken exploration ground over the old SIANA GOLD MINE in the mining camp of SURIGAO DEL NORTE in the north east of the Island. This province has a long history of mining, is in an area of established infrastructure and is politically one of the most stable areas of Mindanao. Furthermore, RED 5 has selected an ideal target to focus its exploration effort on which adds to its much larger WESTERN AUSTRALIAN gold portfolio. Hence, RED 5 has achieved the correct investor balance of risk versus reward.

Furthermore, the exploration effort at SIANA can be correctly paced without taking an undue percentage of overall exploration funding from its prospective Australian portfolio. Any deposit outlined in exploration may be brought to feasibility study without undue expenditure or risks. Aside from the foreign mining and exploration companies, one major Filipino mining company has been consistently actively exploring around its own mining operations. This company is LEPANTO CONSOLIDATED MINING, which owns and operates the famous LEPANTO copper - gold mine, Benguet province, Luzon.

LEPANTO CONSOLIDATED MINING COMPANY (Manila Stock Exchange)


CEO: Mr. Felipe Yap Web address: www.lepantomining.com.ph
Shares in Issue: 21.3 billion Principal Share Holder: The Yap Family

Copper mining has been undertaken at LEPANTO since the Chinese Ming Dynasty, when copper ingots were made and sold to China. The first organized attempt to mine the deposits was under the Spanish established company Cantabrio - Filipino Company established by Don Jose Maria Santos in 1864. This operated until 1874. Under the American occupation, the LEPANTO CONSOLIDATED MINING COMPANY was formed in 1936. However, following the Japanese invasion of December 1941, the mines were operated by MITSUI CORPORATION until the Japanese defeat in October 1944. After the war, the underground mine and mill facilities were rehabilitated, and the mine resumed operations in 1947, mining the high sulphidation "Enargite (copper arsenide) lodes". Since 1947, a total of 34.4 million tonnes of ore have been processed to produce 2,8 million ounces of gold, 12 million ounces of silver and 704,000 tonnes of copper at an average grade of 3.5 g/t Au and 2.2% Cu. The copper arsenide concentrates were formerly shipped exclusively to ASARCO's Tacoma smelter in the US. Following closure of this smelter in 1982, the ore was smelted at a new 50,000 tpa roaster, built by LEPANTO, near the PASAR facilities in the island of Leyte.

The VICTORIA 1 deposit was discovered in September 1995. Exploration and development work shifted from the Enargite deposit to VICTORIA 1. A new 2,500 t/d CIP (carbon - in - pulp) plant costing US$ 5 million was constructed and commissioned on March 16th 1997. In May 2000, a state - of - the - art flotation circuit was built and commissioned at a cost of US$ 3 million to handle the high copper ores. These ores could not be processed through the CIP plant due to excessive cyanide consumption. The Nayak twin decline was started in July 1998 to provide quick access to the VICTORIA 1 veins, and improve overall ventilation. These underground facilities were completed in April 2000 at a cost of US$ 15 million.

On June 1st 2002, LEPANTO announced the discovery of the VICTORIA 2 deposit. VICTORIA 2 is a low - sulphidation style epithermal deposit hosted in dacite and sediments. Unlike the VICTORIA 1 deposit, VICTORIA 2 contains significantly less sulphide minerals including copper. VICTORIA 2 is located 900 meters south from VICTORIA 1. The deposit trends N - S along a series of parallel structures that appear to end in a fault zone separating them from the NE trending VICTORIA 1 mineralized veins.

Initial resource estimates for the ore body indicate that it contains approximately 1.3 million ounces of gold in 7.3 million tonnes of ore at an average grade of 5.5 g/t Au. Ore Reserves are now being updated regularly and LEPANOT has modernized its approach to reserve calculation with the assistance of International Resource Consultants SNOWDEN ASSOCIATES (Canada) and new GENCOM mining software.

