B2Gold to Buy CGA - C$1.07 Billion Dollar to Take Over Philippine Gold Mine

Clive Johnson, chief executive officer of Vancouver-based B2Gold. Photographer: Suzanne Plunkett/Bloomberg

B2Gold Corp. (BTO), a Canadian company with assets in Latin America and Africa, agreed to buy CGA Mining Ltd. (CGA) to gain control of the largest operating gold project in the Philippines.

The deal is worth about C$947 million ($966 million), or C$2.80 a share, in stock as of yesterday's close, down from its announced value of C$1.07 billion. CGA's Australian-traded shares rose 4.7 percent to A$2.67 at the close in Sydney today.

Buying Perth, Australia-based CGA will give B2Gold the Masbate mine in the Philippines, which has total resources of about 7.7 million ounces, according to the company's website. Adding Masbate would increase B2Gold's output by 57 percent, making it reliant on production from the Southeast Asian nation.

"It's a vote of confidence in the Philippines," the nation's Mines and Geosciences Bureau Director Leo Jasareno said in a phone interview today. The government has just renewed for another five years the license for processing in the Masbate gold mine south of Manila, Jasareno said.

Holders of CGA will get 0.74 of a B2Gold share for each they own, the companies said in a joint statement yesterday.

CGA rose 2.3 percent to C$2.71 at the close in Toronto yesterday. B2Gold fell 12 percent to C$3.79, its biggest decline since October 2008. CGA has gained 32 percent this year and B2Gold climbed 22 percent. The Philadelphia Stock Exchange Gold and Silver Index (XAU), which includes 30 mining companies, has gained 7.9 percent this year.

Immediate Leverage

B2Gold is currently forecast to produce about 350,000 ounces from three mines in 2012, according to yesterday's statement. The Masbate mine, which began operating in 2009, is expected to produce about 200,000 ounces of gold in the year through June.

"CGA and its flagship Masbate mine offers B2Gold shareholders immediate leverage to a significantly larger combined production profile," Clive Johnson, chief executive officer of Vancouver-based B2Gold, said in the statement.

Gold futures, which have gained 13 percent this year, reached a six-month high of $1.781.80 an ounce on the Comex in New York yesterday. Gold has risen for 11 straight years, reaching a record $1,923.70 an ounce on Sept. 6, 2011, in New York, as investors buy the metal as a store of value and a hedge against inflation.

"B2Gold is taking advantage of a strong share price and valuation to add a steady producing asset with a long mine life at what appears to be an attractive purchase price," Steven J. Green, a Toronto-based analyst at TD Securities Inc., wrote in a note yesterday.

Gold Deals

Excluding the B2Gold purchase, there have been $2.54 billion of takeovers of gold companies valued at $200 million or more announced this year, with an average premium of 43 percent, according to data compiled by Bloomberg. There were about $11.6 billion of deals in the same period last year, the data show.

Investment in mining in the Philippines may miss a $16 billion target by 2016 after the government stopped issuing new mining permits in January 2011, Philip Romualdez, president of the Chamber of Mines business group, said at a forum in Manila yesterday. An order from President Benigno Aquino in July extended that moratorium and expanded a mining ban until Congress passes a law giving the government a bigger share in resource contracts.

The B2Gold takeover requires 75 percent of CGA shareholders to vote in favor.

B2Gold was founded in 2007 by the former management team of Bema Gold Corp., which was sold that year to Kinross Gold Corp. (K) for C$3.67 billion. The company operates in Nicaragua, is developing a mine in Namibia and has a joint-venture project with AngloGold Ashanti Ltd. (ANG) in Colombia.

CGA is being advised by BMO Capital Markets and Haywood Securities Inc. and its legal counsels are Blake, Cassels & Graydon LLP in Canada and Middletons on Australia. Genuity Canaccord Corp. is B2Gold's financial adviser while its legal counsels are Lawson Lundell LLP in Canada and Squire Sanders in Australia.

Bloomberg 

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Glencore's Philippine copper unit plans $600 Million USD expansion

 

Commodities trader Glencore International is close to concluding technical and financial studies for its $600-million plan to double capacity at the Philippines' only copper smelter and refinery, a top official of the smelter said on Thursday.

Work on enlarging operations at the refinery in the central Philippine province of Leyte could start as soon as next May, once the plan has been approved and finalised by the end of this year or early in 2013, Angel Veloso Jr., chairman of the Philippine Associated Smelting and Refining Corp (PASAR), told Reuters.

"In June, we announced investment of up to about $600 million," Veloso told Reuters. "The expansion plan is to increase capacity to a maximum of 1.2 million tonnes of copper concentrate."

The plant now processes 720,000 tonnes of copper concentrates annually and refines 215,000 tonnes of cathodes.

