Surigao site production eyed by 2012

Publicly listed Abacus Consolidated Resources and Holdings Inc. expects to spend some P355 million within a five-year period, as it moves to start producing coal within its concession areas in Tago, Surigao del Sur.

In a disclosure to the Philippine Stock Exchange, Abacus Consolidated said its wholly owned subsidiary Abacus Coal Exploration and Development Corp. was already allowed by the Department of Energy (DoE) to move to the production and development phase from the exploration phase for Coal Operating Contract No. 148.

According to the DoE, Abacus Coal was “technically and financially qualified to undertake development and production of coal resources in the contract area.” The energy department also found the proposed work program “acceptable.”

Covering seven prospective coal blocks spanning 7,000 hectares in Tago, COC No. 148 for development and production is valid for 10 years until 2020 and can be extended for another 10 years should there be remaining mineable reserves.

Under the work program submitted by Abacus Coal, it intends to start producing coal in the third year (January 2012 to January 2013) with an initial production of 187,200 metric tons. The same volume of production is expected in the fourth and fifth years (January 2013 to January 2015).

The company has also earmarked a total of P25 million for supplemental exploration; P112 million for development; P26.9 million for production and P190.95 million for capital costs within a five-year period.

During the course of its operations, Abacus Coal is likewise mandated by the DoE to implement a health, safety and environmental protection program, as well as an emergency response program as the need arises.

This same Surigao coal mine, however, may be acquired by Lodestar Investment Holdings Corp. for P2.75 billion, through a Heads of Agreement signed earlier.

In the first quarter report of Abacus Consolidated, the parties expected to complete the acquisition within the second quarter. The acquisition of COC No. 148 would be effected primarily through a merger between Lodestar and Abacus Coal. Lodestar will be the surviving corporation.

Under the merger, Lodestar is acquiring not only the coal property but all the other assets and liabilities of Abacus Coal and will be issuing 250 million new common shares at the par value 10 centavos apiece and an agreed issue value of 90 centavos a share to Abacus Coal.