MVP: Good as gold

Shareholders of Philex Mining – which held its annual stockholders’ meeting at Dusit yesterday – are definitely excited with the prospect of acquiring additional mines in the Philippines and a bigger one in Indonesia. These planned acquisitions are on top of the $1 billion Silangan project in Mindanao expected to become fully operational by 2016.

Philex Mining chair and CEO Pangilinan disclosed he would much rather invest in mines that are already up and operational since these can already add to the bottom line. MVP indicated his preference for mines that produce two metals so that one subsidizes the production cost of the other – or simply put, hitting two birds with one stone, which really makes perfect business sense. For instance, in the Padcal mine in Benguet which produces gold and copper, the production cost for gold is less than $100 per ounce – but this cost is offset by revenues from copper.

Although Philex profits slightly dipped during the first quarter this year, its 2011 net profit was at a record high of P5.77 billion. Manny told us the country’s potential for mining is enormous which is why he has set his eyes on turning the mining firm into a global medium sized gold producer with a target output of one million ounces of gold annually. The Philippines also sits on some of the richest ore reserves in the world, which is why it is rather disappointing to see that mining only accounts for one percent of our GDP.

Several foreign investors admitted interest in the mining industry but said they are holding off until they see the final version of the Aquino administration’s long delayed mining policy. Even before its release, local officials are already threatening to engage in a court battle against the government, fuming over DENR Secretary Mon Paje’s statement that national policies will have pre- eminence over local laws and ordinances. Definitely, this is not the kind of scenario that will encourage foreign businessmen to invest in the country.

In any case, Manny Pangilinan assured Spy Bits of his continuing commitment to invest in the Philippines and help in creating job opportunities for Filipinos. First Pacific has several areas of investment with many of it defensive in nature such as telecommunications, food and infrastructure – very attractive especially during tough periods. There is also a lot of focus on natural resources – mining, oil and gas, plantations ( palm oil) – and these make up about 25 percent of the First Pacific Group’s estimated $ 44 billion valuation.

He may not be in Forbes’ magazine’s latest list of the Philippines’ 40 richest individuals, but MVP – who has been described as the richest most eligible bachelor in the country – is definitely good as gold.

Positive economic indicators

While many Europeans continue to be miserable over the effects of the still unresolved debt crisis that has been going on for two years, Filipinos can take heart over reports that the economy will sustain strong growth with positive contribution from tourist arrivals and increased hotel occupancy rates and many others. Analysts also point to increased expenditures from government at 16.7 percent to over P151 billion in May – a reversal from the decline seen in May 2011 and much better than the 9.1 percent recorded in April this year.

Observers note that increased spending is definitely good news since it can help government achieve development targets and sustain economic growth. Coupled with a narrowing trade deficit (down 40.8 percent for the year), these factors will certainly help push economic growth for the second quarter – making analysts revise their GDP forecast upwards to five percent for 2012.

PNB to write off charges

Analysts also foresee the Philippine National Bank fully writing off deferred charges by the end of this year if the Bangko Sentral ng Pilipinas will allow charging the remaining P4.8 billion ( 2011) balance against the surplus account this 2012. PNB’s recent performance has been healthy, posting a P1.2 billion net income for the first quarter. The bank, which is set to merge with Allied Banking Corp. ( ABC), continued to strengthen its core business with income from interest on loans and receivables increasing to 10 percent.

The deferred charges refer to the losses incurred by the bank on the sale of non-performing assets to special purpose vehicles from 2004 to 2007, with amortization set over a period of 10 years. Analysts say the “positive synergy from the PNB-ABC merger over the long term” should allow for trading at higher multiples on account of wider branch networks and increased asset base.

Drowning in Subic

Young bank executive and former RCBC Securities president Jerome Tan drowned while swimming in Subic last Saturday. Sources says the 44-year-old Tan (Spy Bits is not sure how he is related to RCBC president and CEO Lorenzo Tan or Banco de Oro president Nestor Tan) was pulled by an undertow and overpowered by a strong rip current that caused him to drift farther.

There have been an increasing number of drowning incidents in Subic and other areas in Zambales especially during summer, prompting a group of resort owners to initiate a lifeguard training seminar conducted by a local group accredited by the Belgium-based International Life Saving Federation. About 40,000 drowning related incidents are reported every year in the Philippines, and a big percentage of the victims are children.

Reports reaching Spy Bits also said Tan, who was considered a good swimmer, reportedly suffered from cramps which made it difficult for him to overcome the strong rip current. Our condolences to the family of this young man.