SYDNEY, Dec 18 (Reuters) - Australia-listed Lafayette Mining (LAF.AX LAF.AX , 0.015, +0, +0%) said on Tuesday it had entered voluntary administration, a step aimed at getting around liquidation, to give it time to obtain new capital or to sell its Philippine mining business.
Lafayette Ltd's Rapu Rapu mine was the first foreign-owned mine to operate in the Philippines after a law granting full foreign ownership of local mining projects was upheld in 2004.
Cyanide spills in 2005 shut the copper and zinc mine for more than a year and triggered a storm of protest from environmental groups and Catholic bishops that seriously hampered government plans to attract billions of dollars into the sector.
The shutdown, plus damage from a trio of typhoons, left Lafayette with restoration costs and temporarily halted revenues.
Carlos Dominguez, the chairman of the group's Philippine operations, said the mine and its 1,000 strong workforce would continue working until the Australia-based administrator told them otherwise.
"We have no plans to shut down the mine. We will stay open for as long as it is profitable," Dominguez told Reuters.
He said the mine, which is 350 km (218 miles) southeast of Manila, was forecast to generate net cash operating income of $52 million on gross revenues of $105 million in its 2007/08 fiscal year.
A bailout plan under consideration by a private equity group, South East Asian Strategic Asset Fund, would have eliminated around A$300 million ($260 million) of Lafayette's debt and bad hedges with the help of a $151 million capital raising.
Late last month, Lafayette said crucial financial support from the private equity group was a possibility. But on Tuesday it said that the level of certainty over the plan had declined, and it had no grounds to continue to hold that view.
Australia-based administrator Ferrier Hodgson has now been appointed to take control of the the company and its property.
The Rapu Rapu mine had been forecast to turn out 10,000 tonnes of copper in concentrate, 14,000 tonnes of zinc in concentrate, 50,000 ounces of gold, and 600,000 ounces of silver annually.
LG International Corp <001120.ks> and state-run Korea Resources Corp together hold a 26 percent stake in the mine.
Environmental campaigners in the Philippines said they were happy about Lafayette's financial difficulties.
"We are elated about this development. This is the fruit of a long struggle by the residents of Rapu Rapu Island," said Clemente Bautista, national coordinator for environmental group Kalikasan-PNE."
"We hope this development will lead to the permanent closure of mining operations in Rapu Rapu." (Reporting by James Regan; Additional reporting by Carmel Crimmins in Manila; editing by Jan Dahinten)