LISTED GEOGRACE Resources Philippines, Inc. signed on Tuesday a deal with Tanco-led Geogen Corp. to extract nickel from a mine site in northern Luzon, the company told the stock exchange yesterday. Under the deal, Geograce will exclusively develop and operate two adjacent mining areas — 45 and 60 hectares — in the municipality of Dinapigue in Isabela province until March next year, subject to renewal by both parties. Geograce will be able to extract nickel ores not exceeding one million metric tons per year from the two areas. "We are currently preparing the mine for our first shipment. We are expecting commercial revenues within the first half," Carl C. Ng, Geograce vice-president for investor relations, said in a phone interview. The company eyes selling nickel ore extracted early this year to Chinese traders, Mr. Ng told BusinessWorld. He declined to say the expected value of minerals at the site.

Geograce said Geogen is the successor-in-interest of Platinum Group Metals Corp. (PGMC) for the 2,391-hectare Dinapigue mine.

In September, Geograce signed a deal with PGMC to operate and develop initially 45 hectares of mining claims. Geogen acquired the 2,391-hectare Dinapigue nickel project from PGMC early this year.

PGMC, controlled by the Atayde family, has been one of the mining companies hit by diving global mineral prices. PGMC operations focus mainly on nickel, which has gone down by two-thirds to $9,915 from $28,000 per metric ton a year earlier. Aside from its Isabela mining site, it is also letting go of its ferro-nickel smelter operations in Danao in Cebu province.

Eusebio H. Tanco, president and chairman of Geogen, is also a director of the Philippine Stock Exchange.

Geograce will pay a royalty fee equivalent to a tenth of gross revenues from nickel shipments. Furthermore, the parties will decide on royalty fees if other minerals are found in the area. The company is preparing the mining equipment and will start commercial operations in the 60-hectare claim in March, Mr. Ng said. A portion of the revenues will be allocated for the exploration of the remaining Dinapigue property.

"We want to explore the remaining area," Mr. Ng said, adding that Geograce seeks to sign more operating contracts with Geogen.

The project is an open pit nickel mine now operating with infrastructure consisting of a motor pool, causeway, haul road, assay laboratory, sapling nursery, pier yard, administration office and an airstrip.

In June, Geograce signed a deal with Brazilian Vale, the world’s second-largest mining company, for joint explorations of gold and copper in Masbate. Vale committed $6 million in initial investments.

Geograce has exclusive access to nearly 240,000 hectares of nickel, gold, copper and chromite mining projects in the country. — Neil Jerome C. Morales