During the past 5 years, LEPANTO's average cash cost for gold production was only US$135 / ounce making the company one of the lowest cost producers in the world. Annual gold production is currently running at 150,000 oz of fine gold per annum. The company has a total of 21.3 billion shares in issue.

CLIMAX MINING LTD (Australian ASX)


Managing Director: Jim Askew Web address: www.climaxmining.com.au
Shares in Issue: 283 million Principal Shareholder: ANZ Nominees Ltd. 37.64% and Citicorp Nominees Pty Ltd. 18.96%

CLIMAX MINING Ltd, of Australia, which holds the DINKIDI porphyry gold - copper project located 200 kilometers NE of the capital Manila, completed a Feasibility Study and obtained project financing commitment only to never go to the construction phase, underlining the writers earlier comments on big projects.

The deposit has been held since 1994 under a Technical & Financial Services Agreement. This gives CLIMAX the right to explore and mine for up to 50 years and includes the fiscal regime for any development. Measured, Indicated and Inferred Resource for the project totals 121 million tonnes (mt) at a grade of 0.97 grams of gold per tonne (g/t Au) and 0.39% copper (Cu). Therefore, the resource contains some 4 million ounces of fine gold and 1 billion pounds of copper. Within this there is higher grade resource of 17.8 million tonnes of 2.37 g/t Au and 0.67% Cu based on an initial mine life of 9 years at a mining rate of 2 mt/y by small open pit and underground block caving.

CLIMAX completed an initial engineering study in 1996 on the open pit operation. However, metal prices at that time made the proposal commercially unattractive. By mid 2,000 CLIMAX had undertaken optimization studies on the higher-grade alternative, resulting in capital cost estimates (CAPEX) of 138 million US$. At this time key Government approvals to develop the project were obtained and CLIMAX had secured project financing from two major international groups, which included Standard Bank (London) Ltd who had agreed to provide US$ 90 million of the loan. However, according to the company "owing to the political uncertainties in the Philippines (surrounding the EDSA 2 revolution against President Estrada) and weak metal prices the funding process was halted in early 2001". CLIMAX has, therefore, re - examined its approach to this project and has determined that a staged development resulting in a lower CAPEX and quicker payback from mining higher grades is more appropriate. However, despite a higher gold price since 2001 the company has shown no desire to rush back in to re - invest.

CLIMAX is currently concentrating on the development of its prospective Australian gold resources and projects in Argentina and is undertaking very little work in the Philippines. However, the company holds good exploration ground near the PHILEX - ANGLO GOLD porphyry gold - copper project at Surigao del Norte, Mindanao, which, no doubt, it is looking to farm out.

TVI PACIFIC INC (Canadian SX)


CEO: Mr. Clifford James Web address: www.tvipacific.com
Shares in Issue: 257.1 million fully diluted

TVI PACIFIC currently owns and operates the CANATUAN MINING PROJECT, located near the town of Siocon in Zamboanga Province, Western Mindanao. The company holds three claim blocks covering the property comprising a total of 4,755 hectares. The main claim block, in which the ore reserves have been delineated, covers 508 hectares in the south central portion of the property. TVI PACIFIC hold a 100% interest in this claim area, which is subject to a 1% NSR royalty to the underlying claim owner. Furthermore, BENGUET CORPORATION has a 12.5% back - in right.

The CANATUAN deposit is a VMS (Volcanogenic Massive Sulphide) geologic system comprising lenses of oxide (gossan) and massive sulphide ore hosted within the NE trending Tunguan schist's. The deposit dimensions measure 825 m along strike and between 150 to 300 m wide. The deposit was initially defined by a combination of 126 diamond drill holes (Totaling 5160 m) and 96 test pits (total ling 769 m). During 1996, a Feasibility Study was completed by KILBORN INTERNATIONAL, a Canadian company located in Vancouver. In the same year, a Bankable Feasibility Study was completed by another Canadian consultancy PROTON INTERNATIONAL. This was accepted by ROTHCHILDS after independent by Bank Consultants SNOWDEN ASSOCIATES (Australia) and SRK (STEFFEN ROBERTSON KIRSTEN).

