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Philippine Metals Inc.
ProjectsDilong
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Project Overview


The Dilong copper property is located in Barrio Dilong, municipality of Tubo, Abra Province. It straddles close to the boundary of Abra and Ilocos Sur and forms part of the projected belt of porphyry copper deposits extending from Pangasinan from the south up to Ilocos Norte to the north following the western flanks of the Cordillera Central Mountains. Access to the property is available via a number of commercial and private airstrips and helipads within the project site and in the area. Local and international port facilities are also available

The property was initially discovered in 1970. Based on reconnaissance and semi-detailed geological studies, a three-kilometer geological environment of strong hydrothermal alterations of classic potassic, phyllic, silicic, argillic and propylitic zones with lateral zoning patterns was discovered. These zones roughly coincide with discontinuous and roughly concentric to arcuate alteration halos sliced by strong northeast, northwest, east-west and north-south fault systems. Aerial photographs discovered an outcrop of copper 450 meters long by 250 meters wide exposed along the Linang and Punglao creeks.

Prospecting, geological mapping, preliminary exploration and delineated drilling of exploration targets were conducted by W. E. Hale & Associates. Detailed geological mapping was also done with delineation of hydrothermal alteration halos, such as potassic, phyllic and prophylitic zones, leached capping studies, biogeochemical studies, petrographic and ore microscopy, test pitting, trenching and 22 short x-ray holes.

In 1974, Mission Exploration Company, in cooperation with the Benguet Province, conducted detailed geological, structural and lateral zoning alteration patterns of porphyry copper studies in the Dilong area. They indicate 1.5 kilometers of stockworks copper mineralization trending south 65 degrees west. Two "wildcat" holes intersected higher grade ore sections of 50 meters thick with an average grade of about 0.86 percent Cu.

Philippine Metals has recently acquired an extensive historical database from the previous work done at Dilong by Benguet and other operators. This database includes all previous drill hole locations, drill logs, assays, maps etc. The company is currently evaluating the data using modern computer modelling methods in order to better interpret the historical data.

Philippine Metals is acquiring 100 percent of the Dilong project in exchange for US$752,500, plus 312,500 shares. To date, US$357,500 has been paid with monthly payments suspended in February, 2013 and under discussion. Payments of US$25,000 per year will be paid on each anniversary of the date an exploration permit is granted, up to a maximum of US$375,000. The 312,500 shares have been issued are are being held until the exploration permit is granted (Subject to a 1% NSR).

Update

Since the date of the local elections in Tubo, Abra last October, the Company has accelerated its constructive efforts to work with the new local government and community leaders to gain their support for its Exploration Permit Application ("EPA") at Dilong. Negotiations with the rightful indigenous peoples to acquire Free and Prior Informed Consent (FPIC) have been initiated and are progressing positively and consultation with the Local Government Unit's Sanggunian has been ongoing, both key aspects of the EPA process. However, as a result of the Philippine government Mines and Geosciences Bureau's (the "MGB") "use it or lose it policy", which it has now taken steps to enforce, the Company has recently received formal notification from the MGB that its Dilong EPA has been cancelled. The Company believes that its permit has not been cancelled legally and it is currently in discussions with the MGB to resolve this matter and has filed with the MGB central office the appropriate objection notice, supported by documentation already filed with the MGB regional office demonstrating that the Company has been actively progressing its permit application and complying with all of the requirements set by the government, as described above. In addition, the Company notes that in its case, the MGB appears not to have observed its "three-letter-policy" of notification in exacting compliance in respect of its Dilong EPA.

The Company will continue to engage with the MBG to rectify this situation and expects that its Dilong EPA will be reinstated in due course. The Company is supportive of the MGB's efforts to drive reform in the Philippines mining industry and will continue to engage with and support the government in its efforts to implement its reform program. The Company will provide a further update as developments require.


Corporate Strategy

Philippine Metals plans to bring Dilong into 43-101 compliant indicated and measured categories and will drill define the boundaries of the deposit laterally and to depth. Once this exploration work is completed, the company will be seeking development partnerships and off-take agreements with Asian companies.