News & Analysis

Toledo Mining Corp Plc (TMC: AIM) review and analysis

By PSQ Analytics

Toledo Mining Corporation Plc (Toledo) is a nickel exploration and development company with operations on Palawan Island in the Philippines. The company estimates Berong and Celestial combined pre-JORC resources of some 350 Mt grading 1.3% nickel. It reported 563,280 wet-Mt of ore production and shipped 418,350 wet-Mt in FY 2009. Moreover, although the company did not record any production during 1H 10, it shipped 143,765 wet-Mt during the period. Details of the projects in which the company has major interests are as follows:

– Berong Deposit: Toledo has a 56.1% interest in Berong Nickel Corporation (BNC), which owns nickel laterite deposits in Berong, Moorsom and Long Point, collectively known as the Berong Deposit. The company identifies 140 Mt of pre-JORC resource grading 1.41% nickel and a JORC resource estimate of 10 Mt grading 1.55% nickel at Berong. It identifies pre-JORC resource of 120 Mt grading 1.25% nickel at Long Point and Moorsom together. Limited mining was commenced at Berong in 2007 and a long term contract signed to supply the Yabulu nickel refinery with 300,000t- 500,000t of ore per year. That contract, due to expire in August 2012, was terminated in November 2009.

– Ipilan Deposit: The company has a 52% stake in Ipilan Nickel Corporation which owns the Ipilan deposit. The deposit has a pre-JORC resource estimate in excess of 46 Mt grading 1.25% nickel, with a JORC resource estimate of 30.6 Mt grading 1.36% nickel for a portion of the total deposit area. Toledo has an option to acquire 40% of venture partner, Brookes Nickel Ventures Inc.'s 24% stake at USD5 mn up to the time of decision to mine and an option to acquire 40% of Celestial Nickel Mining Exploration Corp's 24% stake in the deposit at USD8 mn within a year from the commencement of commercial production. Exercising its options would take Toledo's stake in the Ipilan Deposit to 71.2%.

Ipilan is part of the broader Celestial Deposit, the rest of which is owned by MacroAsia Corp, with which Toledo has a MOU for possible joint development of adjoining properties. Toledo estimates a combined pre-JORC resource of over 100 Mt for the combined entity. The company also has an MOU with Jiangxi Rare Earth and Rare Metals Tungsten Group Co., Ltd (JXTC) for the construction of a plant on Palawan.

Key recent news

17 February 2010 The company announced that BNC has received an approval permit to commence drilling at the Berong nickel project, aiming to delineate JORC resource of 40Mt nickel laterite ore. Drilling is expected to be completed in 12 months, to be followed by publication of revised JORC 6 months after completion.

21 December 2010: The company announced its interim results for 6 months ending Sept 09. It reported 72.6% y-o-y decline in revenues to GBP0.2 mn and a net loss of GBP1.8 mn in 1H 10 (net income of GBP0.8 mn in 1H 09).