ATLAS - Ar. 17A Apr2010

COVER SHEET
1 1 5 P R EWA R
S.E.C. Registration Number
A T L A S CON SO L I D A T E D M I N I NG
A N D D E V E L OPME N T COR POR A T I ON
A N D S U B S I D I A R I E S
(Company's Full Name)
QU AD A L P H A C E N T RUM
1 2 5 P I ON E E R S T R E E T MAN DA L U YONG
(Business Address: No. Street City /Town / Province)
NOEL T. DEL CASTILLO (632) 635-4495

Contact Person Company Telephone Number
1 2 3 1 S E C 1 7 - A
Month Day FORM TYPE Month Day
Fiscal Year Annual Meeting
N/A last Wednesday of April
Secondary LicenseType, If Applicable
Dept. Requiring this Doc. Amended Articles Number/Section
Total Amount of Borrowings
Total No. of Stockholders Domestic Foreign

_______________________________________________________________________________
To be accomplished by SEC Personnel concerned
_______________________________
File Number LCU
Document I.D. _______________________________

Cashier
Remarks = pls. use black ink for scanning purposes
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SECURITIES AND EXCHANGE COMMISSION
SEC FORM 17 A, AS AMENDED
ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES

REGULATION CODE AND SECTION 141 OF THE
CORPORATION CODE OF THE PHILIPPINES
1. For the fiscal year ended DECEMBER 31, 2009
2. SEC Identification Number 115 PRE WAR
3. BIR Tax Identification No. 000-154-572-000
4. ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION

Exact name of issuer as specified in its charter
5. PHILIPPINES
Province, country or other jurisdiction of Incorporation or organization
6. (SEC Use Only)

Industry Classification Code
7. 9/F QUAD ALPHA CENTRUM , 125 PIONEER ST., MANDALUYONG CITY 1554
Address of principal office Postal Code
8. (632) 635-23-87 and (632) 635-4495

Issuers telephone number, including area code
9. N. A.
Former name, former address, and former fiscal year, if changed since last report
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sections 4 and 8 of RSA
Number of Shares of Common Stock

Title of Each Class Outstanding and Amount of Debt Outstanding
COMMON STOCK, P10 PAR VALUE 1,048,931,882
11. Are any or all of these securities listed on a Stock Exchange?

Yes No
If yes, state the name of such stock exchange and the classes of securities listed therein:
Philippine Stock Exchange - Common Stock

12. Check whether the issuer:
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17.1
thereunder or section 11 of the RSA and RSA Rule 11(a)-1 thereunder and Sections 26 and 141
of the Corporation Code of the Philippines during the preceding twelve (12) months (or for such
shorter period that the registrant was required to file such reports):
Yes No
(b) has been subject to such filing requirements for the past 90 days.
Yes No
13. Aggregate market value of the voting stock held by non-affiliates: P5,311,320,000

TABLE OF CONTENTS
Page No.
PART 1 BUSINESS AND GENERAL INFORMATION
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II OPERATIONAL AND FINANCIAL INFORMATION
Item 5. Market for Issuers Common Equity And Related

Stockholders Matters 7
Item 6. Managements Discussion and Analysis or Plan of
Operation 8
Item 7. Financial Statements 23
Item 8. Changes in and Disagreements with Accountants On
Accounting and Financial Disclosure 23
PART III CONTROL AND COMPENSATION INFORMATION
Item 9. Directors and Executive Officers of the Issuer 24

Item 10. Executive Compensation 27
Item 11. Security Ownership of Certain Beneficial Owners and
Management 28
Item 12. Certain Relationship and Related Transactions 29
PART IV CORPORATE GOVERNANCE
Item 13. Corporate Governance 29
PART V EXHIBITS AND SCHEDULES
Item 14. A. Exhibits 30

B. Reports on SEC Form 17-C (Current Report) 30
SIGNATURES 32
INDEX TO FINANCIAL STATEMENTS AND

SUPPLEMENTARY SCHEDULES 33

PART I BUSINESS AND GENERAL INFORMATION
ITEM 1. BUSINESS
Atlas Consolidated Mining & Development Corporation (The Company, ACMDC, or Atlas) was
incorporated as Masbate Consolidated Mining Company, Inc. on March 9, 1935 as a result of the
merger of assets and equities of three pre-war mining companies, namely, Masbate Consolidated
Mining Company Inc., Antamok Goldfields Mining Company and IXL Mining Company. Thereafter,
it amended its Articles of Incorporation to reflect its present corporate name. The Company is
engaged in mineral and metallic mining, exploration and development and primarily produces copper
concentrate and gold with silver, magnetite and pyrites as major by-products.
On September 16, 2004, Carmen Copper Corporation (CCC), was incorporated. It is engaged
primarily in the business of searching, prospecting, exploring, mining, processing and locating ores
and mineral resources. Berong Nickel Corporation (BNC) (25.2%) was registered with the
Securities and Exchange Commission (SEC) on September 27, 2004 for the purpose of exploring,
developing and mining the Berong Mineral Properties in Palawan. Another subsidiary, TMM
Management, Inc. (TMM) (60%) was incorporated on September 28, 2004 to provide management
services to individual or corporate entities.
On June 23, 2005, two new subsidiaries were incorporated, namely, the Ulugan Nickel Corporation
(UNC) (42%) and the Ulugan Resources Holdings, Inc. (URHI) (70%). The former is tasked to
explore and mine, among others, all the minerals and products that may be extracted or produced
within the Ulugan Mineral Properties located in the Province of Palawan. The latter has the
responsibility to acquire, obtain, direct and manage interests in securities of every kind and in real
properties.
Atlas owns a forty two percent (42%) interest in Nickeline Resources Holdings, Inc. (NRHI), a
company engaged mainly in the acquisition and management of interests in properties and securities
of every kind.
Another wholly-owned subsidiary, Atlas Exploration Inc. (AEI), was incorporated on August 26,
2005 primarily to carry out, either solely or in co-ventures with others, the exploration work for the
purpose of determining the existence of mineral resources and the feasibility of mining them for profit
and to acquire or dispose of claims in mineral and/or other natural resources and other properties.
The Company organized and registered on May 26, 2006 its water subsidiary, AquAtlas, Inc. (AAI)
the primary purpose of which is to provide and supply wholesale/bulk water to local water districts
and other clients and to make available other related and value added services.
On May 15, 2007, the Company acquired a 100% ownership in the Amosite Holdings Inc (AHI), a
company formerly owned by Anscor Property Holdings Inc. and the holder of rights to certain
properties which will be needed in the operation of the Toledo copper mine.
The new subsidiaries are the result of the strategic program designed to diversify the substantial asset
base of the Company and heap economic benefits from this synergy.
The Companys transactions with related parties are discussed in Note 12.
The Companys copper mining operations which started in 1955 are centered in Toledo City, Cebu
where three open pit mines, three underground mines and three milling complexes (concentrators) are
located.
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Due to a strong typhoon that hit Cebu in 1993, the mining facilities suffered considerable damage,
forcing Atlas to shut down its mining operations at its Toledo copper mines in early 1994. CCC, the
operator of the Toledo Copper Mines, started the rehabilitation of the mine assets in September 2007.
In July 2008, mining operations commenced and in October 2008 the concentrator complex produced
the initial copper concentrates.
The Companys revenues are currently derived from royalty fees and the sale of copper concentrates
from its Toledo Copper Mines production and nickel laterite ore from its Berong nickel operations,
rental of some of its idle assets and proceeds from sale of scrap and excess materials. The Company is
not dependent upon a single buyer or client in the pursuit of its business.
The Company and its subsidiaries (the Group) are not involved in any bankruptcy, receivership or
any similar proceedings.
Unlike most industries, mining companies operate in a less than competitive business condition.
Prices of metals produced are not dictated by the mining companies themselves but are rather
influenced by and highly dependent on quotations prevailing in the world market. The Company
usually relies on the London Metal Exchange (LME) quotations to price its metal output. No patents,
trademarks and franchises have been required by the Company for its normal operations. The
Company has agreements with several claimowners granting it the right to use certain mining areas in
exchange for payment of royalties. All sales made by the Company are considered export sales and
compliance with appropriate rules and regulations of the Bangko Sentral ng Pilipinas (BSP) is strictly
adhered to. The Company is not aware of any governmental rules and environmental laws that will
materially affect the results of its operations.
On September 29, 2007, a Collective Bargaining Agreement (CBA) was signed between the
recognized labor union and CCC. The CBA covers only the regular rank and file employees as at the
date of the agreement and will expire five years hence. The total number of employees as of
December 31, 2009 is 3,721. Faced with a prevailing low nickel price, BNC reduced its manpower
during the year to remain viable. For its part, CCC implemented in 2009 its programmed cut-back in
its minesite manning as the initial phase of the Toledo mine complex rehabilitation was essentially
completed.
The number and distribution of personnel at the end of 2009 compared to the same period of 2008 and
2007 are summarized below:
2009 2008 2007

Managerial and Confidential 561 600 481
Rank and File 3,160 5,151 3,584
Total 3,721 5,751 4,065
The harmonious and cordial partnership forged by the union and management was apparently
beneficial to all concerned as no work stoppage or any similar incident was staged by the union during
the period between 2007 and 2009. The Company faithfully complies with labor laws and regulations
that mandate increases in the minimum wages and the provision of other benefits to employees. As of
December 31, 2009, AAI, AHI, AEI, NRHI, UNC and URHI have yet to start commercial operations
and to hire regular employees.
The year was a critical period for the Companys efforts to find a permanent solution to the
environmental and social issues confronting the rehabilitation and re-start of the mine. With the land-
based tailings disposal system at Biga Pit still incomplete due to the delayed plugging of the Sigpit-
Biga Drainage Tunnel, an interim system was put in place utilizing the 5-stage pumping and overland
delivery facility across the Biga ridge. The technical problems that cropped up operating the interim
system made the SBDT plugging and completion of the permanent disposal set-up a high priority
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activity for the year. The major environmental protection and enhancement accomplishments, among
others, are:
Installation of the concrete plug across the SBDT;
Completion of the land-based tailings disposal system that include the overland pipeline
and underground launder components;
Continued operation and maintenance of the existing interim disposal system and its north
Biga tailings pond;
Construction of the Sigpit Dam settling pond;
Rehabilitation of the Carcon Emergency Tailings Pond;
Continued reforestation and re-vegetation of the mine-affected areas at Lusong and south
Biga pit periphery;
Improvement of the Lutopan pit peripheral drainage;
Continued support and maintenance of the CCC Mine Rehabilitation Fund Committee
and Multi-partite Monitoring Team; and
Jump-starting the initial Social Development and Management Program (SDMP)
community-based livelihood projects.
In implementing these activities and managing them to their intended target completion, CCC has
budgeted and spent a total of P301,472,962.77 for the environmental projects and 17,166,937.22 for
the SDMP. The total trust fund deposited in the banks under the Rehabilitation Cash Fund,
Monitoring Cash Fund and Environmental Trust Fund has amounted to P5,215,66.21.
The Company does not employ a system or method for distributing its products or services. With its
Direct Shipping Operations (DSO) in full swing, BNC delivered in February 2007, its first shipment
of laterite nickel ore to its Chinese buyers. On December 29, 2008 CCC made its first shipment of
5,625.86 wet metric tons (WMT) copper concentrates with a preliminary grade estimate of 28.21%
copper, 2.60 gm/ton gold and 20.04 gm/ton silver to Qingdao, China. Aside from copper and pyrite
concentrates, CCC also intends to introduce magnetite concentrates as a new product.
Except as disclosed elsewhere in this report, the Company suspended expenditures on capital projects,
research and development and exploration activities during the last three years. Reference is made to
Notes 1, 9, 10, 11, 12, 13 and 14.
ITEM 2. PROPERTIES
The Group owns several mining claims and is a holder of rights over mining claims by virtue of
Operating Agreements signed with private claimowners. Some of these mining claims are covered by
Mineral Production Sharing Agreements (MPSA) granted by the government, while others are either
covered by Declaration of Location (DOL) or Mining Lease Applications (MLA). Mining claims with
Lease contracts issued or renewed after the effectivity of the 1987 Constitution and those under DOL
and/or MLA are now covered by MPSA applications or Exploration Permit Applications (EPA).
Tabulated below is a breakdown of the Groups mineral properties.
a) CEBU
b) APPROVED MPSA
AREA (HECTARES)
Under
MPSA NUMBER Owned by Total Area STATUS WORK PERFORMED
Operating
ACMDC (Has.)
Agreement
10-month full rehabilitation

Approved on April 28,
1. MPSA-210-2005-VII 119.1663 115.1212 234.2875 work which started Sept. 1,
2005
2007 was completed
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2. MPSA-264-2008-VII 546.2330 101.7923 648.0253 Approved on July 9, 2008 Mining operations resumed in
September 2008 on mining
claims with existing Lease
Contracts covered by the MPSA
by virtue of the 5-Year Work
Program approved by MGB on
Sept. 12, 2008
3. MPSA-307-2009-VII 1,273.4822 0 1,273.4822 Approved on December 23, For Exploration
2009
Sub-total = 1,938.8815 216.9135 2,155.7950
ii) MPSA APPLICATION:

AREA (HECTARES)
MPSA APPLICATION Under
Owned by Total Area STATUS WORK PERFORMED
NUMBER Operating
ACMDC (Has.)
Agreement
Under processing by MGB, Exploration suspended since
1. APSA-000013VII 287.6172 0 287.6172
Central Office, Q.C. 1994.
Exploration suspended since
2. APSA-000042VII 252.3926 0 252.3926 - do -
1994.
Operation suspended since
3. APSA-000044VII 236.2024 295.9382 532.1406 - do -
1992.
Exploration suspended since
4. APSA-000045VII 0 2,552.0993 2,552.0993 - do -
1994
5. APSA-000046VII 1,038.8948 653.9947 1,692.8895 - do - - do -
6. APSA-000196VII 0 762.2479 762.2479 - do - - do -
Sub-total = 1,815.1070 4,264.2801 6,079.3871
iii) EXPLORATION PERMIT APPLICATION

EXPLORATION AREA (HECTARES)
PERMIT Under
APPLICATION Operating
ACMDC (Has.)
NUMBER Agreement
Under processing by
1. EXPA-000083-VI 323.5254 0 323.5254 None
MGB, Central Office, Q.C.
Sub-total = 323.5254 0 323.5254
TOTAL CEBU = 4,077.5139 4,481.1936 8,558.7075
B. CAMARINES NORTE
AREA (HECTARES)
NUMBER Operating
ACMDC (Has.)
Agreement
Under processing by Exploration suspended since
1. APSA-V-0036 0 2,987.1144 2,987.1144
MGB-V 1994.
TOTAL CAMARINES 0 2,987.1144 2,987.1144
NORTE =
C. AGUSAN DEL SUR/SURIGAO DEL SUR

PERMIT Under
ACMDC (Has.)
NUMBER Agreement
Formerly MPSA Appl. Nos.
c) EPA-
APSA-00003X and MPSA-
000073- Exploration suspended since
4,222.9041 213.4459 4,436.3500 (XI)-09 converted into 1-
XIII 1997
Expl. Permit Appl. Under
(02-02-05)
processing at MGB-XIII
TOTAL AGUSAN /
4,222.9041 213.4459 4,436.3500
SURIGAO DEL SUR =
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D. PALAWAN
d) APPROVED MPSA
AREA (HECTARES)
Under
MPSA NUMBER Owned by Total Area STATUS WORK PERFORMED
Operating
ACMDC (Has.)
Agreement
1. MPSA-235-2007-IVB 0 288.0000 288.0000 Approved on June 8, 2007 Pls. refer to Item 6
Sub-total = 0 288.0000 288.0000
ii) MPSA APPLICATION

AREA (HECTARES)
NUMBER Operating
ACMDC (Has.)
Agreement
1. AMA-IVB-038(Amd) Under processing by
0 1,062.0000 1,062.0000 Pls. refer to Item 6
(APSA00369 IV) MGB-IV (MIMAROPA)
Formerly AMA-IVB-02,
AMA-IVB-17, AMA-IVB-
20, and AMA-IVB-36
3. AMA-IVB-147(Amd) 0 2,493.0000 2,493.0000 - do -
Consolidated into one
MPSA under processing
by MGB-IV (MIMAROPA)
Sub-total = 0 3.555.0000 3,555.0000
iii) EXPLORATION PERMIT APPLICATION

PERMIT Under
ACMDC (Has.)
NUMBER Agreement
Under processing by MGB-
1. EPA-IVB-011 0 16,130.4400 16,130.4400 None
IV (MIMAROPA)
2. EPA-IVB-058 970.0000 0 970.0000 -do- None
Formerly PMPSA-IV(1)-7
converted into EXPA. Exploration suspended since
3. EPA-IVB-060 540.0000 5,466.2352 6,006.2352
Under processing by MGB- 1994
IV (MIMAROPA)
Formerly PMPSA-IV(1)-9
converted into EXPA.
4. EPA-IVB-061 810.0000 0 810.0000 - do -
Under processing by MGB-
IV (MIMAROPA)
Sub-total = 2,320.0000 21,596.6752 23,916.6752
TOTAL PALAWAN = 2,320.0000 25,439.6752 27,759.6752
E. BENGUET
e) MPSA APPLICATION
AREA (HECTARES)
NUMBER Operating
ACMDC (Has.)
Agreement
Under processing by Under exploration by Benguet
1. APSA-011 152.1846 0 152.1846
MGB-CAR. Consolidated, Inc. (BCI)
Sub-total = 152.1846 0 152.1846
ii) EXPLORATION PERMIT APPLICATION

PERMIT Under
ACMDC (Has.)
NUMBER Agreement
Under processing by
1. EXPA-069-CAR 0 3,693.0000 3,693.0000 None
MGB-CAR
Sub-total = 0 3,693.0000 3,693.0000
TOTAL BENGUET = 152.1846 3,693.0000 3,845.1846
TOTAL
10,772.6026 36,814.4291 47,587.0317
PHILIPPINES=
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Presented below are the Groups principal mining properties, mills and other materially important
properties as at December 31, 2009:
Properties Location Developments Nature of Interest
Mining Properties:
Lutopan Underground Mine Toledo City, Cebu Suspended Operations Mining claims are owned by the
(Second Lift) on December 31, 1993 Company. All claims are covered
by Lease Contracts (LC) renewed
after the effectivity of 1987
Constitution, now under MPSA No.
264-2008-VII approved by MGB on
July 9, 2008.
Lutopan Open Pit Mine Toledo City, Cebu Mining Operations All the mining claims are owned by
(South and North Lutopan Pits) resumed in September ACMDC.
2008 by virtue of
approval of the 5-Year
Work Program by
MGB on September 12,
2008 covering 3-
existing lease contracts
(No. V-407, 423, and
424) which are within
MPSA No. 264-2008-
VII
Greater Biga Mine Toledo City, Cebu Suspended Operations Mining claims partly owned by
on February 25, 1992 Atlas and partly operated by the
Company under operating
agreements with several private
claimowners. Some of the claims
are covered by LC issued by the
state, others with Declaration of
Location and Mining Lease
Applications. All these claims have
been applied with MPSA designated
as APSA-000044VII that had been
endorsed by MGB Regional Office
VII, Cebu to the MGB Central
Office Q.C. on January 11, 2008 for
final evaluation prior to approval by
the DENR Secretary.
Carmen Mine (includes Carmen Toledo City, Cebu Mine rehabilitation is in Mining claims are partly owned and
Pit and Carmen Underground progress partly operated by Atlas under
First Lift Project) operating agreements with private
claimowners. Some of these claims
are covered by LC and some have
already expired but all were applied
with MPSA, which was approved
on April 28, 2005 as MPSA-210-
2005-VII (Production).
Carmen Copper Concentrator Toledo City, Cebu Milling operations Owned by the Company. Under the
with a milling capacity of resumed in October terms of agreements extending the
44,000 metric tons of ore/day 2008 cover of guarantee of PhilExim to
the loan secured by CCC from
Deutsche Bank, CCC assigned
certain of its rights and created a
first ranking mortgage on certain
assets of CCC.
Palawan Nickel Projects Quezon and Aborlan BNC commenced Atlas has acquired or is acquiring
and Puerto Princesa Direct Shipping all mining rights with MPSA and
Operations (DSO) in EPA. TMC and European Nickel
January 2007 have earned an interest in BNC.
Reference is made to Item 6.
The registered office address of AAI, AEI, BNC, CCC, NRHI, UNC, and URHI is 9th Floor, Quad
Alpha Centrum, 125 Pioneer Street, Mandaluyong City. TMMs office is at 3rd Floor, Corinthian
Plaza, Makati City.
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Reference is also made to Item 6 and Notes 1, 2, 3, 9, 10, 11, 12, 13, 14, 16, 18, 19, 22, and 34.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various lawsuits and claims involving civil, labor, mining, tax and other
cases. In the opinion of management, these lawsuits and claims, if decided adversely, will not involve
sums having material effect on the financial position or operating results of the Company. Please refer
to Notes 1, 16, 17, 27 and 35.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal
year covered by this report.
PART II OPERATIONAL AND FINANCIAL INFORMATION
ITEM 5. MARKET FOR ISSUERS COMMON EQUITY AND RELATED

STOCKHOLDERS MATTERS
The Company has not declared dividends since 1981 on account of its capital deficiency which
resulted from long periods of recurring losses.
In 2009, the Company issued warrants covering the right to subscribe to the Companys common
share at the price of PhP10.00 per share to the following entities:
Warrant Holder No. of Shares Covered by Exercise Period

Warrant
Spinnaker Capital Group 35,000,000 29,000,000 3 years from
15 July 2009
6,000,000 3 years from
30 September 2009
Banco de Oro Unibank, Inc. 18,728,000 5 years from 1 December
2009
Globalfund Holdings, Inc. 4,682,000 5 years from 1 December
2009
The Companys common stock is traded at the Philippine Stock Exchange, Inc. (PSE).
The high and low sales prices for each period are indicated below:
2010 2009 2008
High Low High Low High Low
First Quarter 13.00 9.20 4.55 2.80 14.00 9.30
Second Quarter - - 7.60 4.05 17.00 9.50
Third Quarter - - 9.30 5.60 13.50 10.25
Fourth Quarter - - 10.50 8.30 10.75 2.60
The price as of 14 April 2010 is PhP10.50 per share.
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The number of shareholders of record at PSE as of 31 December 2009 is 21,917. Common shares
outstanding as of 31 December 2009 aggregate 1,048,931,882.
Following are the Top 20 stockholders as of December 31, 2009:
Name No. of Shares Percent

1. PCD Nominee Corporation (Filipino) 359,906,343 34.31%
2. Alakor Corporation 355,304,961 33.87%
3. Anglo Philippine Holdings Corp. 121,000,000 11.54%
4. PCD Nominee Corporation (Non-Filipino) 88,883,696 08.47%
5. Martin Charles Michael Buckingham 27,000,000 02.57%
6. CEDE & CO Bowling Green Station, NY 10,699,120 01.02%
7. Alfredo C. Ramos 10,000,100 00.95%
8. National Bookstore Inc. 9,203,407 00.88%
9. Paul Gerard B. Del Rosario 5,449,700 00.52%
10. The Bank of Nova Scotia 4,425,254 00.42%
11. Bank of Nova Scotia 2,950,169 00.28%
12. Philippine Overseas Drilling & Oil Development Corp. 2,621,000 00.25%
13. Domingo U. Lim 2,240,000 00.21%
14. Peter F. Tanchi 1,850,000 00.18%
15. Metropolitan Bank and Trust Company 1,701,281 00.16%
16. Mitsubishi Metal Corporation 1,680,000 00.16%
17. Minoro Mining & Exploration Corporation 1,589,795 00.15%
18. Ernesto Chua Chiaco 1,570,000 00.15%
19. Philippine Securities Corp. 1,111,389 00.11%
20 William T. Enrile 1,100,000 00.10%
Please refer also to Items 6 and 14 and Notes 1, 16, 18, 20, 21, 25 and 30.
ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
2009 Compared with 2008
The Company generated consolidated revenues of P4,690 million in 2009, four times higher than last
years sales of only P923 million. The much improved output was largely contributed by the
operation of the Companys copper subsidiary, Carmen Copper Corporation (CCC) which was
brought about by an expanded milling capacity of the concentrator plants. Comprising the revenues
are copper sales totaling to P4,308 million, P211 million from sale of gold and P171 million from sale
of beneficiated nickel ore. The continued depressed market and price for nickel accounted for the
lower sales of the Companys nickel operations.
Also in 2009, the Company recognized an P88 million royalty income from the use of the rights and
assets conveyed to CCC.
From the total consolidated costs and expenses of only P1,567 million in 2008, the Company
experienced an upsurge in costs and expenses to aggregate P4,662 million in 2009. The increment was
associated to the improved production activities of CCC that resulted in an increase of P3,095 million
mainly because of the rise in mining and milling costs by P2,796 million. These mining and milling
costs include production overhead, depreciation, depletion and amortization, personnel costs and
outside services.
For the period under review, the Company registered a consolidated net loss of P2,773 million against
the consolidated net income of P129 million attained the previous year. The losses were attributed for
the most part on the fixed-price contracts entered into by CCC with regard to its deliveries of copper
-8-

concentrates to a buyer. The reversal of prior years gain on mark-to-market accounted for the large
portion of the loss coupled with the realized losses sustained on settled and completed contracts and
the unrealized losses on undelivered shipments. Further, the Company booked additional indemnity
charges of P465 million in consideration for the extension of repayment date of the Parent Companys
loan to Spinnaker Capital Group.
Interest expense was higher than the previous year due to the accrual of interest for the new loan
secured from Anglo on top of the interest from the Spinnaker Loan.
The probable loss of P59 million pertains to the recognition of an allowance for the impairment loss
on excess input VAT being claimed by the Company from the tax regulators. Likewise, the Company
recorded a loss of P16 million due to significant decline in the fair value of its available-for-sale
(AFS) investment.
Total assets grew by 3% to P13,936 million following the continued acquisition of machineries and
equipment by CCC for its mounting production requirements. Last years resources were recorded at
P13,556.
During the year, net foreign exchange gain was recorded at P120 million, principally from the
restatement of the Companys dollar denominated loans, compared with the foreign exchange loss of
P554 million in 2008. As of December 31, 2009, US dollar closed at P46.20 compared to P47.52 in
2008. The appreciation of the peso against the dollar was the main contributor in recognizing the gain
related to foreign exchange transactions.
The financial position of the Company as of and for the year ended December 31, 2009 showed the
following changes as compared to the financial position as of and for the year ended December 31,
2008.
Receivables
The increment by 37% in the Receivables account principally relates to transaction entered into by
CCC with its copper concentrates buyer MRI Trading AG (MRI).
Derivative assets
Derivative assets dropped as a net result of outstanding commodity forward deliveries made in 2009
pertaining to copper concentrates shipments contracted in 2008 and the recognition of the value of the
bifurcated derivatives related to the last shipment made by CCC in 2009.
Inventories
Higher Inventory level by 54% was registered compared to last year because of stockpiling and
undelivered copper concentrates to MRI and the procurement of materials and supplies.
Prepayments and other current assets

Included in Prepayments and other current assets are the deposits made to various suppliers, the
unexpended portion of the guarantee fee paid in advance and the debt service account set up for
repayment of principal and interest on the BDO loan.
Property, plant and equipment

The sustained acquisition of machineries and equipment and the capitalization of the cost of
rehabilitation and improvements of mine facilities drove the Property plant and equipment account to
register a 13% growth.
Available-for-sale (AFS) financial assets

The reclassification of investments from being Held-to-maturity to Available-for-sale asset (AFS)
mounted the latter by P5.2 million.
-9-

Other noncurrent assets
Other noncurrent assets rose by 30% for the reason that additional input VAT receivable was recorded
during the period.
Loans payable
Loans payable jack up from P950 million to P978 due to the net effect of the settlement of loan from
the Spinnaker Capital Group amounting to $19 million and the granting of loan by Anglo to Atlas in
the amount of $11.5 million and the bridge financing extended by PhilExim to CCC amounting to the
peso equivalent of $10 million at the time of disbursement.
Accounts payable and accrued liabilities

The increase of P556 million in Accounts payable and accrued liabilities largely relate to the
incurrence of trade credits from various suppliers of CCC, advances from MRI and the recognition of
accrued expenses, duties and professional fees.
Current portion of long-term debt/Long-term debt net of current portion

The rise in the Current portion of long-term debt was the outcome of the reclassification of the part
($20 million) of the loan principal owed by CCC to Deutsche Bank AG becoming due within a year
from the balance sheet date. The reclassification had an inverse effect on the noncurrent portion of the
Long-term debt.
Income tax payable

Income tax payable advanced as a consequence of recognition of royalty income by Atlas and that
bigger amounts were received by CCC from scrap sales during the period in review that were outside
the scope of its registered activities as provided for in its registration with the BOI.
Derivative liabilities
The Derivatives liabilities were recorded as a result of loan agreements entered into by Atlas with
BDO and Anglo with convertibility options, thus, containing embedded derivatives and by CCC for
its supply agreement with MRI.
Advances from and due to related parties

The cash advances made by Alakor to the Parent and the transfer of Atlas shares it owned to
Spinnaker coupled with the non-interest bearing cash advances made by CASOP to CCC and by
TMC and European Nickel PLC to BNC caused the upsurge in Advances from and due to related
parties account by P102 million to P1,890 million.
Liability for mine rehabilitation

The amount of P35 million was added to Liability for mine rehabilitation account as CCC and BNC
recorded additional accrual of mine rehabilitation liabilities in their books.
Retirement benefits liability

Retirement benefits liability expanded by P24 million to end the year at P71 million because of the
accrual of additional pension costs.
Deferred income tax liability

The tax effect on the unrealized foreign exchange gains accounts for the hike in the Deferred income
tax liabilities account.
Additional paid-in capital

A higher Additional paid-in capital of P76 million was booked in 2009 and this is attributed to the
share-based compensation expense in relation to the comprehensive Stock option plan of Atlas.
- 10 -

Premium on deemed disposal of an investment in a subsidiary
The dilution of Atlas interest in CCCs outstanding shareholdings from 65.53% to 64.94% in 2009
was classified as disposal of interest in CCC thus, a Premium on deemed disposal of an investment in
subsidiary amounting to P7 million was recorded in 2009. The reduction of Atlas interest was the
consequence of the conversion of cash advances provided by Atlas and CASOP to CCC into CCCs
share of stock.
Consolidated current ratio stood at 0.27:1 for the year ended December 31, 2009 compared to 0.57:1
for the year ended December 31, 2008. The Companys majority owned subsidiaries namely,
AquAtlas, Inc. (AI), Ulugan Resources Holdings, Inc. (URHI), Atlas Exploration, Inc. (AEI) and
Amosite Holdings, Inc. have not commenced commercial operations as at the end of the period under
review.
The key performance indicators (consolidated figures), including the majority owned subsidiaries, are
as follows:
12/31/2009 12/31/2008
Current ratio 0.27:1 0.57:1
Debt to equity 4.87:1 2.68:1
Return on equity  3.50%
The manner by which the Company calculates current ratio is by dividing current assets by current
liabilities. Debt to equity is calculated by dividing total liabilities by total capital equity and return on
equity by dividing net income for the period by the total capital equity of the Company.
The Company posted an increase in its consolidated assets by P380 million from P13,556 million as
of December 31, 2008 to P13,936 million in 2009. Consolidated liabilities climbed by P1,690 million
from P9,870 million to P11,560 million. Consolidated current liabilities (P7,272 million) exceeded
consolidated current assets (P1,974 million) by P5,298 million.
The Companys annual general meeting of stockholders (AGM) for 2009 was postponed and
rescheduled to be held on June 25, 2010.
The BOD approved the execution of a memorandum of agreement (MOA) with certain indigenous
peoples/indigenous cultural communities (IP/ICC) in the municipalities of Aborlan and Quezon,
Palawan to comply with the requirements for the processing of the Companys exploration permit
application designated as EPA IV-B-060.
On July 9, 2009, the Company executed a loan agreement with Anglo covering a facility for the
amount of US$11.5 million with a term of one (1) year at an interest rate of fifteen percent (15%) per
annum based on the principal amount.
On July 10, 2009, the Company executed a Fifth Amendment Agreement with the various funds
managed by the Spinnaker Capital Group (Spinnaker) respecting the 23 July 2008 loan agreement
between the Company and Spinnaker. The amendment extended the term of the loan by moving the
maturity date to September 30, 2009. It also embodied Spinnakers undertaking not to sell, assign or
transfer their interests in any obligation of the Company. In consideration of such undertaking, the
Company agreed to do, among others, the following:
a) add to the principal amount of the loan all accrued interest as of June 30, 2009;
b) issue warrants to Spinnaker covering the right to subscribe to a total of 29 million of the
Companys shares at the price of P10 per share, exercisable at any time during the three-year
period reckoned from 15 July 2009; and
c) procure the transfer by Alakor Corporation to Spinnaker of a total of 36.5 million Atlas shares
Further amendments to the Spinnaker loan agreement were executed and designated as the Sixth and
Seventh Amendment Agreements. The amendatory agreements allowed Spinnaker Global Emerging
- 11 -

Markets Limited and Spinnaker Global Strategic Fund Limited to be substituted by Alakor as
creditors of the Company to the extent of $2 million of their participation in the principal amount of
the loan and the interest accruing thereon.
On August 12, 2009, the Company authorized (i) the conversion of 21,291,291 of the Companys
class B shares into common shares based on the conversion ratio of one common share for every class
B share, and (ii) the issuance of stock certificates covering the conversion shares. .
The Companys Board of Directors (BOD) approved on September 30, 2009 the issuance of
additional warrants to Spinnaker in consideration of the further extension of the term of the Spinnaker
loan until November 30, 2009.
The details of the issuance of the warrants are as follows:

a) The warrants cover the right to subscribe to a total of 6,000,000 of the Companys common
shares at the price of Php10.00 per share.
b) The subscription rights covered by the warrants may be exercised within a period of three (3)
years to be reckoned from September 30, 2009.
c) The shares to be issued to Spinnaker or their designee upon the exercise of their rights under
the warrants are to be taken from the Companys unissued capital stock.
The BOD approved on October 27, 2009 the assignment by Atlas to BNC of its rights to and interest
in the following exploration permits applications:
f) EPA IVB-058 covering 970 hectares in Puerto Princesa, Palawan;
g) EPA IVB-060 covering 6,006.2352 hectares in Quezon and Aborlan, Palawan;
h) EPA IVB-061 covering 810 hectares in Puerto Princesa, Palawan.
The assignment would become effective only upon the approval thereof by the Mine and Geosciences
Bureau (MGB).
On November 27, 2009, the BOD adopted resolutions authorizing the Company to obtain from Banco
de Oro Unibank, Inc.(BDO) and Global fund Holdings, Inc. (Globalfund) a convertible loan facility
for the amount of US$25,000,000 (the BDO Loan). The proceeds from the BDO Loan were used to
(i) fully pay the Companys obligations to Spinnaker, (ii) partially and repay the advances made by
Alakor, and (iii) fund the capital expenditures of CCC.
The agreement respecting the BDO Loan provides for, among others, (a) the mandatory conversion of
the principal amount of the BDO Loan into equity through the issuance of the Companys common
shares to BDO and Globafund at the price of P10 per share, upon confirmation that the volume
weighted average price of the Companys share for twenty (20) consecutive trading days at the
Philippine Stock Exchange is at least P13, and (b) the accrual of interest on the BDO Loan at the rate
of ten percent (10%) per annum.
On December 18, 2009, the Company subscribed to 46,188,281 common shares of CCC at the price
of P4 per share. The amount paid by the Company to CCC was used to fund further capital
expenditures related to the operation of the Toledo Mining Project.
Berong Nickel Corporation (BNC)
BNC recommenced shipment of nickel laterite ore in May 2009, followed by another shipment on
June and August. Although BNC has temporarily ceased mining operations, the deliveries were
supplied from present stockpiles.
Total assets of BNC fell to P933 million vis-à-vis the P1,074 million registered as of December 31,
2008. Total liabilities slightly increased to P522 million against P521 million in 2008 because of the
advances made by BNCs stockholders to finance its working capital requirements.
- 12 -

For the period ended December 31, 2009, BNC incurred a net loss of P142 million brought about by
the continued depressed laterite market and nickel prices compared to P146 million posted during the
same period last year.
Total costs and expenses amounted to P332 million in 2009 compared to P840 million posted a year
ago, a 60% decrease due to the decline in cost of sales, general and administrative expenses,
marketing and shipping, excise taxes and royalties.
As of December 31, 2009, BNC shipped a total of 143,765 WMT nickel laterite ore to Queensland
Nickel Pty. Ltd. But remained in Care and Maintenance status as of balance sheet date. As
previously stated, the shipments were taken from the ore inventory of BNC.
BNC signed two Memorandums of Agreement (MOA) with Jiangxi Rare Earth and Rare Metals
Tungsten Group (JXTC) for the supply of ore to the pilot planned nickel refinery in China and an
affirmation of the latters commitment to BNC as the favoured supplier of ore.
The long term supply contract executed with BHP Billiton/Queensland Nickel Inc. was being
terminated in a notification sent to BNC in November 2009. BNC consequently seek the advice of
legal advisors.
With more than enough stocks to meet the first shipment to BHP Billiton, all production activity at
Berong ceased for the time being with the consequent significant reduction in manning and site costs.
These actions were essential to the long term viability of BNC and enhanced the prospects for the
future prosperity of the local community.
Carmen Copper Corporation (CCC)
CCCs assets totaled P13,213 million, higher by 4.6% versus the 2008 records. Total liabilities were
up by P672 million or 8.90%, mainly attributable to the recognition of derivative liabilities as well as
the accrual of additional mine rehabilitation costs and retirement benefits and higher advances from
MRI and other accrued expenses.
During 2009, CCC put up higher copper and gold sales by P3,917 million in contrast to P194 million
revenues generated as of December 31, 2008. Total cost and expenses climbed to P4,148 million from
a year ago level of only P619 million. The reason for this was that full year mining operation was
achieved only in 2009 and add to that was the increased milling capacity of the plants.
Net loss amounted to P1,662 million during the year in contrast to net income of P692 million as of
December 31, 2008. CCCs losses would have been lower had it not been affected by the recognition
of the net effect of realized and unrealized mark to market loss of P1,415 million associated with its
supply contract with MRI.
After successfully completing its first shipment of copper concentrates in late December 2008, CCC
completed twelve (12) shipments of copper concentrates in 2009 totaling to 59,480 dmt containing
40.24 million lbs. of copper, 5,715 ozs. of gold and 54,330 ozs. of silver.
The Carmen concentrator has achieved the upward target of and consistently processed 30,000 tons of
ore per day (TPD). Milling capacity of at least 42,000 TPD is expected by early part of 2010 and
approximately 50,000 TPD by the second quarter of 2011 based on CCCs revised operational plans.
The increase in production will be made possible by additional available power and the
commissioning of newly acquired trucks which shall boost mining capacity from the open pit.
CCC expects its revenues to be augmented by sales credits from its by-products, namely, pyrite and
magnetite concentrates.
- 13 -

Liquidity and Capital Resources
During 2009, the Companys cash used in operating activities amounted to P679 million. Net cash
outflows during the period was P580 million, which included net cash used in investing activities of
P2,211 million and net cash inflows from financing activities of P2,271 million, including the effects
in exchange rates amounting to P38 million.
The Company posted another consolidated net income of P128.7 million in 2008 compared to P289.0
million registered in 2007. The decrease by 55% in profit was the result of lower revenue generated
from the sale of nickel laterite ore and higher operating costs incurred by the copper and nickel
projects. The nickel project was heavily affected by an unusually long wet season experienced in its
areas of operations and by the depressed nickel market.
Consolidated revenues declined 26% to P923.0 million in 2008 compared to P1,253.3 million in
2007, mostly contributed by the Companys subsidiaries, Carmen Copper Corporation (CCC) and
Berong Nickel Corporation (BNC), amounting to P208.0 million and P715.0 million, respectively.
Although the Group yielded weaker sales by P330.3 million this was offset by the recognition of gain
on mark-to-market of derivative assets amounting to P1,597.5 million.
On a consolidated basis, cost of sales went up to P838.7 million in 2008 as compared to P316.7
million in 2007 due to higher production overhead (P375.6 million), outside services (P267.1 million),
depreciation (P104.4 million) and personnel costs (P91.6 million).
As of December 31, 2008, foreign exchange losses aggregate P553.8 million, principally from the
restatement of the Groups dollar denominated loans, compared with the foreign exchange gain of
P86.7 million in 2007. As of December 31, 2008, US dollar closed at P47.52 compared to P41.28 a
year before.
2007.
Accounts receivable went up chiefly as a consequence of unpaid copper concentrates and nickel ore
deliveries. Derivatives assets were recognized because of the outstanding commodity forward to be
delivered to MRI Trading AG (MRI). Inventories surged as CCC and BNC continued to stockpile
copper concentrates and nickel laterite ore. Prepayments and other current assets rose as a result of
additional recognition of input tax receivables and deposits to suppliers and advances to service
contractors and the prepayments of supplies and materials in transit to be used by CCC.
The continued acquisition of machineries and equipment during the period effectively increased the
Property, plant and equipment account. Mining rights went down as a consequence of the recognition
of depletion cost. The increase in other noncurrent assets pertains to additional capitalized
expenditures by both CCC and BNC and the acquisition of shares of stock of Toledo Mining Corp.
(TMC shares).
Loan payable pertains to the bridge loan secured from Spinnaker Capital Group. Accounts payable
and accrued liabilities went up primarily because of further incurrence of trade and non trade payables
and the recording of payables to various customers, suppliers and the accrual of salaries, professional
fees and interest expense. Income tax payable refers to the 2% minimum corporate income tax
(MCIT) during the year. The increment in advances from and due to related parties was the result of
the recognition of P100 million loss on indemnity agreement between related parties and the
- 14 -

additional cash advances extended for administrative and operating expenses of subsidiaries. Long-
term debt registered an increase due to the restatement of foreign currency denominated loan at a
higher exchange rate than previously recorded. Current portion of long-term debt are presented
separately as part of current liabilities. Deferred income tax liabilities increased due to the effect of
the temporary differences. Retirement liability went up because of the accrual of additional pension
cost. Liability for mine rehabilitation increased as CCC and BNC recorded the accrual of
supplemental mine rehabilitation liability in their books. Additional paid-in capital increased due to
the valuation made on the Comprehensive Stock Option Plan (CSOP) of the Company.
Consolidated current ratio showed 0.70:1 for the year ended December 31, 2008 compared to 2.835:1
for the year ended December 31, 2007. The Companys majority owned subsidiaries namely,
AquAtlas, Inc. (AI), Ulugan Resources Holdings, Inc. (URHI), Atlas Exploration, Inc. (AEI) and
Amosite Holdings, Inc. have not commenced commercial operations as at the end of the period under
review.
The key performance indicators (consolidated figures), including the majority owned subsidiaries, are
as follows:
12/31/2008 12/31/2007
Current ratio 0.70:1 2.835:1
Debt to equity 2.67:1 2.053:1
Return on equity 3.49% 10.05%
equity by dividing net income for the period by the total capital equity of the Company.
Consolidated assets of the Company grew by P4,776.5 million from P8,779.1 million as of December
31, 2007 to P13,555.6 million a year later. Consolidated liabilities climbed by P3,966.90 million from
P5,903.5 million to P9,870.4 million. Consolidated current liabilities (P5,827.6 million) exceeded
consolidated current assets (P3,781.2 million) by P1,584.3 million.
During a special meeting held on December 21, 2007, the Companys Board of Directors (BOD)
approved the participation of the Company in the Canatuan Copper/Zinc Sulphide Project being
undertaken and operated by TVI Resource Development (Phils.), Inc. (TVIRD). Upon the execution
of the agreement on December 26, 2007, the Company advanced the amount of P42 million to
TVIRD secured by the pledge of shares of TVI International Marketing, Ltd (TVIM) and an option to
require the mortgage of TVIRDs chattel. To allow the Company to conduct a more thorough due
diligence review of the Project, the parties agreed to move the Option Date, the date on which the
Company is to decide whether it will go ahead with the joint venture with TVIRD for the
development of the Project, to January 31, 2008. However, after considering the relevant facts and
information available, the Company elected not to exercise its option to participate in the said joint
venture project. On October 17, 2008, TVIRD paid in full the balance of the amount advanced,
including interest.
In January 2008, the Company infused additional capital into its copper subsidiary, Carmen Copper
Corporation (CCC), amounting to $6.553 million while Crescent Asian Special Opportunities
Portfolio (CASOP) contributed $3.447 million based on the ratio of their current shareholdings in
CCC. The supplemental capital aggregating to S$10 million was subscribed for a total of 112,328,766
common shares of CCC.
On June 3, 2008, the Company and Toledo Mining Corporation (TMC) waived their direct and
indirect pre emptive rights of first refusal with respect to the sale of Investika Limiteds 18.7%
interest in BNC in favor of European Nickel PLC (ENP). The transaction enabled ENP to acquire the
18.7% direct stake of Investika in BNC as well as the 19.3% shareholding of TMC for an aggregate
consideration of approximately $48 million.
- 15 -

A Mineral Production Sharing Agreement (MPSA 264-2008-VII) was signed on July 9, 2008 between
the Company and the Department of Environment and Natural Resources (DENR) covering an area
measuring approximately 648,0159 hectares located in Toledo City, Cebu. The Companys BOD
approved the assignment of the MPSA to CCC pursuant to the Operating Agreement between the
Company and CCC.
The Companys BOD approved on July 18, 2008 the execution of a bridge loan facility agreement
with Spinnaker Capital Group (Spinnaker) amounting to $20 million with a term of ninety (90) days
at the interest rate of fifteen percent (15%) per annum. Alakor Corporation (Alakor) provided security
for the bridge loan in the form of a share pledge. In connection with the creation of the pledge, the
Company executed indemnity agreements to fully indemnify Alakor for any loss, damage, liability or
injury that Alakor may suffer by virtue of the pledge. The bridge loan is intended to be transformed to
a convertible loan agreement at a conversion price of P12.60 per share and most of the proceeds were
infused into CCC for its funding requirements. The loan agreement underwent several amendments
with the recent one extending the term of the bridge loan from the original 90 days to a later date to be
determined by the agent of the lenders. In consideration for the amendments, Alakor transferred a
total of 10 million Atlas shares to the lenders as of December 31, 2008. A further 2.5 million Atlas
shares were transferred by Alakor to the lenders in January 2009. In addition, the Company executed
in favor of the lenders deeds of pledge covering its shares in AEI, AAI, and URHI. The Company
paid a total of $1.23 million on interest due on the loan and $0.159 million on other fees as of
December 31, 2008.
Also, the BOD approved the infusion of additional capital to CCC in the amount of $18.021 million
by way of subscription to 108,713,178 common shares of CCC with CASOP contributing $9,479
million as subscription to 57,185,155 common shares of CCC. Finally, the BOD authorized the
Company to subscribe to 24,995 shares of AHI at par value of P100 per share.
In October 2008, ACMDC agreed with CASOP to a schedule of cash advances for infusion to the
Company amounting to US$48 million. The advances are to be made on scheduled dates until January
2009 and on a pro-rata basis. A shareholder has the right to infuse the contribution of the other if the
latter fails to make the contribution. The advances may be converted into equity at a later date. At the
end of 2008, a total of US$28 million have been infused by the stockholders into CCC with CASOP
contributing US$26.004 million. Of the amount contributed by CASOP, US$24,954,219 is
convertible, at the option of CASOP into 308,170,751 of the Companys common shares, the issuance
of which shall be subject to the Companys compliance with the legal and regulatory requirements
enforced by the Philippine Securities and Exchange Commission with respect to the conversion of
debt into equity. The conversion by CASOP of its total convertible advances could result in CASOP
owning 45.54% of the Companys outstanding capital stock.
The Company settled a pending case filed by the SSS against the directors of ACMDC Ventures Inc
(AVI) for the latters failure to remit the premium contribution and loan amortization of its former
employees. The Company paid SSS P5.9 million as full liquidation of the obligation.
In accordance with the Loan Agreement executed with TMC in 2006, the amount of $2.1 million was
advanced by TMC to BNC for and on behalf of the Company representing the Companys share in the
operating expenses of BNC.
BNCs total assets jumped 24% to P1,074 million in contrast to P869 million registered the previous
year. However, total liabilities also increased by P352 million mainly attributable to the advances
made by BNCs stockholders to finance its working capital requirements. Without such advances,
total liabilities actually declined by 16% in 2008.
- 16 -

During the year in review, BNC suffered a net loss of P145 million compared to P548 million profit
posted in 2007 brought about by the depressed laterite market and nickel price throughout the year
coupled with extreme wet weather conditions experienced during the first half of 2008. Total
revenues dropped by 43% to P715 million against last years P1,253 million generated sales.
Total costs and expenses was higher by P181 million, an increase of 27% compared to last years
amount of P659 million. Production and shipping volumes for the full year 2008 was 476,850 tonnes,
lower by 53,318 tonnes as contrasted to last years registered volume of approximately 530,168
tonnes.
From the period October 2007 to February 2008, ship loading was challenging due to excessive sea
swells making laterite trans-shipment from barge to ocean carriers unsafe. BNC is currently assessing
specific alternative loading systems that may be put in place in 2009.
In May 2008, Investika Limited entered into an agreement with European Nickel PLC (ENP) for the
sale of the formers equity interest in BNC. On June 3, 2009, the Company and TMC waived their
pre-emption rights of first refusal with respect to the sale by Investika of its interest in BNC. This
paved the way for ENP to purchase an 18.7% direct interest in BNC. ENP has leading edge
experience in heap leaching of laterite ores.
BNC signed in November 2008, a Memorandum of Understanding (MOU) with Jiangxi Rare Earth
and Rare Metals Tungsten Group Co. Ltd (JXCT) for the development of a demonstration nickel-
cobalt leaching plant at BNCs nickel laterite deposit in Palawan Province. The plant has a design
capacity of 3,000 tonnes to 5,000 tonnes per year (TPY) of mixed nickel-cobalt hydroxide product
which will be sold to JXTC under a long term off-take arrangement with prices linked to LME market
price. JXTC will fund the entire capital cost of the plant and the associated infrastructure in exchange
for a guaranteed long term laterite ore supply agreement. The final ownership percentages of the
leach plant are yet to be agreed upon. The demonstration plant replaces a pilot plant of the same
capacity originally planned to be built under the MOU signed earlier for the development of the Ipilan
deposit. The plant will require up to 600,000 TPY laterite ore feed. Detailed metallurgical testing in
China will be required over the next six months to define the optimum flow sheet for the plant which
will in turn define the best leach technology to employ and provide the key process design parameters
for the construction of the full scale plant(s) of up to 40,000 TPY nickel in mixed hydroxide product.
JXTC has already commenced the construction of a refinery in China to process the mixed nickel-
cobalt product from the demonstration leach plant to produce nickel and associated cobalt metal
products. BNC will have an option to acquire an equity interest of up to 25% in the refinery.
The long term contract signed by BNC with BHP Billiton/Queensland Nickel Inc in 2007 to supply up
to 500,000 tonnes per annum of nickel laterite until 2013 has helped BNC to minimize the impact of
the disappointing Chinese market; however, negotiations to increase the sales volume to around one
for the full year 2009 with approximately 40% of the volume to be supplied by the current stockpiles.
These related events mean that the full scale mining operations may have to be deferred until the
second half of 2009.
The initial shipment for BHP Billiton is scheduled for April 2009, with monthly shipments thereafter.
With more than enough stocks to meet the first shipment to BHP Billiton, all production activity at
Berong has ceased for the time being with the consequent significant reduction in manning and site
costs. Consequently, more than 600 employees and contractors were laid off. This action was
essential to the long term viability of BNC and enhanced the prospects for the future prosperity within
the local community.
- 17 -