In 1997 a further 20 diamond drill holes were completed and the ore reserve recalculated at the following assumed metal prices:

The final reserve on which the project was constructed was as follows:

ORE TYPE TONNES Au g/t Ag g/t Cu% Zn%
Tailings 48,000 5.30 200 - -
Gossan 892,000 4.10 128.7 - -
Sulphide 1,266,300 1.45 73.02 3.36 2.45

A 50 tpd CIL (carbon - in - leach) gold and silver extraction plant designed to process the deposits near surface gossan oxide ore was commissioned in 1996 and upgraded in 1997 to operate at a throughput of 80 tpd. This plant produced gold and silver dore bar from exploration samples and tailings produced from artisanal miners working the area. Furthermore this plant acted as a pilot plant for the envisaged later full - scale operation.

Mine construction commenced in 2001 and in January 2003, TVI announced it had poured its first dore bar from the oxide processing plant running at a throughput of 50 tpd. Throughput was expanded to 80 - 100 tpd. Plant feed is initially stockpiled artisanal tailings that have to date yielded higher than expected gold and silver grades. This stockpile is expected to last 18 months. TVI plans to increase the production rate from 80 - 100 tpd to 500 tpd over a two - year period.

In their 12 June 2003 stock market release, TVI PACIFIC announced that due to modifications, plant throughput had increased from 37 tpd to 60 tpd. "With the process circuit now stabilized, throughput is being increased to 70 tpd and will be further increased as the second phase of plant commissioning is completed". Gold and silver dore production is now reaching 8 kg per day, with a gold content averaging 4.5% (approximately 12 ounces per day or 300 - 350 ounces per month).

The final open pit is planned with the following dimensions: 800 m long x 250 m wide x 80 m deep. The waste / ore strip ratio is 2.5:1.

TVI holds a 2.5 NSR (Net Smelter Return) in LAFAYETTE MINING N.L.'s RAPU RAPU Polymetallic - gold project in the Philippines, described below.

LAFAYETTE MINING N.L. (Australian ASX listed as LAF and Berlin OTC listed as LFY Cusip No 908514)


CEO: Mr. Andrew McIlwain Web address: www.lafayette.com
Shares in Issue: 257 million Principal Shareholder: Lion Selection Group: 32.6%

LAFAYETTE MINING N.L., Perth, Australia. In November 1998 Lafayette acquired the right to develop the RAPU RAPU (polymetallic) copper - gold - zinc - silver deposit on Rapu Rapu Island, Camarines Sur Province, Luzon.

The Ungay deposit and nearby Hixbar resource are VMS (Volcanogenic Massive Sulphide) type deposits. The Ungay deposit contains a total open pitable reserve of 5.9 mt of ore grading 2.5 g/t Au, 28 g/t Ag (silver), 1.2% Cu and 2.1% Zn (zinc) containing a total of: 481,000 ounces of gold; 5.34 million ounces of silver; 123,000 tonnes of zinc and 71,000 tonnes of copper.

A definitive Feasibility Study was undertaken following an extensive evaluation drilling program and completion of an independent feasibility study in 2,000. The definitive Feasibility Study was funded by Standard Bank London Limited and Lion Selection Group Limited, and completed by the international consulting firm Flour Daniel (Australia) Ltd in January 2001. Included with this study were: an Environmental Impact Study and extensive pilot test plant work undertaken at an independent laboratory. In July 2001, the Government of the Philippines granted an Environmental Compliance Certificate (ECC) to the project.

In December 2002, the Philippine Mines and Geosciences Bureau sanctioned the project with their Declaration of Feasibility. The latter was the final Government regulatory approval required to commence construction.

