Philippine court rules in favour of Oceanagold

MANILA, June 11 Wed Jun 11, 2008 2:20am EDT

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MANILA, June 11 (Reuters) - The Philippine Court of Appeals has temporarily set aside an order barring Australian miner OceanaGold (OGC.AX) (OGC.TO)from operations at a gold-copper project in the north of the country, officials said.

The court said in a ruling on Tuesday it was restraining the local government in the province of Nueva Vizcaya from acting on a cease and desist order against Oceanagold for a period of 60 days.

The cease and desist order was issued by provincial governor Luisa Cuaresma after the firm declined to pay 30 million pesos ($680,000) for a quarrying permit.

The central government has already said that Oceanagold need not pay for the permit since it was not doing any quarrying work.

The court said it was also told that police and troops had forced their way into the Oceanagold premises to block mining operations and created "an atmosphere of tension and antagonism in the locality".

"All these circumstances combined sufficiently to convince this court of the necessity of a temporary restraining order, so as to avert further hostilities and to avoid this controversy from spiralling into more violent proportions," it said.

Only around $1 billion has flowed into the Philippine mining industry in overseas investment since 2004 but the government is hoping this will surge to around $10 billion within the next three years due to record commodity prices and the country's proximity to resource-hungry China.

But local governments, land ownership disputes, communist and Muslim insurgencies and bureaucratic red tape can hold up projects in the Philippines for decades, despite the central government's public support for the sector, miners and fund managers have said.

OceanaGold has so far raised about $200 million to develop its Didipio site in Nueva Vizcaya, around 270 km (168 miles) north of Manila.

The mine is expected to produce around 120,000 ounces of gold and around 15,000 tonnes of copper concentrate a year in the first 10 years of production.

In 2009, while it is still ramping up output, Didipio is expected to produce around 60,000 ounces of gold. The mine is expected to have a minimum life of 15 years. (Reporting by Raju Gopalakrishnan; Editing by Anshuman Daga)

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