Philippine mine in jeopardy as Lafayette enters administration

Lafayette Mining Limited, the Australian listed miner with an interest in the Rapu-Rapu Polymetallic Project in the Philippines, has entered voluntary administration.

The move is intended to avoid bankruptcy proceedings and give the company time to obtain new capital, which may involve the sale of its Philippine mining business.

Lafayette was the first foreign company to operate a mine in the Philippines but its history in the country has been troubled.

In 2005, its copper and zinc mine was closed for over a year because of cyanide spills.

The incident had an adverse effect of the Philippine Government’s plans to attract foreign investment to the minerals industry and the situation was made worse for Lafayette by the activities of environmental campaigners.

The environmentalists involved have continued to put pressure on the company since the time of the spillage, and are hopeful that its current financial difficulties will mean the permanent closure of mining operations in Rapu-Rapu.

However, Carlos Dominguez, chairman of Lafayette’s Philippine operations, has stated that there are “no plans to shut down the mine”, which is expected to produce a net cash operating income of $52 million on gross revenues of $105 million in the 2007/08 fiscal year.

Lafayette is reported to have been considering a plan under which South East Asian Strategic Asset Fund, a private equity group, would invest in the business.