Mankayan: Here’s why Blackstone Minerals is making a big bet with this Fillipino Gold-Copper project

Blackstone Minerals‘ (ASX:BSX) announcement it was purchasing Mankayan could be lost on most investors as another one of those pivots micro-cap resources companies make.

Maybe these companies see it as an opportunity, but there may be an implicit admission of failure in its previous project (in commodity, timing, jurisdiction, or perhaps something else). In this case, Mankayan was indeed a good opportunity for Blackstone, but the years it has spend on Ta Khoa haven’t all been in vain, and may not even be over.

Why Mankayan is a big opportunity

Mankayan, which is in the Phillippines – specifically in Northern Luzon, ~340km from Manila – offers exposure to the hottest commodity of the 21st century.

We think copper destined for a bull run in the next few years as the so-called ‘Copper Crunch’ emerges where demand will continue outstrip supply. Global copper mine output is 22.4Mt in 2023, yet there will be deficit of 10Mt by 2035.

This is why the world’s major miners are investing significantly in copper, particularly BHP which bought Oz Minerals for A$9.6bn in 2023, was willing to offer over US$70bn for AngloAmerican and in FY24 invested twice the amount in its copper assets (Olympic Dam, Oak Dam, Escondida and a couple of new projects in Argentina) than its iron ore assets.

Copper is a predominant mineral in industrial purposes including electrical equipment, motoring, roofing, renewable energy technologies, and heavy machinery, as it is one of the strongest conductors of all elements in the periodic table. It is an essential ingredient to electric vehicles, with a typical EV needing almost four times the amount of copper that traditional fuel-powered cars do.

With electric vehicles on global roads expected to reach 145m by 2030, this will need a significantly higher amount of copper will be needed than is presently being produced. Even though Mankayan is realistically a few years away from production, it could play a role in supplying for the world’s electric vehicle market, particularly in the Asia-Pacific.

Mankayan has ideal geology and less sovereign risk

Mankayan is one of the largest high-grade undeveloped copper-gold porphyry projects globally. Mankayan is a large mineralised system which remains open to the north, south and at depth – in other words, it has not been determined where the mineralisation ends, at least not in those specific directions where the company has drilled. 

BSX is picking up the project by acquiring IDM International, an unlisted Australian gold and copper explorer which since 2021 has owned a 64% stake in a company caked Crescent Mining & Development Corporation (CMDC) – the balance is owned by local shareholders. CMDC has a Mineral Production Sharing Agreement under a 25-year term that began on 12 November 2021.

The Philippines has a long-standing history of successful mining operations, particularly in the gold sector, producing over 1Moz in 2023. The country is a democracy and the current government (under President Bongbong Marcos) will be in power until May 2028. The Marcos administration has been particularly pro-mining. There are several gold projects nearby including a the Didipio Mine which was built by Oceana Gold.

The Philippines has a pro-mining regulatory environment, a skilled workforce and existing infrastructure. The Corporate Tax rate is 25% and its royalties are negotiated with the state on a project-by-project basis (sometimes in conjunction with local Indigenous communities).

What about Ta Khoa? Is BSX giving up on it?

Not just yet. It is true that BSX is not advanced with Ta Khoa as it may have anticipated by now. It is awaiting its DFS and Investment Certificate. No doubt, it has been more difficult than the company had anticipated with the bear market for nickel.

But whatever happens, BSX’s experience with Ta Khoa has not been in vain. The company worked on the project for over 5 years and bought it from an exploration stage to a DFS-stage project. It has built up an established base metals mine development team that can be utilised to unlock the full potential of Mankayan. Its existing relationships and experience in the area, as well as its exploration and development equipment can all be deployed to the project.

Conclusion

Ultimately, BSX will be in better shape as a company once it has been completed the deal to bring Mankayan into its hands offering diversified exposure to projects important for the energy transition, as well as precious minerals.

Readers interested in more information should read the reports published by our friends at Pitt Street Research.

Blackstone is a research client of Pitt Street Research. Pitt Street directors own shares.

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