The Sy-controlled Dominion Holdings Inc. (DHI) is poised to become the biggest mining company in the Philippines through the consolidation of interests in the Tampakan copper-gold project, the largest undeveloped copper and gold deposit in Southeast Asia with an estimated gross value of as much as $200 billion.

The Sy, Alcantara, and Consunji families have finally decided to list their interests in Tampakan through a merger of their investment companies with DHI.

Based on DHI’s disclosures to the Philippine Stock Exchange (PSE) on Thursday, Aug. 20, Indophil Resources Phils. Inc. and Sonar Holdings Inc. will be absorbed by DHI, which has recently been repurposed into a mining holding company, through a merger in which DHI will be the surviving entity.

Indophil and Sonar together hold 100 percent of the voting rights in Sagittarius Mines Inc. (SMI), which is the holder of the financial and technical assistance agreement (FTAA) covering the Tampakan copper-gold project, located in South Cotabato province. Tampakan is considered the largest undeveloped copper-gold deposit in the region.

“This deal could potentially transform DHI into the largest mining company in the Philippines,” said Chinabank Capital Corp. managing director Juan Paolo Colet.

Colet noted, “By some estimates, the Tampakan copper and gold reserves have a gross value of around $150 billion to $200 billion, so the successful development of this project could generate significant returns to DHI’s shareholders, strengthen the country’s resource sector, and contribute meaningfully to national economic growth.”

In approving the merger, DHI said its board of directors views this as “a strategic transaction with potential for generating long-term growth and returns for DHI, aligned with its previously disclosed direction to become a holding company primarily invested in mining companies.”

DHI’s board also authorized management to determine, fix, and finalize the exchange ratio for the merger, in consultation with an independent fairness valuator who shall determine the appropriate values of DHI and the absorbed companies.

To pave the way for the merger and potential issuance of new shares by DHI in exchange for the 100-percent acquisition of SMI through Indophil and Sonar, DHI is seeking the approval of the Securities and Exchange Commission (SEC) for an increase in its authorized capital stock.

DHI said it is amending its articles of incorporation to increase its authorized capital from ₱3.42 billion to ₱30 billion, divided into 29.75 billion common shares with a par value of ₱1 per share and 2.5 million preferred shares with a par value of ₱100 per share.

The firm is also seeking SEC and shareholder approval for the merger, capital increase, and another amendment to its articles of incorporation for the denial of the pre-emptive right of stockholders whenever there is a fresh issuance of shares.

A market analyst said, “The injection of Tampakan is positive for DHI’s asset standing. The last recap on estimated mineral resource of SMI was 2.94 billion tons, containing 15 million to 16.5 million tons of copper and 18 million ounces of gold, although this might require updates.”

“The sequel question is how the firm would finance estimated capital development cost of Tampakan which was last estimated at about $6 billion or ₱367 billion. DHI is raising its capital to ₱30 billion so it might be a prelude to next capital-raising exercise,” the analyst said.

It was also noted that the start of operations for this project is expected to yield ₱77 billion in taxes to the government for the first 10 years of operations, or about ₱8 billion a year, and this would help fill in the fiscal deficit gap and support livelihood creation.

Glencore exited the Philippines due to regulatory roadblocks, and this allowed the Alcantara group to consolidate its control of the Tampakan project by exercising its right of first refusal.

The Sy and Consunji families infused capital into the investment companies to gain stakes in the Tampakan project, with the Sy family acquiring majority control via debt-to-equity conversions while the Consunji and Alcantara groups maintain minority interests.

Last week, the Sy family gained control over Atlas Consolidated Mining and Development Corp. from the Ramos family after raising its stake to 54.48 percent through the acquisition of a 20.43-percent interest by DHI from Anglo Philippine Holdings Corp. (APO).

DHI said it has signed a deed of assignment for the acquisition of subscription rights to 727.2 million Atlas shares from APO for ₱857 million in cash.

In 2017, APO paid 25 percent of the subscription price for these, amounting to ₱797.05 million. DHI will now assume payment of the 75-percent balance amounting to ₱2.39 billion to Atlas upon the call of Atlas’ board of directors.

The Consunji family’s Dacon Corp. also has a minority interest of less than 10 percent in DHI.