In their Press Release of 23/01/03 LAFAYETTE announced it had signed a Heads of Agreement with LG International Corporation of Korea and KORES (the Korean Government resources investment arm) in which the latter will jointly provide US$ 10 million in equity and debt financing to acquire a 26.04% equity interest in the project. Concurrently, LG will enter into an off - take agreement with LAFAYETTE to purchase all the concentrates produced by the RAPU RAPU MINE.

The RAPU RAPU MINE will produce gold dore, copper gold concentrate, and zinc concentrate. Initial annual metal production figures are forecast to be approximately 10,000 tonnes of copper, 50,000 ounces of gold, 590,000 ounces of silver and 14,000 tonnes of zinc. Cash costs for gold and copper production are forecast at US$ 53 / ounce and US$ 0.30 per pound respectively. With by product credits, gold costs of US$ 9 / ounce are forecast.

On 14th April 2003, LAFAYETTE announced that it had reached agreement with LEIGHTON CONTRACTORS (ASIA) LIMITED (a major and highly experienced mine construction company) to undertake the construction of the Mine under a guaranteed maximum price contract where "design and procurement efficiencies flow to LAFAYETTE but cost increases are capped to the original contracted price".

LAFAYETTE holds title to all the prospective ground on Rapu Rapu Island. It should be noted that RAPU RAPU is LAFAYETTE'S only potential mining project and will therefore be the flagship of their operations for some time to come.

INDOPHIL RESOURCES LTD. (Australian ASX)


CEO: Mr. Tony Robbins Web address: www.indophil.com.au
Shares In Issue: 100 million Principal Share Holder: Lion Selection Group 42.4%

INDOPHIL Resources Ltd of Australia is a company formed by ex WESTERN MINING CORPORATION Ltd (WMC of Australia) Staff for the continued exploration and development of Philippine licenses formerly belonging to WMC following this company's departure from the Philippines in 1995. INDOPHIL have one of the strongest and most experienced technical management teams in the country.

INDOPHIL'S main asset is the TAMPAKAN copper - gold porphyry project currently under evaluation. The project site is located 50 km north of the Provincial capital, General Santos in SE Mindanao. INDOPHIL describe TAMPAKAN as the largest undeveloped copper - gold deposit in SE Asia. The mineralized zone comprises a tabular body of mineralisation up to 260 meters thick, containing higher copper - gold grades superimposed on an underlying lower grade porphyry copper - gold deposit. To date the deposit has been drilled with 85 diamond drill holes over an area of 2 km x 1.6 km at a drill hole density ranging from 360 m x 160 m to 160 m x 160 m with limited infill drilling at 80 m. Further infill drilling is in progress.

The current Geological Indicated and Inferred Resource for TAMPAKAN is given below at two cut off grades (COG):

COG (%Cu) Resource (Mt) Copper % Gold g/t GOLD (M ozs)
0.5 900 0.75 0.3 8.68
0.7 430 0.93 0.37 5.12

The TAMPAKAN copper - gold project area is held under a Financial and Technical Service Agreement (the Columbio FTAA) with the Government of the Philippines. This allows a company with up to 100% foreign control to explore for and develop major mineral projects. The Columbio Agreement covers an area of 304.9 sq km.

The Project Area is owned by SAGITTARIUS MINES Inc. (Sagittarius), a Philippine corporation representing former claim owners., who finalized the purchase of the property from WMC (Philippines) Ltd in August 2002. Another (LEPANTO CONSILIDATED MINING CORPORATION) party has challenged the sale process before the courts losing in the regional trial court and subsequently in the Philippine Court of Appeals. An appeal before the Supreme Court is pending and SAGITTARIUS is confident that this action will also be unsuccessful. In a separate move by the same party, a motion lodged before Office of the President of the Philippines was also rejected.