CCC ended the year by posting a net income of P691.9 million, a reversal from the net loss of P452.5
million suffered in 2007.
Net revenues amounted to P193.9 million during the year and nil in 2007. (CCC commenced
commercial operations only in October 2008 and made its first shipment on December 29, 2008).
Cost of sales totals P446.7 million, nil the previous year. During the year in review, a 62% decline in
operating expenses was posted, P152.7 million as against the P398.3 million incurred the preceding
year.
Other income, net of other charges, was recorded at P1,116.8 million in 2008 comprising mainly of
the P1,597.5 million in the mark-to-market gain on derivative assets. Also included is the interest
income derived from deposit accounts amounting to P19.6 million and loss of P481.2 million on
foreign exchange transactions.
CCC paid on April 15, 2009 an income tax of P0.024 million (P24,786.00). Although CCC is a BOI
registered firm and thus enjoys an Income Tax Holiday (ITH) for four years, it is still covered by the
2% Minimum Corporate Income Tax (MCIT) on operations not registered with the BOI such as
income on rental of certain facilities at the mine.
By and large, total assets rose by 67% to P12,631.3 million compared to P7,554.1 million in 2007.
The increase largely reflected the capitalized purchases made by CCC during the year. Consequently,
total liabilities correspondingly climbed to P7,552.8 million from last years amount of P4,820.9
million. Current assets went down by P397.2 million when matched against last years balance of
P3,793.9 million. The drop is attributable to the cash outflows for the procurement of materials and
services required for the completion of the initial phase of the rehabilitation and for operating
requirements.
The equity section grew by almost twice as much as last years to settle at P5,078.6 million from a
year ago level of P2,733.2 million principally due to additional subscription payments by the
stockholders and the income generated.
On March 14, 2008, CCC signed a power supply agreement with the National Power Corporation
(NPC) which provides for NPC to supply 40 MW of electricity to CCC over a period of three years,
from 2008 to 2011. The supply of power to CCC commenced after completion of standard safety tests
carried out by National Transmission Corp. (TRANSCO).
In August 2008, CCC signed an offtake agreement to sell its first 60,000 dry metric tons (DMT) of
copper concentrates to MRI Trading AG (MRI). The agreement calls for MRI to provide copper price
hedging arrangements for the first 30,000 DMT of copper concentrates (or 8,250 DMT of contained
copper) with an average price of $7,612.50 per DMT. Also, MRI agreed to pay for concentrates
delivered into the warehouse at the Sangi Port in Toledo City.
CCC started its mining operations during the second week of July 2008 and thereafter commenced
stockpiling ore near the primary crusher. Test runs and debugging were conducted on the Carmen
Concentrator until September 2008.
After substantially completing the Phase-1 of project rehabilitation of the CCC Toledo mine facilities
in September 2008, CCC commenced commercial operation at the initial milling rate of 20,000 metric
tons of copper ore per day. During the first week of October 2008, CCC successfully produced copper
and pyrite concentrates from the test operations. CCC capped the year with its first shipment of
5,625.86 wet metric tons (WMT) of copper concentrates in CCCs loading terminal at Sangi, Toledo
City. The historic shipment marked the end of the 14-year long hiatus following the shutdown of the
- 18 -

former Atlas Mine. Remaining copper concentrate stock inventories at yearend at the terminal bins
totaled 2,919.42 WMT to Qingdao, China on December 29, 2008.
By year end, CCCs manpower strength totaled 5,400 personnel comprising of 2,506 regulars, 175
probationary and 2,719 project-hired.
A second shipment totaling 5,690.20 WMT of copper concentrates was likewise made to Qingdao,
China on February 8, 2009.
Net cash outflows was P3,119.6 million during the year compared to inflows of P3,837.8 million in
2007. The Companys net cash flows used in operating activities was P827.1 million compared to
P56.0 million the previous year. Net cash outflows from investing activities during the year was
P5,410.8 million from P2,030.7 million generated in 2007. Net cash inflows from financing activities
was P3,113.5 million from P6,313.2 million in 2007.
The Group posted a consolidated net income of P289 million and P47 million for the years ended
December 31, 2007 and 2006, an improvement of P242 million during the year. The increase was due
mainly to higher revenues on sale of nickel laterite ore by the Companys subsidiary, Berong Nickel
Corp. (BNC).
Consolidated revenues amounted to P1,344 million as of and for the year ended December 31, 2007
as compared with P64 million in the same period of the preceding year.
For the period in review, general and administrative expenses were recorded at P914 million as
against P389 million a year ago. The rise is attributable to the increased activities relating to the
rehabilitation works at the Companys copper subsidiary, Carmen Copper Corporation (CCC). As of
December 31, 2007, foreign exchange gains were recorded at P87 million as the peso sustained its
strength vis-à-vis the US dollar to close higher at P41.28 vis-a-vis to P49.03 as at December 31, 2006.
2006.
The increase in accounts receivable was due mainly to the loan extended to TVI Resources and the
recognition of interest on deposit. Inventories increased as BNC continued its stockpiling of
beneficiated nickel silicate ore and the procurement of supplies and materials by both CCC and BNC.
Advances for acquisition of mining rights account pertains to advance payment made to Multicrest
Mining and Development Corporation (Multicrest) by Ulugan Nickel Corporation (UNC).
Prepayments and other current assets increased because of additional input tax receivables, deposits to
suppliers and advances to employees.
Available-for-sale (AFS) financial assets decreased as a result of the cancellation of the Companys
non-proprietary membership in a country club with the related reduction in net unrealized gains on
AFS financial asset as the quoted price of remaining stock remained almost unchanged. Property and
equipment increased due to the acquisition of machineries and equipment and the capitalized cost of
rehabilitation and improvements on mining facilities by both CCC and BNC. Mining rights cost rose
due to the additional acquisition costs of property rights on the Berong Project. Deferred income tax
assets increased because of the effect of the temporary differences in the computation of income.
Deferred mine exploration and development costs were reclassified to property and equipment
account when BNC established that an economically recoverable reserve exists in its areas of
- 19 -

operations. Goodwill was derived from the acquisition of Amosite Holdings, Inc. (AHI) from Anscor
Property Holdings, Inc. The decrease in other non-current asset was brought about by the
reclassification of advances for stock acquisitions and the recording of additional mine rehabilitation
charges for the company rehabilitation liability relating to the eventual cessation in the mind-out-areas
of both BNC and CCC to ensure payment of compensable liabilities.
Loans and acceptances payable, trade and other payables decreased primarily because of the
derecognition / write-off of prescribed liabilities, including penalties and interest and the restatement
of foreign currency denominated loans. Dividends payable pertains to the cash dividend declared by
BNC payable to all of its stockholders of record in proportion to their shareholdings. The
supplementary advances provided by related parties to the Company and certain of its subsidiaries
was the reason for the increment recorded in the Amounts owed to related parties account. As a
consequence of the write-off of prescribed liabilities, income tax payable increased as the
derecognition was subjected to a 2% minimum corporate income tax. Long-term debt registered an
increase as a result of US$100 million term loan facility secured by CCC from Deutsche Bank AG.
This loan facility will be used for the rehabilitation and refurbishment of CCCs concentrator and re-
establishment of open cut and underground mining. Derivative liabilities were reduced due to the
conversion of loan owed to a creditor. Deferred income tax liabilities decreased due to the reversal of
the temporary differences. The Company undertook a manpower right sizing at its Toledo operations,
thus, pension liability declined. Liability for mine rehabilitation increased as CCC and BNC recorded
the accrual of mine rehabilitation liability in their books.
The additions registered in the Capital Stock account was attributed to the shares issued by the Parent
to various brokers, the conversions of advances from a related party and the loan owed to a creditor.
The premiums realized from the private placement transactions entered into by the Parent with the
various brokers and from the conversion of loan owed to CASOP were the factors that increased the
Additional paid in capital account. Premium on deemed disposal of an investment in subsidiary
pertains to the gain booked arising from the deemed dilution of the Companys interest in CCC.
Deposits for future stock subscriptions account increased due to the reclassification and transfer of
convertible loan from Toledo Mining Corp. (TMC).
Consolidated current ratio improved to 1:2.833 for 2007 as against 1:0.159 for the year ended
December 31, 2006. Other key performance indicators as well as segment reporting are not applicable
as the Companys mining operations remained suspended. Further, the Companys majority owned
subsidiaries namely, CCC, AquAtlas, Inc. (AI), Ulugan Resources Holdings, Inc. (URHI), Atlas
Exploration, Inc. (AEI) and Amosite Holdings, Inc. (AHI) have not commenced commercial
operations as of year end.
The key performance indicators (consolidated figures), including the majority-owned subsidiaries, are
as follows:
12/31/2007 12/31/2006
Current ratio 1:2.833 1:0.159
Debt to equity 2.055:1 -
Return on equity 10.06% -
equity by dividing net income for the period by the total capital equity of the Company. For the period
under review, the current ratio increased due to receipt of proceeds from loan secured by the
Companys copper subsidiary and sale of laterite nickel ore, increase in receivables and inventories,
prepayments and other current assets.
Consolidated total assets of the company increased by P5,782 million from P2,997 million as of
December 31, 2006 to P8,779 million as of December 31, 2007. Consolidated total liabilities
- 20 -

increased by P2,088 million from P3,817 million to P5,905 million. Consolidated total current assets
(P4,629 million) exceeded consolidated total current liabilities (P1,633 million) by P2,996 million.
BNC posted a net income of P548 million for the year ended December 31, 2007, compared to a net
loss of P16 million for the same period of the preceding year. The positive turn-around was the result
of BNCs start of commercial operation with the sale of saprolite and limonite ores amounting to
P1,253 million during the year.
Total assets of BNC increased to P869 million as of December 31, 2007, compared to P638 million of
the previous period. Contributing to the increase are the additions to property and equipment,
acquisitions of mining rights, increase in beneficiated nickel silicate ore (inventories), in other current
and noncurrent assets, and in trade and other receivables. Noncurrent liability amounting to P16
million increased due to the recognition of the estimated rehabilitation and decommissioning costs to
be incurred in the future on the mined-out areas of operations. Capital stock went up to P304 million
as a result of the conversion into equity of the deposits for future stock subscription amounting to
P163 million, advances from a related party of P19 million and the declaration of stock dividends in
the amount of P119 million.
On May 28, 2007, BNC was registered with the Board of Investments (BOI) as a new producer of
beneficiated nickel ore on a non-pioneer status.
The government, through the Mines and Geosciences Bureau (MGB), approved on June 8, 2007 the
MPSA No. 235-2007-IVB in favor of BNC as contractor which covers a contract area of
approximately 288 hectares situated in Barangay Berong, Municipality of Quezon, Province of
Palawan.
On June 21, 2007, a JORC compliant resource estimation was completed as part of the Berong Nickel
Project.
On December 3, 2007, the Securities and Exchange Commission approved the increase of the
authorized capital stock of BNC from P10 million to P700 million in compliance with the terms and
conditions of its registration with the Board of Investments (BOI). Out of the increase in authorized
capital stock of P690 million, P301.25 million shares have been actually subscribed. Subscription for
P181.8 million was paid by way of conversion of the Companys indebtedness to TMC and Investika
and the P119.5 million was through the declaration of stock dividends out of the unrestricted retained
earnings.
As of December 31, 2007, nickel production of 530,168 wet metric tons at an average of 1.53% Ni.
Were shipped to Australia and China. A further 141,000 wet metric tons of ore were stockpiled at the
coast awaiting shipment.
CCC posted another net loss of P453 million for the year ended December 31, 2007, compared to the
net loss of P191 million for the preceding year. The significant increase was due mainly to higher
operating expenses as a consequence of the on-going rehabilitation of the mines and incurrence of
interest expense on long-term debts.
Total assets of CCC rose to P7,554 million as of December 31, 2007, compared to P829 million of the
previous period. The increase was mainly contributed by the proceeds of the loan from Deutsche
Bank and the transfer of property and equipment conveyed by Atlas. The rise in current liabilities to
P672 million was the outcome of various orders for supplies, machine and equipment, services and
other costs relative to the rehabilitation of the mines. Noncurrent liabilities consequently increased
- 21 -

due to the loan secured from Deutsche Bank intended for capital expenditure and financing of general
working capital requirements for the rehabilitation of CCCs Toledo Mining Project. Liability for
mine rehabilitation cost which pertains to expenses that will be incurred in the future for the
restoration and rehabilitation of the mined-out areas increased to P14.6 million by the assumption of
cost from Atlas. Pension benefit costs reflect additions due to the accrual of pension benefits of
CCCs existing employees. Advances from Atlas increased to P13 million by reason of additional
administrative expenses paid by Atlas on behalf of CCC. Capital stock and additional paid in capital
increased to P1,239 million and P2,153 million, respectively, as a result of the conversion of
convertible loan owed to CASOP.
On January 2, 2007, the MGB approved the Operating Agreement between Atlas and CCC which
formed part of the lot of financing agreements between Atlas and Crescent Asian Special
Opportunities Portfolio (CASOP).
In an assignment Agreement dated March 16, 2007, CASOP Atlas II Ltd. Assigned the CCC Loan to
CASOP Atlas BV (CASOP BV) and, consequently, assigned the loan to CASOP Atlas Corporation
(CAC).
On May 25, 2007, CCC entered into a loan agreement with Deutsche Bank AG, Singapore Branch in
the amount of $100 million. The proceeds of the loan would be used to start jump the full
rehabilitation of the Carmen mine in Toledo City.
On September 19, 2007, the Board of Directors of CCC amended its articles of incorporation to
increase the authorized capital stock from P10 million to P3.2 billion.
Net cash inflows was P3,838 million during the year compared to P119 million in 2006. The
Companys net cash inflows from operating activities was P60 million as against the P468 million net
cash outflow from previous year. Net cash outflow from investing activities during the year was
P2,031 million from P745 million net cash outflows generated in 2006.
Plan of Operations cover the following activities:
The Company will continue, through its debts for equity swap agreement with Alakor
Corporation, to reduce its liabilities and debts;
The Company will rationalize its asset portfolio, including possible sale of obsolete and
unproductive assets. Negotiation to raise additional project funding of the Toledo copper mine
will be progressed;
An exploration program is planned with a view to identifying higher grade copper resources
within the Atlas Toledo mine area. The Company will progress its exploration portfolio in other
areas of the Philippines;
The Companys Operating Agreement over the Berong Nickel areas will be pursued;
The Company will advance its project of supplying bulk water to Metro Cebu on a commercial
basis;
A re-evaluation of other mineral properties in which Atlas has an interest, including the Diwata
claims in Mindanao, will be undertaken; and
The Company will evaluate other mining claims for possible acquisition.
Reference is also made to Item 2 and Notes 1, 2, 3, 5, 6, 8, 9, 10, 11, 14, 16, 17, 18, 19, 22, 31 and 33.
- 22 -

ITEM 7. FINANCIAL STATEMENTS
The Consolidated financial statements and schedules listed in the accompanying Index to Financial
Statements and Supplementary Schedules (page 33) are filed as part of this Form 17-A.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE
SyCip Gorres Velayo and Co. (SGV) has been the Companys independent auditor since 1958. No
changes in and disagreement with Accountants on accounting and financial disclosure have occurred
in the period under review.
- 23 -

PART III CONTROL AND COMPENSATION INFORMATION
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER
Directors and Executive Officers of the Issuer
Office Name Citizenship Age

Chairman of the Board & President Alfredo C. Ramos Filipino 66
Director and Vice President Adrian S. Ramos Filipino 31
Director, Exec. VP & CFO Martin C. Buckingham British 57
Director Marciano A. Padilla Filipino 39
Director Gerard Antón S. Ramos Filipino 34
Director Ricardo V. Quintos Filipino 72
Director Felipe R. Relucio, Jr. Filipino 67
Independent Director Alfredo R. Rosal, Jr. Filipino 62 ö
Director Christopher M. Gotanco Filipino 60
Corporate Secretary Roderico V. Puno Filipino 45
Treasurer Noel T. del Castillo Filipino 71
General Manager Exploration Pablito M. Ong Filipino 77
AVP Administration/Comptroller Jesus C. Valledor Filipino 46
Asst. CorSec & Asst. Compliance Ofcr. Carmen Basallo-Estampador Filipino 32
Elected Chairman of the Board, President and Chairman of the Nomination Committee on July 18, 2008
Elected Chairman Emeritus on July 18, 2008
Elected Director and Vice-President on July 18, 2008
Elected Director, Executive Vice-President and CFO on July 18, 2008
Elected Treasurer on July 18, 2008
ö Elected Chairman of Audit Committee on July 18, 2008
Elected Member of the Audit Committee on July 18, 2008
Elected Member of Nomination Committee on July 18, 2008
Elected Director and Chairman of Remuneration Committee on July 18, 2008
Elected Member of Remuneration Committee on July 18, 2008
Elected Director on July 18, 2008
Elected Independent Director on July 17, 2008
Elected Officer on July 18, 2008
Nominee of Alakor
Nominee of Anglo
Directors
a) ALFREDO C. RAMOS, Director of the Company since 1989, elected Chairman of the Board of
the Company on April 2, 2003. He is the incumbent Chairman of the Board of various publishing,
finance and holding companies, among them Anvil Publishing, Atlas Publishing Corp., Convoy
Consolidated Holdings, Inc., Penta Capital Finance Corporation and Trafalgar Holdings
Philippines Inc., and the incumbent Chairman and President of Alakor Corporation, National
Book Store Inc., Philodrill Corporation, Vulcan Industrial & Mining Corporation and United
Paragon Mining Corporation (he has been holding these positions for more than five consecutive
years). He graduated from the Ateneo de Manila University with a Bachelor of Arts Degree in
1963. He attended Graduate Studies on Small Business also at the Ateneo de Manila University in
1965.
b) ADRIAN S. RAMOS, Director and Vice-President of the Company since July 18, 2007. He is
the incumbent Vice President of Alakor Corporation and Corporate Secretary of Music One
Corporation. He is also an incumbent director of various corporations including Alakor Securities
- 24 -

Corporation, Zenith Holdings Corporation, AquAtlas, Inc., Anglo Philippine Holdings
Corporation, The Philodrill Corporation, United Paragon Mining Corporation, Treasurer of
Peakpres Corporation and Business Development Manager of National Bookstore, Inc. (he has
been holding these positions for the past five years). He graduated Cum Laude in 1999 with a
degree in Management (Honors Program) from the Ateneo de Manila University. He earned his
MBA with distinction at the Kellogg School of Management, Northwestern University.
c) MARTIN C. BUCKINGHAM, Director of the Company since December 4, 1996 and appointed
CFO on July 22, 2002. He obtained his law degree from Cambridge University in the UK and has
served on a number of company boards, both public and private, including Consort Research Ltd.,
Clogau Gold Mines plc, Philippine Gold plc and Minoro Mining and Exploration Corporation.
d) MARCIANO A. PADILLA, Director of the Company since July 18, 2008, President and
General Manager of Angeles Feeds, Inc. (1995 to present), Angeles General Haulers, Inc. (1998
to present) and Angeles Harvests, Inc. (2006 to present), Vice-President and Vice-Chairman of
Safeguard Security Group (2002 to present), and Director of the Padis Point Restaurant Group
(1992 to present). He obtained his Bachelors Degree in Business Management from the Ateneo
de Manila University in 1991. He attended the Masters Program in Entrepreneurship of the Asian
Institute of Management from 2000 to 2001.
e) GERARD ANTON S. RAMOS, Director of the Company since July 18, 2008. He is the
incumbent President of The Music One Corporation, The Media One Broadcasting Corporation,
Music First Management Corporation; the incumbent Assistant Vice-President of Alakor
Corporation; the incumbent Assistant to the Vice-President of National Book Store, Inc.; the
incumbent Assistant Treasurer of Alakor Securities Corporation; and an incumbent Director of
Zenith Holdings Corporation (he has been holding these positions for the past five years). He
obtained his Bachelors Degree in Business Management from the Ateneo de Manila University
in 1996.
f) RICARDO V. QUINTOS, Director of the Company since October 27, 1999. From 1992-2003,
he served as Chairman of the Board of Jack Nicklaus Sportswear. He was also a partner at R.
Quintos, H.G. Feliciano & Associates from 1993-2004. He graduated with a degree in Veterinary
Medicine from the University of the Philippines. He likewise obtained a bachelors degree in
Commerce from San Beda College. He served as a delegate to the 1971 Constitutional
Convention, authored various pioneering books on agriculture and livestock management, and
acquired more than 30 years of experience in managing agriculture-based companies and
associations.
g) FELIPE R. RELUCIO, JR., Director of the Company since July 22, 2002. He served as
President of Kesang Mining Corporation from 1993 to 1996 and Ayamas Philippines Incorporated
from 1997-1999. He is currently a consultant to the office of Senator Rodolfo Biazon. A
Chemical Engineer, he completed the academic requirements for MBA at the De La Salle
College. He was formerly the General Manager of Veritas Newsmagazine.
h) ALFREDO R. ROSAL, JR., Director of the Company since March 31, 2003 and elected
Independent Director on even date. Managing Partner of Rosal and Valera Law Offices. He was
an Associate Attorney of Sycip Salazar Luna Manalo & Feliciano Law Offices and an Associate
Member of Norberto J. Quisumbing & Associates. He served as general counsel to various local
and foreign investment companies and a Director and Corporate Secretary of Multistone Mining
Corporation. He served as President of Natural Resources Development Corporation and
Bukidnon Forest, Inc. He graduated from the San Beda College of Law and earned his MBA at
the University of the Philippines. The law firm of Rosal and Valera Law Offices does not act as
legal counsel of the Company.
- 25 -

i) CHRISTOPHER M. GOTANCO, Director of the Company since September 6, 2006. He is
currently serving as President of and COO of Anglo Philippines Holdings Corporation, Chairman
of PentaCapital Finance Corporation, and Vice Chairman of PentaCapital Investment
Corporation. He is also an incumbent member of the Boards of Directors of MRT Holdings, Inc.,
MRT Development Corporation, North Triangle Depot Commercial Corporation, Philodrill
Corporation, Vulcan Industrial & Mining Corporation, Carmen Copper Corporation and
Boulevard Holdings, Inc. Mr. Gotanco has a masters degrees in Business Management (Asian
Institute of Management) and International Finance & Development (Tufts University, Boston,
MA).
Officers
a) RODERICO V. PUNO, has been serving as Corporate Secretary of the Company since
September 15, 2006. He obtained his law degree in 1989 from the Ateneo de Manila University
College of Law. He immediately immersed himself in law practice as Associate Attorney in the
law firm of Puno and Puno Law Offices. He served as Vice President-Legal for First Philippine
Holdings Corporation from 2001 to 2003. He is a current member of the Board of Directors of
Global Business Holdings, Global Business Power Holdings and all the operating subsidiary
power companies and was cited by the leading international publication Chambers Global and
International Financial Law Review as one of the leading Philippine Lawyers in Business Law.
b) NOEL T. DEL CASTILLO, Treasurer of the Company. Director and Corporate Secretary of
TMM Management Inc., Director of Berong Nickel Corporation., Director of Solar Publishing
Corporation, Pargold Mining Corporation and Convoy Consolidated Holdings, Inc. and other
companies. He is also the Treasurer of Carmen Copper Corporation. He is a Certified Public
Accountant and a Realtor. He completed the academic requirements for MBA at the Ateneo de
Manila University.
c) PABLITO M. ONG, obtained his Bachelors degree in Mining Engineering from the Mapua
Institute of Technology in Manila and worked as a geologist at the Bureau of Mines and
Geosciences. Finished post graduate training at Camborne School of Mines in Cornwell, England
and completed the PhD program in Geology, Applied Geochemistry at Royal School of Mines,
Imperial College, London University. He has been working as Exploration Geologist for the
Company for over 30 years. He led the team of geologists who discovered the Long Point,
Berong, Moorsom, Tagkawayan / Ulugan Nickel deposits in the Province of Palawan as well as a
nickel deposit in Tawi-Tawi. He also led the team of geologists who explored the Pujada Nickel
Laterite Deposits in Davao.
d) JESUS C. VALLEDOR, JR., graduated with a degree of Bachelor of Science in Commerce

Major in Accounting. He passed the CPA board examinations on October 25, 1985. He joined the
Company on January 22, 1988 and rose from the ranks to his present position as AVP
Administration/Comptroller, Head Office.
e) CARMEN ROSE A. BASALLO-ESTAMPADOR, has been serving as Assistant Corporate

Secretary and Assistant Compliance Officer of the Company since September 15, 2006. She
obtained her law degree from the University of the Philippines-College of Law and worked as a
tax consultant for the Manila Office of the multinational auditing firm KPMG until March 2006
when she joined Alakor Corporation to serve as corporate legal counsel.
- 26 -

ITEM 10. EXECUTIVE COMPENSATION
Information as to the aggregate compensation paid during the last two fiscal years and to be paid in
the ensuing year to the four (4) most highly compensated officers follows:
ANNUAL COMPENSATION *
Name and Position Year Salary Bonus and other
Compensation
CEO and four most highly compensated Officers
Alfredo C. Ramos -- Chairman of the Board & President

Martin C. Buckingham -- Director, Executive Vice President & CFO
Adrian S. Ramos -- Director, Vice-President
Pablito M. Ong -- General Manager Exploration
Noel T. Del Castillo -- Treasurer
2010 (est.) P 13.6 M -
2009 13.6 M -
2008 14.8 M -
All Directors and Officers
2010 (est.) P 14.7 M -
2009 14.7 M -
2008 16.6 M -
No compensation of whatever form is presently given to the Companys directors except the payment
of P5,000 as per diem for every meeting of the Board of Directors attended. The Company has not
entered into any arrangement or contract that will compensate its directors and officers for any service
provided as director or officer of the Company. There are no warrants and options outstanding held
by the Companys directors and executive officers. However, the Companys Board of Directors
approved on January 27, 2005 a proposal to grant Stock Options to directors and qualified officers and
employees of the company.
The Comprehensive Stock Option Plan (CSOP) was approved by the Board on June 18, 2007 and the
same was subsequently ratified by the Stockholders on July 18, 2007 during the Companys Annual
General Meeting of Stockholders. The CSOP and the application for the exemption from registration
of the securities underlying the CSOP was approved by the SEC on 9 April 2008. Reference is also
made to Notes 1, 2, 20, 21, 25 and 26.
- 27 -

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT (AS OF DECEMBER 31, 2009)
(a) Security Ownership of Certain Record and Beneficial Owners

Title of % of
Class Name of owner No. of Shares Citizenship Ownership
Common PCD Nominee Corporation (Filipino) 359,906,343 Filipino 34.31% x

Common Alakor Corporation 355,304,961 Filipino 33.87% >
Common Anglo Philippine Holdings Corp. 121,000,000 Filipino 11.54% >
Common PCD Nominee Corporation (Non-Filipino) 88,883,696 Filipino 08.47% x
Common Martin Charles Michael Buckingham 27,000,000 British 02.57% >
Common CEDE & CO Bowling Green Station, NY 10,699,120 Filipino 01.02% r
Common Alfredo C. Ramos 10,000,100 Filipino 00.95% r>
Common National Bookstore Inc. 9,203,407 Filipino 00.88% r>
(b) Security Ownership
Title of No. of % of
Class Name of Owner Shares Citizenship Ownership
Common Alfredo C. Ramos 10,000,100 Filipino 0.95% r

Common Gerard Anton S. Ramos 10,001,000 Filipino 0.95% r
Common Marciano A. Padilla 1,000 Filipino * r
Common Martin C. Buckingham 27,000,001 British 2.57% r
Common Adrian S. Ramos 6,203,000 Filipino 0.59% r
Common Frank N. Lubbock 1 Australian * r
Common Christopher M. Gotanco 110,000 Filipino * r
Common Ricardo V. Quintos 1 Filipino * r
Common Felipe R. Relucio, Jr. 1,000 Filipino * r
Common Alfredo R. Rosal 100 Filipino * r
Common Noel T. Del Castillo 50,000 Filipino
Common Pablito M. Ong 10,033 Filipino
Common Jesus C. Valledor, Jr. 0 Filipino
Common Roderico V. Puno 0 Filipino
Common Carmen-Rose A. Basallo-Estampador 0 Filipino
Common All Directors and Officers as a Group 53,376,236
* -- Less than 0.01%

> -- Related to Mr. Alfredo C. Ramos with address at 9/F Quad Alpha, 125 Pioneer St., Mandaluyong City
x -- Only broker members can identify holders of more than 5% security. PCD Nominee hold offices a G/F MSE
Bldg., 6767 Ayala Ave., Makati City.
r -- record owner
The Company has no information of person(s) holding 5% or more of the securities held under a
voting trust or similar agreement. The company is not aware, except as are disclosed, of any
arrangements that may result in a change in control of the Company.
- 28 -

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management is not aware of any transaction in the last two (2) years or proposed transaction to which
the Company was or is to be a party in which any of its directors, executive officers or their
immediate family have or is to have any material interest. No director has resigned or declined to
stand for re-election to the board of directors since the date of the last annual meeting of shareholders
because of a disagreement with the Company on any matter relating to the Companys operations,
policies or practices. Please refer to Notes 1, 2, 5, 6, 9, 12, 16, 20, 21, 22, 25 and 26.
PART IV CORPORATE GOVERNANCE
ITEM 13. CORPORATE GOVERNANCE
The evaluation system adopted by the Company is based primarily on the SEC Corporate Governance
Scorecard (which replaced the Corporate Governance Self-Rating Form). Current pronouncements
and / or rulings by regulatory bodies with regard to leading practices on good corporate governance
are adopted / incorporated in the Companys Manual on Corporate Governance (the Manual) to
assure full compliance thereon.
Except to amend Section 4.2 of the Manual to include a provision on the mandatory attendance of
directors at a corporate governance seminar prior to their assumption of office, the Company has not
deviated from the Manual. The Company submitted its duly-accomplished Corporate Governance
Scorecard on September 22, 2009.
- 29 -

PART V EXHIBITS AND SCHEDULES
ITEM 14. EXHIBITS AND REPORTS ON SEC FORM 17-C
(a) Exhibits = See accompanying Index to Exhibits (page 33)
The other exhibits, as indicated in the Index to Exhibits are either not applicable to the
Company or require no answer.
(b) Reports on SEC Form 17-C
Date Filed Item Detail

Jan. 05, 2009 Item 9 Other events Announcement of the first shipment of copper
concentrates from its Carmen Copper Mine in Toledo
City
Jan. 08, 2009 Item 9 Other events Abacus Option
Jan. 09, 2009 Item 9 Other events Pricing Arrangement under Carmen Copper Corporation
- MRI Trading AG (MRI) offtake agreement
Feb. 09, 2009 Item 9 Other events CCC completes its second shipment of copper
concentrate from its Carmen Copper Mine in Toledo
City
Feb. 11, 2009 Item 9 Other events Report on the Operations of Berong Nickel Corporation
(BNC) Fourth Quarter of 2008
Mar. 23, 2009 Item 9 Other events Announcement of the third shipment of copper
City
Apr. 21, 2009 Item 9 Other events Postponement of the Annual General Meeting of Atlas
Stockholders
Execution of memorandom of agreement with
Indigenous peoples/indigenous cultural communities
(IP/ICC)
Apr. 28, 2009 Item 9 Other events Loan Agreement between Atlas and Anglo Philippine
Holdings Corporation.
Resignation of Independent Director Mr. Gerard H.
Brimo
July 10, 2009 Item 9 Other events Execution of Loan agreement between Atlas and Anglo
July 13, 2009 Item 9 Other events Fifth Amendment to the Spinnaker Loan Agreement
July 16, 2009 Item 9 Other events Issuance of Warrants to Spinnaker
Aug. 3, 2009 Item 9 Other events CCC completes its seventh shipment of copper
City
Further Ammendment of Spinnaker Loan Agreemet
Aug. 12, 2009 Item 9 Other events Conversion of Atlass B Shares
Aug. 18, 2009 Item 9 Other events CCC completes its eighth shipment of copper
City
- 30 -

Date Filed Item Detail
Sept. 10, 2009 Item 9 Other events Announcement the ninth shipment of copper
City
Sept. 30, 2009 Item 9 Other events Issuance of Additional Warrants to Spinnaker
Execution of Revised Listing Agreement with PSE
Oct. 9, 2009 Item 9 Other events ACMDC announces the tenth shipments of copper
City
Oct. 28, 2009 Item 9 Other events ACMDC announces eleventh shipment of copper
concentrates to China
Nov. 18, 2009 Item 9 Other events CCC twelve shipments of copper concentrates to China
Nov. 27, 2009 Item 9 Other events BOD approves resolution authorizing Atlas to obtain
from Banco de Oro Unibank, Inc. and Globalfund
Holdings, Inc a convertible loan facility coveringan
aggregate principal amount of US$25,000,000
Dec. 2, 2009 Item 9 Other events ACMDC drawn down the entire proceeds of the US$25
million loan facility with Banco de Oro Unibank, Inc.
and Globalfund Holdings, Inc.
Dec. 3, 2009 Item 9 Other events Board approved/confirmed corporate actions
Dec. 8, 2009 Item 9 Other events ACMDC announces thirteenth shipment of copper
City
Dec. 9, 2009 Item 9 Other events ACMDC executes Indemnity agreement with Alakor
Coproration
Dec. 16, 2009 Item 9 Other events ACMDC and Alakor executes a Deed of Assignment
with Subscription agreement
Dec. 20, 2009 Item 9 Other events BOD authorized ACMDC to subscribe to 46,188,281
common shares to CCC
Jan. 4, 2010 Item 9 Other events ACMDC to hold Annual Stockholders' Meeting on
March 5, 2010
Jan. 11, 2010 Item 9 Other events ACMDC announces the first shipment of copper
City for the year 2010
Feb. 10, 2010 Item 9 Other events Postponement of Annual General Meeting of
Stockholders
Mar. 3, 2010 Item 9 Other events ACMDC announces the successful completion of its
fourth shipment of copper concentrates for the year
2010
- 31 -

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES
FORM 17-A, Item 7
Page No.
CONSOLIDATED FINANCIAL STATEMENTS
Statement of Managements Responsibility for Financial Statements 35

Report of Independent Public Accountants 36
Consolidated Balance Sheets as of December 31, 2009 and 2008 38
Consolidated Statements of Income for the years ended December 31, 2009, 39
2008 and 2007
Consolidated Statement of Changes in Capital Deficiency for the years ended 40
December 31, 2009, 2008 and 2007
Consolidated Statements of Cash Flows for the years ended December 31, 41
2009, 2008 and 2007
Notes to Consolidated Financial Statements 43
PARENT COMPANY FINANCIAL STATEMENTS 107
AMOSITE HOLDINGS FINANCIAL STATEMENTS
AQUATLAS, INC. FINANCIAL STATEMENTS
ATLAS EXPLORATION INC. FINANCIAL STATEMENTS
BERONG NICKEL CORPORATION FINANCIAL STATEMENTS
CARMEN COPPER CORPORATION FINANCIAL STATEMENTS
NICKELINE RESOURCES HOLDINGS INC. FINANCIAL STATEMENTS
TMM MANAGEMENT, INC. FINANCIAL STATEMENTS
ULUGAN NICKEL CORPORATION FINANCIAL STATEMENTS
ULUGAN RESOURCES HOLDINGS, INC. FINANCIAL STATEMENTS
SUPPLEMENTARY SCHEDULES
Report of Independent Public Accountants on Supplementary Schedules

A. Marketable Securities (Current Marketable Equity Securities and *
Other Short-Term Cash Investments)
B. Amounts Receivable from Directors, Officers, Employees, Related 421
Parties and Principal Stockholders (Other than Affiliates)
C. Non-Current Marketable Equity Securities, Other Long Term *
Investments and Other Investments
D. Indebtedness to Unconsolidated Subsidiaries and Affiliates *
E. Property, Plant and Equipment *
F. Accumulated Depreciation *
G. Other Assets *
H. Long Term Debt *
I. Indebtedness to Affiliates and Related Parties (Long Term Loans *
- 33 -

From Related Companies)
J. Guarantees of Securities of Other Issuers *
K. Capital Stock 422
* These schedules have been omitted because they are either not required, not applicable or the information required to be
presented is included in the Companys consolidated financial statements or the notes to consolidated financial statements.
- 34 -

35

36

37

ATLAS CONSOLIDATED MINING AND DEVELOPMENT
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Par Value Per Share)
December 31
2009 2008
ASSETS
Current Assets
Cash and cash equivalents (Note 4) P
=301,355 P881,404
=
Receivables (Note 5) 298,366 218,207
Derivative assets (Note 6) 32,720 876,819
Inventories - net (Note 7) 778,493 505,201
Prepayments and other current assets (Note 8) 563,219 561,866
Total Current Assets 1,974,153 3,043,497
Noncurrent Assets
Property, plant and equipment - net(Note 10):
At cost 10,446,504 9,217,712
At revalued amount 376,088 398,156
Mining rights (Note 11) 76,128 76,128
Goodwill (Note 12) 15,011 15,011
Available-for-sale (AFS) financial assets (Note 15) 5,215 22
Other noncurrent assets (Note 13) 1,042,570 805,061
Total Noncurrent Assets 11,961,516 10,512,090
TOTAL ASSETS P
=13,935,669 =13,555,587
P
LIABILITIES AND EQUITY

Current Liabilities
Loans payable (Note 16) P
=977,585 =950,400
P
Accounts payable and accrued liabilities (Note 17) 2,705,704 2,150,507
Current portion of long-term debt (Note 18) 924,000 475,200
Income tax payable 2,015 991
Derivative liabilities (Notes 6, 16 and 18) 772,818 –
Advances from and due to related parties (Note 25) 1,889,746 1,788,428
Total Current Liabilities 7,271,868 5,365,526
Noncurrent Liabilities
Long-term debt - net of current portion (Note 18) 3,992,792 4,276,800
Liability for mine rehabilitation cost (Note 19) 121,973 87,393
Retirement benefits liability (Note 26) 70,952 46,937
Deferred income tax liabilities (Note 27) 102,626 93,739
Total Noncurrent Liabilities 4,288,343 4,504,869
Total Liabilities 11,560,211 9,870,395
Equity
Capital stock - P
=10 par value (Note 20) 10,489,319 10,489,319
Additional paid-in capital (Note 21) 934,382 858,501
Premium on deemed disposal of an investment in a subsidiary (Note 22) 633,258 625,541
Deposits for future stock subscriptions (Note 20) 150,960 150,960
Revaluation increment on land (Note 10) 218,559 218,559
Net unrealized gain on AFS financial assets (Note 15) 1 1
Deficit (12,596,363) (10,474,765)
(169,884) 1,868,116
Minority interests 2,545,342 1,817,076
Equity 2,375,458 3,685,192
TOTAL LIABILITIES AND EQUITY P
=13,935,669 =13,555,587
P
See accompanying Notes to Consolidated Financial Statements.
38 *SGVMC310102*

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in Thousands, Except Per Share Amounts)
Years Ended December 31
2009 2008 2007
REVENUE
Copper (Note 6) =4,308,244
P =201,619
P P–
=
Gold (Note 6) 210,766 6,377 –
Beneficiated nickel ore and others 171,295 714,992 1,253,273
4,690,305 922,988 1,253,273
Less marketing charges 504,707 152,255 113,860
4,185,598 770,733 1,139,413
COSTS AND EXPENSES
Mining and milling costs (Note 23) 3,635,185 838,745 316,664
Mine products taxes 73,321 40,868 37,598
General and administrative expenses (Note 24) 953,560 687,159 914,099
4,662,066 1,566,772 1,268,361
OTHER INCOME (CHARGES)
Unrealized mark-to-market gains (losses) on derivative assets
(liabilities) (Notes 6, 16 and 18) (1,161,974) 876,819 (452,076)
Indemnity loss (Note 16) (465,000) (100,000) –
Interest expense (Note 28) (427,893) (106,445) (250,581)
Realized mark-to-market gains (losses) on derivative
assets (liabilities) (Note 6) (270,734) 720,670 –
Net foreign exchange gain (loss) 120,418 (553,827) 86,746
Probable losses (59,526) – –
Security fee (Note 16) (28,146) (13,109) –
Provision for impairment loss on AFS financial assets
(Note 15) (15,891) – –
Loss on asset disposal (1,007) – –
Interest income (Note 4) 988 25,211 80,409
Derecognition of long-outstanding liabilities (Note 17) – – 916,485
Gain on settlement of long-term debt – – 36,947
Retirement benefit income (Note 26) – – 16,108
Other income (expenses) - net 24,177 76,836 (599)
(2,284,588) 926,155 433,439
INCOME (LOSS) BEFORE INCOME TAX (2,761,056) 130,116 304,491
PROVISION FOR INCOME TAX (Note 27)
Current 3,176 1,772 51,610
Deferred 8,558 (398) (36,134)
11,734 1,374 15,476
NET INCOME (LOSS) (2,772,790) 128,742 289,015
OTHER COMPREHENSIVE INCOME – – –
TOTAL COMPREHENSIVE INCOME (LOSS) (P
=2,772,790) =128,742
P =289,015
P
Total comprehensive income (loss)/net income (loss)
attributable to:
Equity holders of the Parent Company (P
=2,121,598) (P
=812) P127,374
=
Minority interests (651,192) 129,554 161,641
(P
=2,772,790) =128,742
P =289,015
P
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT COMPANY
(Note 30)
Basic/diluted earnings (loss) per share (P
=2.0226) (P
=0.0008) =0.1285
P
39 *SGVMC310102*

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Thousands)

2009 2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) before income tax (P
=2,761,056) =130,116
P =304,491
P
Adjustments for:
Unrealized mark-to-market loss (gain) on
derivative liabilities (assets) (Note 6) 1,161,974 (876,819) 452,076
Depreciation, depletion and amortization
(Notes 23 and 24) 797,321 180,156 177,180
Indemnity loss (Note 16) 465,000 100,000 –
Interest expense (Note 28) 427,893 106,445 250,581
Net unrealized foreign exchange losses (gains) (204,168) 540,180 (87,435)
Stock-based compensation expense (Note 21) 75,881 110,660 –
Probable losses (Note 13) 59,526 – –
Security fee (Note 16) 28,146 13,109 –
Retirement benefit cost (income) (Notes 26 and 30) 22,185 7,288 (16,108)
Impairment loss on AFS financial assets (Note 15) 15,891 – –
Impairment loss on receivables (Note 5) – 12,397 –
Impairment of land – – 330
Loss on disposal of assets 1,007 – –
Interest income (988) (25,211) (80,409)
Income from derecognition of long-outstanding
liabilities – (11,720) (916,485)
Foreign exchange gain on debt-to-equity
conversion (Note 18) – – (59,431)
Gain on settlement of long-term debt (Note 18) – – (36,947)
Other expense – – 10,947
Operating income (loss) before working capital changes 88,612 286,601 (1,210)
Decrease (increase) in:
Receivables (524,382) (273,695) (94,319)
Inventories (131,064) (271,661) (100,052)
Prepayments and other current assets (896) (914,405) (302,285)
Increase (decrease) in:
Accounts payable and accrued liabilities 480,053 797,683 776,425
Cash generated from (used in) operations (87,677) (375,497) 278,559
Interest received 988 56,553 79,248
Retirement benefit paid (423) (3,189) (5,863)
Interest paid (589,786) (492,920) (244,498)
Income taxes paid (2,151) (12,041) (8,230)
Net cash used in operating activities (679,049) (827,074) 99,216
(Forward)
41 *SGVMC310102*

-2-

2009 2008 2007
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment (Notes 10 and 36) (P
=1,894,674) (P
=5,361,278) (P
=2,007,685)
Investment in shares of stock (Note 13) – (23,725) –
Proceeds from disposal of assets 4,234 – –
Deferred mine exploration costs (Note 13) (3,364) (15,078) –
Mining rights – – (27,274)
Other noncurrent assets (317,066) (10,736) 4,267
Net cash used in investing activities (2,210,870) (5,410,817) (2,030,692)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from availments of long-term debt 1,981,914 909,464 4,643,726
Capital infusion from minority interests 1,387,845 570,211 –
Advances from and due to related parties 133,689 1,633,798 115,601
Proceeds from issuance of shares of stock (Note 20) – – 1,577,686
Payment of loans and long-term debt (Notes 16 and 18) (1,232,000) – (179,051)
Net cash from financing activities 2,271,448 3,113,473 6,157,962
NET EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 38,422 4,770 (388,732)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (580,049) (3,119,648) 3,837,754
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 881,404 4,001,052 163,298
AT END OF YEAR (Note 4) =301,355
P =881,404
P =4,001,052
P
42 *SGVMC310102*

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data or Where Otherwise Indicated)
1. Corporate Information, Business Operations, and Authorization for the

Issuance of Financial Statements
Corporate Information
Atlas Consolidated Mining and Development Corporation (the Parent Company) was incorporated
and registered with the Philippine Securities and Exchange Commission (SEC) as Masbate
Consolidated Mining Company, Inc. on March 9, 1935 as a result of the merger of assets and
equities of three pre-war mining companies, namely, Masbate Consolidated Mining Company,
Antamok Goldfields Mining Company and IXL Mining Company. Thereafter, it amended its
articles of incorporation to reflect the present corporate name. The Parent Company, through its
subsidiaries, is engaged in mineral and metallic mining and exploration, and primarily produces
nickel, copper concentrates and gold with silver, magnetite and pyrites as by-products.
The Parent Company’s shares of stock are listed in the Philippine Stock Exchange (PSE) and its
corporate life was extended up to March 2035. The registered business address of the Parent
Company is 7th Floor, Quad Alpha Centrum, 125 Pioneer St., Mandaluyong City.
A major restructuring of the Parent Company’s assets was undertaken in 2004 and 2005 with the
creation of three special-purpose subsidiaries to develop the Toledo Copper Project, Berong
Nickel Project and the Toledo-Cebu Bulk Water and Reservoir Project. As a result, Carmen
Copper Corporation (CCC), Berong Nickel Corporation (BNC) and AquAtlas, Inc. (AI) were
incorporated and, subsequently, were positioned to attract project financing as well as specialist
management and operating expertise. In addition, the Parent Company incorporated a wholly
owned subsidiary, Atlas Exploration Inc. (AEI), to host, explore and develop copper, gold, nickel
and other mineral exploration properties. AEI will also explore for other metalliferous and
industrial minerals to increase and diversify the mineral holdings and portfolio of the Parent
Company.
As of December 31, 2009 and 2008, the Parent Company and its subsidiaries (see below and
collectively referred to as the Group) are engaged in businesses including mining, professional
services, bulk water supply and as holding companies. The Group has no geographical segments
as the Parent Company and its subsidiaries were incorporated and are operating within the
Philippines.
The Parent Company’s subsidiaries, their respective nature of business and percentage of
ownership in 2009 and 2008 follow:
Percentage of
Ownership
Subsidiaries Nature of Business and Status of Operations 2009 2008
Atlas Exploration Incorporated in the Philippines on August 26, 2005 100.00 100.00
Inc. (AEI) to engage in the business of searching, prospecting, exploring
and locating ores and mineral resources and other exploration
work. As of December 31, 2009, the Company has not yet
started commercial operations.
(Forward)
43 *SGVMC310102*

-2-
Percentage of
Ownership
Subsidiaries Nature of Business and Status of Operations 2009 2008
AquAtlas Inc. (AI) Incorporated in the Philippines on May 26, 2005 100.00 100.00
to provide and supply wholesale or bulk water to local water
districts and other customers. As of December 31, 2009, the
Company has not yet started its commercial operations.
Amosite Holdings, Incorporated in the Philippines on October 17, 2006 100.00 100.00
Inc. (AHI) to hold assets for investment purposes. As of
December 31, 2009, the Company has not yet started its
commercial operations.
Carmen Copper Incorporated in the Philippines on September 16, 2004 64.94 65.53
Corporation primarily to engage in exploration work for the purpose of
(CCC) determining the existence of mineral resources, extent, quality
and quantity and the feasibility of mining them for profit.
The Company is in full operations during the year and
completed 12 copper concentrate shipments in 2009.
TMM Management, Incorporated in the Philippines on September 28, 2004 to 60.00 60.00
Inc. (TMMI) provide management, investment and technical advice to
companies. As of December 31, 2009, the Company generates
management fee revenues for the services rendered to entities
under its management.
Ulugan Resources Incorporated in the Philippines on June 23, 2005 70.00 70.00
Holding, Inc. to deal in and with personal properties and securities.
(URHI) As of December 31, 2009, the Company has not yet started
Indirect subsidiaries of the Parent Company under URHI:
Ulugan Nickel Incorporated in the Philippines on June 23, 2005 42.00 42.00
Corporation to explore, develop and mine the Ulugan mineral properties
(UNC) located in the province of Palawan. As of December 31, 2009,
the Company has not yet started commercial operations.
Nickeline Resources Incorporated in the Philippines on August 15, 2005 42.00 42.00
Holdings, Inc. to deal in and with any kind of shares and securities and to
(NRHI) exercise all the rights, powers and privileges of ownership or
interest in respect to them. As of December 31, 2009, the
Company has not yet started commercial operations.
Berong Nickel Incorporated in the Philippines on September 27, 2004 to 25.20 25.20
Corporation explore, develop and mine the Berong Mineral Properties
(BNC) located in the province of Palawan. In November 2008 and for
the year 2009, BNC has decided not to continue its mining
operations in the Berong Nickel Project due to low nickel prices
and demand. As of December 31, 2009, no decision has been
made by the Company to resume its mining operations.
Deed of assignment and exchange of assets for shares of stock

On May 5, 2006, the Parent Company and CCC entered into an Operating Agreement whereby the
Parent Company conveyed to CCC, among others, the possession, occupancy, use and enjoyment
of the Toledo Mine Rights, which include the operating rights pertaining to the mining claims
*SGVMC310102*

-3-
covered by MPSA 210-2005-VII (the “Mining Rights”). The parties have agreed that pursuant to
such conveyance, CCC shall recognize additional paid-in capital corresponding to the agreed
value of the Mining Rights covered by the Agreement. However, at the time of the execution of
the Operating Agreement, the value of the Mining Rights had not been determined by a third party
independent appraiser accredited by the SEC, and thus, the parties have not yet set the agreed
value of the Mining Rights.
On September 19, 2007, the BOD of CCC amended its Articles of Incorporation to increase the
authorized capital stock of CCC to 3.20 billion shares.
On October 23, 2007, the Parent Company and CCC executed a Deed of Assignment and
Exchange of Assets for Shares of Stock (the “Assignment”) pursuant to Section 3.1 of the
Operating Agreement. The Assignment was intended to cover certain immovable and movable
assets of the Parent Company which are referred to in the Agreement as Fixed Assets.
On January 18, 2008, a duly accredited third party independent appraiser issued a complimentary
report stating that the value of the Mining Rights under consideration as of November 27, 2007 is
reasonably represented at US$127.90 million or = P5.47 billion. The related agreed value of Mining
Rights, transferred to CCC amounted to P =1.20 billion. The determination of the final agreed
values used for the Assignment resulted to the subsequent issuance of common stock and an
increase in additional paid-in capital in CCC amounting to P =809,162 and =P855,831, respectively.
On December 18, 2009, the Parent Company, CCC, CASOP Atlas BV (CABV), and CASOP
Atlas Corporation (CAC) entered into a Subscription Agreement which covers the subscription of
the Parent Company, CABV and CAC to a total of 84,811,387 common shares of CCC for an
aggregate consideration of P
=339.2 thousands (US$7.3 thousands) based on the subscription price
of =
P4 per share. Following the terms of the agreement, CCC issued common shares as follows:
Parent Company 46,188,281

CABV 19,311,553
CAC 19,311,553
As of December 31, 2009, a subscription receivable amounting to P=138,503 was recognized for
the unpaid portion of the above-described stock subscription. Such amount representing the
balance of the subscription price was paid on January 22, 2010.
Operating Agreement (the Agreement) with CCC

On May 5, 2006, the Parent Company entered into the Agreement with CCC wherein the Parent
Company conveyed to CCC its exploration, development and utilization rights with respect to
certain mining claims (the “Toledo Mineral Rights”) and the right to rehabilitate, operate and/or
maintain certain of its fixed assets (the “Fixed Assets”). In consideration of CCC’s use of the
Toledo Mineral Rights, the Agreement provides that CCC shall pay the Parent Company a fee
equal to 10% of the sum of the following:
a. royalty payments to third party claim holders of the Toledo mine rights;
b. lease payments to third party owners of the relevant portions of the parcels of land covered by
the surface rights; and
c. real property tax payments on the parcels of land covered by the surface rights and on the
relevant fixed assets.
*SGVMC310102*

-4-
Under the Agreement, CCC shall have the exclusive and irrevocable right and option at any time
during the life thereof to purchase outright all or part of the Toledo Mineral Rights owned by the
Parent Company, and the Fixed Assets by giving the Parent Company written notice of its
intention. The purchase of the Parent Company’s Mining Rights shall be in the form of CCC’s
shares of stock.
On July 9, 2008, the Parent Company signed the Mineral Production Sharing Agreement (MPSA)
264-2008-VII with the Government which provides for the rational exploration, development and
commercial utilization of copper, gold and other associated mineral deposits existing within the
contract area. The said MPSA is covered by the Agreement entered into by the Parent Company
with CCC on May 5, 2006.
On July 18, 2008, the Parent Company executed a deed of assignment in favor of CCC covering
the assignment of MPSA 264-2008-VII.
As of December 31, 2009, the Parent Company recognized P

=87,600 royalty income for the Parent
Company’s conveyance to CCC of the operating rights covering the mining claims owned by the
Parent Company pursuant to the Operating Agreement.
Business Operations
Toledo Copper Project operated by CCC
With the availability of project financing from the Crescent Asian Special Opportunities Portfolio
(CASOP) drawdown and loans from Deutsche Bank AG (Deutsche), the first-phase of full
rehabilitation of the Toledo Copper Project commenced in September 2007. The initial
rehabilitation was focused on four major facilities needed to bring the mine into production at the
earliest possible time or within the 10-month target, namely: (a) the Carmen Concentrator;
(b) the Land-based Tailings Disposal (LBTD) System; (c) the South Lutopan open pit; and (d) the
Sangi concentrate-loading pier facility.
The first-phase full rehabilitation of the Parent Company’s Toledo mine facilities was substantially
completed in September 2008 enabling it to commence commercial operations thereafter. The
first shipment of copper concentrates weighing 5,625.86 wet metric tons was made on
December 29, 2008.
In 2009, the ore production from the South Lutopan Pit totaled 7.588 million dry metric tons (dmt)
with an average daily output of 20,789 dmt. Total mine waste stripped for the year was
6.946 million dmt at an average of 19,030 dmt per day.
CCC completed 12 copper concentrate shipments in 2009 totaling 59,480 dmt.
All concentrate cargoes were loaded from the Sangi port terminal and shipped to copper smelters
in the People’s Republic of China under different consignees. The Sangi port became fully
operational at the start of the current year.
The major developments on the CCC’s project and associated support facilities include:
The Carmen processing plant milled 7.98 million dmt of ore during 2009, averaging
21,864 dmt milling rate per day. The copper concentrate produced totaled 63,420 dmt
containing 40.24 million pounds (lbs.) of copper, 5,715 ounce (oz). of gold and 54,330 oz. of
silver. The production of pyrite was suspended because of poor market demand.
The magnetite recovery plant was completed on March 27, 2009. The operations were
intermittent due to continuing design renovation and process testing to produce higher iron
content of magnetite concentrate.
*SGVMC310102*