Technical studies should be completed by October and financial studies by December, Veloso said, adding that the project would take two to three years to complete.

Regarding the investment plan, Trade Undersecretary Cristino Panlilio said: "They are committed to that."

PASAR, which is 78-percent owned by Glencore, the world's largest diversified commodities trader, also wants to build a 200-MW coal-fired power plant to lower its energy cost, and may sell extra power to users at an industrial estate it plans to build near its refinery, Panlilio added.

"They have already informed us of their intention to file for (tax) incentives for the project," he said.

PASAR resumed operations at the refinery last month after it was shut in January by a fire.

The company, which has been producing copper cathodes for export since 1976, was acquired from the Philippine government by Glencore in 1999.

PASAR buys and refines copper concentrates from mines in Australia, Canada, Southeast Asia, Papua New Guinea and South America.

PASAR is one of only a handful of companies involved in downstream metals processing in the Southeast Asian country.

Philippine President Benigno Aquino wants the mining industry to shift to more value-added output by setting up processing plants and moving away from direct shipments of ores, so as to help the country raise more revenue from its largely untapped mineral resources, estimated to be worth $850 billion.

Reuters 

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Sen Trillanes Secretly meet China and betrayed the Philippines

Senator Antonio Trillanes IV and Senate President Juan Ponce-Enrile. INQUIRER FILE PHOTO |  Mrs. Brady sa Pilipinas walang may gusto na sa atin yung Scarborough Shoal Trillanes Said

Enrile calls Trillanes a 'coward,' a 'fraud'

Senate President Juan Ponce-Enrile exposed Senator Antonio Trillanes IV's alleged  "quiet, secret and clandestine" meetings with Chinese officials on the Scarborough Shoal issue, including  the latter's alleged visit  as the Philippine negotiator to China  where he supposedly called the Department  of Foreign Affairs chief  a "traitor."

Taking the floor on Wednesday, Enrile revealed that Trillanes met with Philippine ambassador to China Sonia Brady in Beijing sometime in August this year where  he supposedly said things  against  Foreign Affairs Secretary Alberto del Rosario.

"You went to China, you asked the ambassador of the Philippines there, Madam Brady, for a meeting and you said, 'Don't take notes during our conversation' and you called the Secretary of Foreign Affairs a traitor. In fact, you told me that he committed treason," said the Senate leader.

When Trillanes tried to stop the Senate leader from reading the alleged notes of the envoy during their meeting, Enrile cut him and said: "Don't teach me on parliamentary proceedings. I'm not answerable to anybody about what I'm saying in this court."

Senate Pro Tempore Jose "Jinggoy" Estrada, who was presiding over the session, allowed Enrile to read Brady's notes, prompting Trillanes to walk out of the session hall.

"He can't take the heat. He's a coward," Enrile said as Trillanes was leaving the hall.

Senate Minority Leader Alan Peter Cayetano tried to pacify the Senate leader, saying that the latter was "entering the emotional phase" of the discussion.

"No, I'm not emotional. The truth must be told. I don't start this. You start a fight with me, I'll take you on," said Enrile.

Enrile then started to read the notes.

Based on Brady's notes, Enrile said it appeared that Trillanes was protecting China and even suspected the United States behind the Scarborough Shoal dispute.

"When there was a simultaneous withdrawal, he thought to himself  this is not the arrangement," Enrile said, reading the notes .

"He was protecting the Chinese," the Senate leader commented.

The notes also revealed that the release of a picture of man planting a Chinese flag on the disputed island was from an old photo from 1980s.

"So this was rehashed," Enrile said.

Trillanes, Enrile said, also wanted everything that was happening in Scarborough to be made secret to protect the interest of China.

"Senator Trillanes has been quietly, secretly clandestinely meeting with the Chinese about Scarborough or the West Philippine Sea," he said.

"Pnoy (President Benigno Aquino III's nickname) did not know of the arrangements being made by the senator. Imagine talking to an enemy, a potential enemy of this country 16 times? What did he discuss with these people? Who initiated the discussion? Did he or did they? Did they pay for his trip to Beijing?" he said, referring to President Benigno Aquino III.

"My God, this guy is a fraud," Enrile said.

Trillanes, Enrile said, also told Brady that in the Philippines, no one cares about Scarborough Shoal.

"He said to Mrs. Brady sa Pilipinas walang may gusto na sa atin yung Scarborough Shoal. Yan ang sinasabi nya, Filipino ba 'yan?Makabayan ba yan? (in the Philippines no one likes to have the Scarborough Shoal. That's what he said. Is that being a Filipino?)

"My god what kind of a senator is this?" Enrile said.

Inquirer 

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