INDOPHIL currently has a 40% equity in SAGITTARIUS and through a series of agreements with SAGITTARIUS has acquired substantial vested rights to the TAMPAKAN project in exchange foe an unspecified payments and royalty from future production. INDOPHIL has also entered into option agreements with MOUNT ISA MINES Holdings Ltd. (MIM) and ALSONS CORPORATION Ltd., that allows them to purchase part of INDOPHIL'S equity interest in the TAMPAKAN Project, which would give a final proportion: MIM 60%, INDOPHIL 30%, and ALSONS 10%.

INDOPHIL has a substantial portfolio of exploration prospects in the Philippines for gold and copper from Leyte Island, to Labo in Camarines Norte and finally to Northern Sierra Madre in northern Luzon. However, all these prospects are at the grass roots exploration stage.

PHILEX GOLD INC (Canadian Venture Exchange listed under symbol PGI)


President & CEO: Mr. Gerard H Brimo Web address: www.philexgold.com.ca
Shares in Issue: 41.7 million Principal Share Holder: Philex Mining Corporation

PHILEX GOLD INC. is a Canadian gold mining and exploration company. Its shares trade on the Canadian Venture Exchange under the symbol "PGI". PHILEX'S parent company is PHILEX MINING CORPORATION a company with over 40 years experience in mining operations in the Philippines, founded and controlled by the Filipino Brimo Family. The latter holds the controlling interest in this Canadian listed subsidiary.

PHILEX main gold operation is the BULAWAN GOLD MINE located in the province of Negros Occidental, Negros Island, shown on Figure 3. BULAWAN MINE commenced commercial production in January 1996. The deposit consists of disseminated gold mineralisation hosted within a hydrothermally altered, brecciated, dacite porphyry, (breccia pipe), of Miocene age. The gold is very fine grained and free milling. In addition to the BULAWAN deposit, at least nine (9) other gold deposits or mineralized zones have been identified on the property. These include the Korokan and Nagtalay deposits and the Centrun prospect.

Mining operations at BULAWAN commenced with open pit during the period 1996 - 1997. Thereafter, the operation went underground where the workings are accessed by a decline and the ore mined by block caving techniques. Ore Reserve calculations have been overseen by SNOWDEN ASSOCIATES (a firm of International Consultants) employing GECOM PG - based block cave software. Ore is treated at the CIL plant, which has a capacity of 4,000 tpd. Low - grade ore at grades between 0.5 and 1.5 g/t Au is treated by heap leach. Since 1996 the average cash operating cost, per fine ounce of gold produced, has risen from US$ 180 to US$ 260. Annual gold production has fallen from high of 115,000 ounces in 1997 to 52,000 ounces in 2000.The ore reserves of the mine are virtually exhausted. However, there remains potential to add to reserves by further exploration.

PHILEX's most advanced evaluation project is the NORTH PROJECT located in northeastern Mindanao, Surigao del Norte Province, within the historic SURIGAO DEL NORTE GOLD DISTRICT, shown on Figure 3. The District straddles a north - south, Pliocene age, trending volcano - magmatic arc, which hosts a number of gold mines. Recent drilling of the NORTH PROJECTS Boyongan prospect intersected an altered diorite intrusive with significant porphyry copper - gold mineralisation, concealed under volcanic cover.

In September 1999, a joint venture agreement between PHILEX and ANGLO AMERICAN PHILIPPINES INC (ANGLO), a wholly owned subsidiary of ANGLO AMERICAN PLC was signed covering the NORTH PROJECT. By 2001, ANGLO had earned a 40% interest in the project by spending US$ 2.2 million on exploration. Then in December 2001, PHILEX signed an agreement to sell 10% of its interest in the BAYONGAN PROJECT to ANGLO for US$ 20 million. And additional future payments of US$ 5 million should the metal content of the project area exceed 7.96 billion pounds of copper equivalent. ANGLO can earn an additional 30% equity which would bring its total equity in the project to 80% by carrying the project through to Feasibility Study and by providing a full guarantee for non - recourse project financing.