-5-
On July 23, 2009, the permanent plug made of reinforced concrete was fully installed across
the forward section of the Sigpit-Biga Drain Tunnel (SBDT). This allowed the Carmen
concentrator (Carcon) to permanently encapsulate its mill tailings at the Biga pit outfall.
The interim 5-stage slurry pumping set-up that was used to transport the tailings to Biga pit
was dismantled.
At the end of 2009, the draining of the impounded waters at Carmen pit and underground
resulted to a significantly lowered floodwater level of +242-meter above sea level.
The Second Decline Tunnel, used to augment personnel access and material handling, has
advanced 831 meters from the portal at year end. The tunneling for the Carmen drainage
crosscut has reached the 293-meter distance from the SBDT junction.
A 5-year term energy power purchase agreement was signed in December 2009 with Toledo
Power Company. This would assure a stable power supply of the mine for 2010 and beyond.
The agreement will take effect upon the commercial operation of the second unit of the Cebu
Energy Development Corporation coal-fired plant.
Completion of the 1.80-meter long underground launder tunnel for the land-based tailings
disposal system; the new Safety and Environment Division building; rehabilitation of the
Carcon ball mill No. 6; rehabilitation of the recreation center building; Carcon magnetite
plant; Sangi terminal concentrate bin and conveyor system; Biga pit concrete plug and the
Tailings Disposal System permanent pipelines.
CCC’s manpower totaled 3,642 personnel comprising 3,442 regulars, 192 probationary and
8 project-hired.
Berong Nickel Project operated by BNC

beneficiated nickel silicate ore on a non-pioneer status.
On June 8, 2007, the Government approved MPSA No. 235-2007-IVB in favor of BNC as the
Contractor. The said MPSA covers a contract area of approximately 288 hectares situated in
Barangay Berong, municipality of Quezon, Province of Palawan.
In November 2008 and for the year 2009, BNC has temporarily stopped its mining operations in
the Berong Nickel Project due to low nickel prices and demand. BNC continues to assess the
potential to re-open the Berong Nickel Project as a direct shipping operation, but no decision has
been made to resume mining operations.
Nevertheless, BNC was able to complete three shipments of laterite nickel ores in 2009 sourced
from its current stockpile.
Authorization for the Issuance of the Consolidated Financial Statements

The consolidated financial statements were authorized for issue by the Board of Directors (BOD)
on April 14, 2010.
2. Significant Accounting Policies and Financial Reporting Practices
Basis of Preparation
The consolidated financial statements have been prepared on a historical cost basis, except for
land, which is carried at revalued amounts, and derivative financial instruments and AFS financial
assets, which have been measured at fair value. The consolidated financial statements are
presented in Philippine Peso (Peso), which is the Group’s functional currency. All amounts are
rounded off to the nearest thousand (P
=000), except when otherwise indicated.
*SGVMC310102*

-6-
Statement of Compliance
The consolidated financial statements of the Group have been prepared in accordance with
Philippine Financial Reporting Standards (PFRS).
Changes in Accounting Policies
The accounting policies adopted are consistent with those of the previous financial year except
that the Group has adopted the following new, amended and improved PFRS and Philippine
Interpretations based on International Financial Reporting Interpretation Committee (IFRIC)
interpretations and amendments to existing Philippine Accounting Standards (PAS) that became
effective during the year.
Amendments to PAS 1, Presentation of Financial Statements, separate owner and non owner
changes in equity. The statement of changes in equity will include only details of transactions
with owners, with all non-owner changes in equity presented as a single line. In addition, the
standard introduces the statement of comprehensive income, which presents all items of
income and expense recognized in profit or loss, together with all other items of recognized
income and expense, either in one single statement, or in two linked statements. The revision
also includes changes in titles of some of the financial statements to reflect their function more
clearly, although not mandatory for use in the financial statements. The Group has elected to
present a single statement of comprehensive income and opted not to change the balance sheet
to statement of financial position.
Amendments to PFRS 7, Financial Instruments: Disclosures, require additional disclosures

about fair value measurement and liquidity risk. Fair value measurements related to items
recorded at fair value are to be disclosed by source of inputs using a three level fair value
hierarchy, by class, for all financial instruments recognized at fair value. In addition,
reconciliation between the beginning and ending balance for level three fair value
measurements is now required, as well as significant transfers between levels in the fair value
hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with
respect to derivative transactions and financial assets used for liquidity management. The fair
value measurement and liquidity risk disclosures are presented in Notes 31 and 32.
Adoption of the following new, revised and amended PFRS and Philippine Interpretations and
improvements to PFRS did not have any significant impact to the consolidated financial
statements.
New and Revised Standards and Interpretation

PFRS 8, Operating Segments
PAS 23, Borrowing Costs (Revised)
Philippine Interpretation IFRIC 13, Customer Loyalty Programmes
Philippine Interpretation IFRIC 16, Hedges of a Net Investment in a Foreign Operation
Amendments to Standards and Interpretations

PFRS 1, First-time Adoption of PFRS
PFRS 2, Share-based Payment - Vesting Conditions and Cancellations
PAS 1, Presentation of Financial Statements - Puttable Financial Instruments and
Obligations Arising on Liquidation
PAS 27, Consolidated and Separate Financial Statements - Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or Associate
PAS 32, Financial Instruments: Presentation
PAS 39, Financial Instruments: Recognition and Measurement - Embedded Derivatives
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Philippine Interpretation IFRIC 9, Reassessment of Embedded Derivatives
Improvements to PFRS
PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations
PAS 1, Presentation of Financial Statements
PAS 16, Property, Plant and Equipment
PAS 19, Employee Benefits
PAS 20, Accounting for Government Grants and Disclosures of Government Assistance
PAS 23, Borrowing Costs
PAS 28, Investments in Associates
PAS 29, Financial Reporting in Hyperinflationary Economies
PAS 31, Interests in Joint Ventures
PAS 36, Impairment of Assets
PAS 38, Intangible Assets
PAS 39, Financial Instruments: Recognition and Measurement
PAS 40, Investment Property
PAS 41, Agriculture
Improvement to PFRS issued in 2009

PAS 18, Revenue, adds guidance (which accompanies the standard) to determine whether an entity
is acting as a principal or as an agent. The features to consider are whether the entity:
Has primary responsibility for providing the goods or service
Has inventory risk
Has discretion in establishing prices
Bears the credit risk
The Group assessed its revenue arrangements against these criteria and concluded that it is acting
as principal in all arrangements. Accordingly, no change was made in the Group’s revenue
recognition policy.
New Accounting Standards, Interpretations, and Amendments to Existing Standards

Effective Subsequent to December 31, 2009
The Group will adopt the standards and interpretations enumerated below when these become
effective. Except as otherwise indicated, the Group does not expect the adoption of these new and
amended PFRS, PAS and Philippine Interpretations to have significant impact on consolidated
financial statements. The relevant disclosures will be included in the notes to the financial
statements when these become effective.
Effective in 2010
Amendments to PFRS 2, Share-based Payments - Group Cash-settled Share-based Payment

Transactions
The amendments to PFRS 2 effective for annual periods beginning on or after
January 1, 2010, clarify the scope and the accounting for group cash-settled share-based
payment transactions.
Revised PFRS 3, Business Combinations and Amendments to PAS 27,

Consolidated and Separate Financial Statements
The revised standards are effective for annual periods beginning on or after July 1, 2009.
PFRS 3 introduces significant changes in the accounting for business combinations occurring
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after this date. Changes affect the valuation of non-controlling interest, the accounting for
transaction costs, the initial recognition and subsequent measurement of a contingent
consideration and business combinations achieved in stages. These changes will impact the
amount of goodwill recognized, the reported results in the period that an acquisition occurs
and future reported results. PAS 27 requires that a change in the ownership interest of a
subsidiary (without loss of control) is accounted for as a transaction with owners in their
capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will
it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for
losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes in
PFRS 3 and PAS 27 will affect future acquisitions or loss of control of subsidiaries and
transactions with non-controlling interests. PFRS 3 will be applied prospectively, while
PAS 27 will be applied retrospectively with a few exceptions.
Amendment to PAS 39, Financial Instruments: Recognition and Measurement - Eligible

Hedged Items
The amendment to PAS 39 effective for annual periods beginning on or after July 1, 2009,
clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow
variability of a financial instrument as a hedged item. This also covers the designation of
inflation as a hedged risk or portion in particular situations.
Philippine Interpretation IFRIC 17, Distributions of Non-cash Assets to Owners

This interpretation provides guidance on the following types of non-reciprocal distributions of
assets by an entity to its owners acting in their capacity as owners: (a) distributions of
non-cash assets (e.g. items of property, plant and equipment, businesses as defined in PFRS 3,
ownership interests in another entity or disposal groups as defined in PFRS 5); and (b)
distributions that give owners a choice of receiving either non-cash assets or a cash alternative.
Philippine Interpretation IFRIC 18, Transfers of Assets from Customers

This interpretation clarifies the requirements of PFRS for agreements in which an entity
receives from a customer an item of property and equipment that the entity must then use
either to connect the customer to a network or to provide the customer with ongoing access to
a supply of goods or services (such as a supply of electricity, gas or water). Under this
interpretation, when the item of property and equipment is transferred from a customer meets
the definition of an asset under the IASB Framework from the perspective of the recipient, the
recipient must recognize the asset in its financial statements. If the customer continues to
control the transferred item, the asset definition would not be met even if ownership of the
asset is transferred to the utility or other recipient entity. The deemed cost of that asset is its
fair value on the date of the transfer. If there are separately identifiable services received by
the customer in exchange for the transfer, then the recipient should split the transaction into
separate components as required by PAS 18.
Improvement to PFRS Effective in 2010

The omnibus amendments to PFRSs issued in 2009 were issued primarily with a view to removing
inconsistencies and clarifying wording. The amendments are effective for annual periods
beginning on or after January 1, 2010, except when otherwise stated. The Group has not yet
adopted the following amendments and anticipates that these changes will have no material effect
on the consolidated financial statements.
PFRS 2, Share-based Payments

The amendment clarifies that the contribution of a business on formation of a joint venture and
combinations under common control are not within the scope of PFRS 2 even though they are
out of scope of Revised PFRS 3. The amendment is effective for financial years on or after
July 1, 2009.
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The amendment clarifies that the disclosures required with respect to noncurrent assets and
disposal groups classified as held for sale or discontinued operations are only those set out in
PFRS 5. The disclosure requirements of other PFRS only apply if specifically required for
such noncurrent assets or discontinued operations.

The amendment clarifies that segment assets and liabilities need only be reported when those
assets and liabilities are included in measures that are used by the chief operating decision
maker.

The amendment clarifies that the terms of a liability that could result, at anytime, in its
settlement by the issuance of equity instruments at the option of the counterparty do not affect
its classification.
PAS 7, Cash Flow Statements

The amendment explicitly states that only expenditure that results in a recognized asset can be
classified as a cash flow from investing activities.
PAS 17, Leases

The amendment removes the specific guidance on classifying land as a lease. Prior to the
amendment, leases of land were classified as operating leases. The amendment now requires
that leases of land are classified as either “finance” or “operating” in accordance with the
general principles of PAS 17. The amendments will be applied retrospectively.

The amendment clarifies that the largest unit permitted for allocating goodwill, acquired in a
business combination, is the operating segment as defined in PFRS 8 before aggregation for
reporting purposes.

The amendment clarifies that if an intangible asset acquired in a business combination is
identifiable only with another intangible asset, the acquirer may recognize the group of
intangible assets as a single asset provided the individual assets have similar useful lives.
Also, it clarifies that the valuation techniques presented for determining the fair value of
intangible assets acquired in a business combination that are not traded in active markets are
only examples and are not restrictive on the methods that can be used.

The amendment clarifies that a prepayment option is considered closely related to the host
contract when the exercise price of a prepayment option reimburses the lender up to the
approximate present value of lost interest for the remaining term of the host contract. In
addition, it also clarifies the scope exemption for contracts between an acquirer and a vendor
in a business combination to buy or sell an acquiree at a future date applies only to binding
forward contracts and not derivative contracts where further actions by either party are still to
be taken. Further, the amendment clarifies that gains or losses on cash flow hedges of a
forecast transaction that subsequently results in the recognition of a financial instrument or on
cash flow hedges of recognized financial instruments should be reclassified in the period that
the hedged forecast cash flows affect comprehensive income.
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The amendment clarifies that it does not apply to possible reassessment at the date of
acquisition, to embedded derivatives in contracts acquired in a business combination between
entities or businesses under common control or the formation of joint venture.

The amendment states that, in a hedge of a net investment in a foreign operation, qualifying
hedging instruments may be held by any entity or entities within the Group, including the
foreign operation itself, as long as the designation, documentation and effectiveness
requirements of PAS 39 that relate to a net investment hedge are satisfied.
Effective in 2012
Philippine Interpretation IFRIC 15, Agreement for Construction of Real Estate

This Interpretation covers accounting for revenue and associated expenses by entities that
undertake the construction of real estate directly or through subcontractors. This Interpretation
requires that revenue on construction of real estate be recognized only upon completion, except
when such contract qualifies as construction contract to be accounted for under
PAS 11, Construction Contracts, or involves rendering of services in which case revenue is
recognized based on stage of completion. Contracts involving provision of services with the
construction materials and where the risks and reward of ownership are transferred to the buyer on
a continuous basis will also be accounted for based on stage of completion.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Group as of
December 31 of each year. The financial statements of the subsidiaries are prepared for the same
reporting year as the Parent Company using consistent accounting policies.
Subsidiaries
Subsidiaries are entities over which the Parent Company has the power to govern the financial and
operating policies of the entities, or generally has an interest of more than one half of the voting
rights of the entities. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Parent Company controls
another entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group or Parent Company directly or through the holding companies. Control is achieved
where the Parent Company has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. They are deconsolidated from the date on which
control ceases.
All intra-group balances, transactions, income and expenses, and profits and losses resulting from
intra-group transactions that are recognized in assets are eliminated in full. However, intra-group
losses that indicate impairment are recognized in the consolidated financial statements.
Minority Interest
Minority interest represents interest in a subsidiary which is not owned, directly or indirectly by
the Parent Company. The losses applicable to the minority in a consolidated subsidiary may
exceed the minority interest’s equity in the subsidiary. The excess, and any further losses
applicable to the minority, are charged against the majority interest except to the extent that the
minority has a binding obligation to and is able to make good the losses. If the subsidiary
subsequently reports profits, the majority interest is allocated with all such profits until the
minority’s share of losses previously absorbed by the majority is recovered.
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Minority interest represents the portion of profit or loss and the net assets not held by the Group.
Acquisitions of minority interest are accounted for using the entity concept method, whereby the
difference between the consideration and the book value of the share of the net assets acquired is
recognized as an equity transaction.
Reduction of interest in an investment in a subsidiary arising from dilution of interest is accounted

for using the entity concept method, whereby, the resulting gain or loss from the dilution of
interest is recognized in the consolidated statement of changes in equity.
Business Combinations and Goodwill

Business combinations are accounted for using the purchase method. This involves recognizing
identifiable assets and liabilities of the acquired business initially at fair value. If the acquirer’s
interest in the net fair value of the identifiable assets and liabilities exceeds the cost of the business
combination, the acquirer shall (a) reassess the identification and measurement of the acquiree’s
identifiable assets and liabilities and the measurement of the cost of the combination; and
(b) recognize immediately in profit or loss any excess remaining after that reassessment.
When a business combination involves more than one exchange transaction, each exchange
transaction shall be treated separately using the cost of the transaction and fair value information
at the date of each exchange transaction to determine the amount of any goodwill associated with
that transaction. This results in a step-by-step comparison of the cost of the individual investments
with the Parent Company’s interest in the fair value of the acquiree’s identifiable assets, liabilities
and contingent liabilities at each exchange transaction. The fair values of the acquiree’s
identifiable assets, liabilities and contingent liabilities may be different at the date of each
exchange transaction. Any adjustments to those fair values relating to previously held interests of
the Parent Company is a revaluation to be accounted for as such and presented separately as part
of equity.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Parent
Company’s share in the net identifiable assets of the acquired subsidiary or associate at the date of
acquisition. Goodwill on acquisitions of subsidiaries is recognized separately as a noncurrent
asset. Goodwill on acquisitions of associates is included in investments in associates and is tested
annually for impairment as part of the overall balance.
Goodwill is reviewed for impairment annually or more frequently if events or changes in

circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating
unit (CGU) or group of CGUs to which the goodwill relates. Where the recoverable amount of the
CGU or group of CGUs is less than the carrying amount of the CGU or group of CGUs to which
goodwill has been allocated, an impairment loss is recognized. Impairment losses relating to
goodwill cannot be reversed in future periods. The Parent Company performs its impairment test
of goodwill at each balance sheet date.
Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash with original maturities of three
months or less from the dates of acquisition and that are subject to an insignificant risk of change
in value.
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Financial Instruments
Date of recognition
The Group recognizes a financial asset or a financial liability in the consolidated balance sheet
when it becomes a party to the contractual provisions of the instrument. Purchases or sales of
financial assets that require delivery of assets within the time frame established by regulation or
convention in the marketplace are recognized on the settlement date.
Initial recognition and classification of financial instruments

Financial instruments are recognized initially at fair value. The initial measurement of financial
instruments, except for those financial assets and liabilities at fair value through profit or loss
(FVPL), includes transaction cost.
On initial recognition, the Group classifies its financial assets in the following categories: financial
assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and AFS financial
assets, as appropriate. Financial liabilities, on the other hand, are classified as financial liability at
FVPL and other financial liabilities, as appropriate. The classification depends on the purpose for
which the investments are acquired and whether they are quoted in an active market. Management
determines the classification of its financial assets and financial liabilities at initial recognition
and, where allowed and appropriate, re-evaluates such designation at every balance sheet date.
Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or
a component that is a financial liability are reported as expense or income. Distributions to
holders of financial instruments classified as equity are charged directly to equity net of any
related income tax benefits.
The Group has no financial assets classified as HTM investments as of December 31, 2009 and
2008.
Determination of fair value

The fair value of financial instruments that are actively traded in organized financial markets is
determined by reference to quoted market bid prices at the close of business on the balance sheet
date. For investments and all other financial instruments where there is no active market, fair
value is determined using generally acceptable valuation techniques. Such techniques include
using arm’s length market transactions; reference to the current market value of another
instrument, which are substantially the same; discounted cash flow analysis and other valuation
models.
“Day 1” difference
Where the transaction price in a non-active market is different from the fair value from other
observable current market transactions in the same instrument or based on a valuation technique
whose variables include only data from observable market, the Group recognizes the difference
between the transaction price and fair value (a “Day 1” difference) in profit or loss unless it
qualifies for the recognition as some other type of asset. In cases where use is made of data which
is not observable, the difference between the transaction price and model value is only recognized
in profit or loss when the inputs become observable or when the instrument is derecognized. For
each transaction, the Group determines the appropriate method of recognizing the amount of
“Day 1” difference.
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Financial assets and financial liabilities at FVPL

Financial assets and financial liabilities are classified in this category if acquired principally for
the purpose of selling or repurchasing in the near term or upon initial recognition, it is designated
by management as at FVPL. Financial assets and financial liabilities at FVPL are designated by
management on initial recognition as at FVPL if the following criteria are met: (i) the designation
eliminates or significantly reduces the inconsistent treatment that would otherwise arise from
measuring the assets or recognizing gains or losses on them on a different basis; or (ii) the assets
and liabilities are part of a group of financial assets, financial liabilities or both, which are
managed and their performances are evaluated on a fair value basis in accordance with a
documented risk management or investment strategy; or (iii) the financial instrument contains an
embedded derivative that would need to be separately recorded. Derivatives, including separated
embedded derivatives, are also categorized as held at FVPL, except those derivatives designated
and considered as effective hedging instruments. Assets and liabilities classified under this
category are carried at fair value in the consolidated balance sheet. Changes in the fair value of
such assets are accounted for in profit or loss.
The Group’s financial assets and liabilities at FVPL consist of derivative assets and derivative
liabilities.
Derivatives and Hedging

Derivative financial instruments are initially recognized at fair value on the date on which a
derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are
carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Derivatives are accounted for as at FVPL, where any gains or losses arising from changes in fair
value on derivatives are taken directly to net profit or loss for the year, unless the transaction is
designated as effective hedging instrument.
Embedded Derivatives
An embedded derivative is separated from the host financial or nonfinancial contract and
accounted for as a derivative if all of the following conditions are met:
the economic characteristics and risks of the embedded derivative are not closely related to the
economic characteristic of the host contract;
a separate instrument with the same terms as the embedded derivative would meet the
definition of a derivative; and
the hybrid or combined instrument is not recognized as at FVPL.
The Group assesses whether embedded derivatives are required to be separated from host
contracts when the Group first becomes a party to the contract. Reassessment only occurs if there
is a change in the terms of the contract that significantly modifies the cash flows that would
otherwise be required.
Embedded derivatives that are bifurcated from the host contracts are accounted for either as
financial assets or financial liabilities at FVPL. Changes in fair values are included in profit or
loss.
As of December 31, 2009, the Group has embedded derivatives on its convertible loans payable
and its copper sales transactions that are required to be bifurcated.
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Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise when the Group provides money, goods or services
directly to a debtor with no intention of trading the receivables. After initial measurement, loans
and receivables are subsequently carried at cost or amortized cost using the effective interest
method, less any allowance for impairment. Gains and losses are recognized in profit or loss when
the loans and receivables are derecognized or impaired, as well as through the amortization
process. Loans and receivables are included in current assets if maturity is within 12 months from
the balance sheet date. Otherwise, these are classified as noncurrent assets.
As of December 31, 2009 and 2008, the Group’s loans and receivables consist of cash and cash
equivalents, trade receivables, advances to related parties, advances to officers and employees and
other receivables.
AFS Financial Assets

AFS financial assets are non-derivative financial assets that are designated as AFS or are not
classified in any of the three other categories. The Group designates financial instruments as AFS
if they are purchased and held indefinitely and may be sold in response to liquidity requirements
or changes in market conditions After initial recognition, AFS financial assets are measured at fair
value with unrealized gains or losses being recognized in the Group’s statement of comprehensive
income as “Net unrealized gain on AFS financial assets”.
When the investment is disposed of, the cumulative gains or loss previously recorded in equity is
recognized in the profit or loss. Interest earned on the investments is reported as interest income
using the effective interest rate method. Dividends earned on investments are recognized in the
profit or loss as ‘Dividend income’ when the right of payment has been established. The Group
considers several factors in making a decision on the eventual disposal of the investment. The
major factor of this decision is whether or not the Group will experience inevitable further losses
on the investment. These financial assets are classified as noncurrent assets unless the intention is
to dispose of such assets within 12 months from the balance sheet date.
The details of Group’s AFS financial assets as of December 31, 2009 and 2008 are discussed in
Note 15.
Other financial liabilities

Other financial liabilities are initially recorded at fair value, less directly attributable transaction
costs. After initial recognition, other financial liabilities are subsequently measured at amortized
cost using the effective interest method. Amortized cost is calculated by taking into account any
issue costs, and any discount or premium on settlement. Gains and losses are recognized in the
Group’s profit or loss when the liabilities are derecognized as well as through the amortization
process.
As of December 31, 2009 and 2008, other financial liabilities include accounts payable and
accrued liabilities, advances from and due to related parties, loans payable and long-term debt.
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Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated
balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, or to realize the asset and settle the
liability simultaneously. This is not generally the case with master netting agreements, and the
related assets and liabilities are presented gross in the consolidated balance sheets.
Impairment of Financial Assets

The Group assesses at each balance sheet date whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or a group of financial assets is
deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one
or more events that occurred after the initial recognition of the asset (an incurred ‘loss event’) and
that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
the group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the contracted parties or a group of contracted parties is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganization, and where observable data indicate
that there is measurable decrease in the estimated future cash flows such as changes in arrears or
economic conditions that correlate with defaults.

The Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If there is objective evidence that an impairment loss
on loans and receivables carried at amortized cost has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial
recognition). The carrying amount of the asset shall be reduced either directly or through use of
an allowance account. The amount of the loss shall be recognized in profit or loss.
If it is determined that no objective evidence of impairment exists for an individually assessed

financial asset, whether significant or not, the asset is included in a group of financial assets with
similar credit risk characteristics and that group of financial assets is collectively assessed for
impairment. Assets that are individually assessed for impairment and for which an impairment
loss is or continues to be recognized are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognized in profit or loss, to the extent that the carrying value of the asset does not exceed its
amortized cost at the reversal date.
In relation to receivables, a provision for impairment is made when there is objective evidence
(such as the probability of insolvency or significant financial difficulties of the debtor) that the
Group will not be able to collect all of the amounts due under the original terms of the invoice.
The carrying amount of the receivable is reduced through use of an allowance account. Impaired
debts are derecognized when they are assessed as uncollectible.
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AFS financial assets

For AFS financial assets, the Group assesses at each balance sheet date whether there is objective
evidence that a financial asset or group of financial assets is impaired. In the case of equity
investments classified as AFS financial assets, this would include a significant or prolonged
decline in the fair value of the investments below its cost. The determination of what is
‘significant’ or ‘prolonged’ requires judgment. The Group treats ‘significant’ generally as 30% or
more and ‘prolonged’ as greater than 12 months for quoted equity securities. Where there is
evidence of impairment, the cumulative loss measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously
recognized in profit or loss is removed from equity and recognized in the consolidated statement
of comprehensive income.
Impairment losses on equity investments are recognized in profit or loss. Increases in the fair
value after impairment are recognized directly in the consolidated statement of comprehensive
income.
In the case of debt instruments classified as AFS financial assets, impairment is assessed based on
the same criteria as financial assets carried at amortized cost. Interest continues to be accrued at
the original effective interest rate on the reduced carrying amount of the asset and is recorded as
part of ‘interest income’ in profit or loss. If subsequently, the fair value of a debt instrument
increased and the increase can be objectively related to an event occurring after the impairment
loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.
Derecognition of Financial Assets and Financial Liabilities

Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar
financial assets) is derecognized when:
the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a ‘pass through’ arrangement;
or
the Group has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
Where the Group has transferred its rights to receive cash flows from an asset and has neither
transferred nor retained substantially all the risks and rewards of the asset nor transferred control
of the asset, the asset is recognized to the extent of the Group’s continuing involvement in the
asset. Continuing involvement that takes the form of a guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
Where continuing involvement takes the form of a written and/or purchased option (including a
cash-settled option or similar provision) on the transferred asset, the extent of the Group’s
continuing involvement is the amount of the transferred asset that the Group may repurchase,
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except that in the case of a written put option (including a cash-settled option or similar provision)
on asset measured at fair value, the extent of the Group’s continuing involvement is limited to the
lower of the fair value of the transferred asset and the option exercise price.
Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or has expired.
When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amount is recognized in profit or loss.
Inventories
Mine products inventories and materials and supplies are valued at the lower of cost and net
realizable value (NRV).
Beneficiated nickel silicate ore

Cost is determined by the average production cost during the year for beneficiated nickel silicate
ore exceeding a determined cut-off grade.
Copper concentrate
The cost of copper concentrate containing copper, gold and silver is determined using the
weighted average method.
NRV for mine products is the selling price in the ordinary course of business, less the estimated
costs of completion and estimated costs necessary to make the sale. In the case of materials and
supplies, NRV is the value of the inventories when sold at their condition at the balance date.
Input Value-Added Tax (VAT)

Input VAT represents VAT imposed on the Group by its suppliers for the acquisition of goods and
services as required by Philippine taxation laws and regulations.
The input VAT is recognized as an asset and will be used to offset against the Group’s current
output VAT liabilities and any excess will be claimed as tax credits, as applicable. Input VAT is
stated at its estimated NRV.
Prepayments
Prepayments are expenses paid in advance and recorded as asset before they are utilized. This
account comprises advances for acquisition of mining rights, input VAT, deposit to suppliers,
prepaid rent, creditable withholding tax and other prepaid items. Prepaid rentals and other prepaid
items are apportioned over the period covered by the payment and charged to profit or loss when
incurred. Deposits to suppliers are payments in advance for purchase of materials and supplies.
Prepayments that are expected to be realized for no more than 12 months after the balance sheet
date are classified as current asset; otherwise, these are classified as other noncurrent asset.
Deposits
Deposits are recognized to the extent of the amount paid and refundable.
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Property, Plant and Equipment

Items of property, plant and equipment are carried at cost less accumulated depreciation and
depletion and any impairment in value.
Upon completion of mine rehabilitation, the assets are transferred into property, plant and
equipment. The initial cost of property, plant and equipment comprises its purchase price,
including import duties, taxes, and any directly attributable costs of bringing the property, plant
and equipment to its working condition and location for its intended use. Expenditures incurred
after the property, plant and equipment have been placed into operation, such as repairs and
maintenance costs, are normally recognized in profit or loss in the period they are incurred. In
situations where it can be clearly demonstrated that the expenditures have resulted in an increase
in the future economic benefits expected to be obtained from the use of an item of property, plant
and equipment beyond its originally assessed standards of performance, the expenditures are
capitalized as an additional cost of the property, plant and equipment.
Land is carried at revalued amount as determined by independent appraisers as of

December 31, 2005, less impairment in value. The net appraisal increment resulting from the
revaluation of land was credited to the “Revaluation increment on land” account shown under the
equity section of the consolidated balance sheet. Any appraisal decrease is first offset against
revaluation increment on earlier revaluation. The revaluation increment pertaining to disposed
land is transferred to the “Deficit” account.
When assets are sold or retired, the cost and related accumulated depletion and depreciation are
removed from the accounts and any resulting gain or loss is recognized in the profit or loss.
Depreciation of property, plant and equipment, except mine development costs, is computed using
the straight-line method over the estimated useful lives of the assets as follows:
Number of Years
Roadways and bridges 5 - 40
Buildings and improvements 5 - 25
Machinery and equipment 3 - 10
Transportation equipment 5-7
Office furniture and fixtures 5
Depreciation, depletion or amortization of an item of property, plant and equipment begins when it
becomes available for use, i.e., when it is in the location and condition necessary for it to be
capable of operating in the manner intended by management. Depreciation or depletion ceases at
the earlier of the date that the item is classified as held for sale (or included in a disposal group
that is classified as held for sale) in accordance with PFRS 5, and the date the asset is
derecognized.
The useful lives and depreciation methods are reviewed periodically to ensure that the periods and
methods of depreciation are consistent with the expected pattern of economic benefits from items
of property, plant and equipment.
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in profit or loss in the year the asset is derecognized.
*SGVMC310102*

- 19 -
The estimated recoverable reserves, useful lives, and depreciation and depletion methods are
reviewed periodically to ensure that the estimated recoverable reserves, periods and methods of
depreciation and depletion are consistent with the expected pattern of economic benefits from the
items of property, plant and equipment.
Property, plant and equipment also include the estimated costs of rehabilitating the mine site, for
which the Group is constructively liable. These costs, included under mine development costs, are
amortized using the units-of-production method based on the estimated recoverable mine reserves
until the Group actually incurs these costs in the future.
Mine Development Costs and Construction in Progress

Mine development costs and construction in progress are stated at cost, which includes cost of
construction, property and equipment, borrowing costs and other direct costs. Construction in
progress are transferred to the related property, plant and equipment account when the
construction or installation and related activities necessary to prepare the property, plant and
equipment for their intended use are complete and the property, plant and equipment are ready for
service. Mine development costs, except for cost attributable to current operations, and
construction in progress are not depreciated or depleted until such time as the relevant assets are
completed and become available for use. Mine development costs attributed to operations are
depleted using the units-of-production method based on estimated recoverable reserves in tonnes.
Major Maintenance and Repairs

Expenditures on major maintenance refits or repairs comprise the cost of replacement assets or
parts of assets and overhaul cost. Where an asset or part of an asset that was separately
depreciated and is now written off is replaced, and it is probable that future economic benefits
associated with the item will flow to the Group through an extended life, expenditure is
capitalized. Where part of the asset was not separately considered as a component, the
replacement value is used to estimate the carrying amount of the replaced assets which is
immediately written off. All other day to day maintenance costs are expensed as incurred.
Deferred Mine Exploration and Development Costs

Expenditures for mine exploration work prior to drilling are charged to profit or loss.
Expenditures for the acquisition of mining rights, property rights and expenditures subsequent to
drilling and development costs are deferred. When exploration work and project development
results are positive, these costs and subsequent mine development costs are capitalized and carried
under “Mine Development Costs”. When the results are determined to be negative or not
commercially viable, the accumulated costs are written off.
As of December 31, 2009 and 2008, there were no exploration costs that were capitalized.
Mining Rights
Mining rights are expenditures for the acquisition of property rights that are capitalize.
Impairment of Non-financial Assets

The Group assesses at each balance sheet date whether there is an indication that a nonfinancial
asset may be impaired. If any such indication exists, or when annual impairment testing for an
asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell
and its value-in-use and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets.
*SGVMC310102*

- 20 -
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations are recognized in profit or loss in those expense
categories consistent with the function of the impaired asset.
An assessment is made at each balance sheet date as to whether there is any indication that
previously recognized impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognized impairment loss is
reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognized. If that is the case, the carrying amount of
the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in profit or loss, unless the
asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s
revised carrying amount on a systematic basis over its remaining useful life.
Liability for Mine Rehabilitation

Rehabilitation of the mined-out areas is performed progressively and charged to costs as part of
normal operating activity. In addition, an assessment is made at each operation of the discounted
cost at balance sheet date of any future rehabilitation work that will be incurred as a result of
currently existing circumstances and regulations, and a provision is accumulated for this operation.
This provision is charged on a proportionate basis to production over the shorter of the life of the
operation or the term of the mining rights. The estimated cost of rehabilitation is assessed on a
regular basis. Rehabilitation costs include reforestation of areas affected by operations, clean-up
of polluted materials, dismantling of temporary facilities and monitoring of sites for a period of
five (5) years after completion of operations. Any changes in estimates are dealt with on a
prospective basis.
Convertible Loans Payable

Convertible loans payable denominated in the functional currency of the Group are regarded as
compound instruments, consisting of a liability and an equity component. At the date of issue, the
fair value of the liability component is estimated using the prevailing market interest rate for
similar non-convertible debt and is recorded within borrowings. The difference between the
proceeds of issue of the convertible bond and the fair value assigned to the liability component,
representing the embedded option to convert the liability into equity of the Parent Company is
included in the consolidated statement of changes in equity.
When the embedded option in convertible loans payable is denominated in a currency other than
the functional currency of the Group, the option is classified as a liability. The option is mark to
market with subsequent gains and losses being recognized in profit or loss.
Issue costs are apportioned between the liability and equity components of the convertible bonds
where appropriate based on their relative carrying amounts at the date of issue. The portion
relating to the equity component is charged directly against equity. The interest expense on the
*SGVMC310102*

- 21 -
liability component is calculated by applying the effective interest rate for similar non-convertible
debt to the liability component of the instrument. The difference between this amount and the
interest paid is added to the carrying amount of the convertible loans payable.
Borrowing Costs
Borrowing costs are interest and other costs that the Group incurs in connection with the
borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset form part of the cost of that asset. Capitalization of borrowing
costs commences when the activities to prepare the assets are in progress and expenditures and
borrowing costs are being incurred. Borrowing costs are capitalized until the assets are
substantially ready for their intended use. If the carrying amount of the asset exceeds its estimated
recoverable amount, an impairment loss is recorded.
When funds are borrowed specifically to finance a project, the amount capitalized represents the
actual borrowing costs incurred. When surplus funds are temporarily invested, the income
generated from such temporary investment is deducted from the total capitalized borrowing cost.
When the funds used to finance a project form part of general borrowings, the amount capitalized
is calculated using a weighted average of rates applicable to relevant general borrowings of the
Group during the period. All other borrowing costs are recognized in profit or loss in the period in
which they are incurred.
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebates, and sales taxes or duty, as applicable. The
Group assesses its revenue arrangements against specific criteria in order to determine if it is
acting as principal or agent. The Group has concluded that it is acting as principal in all of its
revenue arrangements.
Copper and gold concentrate sales

Contract terms for the Group’s sale of copper and gold in concentrate allow for a price adjustment
based on final assay results of the metal concentrate by the customer to determine the content.
Recognition of sales revenue for the commodities is based on most recently determined estimate
of metal in concentrate and the spot price at the date of shipment.
The terms of metal in concentrate sales contracts with third parties contain provisional pricing
arrangements whereby the selling price for metal in concentrate is based on prevailing spot prices
on a specified future date after shipment to the customer (the “quotation period”). Adjustments to
the sales price occur based on movements in quoted market prices up to the date of final
settlement. The period between provisional invoicing and final settlement can be between one and
six months. The provisionally priced sales of metal in concentrate contain an embedded
derivative, which is required to be separated from the host contract for accounting purposes. The
host contract is the sale of metals in concentrate, while the embedded derivative is the forward
contract for which the provisional sale is subsequently adjusted. Accordingly the embedded
derivative, which does not qualify for hedge accounting, is recognized at fair value, with
subsequent changes in the fair value recognized in profit or loss until final settlement, and
presented as “mark-to-market gain (loss) on derivative assets (liabilities). Changes in fair value
over the quotation period and up until final settlement are estimated by reference to forward
market prices for gold and copper.
*SGVMC310102*

- 22 -
Sale of Beneficiated Nickel Ore

Revenue is recognized when the significant risks and rewards of ownership of the goods have
passed to the buyer, which coincides with the loading of the ores onto the buyer’s vessel. Under
the terms of the arrangements with customers, the Group bills the remaining 10% of the ores
shipped based on the result of the assay agreed by both the Group and the customers. Where the
result of the assay are not yet available as at balance sheet date, the Group accrues for the
remaining 10% of the revenue based on the amount of the initial billing made.
Interest income
Interest income is recognized as the interest accrues using the effective interest rate method.
Deferred Stripping Costs

Stripping costs incurred in the development of a mine before production commences are
capitalized as part of the cost of constructing the mine and subsequently amortized over the
estimated life of the mine on a units of production basis. Where a mine operates several open pit
that are regarded as separate operations for the purpose of mine planning, stripping costs are
accounted for separately by reference to the ore from each separate pit. If, however, the pits are
highly integrated for the purpose of the mine planning, the second and subsequent pits are
regarded as extensions of the first pit in accounting for stripping costs. In such cases, the initial
stripping, (i.e., overburden and other waste removal) of the second and subsequent pits is
considered to be production phase stripping relating to the combined operation.
Stripping costs incurred subsequently during the production stage of its operation are deferred for
those operations where this is the most appropriate basis for matching the cost against the related
economic benefits and the effect is material. This is generally the case where there are
fluctuations in stripping costs over the estimated life of the mine. The amount of stripping costs
deferred is based on the strip ratio obtained by dividing the tonnage of waste mined either by the
quantity of ore mined or by the quantity of minerals contained in the ore. Stripping costs incurred
in the period are deferred to the extent that the current period ratio exceeds the estimated life of the
mine strip ratio. Such deferred costs are then charged to profit or loss to the extent that, in
subsequent periods, the current period ratio falls short of the life of mine (or pit) ratio. The
estimated life of mine (or pit) ratio is based on economically recoverable reserves of the mine (or
pit). Changes are accounted for prospectively, from the date of the change. Deferred stripping
costs are included as part of ‘Mine and mining properties’. These form part of the total investment
in the relevant cash generating units, which are reviewed for impairment if events or changes of
circumstances indicate that the carrying value may not be recoverable.
Retirement Benefits Costs

Retirement benefits costs are actuarially determined using the projected unit credit method. The
projected unit credit method considers each period of service as giving rise to an additional unit of
benefit entitlement and measures each unit separately to build up the final obligation. Upon
introduction of a new plan or improvement of an existing plan, past service cost are recognized on
a straight-line basis over the average period until the amended benefits become vested. To the
extent that the benefits are already vested immediately, past service costs are immediately
expensed. Actuarial gains and losses are recognized as income or expense when the cumulative
unrecognized actuarial gains or losses for each individual plan exceed 10% of the higher of the
present value of the defined benefit obligation and the fair value of the plan assets at that date.
These gains or losses are recognized over the expected average remaining working lives of the
employees participating in the plan. Gains or losses on the curtailment or settlement of retirement
benefits are recognized when the curtailment or settlement occurs.
*SGVMC310102*

- 23 -
The defined retirement benefits liability is the aggregate of the present value of the defined
benefits obligation and actuarial gains and losses not recognized reduced by the past service cost
not yet recognized and the fair value of the plan assets out of which the obligations are to be
settled directly. If such aggregate is negative, the asset is measured at the lower of such aggregate
or the aggregate cumulative unrecognized net actuarial losses and past service cost and the present
value of any economic benefits available in the form of refunds from the plan or reductions in the
future contributions to the plan.
Share-based Payments
Certain officers and employees of the Parent Company receive additional remuneration in the
form of share-based payments, whereby equity instruments (or “equity-settled transactions”) are
awarded in recognition of their services.
The cost of equity-settled transactions with employees is measured by reference to their fair value
at the date they are granted, determined using the acceptable valuation techniques.
The cost of equity-settled transactions, together with a corresponding increase in equity, is

recognized over the period in which the performance and/or service conditions are fulfilled ending
on the date on which the employees become fully entitled to the award (“vesting date”). The
cumulative expense recognized for equity-settled transactions at each balance sheet date up to and
until the vesting date reflects the extent to which the vesting period has expired, as well as the
Group’s best estimate of the number of equity instruments that will ultimately vest. The profit or
loss charge or credit for the period represents the movement in cumulative expense recognized as
the beginning and end of that period. No expense is recognized for awards that do not ultimately
vest, except for awards where vesting is conditional upon a market condition, which awards are
treated as vesting irrespective of whether or not the market condition is satisfied, provided that all
other performance conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognized
as if the terms had not been modified. An additional expense is likewise recognized for any
modification which increases the total fair value of the share-based payment arrangement or which
is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of

cancellation, and any expense not yet recognized for the award is recognized immediately. If a
new award, however, is substituted for the cancelled awards and designated as a replacement
award, the cancelled and new awards are treated as if they were a modification of the original
award, as described in the previous paragraph.
Foreign Currency-denominated Transactions and Translations

Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the
date of the transaction. Outstanding monetary assets and monetary liabilities denominated in
foreign currencies are restated using the rate of exchange at the balance sheet date. Foreign
currency gains or losses are recognized in the profit or loss.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of
the arrangement at inception date and requires an assessment of whether the fulfillment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a
right to use the asset.
*SGVMC310102*

- 24 -
A reassessment is made after inception of the lease only if one of the following applies:
a. change in contractual terms, other than a renewal or extension of the arrangement;

b. a renewal option is exercised or extension granted, unless that term of the renewal or
extension was initially included in the lease term;
c. change in the determination of whether fulfillment is dependent on a specified asset; or
d. substantial change to the asset.
Where a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) above, and at the
date of renewal or extension period for scenario (b).
Leases where the lessor retains substantially all the risks and rewards of ownership are classified
as operating leases. Operating lease payments are recognized as an expense in profit or loss on a
straight-line basis over the lease term. When an operating lease is terminated before the lease
period has expired, any payment required to be made to the lessor by way of penalty is recognized.
Income Taxes
Current income tax
Current tax assets and current tax liabilities for the current and prior periods are measured at the
amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that have been enacted or substantively enacted as of
the balance sheet date.
Deferred income tax

Deferred income tax is provided, using the balance sheet liability method, on all temporary
differences at the balance sheet date between the tax bases of assets and liabilities and their
carrying amount for financial reporting purpose.
Deferred income tax assets are recognized for all deductible temporary differences, carryforward
benefits of the excess of minimum corporate income tax (MCIT) over the regular corporate
income tax (RCIT) [excess MCIT] and unused tax losses from net operating loss carryover
(NOLCO), to the extent that it is probable that sufficient future taxable profits will be available
against which the deductible temporary differences and the carryforward benefits of excess MCIT
and NOLCO can be utilized.
Deferred income tax liabilities are recognized for all taxable temporary differences.
The carrying amount of deferred tax assets are reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient future taxable profits will be available to
allow all or part of the deferred tax assets to be utilized before their reversal or expiration.
Unrecognized deferred tax assets are reassessed at each balance sheet date and are recognized to
the extent that it has become probable that sufficient future taxable profits will allow the deferred
tax assets to be recovered.
Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are
expected to apply in the period when the asset is realized or the liability is settled, based on tax
rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable
right exists to offset current tax assets against current tax liabilities and the deferred income taxes
relate to the same taxable entity and the same taxation authority.
*SGVMC310102*

- 25 -
Capital Stock and Additional Paid-in Capital

The Group has issued capital stock that is classified as equity. Incremental costs directly
attributable to the issue of new capital stock are shown in the consolidated statement of changes in
equity as a deduction, net of tax, from the proceeds.
Where the Group purchases the Group’s capital stock (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of applicable taxes) is deducted from
equity attributable to the Group’s equity holders until the shares are cancelled or reissued. Where
such shares are subsequently reissued, any consideration received, net of any directly attributable
incremental transaction costs and the related tax effects, is included in equity attributable to the
Group’s equity holders.
Amount of contribution in excess of par value is accounted for as an additional paid-in capital.
Additional paid-in capital also arises from additional capital contribution from the shareholders.
Deposit for Future Stock Subscriptions

Deposit for future stock subscriptions generally represents funds received by the Group, which it
records as such with the view to applying the same as payment for future additional issuance of
shares or increase in capital stock.
Deposits for future stock subscriptions for which there is no confirmed subscription agreements
and that exhibit characteristics of a liability, is recognized as a financial liability in the
consolidated balance sheet, net of transaction costs, otherwise, recognized as part of consolidated
statement of changes in equity.
Retained earnings (Deficit)

The amount included in retained earnings (deficit) includes profit attributable to the Group’s
equity holders and reduced by dividends on capital stock. Dividends on capital stock are
recognized as a liability and deducted from equity when they are approved by the Group’s
stockholders. Interim dividends are deducted from equity when they are paid. Dividends for the
year that are approved after the balance sheet date are dealt with as an event after the balance sheet
date.
Retained earnings (deficit) may also include effect of changes in accounting policy as may be
required by the standard’s transitional provisions.
Marketing Charges, and Cost and Expenses Recognition

Marketing charges, and cost and expenses are recognized in the profit or loss in the year they are
incurred.
Business Segment
For management purposes, the Group is organized into two major operating segments (mining and
non-mining businesses) according to the nature of products and the services provided with each
segment representing a strategic business unit that offers different products and serves different
markets. The entities are the basis upon which the Group reports its primary segment information.
Financial information on business segments is presented in Note 29.
Basic Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to the equity
holders of the Parent Company by the weighted average number of common shares outstanding
during the year after giving retroactive effect to stock dividends declared and stock rights
exercised during the year, if any.
*SGVMC310102*

- 26 -
Diluted Earnings (Loss) Per Share

Diluted earnings (loss) per share amounts are calculated by dividing the net income (loss)
attributable to common equity holders of the Parent Company (after deducting interest on
convertible preferred shares) by the weighted average number of common shares outstanding
during the year plus the weighted average number of common shares that would be issued on the
conversion of all dilutive potential common shares into common shares.
Provisions and Contingencies

Provisions are recognized when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. If the effect of the time value of money is material, provisions are discounted using a
current pre-tax discount rate that reflects, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognized
as interest expense. When the Group expects a provision or loss to be reimbursed, the
reimbursement is recognized as a separate asset only when the reimbursement is virtually certain
and its amount is estimable. The expense relating to any provision is recognized in profit or loss,
net of any reimbursement.
Contingent liabilities are not recognized in the financial statements but are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. Contingent assets
are not recognized in the financial statements but disclosed in the notes to financial statements
when an inflow of economic benefits is probable. Contingent assets are assessed continually to
ensure that developments are appropriately reflected in the financial statements. If it has become
virtually certain that an inflow of economic benefits will arise, the asset and the related income are
recognized in the consolidated financial statements.
Events after the Balance Sheet Date

Events after the balance sheet date that provide additional information about the Group’s position
at the balance sheet date (adjusting events) are reflected in the consolidated financial statements.
Events after the balance sheet date that are not adjusting events are disclosed when material.
3. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements in accordance with PFRS requires the
Group to exercise judgment, make accounting estimates and use assumptions that affect the
reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets
and contingent liabilities. Future events may occur which will cause the assumptions used in
arriving at the accounting estimates to change. The effects of any change in accounting estimates
are reflected in the consolidated financial statements as they become reasonably determinable.
Accounting estimates and judgments are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.
Judgments
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effects on
amounts recognized in the consolidated financial statements.
*SGVMC310102*

- 27 -
Determining functional currency

Based on the economic substance of the underlying circumstances relevant to the Group, the
functional currency has been determined to be the Peso. The Peso is the currency of the primary
economic environment in which the Group operates. It is the currency that mainly influences the
costs incurred by the Group and it is the currency that management uses when controlling and
monitoring the performance and financial position of the Group.
Classification of financial instruments

The Group classifies a financial instrument, or its components, on initial recognition as a financial
asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial asset, a financial liability or an equity
instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the consolidated balance sheets.
Financial assets are classified into the following categories:

a. Financial assets at FVPL
b. Loans and receivables
c. AFS financial assets
Financial liabilities, on the other hand, are classified into the following categories:
a. Financial liabilities at FVPL
b. Other financial liabilities
The Group determines the classification at initial recognition and re-evaluates this classification,
where allowed and appropriate, at each balance sheet date.
Classification of leases - Group as lessee

The Group has entered into commercial property leases on its administrative office locations and
certain transportation equipment. The Group has determined that it does not retain all the
significant risks and rewards of ownership of these properties which are leased on operating
leases.
Accounting Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainties at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are as follow:
Estimation of allowance for impairment of loans and receivables

The Group assesses on a regular basis if there is objective evidence of impairment of loans and
receivables. The amount of impairment loss is measured as the difference between the asset’s
carrying amount and the present value of the estimated future cash flows discounted at the asset’s
original effective interest rate. The determination of impairment requires the Group to estimate the
future cash flows based on certain assumptions as well as to use judgment in selecting an
appropriate rate in discounting. In addition, the Group considers factors such as the Group’s
length of relationship with the customers and the customers’ current credit status to determine the
amount of allowance that will be recorded in the receivables account. The Group uses specific
impairment on its loans and receivables. The Group did not assess its loans and receivables for
collective impairment due to few counterparties which can be specifically identified. The amount
of loss is recognized in the profit or loss with a corresponding reduction in the carrying value of
the loans and receivables through an allowance account.
These reserves are re-evaluated and adjusted as additional information becomes available.
Allowance for impairment of receivables as of December 31, 2009 and 2008 amounted to
*SGVMC310102*

- 28 -
=
P40.89 million and =
P44.00 million, respectively. Receivables, net of valuation allowance,
amounted to P=298.37 million and P
=218.21 million as of December 31, 2009 and 2008,
respectively (see Note 5).
Measurement of NRV of mine products inventory

The NRV of mine products inventory is the estimated selling price in the ordinary course of
business less cost to sell. The selling price estimation of mine products inventory is based on the
London Metal Exchange (LME), which also represents an active market for the product. CCC
concurrently uses the prices as agreed with MRI Trading and the weight and assay for metal
content in estimating the selling price of mine products inventory. Any changes in the assay for
metal content of the mine products inventory is accounted for and adjusted accordingly. As of
December 31, 2009 and 2008, the cost of mine products inventory is lower than its NRV since the
remaining inventories are to be sold at an agreed price which is higher than its cost. Hence, no
allowance for decline in value of mine products inventory was recorded by CCC for both years
(see Note 7).
Estimation of allowance for materials and supplies inventory losses

The Group estimates the allowance for materials and supplies inventory losses based on the age of
the inventories. The amounts and timing of recorded expenses for any period would differ if
different judgments or different estimates are made. As of December 31, 2008, materials and
supplies and other inventories amounting to =P347.44 million had been fully provided with an
allowance for impairment. In 2009, there was a reversal of allowance amounting to
=
P11.16 million which pertains to the items of inventory sold and the proceeds are recorded as
other income (see Note 7).
Impairment of AFS financial assets

The Group treats AFS financial assets as impaired when there has been a significant or prolonged
decline in fair value below its cost or where other objective evidence of impairment exists. The
determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Group treats
‘significant’ generally as 30% or more and ‘prolonged’ as greater than 12 months for quoted
equity securities. In addition, the Group evaluates other factors, including normal volatility in
share price for quoted equities and the future cash flows and the discount factors for unquoted
securities.
The carrying amounts of the AFS financial asset amounted to P

=5.22 million and =
P0.22 million in
2009 and 2008, respectively. Allowance for impairment of AFS financial assets amounted to
=
P18.53 million and nil as of December 31, 2009 and 2008, respectively (see Note 15).
Estimation of useful lives of property, plant and equipment

The Group estimates the useful lives of property, plant and equipment based on the period over
which assets are expected to be available for use. The estimated useful lives of property, plant and
equipment are reviewed periodically and are updated if expectations differ from previous
estimates due to physical wear and tear, technical or commercial obsolescence and legal or other
limits on the use of the assets. In addition, the estimation of the useful lives of property, plant and
equipment is based on collective assessment of internal technical evaluation and experience with
similar assets. It is possible, however that future results of operations could be materially affected
by changes in estimates brought about by changes in the factors and circumstances mentioned
above.
Determination of the appraised value of land

The appraised value of land is based on a valuation by an independent appraiser firm, which
management believes, holds a recognized and relevant professional qualification and has recent
experience in the location and category of the land being valued. The appraiser firm used the
*SGVMC310102*

- 29 -
market data approach in determining the appraised value of land. The resulting increase in the
valuation of land based on the 2005 valuation amounting to P=218.56 million is presented as
“Revaluation increment on land”, net of related deferred income tax liability (see Note 10).
Impairment of property, plant and equipment and other noncurrent assets

