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BIG PICTURE - Bezant Resources busy behind the scenes in the Philippines

The fact that Bezant Resources, one year on, is still looking for a partner or acquirer to bring its massive flagship Mankayan gold project into fruition, belies the AIM firm's hard work behind the scenes.

Indeed, the scale and potential of Mankayan is not in question.
Indeed, the scale and potential of Mankayan is not in question.

The fact that Bezant Resources (LON:BZT), one year on, is still looking for a partner or acquirer to bring its massive flagship Mankayan gold project into fruition, belies the AIM  firm's hard work behind the scenes.

In many ways, the firm has been in hibernation, conserving energy and cash before it can pounce - in itself an achievement, when some mining firms have gone, or are going, to the wall.

One notable achievement of 2014 was the commissioning of reviews on the historic 2011 conceptual study for the Philippines project, which made the opportunity for third parties keen to get in on Mankayan look a whole lot more exciting, despite a gold mining environment that can at best be called 'challenging'.

The last report from consultant Mining Plus, building on an earlier document, remodelled the original mine design and costs, and came out with an eye-catching US$307mln of potential cost reductions for the life of the project.

Total capital infrastructure costs were still put at US$1bn over a 28 year mine life at 20mln tonnes per annum (Mtpa).

Post-tax cash flow was stated as US$3.7bn, while the project's net present value (NPV) was put at an impressive US$739mln (at an 8% discount rate) with an internal rate of return of 21%.

Indeed, the scale and potential of Mankayan is not in question.

As chief executive Bernard Olivier highlighted to Proactive last year it's a "very large copper, gold porphyry, of which there's not a lot in the world that's been defined to this JORC-compliant indicated resource level".

The site already has over 1mln tonnes of contained copper and around 3.7mln ounces of gold defined in the highest confidence category - indicated.

To try and put that into some kind of context, in 1989, 7mln tons of copper were produced globally, while one of the world's biggest gold producers, Petropavlovsk, produced around 741,000 ounces of gold in 2013.

Discovered in the 1970s, Mankayan lies around 240km north of the capital Manila and 6km east of a world-class, high-grade copper-gold mine operated by Filipino primary gold producer Lepanto Consolidated Mining, so the address isn't a problem...not entirely anyhow.

A definite dampener on proceedings, however, was a proposal put to the Philippines government last year by a civil service body over the potential introduction of a highly punitive new tax regime for miners.

Historically, the Philippines has been a mining friendly location, offering various incentives and has established a Mineral Development Council to assist foreign investors, but the latest moves have thrown the domestic industry into uncertainty.

Under the plans, the Filipino government would receive 55% tax on a mining operation's adjusted net revenue or 10% tax on its gross revenue, plus a percentage of windfall profit, whichever is higher.

On the plus side, the Chamber of Mines in the country, which opposes the plan, is now in formal dialogue with the Government.

"We firmly believe that the proposal sits at odds with the Government's stated strategy to encourage further cross-border investment into natural resources," said Olivier last month in the group's interims.

Those numbers showed a company determined to lock down excess expenditure and for the six months to December 31, the group loss after tax was reduced to £328,000, compared to £798,000 in the comparable period, mainly due to reduced costs for the group's licence obligations.

The firm also revealed it had taken a hard line on costs - it reduced expenditure by around 59% (£470,000) in the period and is in the process of reining back further, including reducing directors' fees and wages.

It had around £2.1 million cash at bank as at June 30 and remains well funded to continue its operational activities, it revealed.

Encouragingly, it said it was also mulling other potential project opportunities that are already in production, which could be scaled up.

So Bezant, quite literally, has it all to play for this year and 2015 could mark a turning point for the group.

Quick facts: Bezant Resources PLC

Price: 0.284 GBX

Market: AIM
Market Cap: £8.68 m

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