Most recent SCOUT drill results released by ANGLO AMERICAN - PHILEX GOLD Joint Venture for the BOYONGAN PROSPECT have been disappointing and have not added to the hitherto encouraging results for this porphyry copper - gold prospect. Clearly, there is a lot more drilling to be done until a mineable resource is defined and the project can advance to Feasibility Study.

THISTLE MINING INC. (Toronto Stock Exchange: THT & AIM: TMG)


CEO: Mr. William McLucas Web address: www.thistlemining.com
Shares in Issue: 226 million shares

THISTLE MINING INC. currently holds title to the tenements covering the old MASBATE GOLD MINE, near Aroroy on the Island of Masbate.

The MASBATE deposit was discovered and mined by ATLAS CONSOLIDATED MINING CORPORATION, until closure, due to falling gold grades and low gold price, in 1994. In 1995, the MASBATE MINE was sold to PHILIPPINE GOLD PLC (formerly "THE FICUCIARY TRUST"). The history of PHILIPPINE GOLD makes interesting reading and the reader is referred to articles on the internet and press archives concerning the history of this company as it is too complex and convoluted to be dealt with here. Suffice it to say that the company had to write down debts of US$ 39 million by June 1999! However, some money was expended on exploration around the old MASBATE MINE.

Following acquisition of the MASBATE project by THISTLE MINING INC. in 2000, the company's Philippine subsidiary FILMINERA RESOURCES CORPORATION completed slightly in excess of 4,800 m of reverse circulation and diamond drilling on its Colorado, Grand View and Montana deposits near MASBATE MINE. It was announced by THISTLE that the MASBATE GOLD PROJECT contains an estimated 3 million ounces of gold "in the Resource Category".

During the first quarter of 2003, the Company intended to drill a further 5,400 m of RC and 1,500 m of diamond drilling in the HOLY MOSES - BASALT and MAIN VEIN deposits. Additional drilling will be required at the COLORADO deposit for inclusion in resource estimation work.

To date, no further work has been undertaken on the MASBATE GOLD PROJECT, as the THISTLE MINING appear to be focused on their South Africa operations.

RED 5 LIMITED (Australian ASX)


CEO: Mr. Greg Edwardes Web address: www.red5limited.com.au
Shares in Issue: 108 million Principal Shareholder: Topspeed Ptd Ltd 7.61% + Board Directors: 28.61% in roughly equal proportion.

RED 5 (a wholly owned subsidiary of BREMER RESOURCES N.L.) is relatively new to the Philippine Exploration scene. The company has secured the right to earn an 80% interest in the SIANA GOLD PROJECT in the SURIGAO DEL NORTE MINING CAMP from Manila based JCG Resources Corporation on completion of bankable Feasibility Study at any time prior to June 2007. The SIANA MINE has an Indicated Mineral Resource containing some 800,000 ounces of gold.

The project is centered within a major producing gold belt, located a mere 6 km south south east of PHILEX GOLD - ANGLO AMERICAN's BAYONGAN porphyry copper - gold project, described above.

Past gold production from both underground and open pit mining at the SIANA MINE was 1.6 million tonnes at an average grade of 11.8 g/t Au (610,000 ounces) and 3.3 million tonnes at an average grade of 3.6 g/t Au (380,000 ounces) to 1990 when the mine closed. The main lode system, comprising a near vertically dipping complex vein array with mineralized breccias, extends over a currently known strike of 400 m and varies from 20 m to 60 m in width. Previous underground mining exploited high - grade narrow epithermal quartz veins at a mine cut off grade of 9 g/t Au. This mining practice left large volumes of lower grade material unexploited. Furthermore, there are numerous drill intersections and underground drives parallel to the main lode system that remain under explored and are obvious targets for follow up exploration. RED 5 note that as an example, an exploration drive off the "East Zone" located 60 m east of the main system at 150 m below the pit floor intersected 40 m along strike at 4 g/t Au with some faces assaying up to 37 g/t Au.