PFRS requires that an impairment review be performed when certain impairment indicators are
present. Determining the value of property, plant and equipment, which require the determination
of future cash flows expected to be generated from the continued use and ultimate disposition of
such assets, requires the Group to make estimates and assumptions that can materially affect the
consolidated financial statements. Future events could cause the Group to conclude that the
property, plant and equipment is impaired. Any resulting impairment loss could have a material
adverse impact on the Group’s financial condition and results of operations. The carrying amount
of property, plant and equipment, deferred mine exploration costs, deferred income tax assets and
other noncurrent assets amounted to P=11.89 billion and P
=9.62 billion as of December 31, 2009 and
2008, respectively (see Notes 10 and 13). No impairment was recognized by the Group in both
years.
Impairment of goodwill
The Group assess whether there are any indicators that goodwill is impaired at each balance sheet
date. Goodwill is tested for impairment, annually and when circumstances indicate that the
carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating
units to which the goodwill relates. Where recoverable amount of the cash-generating units is less
than their carrying amount, an impairment loss is recognized. Impairment losses relating to
goodwill cannot be reversed in future periods. The Group performs its annual impairment test of
goodwill as of balance sheet date. Based on the management assessment, no impairment loss on
goodwill needs to be recognized as of December 31, 2009 and 2008.
Estimation of fair values of structured debt instruments and derivatives

The fair values of structured debt instruments and derivatives that are not quoted in active markets
are determined using valuation techniques such as discounted cash flow analysis and standard
option pricing models. Where valuation techniques are used to determine fair values, they are
validated and periodically reviewed by qualified personnel independent of the area that created
them. All models are reviewed before they are used, and models are calibrated to ensure that
outputs reflect actual data and comparative market prices. To the extent practicable, models use
only observable data, however areas such as credit risk (both own and counterparty), volatilities
and correlations require management to make estimates. Changes in assumptions about these
factors could affect reported fair value of financial instruments. The carrying value of derivative
assets is P
=32.72 million and P=876.82 million as of December 31, 2009 and 2008, respectively.
The carrying value of derivative liabilities is P
=772.82 million and nil as of December 31, 2009 and
2008, respectively.
Valuation of financial assets and financial liabilities

The Group carries certain financial assets and financial liabilities (i.e., derivatives and AFS
financial assets) at fair value, which requires the use of accounting estimates and judgment. While
significant components of fair value measurement were determined using verifiable objective
evidence (i.e., foreign exchange rates, interest rates, quoted security prices), the amount of
changes in fair value would differ if the Group utilized a different valuation methodology. Any
change in fair value of these financial assets and financial liabilities would affect the consolidated
statement of comprehensive income. The carrying values and corresponding fair values of
financial assets and financial liabilities as well as the manner in which fair values were determined
are discussed in more detail in Note 32.
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Estimation of mine rehabilitation costs

The Group estimates the costs of mine rehabilitation based on previous experience in
rehabilitating fully mined areas in sections of the mine site. These costs are adjusted for inflation
factor based on the average annual inflation rate as of adoption date or date of re-evaluation of the
asset dismantlement, removal or restoration costs, and are measured at present value using the
market interest rate for a comparable instrument adjusted for the Group’s credit standing. While
management believes that its assumptions are reasonable and appropriate, significant differences
in actual experience or significant changes in the assumptions may materially affect the Group’s
depletion and obligations for mine rehabilitation. Liability for mine rehabilitation amounted to
=
P121.97 million and P =87.39 million as of December 31, 2009 and 2008, respectively
(see Note 19).
Measurement of mine products sales

Except when the shipment is price-fixed, mine products sales are provisionally priced such that
these are not settled until predetermined future dates based on market prices at that time. Revenue
on these sales are initially recognized based on shipment values calculated using the provisional
metals prices, shipment weights and assays for metal content less deduction for insurance and
smelting charges as marketing. The final shipment values are subsequently determined based on
final weights and assays for metal content and prices during the applicable quotational period.
Total mine product sales, net of marketing charges, amounted to P =4.19 billion in 2009 and
=
P770.73 million in 2008.
Recognition of deferred income tax assets

The Group reviews the carrying amounts of deferred income tax assets (DTA) at each balance
sheet date and reduces the amounts to the extent that it is no longer probable that sufficient future
taxable profit will be available to allow all or part of the deferred income tax assets to be utilized.
However, there is no assurance that the Group will utilize all or part of the deferred income tax
assets.
Estimation of retirement benefits liability and cost

The Group’s retirement benefits cost is actuarially computed. This entails using certain
assumptions with respect to salary increases and discount rates, among others. The Group’s net
retirement benefit cost amounted to P=24.43 million in 2009, net retirement benefits cost of
=
P31.48 million in 2008 and net retirement benefits income of =P16.11 million in 2007. As of
December 31, 2009 and 2008, the retirement benefits liability amounted to = P70.95 million and
=
P46.94 million, respectively (see Note 26).
Estimation of mineral reserves and resources

Mineral resources and reserves estimates for development projects are, to a large extent, based on
the interpretation of geological data obtained from drill holes and other sampling techniques and
feasibility studies which derive estimates of costs based upon anticipated tonnage and grades of
ores to be mined and processed, the configuration of the orebody, expected recovery rates from the
ore, estimated operating costs, estimated climatic conditions and other factors. Proven reserves
estimates are attributed to future development projects only where there is a significant
commitment to project funding and execution and for which applicable governmental and
regulatory approvals have been secured or are reasonably certain to be secured. All proven
reserve estimates are subject to revision, either upward or downward, based on new information,
such as from block grading and production activities or from changes in economic factors,
including product prices, contract terms or development plans.
Estimates of reserves for undeveloped or partially developed areas are subject to greater
uncertainty over their future life than estimates of reserves for areas that are substantially
developed and depleted. As an area goes into production, the amount of proven reserves will be
*SGVMC310102*

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subject to future revision once additional information becomes available. As those areas are
further developed, new information may lead to revisions.
Recoverability of deferred mine exploration and development costs

Mineral property acquisition costs are capitalized until the viability of the mineral interest is
determined. Exploration, evaluation and pre-feasibility costs are charged to operations in the
period incurred until such time as it has been determined that a property has economically
recoverable reserves, in which case, subsequent exploration costs and the costs incurred to develop
a property are capitalized. The Group reviews the carrying values of its mineral property interests
whenever events or changes in circumstances indicate that their carrying values may exceed their
estimated net recoverable amounts. Deferred mine exploration amounted to P =18.44 million and
=
P15.08 million as at December 31, 2009 and 2008, respectively (see Note 14). Mine development
costs are included under “Mine and mining properties” in the property, plant and equipment
account in the consolidated balance sheet. An impairment loss is recognized when the carrying
value of those assets is not recoverable and exceeds its fair value (see Note 10).
Contingencies
The Group provides for present obligations (legal or constructive) where it is probable that there
will be an outflow of resources embodying economic benefits that will be required to settle said
obligations. An estimate of the provision is based on known information at balance sheet date, net
of any estimated amount that may be reimbursed to the Group. The amount of provision is being
re-assessed at each balance sheet date to consider new relevant information.
4. Cash and Cash Equivalents
2009 2008
Cash on hand and in banks P
=281,257 =881,404
P
Cash equivalents 20,098 –
P
=301,355 =881,404
P
Cash in banks earn interest at the respective bank deposit rates and cash equivalents at the
respective short-term investment rates. Cash equivalents are made for varying periods of up to
three months depending on the immediate cash requirements of the Group.
5. Receivables
2009 2008
Trade (Note 6) P
=245,277 =158,360
P
Advances to related parties (Note 25) 24,052 28,022
Advances to officers and employees (Note 25) 18,319 17,622
Others 51,611 58,212
Total 339,259 262,216
Less allowance for doubtful accounts on:
Trade 12,122 14,445
Advances to officers and employees 1,674 1,674
Others 27,097 27,890
P
=298,366 =218,207
P
*SGVMC310102*

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Trade receivables are noninterest-bearing and are normally settled on 15-30 days’ terms. Other
receivables are noninterest-bearing advances to subcontractors and third parties for their working
capital purposes and are due and demandable.
The following is a rollforward analysis of the allowance for doubtful accounts recognized on
receivables:
2009 2008
Beginning of year P
=44,009 =51,231
P
Provision for the year (Note 24) – 12,397
Write-offs (2,779) (21,154)
Exchange rate adjustment (337) 1,535
End of year P
=40,893 =44,009
P
The impaired receivables were specifically identified as of December 31, 2009 and 2008
(see Note 31).
6. Derivative Assets and Liabilities
Freestanding Derivatives
On August 21, 2008, CCC entered into a contract with MRI Trading AG (MRI) wherein CCC
agreed to sell 60,000 dmt of copper concentrates in six lots of deliveries of 10,000 dmt each from
November 2008 to June 2009. On October 17 and 24, 2008, the first 30,000 was price-fixed. On
October 24, 2008, both parties agreed to enter into a net settlement of a portion of the price fixing
agreement prior to the delivery of the goods. Pursuant to the agreement, MRI paid the difference
between the contracted and the prevailing copper price for the agreed settlement date at the time of
closeout, discounted back to a present value at an agreed discount rate. The rapid, substantial and
unexpected collapse in copper prices in late 2008 resulted in CCC having a mark-to-market credit
exposure, which CCC sought to reduce by terminating a portion of the agreement. As of
December 31, 2008, CCC recognized a derivative asset and an unrealized mark-to-market gain
amounting to P =876.82 million for the outstanding commodity forwards to be delivered. Total
mark-to-market gains realized in 2008 amounted to P =720.67 million.
On December 29, 2008, CCC had its first delivery totaling to 5,038.165 dmt at a fixed price of
US$7,666 per metric ton.
On March 20, 2009, CCC entered into another contract with MRI wherein it agreed to sell
50,000 dmt of copper concentrates in 10 lots of deliveries of 5,000 dmt each, from September
2009 to February 2010. As of December 31, 2009, 10,000 dmt has been price-fixed at a range of
US$4,107 to US$7,545 per dmt.
On September 1, 2009, CCC agreed to sell 10,000 dmt of copper concentrates to MRI. The copper
concentrates are expected to be delivered in the second quarter of 2010 in lots of approximately
5,000 dmt. Another contract was entered by CCC with MRI on October 6, 2009, wherein
20,000 dmt of copper concentrates would be delivered in lots of 5,000 dmt in the second quarter of
2010. As of December 31, 2009, 3,000 dmt has been price-fixed at US$6,142 per dmt.
As of December 31, 2009, CCC recognized a derivative liability amounting to = P294.56 million for
the outstanding commodity forwards to be delivered subsequent to 2009. CCC recognized
realized loss amounting to =
P270.73 million from settled price-fixed deliveries in 2009.
*SGVMC310102*

- 33 -
Pricing agreement
The prices to be paid will be based on the LME as published on the Metal Bulletin and as
averaged over the quotational period (QP) together with the weight and assay for metal content to
be determined by an appointed independent surveyor. CCC will have the option to price-fix in
advance of the QP month, adjusted to the actual QP month with MRI, the payable copper contents
pertaining only to the first 30,000 dmt of concentrate shipped, with MRI’s LME Desk. Any
volume after the first 30,000 dmt will be priced as per contractual QP. If CCC exercises the right
to price-fix prior to the QP month, the prices will have to be mutually agreed with MRI and
confirmed in writing advising the volume and price. Thereafter, an addendum will be issued to the
contract confirming the volume of payable copper priced.
The revenue arising from the contract with MRI amounted to = P4.52 billion and = P208.00 million in
2009 and 2008, respectively. Total trade receivables outstanding as a result of the foregoing
transactions amounted to =
P220.75 million and P=143.18 million as of December 31, 2009 and 2008,
respectively.
Payment arrangement
MRI shall make a first provisional payment to CCC in dollars by telegraphic transfer for the 90%
of the estimated value of each shipment of approximately 5,000 to 10,000 dmt after the
presentation of the provisional commercial invoice, bills of lading, Certificate of Origin and
Weight, and the provisional analysis certificate issued by CCC. The final payment shall be made
within seven days by MRI when all the final details relating to weight, assays and prices became
known, and against the final commercial invoice. CCC may request MRI to provide advance
provisional payments for concentrates stockpiled at the mine site or loading port in an acceptable
facility to MRI at a minimum lot size of 1,000 dmt. In consideration for MRI providing CCC with
advance payment, MRI shall be credited, by way of a deduction against the price, an amount equal
to the advance payment multiplied by the one month LIBOR rate in effect on the date of each
advance payment plus two percent per annum from the date CCC’s bank receives the payment
until when it would otherwise be made.
As a result of the pricing agreement, as discussed above, wherein copper sales will be
provisionally priced at delivery subject to price and quantity adjustment after the quotational
period, the MRI contracts which were not price-fixed have been assessed as having embedded
derivatives that are not clearly and closely related once the commodities have been delivered,
hence required to be bifurcated on delivery date.
As of December 31, 2009, CCC recognized a derivative asset and unrealized mark-to-market gain
amounting to P
=32.72 million to record the value of the bifurcated derivative related to the last
shipment made by CCC in 2009.
Total advances from MRI as of December 31, 2009 and 2008 recorded under “Accounts payable
and accrued liabilities” account in the consolidated balance sheets amounted to P
=423.92 million
and =
P105.06 million, respectively (see Note 17).
*SGVMC310102*

- 34 -
7. Inventories
2009 2008
Copper concentrates - at cost P
=491,789 =219,643
P
Beneficiated nickel silicate ore - at cost 103,502 178,889
Materials and supplies and others - at NRV 183,202 106,669
P
=778,493 =505,201
P
The cost of materials and supplies carried at NRV amounted to P =519,485 and =
P454,105 as of
December 31, 2009 and 2008, respectively. Such materials and supplies carried at NRV are fully
provided with allowance for obsolescence in prior years, thus, no allowance was provided as of
December 31, 2009 and 2008.
8. Prepayments and Other Current Assets
2009 2008
Deposits to suppliers P
=311,658 =281,629
P
Input VAT 54,194 –
Advances for acquisition of mining rights (Note 9) 10,000 10,000
Prepaid rent 779 813
Prepaid insurance – 109,572
Others 186,588 159,852
P
=563,219 =561,866
P
Deposits to suppliers are advance payments made by CCC, as required by the suppliers to serve as
insurance in case of default on payment on the part of CCC.
Others include cost of equipment and supplies in transit paid in advance by CCC, amounting to nil
and P
=153.28 million as of December 31, 2009 and 2008, respectively. In addition, during 2009,
CCC made an advance payment for the guarantee fee pertaining to its loan agreement with
Deutsche Bank amounting to P =53.85 million.
Others also include the initial cash deposit amounting to P

=115.50 million established by the Parent
Company for its BDO loan in 2009 (Note 18).
9. Advances for Acquisition of Mining Rights
On November 3, 2004, the Parent Company entered into a Heads of Agreement (the Agreement)
with Multicrest Mining and Development Corporation (Multicrest) to acquire a 100% interest in
the rights and interests attached to the Exploration Permit Application (EPA) that Multicrest has
lodged with the MGB Region IV. The EPA covers an area situated in the City of Puerto Princesa
in the Province of Palawan. The EPA, denominated as EPA IVB-11, is known as the Tagkawayan
Project (the Project), with an approximate area of 16,130.4 Has. Under the Agreement, the Parent
Company will pay P =0.50 million for the right to exercise the option to acquire a 100% interest in
the Project. In consideration for the payment, the Parent Company will be granted the exclusive
right to explore or work in the Project for two years from the issuance of the EPA and its renewal,
subject to extension. If, by the second anniversary of the Effective Date, as defined in the
Agreement, the Parent Company has not exercised the option to purchase, the Parent Company
may continue to maintain its rights and interests in the Project and work for another two years by
payment to Multicrest the sum of P =1.40 million and P=0.55 million on every anniversary of the
*SGVMC310102*

- 35 -
Effective Date until the start of Commercial Production under an MPSA of Financial or Technical
Assistance Agreement (FTAA) that may be granted.
On January 19, 2005, the Parent Company, Minoro, Investika Limited (Investika), and TMC
entered into a Joint Venture Agreement, whereby the Parent Company granted UNC the exclusive
privilege and right to explore, develop, mine, operate, produce, utilize, process and dispose of all
the minerals and the products and by-products that may be produced, extracted, gathered,
recovered, unearthed, or found within the Project under an EPA, MPSA or FTAA with the
Government of the Philippines.
On July 19, 2007, UNC advanced the amount of = P10.00 million to Multicrest which is chargeable
against the amount due under the Agreement and subject to the condition that the latter will assist
UNC to secure all required endorsements and clearances for the approval of the EPA. In the event
that no EPA is issued or the option is not exercised, then Multicrest will repay the whole amount
upon demand by UNC. As of December 31, 2009 and 2008, advances made by UNC to Multicrest
remain outstanding.
10. Property, Plant and Equipment
December 31, 2009:

At Cost
Mine and Machinery Roadways Office Buildings At Revalued
Mining and and Transportation Furniture and and Construction Amount -
Properties Equipment Bridges Equipment Fixtures Improvements in Progress Total Land
Cost/At Revalued Amount
Beginning of year P
= 4,264,186 P
= 4,453,912 P
= 88,343 P
= 128,712 P
= 34,766 P
= 1,715,199 P
= 3,161,783 P
= 13,846,901 P
=398,486
Additions 22,593 7,115 – – 445 – 2,143,431 2,173,584 –
Disposals/reclassifications 25,828 2,959,717 10,372 (4,492) (292) 137,553 (3,137,950) (9,264) (22,068)
End of year 4,312,607 7,420,744 98,715 124,220 34,919 1,852,752 2,167,264 16,011,221 376,418
Accumulated Depreciation,
Depletion and
Amortization
Beginning of year 1,142,625 2,358,396 25,428 30,076 13,807 637,970 – 4,208,302 –
Additions (Notes 23 and 24) 11,930 55,642 12,422 8,095 7,297 45,868 – 141,254 –
Disposals/reclassifications – (466) – (2,957) (600) – – (4,023) –
Capitalized Depreciation 51,707 623,612 8,522 18,372 – 96,084 – 798,297 –
End of year 1,206,262 3,037,184 46,372 53,586 20,504 779,922 – 5,143,830 –
Allowance for
Impairment Losses
Beginning and end of year 249,207 – – – – 171,680 – 420,887 330
Net Book Values P
= 2,857,138 P
= 4,383,560 P
= 52,343 P
= 70,634 P
= 14,415 P
= 901,150 P
= 2,167,264 P
= 10,446,504 P
=376,088
December 31, 2008:s

At Cost
Mine and Machinery Roadways Office Buildings At Revalued
Mining and and Transportation Furniture and and Construction Amount -
Properties Equipment Bridges Equipment Fixtures Improvements in Progress Total Land
Cost/At Revalued Amount
Beginning of year =2,700,240 =
P P3,511,454 =14,476
P =93,672
P =30,692
P =1,108,754
P P652,255
= =8,111,543
P =376,348
P
Additions 240,472 739,811 – 32,109 443 1,192 4,721,331 5,735,358 22,138
Disposals/reclassifications 1,323,474 202,647 73,867 2,931 3,631 605,253 (2,211,803) – –
End of year 4,264,186 4,453,912 88,343 128,712 34,766 1,715,199 3,161,783 13,846,901 398,486
Accumulated Depreciation,
Depletion and
Amortization
Beginning of year 1,038,461 2,231,288 6,855 6,693 21,644 723,204 – 4,028,145 –
Additions (Notes 23 and 24) 72,612 57,594 1,918 20,851 1,445 25,737 – 180,157 –
Disposals/reclassifications 31,552 69,514 16,655 2,532 (9,282) (110,971) – – –
End of year 1,142,625 2,358,396 25,428 30,076 13,807 637,970 – 4,208,302 –
Allowance for
Impairment Losses
Beginning of year 249,207 – – – – 171,680 – 420,887 330
Additional provision – – – – – – – – –
End of year 249,207 – – – – 171,680 – 420,887 330
Net Book Values =2,872,354 P
P =2,095,516 =62,915
P =98,636
P =20,959
P =905,549
P = 3,161,783
P =9,217,712
P =398,156
P
*SGVMC310102*

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Revaluation increment on land

The Group’s parcels of land are stated at their revalued amounts based on the valuation made in
2005. The resulting increase in the valuation of these assets amounting to P
=218.56 million is
presented under “Revaluation Increment on Land” account, net of the related deferred income tax
liability, in the equity section of the consolidated balance sheets.
In 2008, prior to production, CCC capitalized some of its expenses such as personnel costs,
borrowing costs, mine site supplies, power and other related expenses incurred during its
rehabilitation stage. Since CCC’s commercial operations commenced on the last quarter of 2008,
expenses incurred are allocated between rehabilitation and operations. Those expenses which
pertain to rehabilitation were capitalized and recorded as part of the “Construction in progress”
account under the “Property, plant and equipment” account in CCC’s balance sheet. Those which
were charged to operations were recorded as part of the “General and administrative expenses”
account in the profit or loss.
Total costs which are recorded as part of construction in progress and as operating expenses
amounted to = P2,167,264 and P
=206,486 in 2009, and P =3,161,783 and P=152,659 in 2008,
respectively.
11. Mining Rights
Mining rights pertain to the acquisition costs of property rights on the Berong Nickel Project.
Depletion of mining rights amounted to nil and P =2.93 million in 2009 and 2008, respectively.
2009 2008
Beginning of year P
=76,128 =79,054
P
Depletion for the year (Note 23) – (2,926)
End of year P
=76,128 =76,128
P
On January 19, 2005, the Parent Company, Minoro Mining and Exploration Company (MMEC),
Investika and TMC entered into a Venture Agreement covering all mining tenements or
applications for mining tenements, MPSA and EPA covering the areas known as the Berong
Mineral Properties (collectively referred as “mining rights”) and the Ulugan Mineral Properties
held by the Parent Company and/or Anscor Property Holdings, Inc. (Anscor) and/or Multicrest.
The Venture Agreement provides that the Parent Company and/or MMEC grant to Investika
and/or TMC the right to earn a percentage equity in BNC upon fulfillment of certain conditions,
including the granting of advances to BNC and the Parent Company. The Parent Company and
MMEC shall transfer the title or mining rights or applications over the mining rights held and
maintained either by the Parent Company or Anscor to BNC from the funds provided equally by
TMC and Investika.
12. Goodwill
On May 16, 2007, the Parent Company’s BOD approved the execution and implementation of the
Deed of Sale of the Shares of Stock entered into between the Parent Company and Anscor on the
sale to the Parent Company of Anscor’s 75,000 common shares in AHI or equivalent to 99.99% of
AHI’s total issued and outstanding shares for =
P77.51 million. AHI is the holder of rights to certain
properties which will be needed in the operations of the Toledo Copper Mines. The execution of
*SGVMC310102*

- 37 -
the purchase of shares of stock of AHI was undertaken pursuant to the Memorandum of
Agreement entered into by the Parent Company with Anscor on May 4, 2006 embodying the
mechanics for the Parent Company’s acquisition of rights over the AHI properties. At the time of
the acquisition, the estimated fair value of the net identifiable assets of AHI, consisting
substantially of parcels of land, amounted to =P62.50 million, resulting in a goodwill of
=
P15.01 million, which was recognized in the consolidated balance sheets.
13. Other Noncurrent Assets
2009 2008
Input VAT P
=994,559 =737,704
P
Deferred mine exploration costs (Note 14) 18,442 15,078
Mine rehabilitation funds 13,528 14,510
Deferred income tax assets (Note 27) 1,247 917
Investment in shares stock - at cost – 23,725
Others 14,794 13,127
P
= 1,042,570 =805,061
P
In 2009, the Group recognized an allowance for impairment loss on input VAT amounting to
=
P59.53 million. No allowance for impairment loss on input VAT was recorded in 2008.
Mine rehabilitation funds include the rehabilitation trust funds which receive cash contributions
to accumulate fund for CCC’s and BNC’s rehabilitation liability relating to the eventual closure
of the mine site and to ensure payment of compensable damages caused by mine waste. The
rehabilitation trust funds are deposited in a government depository bank and withdrawal from
such funds shall be upon written approval from the appropriate authority. The rehabilitation trust
funds were opened by virtue of the requirements of the Mine Rehabilitation Fund
Committee - Department of Environment and Natural Resources (DENR) Reg. VII.
14. Deferred Mine Exploration Costs
Deferred mine exploration costs include exploration expenditures of BNC in relation to the
Berong Nickel Project. Management had established that economically recoverable reserves exist
in the area, resulting in the decision to develop the area into a commercial mining operation.
Deferred mine exploration costs were transferred to property and equipment in 2007.
In 2008, BNC started to explore and develop the area adjacent to the Berong Nickel Project.
The deferred mine exploration costs pertaining to this area amounted to P
=18.44 million and
=
P15.08 million as at December 31, 2009 and 2008, respectively.
15. AFS Financial Assets
The Parent Company’s AFS financial assets consist of investments in:
2009 2008
Philippine Long Distance Telecommunications (PLDT) P
=22 =22
P
Toledo Mining Corporation (TMC) 5,193 –
P
= 5,215 =22
P
*SGVMC310102*

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The Parent Company recognized an impairment loss amounting P =15,891 for 2009 for its
investment (originally amounted to = P21) in the quoted common shares of TMC due to significant
decline in fair value of the investment. Investment in PLDT pertains to its quoted preferred shares
at P
=22 in 2009 and 2008. Allowance for impairment loss recognized amounted to = P18,532 and nil
as of December 31, 2009 and 2008, respectively.
The AFS financial asset pertaining to the shares of TMC is denominated in United Kingdom (UK)
Pence. As of December 31, 2009, the Parent Company restated the investment using the closing
rate of €1.61 per US$. The restatement resulted in recognition of unrealized foreign exchange loss
amounting to P=2,641.
16. Loans Payable
Loans payable consists of the following loans extended by:
2009 2008
Anglo Philippine Holding Corporation (APHC) P
=506,405 =–
P
Philippine Export-Import Credit Agency 471,180 –
Spinnaker – 950,400
Total P
=977,585 =950,400
P
Spinnaker Global Emerging Markets Fund Limited, Spinnaker Global Strategic

Fund Limited and Spinnaker Global Opportunity Fund Limited (Spinnaker)
On July 22, 2008, the Parent Company entered into a convertible loan agreement with Spinnaker
amounting to US$20,000. The loan was obtained primarily to invest the monies into CCC to fund
the Parent Company’s pro rata share of the completion costs in respect to CCC’s Toledo Copper
Project, and for the general working capital purposes of the Parent Company. The loan bears an
interest at 15% per annum and has a term of 90 days.
The loan is convertible into ordinary shares of the Parent Company. In 2008, the equity portion
identified with the loan amounted to P=76,973, which was also reversed in 2008 since the
prevailing market price of the Parent Company’s shares of stock was substantially lower than the
exercise price and due to the relatively short-term maturity of the loan.
On October 23, November 7, November 25 and December 23, 2008, the first, second, third and
fourth amendments, respectively, were executed for the extension of the maturity date of the loan.
On January 16, 2009, the Parent Company entered into a deed of pledge with Hongkong and
Shanghai Banking Corporation (HSBC) Limited, financial institution acting in fiduciary capacity,
in relation to the US$20,000 Spinnaker Loan. The pledge covers all the shares issued to the Parent
Company by AI, AEI, and URHI as a continuing security for the satisfaction and discharge of the
facility agreement with Spinnaker.
On July 10, 2009, the Parent Company, Spinnaker and HSBC executed the Fifth Amendment
extending the maturity date of the Spinnaker loan to September 30, 2009 with Spinnaker
undertaking not to sell, assign or transfer its interests in any obligation of the Parent Company. In
consideration of such extension and the relevant undertaking of Spinnaker, the Parent Company
agreed to, among others: (a) issue warrants to Spinnaker covering the right to subscription to up to
29 million shares of the Parent Company at a subscription price of = P 10 per share, (b) add all the
accrued and unpaid interest as of June 30, 2009 to the principal balance of the loan, and (c) cause
Alakor to transfer to Spinnaker a total of 36.5 million of its shares of stock in the Parent Company.
*SGVMC310102*

- 39 -
On July 24, 2009, the Parent Company, Alakor, Spinnaker and HSBC executed the Consent Letter
and Sixth Amendment Agreement which governs the assignment by Spinnaker to Alakor of a
portion of the Spinnaker Loan amounting to US$2,000 (the “Transferable Portion”). As a result of
the assignment, Spinnaker Global Emerging Markets Fund Limited and Spinnaker Global
Strategic Fund Limited were substituted by Alakor as creditors of the Parent Company to the
extent of US$2,000.
On December 1, 2009, the outstanding Spinnaker loan amounting to P =902,684 (US$19,122) was
paid in full using a portion of the proceeds of the US$25,000 loan facility extended by Banco de
Oro Unibank, Inc. and Global fund Holdings, Inc. The decrease in the principal amount of the
loan on settlement date from US$20,000 is due to the net effect of the payment made by Alakor
amounting to P =96,060 (US$2,000) in August 2009 of which P =95,240 (US$1,983) pertains to
principal payment with the balance applied in interest (US$17) and the capitalization of interest
per Fifth Amendment amounting to P =21,105 (US$1,105) in June 30, 2009.
The related interest expense recorded for this loan amounted to P

=110,442 and P
=76,401 on
December 31, 2009 and 2008, respectively.
Indemnity Agreements with Alakor Corporation (Alakor)
To secure the Parent Company’s obligations under the Spinnaker loan agreement, Alakor executed
on July 23, 2008 and on October 17, 2008 a Deed of Pledge and a Supplemental Deed of Pledge,
respectively, covering the 418,304,961 shares of stock of Alakor in the Parent Company in favor
of the designated security trustee. In addition, an officer of the Parent Company executed a Deed
of Pledge on October 23, 2008, covering his 27 million shareholdings in the Parent Company.
Under these deeds, the Parent Company confirmed its undertaking to fully indemnify Alakor and
the officer for any loss, damage, liability, or injury that the latter may suffer by reason of, or in
connection with the pledge plus a certain percentage of the loan as security fee. Security fee
recorded as a result of these transactions amounted to P =28,146 and = P13,109 in 2009 and 2008,
respectively.
On October 23, 2008, the Parent Company, Spinnaker and the security trustee executed an
agreement amending the loan agreement for the extension of the term of the loan from 90 days to
104 days, which was further amended (the Second Amendment) for the extension of the term to
additional 19 days in consideration of the transfer to Spinnaker of 5 million common shares of the
Parent Company owned by Alakor. The Second Amendment provides an option to move the
maturity date further to December 9, 2008 in consideration of the transfer to Spinnaker of 2.5
million common shares of the Parent Company, which are owned by Alakor, and again to further
move the maturity date to December 16, 2008 in consideration of the transfer of another 2.5
million common shares of the Parent Company held by Alakor. This option was formally set out
in the Third Amendment.
On December 23, 2008, the Parent Company, Spinnaker and the security trustee executed an
amendment to the original indemnity agreement wherein the Parent Company was granted an
option to further extend the maturity of the loan, provided however, that the Parent Company shall
enter into a deed of pledge in favor of the security trustee in respect of its 1,562,500 common
shares in AEI, 1,749,995 common shares in URHI, 100,000 common shares in AI and 99,995
common shares in AHI, together with an irrevocable power of attorney from the Parent Company
which appoint the security trustee as the Parent Company’s attorney and which authorizes the
security trustee to sell the shares in the occurrence of “Event of Default” under the principal
agreement set out in the Spinnaker Loan.
*SGVMC310102*

- 40 -
As of December 31, 2008, a total of 10 million common shares of the Parent Company owned by
Alakor were transferred to Spinnaker. In consideration of the transfer of such shares by Alakor to
Spinnaker, the Parent Company shall pay Alakor an amount of = P100,000 which is equivalent to
the total par value of the shares. The amount due to Alakor is convertible into common shares of
the Parent Company at a conversion price of P=10 (unrounded amount) per share at the sole option
of Alakor and upon written notice of such conversion to the Parent Company. This resulted to
recognition of indemnity loss amounting to P=100,000.
As at the end of 2009, the shares of the Parent Company owed by Alakor totaling to 56,500,000
were transferred by Alakor to Spinnaker resulting in the recognition by the Parent Company of
indemnity losses amounting to P =465,000.
In December 2009, Alakor gave notice to the Parent Company of its intention to convert the full
amount of the obligation into 56,500,000 shares of stock of the Parent Company. As of
December 31, 2009, no shares have been issued pending the review and approval of the concerned
regulators.
Loan Agreement with APHC

On July 9, 2009, the Parent Company obtained a 1-year, 15% p.a. loan from APHC amounting to
=531,200 (US$ 11,500), with interest payable semi-annually. The loan is convertible to shares of
P
either AI on the date of maturity at a price to be agreed upon by either parties; or the Parent
Company on the date of maturity at P =10 per share. The proceeds of the loan shall be used for the
working capital requirements of the Parent Company and CCC, its subsidiary.
The loan has an embedded derivative that is required to be bifurcated resulting into the recognition
of a derivative liability and an unrealized mark-to-market loss amounting to P
=79,799 and = P31,052,
respectively, as of December 31, 2009. The interest expense recorded for this loan amounted
=45,808 as of December 31, 2009.
P
Loan Agreement - Trade and Investment Development Corporation of the Philippines

On December 17, 2009, CCC entered into a loan agreement with Trade and Investment
Development Corporation of the Philippines, also known as Philippine Export-Import Credit
Agency (PhilEXIM), for a principal amount of = P471.18 million (US$10.00 million) at the time of
disbursement. The proceeds of the loan shall be used only for the purpose of bridge financing for
the amortization on the PhilEXIM guaranteed US$100.00 million loan from Deutsche Bank, AG.
CCC shall pay monthly interest on the principal amount at the rate equal to PhilEXIM’s transfer
pool rate plus 1.5%. The interest shall be paid in arrears with monthly re-pricing. The principal
amount including all accrued but unpaid interest shall be paid on the date falling 360 days from
the date of disbursement of the entire proceeds of the loan.
The interest expense for this loan amounted to P

=1.59 million as of December 31, 2009.
17. Accounts Payable and Accrued Liabilities
2009 2008
Trade P
= 1,044,714 =739,488
P
Nontrade 465,268 710,215
Advances from customer (Note 6) 423,924 105,062
Accrued expenses and others 771,798 595,742
P
= 2,705,704 =2,150,507
P
*SGVMC310102*

- 41 -
Trade payables consist of payables to various suppliers with credit terms ranging from one to three
months. Nontrade payables consist mainly of the payable to Toledo Power Corporation (TPC)
amounting to P
=438.25 million in both years. Negotiations regarding the settlement of the liability
to TPC are ongoing as of April 14, 2010 (see Note 34).
Accrued expenses consist largely of accrual for salaries, custom duties and professional fees,
which are normally settled within six months.
18. Long-Term Debt
Long-term debt to consists of the following loans extended by:
2009 2008
Deutsche Bank P
= 4,158,000 =4,752,000
P
Less current portion 924,000 475,200
3,234,000 4,276,800
Banco De Oro 758,792 –
Total P
= 3,992,792 =4,276,800
P
Loan Agreement - Deutsche Bank

On May 25, 2007, CCC entered into a loan agreement amounting to US$100.00 million with
Deutsche Bank AG, Singapore Branch. The proceeds of the loan are primarily designated for
capital expenditure and financing of general working capital requirements for the rehabilitation of
the CCC’s Toledo Mining Project. The rate of interest for this loan is equal to the sum of
(i) the 7-year United States (US) Swap Rate, (ii) the 5-year Credit Default Swap rate of the
Republic of the Philippines and (iii) a fixed margin of 0.965%. The interest period is for a period
of six (6) months which will start on June 30, 2007 and to be paid within 7 years after utilization
date on or before June 30, 2014. CCC shall repay the loan in ten (10) equal semi-annual
installments, which shall fall due on the last day of the fifth interest period to the final maturity
date. CCC paid the first principal amortization including the accrued interest on
December 21 and 22, 2009 totaling US$13.81million.
As of December 31, 2009 and 2008, CCC capitalized the interest related to this loan amounting
=
P238.86 million and P
=395.67 million, respectively. Interest expense charged to operations
amounted to =
P157.84 million and nil for 2009 and 2008, respectively.
Loan agreement with TMC

On April 17, 2006, the Parent Company signed a loan agreement with TMC for a three-year loan
with principal amount of US$5 million, which will be drawn over a period of time to meet the
funding contributions of the Parent Company with respect to its obligations in the Berong Nickel
Project. The loan bears interest at 10% per annum and is convertible into shares of stock of the
Parent Company at par and is secured by an assignment of the Parent Company’s share in earnings
from the Berong Nickel Project. On May 31, 2007, TMC exercised its rights under the loan
agreement to convert the drawdown loan aggregating US$2,750 dollars into the 12.98 million
shares of the Parent Company. As of December 31, 2009 and 2008, the balance is reported under
the “Deposits for future stock subscriptions” account under the equity section of the consolidated
balance sheets (see Note 20).
*SGVMC310102*

- 42 -
Banco de Oro Unibank, Inc., Global Fund Holdings, Inc. and Banco de Oro Unibank, Inc. - Trust
and Investment Group (BDO)
On November 27, 2009, the Parent Company entered into a 3-year, 10%, convertible loan and
security agreement with BDO (the “BDO Loan Agreement”) amounting to P =1.16 million
(US$25,000). The interest shall be payable on the last day of an interest period which has a six
month duration. The BDO loan was obtained primarily to pay the Spinnaker loans and to finance
the working capital requirements of the Group. The loan is prepayable at par plus a certain
penalty.
On December 1, 2009, a portion of the proceeds of the BDO loan was used to settle fully the
Spinnaker loan outstanding as of the same date.
The interest expense recorded for this loan amounted to =

P18,686 as of December 31, 2009.
Security for BDO Loan

To secure the Parent Company’s obligations under the BDO Loan, Alakor and
Mr. Martin Buckingham (“Principal Shareholders”) created a pledge over a total of 357,000,000 of
their shares of stock in the Parent Company in favor of BDO (the “Pledged Shares”).
In the event of default, BDO shall have the option to require the Parent Company to substitute the
Pledged Shares with a pledge of the Parent Company’s shares in CCC.
Conversion of BDO Loan

Mandatory Conversion
The BDO Loan Agreement provides for the mandatory conversion of the entire amount of the
BDO Loan at the conversion price of = P10.00 when, during the term of the loan, the volume
weighted average price of the Parent Company’s shares of stock based on trading at the Philippine
Stock Exchange does not fall below P=13.00 per day for twenty (20) consecutive trading days.
Upon the issuance of shares of stock to BDO pursuant to the mandatory conversion, the BDO
Loan shall be deemed to have been paid in full.
Put Option
If, during the term of the BDO Loan, the events giving rise to mandatory conversion do not take
place (i.e., the Parent Company’s shares fail to trade at a volume weighted average price of P
=13.00
per day for twenty (20) consecutive days), BDO shall have the option to require the Parent
Company or the Principal Shareholders to purchase the notes representing the BDO Loan
(“Notes”) at a price equal to US$34,630 in lieu of the repayment of the US$25,000 principal
amount of the loan. In the event that the Parent Company is unable to purchase the Notes on the
put option exercise date, the Principal Shareholders shall purchase the Notes and shall pay for the
put option price through the assignment to BDO of such number of shares which are to be taken
from the pledged shares and which have an aggregate market value equal to the put option price of
US$34,630.
The combined values of the convertible and put options have negative fair values amounting to
=411.20 million and P
P =398.46 million at inception and year-end, respectively, resulting in the
recognition of a derivative liability and an unrealized mark-to-market gain of =
P 398.46 million and
=12.74 million, respectively, as of December 31, 2009.
P
Issuance of Warrants
Pursuant to the terms of the BDO Loan Agreement, the Parent Company issued to BDO on
December 1, 2009 warrants covering the right to subscribe to a total of 23,410,000 of the Parent
Company’s shares at the price of P =10.00 per share. The warrants may be exercised within a period
of five (5) years to be reckoned from the date of issuance.
*SGVMC310102*

- 43 -
Establishment of Accounts
Pursuant to the BDO Loan Agreement, the Parent Company established a Debt Service Account
(DSA) using a portion of the proceeds of the BDO Loan. The initial cash deposit amounting to
=115,500 (US$2,500) is restricted by BDO. As long as the BDO Loan remains outstanding, the
P
DSA is required to have a minimum maintaining balance equal to the aggregate amount of interest
payments due on all outstanding advances for two interest periods.
This cash in bank deposit is not classified as part of cash but still qualifies as part of the Parent
Company’s current assets.
Under the terms of the BDO Loan Agreement, the designated collateral trustee shall invest and
reinvest the funds deposited in the DSA in government securities or, at the Parent Company’s
request, in other types and mix of investments. Per regulations issued by the Bangko Sentral ng
Pilipinas, funds held in the DSA are not covered by the Philippine Deposit Insurance Corporation,
and as such, any loss or depreciation in their value shall be for the account of the Parent Company.
19. Liability for Mine Rehabilitation Cost
2009 2008
January 1 P
=87,393 =30,382
P
Additions during the year 22,593 49,997
Accretion of interest 11,987 7,014
December 31 P
=121,973 =87,393
P
Discount rates used by CCC for the accretion of interest are 7.1% and 4.9% for 2009 and 2008,
respectively.
20. Capital Stock and Deposits for Future Stock Subscriptions
Capital Stock
The details of capital stock as of December 31, 2009 and 2008 are as follow:
No. of Shares Amount

Authorized - =
P10 par value 1,200,000,000 P
=12,000,000
Issued and outstanding 1,048,931,900 P
=10,489,319
On May 19, 2006, the BOD of the Parent Company approved the increase in the authorized capital
stock of the Parent Company from = P12.00 billion (divided into 1.20 billion common shares at
=
P10 par value per share) to P=20.00 billion (divided into 2.00 billion shares at P=10 par value per
share). The increase in authorized capital stock and the stock option to be offered to qualified
directors, officers and employees was approved by the stockholders on September 6, 2006 and
during the special meeting of the stockholders on February 9, 2007 (see Note 21).
On December 14, 2006, the SEC approved the Parent Company’s earlier application for the
increase in its authorized capital stock from P
=6.50 billion to P=12.00 billion. Alakor and its various
assignees subscribed for =P5.46 billion out of the P=5.50 billion increase at par value pursuant to the
Debt-for-Equity Swap Agreement between the Parent Company and Alakor.
*SGVMC310102*

- 44 -
On May 2, 2007, the BOD approved the conversion of the loan owed to CASOP amounting to
US$11.67 million, or P
=604.57 million, under the Debt Restructuring Agreement executed with the
Parent Company in May 2006. The debt was converted into 60.46 million common shares.
On December 5, 2007, the Parent Company issued 12.30 million common shares to Alakor in
connection with the conversion into equity of the debt owed by the Parent Company to Alakor
amounting to P
=121.93 million.
No application for increase in authorized capital was filed with the Securities and Exchange
Commission as of December 31, 2009.
Deposits for Future Stock Subscriptions

As of December 31, 2009 and 2008, there was no movement in the deposits for future stock
subscriptions account. The analysis follows:
Alakor TMC Total

December 31, 2006 P117,211
= =–
P P117,211
=
Conversion of debt into capital stock (117,211) – (117,211)
Deposits – 150,960 150,960
December 31, 2007 =–
P =150,960
P =150,960
P
21. Comprehensive Stock Option Plan
On July 18, 2007, the Parent Company’s stockholders and BOD approved and ratified the stock
option plan. The salient terms and features of the stock option plan, among others, are as follow:
Participants: directors, officers, managers and key consultants of the Parent Company and its
significantly owned subsidiaries;
i. Number of shares: 50,000,000 common shares to be taken out of the unissued portion of the
Parent Company’s authorized capital stock; 25,000,000 of the shares have already been
earmarked for the first-tranche optionees comprising of the Parent Company’s directors and
officers upon the approval of the Parent Company’s stockholders during the annual general
meeting held on July 18, 2007;
ii. Option period: Three years from the date the stock option is awarded to the optionees;
iii. Vesting period: 1/3 of the options granted will vest in each year; and
iv. Exercise price: Average closing price between the approval of the stockholders and the
BOD, which amounted to = P11.05 less a discount of 9.50%, or equivalent to P
=10.00.
During the stockholder’s meeting held on July 18, 2007, the 25,000,000 shares were granted to the
Parent Company’s directors and officers. The Parent Company uses the Black-Scholes to compute
for the fair value of the options together with the following assumptions as of July 18, 2007:
Spot price per share P15.00

=
Time to maturity 3 years
Volatility* 52.55%
Dividend yield 0.00%
*Volatility is calculated using historical stock prices and their corresponding logarithmic returns
*SGVMC310102*

- 45 -
No stock option has been awarded as of December 31, 2009 and 2008. Share-based compensation
expense and stock options outstanding, presented as part of additional paid-in capital, amounted to
=
P75,881 and P
= 110,660 in 2009 and 2008, respectively.
22. Premium on Deemed Disposal of an Investment in Subsidiary
The Parent Company’s ownership of the outstanding shares of stock of CCC decreased from 100%
to 65.53% as of December 31, 2007and further decreased to 64.94% as of December 31, 2009.
The reduction in the Parent Company’s ownership interest in CCC, which was deemed as a
disposal, was accounted for using the parent entity concept method which prescribes that the
Group should regard the deemed disposal of interest as an equity transaction. Thus, the dilution
gain arising from the deemed disposal of interest in CCC amounting to P =633.26 million and
=
P625.54 million in 2009 and 2008, respectively, were recognized as “Premium on deemed
disposal of an investment in a subsidiary” in the equity section of the consolidated balance sheets.
23. Mining and Milling Costs
2009 2008 2007

Production overhead P
=2,423,721 =375,575
P =38,740
P
Depreciation, depletion and
amortization (Note 10) 656,067 104,397 26,977
Personnel costs (Note 24) 471,062 91,629 24,783
Outside services 64,936 267,144 226,164
Other costs 19,399 – –
P
=3,635,185 =838,745
P =316,664
P
24. General and Administrative Expenses
2009 2008 2007

Personnel costs P
=328,870 =281,937
P =241,995
P
Professional fees 254,161 77,836 135,929
Depreciation and amortization 141,254 75,759 177,180
Taxes and licenses 35,364 13,469 46,765
Mine site and office supplies 33,308 8,587 24,878
Communication, light and water 20,686 5,966 10,311
Entertainment, amusement and
recreation 20,161 10,569 23,066
Transportation and travel 19,913 61,337 73,965
Rentals 12,138 19,695 26,200
Repairs and maintenance 6,369 18,516 14,258
PSE listing, assessment and
other processing fees 1,072 1,515 7,691
Assay expenses 564 5,856 11,264
(Forward)
*SGVMC310102*

- 46 -
2009 2008 2007

Provision for doubtful accounts
(Note 5) P
=– =12,397
P =–
P
Feasibility study cost – 6,262 4,115
Provision for impairment – 2,232 330
Others 79,700 85,226 116,152
P
=953,560 =687,159
P =914,099
P
Personnel costs consist of the following:
2009 2008 2007

Salaries, wages and others P
=708,333 =342,082
P =266,778
P
Retirement benefit cost (Note 26) 22,185 31,484 –
Other employee benefits 69,414 – –
P
=799,932 =373,566
P =266,778
P
The above is distributed as follows:
2009 2008 2007

Cost of sales (see Note 23) P
= 471,062 P91,629
= P24,783
=
General and administrative 328,870 281,937 241,995
P
=799,932 =373,566
P =266,778
P
25. Related Party Disclosures
Related party relationships exist when one party has the ability to control, directly or indirectly
through one or more intermediaries, the other party or exercise significant influence over the
other party in making financial and operating decisions. Such relationships also exist between
and/or among entities which are under common control with the reporting enterprise or between
and/or among the reporting enterprises and their key management personnel, directors or its
stockholders.
a. The Group’s transactions with related parties consist mainly of advances availed from and
granted to, which were entered into under normal commercial terms and conditions, for
administrative and operating costs and expenses and assignment of receivables and payables.
The consolidated balance sheets include the following amounts resulting from the foregoing
transactions with related parties:
Nature of
Relationship 2009 2008
Advances from and due to related parties:
CASOP Stockholder P
=610,825 =1,285,410
P
TMC Related party 446,453 310,015
Alakor (Note 16) Stockholder 743,808 112,759
Investika Related party 88,660 80,244
P
=1,889,746 =1,788,428
P
TMC and Investika are both stockholders of URHI and BNC.
*SGVMC310102*

- 47 -
The outstanding balances of advances to and from related parties consist mainly of cash
advances to cover for the administrative and operating expenses. These amounts are
non-interest bearing and are due and demandable when sufficient funds are available.
The amount due to Alakor of = P.47 million in 2009 and P=.10 million in 2008 represents the
liability of the Parent Company in relation to the indemnity obligation on the Spinnaker loan
(see Note 16).
Advances to officers and employees as of December 31, 2009 and 2008 amounting to P =18,319
and =P17,622, respectively, pertain to the advances and loans extended by the Group to its
officers and employees.
In November 2008, the Parent Company contributed P =22,068 for the payment of the purchase
price of certain parcels of land which were conveyed by the Social Security System to Alakor.
As the Parent Company was unable to participate in the transaction covering the conveyance
of the properties, the amount contributed was treated as advances to Alakor which shall be
repaid under terms to be subsequently determined and subject to the provisions of existing
loan agreements executed by the Parent Company.
In a BOD meeting held on May 6, 2009, ACMDC and CASOP were given the authority to
extend to CCC cash advances not exceeding US$20 million, each contributing based on the
agreed ACMDC/CASOP equity ratio of 54.50% and 45.50%, respectively. As of
December 31, 2009, total advances made by ACMDC and CASOP were $10.9 million and
US$9.1 million, respectively.
In 2009, CASOP made a down payment amounting to =

P126.16 million for an equipment to be
used on CCC’s operations.
b. Compensation of Key Management Personnel
The Group considered all senior officers as key management personnel.
2009 2008 2007

Short-term benefits P
=39,607 =31,018
P =71,822
P
Retirement benefits 19,214 5,216 21,451
P
=58,821 =36,234
P =93,273
P
26. Retirement Benefits Costs
The Parent Company and CCC have unfunded defined benefit retirement plans covering
substantially all of their employees. The following tables summarize the components of
retirement benefits cost (income) recognized in the consolidated statements of comprehensive
income and the amounts recognized in the consolidated balance sheets.
*SGVMC310102*

- 48 -
a. The details of retirement benefits cost (income) follow:

2009 2008 2007
Current service cost P
=18,912 =29,280
P =6,784
P
Interest cost 3,448 2,106 4,579
Amortizations for:
Past service cost (vested) 6,350 – –
Past service cost (non-vested) 29 – –
Net actuarial (gain) loss
recognized in the year (1,416) 98 2,797
Transferred employees from the
Parent Company – – 5,506
Curtailment gain (2,885) – (35,774)
Retirement benefit cost (income) P
=24,438 =31,484
P (P
=16,108)
b. The details of retirement benefits liability as of December 31 follow:

2009 2008 2007
Beginning of year P
=46,937 =
P18,642 P40,613
=
Retirement benefits cost 24,438 31,484 (16,108)
Benefits paid (423) (3,189) (5,863)
End of year P
=70,952 =
P46,937 =18,642
P
c. Changes in the present value of defined benefit obligation as of December 31 follow:
2009 2008 2007

Beginning of year P
=24,377 =20,950
P =75,987
P
Current service cost 18,912 29,280 6,784
Past service cost 6,699 – –
Interest cost 3,448 2,106 4,579
Actuarial (gain) loss 288 (24,770) (8,178)
Effect of curtailment (1,759) – (52,359)
Benefits paid (423) (3,189) (5,863)
End of year P
=51,542 =24,377
P =20,950
P
The principal assumptions used in determining retirement benefits obligation as of

December 31 for the Group’s plans are shown below:
2009 2008 2007 2006

Discount rate 10.26%-10.33% 13.62%-15.11% 10.00% 10.50%
Future salary increase 8%-10% 8.00%-10.00% 10.00% 10.00%
Amounts for the current and previous periods are as follow:
2009 2008 2007

Present value of the defined
benefit retirement obligation P
=51,542 =24,377
P =20,950
P
Experience adjustments on
defined benefit retirement
obligation 288 (24,770) (8,178)
*SGVMC310102*

- 49 -
The latest actuarial valuation is as of December 31, 2009. The discount rates used to determine
the present value of defined benefit obligation of the Parent Company and CCC as of
December 31, 2009 are 10.33% and 10.26%, respectively.
27. Income Taxes
a. The components of provision for current income tax are as follow:
2009 2008 2007

Current:
RCIT P
= 1,058 =1,610
P =33,725
P
Excess of MCIT over RCIT 2,117 162 11,078
Final 1 – 6,807
P
= 3,176 =1,772
P =51,610
P
b. The Group has the following carryforward benefits of NOLCO and MCIT and deductible
temporary differences for which no deferred income tax assets were recognized as it is not
probable that sufficient future taxable profits will be available against which the benefits can
be utilized.
The carryforward benefits and deductible temporary differences follow:
2009 2008
Carryforward benefits of:
NOLCO P
=1,851,093 =1,122,999
P
MCIT 14,369 13,777
Allowance for impairment losses on:
Inventories 336,283 347,437
Receivables 40,893 44,009
AFS 18,532 –
Land 330 330
Unrealized foreign exchange loss 29,737 87,177
Retirement liability 70,952 46,937
c. The Group’s deferred income tax assets amounting to =P1.25 million and =
P0.92 million as of
December 31, 2009 and 2008, respectively, pertains to deductible temporary difference arising
from accounting for mine rehabilitation and decommissioning costs.
d. Deferred income tax liabilities consist of the tax effects of:
2009 2008
Revaluation increment on land P
=93,668 =93,668
P
Unrealized foreign exchange gains 8,958 71
P
= 102,626 =93,739
P
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e. As of December 31, 2008, the Group’s NOLCO and MCIT that can be claimed as deduction
against future taxable income follows:
Year Incurred Available Until NOLCO MCIT

2009 2012 P1,108,748
= =2,117
P
2008 2011 305,766 991
2007 2010 436,579 11,261
=1,851,093
P =14,369
P
Movements in NOLCO and MCIT follow:

