February 7, 2009

Weekend Economic Report

Local Mining industry made some headlines these weekend as foreign investors pulled-out some projects in an attempt to mitigate their losses from the onslaught of the worldwide meltdown in industrial metals. After a mining company decided to shut their mining operation in Northern Luzon, another foreign company prepares for take-over from a local mining giant Philex Mining corporation.

Publicly listed Philex Mining Corp. said Friday it now has full control over the Bongoyan copper-gold project in Surigao after it bought out partner Anglo American Plc. in the venture.

In a statement to the local bourse, Philex said it has acquired the 50 percent stake of Anglo American in the mine project through 81-percent owned subsidiary, Philex Gold Philippines Inc.

The acquisition was done via a share and asset purchase agreement covering the purchase by Philex of the shares of Anglo in the joint venure companies, Silangan Mindanao Mining Co. Inc. and Silangan Mindadao Exploration Co. Inc., as well as the acquisition of various assets, receivables and obligations of Anglo in the project for a total consideration of $55 million.

"(The transaction) paves the way for the continued development of Boyongan and the adjacent areas expeditiously and for the best interest of Philex," said Renato MigriƱo, Philex vice president for finance.

Philex and Anglo American earlier argued about the viability of the Boyongan project. A previous study conducted by the latter showed the mine would not produce an acceptable rate of return.

The 25,184-hectare Boyongan project was estimated by the government to have ore reserves of 300 million tons.

Philex said production at Boyongan could start by 2012.

Another sector is currently facing a major crisis at this moment, as more people are now starting to question the stability of their pre-need plans. "Despite the Security And Exchange Commission claiming to have loosen their policy on pre-need firms, they cannot guarantee that we will still get our money from the bankrupt company!" one policy holder commented.

Philippine Deposit Insurance Corporation (PDIC) conducted a depositor's forum in front of more than a thousand depositors from Cebu City who were affected by various bank holidays of the bankrupt Legacy Group of Companies at the Mandaue City Sports Complex.

The PDIC panel was composed of Ferdinand Beluan of Receivership and Liquidation Dept., Atty. Elaine Deticio- AVP for Claims Processing Dept., Teresita Gonzales- Recounting and Liquidation Group, and other PDIC Executives.

More than 130,000 depositors in Central Visayas were affected by the bank holiday, 25,000 of whom are from Cebu depositors in 5 banks under the Legacy Group of Companies.

During the forum, PDIC announced the schedule of claims, where depositors with deposits 100,000 and below can claim their P 250,000 insurance starting February 13.

Depositors with deposits above P 100,000 can start claiming their insurance starting March 1, 2009.

Depositors are reminded to bring the original Pass Book, an ID issued by the government and the accomplished claim form.

On the good side, inflation dropped further in January to 7.1 percent year-on-year from 8 percent in December, the lowest since March last year. Lower prices of fuel and transportation and communication services, and slower increases in the prices of most commodity groups accounted for the continued slowdown of inflation in January. Core inflation, which excludes certain specific food and energy items to obtain an underlying measure of generalized price pressures, was also lower at 6.9 percent year-on-year in January from 7.3 percent in December. Meanwhile, month-on-month headline inflation turned positive in January at 0.3 percent after being negative for four consecutive months. --- quotes courtesy of www.abs-cbnnews.com

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