Australia-based gold miner OceanaGold will invest a further $29 million in the next six months in its Philippine copper and gold venture while it seeks a partner for the project, a company official said on Wednesday.

The company was in talks with different groups on a possible joint venture or merger arrangement to partly fund an additional $185 million needed for the Didipio copper and gold project to take off, Darren Klinck, company vice president for corporate and investor relations, told reporters.

“One of the areas that we think will probably be most likely at this point is a partner for the project,” Klinck said. “And that would be on a joint venture arrangement of some sort.”

Klinck said the company was evaluating a number of prospective partners globally which he did not identify. Last month, he said the group was in talks with 5 to 10 different firms interested in the Didipio project and in OceanaGold.

Oceanagold is also considering borrowings to fund part of the Didipio project, but the amount would depend on how much a prospective partner would be ready to sink into the venture.

“There are debt options that have been presented to us, and those debt options are under a variety of terms. But they would not cover the full quantum of the amount required,” Klinck said.

The search for a partner would delay the start of production at the mine to the second half of 2009 from an earlier guidance of the first-half next year. Start-up operations at Didipio were partially suspended earlier this year due to rising development costs.

The Didipio project in Nueva Vizcaya province north of Manila is only the second mining venture to be operated by a foreign firm in the Philippines.

Manila wants to boost investor interest in the country’s mining sector, one of the world’s biggest and most profitable in the 1970s, with investments expected to reach about $10 billion in the next three years from only around $1 billion now.

The Didipio project cost was raised to $320 million in May from an original cost of $155 million in 2006 due to higher raw material costs and after Oceanagold altered the project to include the building of a $33-$34 million, 18-megawatt power facility to ensure steady power supply at the mine site.

“We have seen a significant inflationary environment, everything from steel, to concrete, to labour,” Klinck said.

The Didipio mine is expected to produce around 120,000 ounces of gold and around 15,000 tonnes of copper concentrate annually in the first 10 years of production. The mine has a minimum life of 15 years.

source : reuters

Posted in : Mining Companies, Mining Exploration, Mining Industry, Mining Investment, Mining Trade & Market