2009 2008
NOLCO:
Beginning of year P
= 1,122,999 =1,120,702
P
Additions 1,108,748 305,766
Expirations (380,654) (303,469)
End of year P
= 1,851,093 =1,122,999
P
MCIT:
Beginning of year P
=13,777 =12,786
P
Additions 2,117 991
Expirations (1,525) –
End of year P
=14,369 =13,777
P
f. A reconciliation of the provision for income tax computed at the statutory income tax rate with
the provision for income tax follows:
2009 2008 2007

Provision for income tax at
statutory income tax rates (P
= 828,317) =50,129
P =106,572
P
Additions to (reductions in)
income tax resulting from:
Operating income under
Income Tax Holiday 342,384 (264,769) (160,374)
Deductible temporary
differences and
carryforward benefits of
NOLCO and MCIT for
which no deferred
income tax assets were
recognized in current
year 304,295 134,405 105,018
Nondeductible expenses 184,053 48,682 32,648
Stock-based compensation
expense 22,764 38,731 –
Interest income subjected to
final tax and others (296) (6,954) (21,284)
Nontaxable income – – (145,972)
Mark-to-market loss (gain)
on derivative assets
and liabilities 5,494 – 158,226
(Forward)
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2009 2008 2007

Application of NOLCO for
which no deferred
income tax assets were
recognized in previous
years P
=– =–
P (P
= 101,936)
Accretion interest on loans
payable and long-term
debt – – 42,578
Impairment loss - AFS 4,767 – –
Royalties (26,280) – –
Effect of change in tax rate 2,870 1,150 –
Provision for income tax P
=11,734 =1,374
P =15,476
P
g. Republic Act (RA) No. 9337 or the Expanded-Value Added Tax (E-VAT) Act of 2005 took
effect on November 1, 2005. The new E-VAT law provides, among others, for change in
RCIT rate from 32% to 35% for the next three years effective on November 1, 2005 and 30%
starting January 1, 2009. The unallowable deductions for interest expense was likewise
changed from 38% to 42% of the interest income subjected to final tax, provided that,
effective January 1, 2009, the rate shall be 33%.
h. On July 7, 2008, RA 9504, which amended the provisions of the 1997 Tax Code, became
effective. It includes provisions relating to the availment of the Optional Standard Deduction
(OSD). Corporations, except for nonresident foreign corporations, may now elect to claim
standard deduction in an amount not exceeding 40% of their gross income. A corporation
must signify in its returns its intention to avail of the OSD. If no indication is made, it shall be
considered as having availed of the itemized deductions. The availment of the OSD shall be
irrevocable for the taxable year for which the return is made.
On September 24, 2008, the Bureau of Internal Revenue issued Revenue Regulation 10-2008
for the implementing guidelines of the law. The Group opted not to avail the OSD in 2009.
28. Interest Expense
The breakdown of interest expense is as follows:
2009 2008 2007

Interest expense on loans
(Notes 16 and 18) P
= 415,906 =99,431
P =248,053
P
Accretion of interest on liability
for mine rehabilitation 11,987 7,014 2,528
P
= 427,893 =106,445
P =250,581
P
29. Segment Information
The primary segment reporting format is determined to be the business segments since the Group
is organized and managed separately according to the nature of the products and services
provided, with each segment representing a strategic business unit. The mining segment is
engaged in exploration and mining operations. Meanwhile, the non-mining segment is engaged
in services, bulk water supply or acts as holding company.
*SGVMC310102*

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The Group’s operating business segments remain to be neither organized nor managed by
geographical segment.
2009
Mining Non-Mining Total Eliminations Consolidated
Segment revenue
From external customers =4,690,305
P =–
P =4,690,305
P =–
P P
=4,690,305
From intersegment sales/services 20 31,538 31,558 (20,067) 11,491
=4,690,325
P =31,538
P =4,721,863
P (P
=20,067) P
=4,701,796

Segment results
=1,825,250) (P
=935,806) (P
=2,761,056) P–
= (P
= 2,761,056)
Provision for income tax 343 (12,077) (11,734) – (11,734)
Net income (loss) (P
=1,824,906) (P
=947,883) (P
=2,772,791) =–
P (P
= 2,772,790)
Assets
Segment assets =14,160,123
P P1,462,824
= P
=15,622,947 (P
=1,707,504) P
=13,915,443
Investments – 2,493,251 2,493,251 (2,488,036) 5,215
Goodwill – – – 15,011 15,011
=14,160,123
P =3,956,075
P P
=18,116,198 (P
=4,180,529) P
=13,935,669
Liabilities
Segment liabilities P5,442,030
= P1,954,758
= P7,396,788
= (P
=1,043,319) P=6,353,469
Unallocated liabilities 3,356,473 1,850,569 5,207,042 (300) 5,206,742
=8,798,502
P =3,805,327
P P
=12,603,830 (P
=1,043,619) P
=11,560,211
Other segment information

Capitalized expenditure =2,173,456
P =128
P =2,173,584
P =–
P P
=2,173,584
Depreciation, depletion, and
amortization 796,257 1,065 797,322 – 797,322
Interest expense 220,094 207,799 427,893 – 427,893
2008
Segment revenue
From external customers =922,988
P =21,756
P =944,744
P P–
= =944,744
P
From intersegment sales/services – 2,751 2,751 (3) 2,748
=922,988
P =24,507
P =947,495
P (P
=3) =947,492
P
Segment results
Income (loss) before income tax =531,068
P (P
=400,948) =130,120
P (P
=4) =130,116
P
Provision for income tax 388 (1,762) (1,374) – (1,374)
Net income (loss) =531,456
P (P
=402,710) =128,746
P (P
=4) =128,742
P
Assets
Segment assets =13,720,314
P =725,646
P P
=14,445,960 (P
=929,131) P
=13,516,829
Investments – 2,327,030 2,327,030 (2,303,283) 23,747
Goodwill – – – 15,011 15,011
=13,720,314
P =3,052,676
P P
=16,772,990 (P
=3,217,403) P
=13,555,587
Liabilities
Segment liabilities P3,265,765
= =980,246
P P4,246,011
= (P
=263,838) P3,982,173
=
Unallocated liabilities 4,839,950 1,048,572 5,888,522 (300) 5,888,222
=8,105,705
P =2,028,818
P P
=10,134,523 (P
=264,138) =9,870,395
P

P =22,443
P =5,757,496
P =–
P =5,757,496
P
amortization 53,850 126,306 180,156 – 180,156
Interest expense 19,406 87,039 106,445 – 106,445
*SGVMC310102*

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2007
Segment revenue
From external customers =1,253,273
P =796
P =1,254,069
P =–
P =1,254,069
P
From intersegment sales/services – 2,400 2,400 (2,400) –
=1,253,273
P =3,196
P =1,256,469
P (P
=2,400) =1,254,069
P

Segment results
Income (loss) before income tax =311,449
P (P
=6,958) =304,491
P P–
= =304,491
P
Provision for income tax (15,378) (98) (15,476) – (15,476)
Net income (loss) =296,071
P (P
=7,056) =289,015
P =–
P =289,015
P
Assets
Segment assets P9,407,252
= P70,322
= P9,477,574
= (P
=713,553) =8,764,021
P
Investments 1,104,043 113,575 1,217,618 (1,217,596) 22
Goodwill – – – 15,011 15,011
=10,511,295
P =183,897
P P
=10,695,192 (P
=1,916,138) =8,779,054
P
Liabilities
Segment liabilities =4,740,893
P =916,682
P =5,657,575
P (P
=49,273) =5,608,302
P
Unallocated liabilities 249,521 45,653 295,174 – 295,174
=4,990,414
P =962,335
P =5,952,749
P (P
=49,273) =5,903,476
P

P =–
P =1,947,225
P =–
P =1,947,225
P
amortization 189,863 694 190,557 – 190,557
Interest expense 250,582 – 250,582 – 250,582
The consolidated revenue in the above tables includes the non-mining revenue, which consist of
management fees, which are presented as other income in the consolidated statements of income
since these are not significant.
30. Basic/Diluted Earnings (Loss) Per Share
Basic/diluted earnings (loss) per share is computed as follows:
2009 2008 2007

Net income (loss) attributable to
equity holders of the Parent
Company (P
= 2,121,598) (P
=812) =127,374
P
Divided by weighted average number
of common shares outstanding
(in thousands) 1,048,932 1,048,932 991,441
(P
= 2.0226) (P
=0.0008) P0.1285
=
In 2009, the Parent Company considered the effect of its potentially dilutive stock options
outstanding. The assumed conversion of these stock options will result in additional 8 million
common shares. The fair value of the common shares as of December 31, 2009 is = P9.20 per share
while the exercise price of the stock option is P
=10.00 per share. The stock options are considered
anti-dilutive because the fair value of the shares is lower than the exercise price of the stock
options. The potentially dilutive convertible debt in 2008 was already settled in 2009. However,
there is a new convertible debt from BDO acquired in 2009 which are contingent on the volume
weighted average price of the Parent Company’s stocks on the PSE. This convertible debt is
considered anti-dilutive because as of December 31, 2009, the Parent Company’s stocks have not
*SGVMC310102*

- 54 -
met the contingent condition of having an average price of P =13.00 per share for 20 consecutive
trading days. In addition, a new convertible debt was acquired from APHC in 2009, but this is
also considered anti-dilutive since the conversion will lead to a lower loss per share.
In 2008, there were potentially dilutive stock options outstanding and convertible debt. The
assumed conversion of these stock options will result in additional 25 million common shares in
2008. The fair value of the common shares as of December 31, 2008 is P =2.50 per share while the
exercise price of the stock option is P
=10.00 per share. The stock options are considered
anti-dilutive because the fair value of the shares is lower than the exercise price of the stock
options. The convertible debt is likewise considered anti-dilutive because the conversion of the
debt-to-equity will result in a lower loss per share.
There are no dilutive potential common shares as of December 31, 2007.
31. Financial Risk Management Objectives and Policies
The Group’s financial instruments consists of cash and cash equivalents, receivables, derivative
instruments, AFS financial asset, loans payable, accounts payable and accrued liabilities and long-
term debt. The main purpose of these financial instruments is to raise finances for the Group’s
operations and its investments in existing and new projects.
Exposures to foreign exchange, equity price, credit, and liquidity risk arise in the normal course of
the Group’s business activities. The main objectives of the Group’s financial risk management are
as follow:
to identify and monitor such risks on an ongoing basis;

to minimize the risk’s potential adverse effects on the Parent Company’s financial
performance; and
to provide a degree of certainty about costs.
Foreign exchange risk

Foreign exchange risk is the risk to earnings or capital arising from changes in foreign exchange
rates. The Group has foreign currency risk arising from its cash and cash equivalents, receivables,
deposits, accounts payable and accrued liabilities, loans payable and long-term debt. To mitigate
the risk of incurring foreign exchange losses, foreign currency holdings are matched against the
potential need for foreign currency in financing equity investments and new projects.
As of December 31, 2009 and 2008, foreign-currency denominated assets and liabilities follow:
2009 2008
Foreign Peso Foreign Peso
Currency Equivalent Currency Equivalent
Financial assets:
Cash and cash equivalents US$2,577 P
=119,059 US$5,742 =272,848
P
Receivables 2,312 106,849 2,067 98,245
Derivative assets 706 32,610 18,452 876,819
Deposits 2,917 134,774 – –
8,512 393,292 26,261 1,247,912
(Forward)
*SGVMC310102*

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2009 2008
Financial liabilities:
Accounts payable and
accrued liabilities US$4,337 P
=200,380 US$12,634 =600,355
P
Loans payable 117,385 5,423,197 20,000 950,400
Advances from stockholders 9,170 423,667 – –
Long-term debt 6,354 293,571 100,000 4,752,000
137,246 6,340,815 132,634 6,302,755
=5,947,523) (US$106,373) (P
(US$128,734) (P =5,054,843)
The exchange rates used were P

=46.20 to US$1 and P
=47.52 to US$1 at December 31, 2009 and
2008, respectively.
The following table summarizes the impact on income before income tax of reasonably possible
changes in the exchange rates of US$ against the Peso as of December 31, 2009 and 2008:
US$ Appreciates/ Increase/

(Depreciates) (Decrease)
2009 2.06% (P
=122,519)
(2.06%) 122,519
2008 2.15% (108,679)
(2.15%) 108,679
There is no other impact on the Group’s equity other than those affecting profit or loss.
Commodity price risk

CCC’s copper concentrate revenue are based on international commodity quotations
(i.e., primarily on the LME) over which CCC has no significant influence or control. This exposes
CCC’s results of operations to commodity price volatilities that may significantly impact its cash
inflows. CCC enters into derivative transactions as a means to mitigate the risk of fluctuations in
the market prices of its mine products.
Shown below is CCC’s sensitivity to changes in the copper prices arising from its copper
derivatives as of December 31, 2009 and 2008:
December 31, 2009:
Effect on Income
Change in Copper Prices Before Income Tax
Increase by 10% (P
=79,001)
Decrease by 10% 79,001
December 31, 2008:
Effect on Income
Increase by 10% (P
=60,437)
Decrease by 10% 60,437
*SGVMC310102*

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Equity price risk

Equity price risk is the risk that the value of a financial instrument will fluctuate because of
changes in market prices. The Group is exposed to equity price risk because of financial assets
held by the Group, which are classified as AFS financial assets. Management believes that the
fluctuation in the fair value of AFS financial assets will not have a significant effect on the
consolidated financial statements.
Credit risk
Credit risk is the risk that the Group will incur a loss because its customers, clients or
counterparties failed to discharge their contractual obligation. The Group’s financial assets which
are exposed to credit risk include its cash and cash equivalents, receivables, derivative asset and
AFS financial assets with a maximum exposure equal to the carrying amount of these investments.
With respect to cash and cash equivalents and AFS financial assets, credit risk is mitigated by the
short-term and/or liquid nature of its cash investments placed with financial institutions of high
credit standing.
Credit risk arising from derivative financial instruments is, at any time, limited to those with
positive fair values, as recorded in the consolidated balance sheets.
The following table summarizes the gross maximum exposure to credit risk for the components of
the consolidated balance sheets. The maximum exposure is shown gross, before the effect of
mitigation through use of master netting and collateral agreements.
2009 2008
Loans and receivables:
Cash and cash equivalents, excluding P
=299,104 =879,640
P
cash on hand
Receivables:
Trade 233,155 143,915
Advances to related parties 24,052 28,022
Others 24,514 30,322
597,470 1,097,847
Derivative assets 32,720 876,819
AFS financial asset 5,215 22
Total credit risk exposure P
=635,405 =1,974,688
P
Risk concentrations of the maximum exposure to credit risk

Concentration of risk is managed by business segment. The Group’s financial asset, before taking
into account any collateral held or other credit enhancements, can be analyzed by the following
business segments:
2009 2008
Mining P
=616,081 =1,978,380
P
Non-mining 19,324 10,818
P
=635,405 =1,989,198
P
*SGVMC310102*

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Credit quality per class of financial assets

The credit quality by class of asset for the Parent Company’s financial assets as of
December 31, 2009 and 2008, based on credit rating system follows:
December 31, 2009:
Neither past due nor impaired Past Due

Standard Substandard But Not
High Grade Grade Grade Impaired Impaired Total
Cash and cash equivalents,
excluding cash on hand =299,104
P =–
P =–
P =–
P =–
P P
=299,104
Receivables:
Trade 233,155 – – – 12,122 245,277
Advances to related
parties – 22,068 – 1,984 – 24,052
Advances to officers
and employees 8,040 1,175 6,518 912 1,674 18,319
Others 105 2,568 – 21,841 27,097 51,611
540,404 25,811 6,518 24,737 40,893 638,363
Derivative asset 32,720 – – – – 32,720
AFS financial asset 5,215 – – – – 5,215
=578,339
P =25,811
P =6,518
P =24,737
P =40,893
P P
=676,298
December 31, 2008:

Neither past due nor impaired Past Due
Standard Substandard But Not
P =–
P =–
P =–
P =–
P =879,640
P
Receivables:
Trade 5,553 137,630 – 732 14,445 158,360
Advances to related
parties – 27,608 – 414 – 28,022
and employees 6,393 6,151 – 3,404 1,674 17,622
Others 17,565 1,070 1,793 9,894 27,890 58,212
909,151 172,459 1,793 14,444 44,009 1,141,856
AFS financial asset 22 – – – – 22
=1,785,992 =
P P172,459 =1,793
P =14,444
P =44,009 =
P P2,018,697
High grade receivables pertain to those receivables from clients or customers that consistently pay
before the maturity date. Standard grade receivable includes those that are collected on their due
dates even without an effort from the Group to follow them up while receivables which are
collected on their due dates provided that the Group made a persistent effort to collect them are
included under substandard grade receivables. Past due receivables and advances include those
that are either past due but still collectible or determined to be individually impaired.
*SGVMC310102*

- 58 -
The aging analysis of the Group’s loans and receivables follows:
December 31, 2009:
Neither past Past due but not impaired

due nor Less than 30 - 60 More than 60
impaired 30 days days Days Impaired Total
excluding cash on hand =
P299,104 =
P– =–
P =–
P =–
P =
P299,104
Receivables:
Trade 233,155 – – – 12,122 245,277
Advances to related
parties 22,068 – 1,984 – – 24,052
and employees 15,733 218 22 672 1,674 18,319
Others 2,673 17,884 1,012 2,945 27,097 51,611
550,665 18,102 3,018 3,617 40,893 638,363
Derivative assets 32,720 – – – – 32,720
AFS financial asset 5,215 – – – – 5,215
P
=588,600 =18,102
P =3,018
P =3,617
P =40,893
P =
P676,298
December 31, 2008:
Neither past Past due but not impaired

due nor Less than 30 - 60 More than 60
impaired 30 days days days Impaired Total
excluding cash on hand =
P879,640 =
P– =–
P =–
P =–
P =
P879,640
Receivables:
Trade 143,183 732 – – 14,445 158,360
Advances to related
parties 27,608 414 – – – 28,022
and employees 12,544 1,311 – 2,093 1,674 17,622
Others 20,428 7,615 – 2,279 27,890 58,212
1,083,403 10,072 – 4,372 44,009 1,141,856
AFS financial asset 22 – – – – 22
=1,960,244
P =10,072
P =–
P =4,372
P =44,009
P =2,018,697
P
Impairment assessment
The main consideration for the loan impairment assessment include whether any payments of
principal or interest are overdue by more than one year or there are any known difficulties in the
cash flows of counterparties, credit rating downgrades, or infringement of the original terms of the
contract.
The Group determines the allowance appropriate for each individually significant receivable on an
individual basis. Items considered when determining allowance amounts include the availability
of other financial support and the timing of the expected cash flows. The impairment losses are
evaluated at each reporting date, unless unforeseen circumstances require more careful attention.
Impaired financial assets as of December 31, 2009 and 2008 relate to overdue accounts.
*SGVMC310102*

- 59 -
Rollforward of allowance for doubtful accounts follows:
December 31, 2009:
Beginning of Charges for Exchange rate

year the year Write-offs adjustments End of year
Trade receivables =14,445
P P–
= =–
P (P
=2,323) P
=12,122
and employees 1,674 – – – 1,674
Other receivables 27,890 – (793) – 27,097
=44,009
P =–
P (P
=793) (P
=2,323) P
=40,893
December 31, 2008:
Beginning of Charges for Exchange rate

year the year Write-offs adjustments End of year
Trade receivables =1,879
P =11,031
P =–
P =1,535
P =14,445
P
and employees 308 1,366 – – 1,674
Other receivables 49,044 – (21,154) – 27,890
=51,231
P =12,397
P (P
=21,154) =1,535
P =44,009
P
Liquidity Risk
Liquidity risk is such risk where the Group becomes unable to meet its payment obligations when
they fall due under normal and stress circumstances. The Group’s objective is to maintain a
balance between continuity of funding and flexibility through the use of bank loans. The Group
also manages its liquidity risk on a consolidated basis based on business needs, tax, capital or
regulatory considerations, if applicable, through numerous sources of finance in order to maintain
flexibility.
The tables below summarizes the maturity profile of the financial liabilities of the Group, as well
as financial assets considered by management as part of its liquidity risk management based on
remaining undiscounted contractual obligations as of December 31, 2009 and 2008 follow:
December 31, 2009:
On demand Within 1 year 1 to <3 years > 3 years Total

P =–
P =–
P =–
P P
= 299,104
Receivables:
Trade 233,155 – – – 233,155
Advances to related parties – 24,052 – – 24,052
Advances to officers and
employees 15,733 912 – – 16,645
Others 2,673 21,841 – – 24,514
=550,665
P =46,805
P =–
P =–
P P
= 575,402
Other financial liabilities:

Loans payable =–
P =1,073,016
P =–
P =–
P P
=1,073,016
Accounts payable and accrued
liabilities 2,684,362 21,342 – – 2,705,704
Advances from related parties 1,889,746 – – – 1,889,746
Long-term debt – 1,232,938 4,465,026 1,738,665 7,436,629
Derivative liabilities 772,818 – – – 772,818
=5,346,926
P =2,327,296
P =4,465,026
P =1,738,665
P P
=13,877,913
*SGVMC310102*

- 60 -
December 31, 2008:

On demand Within 1 year 1 to <3 years > 3 years Total
P =–
P =–
P =–
P =879,640
P
Receivables:
Trade 143,915 – – – 143,915
Advances to related parties – 28,022 – – 28,022
Advances to officers and employees 12,544 3,404 – – 15,948
Others 20,428 9,894 – – 30,322
=1,056,527
P =41,320
P =–
P =–
P =1,097,847
P

Loans payable =–
P =950,400
P =–
P =–
P =950,400
P
liabilities 2,074,699 75,458 – – 2,150,157
Advances from related parties 1,788,428 – – – 1,788,428
Long-term debt 8,893 836,170 2,443,457 2,649,660 5,938,180
=3,872,020
P =1,862,028
P =2,443,457
P =2,649,660
P =10,827,165
P
32. Financial Instruments
Fair value is defined as the amount at which the financial instrument could be exchanged in a
current transaction between knowledgeable willing parties in an arm’s length transaction, other
than in a forced liquidation or sale. Fair values are obtained from quoted market prices,
discounted cash flow models and option pricing models, as appropriate.
Fair Values of Financial Instruments

The following table shows the carrying values and fair values of the Group’s financial assets and
liabilities:
Carrying Values Fair Values

2009 2008 2009 2008
Financial Assets
Cash and cash equivalents =301,355
P =881,404
P =301,355
P =881,404
P
Receivables:
Trade 233,155 143,915 233,155 143,915
employees 16,645 15,948 16,645 15,948
Advances to related parties 24,052 28,022 24,052 28,022
Note receivable – – – –
Others 24,514 30,322 24,514 30,322
Financial assets at FVPL:
Derivative asset 32,720 876,819 32,720 876,819
AFS financial asset 5,215 22 5,215 22
=637,656
P =1,976,452
P =637,656
P =1,976,452
P
*SGVMC310102*

- 61 -

2009 2008 2009 2008
Financial Liabilities
Loans payable =977,585
P =950,400
P =977,585
P =950,400
P
accrued liabilities 2,705,704 2,150,507 2,705,704 2,150,507
Advances from and due to
related parties 1,889,746 1,788,428 1,889,746 1,788,428
Long-term debt 4,916,792 4,752,000 5,330,983 5,568,342
Derivative liabilities 772,818 – 772,818 –
= 11,262,645
P =9,641,335
P =11,676,836
P =10,457,677
P
The following methods and assumptions are used to estimate the fair value of each class of
financial instruments:
Cash and cash equivalents, receivables and mine rehabilitation funds

The carrying amounts of cash and cash equivalents and receivables approximate their fair value
due to the relatively short-term maturities of these financial instruments.

The fair values were determined with reference to market quoted bid price as of balance sheet
date.
Loans payable, accounts payable and accrued liabilities and advances from and due to related
parties
The carrying amounts of loans and acceptance payable and trade and other payables approximate
their fair values due to the relatively short-term maturities of these financial instruments.
Long-term debt
The fair value of long-term debt is computed using the discounted cashflow method, with credit-
adjusted zero coupon rates as discount rate.
Derivative instruments
Fair values are estimated based on acceptable valuation models. All valuation inputs used such as
volatility, copper spot and forward prices, discount rates, and foreign currency exchange rates are
considered market observable obtained from an internationally recognized financial service
provider.
The Group uses the following hierarchy for determining and disclosing the fair value by valuation
technique:
Quoted prices in active markets for identical liability (Level 1);

Those involving inputs other than quoted prices included in Level 1 that are observable for
the liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and
Those inputs for the liability that are not based on observable market data (unobservable
inputs) (Level 3).
*SGVMC310102*

- 62 -
The fair value hierarchy of the financial assets and liabilities as of December 31, 2009 is presented
in the following table:
Level 1 Level 2 Total

AFS quoted financial assets =5,215
P =–
P P
=5,215
Derivative assets – 32,720 32,720
Derivative liabilities – 772,818 772,818
Total =5,215
P =805,538
P P
= 810,753
There were no transfers between levels of fair value measurement as of December 31, 2009. The
Group has no financial assets and liabilities measured under level 3.
33. Capital Management

The primary objective of the Group’s capital management is to ensure that it maintains a strong
credit rating and healthy capital ratios in order to support its business and maximize shareholder
value.
The Group manages its capital structure and makes adjustments to it, in light of changes in
economic conditions. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares. No changes
were made in the objectives, policies or processes during 2008 and 2007.
The table below summarizes the total capital considered by the Group:
2009 2008
Capital stock P
= 10,489,319 =10,489,319
P
Additional paid-in capital 934,382 858,501
Deposits for future stock subscriptions 150,960 150,960
Deficit (12,596,363) (10,474,765)
(P
= 1,021,702) =1,024,015
P
34. Significant Agreements

Company conveyed to CCC its exploration, development and utilization rights under certain
mining rights and claims and the right to rehabilitate, operate and/or maintain certain of its fixed
assets.
In consideration for the use of the Parent Company’s rights and fixed assets, CCC will pay the
Parent Company a fee equal to 10% of the sum of the following:
*SGVMC310102*

- 63 -
during the life of the Operating Agreement, to purchase outright all or part of the Parent
Company’s rights, title, or interest in any of the fixed assets and the surface rights by giving the
Parent Company a written notice of its intention. The purchase of the Parent Company’s mine
rights shall be in the form of CCC’s shares of stock.
Agreement with TPC and THC

In February 2002, TPC and its wholly owned subsidiary, Toledo Holdings Corporation (THC),
signed the following agreements with the Parent Company:
a. Release and Quitclaim, wherein the Parent Company assigns to THC a portion of an area
covered by two foreshore leases, three deep wells and portions of cadastral lots located in
Toledo City, Cebu in settlement of its obligations to TPC for financial assistance extended and
assumption of the Parent Company’s liability to National Power Corporation;
b. Deed of Absolute Sale, wherein the Parent Company sells to THC parcels of land under the
name of a trustee located in Don Andres Soriano, Toledo, Cebu in consideration of =
P62;
c. Easement of Road Right-of-Way, wherein the Parent Company grants TPC perpetual
easement of road right-of-way within the Parent Company’s mine site area in Toledo, Cebu;
d. Right to Use Facilities, wherein TPC grants the Parent Company the perpetual right to use the
former’s port facilities located in Toledo, Cebu as additional consideration to the latter for the
rights granted under the Easement of Road Right-of-Way Agreement;
e. Deed of Assignment of Rights, wherein the Parent Company assigns to THC all its rights,
interest, participation and obligations over the portions of the areas located in Sangi, Toledo,
which are covered by two foreshore leases in consideration of P =19.90 million; and
f. Deed of Absolute Sale, wherein the Parent Company sells to THC three deep wells located in
a lot under the name of a trustee in Calumpao, Toledo in consideration of P
=2.07 million. This
agreement likewise grants a perpetual right-of-way over the above described lot.
The Parent Company’s BOD, however, withheld ratification of the foregoing agreements due to
several reasons, namely: (a) the Parent Company believes that a more satisfactory and balanced
settlement can be reached with TPC to the advantage of all parties concerned; (b) the agreements
only dealt with a portion of the Parent Company’s liability to TPC; and (c) part of the land areas
ceded in the agreements are essential to future copper concentrate transport plans and are not
necessarily needed by TPC. Accordingly, the Parent Company did not reflect the transactions
resulting from the said agreements in the Parent Company’s records as of December 31, 2009
and 2008.
As of April 14, 2010, the Parent Company is renegotiating with TPC and THC the terms of the
agreements. The Parent Company believes that a satisfactory settlement with TPC and THC can
be reached.
35. Contingencies
The Group is involved in various lawsuits and claims involving civil, labor, mining, tax and other
cases. In the opinion of management, these lawsuits and claims, if decided adversely, will not
involve sums having material effect on the financial position or operating results of the Group.
*SGVMC310102*

- 64 -
36. Note to Consolidated Statements of Cash Flows
The table below summarizes the reconciliation of the property, plant and equipment additions to
reflect the cash activities that were used in the development of certain projects:
2009 2008
PPE Additions (Note 10) P
=2,173,584 =5,757,496
P
Reconciling items:
Pension benefit cost (2,253) (24,196)
Increase in deferred mine rehabilitation cost (22,593) (57,011)
Capitalized borrowing cost (254,064) (391,004)
Capitalized depreciation – 78,919
Increase in mining rights – (2,926)
P
=1,894,674 =5,361,278
P
In addition, the consolidated statements of cash flows excluded capitalized depreciation from the
(increase)/decrease in inventories amounting to =P 142,230 and =
P78,919 as of December 31, 2009
and 2008, respectively.
*SGVMC310102*

107

ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION
PARENT COMPANY BALANCE SHEETS
(Amounts in Thousands, Except Par Value per Share)
December 31
2009 2008
ASSETS
Current Assets
Cash (Note 4) P
=10,334 =5,553
P
Receivables (Note 5) 929,644 303,897
Input value-added tax 1,918 1,441
Other current asset (Note 10) 115,500 –
Total Current Assets 1,057,396 310,891
Noncurrent Assets
Investments in shares of stock (Note 6) 2,374,461 2,213,432
Property and equipment - net (Note 7) 316,172 338,565
Available-for-sale (AFS) financial assets (Note 8) 5,215 22
Other noncurrent assets 1,262 1,154
Total Noncurrent Assets 2,697,110 2,553,173
TOTAL ASSETS P
=3,754,506 =2,864,064
P
LIABILITIES AND EQUITY

Current Liabilities
Loans payable (Note 10) P
=506,405 =950,400
P
Accounts payable and accrued liabilities (Note 9) 1,046,472 718,460
Income tax payable 1,973 966
Derivative liabilities (Note 10) 478,256 –
Advances from related parties (Note 13) 746,817 115,869
Total Current Liabilities 2,779,923 1,785,695
Noncurrent Liabilities
Long-term debt (Note 10) 758,792 –
Retirement benefits liability (Note 15) 13,361 12,096
Deferred income tax liabilities (Note 16) 102,624 93,668
Total Noncurrent Liabilities 874,777 105,764
Total Liabilities 3,654,700 1,891,459
Equity
Capital stock - P
=10 par value (held by 15,686
equity holders in 2009 and 2008) (Note 11)
Authorized - 1.2 billion shares
Issued and outstanding - 1.05 billion shares 10,489,319 10,489,319
Additional paid-in capital (Note 12) 789,563 713,681
Deposits for future stock subscriptions (Notes 10 and 11) 150,960 150,960
Revaluation increment on land (Note 7) 218,559 218,559
Net unrealized gain on AFS financial assets 1 1
Deficit (11,548,596) (10,599,915)
Equity 99,806 972,605
TOTAL LIABILITIES AND EQUITY P
=3,754,506 =2,864,064
P
See accompanying Notes to Parent Company Financial Statements.
*SGVMC310103*

PARENT COMPANY STATEMENTS OF COMPREHENSIVE INCOME

2009 2008
GENERAL AND ADMINISTRATIVE EXPENSES (Note 14) (P

=336,127) (P
=204,328)
OTHER INCOME (CHARGES)

Indemnity loss (Note 10) (465,000) (100,000)
Interest expense (Note 10) (207,799) (87,039)
Royalty income (Note 6) 87,600 –
Foreign exchange loss (gain) - net 34,788 (34,585)
Security fee (Note 10) (28,146) (13,109)
Mark-to-market loss on derivative liabilities - net (Note 10) (18,312) –
Provision for impairment loss on AFS financial assets (Note 8) (15,891) –
Interest income 17 5,801
Other income - net 11,221 38,395
LOSS BEFORE INCOME TAX (937,649) (394,865)
PROVISION FOR INCOME TAX (Note 16) 11,032 1,103
NET LOSS (948,681) (395,968)
OTHER COMPREHENSIVE INCOME – –
TOTAL COMPREHENSIVE LOSS (P

=948,681) (P
=395,968)
*SGVMC310103*

PARENT COMPANY STATEMENTS OF CASH FLOWS

2009 2008
Loss before income tax (P
=937,649) (P
=394,865)
Adjustments for:
Indemnity loss (Note 10) 465,000 100,000
Interest expense (Note 10) 207,799 87,039
Stock-based compensation expense (Note 12) 75,882 110,660
Net unrealized foreign exchange loss (gain) (29,923) 34,585
Security fee (Note 10) 28,146 13,109
Mark-to-market loss on derivative liabilities (Note 10) 18,312 –
Provision for:
Impairment loss on AFS financial assets 15,891 –
Retirement benefits cost (Note 15) 1,265 2,905
Impairment loss on receivables (Note 5) – 106
Depreciation (Note 7) 453 385
Interest income (17) (5,801)
Income from reversal of long-outstanding liability – (11,720)
Operating loss before working capital changes (154,841) (63,597)
Increase in:
Receivables (606,385) (192,769)
Other current assets (117,150) –
Input value-added tax (477) (1,441)
Increase in:
Accounts payable and accrued liabilities 255,221 55,084
Advances from related parties 185,712 (31,333)
Retirement benefits liability – (3,189)
Cash used in operations (437,920) (237,245)
Interest paid (128,091) (91,377)
Income taxes paid (1,069) (11,398)
Interest received 17 6,218
Net cash used in operating activities (567,063) (333,802)
Acquisitions of:
Investment in shares of stock (Note 6) (184,753) (1,109,411)
Property and equipment (Note 7) (128) (22,443)
Increase in other noncurrent assets (108) (1,154)
Net cash used in investing activities (184,989) (1,133,008)
Proceeds from loan drawdown 1,694,034 904,900
Payment of loans (950,400) –
Net cash from financing activities 743,634 904,900
EFFECT OF EXCHANGE RATE CHANGES ON CASH 13,199 12,892
NET INCREASE (DECREASE) IN CASH 4,781 (549,018)
CASH AT BEGINNING OF YEAR 5,553 554,571
CASH AT END OF YEAR (Note 4) = 10,334
P =5,553
P
*SGVMC310103*

-1-

NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
(Amounts in Thousands, Except Per Share Data and as Otherwise Indicated)
1. Corporate Information and Authorization for the Issuance of Financial Statements
Atlas Consolidated Mining and Development Corporation (the Parent Company) was incorporated
and was registered with Philippine Securities and Exchange Commission (SEC) as “Masbate
Consolidated Mining Company, Inc.” on March 9, 1935 as a result of the merger of assets and
equities of three pre-war mining companies, namely, Masbate Consolidated Mining Company,
Antamok Goldfields Mining Company and IXL Mining Company. Thereafter, it amended its
articles of incorporation to reflect the present corporate name. The Parent Company, through its
subsidiaries, is engaged in mineral and metallic mining and exploration, and primarily produces
nickel, copper concentrates and gold with silver, magnetite and pyrites as by-products.
The Parent Company’s shares of stock are listed at the Philippine Stock Exchange (PSE) and its
corporate life was extended up to March 2035. The registered business address of the Parent
Company is 7th Floor, Quad Alpha Centrum, 125 Pioneer St., Mandaluyong City.
A major restructuring of the Parent Company’s assets was undertaken in 2004 and 2005 with the
creation of three special-purpose subsidiaries to develop the Toledo Copper Project, Berong
Nickel Project and the Toledo-Cebu Bulk Water and Reservoir Project. As a result, Carmen
Copper Corporation (CCC), Berong Nickel Corporation (BNC) and AquAtlas, Inc. (AI) were
incorporated and, subsequently, were positioned to attract project financing as well as specialist
management and operating expertise. In addition, the Parent Company incorporated a wholly
owned subsidiary, Atlas Exploration Inc. (AEI) to host, explore and develop copper, gold, nickel
and other mineral exploration properties. AEI will also explore for other metalliferous and
industrial minerals to increase and diversify the mineral holdings and portfolio of the Parent
Company.
As of December 31, 2009 and 2008, the Parent Company has effective control in nine subsidiaries
(Note 6), which are engaged in business including mining, professional services, bulk water
supply and as holding companies. The Parent Company has no geographical segments as these
entities were incorporated and are operating within the Philippines.
Authorization for the Issuance of Financial Statements

The Parent Company financial statements were authorized for issue by the Board of Directors
(BOD) on April 14, 2010.
2. Summary of Significant Accounting Policies and Financial Reporting Practices
The Parent Company financial statements have been prepared on a historical cost basis, except for
land, which is carried at revalued amounts, and derivative financial instruments and AFS financial
assets which have been measured at fair value. The Parent Company financial statements are
presented in Philippine Peso (Peso), which is the Parent Company’s functional currency. All
amounts are rounded to the nearest thousand (P =000), except when otherwise indicated.
*SGVMC310103*

-2-
The Parent Company financial statements have been prepared in accordance with Philippine
Financial Reporting Standards (PFRS). The Parent Company also prepares and issues
consolidated financial statements for the same period as the separate financial statements
presented in compliance with PFRS, and are filed with the Philippine SEC and available in the
Parent Company’s website.
that the Parent Company has adopted the following new, amended and improved PFRS and
Philippine Interpretations based on International Financial Reporting Interpretation Committee
(IFRIC) interpretations and amendments to existing Philippine Accounting Standards (PAS) that
became effective during the year.
income and expense, either in one single statement or in two linked statements. The revision
clearly, although not mandatory for use in the financial statements. The Parent Company has
elected to present a single statement of comprehensive income and opted not to change the
balance sheet to statement of financial position.

recorded at fair value are to be disclosed by source of inputs using a three-level fair value
reconciliation between the beginning and ending balance for level three fair value
measurements is now required, as well as significant transfers between levels in the fair value
hierarchy. The amendments also clarify the requirements for liquidity risk disclosures with
respect to derivative transactions and financial assets used for liquidity management. The fair
value measurement and liquidity risk disclosures are presented in Note 18.
Adoption of the following new, revised and amended PFRS and Philippine Interpretations and
improvements to PFRS did not have any significant impact to the Parent Company financial
statements.


*SGVMC310103*

-3-

PAS 18, Revenue
PAS 41, Agriculture

The Parent Company will adopt the standards and interpretations enumerated below when these
become effective. Except as otherwise indicated, the Parent Company does not expect the
adoption of these new and amended PFRS, PAS and Philippine Interpretations to have significant
impact on the Parent Company financial statements. The relevant disclosures will be included in
the notes to the financial statements when these become effective.
Effective in 2010
Amendments to PFRS 2, Group Cash-settled Share-based Payment Transactions

Revised PFRS 3, Business Combinations and Amendments to PAS 27,

Consolidated and Separate Financial Statements
*SGVMC310103*

-4-
transactions with non-controlling interests.
PFRS 3 will be applied prospectively, while PAS 27 will be applied retrospectively with a few
exceptions.
Amendment to PAS 39, Financial Instruments: Recognition and Measurement -

Eligible Hedged Items

The interpretation provides guidance on the following types of non-reciprocal distributions of
assets by an entity to its owners acting in their capacity as owners: (a) distributions of
non-cash assets (e.g. items of property, plant and equipment, businesses as defined in PFRS 3,
ownership interests in another entity or disposal groups as defined in PFRS 5); and (b)

This interpretation clarifies the requirements of PFRS for agreements in which an entity
receives from a customer an item of property and equipment that the entity must then use
either to connect the customer to a network or to provide the customer with ongoing access to
a supply of goods or services (such as a supply of electricity, gas or water). Under this
interpretation, when the item of property and equipment is transferred from a customer meets
the definition of an asset under the IASB Framework from the perspective of the recipient, the
recipient must recognize the asset in its financial statements. If the customer continues to
control the transferred item, the asset definition would not be met even if ownership of the
asset is transferred to the utility or other recipient entity. The deemed cost of that asset is its
fair value on the date of the transfer. If there are separately identifiable services received by
the customer in exchange for the transfer, then the recipient should split the transaction into
separate components as required by PAS 18.
Improvement to PFRS Effective in 2010

The omnibus amendments to PFRS issued in 2009 were issued primarily with a view to removing
beginning on or after January 1, 2010, except when otherwise stated. The Parent Company has
not yet adopted the following amendments and anticipates that these changes will have no material
effect on the Parent Company financial statements.

July 1, 2009.
*SGVMC310103*

-5-


maker.

its classification.
PAS 7, Statements of Cash Flow

PAS 17, Leases


reporting purposes.

intangible assets as a single asset provided the individual assets have similar useful lives.
Also, it clarifies that the valuation techniques presented for determining the fair value of

The amendment clarifies that a prepayment option is considered closely related to the host
approximate present value of lost interest for the remaining term of the host contract. In
addition, it also clarifies the scope exemption for contracts between an acquirer and a vendor
in a business combination to buy or sell an acquiree at a future date applies only to binding
forward contracts and not derivative contracts where further actions by either party are still to
be taken. Further, the amendment clarifies that gains or losses on cash flow hedges of a
forecast transaction that subsequently results in the recognition of a financial instrument or on
cash flow hedges of recognized financial instruments should be reclassified in the period that
the hedged forecast cash flows affect comprehensive income.
*SGVMC310103*

-6-


hedging instruments may be held by any entity or entities within the group, including the
Effective in 2012

undertake the construction of real estate directly or through subcontractors. This Interpretation
when such contract qualifies as construction contract to be accounted for under
PAS 11, Construction Contracts, or involves rendering of services in which case revenue is
recognized based on stage of completion. Contracts involving provision of services with the
construction materials and where the risks and reward of ownership are transferred to the buyer on
a continuous basis will also be accounted for based on stage of completion.
Summary of Significant Accounting Policies
Cash
Cash includes cash on hand and in banks.
Date of recognition
The Parent Company recognizes a financial asset or a financial liability in the balance sheet when
it becomes a party to the contractual provisions of the instrument. Purchases or sales of financial
assets that require delivery of assets within the time frame established by regulation or convention
in the marketplace are recognized on the settlement date.

On initial recognition, the Parent Company classifies its financial assets in the following
categories: financial assets at FVPL, loans and receivables, HTM investments and AFS financial
assets, as appropriate. Financial liabilities, on the other hand, are classified as financial liabilities
at FVPL and other financial liabilities, as appropriate. The classification depends on the purpose
for which the investments are acquired and whether they are quoted in an active market.
Management determines the classification of its financial assets at initial recognition and, where
allowed and appropriate, re-evaluates such designation at each balance sheet date.
*SGVMC310103*

-7-
The Parent Company has no HTM investments and financial assets at FVPL as of
December 31, 2009 and 2008.

models.
Day 1 difference
whose variables include only data from observable market, the Parent Company recognizes the
difference between the transaction price and fair value (a Day 1 difference) in the profit or loss
unless it qualifies for the recognition as some other type of asset. In cases where use is made of
data which is not observable, the difference between the transaction price and model value is only
recognized in the profit or loss when the inputs become observable or when the instrument is
derecognized. For each transaction, the Parent Company determines the appropriate method of
recognizing the Day 1 difference amount.

and considered as effective hedging instruments. Assets classified under this category are carried
at fair value in the balance sheet. Changes in the fair value of such assets are accounted for in the
profit or loss.

are not quoted in an active market. They arise when the Parent Company provides money, goods
or services directly to a debtor with no intention of trading the receivables. After initial
measurement, loans and receivables are subsequently carried at cost or amortized cost using the
effective interest method less any allowance for impairment. Gains and losses are recognized in
profit or loss when the loans and other receivables are derecognized or impaired, as well as
through the amortization process. Loans and other receivables are included in current assets if
maturity is within twelve months from the balance sheet date. Otherwise, these are classified as
noncurrent assets.
*SGVMC310103*

-8-
As of December 31, 2009 and 2008, the Parent Company’s loans and other receivables consist of
cash, advances to officers and employees, advances to related parties, royalties and other
receivables.
AFS Financial Assets

AFS financial assets are non derivative financial assets that are designated as AFS or are not
classified in any of the three other categories. The Parent Company designates financial
instruments as AFS if they are purchased and held indefinitely and may be sold in response to
liquidity requirements or changes in market conditions. After initial recognition, AFS financial
assets are measured at fair value with unrealized gains or losses being recognized in the parent
company statement of comprehensive income as “Unrealized gain on AFS financial assets”.
When the investment is disposed of, the cumulative gains or loss previously recorded in equity is
recognized in profit or loss. Interest earned on the investments is reported as interest income using
the effective interest method. Dividends earned on investments are recognized in profit or loss as
‘Dividend income’ when the right of payment has been established. The Parent Company
considers several factors in making a decision on the eventual disposal of the investment. The
major factor of this decision is whether or not the Parent Company will experience inevitable
further losses on the investment. These financial assets are classified as noncurrent assets unless
the intention is to dispose of such assets within 12 months from the balance sheet date.
The details of Parent Company’s AFS financial assets as of December 31, 2009 and 2008 are
discussed in Note 8.

cost using the effective interest method. Amortized cost is calculated by taking into account any
issue costs, and any discount or premium on settlement. Gains and losses are recognized in profit
or loss when the liabilities are derecognized as well as through the amortization process.
accrued liabilities, advances from related parties, loans payable and long term debt.

Derivative financial instruments (e.g., currency and commodity derivatives such as forwards,
swaps and option contracts to economically hedge exposure to fluctuations in copper prices) are
initially recognized at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is
positive and as liabilities when the fair value is negative.
value on derivatives are taken directly to net profit or loss for the year, unless the transaction is a
designated and effective hedging instrument.
An embedded derivative is separated from the host financial or non-financial contract and
*SGVMC310103*

-9-
The Parent Company assesses whether embedded derivatives are required to be separated from
host contracts when the Parent Company first becomes a party to the contract. Reassessment only
occurs if there is a change in the terms of the contract that significantly modifies the cash flows
that would otherwise be required.
financial assets or financial liabilities at FVPL. Changes in fair values are included in the profit or
loss.
As of December 31, 2009, the Parent Company has an embedded derivative that is required to be
bifurcated from its convertible loans payable and long-term debt (see Note 10).
Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet
if, and only if, there is a currently enforceable legal right to offset the recognized amounts and
there is an intention to settle on a net basis, or to realize the asset and settle the liability
simultaneously. This is not generally the case with master netting agreements, and the related
assets and liabilities are presented gross in the Parent Company balance sheet.

The Parent Company assesses at each balance sheet date whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or a group of financial
assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a
result of one or more events that occurred after the initial recognition of the asset (an incurred
‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the
financial asset or the group of financial assets that can be reliably estimated. Evidence of
impairment may include indications that the contracted parties or a group of contracted parties is
experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganization, and
where observable data indicate that there is measurable decrease in the estimated future cash flows
such as changes in arrears or economic conditions that correlate with defaults.

The Parent Company first assesses whether objective evidence of impairment exists individually
for financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant. If there is objective evidence that an impairment loss
on loans and receivables carried at amortized cost has been incurred, the amount of the loss is
measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial
recognition). The carrying amount of the asset shall be reduced either directly or through use of
an allowance account. The amount of the loss shall be recognized in the profit or loss.

*SGVMC310103*

- 10 -
recognized in the profit or loss, to the extent that the carrying value of the asset does not exceed its
In relation to trade receivables, a provision for impairment is made when there is objective
evidence (such as the probability of insolvency or significant financial difficulties of the debtor)
that the Parent Company will not be able to collect all of the amounts due under the original terms
of the invoice. The carrying amount of the receivable is reduced through use of an allowance
account. Impaired debts are derecognized when they are assessed as uncollectible.

For AFS financial assets, the Parent Company assesses at each balance sheet date whether there is
objective evidence that a financial asset or group of financial assets is impaired. In case of equity
investments classified as AFS financial assets, this would include a significant or prolonged
decline in the fair value of the investments below its cost. The determination of what is
‘significant’ or ‘prolonged’ requires judgment. The Parent Company treats ‘significant’ generally
as 30% or more and ‘prolonged’ as greater than 12 months for quoted equity securities. Where
there is evidence of impairment, the cumulative loss measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognized in profit or loss is removed from equity and recognized in the Parent
Company statement of comprehensive income.
Impairment losses on equity investments are recognized in profit or loss. Increases in the fair
value after impairment are recognized directly in the Parent Company statement of comprehensive
income.
In the case of debt instruments classified as AFS financial assets, impairment is assessed based on
the same criteria as financial assets carried at amortized cost. Interest continues to be accrued at
the original effective interest rate on the reduced carrying amount of the asset and is recorded as
part of ‘interest income’ in profit or loss. If subsequently, the fair value of a debt instrument
increased and the increase can be objectively related to an event occurring after the impairment
loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.
Derecognition of Financial Assets and Liabilities

Financial assets
the rights to receive cash flows from the asset have expired; or
the Parent Company retains the right to receive cash flows from the asset but has assumed an
obligation to pay them in full without material delay to a third party under a ‘pass through’
arrangement; or
the Parent Company has transferred its rights to receive cash flows from the asset and either
(a) has transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset but has transferred
control of the asset.
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Where the Parent Company has transferred its rights to receive cash flows from an asset and has
neither transferred nor retained substantially all the risks and rewards of the asset nor transferred
control of the asset, the asset is recognized to the extent of the Parent Company’s continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying amount of the asset and the
maximum amount of consideration that the Parent Company could be required to repay.
cash-settled option or similar provision) on the transferred asset, the extent of the Parent
Company’s continuing involvement is the amount of the transferred asset that the Parent Company
may repurchase, except that in the case of a written put option (including a cash-settled option or
similar provision) on asset measured at fair value, the extent of the Parent Company’s continuing
involvement is limited to the lower of the fair value of the transferred asset and the option exercise
price.
Input Value-Added Tax (VAT) Recoverable

Input tax recoverable is stated at 10% in prior years up to January 2006 and 12% starting
February 2006 of applicable purchase cost of goods and services less, allowance for probable
losses, if any.
Input VAT
Input VAT represents VAT imposed on the Parent Company by its suppliers for the acquisition of
goods and services as required by Philippine taxation laws and regulations.
The input VAT is recognized as an asset and will be used to offset against the Parent Company’s
current output VAT liabilities and any excess will be claimed as tax credits. Input VAT is stated
at its estimated NRV.
Investments in Shares of Stock

Investments in share of stock of subsidiaries, jointly controlled entities and associates either at cost
or in accordance with PFRS 9 or PAS 39 in accordance with PAS 27. The Parent Company shall
apply the same accounting for each category of investments. Investments accounted at cost shall
be accounted for in accordance with IFRS 5 when they are classified as held for sale or included in
a disposal group that is classified as held for sale.
A subsidiary is an entity that is controlled by the Parent Company. An associate is an entity in

which the Parent Company has significant influence and which is neither a subsidiary nor a joint
venture.
Property and Equipment

Property and equipment, except land, are stated at cost less accumulated depreciation and
impairment in value.
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The initial cost of property and equipment consists of its purchase price, including import duties,
taxes, borrowing costs and any directly attributable costs of bringing the asset to its working
condition and location for its intended use. Expenditures incurred after the property and
equipment have been put into operation, such as repairs and maintenance and overhaul costs, are
normally recognized in the Parent Company’s profit or loss in the period in which costs are
incurred. In situations where it can be clearly demonstrated that the expenditures would result in
an increase in future economic benefits expected to be obtained from the use of an item of
property and equipment beyond its originally assessed standard of performance, the expenditures
are capitalized as additional cost of such property and equipment.
Land is carried at revalued amount as determined by independent appraisers as of

December 31, 2005, less impairment in value.
The net appraisal increment resulting from the revaluation of land was credited to the
“Revaluation increment on land” account shown under the equity section of the Parent Company
balance sheet. Any appraisal decrease is first offset against revaluation increment on earlier
revaluation.
When assets are sold or retired, the cost and related accumulated depreciation and accumulated
impairment in value are removed from the accounts and any resulting gain or loss is reflected in
the profit or loss.
Depreciation is computed using the straight-line method over the estimated useful lives of the
assets as follows:
Category Number of Years

Office furniture and fixtures 5
Depreciation or amortization of an item of property and equipment begins when it becomes

available for use, i.e., when it is in the location and condition necessary for it to be capable of
operating in the manner intended by management. Depreciation ceases at the earlier of the date
that the item is classified as held for sale (or included in a disposal group that is classified as held
for sale) in accordance with PFRS 5, and the date the asset is derecognized.
of property and equipment.
An item of property and equipment is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of
the asset) is included in profit or loss in the year the asset is derecognized.
The asset’s useful lives and methods of depreciation are reviewed and adjusted, if appropriate, at
each balance sheet date.
Convertible Loans Payable

Convertible loans payable denominated in the functional currency of the Parent Company are
regarded as compound instruments, consisting of a liability and an equity component. At the date
of issue, the fair value of the liability component is estimated using the prevailing market interest
*SGVMC310103*

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rate for similar nonconvertible debt and is recorded within borrowings. The difference between
the proceeds of issue of the convertible bond and the fair value assigned to the liability
component, representing the embedded option to convert the liability into equity of the Parent
Company is included in equity.
When the embedded option in convertible loans payable is denominated in a currency other than
the functional currency of the Parent Company, the option is classified as a liability. The option is
marked to market with subsequent gains and losses being recorded in profit or loss.
Issue costs are apportioned between the liability and equity components of the convertible bonds
where appropriate based on their relative carrying amounts at the date of issue. The portion
relating to the equity component is charged directly against equity. The interest expense on the
liability component is calculated by applying the effective interest rate for similar nonconvertible
debt to the liability component of the instrument. The difference between this amount and the
interest paid is added to the carrying amount of the convertible loans payable.
Borrowing Costs
Borrowing costs are interest and other costs that the Parent Company incurs in connection with the
borrowing of funds. Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset form part of the cost of that asset. Capitalization of borrowing
costs commences when the activities to prepare the assets are in progress and expenditures and
borrowing costs are being incurred. Borrowing costs are capitalized until the assets are
substantially ready for their intended use. If the carrying amount of the asset exceeds its estimated
recoverable amount, an impairment loss is recorded.
When funds are borrowed specifically to finance a project, the amount capitalized represents the
actual borrowing costs incurred. When surplus funds are temporarily invested, the income
generated from such temporary investment is deducted from the total capitalized borrowing cost.
When the funds used to finance a project form part of general borrowings, the amount capitalized
is calculated using a weighted average of rates applicable to relevant general borrowings of the
Parent Company during the period. All other borrowing costs are recognized in profit or loss in
the period in which they are incurred.
Impairment of Non-Financial Assets

The Parent Company assesses at each balance sheet date whether there is an indication that
nonfinancial assets may be impaired. If any such indication exists, or when annual impairment
testing for an asset is required, the Parent Company makes an estimate of the asset’s recoverable
amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair
value less costs to sell and its value-in-use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those from other assets or
groups of assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value-in-use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations are recognized in profit or loss in those expense
categories consistent with the function of the impaired asset.
*SGVMC310103*

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An assessment is made at each balance sheet date as to whether there is any indication that
previously recognized impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognized impairment loss is
reversed only if there has been a change in the estimates used to determine the asset’s recoverable
amount since the last impairment loss was recognized. If that is the case the carrying amount of
the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying
amount that would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in profit or loss, unless the
asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.
After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s
revised carrying amount less any residual value on a systematic basis over its remaining useful
life.

