Benguet Corp., the Philippines' fourth biggest miner by market value, has suspended exploration activity at a copper-gold project on the southern island of Mindanao due to a dispute with a local partner, the firm said on Tuesday.

Benguet, a listed mining firm led by the Romualdez group, told the stock exchange the suspension was "intended to give the company relief from the effects of the pending dispute, which frustrates the performance of its obligations" under its contract. The Department of Environment and Natural Resources has previously awarded a Mineral Production Sharing Agreement for the exploration activity in Kinking located in Pantukan, Compostela Valley.

Benguet said it has informed the environment department of the move through a letter dated Jan. 9. The suspension period allows the Benguet and its partnerto explore posible resolution of their legal dispute.

Dispute

The company, the Philippines' biggest gold miner until the late 1980s, said its partner, unlisted Nationwide Development Corp (Nadecore), last year filed a complaint with the government to remove Benguet as operator of the project.

"They're saying that the development of the project has been delayed, which is not true," Benguet counsel Reynaldo Mendoza told Reuters, adding that the company had hired independent mining consultancy firm SRK to do a feasibility study.

In its complaint, Nadecore questioned the transparency of Benguet particularly on its operations and financial performance. It alleged the mining firm failed to disclose to the PSE material facts including the substantial delays in its projected financial benefits of the Sta. Cruz Nickel Project in Zambales and the civil and criminal cases filed by local provincial officials against Benguet and its directors.

Nadecore shareholders claimed that Benguet allegedly wrongly declared in its 2007 annual report that Citigroup remained to be the financial advisor for the mining firm’s Kingking copper porphyry project.

Nadecor terminated its operating agreement with Benguet last August 29, 2008 and formally requested for arbitration with the DENR on September 15, 2008.

Benguet, for its part, belied these complaints and stressed that the company has been fully compliant with the PSE and Securities and Exchange Commission's disclosure requirements.

Its legal counsel Rey Mendoza explained Benguet does not disclose information about operations, especially if the details are not yet final.

He admitted, however, the two parties are trying to settle their dispute out of court.

Once the parties have settled their dispute, activities at the Kingking project will resume, Mendoza said.

Benguet said it remains committed to developing Kingking, considered as one of the country's priority mining projects, and is prepared to resume its activities as soon as possible.

The Kingking site has an estimated mineral resource of 353 million tons with an average grade of 0.35 percent copper and 0.439 percent gold.

Benguet was in talks with nickel producer Jinchuan Group Ltd about the state-run Chinese firm investing in Kingking, Mendoza said. "The talks are still ongoing with Jinchuan and others," he added.

But given the global financial crisis, investors have taken a wait and see stance for the time being, he said. -- with Reuters