philexgold.com - Operations

Operations

BULAWAN MINE

Philex Gold's Bulawan mine began commercial production in January 1996 and was

decommissioned in May 2002, after producing a total of 465,766 equivalent ounces of gold over its lifetime.

The Bulawan property is located 570 kilometres south of Manila, on southwest Negros Island in the province of Negros Occidental.

Gold mineralization on the property occurs as disseminations within hydrothermally altered, brecciated, dacite porphyry of Miocene age. In addition to the main Bulawan deposit, at least nine other gold deposits or mineralized zones have been identified. The property also contains areas anomalous in both copper and gold.

The Bulawan operation consisted of an underground mine, accessed by a decline, and a 4,000 tonnes per day capacity carbon-in-leach (CIL) processing plant. From 1996-2002, the CIL plant processed 6,163,754 tonnes with an average grade of 2.51 grams gold per tonne and achieved an average recovery of 89%.

Open pit mining was carried out on the upper portion of the main Bulawan deposit in 1996 and 1997, and on the satellite Korokan deposit, located 500 metres southwest of the Bulawan deposit, from August 1997 until the second half of 1998. From late 1996 through early 1999, low grade ore, averaging less than 1.5 grams of gold per tonne but above 0.5 grams per tonne, was treated by heap leaching. The low grade ore was supplied from the Bulawan and Korokan open pits.

The mine's production, in the form of doré bullion bars containing gold and silver, was shipped for sale to England, Germany and Singapore.

A re-evaluation of the economics of continuing development in the mine's Central Block was carried out in the second half of 2001 and showed that the financial returns would be uneconomic, because of the high cost of the required ground support and the prevailing low cost of gold. All development work was terminated in November 2001. Mining of the remaining broken ore was completed in April 2002.

Since production ceased, work at the property has primarily involved rehabilitation of mine areas and reforestation, maintenance of the tailing ponds and erosion control. Plant and equipment are being stored properly and disposed of as opportunities arise. The mine practised progressive rehabilitation throughout its operation, so closure costs are not substantial and are being spread out over five years. The retrenchment of mine personnel was funded by the parent company's retirement trust fund.