ABACORE Capital Holdings, Inc. said on Tuesday that it upgraded an existing venture with Oriental Vision Mining Philippines Corp. (ORVI) from exploration and development to a coal operating agreement.
“This is a development that will deliver long-term value to the holding company’s shareholders,” the company said in a press release.
Abacus Coal Exploration Development Corp. (Abacoal), a subsidiary of AbaCore, will provide three coal blocks that it owns in Surigao Del Norte for ORVI to develop.
The agreement allows ORVI to develop a total of 3,000 hectares of coal blocks — 84, 85 and 86 — that Abacoal owns in the municipalities of Tago and Marihatag.
AbaCore said that ORVI agreed to commercially operate coal block 85 within six months after signing and coal blocks 84 and 86 within a year.
As part of the agreement, ORVI paid P10 million to Abacoal as advance royalty which will be deducted from the royalties Abacoal will receive from ORVI throughout the agreement.
“We are pleased to enter into the next phase of our partnership with ORVI that will allow us to fully unlock the strategic value if the assets that we own in Surigao del Sur,” AbaCore President and Chief Executive Officer Raul B. de Mesa said.
Mr. De Mesa added that the venture will help AbaCore in increasing its revenue and in strengthening its liquidity amid the price inflation of coal in the world market.
Abacoal will generate revenue from its coal assets through the royalty fees ORVI will pay out. The fee is set at 8% of the gross selling price of coal per metric ton.
Abacoal will pay a royalty fee amounting to 5% of the gross price per ton of other minerals aside from coal that ORVI will find during its exploration.
Mr. De Mesa said that AbaCore is confident in ORVI’s expertise and experience in the industry, thus it allowed the operation of its coal assets.
“We look forward to a productive partnership that will provide long-term benefits to our stakeholders and the communities we serve,” he added.
On Tuesday, AbaCore shares ended higher by 2.34% or P0.04 to close at P1.75 apiece on the stock market. — Justine Irish D. Tabile