Below the known underground workings there is abundant evidence in old mine plans that the mineralisation continues to depth over the entire known strike length of the exploited system. Furthermore, at the northern end of the main ore zone altered and mineralized andesite porphyry has been discovered. This andesite demonstrates potential to host bulk a low - grade resource of between 1.0 and 2.0 g/t Au. This body is open to the north and at depth. Previous intersections near the andesite have included 158 meters at 2.3 g/t Au from surface. However, these results need confirming in follow up drilling.

In its April 2003 Australian Stock Exchange release, RED 5 announced that its first program of reverse circulation (RC) and diamond drilling had targeted three prospective areas in the immediate vicinity of the current resource of 7.7 million tonnes at 3.3 g/t Au. Initial RC drilling results confirm the discovery of a new gold zone "the Crackerjack" located 500 m north - west from the open pit. SMRC003 intersected 13 m at 6.23 g/t Au at 47 m depth. Furthermore, surface trenching at "the Fritz Weber Prospect" 300 m north west of "the Crackerjack" has exposed a zone of intense zone of alteration 40 m wide with results up to 2.83 g/t Au.

In a 25 June 2003 ASX shareholders report, RED 5 have stated that they have received good assay results from the sampling of old mine workings in the ALEGRIA vein swarm, located 6 km south of the SIANA gold deposit. To quote RED 5 ",,,,, One of the veins has yielded results averaging 10.3 g/t Au and 84.7 g/t Ag over a strike length of 100 m". However, RED 5 do not specify the sample density, type of samples, or the average width of the mineralized vein. Therefore, it is impossible to determine the significance of these results.

MINDORO RESOURCES INC. (Listed on the TSX Venture Exchange - Symbol MIO)


President and CEO: Mr. Tony Climie Web address: www.mindoro.com
Shares in Issue: 38.34 million fully diluted Major Shareholder:

MINDORO RESOURCES LTD. Is one of the new entrants to the gold exploration scene in the Philippines. However, it has been very active. The Chairman of the company is the well - known and respected professional geologist Dr Roger Morton.

MINDORO has acquired some good exploration properties in the Philippines, most notable amongst which is their LOBO gold prospect. The latter is located in Batangas, just south of Manila on Luzon, shown on Figure 3.

MINDORO has rights to earn a 75% interest in the LOBO prospect from the private Philippine company, EGERTON GOLD PHILIPPINES INC.

MINDORO has identified two major epithermal vein / breccia trends at LOBO; i.e., the SAMPSON and CAMO trends, located about 0.8 km apart, and each extending for at least 2 km along strike. Reconnaissance rock chip sampling indicates that high gold (copper - silver) values occur widely distributed along these trends as well as associated with several other trends that have only been partially defined to date. Exploration work is currently focused on the "SW BRECCIA ZONE" located in the SW of the CAMO trend. In the first 5 core - drill holes executed MINDORO has received the following encouraging results:

Hole No From To Downhole Width Weighted average grade
LB - 03 0.00 13.30 13.30 8.32 g/t Au
LB - 04 0.00 17.85 17.85 9.62 g/t Au
LB - 05 00.00 5.95 5.95 3.43 g/t Au
24.50 38.25 13.75 14.28 g/t Au

It should be noted, that holes LB - 03, 04 and 05 were drilled from the same collar position. Only LB - 03 cuts across strike and dip. LB - 04 was drilled oblique to the strike and dip and LB - 05 was drilled down dip to test the orientation of the mineralized breccia system and explore it down dip. Therefore, the LB - 05 intersection does not n any way relate to its true width. MINDORO point out that core recovery in the mineralized breccia was poor in places. In particular, they point out that there was strong core loss in the friable sulphide rich matrix. Given this observation, it is possible that gold grades may well be understated for these intercepts. The results to date are encouraging, but it is very much "early days" and MINDORO are a way off defining a project for evaluation drilling.

