Oriental Peninsula unit to go small-scale mining

Posted at 06/16/08 3:32 AM

Publicly listed Oriental Peninsula Group Inc. has disclosed plans of its subsidiary, Citinickel Mines and Development Corp., to commence small scale mining operations in a town in Palawan as it faced delays over a different disputed site.

This move follows a series of pending legal battles in the local government units and at the courts over a disputed mining site in the town of Narra.

The legal battles has hindered Citinickel from commencing potentially highly profitable nickel mining operations in Narra in February, the target month it earlier told the exchange.

Citinickel has a mineral production sharing agreement (MPSA) permit, which granted them a 25-year term to mine up to 2,176 hectares in Palawan. Of this, 768 hectares are located in Narra while 1,408 hectares are in the town of Sofronio Espanola where it plans to start its small scale mining operations.

Oriental corporate information officer Josephine Caneba told the stock exchange that Citinickel will undertake development works in the Pulot mine, which is located within an area in Sofronio Espanola. She said the company already has a valid Environmental Compliance Certificate for that area.

However, Caneba noted that the company still has no activities in the Toronto mine in Narra after another mining firm, Platinum Group Metals Corp. (PGMC), barred it from entering the site.

Citinickel was seeking assistance from the government to expel PGMC so it could conduct "further studies and commence development in the area."

PGMC is contesting Citinickel’s rights in Narra town, where PGMC had a 25-year operating agreement signed in 2003 with land owner, Olympic Mines and Development Corp.

PGMC is questioning Citinickel’s MPSA permit granted by the environment department despite PGMC’s claims that it was the first to tender an MPSA application over the same mining tenement area.

Earlier, Citinickel bought out Olympic and won a ruling from the panel of arbitrators in Region IV-B that the operating agreement between Olympic and PGMC is void, thus has lost ground for its pursuit for the permit.

However, PGMC chief finance officer Raoul Romulo said "the grounds relied by Citinickel are without any legal and factual basis."

He said the decisions of the panel of arbitrators were assailed as null and void by PGMC in a petition filed with the Court of Appeals. This was later elevated by PGMC to the Supreme Court.

"Hence, the aforesaid decision/resolution relied by Citinickel is not yet final and executory," Romulo said.

Small scale permit

Oriental said Citinickel’s operations on the planned site in Sofronio Española town will be under a small-scale mining permit.

According to the website of Mines and Geosciences Bureau (MGB), the government agency overseeing the mining industry, a small scale mining permit  only grants them right to conduct mining activities that rely heavily on manual labor using simple tools and methods. Heavy mining equipment and the use of explosives are not allowed.

Small scale miners can only operate in a maximum area of 20 hectares per permit, which has a limited but renewable two-year term. An MPSA, on the other hand, grants a 25-year term to mine up to 5,000 hectares.

Earlier, Oriental accused PGMC of violating mining rules. It said PGMC, which was also operating under a small scale mining permit, was extracting more than the allowed 50,000 tons a year.