Share-based Payments
Certain officers and employees of the Parent Company receive additional remuneration in the
form of share-based payments, whereby equity instruments (or “equity-settled transactions”) are
awarded in recognition of their services.
The cost of equity-settled transactions with employees is measured by reference to their fair value
at the date they are granted, determined using the acceptable valuation techniques.
The cost of equity-settled transactions, together with a corresponding increase in equity, is

recognized over the period in which the performance and/or service conditions are fulfilled ending
on the date on which the employees become fully entitled to the award (“vesting date”). The
cumulative expense recognized for equity-settled transactions at each reporting date up to and
until the vesting date reflects the extent to which the vesting period has expired, as well as the
Parent Company’s best estimate of the number of equity instruments that will ultimately vest. The
*SGVMC310103*

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profit or loss charge or credit for the period represents the movement in cumulative expense
recognized as the beginning and end of that period. No expense is recognized for awards that do
not ultimately vest, except for awards where vesting is conditional upon a market condition, which
awards are treated as vesting irrespective of whether or not the market condition is satisfied,
provided that all other performance conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum, an expense is recognized
as if the terms had not been modified. An additional expense is likewise recognized for any
modification which increases the total fair value of the share-based payment arrangement or which
is otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of

cancellation, and any expense not yet recognized for the award is recognized immediately. If a
new award, however, is substituted for the cancelled awards and designated as a replacement
award, the cancelled and new awards are treated as if they were a modification of the original
award, as described in the previous paragraph.

Where the Parent Company purchases capital stock (treasury shares) of its subsidiaries, the
consideration paid, including any directly attributable incremental costs (net of applicable taxes) is
deducted from equity attributable to the Parent Company’s equity holders until the shares are
cancelled or reissued. Where such shares are subsequently reissued, any consideration received,
net of any directly attributable incremental transaction costs and the related tax effects, is included
in equity attributable to the Parent Company’s equity holders.

Deposits for future stock subscriptions generally represent funds received by the Parent Company,
which it records as such with the view to applying the same as payment for future additional
issuance of shares or increase in capital stock.
Deposits for future stock subscriptions for which there is no confirmed subscription agreements
and that exhibit characteristics of a liability, is recognized as a financial liability in the Parent
Company’s balance sheet, net of transaction costs, otherwise, recognized as part of equity.
Retained Earnings/Deficit
The amount included in retained earnings/deficit includes profit attributable to the Parent
Company’s equity holders and reduced by dividends on capital stock. Dividends on capital stock
are recognized as a liability and deducted from equity when they are approved by the Company’s
stockholders. Interim dividends, if any, are deducted from equity when they are paid. Dividends
for the year that are approved after the balance sheet date are dealt with as an event after the
balance sheet date.
Retained earnings may also include effect of changes in accounting policy as may be required by
the standard’s transitional provisions.
Interest Income
Interest income is recognized as the interest accrues.
*SGVMC310103*

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Royalty Income
Revenue from royalties shall be recognized on an accrual basis in accordance with the substance
of relevant agreement.
General and Administrative Expenses, and Other Charges

General and administrative expenses, and other charges are recognized in the profit or loss in the
year they are incurred.

date of the transaction. Outstanding monetary assets and liabilities denominated in foreign
currencies are restated using the rate of exchange at the balance sheet date. Foreign currency
gains or losses are recognized in the profit or loss.
Leases
(a) change in contractual terms, other than a renewal or extension of the arrangement;
(b) a renewal option is exercised or extension granted, unless that term of the renewal or
(c) change in the determination of whether fulfillment is dependent on a specified asset; or
(d) substantial change of use of the asset.
as operating leases. Operating lease payments are recognized as an expense in profit or loss on a
straight-line basis over the lease term. When an operating lease is terminated before the lease
period has expired, any payment required to be made to the lessor by way of penalty is recognized.
Income Taxes
Current income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that have been enacted or substantively enacted as of the balance
sheet date.
Deferred income tax

carrying amount for financial reporting purpose.
*SGVMC310103*

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Deferred income tax assets are recognized for deductible temporary differences, carry forward
benefits of unused tax credits from MCIT and unused tax losses from net operating loss carryover
against which the deductible temporary differences and the carry forward benefits of unused tax
credits and NOLCO can be utilized. Deferred income tax liabilities are recognized for all taxable
temporary differences.
right exists to set off current tax assets against current tax liabilities and the deferred income taxes

Provisions are recognized when the Parent Company has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. If the effect of the time value of money is material, provisions are
discounted using a current pre-tax discount rate that reflects, where appropriate, the risks specific
to the liability.
as interest expense. When the Parent Company expects a provision or loss to be reimbursed, the
and its amount is estimable. The expense relating to any provision is presented in the profit or
loss, net of any reimbursement.
Contingent liabilities are not recognized in the Parent Company financial statements but are
disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the Parent Company financial statements, but disclosed in
the notes to financial statements when an inflow of economic benefits is probable. Contingent
assets are assessed continually to ensure that developments are appropriately reflected in the
financial statements. If it has become virtually certain that an inflow of economic benefits will
arise, the asset and the related income are recognized in the Parent Company financial statements.

Events after balance sheet date that provide additional information about the Parent Company’s
position at the balance sheet date (adjusting events) are reflected in the Parent Company financial
statements. Events after balance sheet date that are not adjusting events are disclosed when
material.
*SGVMC310103*

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The preparation of the Parent Company financial statements in accordance with PFRS requires the
Parent Company to exercise judgment, make accounting estimates and use assumptions that affect
the reported amounts of assets, liabilities, income and expenses and disclosure of contingent assets
and contingent liabilities. Future events may occur which will cause the assumptions used in
arriving at the accounting estimates to change. The effects of any change in accounting estimates
are reflected in the Parent Company financial statements as they become reasonably determinable.
Accounting estimates and judgments are continually evaluated and are based on historical
reasonable under the circumstances.
Judgments
In the process of applying the Parent Company’s accounting policies, management has made
judgments, apart from those involving estimations, which has the most significant effects on the
amounts recognized in the Parent Company financial statements.
Determination of functional currency

Based on the economic substance of the underlying circumstances relevant to the Parent
Company, the functional currency of the Parent Company has been determined to be the Peso.
The Peso is the currency of the primary economic environment in which the Parent Company
operates. It is the currency that mainly influences the costs incurred by the Parent Company and it
is the currency that management uses when controlling and monitoring the performance and
financial position of the Parent Company.

The Parent Company classifies a financial instrument, or its components, on initial recognition as
a financial liability, a financial asset or an equity instrument in accordance with the substance of
the contractual arrangement and the definitions of a financial liability, a financial asset or an
equity instrument. The substance of a financial instrument, rather than its legal form, governs its
classification in the Parent Company balance sheets.

a. Loans and receivables
b. AFS financial assets
The Parent Company determines the classification at initial recognition and re-evaluates this
classification, where allowed and appropriate, at each balance sheet date (see Note 19).
Classification of leases - Parent Company as lessee

The Parent Company has entered into commercial property leases on its administrative office
locations and certain transportation equipment. The Parent Company has determined that it does
not retain all the significant risks and rewards of ownership of these properties which are leased on
operating leases.
*SGVMC310103*

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balance sheet date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are as follows:
Estimation of allowance for impairment of loans and receivables

The Parent Company assesses on a regular basis if there is objective evidence of impairment of
loans and receivables. The amount of impairment loss is measured as the difference between the
asset’s carrying amount and the present value of the estimated future cash flows discounted at the
asset’s original effective interest rate. The determination of impairment requires the Parent
Company to estimate the future cash flows based on certain assumptions as well as to use
judgment in selecting an appropriate rate in discounting. The Parent Company uses specific
impairment on its loans and receivables. The Parent Company did not assess its loans and
receivables for collective impairment due to the few counterparties which can be specifically
identified. The amount of loss is recognized in profit or loss with a corresponding reduction in the
carrying value of the loans and receivables through an allowance account.
These reserves are re-evaluated and adjusted as additional information becomes available.
Allowance for impairment of receivables as of December 31, 2009 and 2008 amounted to
=
P27,404 and P= 30,183, respectively, both of which are inclusive of P
=308 allowance provided for
the advances to officers and employees. Receivables, net of valuation allowance, amounted to
=
P929,644 and P=303,897 as of December 31, 2009 and 2008, respectively (see Note 5).
Estimation of allowance for impairment of inventory

The Parent Company estimates the allowance for materials and supplies inventory losses based on
the age of the inventories. The amounts and timing of recorded expenses for any period would
differ if different judgments or different estimates are made. As of December 31, 2008, materials
and supplies and other inventories amounting to P =345,205 had been fully provided with an
allowance for impairment. In 2009, there was a reversal of allowance amounting to P =11,154
which pertains to the items of inventory sold and the proceeds are recorded as other income.
Impairment of AFS financial assets

The Parent Company treats AFS financial assets as impaired when there has been a significant or
prolonged decline in fair value below its cost or where other objective evidence of impairment
exists. The determination of what is ‘significant’ or ‘prolonged’ requires judgment. The Parent
Company treats ‘significant’ generally as 30% or more and ‘prolonged’ as greater than 12 months
for quoted equity securities. In addition, the Parent Company evaluates other factors, including
normal volatility in share price for quoted equities and the future cash flows and the discount
factors for unquoted securities. The carrying amounts of the AFS financial assets amounted to
=5,215 and P
P =22 as of December 31, 2009 and 2008, respectively. Allowance for impairment of
AFS financial assets provided in 2009 and 2008 amounted to = P15,891 and nil, respectively
(see Note 8).
Estimation of useful lives of property and equipment

The Parent Company estimates the useful lives of property and equipment based on the period
over which assets are expected to be available for use. The estimated useful lives of property and
limits on the use of the assets. In addition, the estimation of the useful lives of property and
*SGVMC310103*

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equipment is based on collective assessment of internal technical evaluation and experience with
similar assets. It is possible, however that future results of operations could be materially affected
by changes in estimates brought about by changes in the factors and circumstances mentioned
above. As of December 31, 2009 and 2008, the aggregate net book values of property and
equipment amounted to = P316,172 and =P338,565, respectively (see Note 7).
Determination of the appraised value of land

The appraised value of land is based on a valuation by an independent appraiser firm, which
management believes, holds a recognized and relevant professional qualification and has recent
experience in the location and category of the land being valued. The appraiser firm used the
market data approach in determining the appraised value of land. The resulting increase in the
valuation of land based on the 2005 valuation amounting to P =218.56 million is presented as
“Revaluation increment on land”, net of related deferred income tax liability (see Note 7).

factors could affect reported fair value of financial instruments. As of December 31, 2009 and
2008, the carrying amount of the derivative liability is =P478,782 and nil, respectively.
Valuation of financial assets and financial liabilities

The Parent Company carries certain financial assets and financial liabilities (i.e., derivatives and
AFS financial assets) at fair value, which requires the use of accounting estimates and judgment.
While significant components of fair value measurement were determined using verifiable
objective evidence (i.e., foreign exchange rates, interest rates, quoted security prices), the amount
of changes in fair value would differ if the Parent Company utilized a different valuation
methodology. Any change in fair value of these financial assets and financial liabilities would
affect the Parent Company statement of comprehensive income. The carrying values and
corresponding fair values of financial assets and financial liabilities as well as the manner in which
fair values were determined are discussed in more detail in Note 18.
Recognition of Deferred Tax Asset (DTA)

The Parent Company reviews the carrying amounts of DTA at each balance sheet date and reduces
the amounts to the extent that it is no longer probable that sufficient future taxable profits will be
available to allow all or part of the DTA to be utilized. The Parent Company has unrecognized
DTA amounting to = P317,437 and = P256,547 as of December 31, 2009 and 2008, respectively
(see Note 16).
Estimation of retirement benefits liability and cost

The Parent Company’s retirement benefits cost is actuarially computed. This entails using certain
assumptions with respect to salary increases and discount rates, among others. As of
December 31, 2009 and 2008, the Parent Company’s retirement benefits cost amounted to
=1,265 and P
P =2,905, respectively and the retirement benefits liability amounted to P
=13,361 and
=12,096 as of December 31, 2009 and 2008, respectively (see Note 15).
P
*SGVMC310103*

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Contingencies
The Parent Company provides for present obligations (legal or constructive) where it is probable
that there will be an outflow of resources embodying economic benefits that will be required to
settle the said obligations. The Parent Company is a party to certain lawsuits or claims arising
from the ordinary course of business as discussed in Note 22. However, the Parent Company’s
management and legal counsel believe that the eventual liabilities under these lawsuits or claims,
if any, will not have material effect on the Parent Company financial statements.
4. Cash
Cash on hand and in banks amounted to P =10,334 and = P5,553 as of December 31, 2009 and 2008,
respectively. Cash in banks earns interest at the respective bank deposit rates.
5. Receivables
2009 2008
Advances to related parties (Note 13) P
= 829,521 =290,971
P
Royalties (Note 6) 87,600 –
Advances to officers and employees (Note 13) 8,672 9,162
Others 31,255 31,962
Total 957,048 332,095
Less allowance for doubtful accounts on:
Advances to officers and employees 308 308
Others 27,096 27,890
P
= 929,644 =303,897
P
Advances to related parties and royalties are collectible upon demand.
As of December 31, 2009, trade receivables amounting to =

P1,985 and advances to officers and
employees amounting to =
P794, which were fully provided with an allowance in the prior years,
were written off.
The following is a rollforward analysis of the allowance for doubtful accounts recognized on
receivables:
2009 2008
Beginning of year P
=30,183 P51,231
=
Write-offs (2,779) (21,154)
Provision (Note 14) – 106
End of year P
=27,404 =30,183
P
The impaired receivables were specifically identified as of December 31, 2009 and 2008.
*SGVMC310103*

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6. Investments in Shares of Stock
Investments in shares of stock consist of investments in subsidiaries amounting to =

P2,374,461 and
=2,213,432 as of December 31, 2009 and 2008, respectively.
P
The Parent Company’s subsidiaries, their respective nature of business and percentage of
ownership in 2009 and 2008 follow:
Percentage of
Subsidiaries Nature of Business and Status of Operations Ownership
2009 2008
AEI Incorporated in the Philippines on August 26, 2005 100.00 100.00
to engage in the business of searching, prospecting,
exploring and locating of ores and mineral resources and
other exploration work. As of December 31, 2009, the
Company has not yet started commercial operations.
AI Incorporated in the Philippines on May 26, 2005 100.00 100.00

to provide and supply wholesale or bulk water to local
water districts and other customers. As of
December 31, 2009, the Company has not yet started
Amosite Holdings, Incorporated in the Philippines on October 17, 2006 to 100.00 100.00
Inc. hold assets for investment purposes. As of
(AHI) December 31, 2009, the Company has not yet started
CCC Incorporated in the Philippines on September 16, 2004 64.94 65.53

primarily to engage in exploration work for the purpose of
determining the existence of mineral resources, extent,
quality and quantity and the feasibility of mining them for
profit. The company is in full operations during the year
and completed 12 copper concentrate shipments in 2009.
TMM Management, Incorporated in the Philippines on September 28, 2004 to 60.00 60.00
Inc. (TMMI) provide management, investment and technical advice to
companies. The Company accrues management fees for
the services rendered to entities under its management.
Ulugan Resources Incorporated in the Philippines on June 23, 2005 70.00 70.00
Holding, Inc. to deal in and with personal properties and securities. As
(URHI) of December 31, 2009, the Company has not yet started
Ulugan Nickel Incorporated in the Philippines on June 23, 2005 42.00 42.00
Corporation to explore, develop and mine the Ulugan mineral
(UNC) properties located in the Province of Palawan. As of
December 31, 2009, the Company has not yet started
(Forward)
*SGVMC310103*

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Percentage of
Subsidiaries Nature of Business and Status of Operations Ownership
2009 2008
Nickeline Resources Incorporated in the Philippines on August 15, 2005 42.00 42.00
Holdings, Inc. to deal in and with any kind of shares and securities and to
(NRHI) exercise all the rights, powers and privileges of ownership
or interest in respect to them. As of December 31, 2009,
the Company has not yet started commercial operations.
BNC Incorporated in the Philippines on September 27, 2004 to 25.20 25.20

explore, develop and mine the Berong Mineral Properties
located in Barangay Berong, Quezon, province of
Palawan. In November 2008 and for the year 2009, BNC
has decided not to continue its mining operations in the
Berong Project due to low nickel prices and demand. As
of December 31, 2009, no decision has been made by
BNC to resume its mining operations.
The investments in subsidiaries consist of the following acquisition costs:
2009 2008
CCC P
= 2,289,799 =2,105,045
P
AHI 80,012 80,012
AEI 2,500 2,500
URHI 1,750 1,750
TMMI 300 300
AI 100 100
P
= 2,374,461 =2,189,707
P
Investment in CCC
On May 5, 2006, the Parent Company and CCC entered into an Operating Agreement whereby the
Parent Company conveyed to CCC, among others, the possession, occupancy, use and enjoyment
of the Toledo Mine Rights which include the operating rights pertaining to the mining claims
covered by the Mineral Production Sharing Agreement (MPSA) 210-2005-VII (the Mining
Rights). The parties have agreed that pursuant to such conveyance, CCC shall recognize
additional paid-in capital corresponding to the agreed value of the Mining Rights covered by the
Agreement. However, at the time of the execution of the Agreement, the value of the Mining
Rights had not been determined by a third party independent appraiser accredited by the SEC and
thus, the parties have not yet set the agreed value of the Mining Rights.
On September 19, 2007, the BOD of CCC amended its Articles of Incorporation to increase the
authorized capital stock of CCC to 3.20 billion shares.
On October 23, 2007, the Parent Company and CCC executed a Deed of Assignment and
Exchange of Assets for Shares of Stock (the “Assignment”) pursuant to Section 3.1 of the
Agreement. The Assignment was intended to cover certain immovable and movable assets
of the Parent Company which are referred to in the Agreement as Fixed Assets.
*SGVMC310103*

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The Assignment resulted to the subscription by the Parent Company to CCC’s common shares
amounting to P =809.16 million. In relation to the Assignment, the rehabilitation trust funds and the
liability for mine rehabilitation were also transferred to CCC in 2007.
On January 18, 2008, a duly accredited third party independent appraiser issued a complimentary
reasonably represented at US$127.90 million or = P5.47 billion. The related agreed value of Mining
Rights, transferred to CCC amounted to P =1.20 billion. The determination of the final agreed
values used for the Assignment resulted to the subsequent issuance of common stock and an
increase in additional paid-in capital in CCC amounting to P =809,162 and =P855,831, respectively.
On December 18, 2009, the Parent Company, CCC, CASOP Atlas BV (CABV), and CASOP
Atlas Corporation (CAC) entered into a Subscription Agreement which covers the subscription of
the Parent Company, CABV and CAC to a total of 84,811,387 common shares of CCC for an
aggregate consideration of P
=339.2 thousands (US$7.3 thousands) based on the subscription price
of =
P4 per share. Following the terms of the agreement, CCC issued common shares as follows:
Parent Company 46,188,281

CABV 19,311,553
CAC 19,311,553
As of December 31, 2009, a subscription receivable amounting to P=138,503 was recognized for
the unpaid portion of the above-described stock subscription. Such amount representing the
balance of the subscription price was paid on January 22, 2010.

Company conveyed to CCC its exploration, development and utilization rights with respect to
certain mining claims (the “Toledo Mineral Rights”) and the right to rehabilitate, operate and/or
maintain certain of its fixed assets (the “Fixed Assets”). In consideration of CCC’s use of the
Toledo Mineral Rights, the Agreement provides that CCC shall pay the Parent Company a fee
equal to 10% of the sum of the following:
during the life thereof to purchase outright all or part of the Toledo Mineral Rights owned by the
Parent Company, and the Fixed Assets by giving the Parent Company written notice of its
intention. The purchase of the Parent Company’s Mining Rights shall be in the form of CCC’s
shares of stock.
On July 9, 2008, the Parent Company signed the Mineral Production Sharing Agreement (MPSA)
264-2008-VII with the Government which provides for the rational exploration, development and
commercial utilization of copper, gold and other associated mineral deposits existing within the
contract area. The said MPSA is covered by the Agreement entered into by the Parent Company
with CCC on May 5, 2006.
*SGVMC310103*

- 25 -
On July 18, 2008, the Parent Company executed a deed of assignment in favor of CCC covering
the assignment of MPSA 264-2008-VII.
As of December 31, 2009, the Parent Company recognized P

=87,600 royalty income for the Parent
Company’s conveyance to CCC of the operating rights covering the mining claims owned by the
Parent Company pursuant to the Operating Agreement.
Toledo Copper Project operated by CCC

(CASOP) drawdown and loans from Deutsche Bank, the first phase of full rehabilitation of the
Toledo Mining Project commenced in September 2007. The initial phase of the rehabilitation was
focused on four major facilities needed to bring the mine into production at the earliest possible
time or within the 10-month target, namely: (a) the Carmen Concentrator; (b) the Land-based
Tailings Disposal (LBTD) System; (c) the South Lutopan open pit; and (d) the Sangi concentrate-
loading pier facility.
Phase I of the rehabilitation of CCC’s Toledo mine facilities was completed in

September 2008, enabling it to commence commercial operations thereafter at the initial milling
rate of 20,000 metric tons of copper ore per day. The first shipment of copper concentrates
weighing 5,625.86 wet metric tons (wmt) was made on December 29, 2008.
CCC completed 12 copper concentrate shipments in 2009 totaling 59.480 dmt.
in the People’s Republic of China under different consignees. The CCC-owned port became fully
operational at the start of the current year.
The major developments on the CCC’s project and associated support facilities include:
containing 40.24 million pounds (lbs.) of copper, 5,715 ounce (oz.) of gold and 54,330 oz. of
was dismantled.
*SGVMC310103*

- 26 -
Completion of the 1.80-kilometer long underground launder tunnel for the land-based tailings
The CCC’s manpower totaled 3,642 personnel comprising 3,442 regulars,
192 probationary and 8 project-hired.
Investment in AHI
The BOD approved on May 16, 2007 the execution and implementation of the Deed of Sale of the
Shares of Stock entered into between the Parent Company and Anscor Property Holdings, Inc.
(APHI) on the sale to the Parent Company of APHI’s 75,000 common shares in AHI or equivalent
to 99.99% of AHI’s total issued and outstanding shares. AHI is the holder of rights to certain
properties which will be needed in the operations of the Toledo copper mines. The execution of
the purchase of stocks of AHI was undertaken pursuant to the Memorandum of Agreement entered
into by the Parent Company with APHI on May 4, 2006 embodying the mechanics for the Parent
Company’s acquisition of rights over the AHI properties, which at that time were still in the name
of APHI. On September 1, 2008, the Parent Company acquired the remaining unissued
24,995 shares of stock with total par value of P
=2,499.
Berong Nickel Project operated by BNC

beneficiated nickel ore on a non-pioneer status.
On June 8, 2007, the government approved MPSA No. 235-2007-IVB in favor of BNC as the
Contractor. The MPSA covers a contract area of approximately 288 hectares situated in Barangay
Berong, municipality of Quezon, Province of Palawan.
In November 2008 and for the year 2009, BNC has decided not to continue its mining operations
in the Berong Project due to low nickel prices and demand. BNC continues to assess the potential
to re-open the Berong Project as a direct shipping operation, but no decision has been made to
resume mining operations.
Nevertheless, BNC was able to complete three shipments of laterite nickel ores in 2009, sourced
from its current stockpile.
7. Property and Equipment
The Parent Company’s property and equipment at cost, except for the land which is carried at
revalued amount, consist of the following:
December 31, 2009:

At Cost -
At Revalued Office Equipment,
Amount - Land Furniture and Fixtures Total
Revalued Amount/Cost
January 1 =337,956
P =2,522
P = 340,478
P
Additions – 128 128
(Forward)
*SGVMC310103*

- 27 -
At Cost -
Transfer (P
=22,068) =–
P (P
=22,068)
December 31 315,888 2,650 318,538
Accumulated Depreciation
January 1 – 1,583 1,583
Depreciation (Note 14) – 453 453
December 31 – 2,036 2,036
Allowance for Impairment
December 31 330 – 330
Net Book Values =315,558
P =614
P = 316,172
P
December 31, 2008:
At Cost -
Revalued Amount/Cost
January 1 =315,888
P =2,147
P =318,035
P
Additions 22,068 375 22,443
Disposals – – –
December 31 337,956 2,522 340,478
January 1 – 1,198 1,198
Depreciation (Note 14) – 385 385
December 31 – 1,583 1,583
Allowance for Impairment
December 31 330 – 330
P =939
P =338,565
P
Revaluation increment on land

The Parent Company’s parcels of land are stated at their revalued amounts based on the valuation
made in 2005. The resulting increase in the valuation of these assets amounting to =
P218,559 is
presented under “Revaluation Increment on Land” account, net of the related deferred income tax
liability, in the equity section of the consolidated balance sheets.
8. AFS Financial Assets
The Parent Company’s AFS financial assets consist of investments in:
2009 2008
Philippine Long Distance Telecommunications (PLDT) P
=22 =22
P
Toledo Mining Corporation (TMC) 5,193 –
P
= 5,215 =22
P
The Parent Company recognized an impairment loss amounting to P =15,891 in 2009 for its
investment (originally amounted to = P21) in the quoted common shares of TMC due to the
significant decline in fair value of the investment. The investment in PLDT pertains to preferred
shares quoted at =P22 as of December 31, 2009 and 2008. Allowance for impairment loss
recognized amounted to P =15,891 and nil as of December 31, 2009 and 2008, respectively.
*SGVMC310103*

- 28 -
The AFS financial asset pertaining to the shares of TMC is denominated in United Kingdom (UK)
Pence. As of December 31, 2009, the Parent Company recognized the investment using the
closing rate of €1.61 per US$ which resulted to the recognition of unrealized foreign exchange
loss amounting to P=2,641.
2009 2008
Nontrade P
=816,020 =527,628
P
Advances from Toledo Mining Corporation (TMC) 94,727 97,433
Accrued and other liabilities 68,907 75,003
Interest (Note 10) 66,818 18,396
P
= 1,046,472 =718,460
P
Nontrade payables consist largely of the liability to Toledo Power Corporation (TPC), subscription
payable due to CCC and other payables. Negotiations regarding the settlement of the liability to
TPC amounting to P=438,249 are still ongoing as of April 14, 2010 (see Note 21).
Advances from TMC pertain to the amounts advanced by TMC to BNC for and in behalf of the
Parent Company – for its share in the operating expenses of BNC (see Note 13). The advances are
in relation to the loan agreement signed by the Parent Company with TMC (see Note 10).
Accrued and other liabilities consist of the accrued salaries and accrued professional fees.
10. Loans Payable
Loans payable and long-term debt consist of:
2009 2008
Loans payable:
Anglo Philippine Holding Corporation (APHC) P
=506,405 =–
P
Spinnaker – 950,400
Total P
=506,405 =950,400
P
2009 2008
Long-term debt:
BDO P
=758,792 =
P–
Loan agreement with TMC

On April 17, 2006, the Parent Company signed a loan agreement with TMC for a three-year loan
with principal amount of US$5 million, which will be drawn over a period of time to meet the
funding contributions of the Parent Company with respect to its obligations in the Berong Nickel
Project. The loan bears interest at 10% per annum and is convertible into shares of stock of the
Parent Company at par and is secured by an assignment of the Parent Company’s share in earnings
*SGVMC310103*

- 29 -
from the Berong Nickel Project. On May 31, 2007, TMC exercised its rights under the loan
agreement to convert the drawdown loan aggregating US$2,750 dollars into the 12.98 million
shares of the Parent Company. As of December 31, 2009 and 2008, the balance is reported under
the “Deposits for future stock subscriptions” account under the equity section of the Parent
Company balance sheets.
Spinnaker Global Emerging Markets Fund Limited, Spinnaker Global Strategic

Fund Limited and Spinnaker Global Opportunity Fund Limited (Spinnaker)
On July 22, 2008, the Parent Company entered into a convertible loan agreement with Spinnaker
amounting to US$20,000. The loan was obtained primarily to invest the monies into CCC to fund
the Parent Company’s pro rata share of the completion costs in respect to CCC’s Toledo Copper
Project, and for the general working capital purposes of the Parent Company. The loan bears an
interest at 15% per annum and has a term of 90 days.
The loan is convertible into ordinary shares of the Parent Company. In 2008, the equity portion
identified with the loan amounted to P=76,973, which was also reversed in 2008 since the
prevailing market price of the Parent Company’s shares of stock was substantially lower than the
exercise price and due to the relatively short-term maturity of the loan.
On October 23, November 7, November 25 and December 23, 2008, the first, second, third and
fourth amendments, respectively, were executed for the extension of the maturity date of the loan.
On January 16, 2009, the Parent Company entered into a deed of pledge with Hongkong and
Shanghai Banking Corporation (HSBC) Limited, financial institution acting in fiduciary capacity,
in relation to the US$20,000 Spinnaker Loan. The pledge covers all the shares issued to the Parent
Company by AI, AEI, and URHI as a continuing security for the satisfaction and discharge of the
facility agreement with Spinnaker.
On July 10, 2009, the Parent Company, Spinnaker and HSBC executed the Fifth Amendment
extending the maturity date of the Spinnaker loan to September 30, 2009 with Spinnaker
undertaking not to sell, assign or transfer its interests in any obligation of the Parent Company. In
consideration of such extension and the relevant undertaking of Spinnaker, the Parent Company
agreed to, among others: (a) issue warrants to Spinnaker covering the right to subscription up to
29.0 million shares of the Parent Company at a subscription price of = P10 per share, (b) add all the
accrued and unpaid interest as of June 30, 2009 to the principal balance of the loan, and (c) cause
Alakor to transfer to Spinnaker a total of 36.5 million of its shares of stock in the Parent Company.
On July 24, 2009, the Parent Company, Alakor, Spinnaker and HSBC executed the Consent Letter
and Sixth Amendment Agreement which governs the assignment by Spinnaker to Alakor of a
portion of the Spinnaker Loan amounting to US$2,000 (the “Transferable Portion”). As a result of
the assignment, Spinnaker Global Emerging Markets Fund Limited and Spinnaker Global
Strategic Fund Limited were substituted by Alakor as creditors of the Parent Company to the
extent of US$2,000.
On December 1, 2009, the outstanding Spinnaker loan amounting to P =902,684 (US$19,122) was
paid in full using a portion of the proceeds of the US$25,000 loan facility extended by Banco de
Oro Unibank, Inc. and Globalfund Holdings, Inc. The decrease in the principal amount of the loan
on settlement date from US$20,000 is due to the net effect of the payment made by Alakor
amounting to P =96,060 (US$2,000) in August 2009 of which P =95,240 (US$1,983) pertains to
principal payment with the balance applied in interest (US$17) and the capitalization of interest
per Fifth Amendment amounting to P =21,105 (US$1,105) in June 30, 2009.
*SGVMC310103*

- 30 -
The related interest expense recorded for this loan amounted to P

=110,442 and P
=76,401 on
December 31, 2009 and 2008, respectively.
Indemnity Agreements with Alakor Corporation (Alakor)

To secure the Parent Company’s obligations under the Spinnaker loan agreement, Alakor executed
on July 23, 2008 and on October 17, 2008 a Deed of Pledge and a Supplemental Deed of Pledge,
respectively, covering the 418,304,961 shares of stock of Alakor in the Parent Company in favor
of the designated security trustee. In addition, an officer of the Parent Company executed a Deed
of Pledge on October 23, 2008, covering his 27 million shareholdings in the Parent Company.
Under these deeds, the Parent Company confirmed its undertaking to fully indemnify Alakor and
the officer for any loss, damage, liability, or injury that the latter may suffer by reason of, or in
connection with the pledge plus a certain percentage of the loan as security fee. Security fee
recorded as a result of these transactions amounted to P =28,146 and = P13,109 in 2009 and 2008,
respectively.
On October 23, 2008, the Parent Company, Spinnaker and the security trustee executed an
agreement amending the loan agreement for the extension of the term of the loan from 90 days to
104 days, which was further amended (the Second Amendment) for the extension of the term to
additional 19 days in consideration of the transfer to Spinnaker of 5 million common shares of the
Parent Company owned by Alakor. The Second Amendment provides an option to move the
maturity date further to December 9, 2008 in consideration of the transfer to Spinnaker of 2.5
million common shares of the Parent Company, which are owned by Alakor, and again to further
move the maturity date to December 16, 2008 in consideration of the transfer of another 2.5
million common shares of the Parent Company held by Alakor. This option was formally set out
in the Third Amendment.
On December 23, 2008, the Parent Company, Spinnaker and the security trustee executed an
amendment to the original indemnity agreement wherein the Parent Company was granted an
option to further extend the maturity of the loan, provided however, that the Parent Company shall
enter into a deed of pledge in favor of the security trustee in respect of its 1,562,500 common
shares in AEI, 1,749,995 common shares in URHI, 100,000 common shares in AI and 99,995
common shares in AHI, together with an irrevocable power of attorney from the Parent Company
which appoint the security trustee as the Parent Company’s attorney and which authorizes the
security trustee to sell the shares in the occurrence of Event of Default under the principal
agreement set out in the Spinnaker Loan.
As of December 31, 2008, a total of 10 million common shares of the Parent Company owned by
Alakor were transferred to Spinnaker. In consideration of the transfer of such shares by Alakor to
Spinnaker, the Parent Company shall pay Alakor an amount of = P100,000 which is equivalent to
the total par value of the shares. The amount due to Alakor is convertible into common shares of
the Parent Company at a conversion price of P=10 (unrounded amount) per share at the sole option
of Alakor and upon written notice of such conversion to the Parent Company. This resulted to
recognition of indemnity loss amounting to P=100,000.
As at the end of 2009, the shares of the Parent Company owed by Alakor totaling to 56,500,000
were transferred by Alakor to Spinnaker resulting in the recognition by the Parent Company of
indemnity losses amounting to P =465,000.
In December 2009, Alakor gave notice to the Parent Company of its intention to convert the full
amount of the obligation into 56,500,000 shares of stock of the Parent Company. As of
December 31, 2009, no shares have been issued pending the review and approval of the concerned
regulators.
*SGVMC310103*

- 31 -
Loan Agreement with APHC

On July 9, 2009, the Parent Company obtained a 1-year, 15% p.a. loan from APHC amounting to
=531,200 (US$ 11,500), with interest payable semi-annually. The loan is convertible to shares of
P
either AI on the date of maturity at a price to be agreed upon by either parties; or the Parent
Company on the date of maturity at P =10 per share. The proceeds of the loan shall be used for the
working capital requirements of the Parent Company and CCC, its subsidiary.
The loan has an embedded derivative that is required to be bifurcated resulting into the recognition
of a derivative liability and an unrealized mark-to-market loss amounting to P
=79,799 and = P31,052,
respectively, as of December 31, 2009. The interest expense recorded for this loan amounted
=45,808 as of December 31, 2009.
P
Banco de Oro Unibank, Inc., Global Fund Holdings, Inc. and Banco de Oro Unibank, Inc. - Trust
and Investment Group (BDO)
On November 27, 2009, the Parent Company entered into a 3-year, 10%, convertible loan and
security agreement with BDO (the “BDO Loan Agreement”) amounting to P =1.16 million
(US$25,000). The interest shall be payable on the last day of an interest period which has a six
month duration. The BDO loan was obtained primarily to pay the Spinnaker loans and to finance
the working capital requirements of the Parent Company and its subsidiaries. The loan is
prepayable at par plus a certain penalty.
On December 1, 2009, a portion of the proceeds of the BDO loan was used to settle fully the
Spinnaker loan outstanding as of the same date.
The interest expense recorded for this loan amounted to =

P18,686 as of December 31, 2009.
Security for BDO Loan

To secure the Parent Company’s obligations under the BDO Loan, Alakor and Mr. Martin
Buckingham (“Principal Shareholders”) created a pledge over a total of 357,000,000 of their
shares of stock in the Parent Company in favor of BDO (the “Pledged Shares”).
In the event of default, BDO shall have the option to require the Parent Company to substitute the
Pledged Shares with a pledge of the Parent Company’s shares in CCC.
Conversion of BDO Loan

Mandatory Conversion
The BDO Loan Agreement provides for the mandatory conversion of the entire amount of the
BDO Loan at the conversion price of = P10.00 when, during the term of the loan, the volume
weighted average price of the Parent Company’s shares of stock based on trading at the Philippine
Stock Exchange does not fall below P=13.00 per day for twenty (20) consecutive trading days.
Upon the issuance of shares of stock to BDO pursuant to the mandatory conversion, the BDO
Loan shall be deemed to have been paid in full.
Put Option
If, during the term of the BDO Loan, the events giving rise to mandatory conversion do not take
place (i.e., the Parent Company’s shares fail to trade at a volume weighted average price of P
=13.00
per day for twenty (20) consecutive days, BDO shall have the option to require the Parent
Company or the Principal Shareholders to purchase the notes representing the BDO Loan
(“Notes”) at a price equal to US$34,630 in lieu of the repayment of the US$25,000 principal
*SGVMC310103*

- 32 -
amount of the loan. In the event that the Parent Company is unable to purchase the Notes on the
put option exercise date, the Principal Shareholders shall purchase the Notes and shall pay for the
put option price through the assignment to BDO of such number of shares which are to be taken
from the pledged shares and which have an aggregate market value equal to the put option price of
US$34,630.
The combined values of the convertible and put options have negative fair values amounting to
=411,000 and P
P =398,000 at inception and year-end, respectively, resulting in the recognition of a
derivative liability and an unrealized mark-to-market gain of P
=398,457and P =12,740, respectively,
as of December 31, 2009.
Issuance of Warrants
Pursuant to the terms of the BDO Loan Agreement, the Parent Company issued to BDO on
December 1, 2009 warrants covering the right to subscribe to a total of 23,410,000 of the Parent
Company’s shares at the price of P =10.00 per share. The warrants may be exercised within a period
of five (5) years to be reckoned from the date of issuance.
Establishment of Accounts
Pursuant to the BDO Loan Agreement, the Parent Company established a Debt Service Account
(DSA) using a portion of the proceeds of the BDO Loan. The initial cash deposit amounting to
=115,500 (US$2,500) is restricted by BDO. As long as the BDO Loan remains outstanding, the
P
DSA is required to have a minimum maintaining balance equal to the aggregate amount of interest
payments due on all outstanding advances for two interest periods. This cash in bank deposit is
not classified as part of cash but still qualifies as part of the Parent Company’s current assets.
Under the terms of the BDO Loan Agreement, the designated collateral trustee shall invest and
reinvest the funds deposited in the DSA in government securities or, at the Parent Company’s
request, in other types and mix of investments. Per regulations issued by the Bangko Sentral ng
Pilipinas, funds held in the DSA are not covered by the Philippine Deposit Insurance Corporation,
and as such, any loss or depreciation in their value shall be for the account of the Parent Company.
11. Capital Stock and Deposits for Future Stock Subscriptions
Capital Stock
The details of capital stock as of December 31, 2009 and 2008 are as follow:
No. of Shares Amount

Authorized - =
P1 par value 1,200,000,000 P
=12,000,000
Issued and outstanding 1,048,931,882 P
=10,489,319
On May 19, 2006, the BOD of the Parent Company approved the increase in the authorized capital
stock of the Parent Company from = P12 million (divided into 1.2 billion common shares at par
value of P
=10 per share) to =
P20 million (divided into 2.00 billion shares at P
=10 par value per share).
The increase in authorized capital stock and the stock option to be offered to qualified directors,
officers and employees was approved by the stockholders on September 6, 2006 and during the
special meeting of the stockholders on February 9, 2007 (see Note 12).
*SGVMC310103*

- 33 -
On December 14, 2006, the SEC approved the Parent Company’s earlier application for the
increase in its authorized capital stock from P
=6.5 million to P
=12 million. Alakor and its various
assignees subscribed for =P5.5 million out of the P
=5.5 million increase at par value pursuant to the
Debt-for-Equity Swap Agreement between the Parent Company and Alakor.
On May 2, 2007, the BOD approved the conversion of the loan owed to CASOP amounting to
US$11.67 million, or P
=604.57 million, under the Debt Restructuring Agreement executed with the
Parent Company in May 2006. The debt was converted into 60.46 million common shares.
On December 5, 2007, the Parent Company issued 12.30 million common shares to Alakor in
connection with the conversion into equity of the debt owed by the Parent Company to Alakor
amounting to P
=121.93 million.
No application for increase in authorized capital was filed with the Securities and Exchange
Commission as of December 31, 2009 and 2008.

There was no movement in the deposits for future stock subscriptions account since 2007. The
analysis of the account follows:
Alakor TMC Total

December 31, 2006 =117,211
P =–
P =117,211
P
Conversion of debt into capital stock (117,211) – (117,211)
Deposits – 150,960 150,960
December 31, 2007 =–
P =150,960
P =150,960
P
12. Comprehensive Stock Option Plan
On July 18, 2007, the Parent Company’s stockholders and BOD approved and ratified the stock
option plan. The salient terms and features of the stock option plan, among others, are as follow:
Participants: directors, officers, managers and key consultants of the Parent Company and its
significantly owned subsidiaries;
i. Number of shares: 50,000,000 common shares to be taken out of the unissued portion of the
Parent Company’s authorized capital stock; 25,000,000 of the shares have already been
earmarked for the first-tranche optionees comprising of the Parent Company’s directors and
officers upon the approval of the Parent Company’s stockholders during the annual general
meeting held on July 18, 2007;
ii. Option period: Three years from the date the stock option is awarded to the optionees;
iii. Vesting period: 1/3 of the options granted will vest in each year; and
iv. Exercise price: Average closing price between the approval of the stockholders and the
BOD, which amounted to = P11.05 less a discount of 9.50%, or equivalent to P
=10.00.
*SGVMC310103*

- 34 -
During the stockholder’s meeting held on July 18, 2007, the 25,000,000 shares were granted to the
Parent Company’s directors and officers. The Parent Company uses the Black-Scholes to compute
for the fair value of the options together with the following assumptions as of July 18, 2007:
Spot price per share P15.00

=
Time to maturity 3 years
Volatility* 52.55%
Dividend yield 0.00%
*Volatility is calculated using historical stock prices and their corresponding logarithmic returns
No stock option has been awarded as of December 31, 2009 and 2008.
Share-based compensation expense and stock options outstanding, presented as part of additional
paid-in capital, amounted to =
P75,881 and P
=110,660 in 2009 and 2008, respectively.
13. Related Party Transactions
Related party relationships exist when one party has the ability to control, directly or indirectly
through one or more intermediaries, the other party or exercise significant influence over the other
party in making financial and operating decisions. Such relationships also exist between and/or
among entities which are under common control with the reporting enterprise, or between and/or
among the reporting enterprises and their key management personnel, directors or its stockholders.
The Parent Company’s transactions with related parties consist mainly of advances availed from
and granted to, which were entered into under normal commercial terms and conditions, for
administrative and operating costs and expenses and assignment of receivables and payables.
The Parent Company’s balance sheets include the following amounts resulting from the foregoing
transactions with related parties:
Nature of
Advances to related parties:
CCC Subsidiary P
= 631,473 =111,144
P
BNC Subsidiary 94,727 97,433
AEI Subsidiary 48,757 29,442
AI Subsidiary 27,669 22,025
URHI Subsidiary 3,006 3,006
NRHI Subsidiary 1,224 1,224
UNC Subsidiary 597 597
Alakor Stockholder 22,068 26,100
P
= 829,521 =290,971
P
Advances from related parties:

Alakor Stockholder P
= 743,808 =112,759
P
AHI Subsidiary 3,009 3,110
P
= 746,817 =115,869
P
*SGVMC310103*

- 35 -
The outstanding balances of advances to and from related parties consist mainly of cash advances
to cover for the administrative and operating expenses. These amounts are non-interest bearing
and are due and demandable to be paid when sufficient funds are available.
The amount due to Alakor of = P465,000 and =

P100,000 in 2009 and 2008, respectively, which
represents the liability of the Parent Company in relation to the indemnity obligation on the
Spinnaker loan (see Note 10).
In November 2008, the Parent Company contributed P =22,068 for the payment of the purchase
price of certain parcels of land which were conveyed by the Social Security System to Alakor. As
the Parent Company was unable to participate in the transaction covering the conveyance of the
properties, the amount contributed was treated as advances to Alakor which shall be repaid under
terms to be subsequently determined and subject to the provisions of existing loan agreements
executed by the Parent Company.
Advances to officers and employees as of December 31, 2009 and 2008 amounting to P =8,672 and
=
P9,162, respectively, pertain to the advances and loans extended by the Parent Company to its
officers and employees.
Compensation of Key Management Personnel

The Parent Company considers all seniors officers as key management personnel. Compensation
of key management personnel of the Parent Company are as follows:
2009 2008
Short-term benefits P
=15,634 =17,800
P
Retirement benefits 2,343 2,901
P
=17,977 =20,701
P
2009 2008
Professional and consultancy fees P
= 187,326 =10,628
P
Salaries, wages and benefits (Note 12) 85,740 138,040
Taxes and licenses 20,379 5,240
Entertainment, amusement and recreation 6,520 3,996
Transportation and travel 2,999 2,495
Communication, light and water 1,073 1,090
PSE listing, assessment and other processing fee 1,072 1,515
Repairs and maintenance 896 1,766
Depreciation (Note 7) 453 385
Office supplies 265 685
Training and development 204 5
Dues and subscriptions 13 73
Provision for impairment of receivables – 106
Others 29,187 38,304
P
= 336,127 =204,328
P
*SGVMC310103*

- 36 -
15. Retirement Benefits
The Parent Company has an unfunded defined benefit retirement plan covering substantially all of
its employees. The following tables summarize the components of net benefit expense
recognized in the profit and loss and the amounts recognized in the Parent Company balance
sheets.
a. The details of net retirement benefits cost follow:
2009 2008
= 1,090 =2,084
P
Interest cost on defined benefits obligation 735 973
Amortization of actuarial gain on obligation (560) (152)
P
= 1,265 =2,905
P
2009 2008
Beginning of year P
=12,096 =12,380
P
Retirement benefits cost 1,265 2,905
Benefits paid – (3,189)
End of year P
=13,361 =12,096
P
c. Changes in the present value of defined benefit obligation as of December 31 follow:
2009 2008
Beginning of year P
= 5,393 =9,730
P
Current service cost 1,090 2,084
Interest cost 735 973
Actuarial loss (gain) 944 (4,205)
Benefits paid – (3,189)
End of year P
= 8,162 =5,393
P
d. The details of accrued retirement benefits cost are as follow:
2009 2008
Defined benefits obligation P
= 8,162 =5,393
P
Fair value of plan assets – –
8,162 5,393
Unrecognized net actuarial gains 5,199 6,703
P
=13,361 =12,096
P
The principal assumptions used in determining retirement benefits cost for the Parent Company’s
defined benefit retirement plan as of January 1 follow:
2009 2008 2007

Discount rate 13.62% 10.00% 6.38%
Future annual increase in salary 10.00% 10.00% 10.00%
Average expected term of obligation 11 11 11
*SGVMC310103*

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Amounts for the current and previous periods follow:
2009 2008 2007 2006

Present value of defined benefit
obligation P
=8,162 P5,393
= =9,730
P =75,987
P
Experience adjustments 944 (4,205) (13,032) 38,920
The Parent Company’s latest actuarial valuation is as of December 31, 2009. The discount rate
used to determine the present value of defined benefit obligation as of December 31, 2009 is
10.33%.
16. Income Taxes
a. The components of provision for income tax are as follow:
2009 2008
Current:
MCIT P
= 2,075 =966
P
Final 1 137
2,076 1,103
Deferred 8,956 –
P
=11,032 =1,103
P
b. The reconciliation of benefit from income tax computed at the statutory income tax rates to the
provision for income tax follows:
2009 2008
Benefit from income tax computed at statutory
income tax rates (P
= 281,295) (P
= 138,203)
Additions to (reductions in) income tax
resulting from:
Deductible temporary differences and
carryforward benefits of NOLCO and MCIT
for which no deferred income tax assets
were recognized in the current year 122,820 59,291
Nondeductible expenses 162,765 41,786
Royalty income (26,280) –
Stock-based compensation expense 22,764 38,731
Mark-to-market loss on derivative liabilities 5,494 –
Impairment loss on AFS investments 4,767 –
Interest income (3) (502)
=11,032 =1,103
P
c. As of December 31, 2008, the deferred income tax liability amounting to = P 93,668 represents
the revaluation increment on land. As of December 31, 2009, the deferred income tax liability
amounting to P=102,624 represents the tax effect of unrealized foreign exchange gain
amounting to P=8,956 and the revaluation increment on land amounting to P =93,668.
*SGVMC310103*

- 38 -
d. The Parent Company has the following deductible temporary differences and carryforward
benefits of NOLCO and MCIT for which no DTA were recognized as it is not probable that
sufficient future taxable profits will be available against which the benefits can be utilized.
The deductible temporary differences and carryforward benefits follow:
2009 2008
Deductible temporary differences on:
Allowance for impairment on:
Inventory P
=334,051 =345,205
P
AFS financial assets 18,532 –
Land 330 330
Unrealized foreign exchange loss – 44,306
Security fee 28,146 13,109
Retirement benefits liability 13,361 12,096
Carryforward benefits of:
NOLCO 588,622 364,089
MCIT 14,302 13,752
e. As of December 31, 2009, the NOLCO and MCIT that can be claimed as deduction from
future taxable income follow:
Year Incurred Available Until NOLCO MCIT

2009 2012 =444,497
P P2,075
=
2008 2011 144,125 966
2007 2010 – 11,261
=588,622
P =14,302
P
Movements in NOLCO and MCIT follow:
2009 2008
NOLCO:
Beginning of year P
=364,089 =499,817
P
Additions 444,497 144,125
Expirations (219,964) (279,853)
End of year P
=588,622 =364,089
P
MCIT:
Beginning of year P
=13,752 =12,786
P
Additions 2,075 966
Expirations (1,525) –
End of year P
=14,302 =13,752
P
f. Republic Act (RA) No. 9337 or the Expanded-Value Added Tax (E-VAT) Act of 2005 took
changed from 38% to 42% of the interest income subjected to final tax, provided that effective
January 1, 2009, the rate shall be 33%.
*SGVMC310103*

- 39 -
g. On July 7, 2008, RA 9504, which amended the provisions of the 1997 Tax Code, became
effective. It includes provisions relating to the availment of the optional standard deduction
irrevocable for the taxable year for which the return is made. On September 24, 2008, the
Bureau of Internal Revenue issued Revenue Regulation 10-2008 for the implementing
guidelines of the law. The Parent Company opted not to avail OSD in 2009.
17. Foreign Currency-denominated Monetary Assets and Liabilities
The Parent Company’s foreign currency-denominated monetary assets and liabilities and their
Peso equivalents are as follow:
2009 2008
Assets:
Cash US$8 = 384
P US$2 =118
P
Receivables 2,050 94,727 2,050 97,433
Other current assets 2,917 120,693 – –
4,975 215,804 2,052 97,551
Liabilities:
liabilities 2,273 104,790 2,704 128,484
Loans payable 10,961 506,405 20,000 950,400
Long-term debt 16,424 758,792 – –
29,658 1,369,987 22,704 1,078,884
(US$24,683) (P
=1,154,183) (US$20,652) (P
=981,333)
As of December 31, 2009 and 2008, the exchange rates used were = P46.20 and = P47.52 (unrounded
figures), respectively, for each US$1. On April 14, 2010, the exchange rate is =
P44.93 for each
US$1.
Fair value of financial instruments

The carrying values and fair values of the financial instruments per category as of
December 31, 2009 and 2008 are as follow:
2009 2008 2009 2008
Financial assets
Cash =10,334
P =5,553
P =10,334
P =5,553
P
Receivables:
Advances to related parties 829,521 290,971 829,521 290,971
Royalties 87,600 – 87,600 –
Advances to officers and employees 8,364 8,854 8,364 8,854
Others 4,159 4,072 4,159 4,072
939,978 309,450 939,978 309,450
AFS financial asset 5,215 22 5,215 22
= 945,193
P =309,472
P = 945,193
P =309,472
P
*SGVMC310103*

- 40 -

2009 2008 2009 2008
Accounts payable and accrued liabilities:
Nontrade = 789,136
P =527,628
P = 789,136
P =527,628
P
Advances from and due to related
parties 746,817 115,869 746,817 115,869
Advances from TMC 94,727 97,433 94,727 97,433
Accrued and other liabilities 68,907 75,003 68,907 75,003
Interest 66,818 18,396 66,818 18,396
Loans payable 506,405 950,400 506,405 950,400
Long-term debt 758,792 – 758,792 –
Financial liability at FVPL:
Derivative liabilities 478,256 – 478,256 –
=3,509,858
P =1,784,729
P = 3,509,858
P =1,784,729
P
Cash, receivables and accounts payable and accrued liabilities

The carrying values approximate the fair values due to the relatively short-term maturity of these
financial instruments and advances to and from related parties will be settled on demand and when
available funds are obtained.