MINDORO point out that their drill core is transferred from the drill rig to core boxes under supervision of MINDORO employees. Core boxes are security strapped and transported to a secure core - processing area, where the core is reportedly logged and split by diamond saw under the direct supervision of MINDORO geologists. Samples are then transported in sealed bags to MCPHAR GEOSERVICES In Manila. Where samples are assayed using standard techniques. MCPHAR has a rigorous quality control system of internal checks and blanks. One out of 20 samples are independently check assayed at INTERTEK TESTING SERVICES, Jakarta, Indonesia.

PANORO MINERALS Ltd. (Listed on the Toronto Venture Capital Exchange as TSX-V:PML)


CEO: Mr. Helmut W Wober Web address: www.panoro.com
Issued Capital: 22.6 million shares Fully Diluted: 36.7 million shares
Working Capital: C$ 1.8 million (15/11/2003)

PANORO MINERALS (PANORO) is a newcomer to the Philippine Gold exploration scene. Owing to the very tight ground situation, PANORO has been forced to "farm in" to good exploration real estate by concluding an Option Agreement with another Canadian Junior, MINDORO RESOURCES Ltd. The Agreement covers a large package of exploration licenses covering some 23,900 hectares MINDORO immediately to the south of the Surigao Del Norte province of NE Mindanao. These licenses are in turn held under another option agreement with MINIMAX Resources Ltd (a Philippine based company).

Under the terms of the Agreement, PANORO can earn a 40% interest in then properties through the expenditure of $2 Million in exploration expenditures over a period of 4 Years (350,000 in Year 1, 450,000 in Year 2 and 600,000 each in Years 3 and 4) following the execution of a "Formal Agreement". PANORO has three months after the date of this "Letter of Intent" to notify MINDORO that it has obtained the financing for at least the first twelve months expenditure requirements of PANORO under the "Farm-In Agreement".

PANORO is also active in porphyry copper - gold and associated epithermal gold system exploration in Peru, at its "El Rosal Project" and nearby "La Ramada" target. These projects are PANORO's most advanced exploration targets. Not surprisingly, PANORO intends immediately drill test these more advanced projects with the second phase of its exploration program costing US$ 254, 000, and comprising some 2,000 meters of diamond drilling. Success in either or both of these properties will significantly facilitate PANORO's ability to raise further funds for both these and its Philippine projects.

To date, MINDORO has done little to "add value" to the large chunk of exploration real estate near Surigao. Its focus is in central Luzon. No doubt that, technically speaking, the ground held near Surigao lies along the highly prospective "Philippine Fault", or major north - south transpressional zone, which controls, and has influenced, the plumbing system and intrusion of porphyry copper - gold systems, and their associated low sulphidation epithermal gold vein arrays and silicified breccias, so far discovered and mined in Mindanao. Indeed, the exploration ground lies to the south of the ANGLO - AMERICAN - PHILEX GOLD Inc. Boyongan porphyry copper - gold project, the old Placer gold mine and Siana gold project of RED 5 (described above - also see PANORO website). The company draws attention to the gold and copper potential of its Agata and Tapian San Franciso prospects. In the later, it states that it has discovered "the presence of a large phyllic alteration zone, overlain by highly anomalous copper and gold in soils, (and) ..the recognition of potassic alteration and the presence of large though going northeasterly structures that control the locations of the Boyongan copper-gold porphyry deposit and the Placer gold deposit to the northeast of Tapian San Francisco". This is encouraging.

It should be noted by investors, that exploration of the Surigao properties is still very much "grass roots", and, therefore, "significant numbers" in the form of drilling results are some way off. However, the area has undoubted potential, and it will be a prospect to watch in the medium term. Identification of a large alteration system(s) with attendant silicification and quartz veining, or presence of stockwork veining, at surface, by a program of trenching and shallow drilling, with associated and reasonably consistent widths with gold grades above 1 gram per tonne, will confirm the potential.





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The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities.

Mr Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.