Top Frontier to tap SMC dividends for mining ventures

By Neil Jerome C. Morales, The Philippine Star

Posted at Jul 10 2014 07:27 AM | Updated as of Jul 10 2014 03:27 PM

MANILA, Philippines - Top Frontier Investment Holdings Inc., the majority shareholder of diversified conglomerate San Miguel Corp. (SMC), is gearing up to start mining and processing ores from several nickel and gold mining projects in the next five years.

The listed investment vehicle will fund its mining projects with cash dividends from SMC, which will continue to be an active participant in the government’s Public-Private Partnership (PPP) auctions, its top official said yesterday.

“We are conducting due diligence to make sure reserves are in the right places where we are going to mine. As soon as that is ready, we’re going to put up the plant,” Top Frontier president and CEO Ramon S. Ang told reporters after the company’s annual stockholders meeting.

Specifically, exploration projects and feasibility studies, which will determine the mineable deposits, will require one year to complete.

Ang said Top Frontier allotted another three years to build the mine and start processing ores.

“The Philippines currently has one of the largest mineral reserves in the world,” Ang said, adding that long-term outlook on mineral prices is on the positive side.

Top Frontier, through wholly-owned subsidiary Clariden Holdings Inc., holds the mining rights for the Nonoc nickel project in Surigao del Norte, Mt. Cadig nickel project in Camarines Norte and Lo-oc limestone project in Cebu.

It also has exploration permits for certain areas under the Bango gold project in Davao Oriental, Dinagat chrome nickel project and North Davao gold and copper project.

“We can do project financing and Top Frontier has enough cash dividend (from SMC). We can use that as equity,” Ang said.

He said there is no need to raise funds through a follow-on offering.

In January, Top Frontier listed by way of introduction or without conducting an initial public offering.

SMC earlier distributed to its stockholders the 240.19 million common shares or 49 percent of Top Frontier as a property dividend. The transaction ended the two companies’ cross ownership structure which allows both parties to block any takeover or entry of hostile entities given each other’s rights to match any offer from potential investors.

Ang said Top Frontier is also open to acquiring operating mines here and abroad.

For its part, SMC will remain as one of the most active conglomerates in the infrastructure scene.

Ang said SMC is looking to join all PPP projects up for public bidding despite a setback in the P35.4 billion Cavite-Laguna Expressway (CALAX).

Last month, the Department of Public Works and Highways disqualified SMC subsidiary Optimal Infrastructure Development Inc. from the auction of the CALAX after the latter failed to comply with the bidding rules, particularly on the issue of the validity of its bid security.

Top Frontier’s earnings hit P299 million in the first quarter, reversing the P327-million net loss a year ago prior to its reorganization program. Gross revenues reached P195.63 billion from just P2 million last year, driven by Petron Corp. and SMC Global Power Holdings Corp. that posted double-digit improvement even as core businesses reported better quarter-on-quarter results while liquor firm Ginebra San Miguel made a solid recovery.