The fair values were determined by reference to market bid quotes as of balance sheet date.
Loans payable and long-term debt

The carrying value approximates fair value because of recent and regular repricing based on
market conditions
Fair values are estimated based on acceptable valuation models.
The Company uses the following hierarchy for determining and disclosing the fair value of
financial instruments by valuation technique:
inputs) (Level 3).
The fair value hierarchy of the financial assets as of December 31, 2009 is presented in the
following table:
Level 1 Level 2 Total

AFS quoted financial assets =5,215
P =–
P P
=5,215
Derivative liabilities – 478,256 478,256
Total =5,215
P =478,256
P P
= 483,471
There were no transfers between Level 1 and Level 2 fair value measurements and no transfers
into and out of Level 3 fair value measurements.
*SGVMC310103*

- 41 -
The Parent Company’s financial assets consist of cash, receivables and AFS financial assets,
which arise directly from its operations. On the other hand, the Parent Company’s financial
liabilities consist of accounts payable and accrued liabilities and loans payable. The main purpose
of these financial liabilities is to raise finances for the Parent Company’s operations.
Exposures to foreign exchange, equity price, interest rate, credit and liquidity risk arise in the
normal course of the Parent Company’s business activities. The main objectives of the Parent
Company’s financial risk management are as follow:
to identify and monitor such risks on an ongoing basis;

to minimize the risk’s potential adverse effects on the Parent Company’s financial
performance; and
to provide a degree of certainty about costs.
Foreign exchange risk

Foreign exchange risk is the risk to earnings or capital arising from changes in foreign exchange
rates. The Parent Company has foreign currency risk arising from its cash, accounts payable and
accrued liabilities and loans payable. To mitigate the risk of incurring foreign exchange losses,
foreign currency holdings are matched against the potential need for foreign currency in financing
equity investments and new projects.
The following table summarizes the impact on income before income tax of reasonably possible
changes in the exchange rates of US Dollar against the Peso as of December 31, 2009 and 2008:
US$ Appreciates/ Increase/

(Depreciates) (Decrease)
2009 2.31% (P
=26,342)
(2.31%) 26,342
2008 2.15% (21,064)
(2.15%) 21,064
There is no other impact of exchange rates on the Parent Company’s equity other than those
affecting profit or loss.
Equity price risk

Equity price risk is the risk that the value of a financial instrument will fluctuate because of
changes in market prices. The Parent Company is exposed to equity price risk because of
financial assets held by the Parent Company, which are classified as AFS financial assets.
Management believes that the fluctuation in the fair value of AFS financial assets will not have a
significant effect on the Parent Company financial statements.
Credit risk
Credit risk is the risk that the Parent Company could incur a loss if its counterparties fail to
discharge their contractual obligations. The Parent Company manages and controls credit risk by
doing business only with recognized, creditworthy third parties.
*SGVMC310103*

- 42 -
Receivable balances are monitored on an ongoing basis with the result that the Parent Company’s
exposure to bad debts is not significant.
With respect to credit risk arising from cash and AFS financial assets, the Parent Company’s
exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to
the carrying amount of these instruments.
The following table summarizes the gross maximum exposure to credit risk for the components of
the Parent Company balance sheets as of December 31, 2009 and 2008:
2009 2008
Financial assets
Cash P
=10,334 =5,553
P
Receivables:
Advances to related parties 829,521 290,971
Royalties 87,600 –
Others 4,159 4,072
939,978 309,450
AFS financial asset 5,215 22
P
=945,193 =309,472
P
It is the Parent Company’s policy to enter into transactions with a diversity of creditworthy parties
to mitigate any significant concentration of credit risk. The Parent Company has internal
mechanism to monitor the granting of credit and management of credit exposures. The Parent
Company has no significant concentration risk to a counterparty or group of counterparties.
The credit quality of financial assets is managed by the Parent Company using internal credit
ratings.
The credit quality by class of asset for the Parent Company’s financial assets as of
December 31, 2009 and 2008, based on credit rating system follows:
December 31, 2009:
Neither Past Due nor Impaired Past Due

Standard Substandard but Not
Cash in banks =9,518
P =–
P =–
P =–
P =–
P P
=9,518
Receivables:
Advances to related
parties – 829,521 – – – 829,521
Royalties – – 87,600 – – 87,600
and employees – 1,175 6,518 671 308 8,672
Others – – – 4,159 27,096 31,255
9,518 830,696 94,118 4,830 27,404 966,566
AFS financial assets 5,215 – – – – 5,215
=14,733
P =830,696
P =94,118
P =4,830
P =27,404
P P
=971,781
*SGVMC310103*

- 43 -
December 31, 2008:
Neither Past Due nor Impaired Past Due

Standard Substandard but Not
P =–
P =–
P =–
P =–
P =4,427
P
Receivables:
Trade – – – – 1,985 1,985
Advances to related
parties – 290,971 – – – 290,971
and employees – 6,761 – 2,093 308 9,162
Others – – 1,793 2,279 27,890 31,962
4,427 297,732 1,793 4,372 30,183 338,507
AFS financial assets 22 – – – – 22
=4,449 P
P =297,732 P1,793
= =4,372
P =30,183
P =338,529
P
before the maturity date. Standard grade receivable includes those that are collected on their due
dates even without an effort from the Parent Company to follow them up while receivables which
are collected on their due dates provided that the Parent Company made a persistent effort to
collect them are included under substandard grade receivables. Past due receivables and advances
include those that are either past due but still collectible or determined to be individually impaired.
The credit quality of the financial assets was determined as follows:
Cash and AFS financial asset are classified as “High Grade” since cash is placed in high
profile banking institutions while the concentration of AFS financial asset are invested in blue
chip shares of stock.
Receivables are classified as “Standard Grade” since the collection of the balances depends on
the availability of funds of existing and active parties, except for items specifically identified
below as past due but not impaired in 2008.
The aging analysis of the past due but not impaired receivables of the Parent Company as of
December 31, 2009 and 2008 follows:
December 31, 2009:
Past Due but Not Impaired

1 - 90 days 91 - 120 days 121- 180 days Total
Receivables:
employees P–
= =671
P =–
P =671
P
Others – – 4,159 4,159
=–
P =671
P =4,159
P =4,830
P
*SGVMC310103*

- 44 -
December 31, 2008
Past Due but Not Impaired

1 - 90 days 91 - 120 days 121- 180 days Total
Receivables:
employees P–
= =22
P P2,071
= P2,093
=
Others – 1,009 1,270 2,279
=–
P =1,031
P =3,341
P =4,372
P
Liquidity risk
Liquidity risk is defined as the risk that the Company may not be able to settle or meet its
obligations on time or at a reasonable price. The Parent Company’s objective is to maintain a
balance between continuity of funding and flexibility through the use of bank loans. The Parent
Company also manages its liquidity risk on a consolidated basis based on business needs, tax,
capital or regulatory considerations, if applicable, through numerous sources of finance in order to
maintain flexibility.
The following table shows the maturity profile of the Parent Company’s other financial liabilities
as well as the undiscounted cash flows from financial assets used for liquidity purposes as of
December 31, 2009:
More than 12
On demand 1 to 12 months months Total
P =–
P =–
P P9,518
=
Receivables:
Advances to related parties – 829,521 – 829,521
Advances to officers and employees – 8,364 – 8,364
Others – – 4,159 4,159
=9,518
P =837,885
P =4,159
P =851,562
P
Accounts payable and accrued liabilities:
Nontrade =–
P =816,020
P P–
= P816,020
=
Advances from and due to related parties 746,817 – – 746,817
Advances from TMC – – 94,727 94,727
Accrued and other liabilities – 68,907 – 68,907
Interest 66,818 – – 66,818
Loans payable – 546,284 – 546,284
Long-term debt – – 981,160 981,160
Derivative liabilities – 478,256 – 478,256
=813,635
P =1,909,467
P =1,075,887
P =3,798,989
P
As of December 31, 2008, the Parent Company’s accounts payable and accrued liabilities and
loans payable are due and demandable.
The Parent Company maintains a capital base to cover risks inherent in the business. The primary
objective of the Parent Company’s capital management is to optimize the use and earnings
potential of the Parent Company’s resources, ensuring that the Parent Company complies with
*SGVMC310103*

- 45 -
externally imposed capital requirements, if any, and considering changes in economic conditions
and the risk characteristics of the Parent Company’s activities. No significant changes have been
made in the objectives, policies and processes of the Parent Company from the previous years.
The table below summarizes the total capital considered by the Parent Company:
2009 2008
Capital stock P
= 10,489,319 =10,489,319
P
Additional paid-in capital 789,563 713,681
Deposits for future stock subscriptions 150,960 150,960
Deficit (11,548,595) (10,599,915)
(P
=118,753) =754,045
P
TPC and THC

In February 2002, TPC and its wholly owned subsidiary, Toledo Holdings Corporation (THC),
signed the following agreements with the Parent Company:
a. Release and Quitclaim, wherein the Parent Company assigns to THC a portion of an area
covered by two foreshore leases, three deep wells and portions of cadastral lots located in
Toledo City, Cebu in settlement of its obligations to TPC for financial assistance extended and
assumption of the Parent Company’s liability to National Power Corporation;
b. Deed of Absolute Sale, wherein the Parent Company sells to THC parcels of land under the
name of a trustee located in Don Andres Soriano, Toledo, Cebu in consideration of =
P62;
c. Easement of Road Right-of-Way, wherein the Parent Company grants TPC perpetual
easement of road right-of-way within the Parent Company’s mine site area in Toledo, Cebu;
d. Right to Use Facilities, wherein TPC grants the Parent Company the perpetual right to use the
former’s port facilities located in Toledo, Cebu as additional consideration to the latter for the
rights granted under the Easement of Road Right-of-Way Agreement;
e. Deed of Assignment of Rights, wherein the Parent Company assigns to THC all its rights,
interest, participation and obligations over the portions of the areas located in Sangi, Toledo,
which are covered by two foreshore leases in consideration of P =19,904; and
f. Deed of Absolute Sale, wherein the Parent Company sells to THC three deep wells located in
a lot under the name of a trustee in Calumpao, Toledo in consideration of P
=2,067. This
agreement likewise grants a perpetual right-of-way over the above described lot.
The Parent Company’s BOD, however, withheld ratification of the foregoing agreements due to
several reasons, namely: (a) the Parent Company believes that a more satisfactory and balanced
settlement can be reached with TPC to the advantage of all parties concerned; (b) the agreements
only dealt with a portion of the Parent Company’s liability to TPC; and (c) part of the land areas
ceded in the agreements are essential to future copper concentrate transport plans and are not
necessarily needed by TPC. Accordingly, the Parent Company did not reflect the transactions
resulting from the said agreements in the Parent Company’s records as of December 31, 2009 and
2008.
*SGVMC310103*

- 46 -
As of April 14, 2010, the Parent Company is renegotiating with TPC and THC the terms of the
agreements. The Parent Company believes that a satisfactory settlement with TPC and THC can
be reached.
22. Contingencies
The Parent Company is involved in various lawsuits and claims involving civil, labor, mining, tax
and other case. In the opinion of management, these lawsuits and claims, if decided adversely,
will not involve sums having material effect on the financial position or operating results of the
Parent Company.
23. Segment Information
The primary segment reporting format is determined to be the business segments since the Parent
Company is organized and managed separately according to the nature of the products and
services provided, with each segment representing a strategic business unit. The mining segment
is engaged in exploration and mining operations. Meanwhile, the non-mining segment is engaged
in services, bulk water supply or acts as holding company. The Parent Company has no mining
segment since it only acts as a holding company.
The Parent Company’s operating business segments remain to be neither organized nor managed
by geographical segment.
Non-mining
2009 2008
Segment results
= 937,649) (P
=394,865)
Provision for income tax 11,032 1,103
Net loss (P
= 948,681) (P
=395,968)
Assets
Segment assets P
=1,374,830 =650,610
P
Investments 2,379,676 2,213,454
P
=3,754,506 =2,864,064
P
Liabilities
Segment liabilities P
=1,804,134 =842,902
P
Unallocated liabilities 1,850,566 1,048,557
P
=3,654,700 =1,891,459
P
Capitalized expenditure P
=128 =22,443
P
Amortization 453 385
Interest expense 207,799 87,039
*SGVMC310103*

AMOSITE HOLDINGS, INC.
(A Wholly Owned Subsidiary of
Atlas Consolidated Mining and Development Corporation)
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Additional
Capital Paid-in
Stock Capital Deficit Total
BALANCES AT DECEMBER 31, 2007 P

=7,500,500 =55,000,000
P (P
= 1,870,051) P
=60,630,449
Issuance of additional capital stock (Note 6) 2,499,500 – – 2,499,500
Net loss for the year – – (86,181) (86,181)
Other comprehensive loss for the year – – – –
BALANCES AT DECEMBER 31, 2008 10,000,000 55,000,000 (1,956,232) 63,043,768
Net loss for the year – – (100,207) (100,207)
Other comprehensive loss for the year – – – –

=10,000,000 =55,000,000
P (P
= 2,056,439) P
=62,943,561
See accompanying Notes to Financial Statements.
*SGVMC310107*

STATEMENTS OF CASH FLOWS

2009 2008

=100,207) (P
=85,217)
Adjustment for interest income – (4,819)
Decrease (increase) in due from Parent Company (Note 4) 100,783 (3,109,794)
Increase in accrued liability – 75,000
Cash generated from (used in) operations 576 (3,124,830)
Interest received – 4,819
Final tax paid – (964)
Net cash flows generated from (used in) operating activities 576 (3,120,975)
CASH FLOWS FROM FINANCING ACTIVITY

Proceeds from issuance of capital stock (Note 6) – 2,499,500
NET INCREASE (DECREASE) IN CASH 576 (621,475)
CASH AT END OF YEAR P

=9,550 =8,974
P
*SGVMC310107*

NOTES TO FINANCIAL STATEMENTS
1. Corporate Information, Status of Operations and Authorization for Issue of the Financial
Statements
Amosite Holdings, Inc. (the Company), a wholly owned subsidiary of Atlas Consolidated Mining
and Development Corporation (ACMDC or the Parent Company), was registered with the
Philippine Securities and Exchange Commission (SEC) on October 17, 2006 primarily to
purchase, subscribe for, otherwise acquire and own, hold, use, manage, sell, assign, transfer,
mortgage, pledge, exchange or otherwise dispose of real and personal property of every kind and
decription, without however engaging as an investment company under the Investment Company
Act or as a real estate broker, developer or as realty company but only holds the foregoing assets
for purely investment purposes.
The registered business address of the Company is 7th Floor, Pacific Star Building, Makati
Avenue, Makati City.
Status of Operations
The Company has not yet started commercial operations.
Authorization for Issue of the Financial Statements

The financial statements were authorized for issue by the Board of Directors (BOD) on
March 15, 2010.
The financial statements of the Company have been prepared on the historical cost basis. These
financial statements are presented in Philippine Peso (Peso), which is the Company’s functional
currency. All amounts are rounded to the nearest Peso except when otherwise indicated.
The financial statements were prepared in accordance with Philippine Financial Reporting
Standards (PFRS).

that the Company has adopted the following new and amended PFRSs and Philippine
*SGVMC310107*

-2-
clearly, although not mandatory for use in the financial statements. The Company has elected
to present a single statement of comprehensive income and elected not to change the balance
sheet to statement of financial position.

reconciliation between the beginning and ending balance for level 3 fair value measurements
is now required, as well as significant transfers between levels in the fair value hierarchy. The
amendments also clarify the requirements for liquidity risk disclosures with respect to
derivative transactions and financial assets used for liquidity management. The fair value
measurement and liquidity risk disclosures are presented in Notes 8 and 9.
Adoption of the following new, revised and amended PFRS and Philippine Interpretations from
IFRIC and improvements to PFRS did not have any significant impact to the Company.
New and Revised Standards and Interpretations

Amendments to Standards and Interpretation

*SGVMC310107*

-3-

PAS 41, Agriculture

Has inventory risk
New Accounting Standards, Interpretations and Amendments to Existing Standards Effective

Subsequent to December 31, 2009
The Company will adopt the standards and interpretations enumerated below when these become
effective. Except as otherwise indicated, the Company does not expect the adoption of these new
and amended PFRS and Philippine Interpretations from IFRIC to have significant impact on its
Effective in 2010
Revised PFRS 3, Business Combinations and Amendments to PAS 27, Consolidated and
Separate Financial Statements
PFRS 3 (Revised) introduces significant changes in the accounting for business combinations
occurring after this date. Changes affect the valuation of non-controlling interest, the
accounting for transaction costs, the initial recognition and subsequent measurement of a
contingent consideration and business combinations achieved in stages. These changes will
impact the amount of goodwill recognized, the reported results in the period that an
acquisition occurs and future reported results. PAS 27 (Amended) requires that a change in
the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction
with owners in their capacity as owners. Therefore, such transactions will no longer give rise
to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes
the accounting for losses incurred by the subsidiary as well as the loss of control of a
subsidiary. The changes by PFRS 3 (Revised) and PAS 27 (Amended) will affect future
acquisitions or loss of control of subsidiaries and transactions with non-controlling interests.
PFRS 3 (Revised) will be applied prospectively while PAS 27 (Amended) will be applied
retrospectively with a few exceptions.

Transactions
The amendments to PFRS 2, Share-based Payments, effective for annual periods beginning on
or after January 1, 2010, clarify the scope and the accounting for group cash-settled share-
based payment transactions. The Company has concluded that the amendment will have no
impact on the financial position or performance of the Company as it has not entered into any
such share-based payment transactions.
*SGVMC310107*

-4-

Hedged Items
The amendment to PAS 39, Financial Instruments: Recognition and Measurement, effective
for annual periods beginning on or after July 1, 2009, clarifies that an entity is permitted to
designate a portion of the fair value changes or cash flow variability of a financial instrument
as a hedged item. This also covers the designation of inflation as a hedged risk or portion in
particular situations. The Company has concluded that the amendment will have no impact on
the balance sheet or statement of comprehensive income, as it has not entered into any such
hedges.
Philippine Interpretations IFRIC 17, Distributions to Non-Cash Assets to Owners

This Interpretation is effective for annual periods beginning on or after July 1, 2009 with early
application permitted. It provides guidance on how to account for non-cash distributions to
owners. The interpretation clarifies when to recognize a liability, how to measure it and the
associated assets, and when to derecognize the asset and liability. The Company does not
expect the Interpretation to have an impact on its financial statements as it has not made non-
cash distributions to shareholders in the past.
Improvements to PFRS Effective 2010

inconsistencies and clarifying wording. The amendments are effective for annual periods financial
years January 1, 2010 except otherwise stated. The Company has not yet adopted the following
amendments and anticipates that these changes will have no material effect on the financial
statements.

Clarifies that the contribution of a business on formation of a joint venture and
combinations under common control are not within the scope of PFRS 2 even though
they are out of scope of PFRS 3, Business Combinations (Revised). The amendment
is effective for financial years on or after July 1, 2009.

Clarifies that the disclosures required in respect of noncurrent assets and disposal
groups classified as held for sale or discontinued operations are only those set out in
PFRS 5. The disclosure requirements of other PFRS only apply if specifically
required for such noncurrent assets or discontinued operations.

Clarifies that segment assets and liabilities need only be reported when those assets
and liabilities are included in measures that are used by the chief operating decision
maker.

Clarifies that the terms of a liability that could result, at anytime, in its settlement by
the issuance of equity instruments at the option of the counterparty do not affect its
classification.

Explicitly states that only expenditure that results in a recognized asset can be
*SGVMC310107*

-5-
PAS 17, Leases

Removes the specific guidance on classifying land as a lease. Prior to the amendment,
leases of land were classified as operating leases. The amendment now requires that
leases of land are classified as either ‘finance’ or ‘operating’ in accordance with the

Clarifies that the largest unit permitted for allocating goodwill, acquired in a business
combination, is the operating segment as defined in PFRS 8 before aggregation for
reporting purposes.

Clarifies that if an intangible asset acquired in a business combination is identifiable
only with another intangible asset, the acquirer may recognize the group of intangible
assets as a single asset provided the individual assets have similar useful lives. Also
clarifies that the valuation techniques presented for determining the fair value of
intangible assets acquired in a business combination that are not traded in active
markets are only examples and are not restrictive on the methods that can be used.

Clarifies that a prepayment option is considered closely related to the host contract
when the exercise price of a prepayment option reimburses the lender up to the
approximate present value of lost interest for the remaining term of the host contract;
that the scope exemption for contracts between an acquirer and a vendor in a business
combination to buy or sell an acquiree at a future date applies only to binding forward
contracts, and not derivative contracts where further actions by either party are still to
be taken; and that gains or losses on cash flow hedges of a forecast transaction that
subsequently results in the recognition of a financial instrument or on cash flow
hedges of recognized financial instruments should be reclassified in the period that the
hedged forecast cash flows affect profit or loss.

Clarifies that it does not apply to possible reassessment at the date of acquisition, to
embedded derivatives in contracts acquired in a business combination between entities
or businesses under common control or the formation of joint venture.

States that, in a hedge of a net investment in a foreign operation, qualifying hedging
instruments may be held by any entity or entities within the group, including the
Effective in 2012

This interpretation covers accounting for revenue and associated expenses by entities that
undertake the construction of real estate directly or through subcontractors. This interpretation
when such contract qualifies as construction contract to be accounted for under PAS 11,
*SGVMC310107*

-6-
Construction Contracts, or involves rendering of services in which case revenue is recognized

based on stage of completion. Contracts involving provision of services with the construction
materials and where the risks and reward of ownership are transferred to the buyer on a continuous
basis will also be accounted for based on stage of completion.
Cash
Cash pertains to cash in bank.
Date of recognition
The Company recognizes a financial asset or a financial liability in the balance sheet when it
becomes a party to the contractual provisions of the instrument. Purchases and sales of financial
Initial recognition of financial instruments

All financial assets and financial liabilities are recognized initially at fair value. Except for
securities at fair value through profit or loss (FVPL), the initial measurement of financial assets
includes transactions costs. The Company classifies its financial assets in the following
categories: financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments
and available-for-sale (AFS) financial assets, as appropriate. The Company also classifies its
financial liabilities as at FVPL and other financial liabilities, as appropriate. The classification
depends on the purpose for which the investments were acquired or whether they are quoted in an
active market. The Company determines the classification of its financial assets and financial
liabilities at initial recognition and, where allowed and appropriate, re-evaluates such designation
at each financial year end.
Financial instruments are classified as liability or equity in accordance with the substance of the
contractual arrangement. Interest, dividends, gains or losses relating to a financial instrument or a
component that is a financial liability, are reported as expense or income. Distributions to holders
of financial instruments classified as equity are charged directly to equity, net of any related
income tax benefits.
As of December 31, 2009 and 2008, the Company has no financial assets at FVPL, AFS financial
assets and HTM investments or financial liabilities at FVPL.

Loans and receivables are nonderivative financial assets with fixed or determinable payments and
are not quoted in an active market. They arise when the Company provides money, goods or
services directly to a debtor with no intention of trading the receivables. After initial
effective interest method less any allowance for impairment. Gains or losses are recognized in
profit or loss when the loans and receivables are derecognized or impaired, as well as through the
amortization process.
Loans and receivables are included in current assets if maturity is within 12 months from the
balance sheet date. Otherwise, these are classified as noncurrent assets.
As of December 31, 2009 and 2008, loans and receivables consist of cash and due from Parent
Company.
*SGVMC310107*

-7-

This category pertains to financial liabilities that are not held for trading or not designated as
FVPL upon the inception of the liability. These include liabilities arising from operations or
borrowings (e.g., payables, accruals).
The financial liabilities are recognized initially at fair value and are subsequently carried at
amortized cost, taking into account the impact of applying the effective interest method of
amortization (or accretion) for any related premium, discount and any directly attributable
transaction cost.
As of December 31, 2009, the Company’s other financial liabilities include accrued liability.

The Company assesses at each balance sheet date whether a financial asset or group of financial
assets is impaired.

The Company first assesses whether an objective evidence of impairment exists individually for
financial assets that are individually significant, and collectively for financial assets that are not
individually significant. Objective evidence includes observable data that comes to the attention
of the Company about loss events such as but not limited to significant financial difficulty of the
counterparty, a breach of contract, such as a default or delinquency in interest or principal
payments probability that the borrower will enter bankruptcy or other financial reorganization. If
it is determined that no objective evidence of impairment exists for an individually assessed
similar credit risk and characteristics and that group of financial assets is collectively assessed for
If there is objective evidence that an impairment loss on loans and receivables carried at amortized
cost has been incurred, the amount of the loss is measured as the difference between the asset’s
carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset’s original effective interest
rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the
asset shall be reduced either directly or through the use of an allowance account. The amount of
the loss shall be recognized in profit or loss.

Financial assets
the Company retains the right to receive cash flows from the asset, but has assumed an
obligation to pay them in full without material delay to a third party under a ‘pass-through’
arrangement; or
*SGVMC310107*

-8-
the Company has transferred its rights to receive cash flows from the asset and either (a) has
asset.
Where the Company has transferred its rights to receive cash flows from an asset and has neither
of the asset, the asset is recognized to the extent of the Company’s continuing involvement in the
consideration that the Company could be required to repay.
cash-settled option or similar provision) on the transferred asset, the extent of the Company’s
continuing involvement is the amount of the transferred asset that the Company may repurchase,
on an asset measured at fair value, the extent of the Company’s continuing involvement is limited
to the lower of the fair value of the transferred asset and the option exercise price.
Where an existing financial liability is replaced by another from the same lender on substantially
liability, and the difference in the respective carrying amounts is recognized in profit or loss.

assets and liabilities are presented gross in the balance sheet.
Investment Properties
Investment properties consist of parcels of land owned by the Company, which are held primarily
for capital appreciation. Investment properties are measured at cost, including transaction costs,
less any accumulated impairment losses.
Investment properties are derecognized when either they have been disposed of or when the
investment property is permanently withdrawn from use and no future economic benefit is
expected from its disposal. Any gains or losses on the retirement or disposal of an investment
properties are recognized in profit or loss in the year of retirement or disposal.
Impairment of Nonfinancial Assets

The carrying values of investment properties are reviewed for impairment when events or changes
in circumstances indicate that the carrying value may not be recoverable. If any such indication
exists and where the carrying values exceed the estimated recoverable amounts, the assets or cash-
generating units are written down to their recoverable amounts. The recoverable amount of
property and equipment is the greater of the net selling price and value-in-use. Any impairment
loss is recognized in profit or loss.
*SGVMC310107*

-9-

The Company has issued capital stock that is classified as equity. Incremental costs directly
attributable to the issue of new capital stock are shown in equity as a deduction, net of tax, from
the proceeds.
Where the Company purchases the Company’s capital stock (treasury shares), the consideration
paid, including any directly attributable incremental costs (net of applicable taxes) is deducted
from equity attributable to the Company’s equity holders until the shares are cancelled or reissued.
Where such shares are subsequently reissued, any consideration received, net of any directly
attributable incremental transaction costs and the related tax effects, is included in equity
attributable to the Company’s equity holders. Amount of contribution in excess of par value is
accounted for as an additional paid-in capital. Additional paid-in capital also arises from
additional capital contribution from the shareholders.
Interest Income
Interest income is recognized as the interest accrues.
Operating Expenses
Operating expenses constitute costs of administering the business which are expensed as incurred.
Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the
laws used to compute the amount are those that are enacted or substantively enacted at the balance
sheet date.
Deferred income tax

Deferred income tax is provided using the balance sheet liability method, on all temporary
carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences. Deferred
income tax assets are recognized for all deductible temporary differences and carryforward
benefits of unused net operating loss carryover (NOLCO), to the extent that it is probable that
sufficient future taxable profit will be available against which the deductible temporary
differences and carryforward benefits of NOLCO can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient future taxable profits will be
available to allow all or part of the deferred income tax assets to be utilized. Unrecognized
deferred income tax assets are reassessed at each balance sheet date and are recognized to the
extent that it has become probable that sufficient future taxable profits will allow the deferred
income tax asset to be recovered.
expected to apply to the period when the asset is realized or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
*SGVMC310107*

- 10 -

Provisions are recognized when the Company has a present obligation (legal or constructive) as a
be required to settle the obligation and a reliable estimate can be made of the obligation.
Contingent liabilities are not recognized in the financial statements but are disclosed in the notes
to financial statements unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent assets are not recognized in the financial statements but disclosed
in the notes to financial statements when an inflow of economic benefits is probable.
Events After the Balance Sheet Date

Events afer balance sheet date that provide additional information about the Company’s position at
the balance sheet date (adjusting events) are reflected in the financial statements. Events afer
balance sheet date that are not adjusting events are disclosed in the notes to the financial
statements when material.
The preparation of the Company’s financial statements in accordance with PFRS requires
management to make judgments, estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. The judgments, estimates and assumptions are
based on management’s evaluation of relevant facts and circumstances as of date of the financial
statements. Actual results could differ from these estimates and assumptions used, and such will
be adjusted accordingly, when the effects become determinable.
Judgments
In the process of applying the Company’s accounting policies, management has made the
following judgments, apart from those involving estimations, which has the most significant effect
on the amounts recognized in the financial statements:

The Company classifies a financial instrument, or its component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
classification in the Company’s balance sheet.
Estimates and Assumptions

The key assumptions involving the future and other key sources of estimation at the balance sheet
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below:
Determination of impairment of investment properties

The Company determines whether its investment properties are impaired at least on an annual
basis. This requires an estimation of recoverable amount which is the higher of an asset’s or cash-
generating unit’s fair value less cost to sell and value-in-use. Estimating the value-in-use requires
the Company to make an estimate of the expected future cash flows from the cash-generating unit
and also to choose an appropriate discount rate in order to calculate the present value of those cash
flows. Estimating the fair value less cost to sell is based on the information available to reflect the
*SGVMC310107*

- 11 -
amount that the Company could obtain as of the balance sheet date. In determining this amount,
the Company considers the outcome of recent transactions for similar assets within the same
industry. As of December 31, 2009 and 2008, the Company does not have any provision for
impairment of its investment properties.

available to allow all or part of the deferred income tax assets to be utilized. The Company did not
recognize deferred income tax assets on the carryforward benefits of NOLCO amounting to
=
P2,065,243 and P =1,965,036 as of December 31, 2009 and 2008, respectively (see Note 7).
The Company either pays for some of the operating expenses incurred by ACMDC or the latter
shoulders the operating expenses of the Company. In 2009, ACMDC paid the operating expenses
incurred by the Company amounting to = P100,207. In 2008, the Company paid in advance certain
expenses on behalf of ACMDC amounting to P =925,000. Total outstanding receivables from
ACMDC amounted to = P3,009,011 and = P3,109,794 as of December 31, 2009 and 2008,
respectively, which are all noninterest-bearing and to be settled upon demand and when the funds
are available.
5. Investment Properties
Investment properties pertain to parcels of land located in Cebu with an aggregate area of 1,312.12
hectares. These investment properties were assigned to the Company in exchange for 50,000 of its
shares of stock (see Note 6). The fair value of the properties have not been determined on
transactions observable in the market because of lack of comparable data.
6. Equity
On November 22, 2006, Anscor Property Holdings, Inc. (APHI) assigned investment properties
amounting to P
=60,000,000 to the Company in exchange for issuance of shares of stock of the
Company upon confirmation by the Bureau of Internal Revenue (BIR) that the said exchange has
no tax consequences.
On February 26, 2007, the Company issued additional 18,750 shares of stock to APHI at par value
of P
=100 per share.
On March 1, 2007, the BIR confirmed that the exchange of investment properties for issuance of
shares of stock is not subject to income tax, capital gains tax, withholding tax, donor’s tax,
value-added tax nor documentary stamp tax. Consequently, the Company issued 50,000 shares of
stock with an issue value of =
P1,200 per share to APHI. The deposit for future stock subscription
amounting to P=60,000,000 was properly credited to capital stock and additional paid-in capital.
On May 11, 2007, ACMDC acquired 75,005 shares of stock of the Company that were held by
APHI, making the Company a wholly owned subsidiary of ACMDC.
*SGVMC310107*

- 12 -
On September 1, 2008, the Company’s BOD approved the issuance of the remaining 24,995
shares of stock to ACMDC with total par value of P
=2,499,500.
The movements of the Company’s issued and outstanding shares of stock follow:
Number of Shares
2009 2008
Beginning of year 100,000 75,005
Issuance of shares of stock 24,995
End of year 100,000 100,000
7. Income Taxes
a. In 2009, the Company has no provision for income tax. In 2008, the Company’s provision for
income tax pertains to final tax on interest income. The Company will not be subjected to
minimum corporate income tax until January 1, 2010.
b. The reconciliation between the benefit from income tax computed at the statutory income tax
rates and the provision for income tax at the effective income tax rate follows:
2009 2008
Benefit from income tax computed at the statutory
income tax rates (P
= 30,062) (P
= 29,826)
Additions to:
NOLCO for which deferred income tax asset
was not recognized in current year 30,062 27,011
Interest income already subjected to final tax – (723)
Effect of change in tax rate – 4,502
=– =964
P
As of December 31, 2009 and 2008, deferred income tax assets representing the carryforward
benefits of NOLCO amounting to = P2,065,243 and =
P1,965,036, respectively, were not
recognized because management believes that sufficient future taxable profits may not be
available to allow all or part of deferred income tax assets to be utilized prior to its expiration.
c. As of December 31, 2009, the NOLCO that can be claimed as deduction from future taxable
income follows:
Year Incurred Available Until Amount
2009 2012 =100,207
P
2008 2011 90,036
2007 2010 1,875,000
=2,065,243
P
Movements in NOLCO follow:

2009 2008
Beginning of year P
= 1,965,036 =1,875,000
P
Additions 100,207 90,036
Expirations – –
End of year P
= 2,065,243 =1,965,036
P
*SGVMC310107*

- 13 -
d. The Republic Act (RA) No. 9337 or the Expanded-Value Added Tax (E-VAT) Act of 2005
took effect on November 1, 2005. The new E-VAT law provides, among others, for change in
changed from 38% to 42% of the interest income subjected final tax, provided that, effective
e. On July 7, 2008, RA 9504, which amended the provisions of the 1997 Tax Code, became
effective. It includes provisions relatin to the availment of the optional standard deduction
for the implementing guidelines of the law.
The Company’s principal financial instruments comprise of cash, due from Parent Company and
accrued liability. The following table summarizes the carrying values and fair values of the
Company’s financial assets and financial liabilities per class as of December 31, 2009 and 2008:
2009 2008
Carrying Fair Carring Fair
Values Values Values Values
Financial Assets
Cash P
=9,550 P
=9,550 =8,974
P =8,974
P
Due from Parent Company 3,009,011 3,009,011 3,109,794 3,109,794
P
=3,018,561 P
=3,018,561 =3,118,768
P =3,118,768
P
Financial Liability
Other Financial Liability:
Accrued liability P
= 75,000 P
=75,000 =75,000
P =75,000
P
Due to the short-term nature of cash, due from Parent Company and accrued liability, the carrying
values of these financial instruments were assessed to approximate their fair values.
Financial Instruments Carried at Fair Value

As of December 31, 2009 and 2008, the Company has no financial instruments carried at fair
value. Thus, no disclosure on fair value hierarchy is necessary.
The main purpose of the Company’s financial instruments is to finance the Company’s operations.
The BOD has overall responsibility for the establishment and oversight of the Company’s risk
management framework. The Company’s risk management policies are established to identify
and manage the Company’s exposure to financial risks, to set appropriate transaction limits and
controls, and to monitor and assess risks and compliance to internal control policies. Risk
*SGVMC310107*

- 14 -
management policies and structure are reviewed regularly to reflect changes in market conditions
and the Company’s activities.
The main risks arising from the Company’s financial instruments are credit risk and liquidity risk.
The Company’s BOD reviews and adopts policies for managing each of these risks and they are
summarized below:
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other
party by failing to discharge an obligation. The Company deals only with counterparty duly
approved by the BOD.
The maximum exposure to credit risk of the Company pertains to its cash in bank amounting to
=9,550 in 2009 and P
P =8,974 in 2008, and due from Parent Company amounting to P =3,009,011 in
2009 and P
=3,109,794 in 2008. These financial assets are considered collectible on demand and no
impairment was identified as of December 31, 2009 and 2008, respectively.
Liquidity Risk
Liquidity risk arises from the possibility that an entity will encounter difficulty in raising funds to
meet associated commitments with financial instruments. The Company’s objective is to maintain
a continuity of funding until the Company commences operations.
The financial liability of the Company pertains to the accrued liability amounting to P
=75,000 as of
December 31, 2009 and 2008, which is payable on demand.
The undiscounted cash flows from financial assets used for liquidity purposes pertain to cash
amounting to P
=9,550 and P=8,974 and due from Parent Company amounting to P =3,009,011 and
P
The primary objective of the Company’s capital management policies is to ensure that it maintains
sufficient capital to safeguard its ability to continue as a going concern as evidenced by its ability
to pay its creditors, and to ensure that the Company provides returns for shareholders and benefits
for other stakeholders.
No changes were made in the objectives, policies and processes from the previous years.
The table below summarizes the total capital considered by the Company:
2009 2008
Capital stock P
=10,000,000 =10,000,000
P
Additional paid-in capital 55,000,000 55,000,000
Deficit (2,056,439) (1,956,232)
P
=62,943,561 =63,043,768
P
*SGVMC310107*

- 15 -
The Company manages its capital structure and makes adjustments to it in light of changes in
economic conditions. To maintain or adjust the capital structure, the Company may obtain cash
advances from ACMDC.
The Company had been able to meet its objectives, except for providing returns to its shareholders
as the Company is still in a deficit position. No changes were made in the objectives, policies or
processes for the years ended December 31, 2009 and 2008.
*SGVMC310107*

AQUATLAS, INC.
STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
Capital Stock Deficit Total
BALANCES AT DECEMBER 31, 2007 = 100,000

P (P
= 19,025,237) (P
=18,925,237)
Net loss for the year – (7,673,034) (7,673,034)
Other comprehensive income for the year – – –
BALANCES AT DECEMBER 31, 2008 100,000 (26,698,271) (26,598,271)
BALANCES AT DECEMBER 31, 2009 = 100,000

P (P
= 28,040,372) (P
=27,940,372)
*SGVMC310105*

AQUATLAS, INC.

2009 2008

Net loss (P
=1,342,101) (P
=7,673,034)
Loss on the disposal of office equipment (Note 4) 30,893 –
Adjustment for depreciation (Note 4) – 30,893
Operating loss before working capital changes (1,311,208) (7,642,141)
Increase (decrease) in accrued liabilities (4,332,963) 4,512,008
Increase in due to parent company (Note 5) 5,644,171 3,130,133
Net cash from operating activities – –

= 101,000 =101,000
P
*SGVMC310105*

AQUATLAS, INC.
Statements
AquAtlas, Inc. (the Company), a wholly owned subsidiary of Atlas Consolidated Mining
and Development Corporation (ACMDC or the Parent Company), was registered with the
Philippine Securities and Exchange Commission (SEC) on May 26, 2005 for the purpose of
providing and supplying wholesale or bulk water to local water districts and other customers and
providing other related and value added services.
The Company has no regular employee. It conducts its feasibility study and related activities
through the personnel independently contracted out to it by ACMDC. The registered business
address of the Company is 7th Floor, Quad Alpha Centrum, 125 Pioneer Street, Mandaluyong
City.
The Company has been continuously incurring significant losses amounting to P =1.3 million in
2009 and P=7.7 million in 2008 and is in a capital deficiency position of P
=27.9 million and
=26.6 million as of December 31, 2009 and 2008, respectively. To address this adverse condition,
P
ACMDC provides financial support to enable the Company to continue as a going concern.

The financial statements were authorized for issue by the Company’s Board of Directors (BOD)
on March 15, 2010.
2. Summary of Significant Accounting Policies and Financial Reporting Policies
The financial statements of the Company have been prepared using the historical cost basis. These
currency. All amounts are rounded to the nearest Peso except when otherwise indicated.
The financial statements have been prepared in accordance with Philippine Financial Reporting
Standards (PFRS).

*SGVMC310105*

-2-



*SGVMC310105*

-3-

PAS 41, Agriculture

Has inventory risk

Effective in 2010
*SGVMC310105*

-4-

Transactions

Hedged Items
hedges.


statements.



maker.
*SGVMC310105*

-5-

classification.

PAS 17, Leases


reporting purposes.




*SGVMC310105*

-6-
Effective in 2012

Cash in bank
Cash pertains to cash in bank.
Date of recognition

includes transactions costs. The Company classifies its financial assets in the following
categories: financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments
and available-for-sale (AFS) financial assets, as appropriate. The Company also classifies its
financial liabilities into FVPL and other financial liabilities, as appropriate. The classification
depends on the purpose for which the investments were acquired or whether they are quoted in an
active market. The required to buy those equity instruments (e.g., treasury shares) from another
party, or (b) the Company determines the classification of its financial assets and financial
liabilities at initial recognition and, where allowed and appropriate, re-evaluates such designation
at each financial year end.
a component that is a financial liability, are reported as expense or income. Distributions to
holders of financial instruments classified as equity are charged directly to equity, net of any
As of December 31, 2009 and 2008, the Company has no financial assets and financial liabilities
at FVPL, AFS financial assets and HTM investments.

are not quoted in an active market. They arise when the Company provides money, goods
or services directly to a debtor with no intention of trading the receivables. After initial
effective interest rate method less any allowance for impairment. Gains and losses are recognized
*SGVMC310105*

-7-
in profit or loss when the loans and receivables are derecognized or impaired, as well as through
the amortization process. Loans and receivables are included in current assets if maturity is within
12 months from the balance sheet date. Otherwise, these are classified as noncurrent assets.
As of December 31, 2009 and 2008, loans and receivables consist only of cash in bank.

These financial liabilities are recognized initially at fair value and are subsequently carried at
transaction cost.
As of December 31, 2009 and 2008, the Company’s other financial liabilities include accrued
liabilities and due to parent company.

assets is impaired.

financial assets that are individually significant, and collectively for financial assets that are not
individually significant. Objective evidence includes observable data that comes to the attention
of the Company about loss events such as but not limited to significant financial difficulty of the
counterparty, a breach of contract, such as a default or delinquency in interest or principal
payments probability that the borrower will enter bankruptcy or other financial reorganization. If
it is determined that no objective evidence of impairment exists for an individually assessed
similar credit risk and characteristics and that group of financial assets is collectively assessed for
rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the
asset shall be reduced either directly or through the use of an allowance account. The amount of
the loss shall be recognized in profit or loss.
*SGVMC310105*

-8-

Financial assets
arrangement; or
asset.

Office Equipment
Office and equipment are stated at cost less accumulated depreciation and any impairment in
value.
The initial cost of office equipment includes their purchase price and any directly attributable
costs of bringing the assets to their working condition and location for their intended use.
Expenditures incurred after the office equipment have been put into operation, such as repairs and
*SGVMC310105*

-9-
maintenance and overhaul costs, are normally recognized in profit or loss in the period in which
these costs are incurred. In situations where it can be clearly demonstrated that the expenditures
have resulted in an increase in the future economic benefits expected to be obtained from the use
of an item of office equipment beyond its originally assessed standard of performance, the
expenditures are capitalized as an additional cost of office equipment. When assets are retired or
otherwise disposed of, the cost and the related accumulated depreciation and any impairment loss
are removed from the accounts and any resulting gain or loss is recognized in profit or loss.
Depreciation is computed on a straight-line basis over the estimated useful life of the office
equipment which is three years.
The estimated useful life and depreciation method are reviewed periodically to ensure that these
are consistent with the expected pattern of economic benefits from items of office equipment.

The carrying values of office equipment is reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable. If any such indication
exists and where the carrying values exceed the estimated recoverable amounts, the assets or cash-
generating units are written down to their recoverable amounts. The recoverable amount of office
equipment is the greater of the fair value less cost to sell and value-in-use. Any impairment loss is
recognized in profit or loss.
Related Party Relationships and Transactions

Related party relationship exists when the party has the ability to control, directly or indirectly,
through one or more intermediaries, or exercise significant influence over the other party in
making financial and operating decisions. Such relationships also exist between and/or among
entities which are under common control with the reporting entity and its key management
personnel, directors or stockholders. In considering each possible related party relationship,
attention is directed to the substance of the relationships, and not merely to the legal form.
Capital Stock
the proceeds.
attributable to the Company’s equity holders.
Retained Earnings (Deficit)

The amount included in retained earnings (deficit) includes profit (loss) attributable to the
date. Retained earnings may also include effect of changes in accounting policy as may be
Operating Expenses
Operating expenses constitute costs of administering the business which are expensed as incurred.
*SGVMC310105*

- 10 -
Income Taxes
Current income tax
sheet date.
Deferred income tax

income tax asset is recognized for the carryforward benefit of unused net operating loss carryover
against which the carryforward benefit of NOLCO can be utilized.
The carrying amount of deferred income tax asset is reviewed at each balance sheet date and
Deferred income tax assets and deferred income liabilities are measured at the tax rates that are
right exists to set off current income tax assets against current income tax liabilities and the
deferred income taxes relate to the same taxable entity and the same taxation authority.

result of a past event, and it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the obligation.

Events after the balance sheet date that provide additional information about the Company’s
position at the balance sheet date (adjusting events) are reflected in the financial statements.
Events after the balance sheet date that are not adjusting events are disclosed in the notes to the
financial statements when material.
*SGVMC310105*

- 11 -
Judgments

Determination of fair value of financial assets

The Company carries certain financial assets at fair value, which requires extensive use of
accounting estimates and judgments. While significant components of fair value measurement
were determined using verifiable objective evidence (i.e., foreign exchange rates, interest rates,
volatility rates), the amount of changes in fair value would differ if the Company utilized a
different valuation methodology. Any changes in fair value of these financial assets would affect
profit or loss and equity. The carrying amounts and fair values of financial assets and financial
liabilities as of December 31, 2009 and 2008 are disclosed in Note 7.


=
P14,640,851 and P =23,128,422 as of December 31, 2009 and 2008, respectively
(see Note 6).
Estimation of useful life of office equipment

The useful life of office equipment is estimated based on the period over which this asset is
expected to be available for use. The estimated useful life is reviewed periodically and updated if
expectations differ from previous estimates due to asset utilization, internal technical evaluation,
technological changes, environmental and anticipated use of the assets tempered by related
industry benchmark information. It is possible that future results of operations could be materially
affected by changes in these estimates brought about by changes in factors mentioned. There is no
change in the estimated useful life of office equipment. The carrying value of office equipment
amounted to nil and P =30,893 as of December 31, 2009 and 2008, respectively (see Note 4).
*SGVMC310105*

- 12 -
Impairment of nonfinancial asset

The Company determines whether its office equipment is impaired at least on an annual basis.
This requires an estimation of recoverable amount, which is the higher of an asset’s or cash-
generating unit’s fair value less cost to sell and value-in-use. Estimating the value-in-use requires
the Company to make an estimate of the expected future cash flows from the cash-generating unit
and to choose an appropriate discount rate in order to calculate the present value of those cash
flows. Estimating the fair value less cost to sell is based on the information available to reflect the
amount that the Company could obtain as of the balance sheet date. In determining this amount,
the Company considers the outcome of recent transactions for similar assets within the same
industry. There is no indication of impairment of nonfinancial assets as of December 31, 2009
and 2008.
4. Office Equipment
The cost and accumulated depreciation of the Company’s office equipment amounted to P=92,679
and P
=61,786, respectively as of December 31, 2008. Depreciation amounted to =
P30,893 in 2008.
In 2009, the Company disposed the office equipment that resulted to a recognition of loss on
disposal amounting to P
=30,893.
5. Due to Parent Company
Due to parent company pertains to noninterest-bearing cash advances from ACMDC to finance the
working capital requirements of the Company and is settled upon demand and when funds are
available.
6. Income Taxes
a. There is no provision for current income tax in 2009 and 2008 because the Company is in a
tax loss position.
rates and the provision for income tax at the effective income tax rates follows:
2009 2008
Benefit from income tax computed
at the statutory income tax rates (P
= 402,630) (P
= 2,685,562)
Additions to:
NOLCO for which no deferred income tax asset
was recognized in current year 380,926 2,290,315
Nondeductible expense 21,704 13,528
Effect of change in tax rate 381,719
= =–
P
As of December 31, 2009 and 2008, deferred income tax asset representing the carryforward
benefits of NOLCO amounting to P =14,640,851 and P=23,128,422, respectively, were not
available to allow all or part of deferred income tax asset to be utilized prior to their
expiration.
*SGVMC310105*

- 13 -
income are as follows:

2009 2012 =1,269,753
P
2008 2011 7,634,383
2007 2010 5,736,715
=14,640,851
P
Movements in NOLCO follow:
2009 2008
Beginning of year P
=23,128,422 =18,925,501
P
Additions 1,269,753 7,634,383
Expirations (9,757,324) (3,431,462)
End of year P
=14,640,851 =23,128,422
P
changed from 38% to 42% of the interest income subjected final tax, provided that, effective
effective. It includes provisions relatin to the availment of the optional standard deduction
The Company’s principal financial instruments comprise of cash, accrued liabilities and due to
parent company. The following table summarizes the carrying values and fair values of the
Company’s financial assets and financial liabilities per class as of December 31:
2009 2008
Carrying Fair Carrying Fair
Financial Asset
Cash in bank P
=101,000 P
= 101,000 P101,000
= P101,000
=
P
=101,000 P
= 101,000 =101,000
P =101,000
P
(Forward)
*SGVMC310105*

- 14 -
2009 2008
Accrued liabilities P
=371,837 P
= 371,837 P4,704,800
= P4,704,800
=
Due to parent company 27,669,535 27,669,535 22,025,364 22,025,364
P
=28,041,372 P
=28,041,372 =26,730,164
P =26,730,164
P
Due to the short-term nature of cash in bank, accrued liabilities and due to parent company, the
carrying values of these financial instruments were assessed to approximate their fair values.

summarized below:
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other
party by failing to discharge an obligation. The Company deals only with counterparty duly
approved by the BOD.
The gross maximum exposure to credit risk of the Company pertains to its cash in bank amounting
to =
P101,000 in both years. Cash in bank is classified as high grade since this is deposited with a
reputable bank and can be withdrawn anytime.
Liquidity risk
The following tables show the maturity profile of the Company’s other financial liabilities, as well
as the undiscounted cash flows from loans and receivables used for liquidity purposes as of:
*SGVMC310105*

- 15 -
December 31, 2009:
Less than
On demand one year Total
Cash in bank =101,000
P =–
P P
= 101,000
Accrued liabilities =–
P =371,837
P P
=371,837
Due to parent company 27,669,535 – 27,669,535
=27,669,535
P =371,837
P P
=28,041,372
December 31, 2008:
Less than
Cash in bank =101,000
P =–
P =101,000
P
Accrued liabilities P–
= =4,704,800
P P4,704,800
=
Due to parent company 22,025,364 – 22,025,364
=22,025,364
P =4,704,800
P =26,730,164
P
The Company considers the following as capital:
2009 2008
Due to parent company = 27,669,535
P =22,025,364
P
Capital stock 100,000 100,000
Deficit (28,040,372) (26,698,271)
(P
=270,837) (P
=4,572,907)
The Company manages its capital structure and makes adjustments to it in the light of changes in
economic conditions. To maintain or adjust the capital structure, the Company may obtain
additional advances from ACMDC.
The Company had been able to meet its objectives except for providing returns to its shareholders
as the Company is still in a deficit position. No changes were made in the objectives, policies and
processes of the Company for the years ended December 31, 2009 and 2008.
*SGVMC310105*

ATLAS EXPLORATION INC.
STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
Capital Stock Deficit Total

= 2,500,000 (P
= 19,016,047) (P
= 16,516,047)
BALANCES AT DECEMBER 31, 2008 2,500,000 (33,194,189) (30,694,189)

= 2,500,000 (P
= 52,741,301) (P
= 50,241,301)
*SGVMC310106*


2009 2008

Net loss (P
=19,547,112) (P
=14,178,142)
Adjustment for depreciation (Note 4) 336,356 301,535
Interest income (260) –
Operating loss before working capital changes (19,211,016) (13,876,607)
Receivables (1,296) 23,923
Input value-added tax (76,659) (157,072)
Increase in:
Accrued liabilities 214,507 141,956
Due to related parties (Note 5) 19,337,089 14,029,170
Cash generated from operations 262,625 161,370
Interest received 260 –
Net cash used in operating activities 262,885 161,370
CASH FLOWS FROM INVESTING ACTIVITY

Acquisitions of property and equipment (Note 4) – (244,069)
NET INCREASE (DECREASE) IN CASH 262,885 (82,699)

= 311,294 =48,409
P
*SGVMC310106*

Statements
Atlas Exploration Inc. (the Company), a wholly owned subsidiary of Atlas Consolidated Mining
and Development Corporation (ACMDC) was registered with the Philippine Securities and
Exchange Commission (SEC) on August 26, 2005 primarily to engage in the business of
searching, prospecting, exploring and locating of ores and mineral resources and to conduct all
ground and airborne geophysical surveys and other work or means commonly regarded as
exploration work for the purpose of determining the existence of mineral resources, extent, quality
and quantity and the feasibility of mining them for profit.
The registered business address of the Company is 7th Floor, Quad Alpha Centrum, 125 Pioneer
Street, Mandaluyong City.
The Company has been continuously incurring net losses amounting to P =19.5 million in 2009 and
=14.2 million in 2008 and is in a capital deficiency position of P
P =50.2 million and P
=30.7 million as
of December 31, 2009 and 2008, respectively. The incurrence of net losses is mainly attributable
to the Company’s payment of administrative expenses and professional services during the year.
ACMDC provides the necessary level of financial support to address this adverse condition and to
enable the Company to continue as a going concern.

