As Department of Environment and Natural Resources (DENR) Secretary Lito Atienza and Mr. Clifford M. James, President and CEO of TVI Pacific Inc. wing their way to the Asia Mining Congress, 7-11 April 2008 at Raffles City Convention Centre, Singapore two topics will perhaps not be on their public speaking agenda:
1. At a meeting on March 18th during Holy Week 2008, in Melbourne , Australia , the creditors of Lafayette Mining Limited (LML) approved the decision to execute a Deed of Company Arrangement (DOCA) following the advice of two Ferrier Hodgson appointed Administrators. To the question raised in Melbourne : What is the timing for the DENR to revoke the mining licence of LML? The answer given by the chairman was that the DENR were to meet with the potential purchaser on 19th March 2008, to discuss the project going forward. No revocation would be issued until the outcome of the meeting was known.
2. In March 2008, Siskinds LLP filed a $16 million class action under Ontario ’s new investor protection legislation (Part XXIII.1 of the Ontario Securities Act) against TVI Pacific Inc. ("TVI") and certain of its directors and officers. The action arises out of TVI's August 9, 2007 disclosure that TVI would need to restate its financial statements for the years 2005 and 2006 and for the first quarter of 2007. Among other accounting errors, it is alleged in the Statement of Claim that TVI's stock options were manipulated and that TVI incorrectly expensed its stock options to senior executives. The class action is brought on behalf of all persons who acquired TVI securities from March 30, 2006 to and including August 9, 2007 (the "Class Period"), and who held some or all of those securities on August 9, 2007.
Before it becomes a butterfly, a caterpillar goes through a growth stage during which it is called a "chrysalis." On the surface it may not look like much is happening, but the delicate chrysalis process changes the fuzzy caterpillar into an awesome butterfly with wings of intricate designs and intense colours. The chrysalis stage of “cross-over junior” mining companies in the Philippines is still entombed in Holy Week, unable to transform into money making enterprises beyond their dreams. Reared tropical butterflies from Marinduque Island , perhaps is the way to go, but unfortunately they exist due to the mining moratorium resulting from the Marcopper mine disasters.
Lafayette Mining Limited (LML)
On May 1, 2004, pursuant to the powers vested under the Republic Act 7916, otherwise known as the Special Economic Zone Act of 1995, the President signed Proclamation 625, creating and designating as a special economic zone an area located at Barangays Malobago and Pagcolbon where the Rapu-Rapu Polymetallic Project, an ongoing mining project, is being undertaken in the Municipality of Rapu-Rapu, Province of Albay . The Project is operated by the Rapu-Rapu Processing, Inc. (RRPI), a unit of Lafayette Philippines, Inc. (LPI) which is 74% owned by Lafayette Mining Ltd (LML), an Australian listed company, with the remaining 26% held by Philco (jointly owned by LG Metals and Kores, Inc.), a Malaysian corporation. LML was more likely than not insolvent from at least 17th December 2007 and to avoid being wound up passed into a “Deed of Company Arrangement” in the hands of two Australian administrators.
The creditors of LML are ranked as secured, preferential and unsecured. LML had a number of finance facilities with a syndicate of banks (ABN AMRO Bank N.V., Investec Bank [ Mauritius ] Limited, F.A. International Limited and ANZ Banking Group Limited). The exposure of the Bank syndicate to the Group at appointment of the administrators had risen to circa $270,000,000. Debt owed to ANZ under registered fixed charge number 1042333 as at 18 December 2007 is USD 98,213,791. LML issued over $26,000,000 in convertible notes requiring regular servicing of interest to the note holders.Partly secured creditors (basically from Malaysia) consist of convertible note holders held by the following: SEASAF LP - USD $10,000,000; VS Holdings Limited - USD $3,000,000 and Brightyield Enterprise Limited - USD $2,000,000, at cost or net book value of $17,530,471.
The administrators estimated the Company’s liability to unsecured creditors at $8,035,547. No dividend will be paid to the latter.
The administrators closed four bank accounts with the National Australia Bank Limited and deposited closing proceeds of $69,663 to a separate administration account. The debtors’ ledger as at 18th December 2007 totalled $53,784 relating to one debtor. This amount is disputed. LML had an investment (74% shareholding) of $19,969,352 in Lafayette Philippines Inc.(LPI) and an investment of $953,969 in Lafayette Mining Gabon SA. LML does not own any real property.
LML indirectly owns 74% of the Project which is located on Rapu Rapu Island in the Republic of the Philippines . LML has 981,467,099 shares on issue, with $507,043,288 paid. On 17th December 2007, Rapu Rapu Mining Inc (RRMI), an associate of the Company, received a default notice from its mining contractor, Leighton for USD 871,105 out of a total debt owed of 4,628,206. LML is a co-guarantor for the payment of money (contingent liability) due under the mining contract with Leighton.
Roderick John Sutton and Peter Damien McCluskey will endeavour to maintain the corporate shell of LML in order that it can be sold (subject to shareholder meetings approving the restructuring). The Deed Administrators will undertake a sale process and invite expressions of interest to recapitalise the corporate shell, which may generate a return for some creditors (i.e. the Equity Portfolio Foreign Investment [EPFI] creditors). They will create ''a Fund" for the payment of participating creditors' claims. The Fund shall comprise the realisation, and conversion to cash, of all assets of the Company plus any amount received from the sale of the corporate entity.
The people of the Island of Rapu Rapu are non-ranked creditors since they only live on the Island and the majority of them (70%) depend on fishing for their livelihoods. Who will pay the people of Rapu Rapu the P16 million arrears in social development programmes? Has anyone of the EPFI creditors or the “new buyers” picking their way through the carcass of LML, acquired the social acceptability of the “new corporate project” from the inhabitants of the island?
The DENR under Environment Secretary Jose L. Atienza Jr. has ordered proponents of the Rapu Rapu Polymetallic Project in Albay to "set aside" at least P137 million for the environmental rehabilitation and social development of the areas impacted by the project, based on the country's mining law. Who will pay? Should the “new shell” investors not have to start from scratch, hence compulsory revocation of previous mining licence, since who can rely on the failed planning and processes of the previous owners who have squandered such vast amounts of money, not to mention damage to the fragile ecosystems of Rapu Rapu?
Rapu Rapu is not socially, technically, environmentally and financially feasible but, still it was allowed to proceed. Who should be held accountable?