Investors back out of Arroyo’s flagship mining project in Rapu-Rapu

Green groups call for end to financially-devastated, ecologically-destructive mine ops

Environmentalists today welcomed news of an investor pull-out and a trading halt by Australian-owned firm Lafayette Mining Limited this weekend, hoping that this would signal the beginning of the end for the Arroyo administration’s flagship mining project in Rapu-Rapu island in Albay.

“This development is a tactical victory over Lafayette. The investor pull-out comes in the wake of strong protests by Rapu-Rapu residents and environmental groups to stop Lafayette’s mining operations as well as a devastating fish kill last October which is widely believed to be related to the mine project,” said Clemente Bautista, Jr., National Coordinator of Kalikasan People’s Network for the Environment (Kalikasan PNE) in a statement.

“The local, national, and international lobbying efforts and struggles of Rapu-Rapu residents and their supporters from environmental and fisherfolk groups is bearing fruit. We hope that this spells the beginning of the end for Lafayette mining in Rapu-Rapu,” Bautista said.

In a letter addressed to Mr. Nicholas Ong, Senior Adviser at the Australian Securities Exchange in Perth, and dated 30 November 2007, Lafayette Mining Limited requested for an immediate trading halt in its securities after a new investor group, which initially planned to buy the company out of is debt obligations of 269 million US$, announced its pull-out in the Rapu-Rapu mine project.

The trading halt is expected to last until today, December 3, the letter said.

Early in October 2007, Lafayettte announced a “major restructuring” and “recapitalization” of the project, which essentially is a buy out of the bank lending group by a new ‘Special Purpose Vehicle’ jointly owned by Cornerstone Investors and South East Asian Strategic Assets Fund LP (SEASAF), a Malaysian private investment firm. Under the preliminary agreement, the SPV will buy all outstanding debt, capitalized interest and fees owing by the project to the bank group. The SPV will purchase this for a proposed sum of 123 million US$ (50 percent of face value).

“Cornerstone Investor’s pull-out from the deal only and Lafayette’s crippling debt obligations only unmasks how weak and financially unstable the Rapu-Rapu mining project really is. It is another reason why Lafayette’s mining project in Albay should be terminated immediately. Lafayette is not only guilty of environmental destruction, it is also in a state of financial devastation and must be stopped in its tracks,” Bautista said.

“Lafayette is already in the red and should have no business continuing with its mining operations on such doomed financial straits. As of June 30, 2007, Lafayette is near bankruptcy. Based on its annual report, Lafayette has a total liabilities of A$348,300,418.00 with a net loss of A$224,507,576. In 2006 it has a net loss of A$172, 202, 840.00,” Bautista said.

Rapu-Rapu residents, meanwhile, vowed to launch more intense and massive protest actions calling for the immediate closure of the mine.

Antonio Casitas of Sagip Isla Sagip Kapwa (SISK), a local community organization of Rapu-Rapu residents, promised no let-up in current local protest actions against Lafayette, which included protest rallies in front of the municipal hall in Poblacion since the November fish kills.

“Tuloy tuloy ang laban hanggang mapaalis ang Lafayette sa isla ng Rapu-Rapu” (We will continue to fight until we expel Lafayette from the island of Rapu-Rapu), Casitas said.

Lafayette incurred national and international controversy after causing two mine tailings spills that led to fish kills in October 11 and 31 in 2005. The mine has been in operation since February 2007 and has been planning to extend its operations into other areas of the island―developments which have been strongly opposed by the communities to be affected. ###

Mr. Clemente Bautista, Jr. Kalikasan-PNE National Coordinator (0922-844-9787)
Mr. Antonio Casitas, Spokesperson, Sagip Isla Sagip Kapwa, Rapu-Rapu (0910-2748844)

National Coordinator
Kalikasan-People’s Network for the Environment (Kalikasan-PNE)
No.26 Matulungin St. Bgy, Central, Quezon City, Philippines 1100
Tel. No. +63-2-9248756 Fax No. +63-2-9209099


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