DISTRIBUTION SYSTEM

LEPANTO CONSOLIDATED MINING COMPANY

I.

Company Background Lepanto Consolidated Mining Company is a publicly-owned company providing investors with highly liquid gold products. As a pioneering mining company, Lepanto has been a proud resident of Mankayan, Benguet for 76 years since 1936. Its main office is located in Paseo de Roxas, Makati City. The owners of

At present, it operates the Victoria and Teresa gold deposits in Mankayan, Benguet.

As a publicly listed company, Lepantos shares are traded in the Philippine Stock Exchange under the symbols of LC and LCB.

II.

Names and Types of Offering It is a Trading Company and primarily offers Mining services.

Lepanto Consolidated Mining Company engages in exploring and mining

gold deposits. It also sells copper concentrates; and explores and mines for silver, copper, lead, zinc, and various kinds of ores, metals, and minerals, as well as oil, gas, coal, and their related by-products.

The company primarily holds interest in the Victoria and Teresa gold

projects, and the Enargite copper project located in Mankayan, Benguet.

In addition, it is involved in hauling, warehousing, and sawmilling activities;

apartments, guesthouses, and warehouses leasing activities; operating resort/restaurant; and investment and insurance brokerage business.

Further, the company offers diamond drilling services primarily to mining

companies; and manufactures, distributes, and sells industrial diamond tools, including diamond core and non-core bits, reamer shells, casing bits, diamond circular segmental and diamond gang saws, and tubular products for the mining exploration, marble cutting, and the construction industry.

Lepanto Consolidated Mining Company sells its products primarily in the

Philippines, Hong Kong, Canada, Peru, and China. The company was founded in 1936 and is based in Makati City, the Philippines.

III.

Marketing Channel Objectives To have a fast, safe and efficient delivery To have a fast and better terms of payments To prioritize companies which are in close proximity

IV.

Marketing Channels

Mining Site (Raw Materials)

Refinery Companies

Manufacturing Comapanies

Wholesalers

Retailers

End-user

Supply Chain

MINING SITE: It is the first path in the supply chain where the raw materials come from. In here, the mining process takes place. It starts with the exploration of the area to know if the deposits are viable to extract and profitable enough. After having a thorough exploration of the area, the next process is the extraction of the ore body. Here, the whole mining process

begins which is from the building of the tunnels to the actual extraction of the rocks. After the extraction, the ore body will now be ready for the milling process. After this, the cleaned ore body will be ready for shipment to the gold refineries.

REFINERY COMPANIES: These are the major buyers of the milled ore body. They are the one responsible for the creation of the Gold Bullions (gold bars). The primary Refinery Companies that buy the gold from Lepanto mainly come from Hong Kong, Peru, China, and Canada.

MANUFACTURING COMPANIES: These are the companies that further process the gold bullions in compliance with their different customers specifications. These companies then directly sell the finished products to either wholesalers or to end users.

WHOLESALERS: These wholesalers are also companies who buy the gold to use them for some of the component of their products. Examples of these companies include the electronics and semiconductor companies.

Other wholesalers, though, buy the gold for storage purposes to increase their reserves. An example of this is the Central Bank and other gold traders.

RETAILERS: The retailers are the distribution channels of the wholesalers who then sell the products directly to the end consumers. These include the electronic stores and jewellers, among others.

A. Types In terms of their business, Lepanto doesnt have any suppliers, instead it is the one that provides the raw materials for the refinery and manufacturing companies that buy their products. Then afterwards,

wholesalers and retailers indirectly

B. NumberAs shown on the graph above, Lepantos products will pass through four channels before reaching the end-users.

C. Length International

D. Size

E. LocationCanada, China, Hong Kong, Peru.

V.

Distribution Strategies

VI.

Channel Management Decisions The distribution channel management decisions of mining companies are different from other industries. Lepanto, for instance, is the one where the refinery and manufacturing companies buy the raw materials from.

Therefore, Lepanto exercises their rights to choose and select companies in which they will make business deals with. They choose the companies based on their marketing channel objectives.

VII.

Legal and Ethical Issues Legal and Ethical issues includes having conflicts with the workers unions inside the company, environmental disasters and issues regarding the local government.

VIII.

Corporate Social Responsibilities

IX.

Channel Conflict Management Bad Weather Due to the inclement weather patterns, the delivery of the products to the refinery companies may not be on time. In regards with this, Lepanto gives

notices to the refinery companies about the situation so that both sides can make adjustments regarding the delivery.

X.

Distribution Plans A. Cost Concideration Changing oil prices: Lepanto uses their own cargo planes to deliver their products to the refinery companies. Tariffs and Taxes:

XI.

Conclusion Being on top of the supply chain, Lepanto Consolidated Mining Company has lesser distribution conflicts than other companies because they only have to deal with the refinery companies. Even though the golds that they mine passes through four channels before reaching the end-users, they only directly transact with one channel, which is the refinery companies.