The financial statements were authorized for issue by the Board of Directors on March 15, 2010.
The financial statements of the Company have been prepared using the historical cost basis. These
currency. All amounts are rounded to the nearest Peso, except when otherwise indicated.
The financial statements have been prepared in accordance with Philippine Financial Reporting
Standards (PFRSs).

*SGVMC310106*

-2-

derivative transactions and financial assets used for liquidity management. The fair
valuemeasurement and liquidity risk disclosures are presented in Notes 7 and 8.


*SGVMC310106*

-3-

PAS 41, Agriculture

Has inventory risk

Effective in 2010
*SGVMC310106*

-4-

Transactions

Hedged Items
hedges.


statements.



maker.
*SGVMC310106*

-5-

classification.

PAS 17, Leases


reporting purposes.




*SGVMC310106*

-6-
Effective in 2012

Cash
Cash includes cash on hand and in bank.
Date of recognition

includes transactions costs. The Company classifies its financial assets in the following categories:
financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and available-
for-sale (AFS) financial assets, as appropriate. The Company also classifies its financial liabilities
into FVPL and other financial liabilities, as appropriate. The classification depends on the purpose
for which the investments were acquired or whether they are quoted in an active market. The
Company determines the classification of its financial assets and financial liabilities at initial
recognition and, where allowed and appropriate, re-evaluates such designation at each financial
year-end.
contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument or a
component that is a financial liability, are reported as expense or income. Distributions to holders
of financial instruments classified as equity are charged directly to equity, net of any related
income tax benefits.
As of December 31, 2009 and 2008, the Company has no financial assets at FVPL, AFS financial
assets, HTM investments and financial liabilities at FVPL.

effective interest method less any allowance for impairment. Gains and losses are recognized in
profit or loss when the loans and receivables are derecognized or impaired, as well as through the
*SGVMC310106*

-7-
Loans and receivables are included in current assets if maturity is within 12 months from the
balance sheet date. Otherwise, these are classified as noncurrent assets.
As of December 31, 2009 and 2008, this category includes the Company’s cash and receivables.

The financial liabilities are recognized initially at fair value and are subsequently carried at
transaction costs.
As of December 31, 2009 and 2008, this category includes the Company’s accrued liabilites and
due to related parties.

assets is impaired.

assets that are not individually significant. Objective evidence includes observable data that
comes to the attention of the Company about loss events such as but not limited to significant
financial difficulty of the counterparty, a breach of contract, such as a default or delinquency in
interest or principal payments probability that the borrower will enter bankruptcy or other
financial reorganization. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk and characteristics and that group of financial assets is
collectively assessed for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognized are not included in a collective
assessment of impairment.
(i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset
shall be reduced either directly or through the use of an allowance account. The amount of the
loss shall be recognized in profit or loss.
*SGVMC310106*

-8-

Financial assets
Financial asset (or, where applicable, a part of a financial asset or part of a group of similar
arrangement; or
retained substantially all risks and rewards of the asset, but has transferred control of the asset.
Financial liability is derecognized when the obligation under the liability is discharged, cancelled
or has expired.

Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts
and there is an intention to settle on a net basis, or to realize the asset and settle the liability
Input value-Added Tax (VAT)

Input VAT represents VAT imposed on the Company by its suppliers for the acquisition of goods
and services as required by Philippine taxation laws and regulations.
The input VAT is recognized as an asset and will be used to offset against the Company’s future
output VAT liabilities and any excess will be claimed as tax credits. Input VAT is stated at its
estimated NRV.
*SGVMC310106*

-9-

Property and equipment are stated at cost less accumulated depreciation and any impairment in
value.
The initial cost of property and equipment includes their purchase price and any directly
attributable costs of bringing the assets to their working condition and location for their intended
use. Expenditures incurred after the property and equipment have been put into operation, such as
repairs and maintenance and overhaul costs, are normally recognized in profit or loss in the period
in which these costs are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits expected to be obtained
from the use of an item of property and equipment beyond its originally assessed standard of
performance, the expenditures are capitalized as an additional cost of property and equipment.
When assets are retired or otherwise disposed of, the cost and the related accumulated depreciation
and any impairment loss are removed from the accounts and any resulting gain or loss is
Depreciation is computed on a straight-line basis over the estimated useful lives of the property
and equipment as follows:
Number of Years
Transportation equipment 5
Furniture and fixtures 2-5
Office equipment 2-5
The estimated useful lives and depreciation method are reviewed periodically to ensure that these
are consistent with the expected pattern of economic benefits from items of property and
equipment.
Depreciation and of items of property and equipment begins when it becomes available for use,
i.e., when it is in the location and condition necessary for it to be capable of operating in the
manner intended by management. Depreciation ceases at the earlier of the date that the item is
classified as held for sale (or included in a disposal group that is classified as held for sale) in
accordance with PFRS 5, Noncurrent Assets Held for Sale and Discontinued Operations, and the
date the item is derecognized.
Impairment of Noncurrent Nonfinancial Assets

The carrying values of property and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable. If any such
indication exists and where the carrying values exceed the estimated recoverable amounts, the
assets or cash-generating units are written down to their recoverable amounts. The recoverable
amount of property and equipment is the greater of the net selling price and value-in-use. Any
impairment loss is recognized in profit or loss.
Income Taxes
Current income tax
sheet date.
*SGVMC310106*

- 10 -
Deferred income tax

income tax assets are recognized for all deductible temporary differences and carryforward benefit
of unused net operating loss carryover (NOLCO), to the extent that it is probable that sufficient
future taxable profits will be available against which the deductible temporary differences and
carryforward benefit of NOLCO can be utilized.
right exists to offset current income tax assets against current income tax liabilities and the
Related Party Relationships and Transactions

Related party relationship exists when the party has the ability to control, directly or indirectly,
through one or more intermediaries, or exercise significant influence over the other party in
making financial and operating decisions. Such relationships also exist between and/or among
entities which are under common control with the reporting entity and its key management
personnel, directors or stockholders. In considering each possible related party relationship,
attention is directed to the substance of the relationships, and not merely to the legal form.

result of a past event, and it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the obligation.
Capital Stock
the proceeds.
*SGVMC310106*

- 11 -
Retained Earnings (Deficit)

The amount included in retained earnings (deficit) includes profit (loss) attributable to the
date. Retained earnings may also include effect of changes in accounting policy as may be
Operating Expenses
Operating expenses constitute costs of administering the business, which are expensed as incurred.

Events after the balance sheet date that are not adjusting events are disclosed in the notes to the
financial statements when material.
Judgments

Operating leases - Company as lessee

The Company has entered into property leases, where it has determined that all the risks and
rewards incidental and related to those properties are substantially retained by the lessors. As
such, these lease agreements are accounted for as operating leases.
*SGVMC310106*

- 12 -

Estimation of useful lives of property and equipment

The useful lives of property and equipment are estimated based on the period over which these
assets are expected to be available for use. The estimated useful lives are reviewed periodically
and updated if expectations differ from previous estimates due to asset utilization, internal
technical evaluation, technological changes, environmental and anticipated use of the assets
tempered by related industry benchmark information. It is possible that future results of
operations could be materially affected by changes in these estimates brought about by changes in
factors mentioned. There is no change in the estimated useful lives of the property and equipment.
As of December 31, 2009 and 2008, the carrying values of property equipment amounted to
=660,330 and P
P =996,686, respectively (see Note 4).
Impairment of nonfinancial assets

The Company determines whether its property and equipment are impaired at least on an annual
basis. This requires an estimation of recoverable amount, which is the higher of an asset’s or
cash-generating unit’s fair value less cost to sell and value-in-use. Estimating the value-in-use
requires the Company to make an estimate of the expected future cash flows from the cash-
generating unit and to choose an appropriate discount rate in order to calculate the present value of
those cash flows. Estimating the fair value less cost to sell is based on the information available to
reflect the amount that the Company could obtain as of the balance sheet date. In determining this
amount, the Company considers the outcome of recent transactions for similar assets within the
same industry. As of December 31, 2009 and 2008, the Company does not have any provision for
impairment of nonfinancial assets.

=
P41,338,270 and P =27,102,880 as of December 31, 2009 and 2008, respectively
(see Note 6).
December 31, 2009:

Transportation Office Furniture and
Equipment Equipment Fixtures Total
Cost
Beginning of year P650,000
= P912,010
= P40,009
= P1,602,019
=
End of year =650,000
P =912,010
P =40,009
P =1,602,019
P
Beginning of year 105,278 483,913 16,142 605,333
Depreciation for the year 100,000 216,351 20,005 336,356
End of year 205,278 700,264 36,147 941,689
P =211,746
P =3,862
P =660,330
P
*SGVMC310106*

- 13 -
December 31, 2008:
Transportation Office Furniture and

Equipment Equipment Fixtures Total
Cost
Beginning of year =650,000
P =707,950
P =–
P =1,357,950
P
Additions – 204,060 40,009 244,069
Disposal – – – –
End of year 650,000 912,010 40,009 1,602,019
Beginning of year 5,278 298,520 – 303,798
Depreciation for the year 100,000 185,393 16,142 301,535
Disposal – – – –
End of year 105,278 483,913 16,142 605,333
P =428,097
P =23,867
P =996,686
P
Due to related parties account pertains mainly to noninterest-bearing cash advances from ACMDC
to finance the working capital requirements of the Company and to be settled upon demand and
when the funds are available. Outstanding payables to ACMDC amounted to P =48,756,634 and
P
The account also includes payable to Carmen Copper Corporation (CCC), an affiliate, amounting
to =
P2,117,721 and =
P2,095,221 as of December 31, 2009 and 2008, respectively, for which CCC
paid in advance certain expenses on behalf of the Company. These are non-interest bearing and to
be settled upon demand and when the funds are available.
The rent expense amounting to P =437,795 and P =79,631 as of December 31, 2009 and 2008,
respectively, recognized in profit or loss, pertains to its proportionate share for the rental of the
office space occupied by ACMDC.
6. Income Taxes
a. The Company has no provision for income tax for the years ended December 31, 2009 and
2008, since it is in a tax loss position.
rates and the provision for income tax at the effective income tax rate follows:
2009 2008
Benefit from income tax computed at the statutory
income tax rates (P
= 5,864,133) (P
= 4,962,350)
Additions to:
NOLCO for which deferred income tax asset
was not recognized in current year 5,826,549 4,185,837
(Forward)
*SGVMC310106*

- 14 -
2009 2008
Nondeductible expense P
=37,662 =78,874
P
Interest income subjected to final tax (78) –
Effect of change in tax rate – 697,639
Provision for income tax P=– =–
P
As of December 31, 2009 and 2008, deferred income tax asset representing the carryforward
benefit of NOLCO amounting to = P41,338,011 and P=27,102,880, respectively, was not
available to allow all or part of the deferred income tax asset to be utilized prior to their
expiration.
income follows:

2009 2012 =19,421,830
P
2008 2011 13,952,789
2007 2010 7,963,651
=41,338,270
P
The following are the movements in NOLCO:
2009 2008
Beginning of year P
=27,102,880 =17,633,618
P
Additions 19,421,830 13,952,789
Expirations (5,186,440) (4,483,527)
End of year P
=41,338,270 =27,102,880
P
*SGVMC310106*

- 15 -
The Company’s principal financial instruments comprise of cash, receivables, accrued liabilities
and due to related parties. The following table summarizes the carrying values and fair values of
the Company’s financial assets and financial liabilities per class as of December 31 2009 and
2008:
2009 2008
Financial Assets
Cash on hand P
=268,409 P
= 268,409 =5,783
P =5,783
P
Cash in banks 42,885 42,885 42,626 42,626
Receivables 81,315 81,315 80,019 80,019
P
=392,609 P
= 392,609 =128,428
P =128,428
P
Accrued liabilities P
=653,616 P
= 653,616 =439,109
P =439,109
P
Due to related parties 50,874,355 50,874,355 31,537,266 31,537,266
P
= 51,527,971 P
=51,527,971 =31,976,375 =
P P31,976,375
Due to the short-term nature of cash, receivables, accrued liabilities and due to related parties, the
carrying values of these financial instruments were assessed to approximate their fair values.

summarized below:
Credit Risk
Credit risk is the risk that the Company will incur losses if its counterparties fail to discharge their
contractual obligations.
*SGVMC310106*

- 16 -
The table below shows the gross maximum exposure to credit risk for the components of the
balance sheets:
2009 2008
Cash in banks P
=42,885 =42,626
P
P
= 124,200 =122,645
P
Cash in banks are classified as high grade since these are deposited with reputable banks and can
be withdrawn anytime.
Significant portion of the Company’s receivables balances pertain to advances to employees,

which the Company classifies as past due, but not impaired since these are still collectible
although had been long-outstanding.
Liquidity Risk
The following tables show the maturity profile of the Company’s financial liabilities, other
financial liabilities as well as the undiscounted cash flows from financial assets used for liquidity
purposes as of:
December 31, 2009:
Less than
P =–
P P
= 42,885
Receivables – 81,315 81,315
=42,885
P =81,315
P P
=124,200
Accrued liabilities =–
P =653,616
P P
=653,616
Due to related parties 50,874,355 – 50,874,355
=50,874,355
P =653,616
P P
=51,527,971
December 31, 2008:

Less than
P =–
P =42,626
P
Receivables – 80,019 80,019
=42,626
P =80,019
P =122,645
P
Accrued liabilities P–
= =439,109
P P439,109
=
Due to related parties 31,537,266 – 31,537,266
=31,537,266
P =439,109
P =31,976,375
P
*SGVMC310106*

- 17 -
2009 2008
Due to ACMDC = 48,756,634
P =29,442,045
P
Capital stock 2,500,000 2,500,000
Deficit (52,741,301) (33,194,189)
(P
= 1,484,667) (P
=1,252,144)
The Company expects to meet its capital management objectives once it has commenced its
operations. Currently, the Company manages its capital structure and makes necessary
adjustments to it in the light of changes in economic conditions. To maintain or adjust the capital
structure, the Company may obtain additional advances from ACMDC.
*SGVMC310106*

BERONG NICKEL CORPORATION
Retained
Capital Stock Earnings Total
Balances at December 31, 2007 =303,750,000
P =395,812,748
P =699,562,748
P
Total comprehensive loss for the year – (145,879,668) (145,879,668)
Balances at December 31, 2008 303,750,000 249,933,080 553,683,080
Total comprehensive loss for the year – (142,440,297) (142,440,297)
Balancess at December 31, 2009 =303,750,000
P =107,492,783
P =411,242,783
P
*SGVMC407818*


2009 2008
= 142,769,963) (P
= 146,348,286)
Adjustments for:
Depreciation and depletion (Notes 8 and 18) 54,325,231 54,297,927
Accretion expense for provision for mine rehabilitation and
decommissioning (Notes 11 and 19) 1,098,887 1,031,644
Gain on disposal of property and equipment (Note 20) (347,731) –
Interest income (Notes 4 and 19) (177,337) (245,425)
Interest expense (Note 19) 151 26,430
Operating loss before changes in working capital (87,870,762) (91,237,710)
Trade and other receivables (940,949) (4,012,300)
Inventories 75,787,720 (73,095,925)
Other current assets (73,930) (9,333,876)
Decrease in trade and other payables (45,496,708) (28,123,039)
Net cash used in operations (58,594,629) (205,802,850)
Interest received 177,337 245,425
Interest paid (151) (26,430)
Net cash flows used in operating activities (58,417,443) (205,583,855)
Acquisition of property and equipment (Note 8) (7,604,767) (147,175,376)
Proceeds from disposal of property and equipment 1,181,920 –
Deferred mine exploration costs (3,364,402) (15,078,007)
Other noncurrent assets 3,984,111 4,690,975
Net cash flows used in investing activities (5,803,138) (157,562,408)
CASH FLOW FROM FINANCING ACTIVITY
Increase in advances from stockholders 45,404,112 378,263,263
NET INCREASE (DECREASE) IN CASH (18,816,469) 15,117,000
AT BEGINNING OF YEAR 70,045,756 54,928,756
CASH AND CASH EQUIVALENTS AT END OF YEAR P
=51,229,287 =70,045,756
P
*SGVMC407818*

1. Corporate Information and Status of Operations
a. Corporate Information
Berong Nickel Corporation (the Company) was registered with the Philippine Securities and
Exchange Commission on September 27, 2004, for the purpose of exploring, developing and
mining the Berong Mineral Properties located in Barangay Berong, Quezon, province of
Palawan. The Company shall have the exclusive privilege and right to explore, develop, mine,
operate, produce, utilize, process and dispose of all the minerals and the products or
by-products that may be produced, extracted, gathered, recovered, unearthed or found within
the Mineral Properties, inclusive of Direct Shipping Project, under a Mineral Production
Sharing Agreement (MPSA) with the Government of the Philippines or under any appropriate
rights granted by law or the Government of the Philippines.
The Company is 60% owned by Nickeline Resources Holdings, Inc. (NRHI), 21.3% owned by
Toledo Mining Corporation (TMC) and 18.7% owned by European Nickel PLC (EN)
(see Note 12). Its ultimate parent is Atlas Consolidated Mining and Development Corporation
(ACMDC).
The registered office address of the Company is 7th Flr. Quad Alpha Centrum, 125 Pioneer
b. Status of Operations
In 2005, following the grant of temporary exploration permit by the Philippine Government,
the Company commenced a confirmatory exploration and resampling program in the initial
production area of the “Berong Nickel Mining Project” (the Berong Project).
In 2006, after establishing that economically recoverable reserves exist in the area, the
Company proceeded to develop the area into commercial mining operation. On
November 24, 2006, the Company was issued a Special Mines Permit (SMP) by the
Department of Environment and Natural Resources (DENR), through the Mines and
Geosciences Bureau (MGB) subject to the pertinent provisions of DENR Administrative
Order No. 96-40. The SMP has a term of one (1) year and is renewable for a further one (1)
year. The issuance of the SMP allowed the Company to commence its mining operations
while it completes a feasibility report as part requirement for the Company’s commercial
MPSA application.
On May 28, 2007, the Company was registered with the Board of Investments (BOI) as a new
producer of beneficiated nickel ore on a non-pioneer status (see Note 27).
On June 8, 2007, the government approved MPSA No. 235-2007-IVB in favor of the
Company as the Contractor. The MPSA covers a contract area of approximately two hundred
eighty-eight (288) hectares situated in Barangay Berong, municipality of Quezon, province of
Palawan.
*SGVMC407818*

-2-
In November 2008 and for the year 2009, the Company has decided not to continue its mining
operations in the Berong Project due to low nickel prices and demand. The Company
continues to assess the potential to re-open the Berong Project as a direct shipping operation,
but no decision has been made to resume mining operations.
The financial statements of the Company as at and for the years ended December 31, 2009 and
2008 were authorized for issue by the Board of Directors (BOD) on March 3, 2010.
2. Basis of Preparation, Statement of Compliance and Summary of Significant Accounting

Policies
The accompanying financial statements of the Company have been prepared on a historical cost
basis. The financial statements are presented in Philippine peso, which is the Company’s
functional and presentation currency under the Philippine Financial Reporting Standards (PFRS).
All values are rounded to the nearest peso except as otherwise indicated.
The financial statements of the Company have been prepared in compliance with the PFRS.
Changes in Accounting Policies and Disclosures

The accounting policies adopted are consistent with those of the previous financial year except for
the adoption of the following PFRS, Philippine Interpretation International Financial Reporting
Interpretations Committee (IFRIC) and amendments as at January 1, 2009:
New Standards and Interpretations

Philippine Accounting Standards (PAS) 1, Presentation of Financial Statements
Amendments to Standards
PAS 32 and PAS 1 Amendments - Puttable Financial Instruments and Obligations Arising on
Liquidation
PFRS 1 and PAS 27 Amendments - Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate
PFRS 2 Amendment - Vesting Conditions and Cancellations
PFRS 7 Amendments - Improving Disclosures about Financial Instruments
Philippine Interpretation IFRIC 9 and PAS 39 Amendments - Embedded Derivatives
Standards or interpretations that have been adopted and that are deemed to have an impact on the
financial statements or performance of the Company are described below:
Amendments to PAS 1, Presentation of Financial Statements, separates owner and non-owner

changes in equity. The statement of changes in equity includes only details of transactions
with owners, with non-owner changes in equity presented in a reconciliation of each
*SGVMC407818*

-3-
component of equity. In addition, the standard introduces the statement of comprehensive

income: it presents all items of recognized income and expense, either in one single statement,
or in two linked statements. The Company has elected to present one single statement.
Amendments to PFRS 7, Improving Disclosures about Financial Instrument, requires

additional disclosures about fair value measurement and liquidity risk. Fair value
measurements related to items recorded at fair value are to be disclosed by source of inputs
using a three level fair value hierarchy, by class, for all financial instruments recognized at fair
value. In addition, a reconciliation between the beginning and ending balance for level 3 fair
value measurements is now required, as well as significant transfers between levels in the fair
value hierarchy. The amendments also clarify the requirements for liquidity risk disclosures
with respect to derivative transactions and financial assets used for liquidity management. The
fair value measurement disclosures are presented in Note 25. The liquidity risk disclosures are
not significantly impacted by the amendments and are presented in Note 24.
Improvements to PFRSs
PAS 19, Employee Benefits, revises the definition of “past service costs” to include reductions
in benefits related to past services (“negative past service costs”) and to exclude reductions in
benefits related to future services that arise from plan amendments. Amendments to plans
that result in a reduction in benefits related to future services are accounted for as a
curtailment.
Revises the definition of “return on plan assets” to exclude plan administration costs if they
have already been included in the actuarial assumptions used to measure the defined benefit
obligation.
Revises the definition of “short-term” and “other long-term” employee benefits to focus on
the point in time at which the liability is due to be settled.
Deletes the reference to the recognition of contingent liabilities to ensure consistency with
PAS 37, Provisions, Contingent Liabilities and Contingent Assets.
PAS 36, Impairment of Assets, when discounted cash flows are used to estimate “fair value
less cost to sell” additional disclosure is required about the discount rate, consistent with
disclosures required when the discounted cash flows are used to estimate “value in use”.
Except for the adoption of amendments to PAS 1 and PFRS 7, and improvements to PAS 19 and
PAS 36, the above changes in PFRS did not have any significant effect to the Company.
Future Changes in Accounting Policies

The Company has not applied the following PFRS and Philippine Interpretations which are not
effective for the year ended December 31, 2009:
Effective in 2010:
Revised PFRS 3, Business Combinations and Amended PAS 27, Consolidated and Separate
Financial Statements, are effective for annual periods beginning on or after July 1, 2009.
Revised PFRS 3 introduces significant changes in the accounting for business combinations
*SGVMC407818*

-4-
acquisition occurs and future reported results. Amended PAS 27 requires that a change in the
ownership interest of a subsidiary (without loss of control) is accounted for as a transaction
subsidiary. The changes by revised PFRS 3 and amended PAS 27 will affect future
Revised PFRS 3 will be applied prospectively while amended PAS 27 will be applied
Philippine Interpretation IFRIC 17, Distributions of Non-Cash Assets to Owners, is effective

for annual periods beginning on or after July 1, 2009 with early application permitted. It
provides guidance on how to account for non-cash distributions to owners. The interpretation
clarifies when to recognize a liability, how to measure it and the associated assets, and when
to derecognize the asset and liability. The Company does not expect the interpretation to
have an impact on the financial statements as the Company has not made non-cash
distributions to shareholders in the past.
Amendment to PAS 39, Eligible Hedged Items, clarifies that an entity is permitted to
particular situations. The Company has concluded that the amendment will have no impact
on the financial position or performance of the Company, as the Company has not entered
into any such hedges.
Amendments to PFRS 2, Group Cash-settled Share-based Payment Transactions, clarifies the

scope and the accounting for group cash-settled share-based payment transactions. The
Company has concluded that the amendment will have no impact on its financial position or
performance as the Company has not entered into any such share-based payment transactions.
Improvements to PFRSs 2009
beginning on or after January 1, 2010 except as otherwise stated. The Company has not yet
on the financial statements.
PFRS 2, Share-based Payment, clarifies that the contribution of a business on formation of a

joint venture and combinations under common control are not within the scope of PFRS 2
even though they are out of scope of the revised PFRS 3, Business Combinations. The
amendment is effective for financial years on or after July 1, 2009.
*SGVMC407818*

-5-
PFRS 5, Non-current Assets Held for Sale and Discontinued Operations, clarifies that the
disclosures required in respect of noncurrent assets and disposal groups classified as held for
sale or discontinued operations are only those set out in PFRS 5. The disclosure requirements
of other PFRS only apply if specifically required for such noncurrent assets or discontinued
operations.
PFRS 8, Operating Segment Information, clarifies that segment assets and liabilities need only
be reported when those assets and liabilities are included in measures that are used by the
chief operating decision maker.
PAS 1, Presentation of Financial Statements, clarifies that the terms of a liability that could
result, at anytime, in its settlement by the issuance of equity instruments at the option of the
counterparty do not affect its classification.
PAS 7, Statement of Cash Flows, explicitly states that only expenditure that results in a
recognized asset can be classified as a cash flow from investing activities.
PAS 17, Leases, removes the specific guidance on classifying land as a lease. Prior to the
PAS 36, Impairment of Assets, clarifies that the largest unit permitted for allocating goodwill,
acquired in a business combination, is the operating segment as defined in PFRS 8 before
aggregation for reporting purposes.
PAS 38, Intangible Assets, clarifies that if an intangible asset acquired in a business
combination is identifiable only with another intangible asset, the acquirer may recognize the
group of intangible assets as a single asset provided the individual assets have similar useful
lives. Also clarifies that the valuation techniques presented for determining the fair value of
PAS 39, Financial Instruments: Recognition and Measurement, clarifies the following:
that a prepayment option is considered closely related to the host contract when the
exercise price of a prepayment option reimburses the lender up to the approximate present
value of lost interest for the remaining term of the host contract;
contracts, and not derivative contracts where further actions by either party are still to be
taken; and
that gains or losses on cash flow hedges of a forecast transaction that subsequently results
in the recognition of a financial instrument or on cash flow hedges of recognized financial
instruments should be reclassified in the period that the hedged forecast cash flows affect
statement of comprehensive income.
Philippine Interpretation IFRIC 9, Reassessment of Embedded Derivatives, clarifies that it

does not apply to possible reassessment at the date of acquisition, to embedded derivatives in
contracts acquired in a business combination between entities or businesses under common
control or the formation of joint venture.
*SGVMC407818*

-6-
Philippine Interpretation IFRIC 16, Hedge of a Net Investment in a Foreign Operation, states
that, in a hedge of a net investment in a foreign operation, qualifying hedging instruments may
be held by any entity or entities within the group, including the foreign operation itself, as
long as the designation, documentation and effectiveness requirements of PAS 39 that relate to
a net investment hedge are satisfied.
Effective in 2012:
Philippine Interpretation IFRIC 15, Agreement for Construction of Real Estate, covers
accounting for revenue and associated expenses by entities that undertake the construction of
real estate directly or through subcontractors. This interpretation requires that revenue on
construction of real estate be recognized only upon completion, except when such contract
qualifies as construction contract to be accounted for under PAS 11, Construction Contracts,
or involves rendering of services in which case revenue is recognized based on stage of
completion. Contracts involving provision of services with the construction materials and
where the risks and reward of ownership are transferred to the buyer on a continuous basis
will also be accounted for based on stage of completion.
The Company does not expect any significant impact in the financial statements when it adopts the
above standard, amendments and interpretations. The revised and additional disclosures provided
by the standard, amendments and interpretations will be included in the financial statements when
these are adopted in 2010 and 2012, if applicable.
Financial Instruments - Initial Recognition and Subsequent Measurement

Date of Recognition
Financial instruments are recognized in the statement of financial position when the Company
becomes a party to the contractual provisions of the instrument. Purchases or sales of financial
in the marketplace are recognized on the trade date.
Initial Recognition of Financial Instruments

All financial assets, including trading and investment securities and loans and receivables, are
initially measured at fair value. Except for financial assets at FVPL, the initial measurement of
financial assets includes transaction costs. The Company classifies its financial assets in the
following categories: financial assets at FVPL, HTM investments, AFS investments, and loans and
receivables. The classification depends on the purpose for which the investments were acquired
and whether they are quoted in an active market. The Company’s financial assets are in the nature
of loans and receivables. The Company has no financial assets classified as financial assets at
FVPL, AFS investments and HTM investments as at December 31, 2009 and 2008.
Financial liabilities are classified as either at FVPL or as other financial liabilities. Management
determines the classification of its financial instruments at initial recognition and, where allowed
and appropriate, re-evaluates such designation at every end of the reporting period.
contractual arrangement. Interests, dividends, gains and losses relating to a financial instrument or
*SGVMC407818*

-7-
The Company’s financial liabilities as at December 31, 2009 and 2008 are in the form of other
financial liabilities.
Financial instruments recognized at fair value are analyzed based on:

Level 1 - Quoted prices in active markets for identical asset or liability
Level 2 - Those involving inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly (derived from
prices)
Level 3 - Those with inputs for asset or liability that are not based on observable market date
(unobservable inputs)
When fair values of listed equity and debt securities as well as publicly traded derivatives at the
end of the reporting date are based on quoted market prices or binding dealer price quotations
without any deduction for transaction costs, the instruments are included within level 1 of the
hierarchy.
For all other financial instruments, fair value is determined using valuation technique. Valuation
techniques include net present value techniques, comparison to similar instruments for which
market observable prices exist, option pricing models and other relevant valuation model. For
these financial instruments, inputs into models are market observable and are therefore included
within level 2.
Instruments included in level 3 include those for which there is currently no active market.
Subsequent Measurement
The subsequent measurement of financial assets and liabilities depends on their classification as
follows:
Loans and Receivables

These are nonderivative financial assets with fixed or determinable payments and fixed maturities
that are not quoted in an active market. They are not entered into with the intention of immediate
or short-term resale and are not classified as “financial assets held for trading”, designated as
“AFS investments” or “financial assets designated at FVPL”. Loans and receivables are included
in current assets if maturity is within twelve (12) months from the end of the reporting period.
Otherwise, these are classified as noncurrent assets.
After initial measurement, loans and receivables are subsequently measured at amortized cost
using the effective interest rate method, less allowance for impairment. Amortized cost is
calculated by taking into account any discount or premium on acquisition and fees and costs that
are an integral part of the effective interest rate. The amortization is included in the “financial
income” in the statement of comprehensive income. The losses arising from impairment are
recognized in “general and administrative expenses” in the statement of comprehensive income.
Included under this category are the Company’s cash and cash equivalents, trade and other
receivables and mine rehabilitation fund (MRF) as part of “other noncurrent assets” (see Note 24).
Other Financial Liabilities

Issued financial instruments or their components, which are not designated at FVPL are classified
as other financial liabilities, where the substance of the contractual arrangement results in the
Company having an obligation either to deliver cash or another financial asset to the holder, or to
satisfy the obligation other than by the exchange of a fixed amount of cash or another financial
asset for a fixed number of own equity shares. The components of issued financial instruments
*SGVMC407818*

-8-
that contain both liability and equity elements are accounted for separately, with the equity
component being assigned the residual amount after deducting from the instrument as a whole the
amount separately determined as the fair value of the liability component on the date of issue.
Other financial liabilities are initially recorded at fair value, less directly attributable transactions
costs. After initial measurement, other financial liabilities are subsequently measured at amortized
cost using the effective interest rate method. Amortized cost is calculated by taking into account
any discount or premium on the issue and fees that are an integral part of the effective interest rate.
Any effects of restatement of foreign currency-denominated liabilities are recognized in the
statement of comprehensive income. Included under this category are the Company’s trade and
other payables, advances from stockholders and dividends payable (see Note 24).

The Company assesses at each end of the reporting period whether a financial asset or group of
financial assets is impaired.
Financial Assets Carried at Amortized Cost

losses that have not been incurred) discounted at the financial asset’s original effective interest rate
shall be reduced either directly or through use of an allowance account. The amount of the loss
shall be recognized in the statement of comprehensive income.
The Company first assesses whether objective evidence of impairment, such as age analysis and
status of counterparty, exists individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually significant. The factors in
determining whether objective evidence of impairment exist include, but are not limited to, the
length of the Company’s relationship with debtors, their payment behavior and known market
factors. Evidence of impairment may also include indications that the borrowers is experiencing
significant difficulty, default and delinquency in payments, the probability that they will enter
bankruptcy, or other financial reorganization and where observable data indicate that there is
measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults. If it is determined that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, the asset
is included in a group of financial asset with similar credit risk characteristics and that group of
financial assets is collectively assessed for impairment. Assets that are individually assessed for
impairment and for which an impairment loss is or continues to be recognized are not included in
a collective assessment of impairment.
recognized in the statement of comprehensive income, to the extent that the carrying value of the
asset does not exceed its amortized cost at the reversal date.
With respect to trade and other receivables, the Company maintains a provision for impairment
losses of trade and other receivables at a level considered adequate to provide for potential
uncollectible receivables. The level of this provision is evaluated by management on the basis of
factors that affect the collectibility of the accounts. A review of the age and status of receivables,
designed to identify accounts to be provided with allowance, is performed regularly. The carrying
amount of the trade and other receivables is reduced through the use of an allowance account.
*SGVMC407818*

-9-
Trade and other receivables together with allowance are written-off when there is no realistic
prospect of future recovery.
Impairment losses are estimated by taking into consideration the following information: current
economic conditions, the approximate delay between the time a loss is likely to have been incurred
and the time it will be identified as requiring an individually assessed impairment allowance, and
expected receipts and recoveries once impaired. Management is responsible for deciding the
length of this period which can extend for as long as one year.
Derecognition of Financial Instruments

Financial Assets
the Company retains the right to receive cash flows from the asset, but has assumed
an obligation to pay them in full without material delay to a third party under a
“pass-through” arrangement or
the Company has transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
liability, and the difference in the respective carrying amounts are recognized in the statement of
comprehensive income.
*SGVMC407818*

- 10 -

Financial assets and liabilities are only offset and the net amount reported in the statement of
financial position when there is a legally enforceable right to offset the recognized amounts and
the Company intends to either settle on a net basis, or to realize the asset and the liability
simultaneously.
Inventories
Inventories are valued at the lower of cost and net realizable values (NRV). Cost is determined by
the average production cost during the period for beneficiated nickel ore exceeding a determined
cut-off grade and moving average method for fuel. NRV for beneficiated nickel ore is the
estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale. NRV for supplies and fuel is the current
replacement cost.

Property and equipment, except land, is stated at cost, excluding the costs of day-to-day servicing,
less accumulated depreciation and any accumulated impairment in value. Such cost includes the
cost of replacing part of such property and equipment when that cost is incurred if the recognition
criteria are met.
Land is carried at cost less of any accumulated impairment in value.
Depreciation and amortization are computed on the straight-line basis over the following estimated
useful lives of the assets or the term of the lease, whichever is shorter in case of leasehold
improvements.

Leasehold improvements 5-10
Machinery and other equipment 5-10
Transportation equipment 5
Office equipment 5
Mine and mining properties included in property and equipment, consists of mine development
costs, capitalized cost of mine rehabilitation and decommissioning (refer to accounting policy on
“Provision for mine rehabilitation and decommissioning”) and mining rights. Mining rights are
expenditures for the acquisition of property rights that are capitalize.
Mine development costs consist of capitalized costs previously carried under “Deferred mine
exploration costs”, which were transferred to property and equipment upon start of commercial
operations. The net carrying amount of mine development costs is depleted using unit-of-
production method based on the estimated economically recoverable reserves to which they relate
or are written-off if the property is abandoned.
The useful lives, depreciation, amortization and depletion methods are reviewed periodically to
ensure that the period and methods of depreciation and depletion are consistent with the expected
pattern of economic benefits from items of property and equipment.
changes in circumstances indicate that the carrying value may not be recoverable.
*SGVMC407818*

- 11 -
the asset) is included in the statement of comprehensive income in the period the asset is
derecognized.
The asset’s residual value, if any, useful lives and methods are reviewed, and adjusted if
appropriate, at each end of the financial reporting period.
Construction in-progress represents work under construction and is stated at cost. This includes
the cost of construction and other direct costs. Construction in-progress is not depreciated until
completed and put into operational use.
Deferred Mine Exploration Costs

Expenditures for mine exploration work prior to drilling are charged to operations. When it has
been established that a mineral deposit is commercially mineable and a decision has been made to
formulate a mining plan (which occurs upon completion of a positive economic analysis of the
mineral deposit), the costs subsequently incurred to develop a mine on the property prior to the
start of mining operations are capitalized. Upon the start of commercial operations, such costs are
transferred to property and equipment. Capitalized amounts may be written down if future cash
flows, including potential sales proceeds related to the property, are projected to be less than the
carrying value of the property. If no mineable ore body is discovered, capitalized acquisition costs
are expensed in the period in which it is determined that the mineral property has no future
economic value.
Costs incurred during the start-up phase of a mine are expensed as incurred. Ongoing mining
expenditures on producing properties are charged against earnings as incurred. Major
development expenditures incurred to expose the ore, increase production or extend the life of an
existing mine are capitalized.

Property and equipments are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. If any such
indication exists and where the carrying amount of an asset exceeds its recoverable amount, the
asset or cash-generating unit is written down to its recoverable amount. The estimated recoverable
amount is the higher of an asset’s net selling price and value in use. The net selling price is the
amount obtainable from the sale of an asset in an arm’s-length transaction less the costs of
disposal while value in use is the present value of estimated future cash flows expected to arise
from the continuing use of an asset and from its disposal at the end of its useful life. For an asset
that does not generate largely independent cash inflows, the recoverable amount is determined for
the cash-generating unit to which the asset belongs. Impairment losses are recognized in the
Recovery of impairment losses recognized in prior periods is recorded when there is an indication
that the impairment losses recognized for the asset no longer exist or have decreased. The
recovery is recorded in the statement of comprehensive income. However, the increased carrying
amount of an asset due to recovery of an impairment loss is recognized to the extent it does not
exceed the carrying amount that would have been determined (net of depletion, depreciation and
amortization) had no impairment loss benn recognized for that asset in prior periods.
*SGVMC407818*

- 12 -
Mine and Mining Properties and Deferred Mine Exploration Costs

An impairment review is performed, either individually or at the cash-generating unit level, when
there are indicators that the carrying amount of the assets may exceed their recoverable amounts.
To the extent that this occurs, the excess is fully provided against, in the financial period in which
this is determined. Exploration assets are reassessed on a regular basis and these costs are carried
forward provided that at least one of the following conditions is met:
such costs are expected to be recouped in full through successful development and
exploration of the area of interest or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not yet reached a stage
which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in relation to the area are
continuing, or planned for the future.
Provisions
General
obligation. If the effect of the time value of money is material, provisions are made by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessment
of the time value of money and, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognized as an
accretion expense.
Provision for Mine Rehabilitation and Decommissioning

The Company records the present value of estimated costs of legal and constructive obligations
required to restore operating locations in the period in which the obligation is incurred. The nature
of these restoration activities includes dismantling and removing structures, rehabilitating mines
and tailings dams, dismantling operating facilities, closure of plant and waste sites, and
restoration, reclamation and re-vegetation of affected areas. The obligation generally arises when
the asset is installed or the ground/environment is disturbed at the production location. When the
liability is initially recognized, the present value of the estimated cost is capitalized by increasing
the carrying amount of the related mining assets. Over time, the discounted liability is increased
for the change in present value based on the discount rates that reflect current market assessments
and the risks specific to the liability. The periodic unwinding of the discount is recognized in the
statement of comprehensive income under “other charges”. Additional disturbances or changes in
rehabilitation costs will be recognize as additions or charges to the corresponding assets and
provision for mine rehabilitation and decommissioning when they occur.
The liability is reviewed on an annual basis for changes to obligations or legislation or discount
rates that affect change in cost estimates or life of operations. The cost of the related asset is
adjusted for changes in the liability resulting from changes in the estimated cash flows or discount
rate, and the adjusted cost of the asset is depreciated prospectively.
Where rehabilitation is conducted progressively over the life of the operation, rather than at the
time of closure, liability is made for the estimated outstanding continuous rehabilitation work at
each end of the reporting period and the cost is charged to the statement of comprehensive income.
*SGVMC407818*

- 13 -
The ultimate cost of mine rehabilitation is uncertain and cost estimates can vary in response to
many factors including changes to the relevant legal requirements, the emergence of new
restoration techniques or experience. The expected timing of expenditure can also change, for
example in response to changes in ore reserves or production rates. As a result, there could be
significant adjustments to the provision for mine rehabilitation and decommissioning, which
would affect future financial results.
MRF committed for use in satisfying environmental obligations are included within “Other
noncurrent assets” in the statement of financial position.
Foreign Currency Translation

The financial statements are presented in Philippine peso, which is the Company’s functional and
presentation currency. Transactions in foreign currencies are initially recorded in the functional
currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are restated using the closing rate of exchange ruling at the end of reporting
period. All differences are taken to the statement of comprehensive income.
Capital Stock
Ordinary shares are classified as equity.
Incremental costs directly attributanble to the issue of new shares or options are shown in equity as a
deduction from proceeds. The excess of proceeds form issuance of shares over the par value of the
shares are credited to share premium.
Where the Company purchases its own shares (treasury shares), the consideration paid including any
directly attributable incremental costs is deducted from equity attributable to the Company’s equity
until the shares are cancelled, reissued or disposed of. Where such share are subsequently sold or
reissued, any consideration received, net of any directly attributable incremental transaction costs
and related income tax effects, and is included in equity attributable to the Company’s stockholders.
Retained Earnings
Retained earnings are the cumulative portion of annual earnings or losses as stated in the statements
of comprehensive income less dividends declared.
Dividends are recognized as a liability and deducted from retained earnings when they are approved
by the stockholders of the Company. Dividends for the period that are approved after the end of the
reporting period are dealt with as an event after the reporting period.
Revenue Recognition
Company and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognized:
Sale of Beneficiated Nickel Ore

Revenue is recognized when the significant risks and rewards of ownership of the goods have
passed to the buyer, which coincides with the loading of the ores onto the buyer’s vessel. Under
the terms of the arrangements with customers, the Company bills the remaining 10% of the ores
shipped based on the assay tests agreed by both the Company and the customers. Where the assay
tests are not yet available as at financial reporting date, the Company accrues for the remaining
10% of the revenue based on the amount of the initial billing made.
*SGVMC407818*

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Health, Safety, Environment and Community (HSEC) Premium

Revenue is also recognized when the significant risks and rewards of ownership of the goods
haved passed to Queensland Nickel Pty. Ltd. (QNPL).
Despatch
Revenue is recognized when shipment is loaded within the allowable laytime.
Interest
Revenue is recognized as interest accrues using the effective interest rate, that is, the rate that
exactly discounts estimated future cash receipts through the expected life of the financial
instrument to the net carrying amount of the financial asset.
Leases
Determination of Whether an Arrangement Contains a Lease
the arrangement and requires an assessment of whether the fulfillment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset. A reassessment is made after inception of the lease only if one of the following applies:
(a) There is a change in contractual terms, other than a renewal or extension of the
arrangement;
(b) A renewal option is exercised or extension granted, unless that term of the renewal or
(c) There is a change in the determination of whether fulfillment is dependent on a specified

asset; or
(d) There is a substantial change to the asset.
Company as a Lessee
Operating leases represent those leases under which substantially all risks and rewards of
ownership of the leased assets remains with the lessors. Noncancellable operating lease payments
are recognized as expense in the statement of comprehensive income on a straight-line basis over
the lease term.
Income Taxes
Current Income Tax
laws used to compute the amount are those that are enacted or substantively enacted as at the end
of the reporting period.
Deferred Income Tax

Deferred income tax is provided using the balance sheet liability method on temporary differences
at the end of the reporting period between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes.
*SGVMC407818*

- 15 -
Deferred income tax liabilities are recognized for all taxable temporary differences, except:
where the deferred income tax liability arises from the initial recognition of goodwill
or of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting income nor taxable income or
loss; and
in respect of taxable temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences, carryforward
benefits of unused tax credits and unused tax losses, to the extent that it is probable that taxable
income will be available against which the deductible temporary differences, and the carryforward
of unused tax credits and unused tax losses can be utilized except:
where the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting
income nor taxable income or loss; and
in respect of deductible temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, deferred tax assets are
recognized only to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable income will be available against which
the temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each end of reporting period and
reduced to the extent that it is no longer probable that sufficient taxable income will be available
to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income
tax assets are reassessed at each end of reporting period and are recognized to the extent that it has
become probable that future taxable income will allow the deferred income tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply
to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at the end of reporting period.
Contingencies
Contingent liabilities are not recognized in the financial statements. These are disclosed unless the
are not recognized in the financial statements but disclosed when an inflow of economic benefits
is probable.
*SGVMC407818*

- 16 -
Events After the Reporting Period

Post year-end events that provide additional information about the Company’s position at the end
of reporting period (adjusting events) are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed when material.
3. Summary of Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements in accordance with PFRS requires the Company to
make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities,
income and expenses and disclosure of contingent assets and contingent liabilities. Future events
may occur which will cause the assumptions used in arriving at the estimates to change. The
effects of any change in estimates are reflected in the financial statements as they become
reasonably determinable.
Judgments, estimates and assumptions are continually evaluated and are based on historical
reasonable under the circumstances. However, actual outcome can differ from these estimates.
Judgments
on the amounts recognized in the financial statements.
Determining Functional Currency

Based on the economic substance of the underlying circumstances relevant to the Company, the
functional currency of the Company has been determined to be the Philippine peso. The
Philippine peso is the currency of the primary economic environment in which the Company
operates. It is the currency that mainly influences labor, material and other costs of providing
goods, in which fund from financing activities are generated, and in which receipts from operating
activities are generally retained.
Classification of Financial Instruments

classification in the statement of financial position.
Operating Lease Commitments - Company as a Lessee

The Company has entered into property and vehicle leases. The Company has determined that it
does not retain all the significant risks and rewards of ownership of these properties which are
leased on operating leases.
Assessing Recoverability of Deferred Mine Exploration Costs

The application of the Company’s accounting policy for deferred mine exploration costs requires
judgment in determining whether it is likely that the future economic benefits are certain, which
may be based on assumptions about future events or circumstances. Estimates and assumptions
may change if new information becomes available. If, after mine explorations costs are
capitalized, information becomes available suggesting that the recovery of expenditure is unlikely,
*SGVMC407818*

- 17 -
the amount capitalized is written-off in the statement of comprehensive income in the period when
the new information becomes available. Deferred mine exploration cost amounted to
=18.4 million and =
P P15.1 million as at December 31, 2009 and 2008, respectively (see Note 9).
Assessing Production Start Date

The Company assesses the stage of each mine development project to determine when a mine
moves into the production stage. The criteria used to assess the start date of a mine are determined
based on the unique nature of each mine development project. The Company considers various
relevant criteria to assess when the mine is substantially complete, ready for its intended use and
moves into the production phase. Some of the criteria include, but are not limited to the
following:
the level of capital expenditure compared to construction cost estimates;
completion of a reasonable period of testing of the property, plant and equipment;
ability to produce ore in saleable form; and
ability to sustain ongoing production of ore.
When a mine development project moves into the production stage, the capitalization of certain
mine construction costs ceases and costs are either regarded as inventory or expensed, except for
capitalizable costs related to mining asset additions or improvements, underground mine
development or mineable reserve development. It is also at this point that depreciation or
depletion commences.

The key estimates and assumptions concerning the future and other key sources of estimation
uncertainty at the end of reporting period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets within the next financial year are discussed below.
Estimating Beneficiated Nickel Ore Reserves

Ore reserves are estimates of the amount of ore that can be economically and legally extracted
from the Company’s mining properties. The Company estimates its ore reserves based on
information compiled by appropriately qualified persons relating to the geological data on the size,
depth and shape of the ore body, and require complex geological judgment to interpret the data.
The estimation of recoverable reserves is based upon factors such as estimates of foreign exchange
rates, commodity prices, future capital requirements, and production costs along with geological
assumptions and judgment made in estimating the size and grade of the ore body. Changes in the
reserve or resource estimates may impact upon the carrying value of deferred mine exploration
costs, mining properties, property and equipment, provision for mine rehabilitation and
decommissioning, recognition of deferred income tax assets, and depreciation and amortization
charges.
Estimating Allowance for Impairment Losses on Trade and Other Receivables

The Company maintains allowance for impairment losses at a level considered adequate to
provide for potential uncollectible receivables. The level of this allowance is evaluated by
management on the basis of the factors that affect the collectibility of the accounts. These factors
include, but are not limited to, the Company’s relationship with its customer, customer’s current
credit status and other known market factors. The Company reviews the age and status of trade
and other receivables and identifies accounts that are to be provided with allowance either
*SGVMC407818*

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individually or collectively. The amount and timing of recorded expenses for any period would
differ if the Company made different judgment or utilized different estimates. An increase in the
Company’s allowance for impairment losses will increase the Company’s recorded expenses and
decrease current assets. As at December 31, 2009 and 2008, trade and other receivables amounted
to =
P11.8 million and P=10.8 million, respectively, and allowance for impairment losses amounted to
=
P13.5 million and =P13.8 million, respectively (see Note 5).
Estimating Allowance for Inventory Losses

The Company maintains allowance for inventory losses at a level considered adequate to reflect
the excess of cost of inventories over their NRV. NRV of inventories are assessed regularly based
on prevailing estimated selling prices of inventories and the corresponding cost of disposal.
Increase in the NRV of inventories will increase cost of inventories but only to the extent of their
original acquisition costs. The carrying values of inventories amounted to =P 104.2 million and
=180.0 million as at December 31, 2009 and 2008, respectively, and allowance for impairment
P
losses amounted to =P2.2 million as at December 31, 2009 and 2008 (see Note 6).
Estimating Useful Lives of Property and Equipment

The Company estimates the useful lives of property and equipment based on the period over
which the assets are expected to be available for use. The estimated useful lives of property and
limits on the use of the assets. In addition, estimation of the useful lives of property and
equipment is based on collective assessment of industry practice, internal technical evaluation and
experience with similar assets. It is possible, however, that future results of operations could be
materially affected by changes in estimates brought about by changes in factors mentioned above.
The amounts and timing of recorded expenses for any period would be affected by changes in
these factors and circumstances. The aggregate net book values of property and equipment
amounted to = P685.3 million and = P732.8 million as at December 31, 2009 and 2008, respectively
(see Note 8).
Estimating Impairment on Property and Equipment

The Company assesses impairment on property and equipment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. The factors
that the Company considers important which could trigger an impairment review include the
following:
Significant underperformance relative to expected historical or projected future operating

results;
Significant changes in the manner of use of the acquired assets or the strategy for overall
business; and
Significant negative industry or economic trends.
In determining the present value of estimated future cash flows expected to be generated from the
continued use of the assets, the Company is required to make estimates and assumptions that can
materially affect the financial statements.
*SGVMC407818*

- 19 -
These assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss would be recognized
whenever evidence exists that the carrying value is not recoverable. For purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
flows. The carrying values of property and equipment amounted to P =685.3 million and
=732.8 million as at December 31, 2009 and 2008, respectively (see Note 8).
P
An impairment loss is recognized and charged to earnings if the discounted expected future cash
flows are less than the carrying amount. Fair value is estimated by discounting the expected future
cash flows using a discount factor that reflects the risk-free rate of interest for a term consistent
with the period of expected cash flows.
Assessing Recoverability of Deferred Mine Exploration Costs

The application of the Company’s accounting policy for deferred mine exploration costs requires
judgment in determining whether it is likely that future economic benefits are certain, which may
be based on assumptions about future events or circumstances. Estimates and assumptions made
may change if new information becomes available. If, after mine explorations costs are
capitalized, information becomes available suggesting that the recovery of expenditure is unlikely,
the amount capitalized is written-off in the statement of comprehensive income in the period when
the new information becomes available.
The Company reviews the carrying values of its mineral property interests whenever events or
changes in circumstances indicate that their carrying values may exceed their estimated net
recoverable amounts. An impairment loss is recognized when the carrying values of these assets
are not recoverable and exceeds their fair value. Deferred mine exploration costs amounted to
=18.4 million and =
P P15.1 million as at December 31, 2009 and 2008, respectively (see Note 9).
Assessing Realizability of Deferred Income Tax Assets

The Company reviews the carrying amounts of deferred income tax assets at each end of reporting
period and reduces deferred income tax assets to the extent that it is probable that taxable income
will be available against which these can be utilized. Significant management judgment is
required to determine the amount of deferred income tax assets that can be recognized, based upon
the likely timing and level of future taxable income together with future tax planning strategies.
The Company recognized deferred income tax assets on the provision for mine rehabilitation and
decommissioning costs amounting to P =1.2 million and P=0.9 million as at December 31, 2009 and
2008, respectively. The Company has other temporary differences such as unrealized foreign
exchange losses, provision for impairment losses on trade and other receivables and provision for
inventory losses for which no deferred income tax assets have been recognized because
management believes that the carryforward benefits would not be realized prior to its expiration
(see Note 22).
Estimating Provision for Mine Rehabilitation and Decommissioning

The Company assesses its provision for mine rehabilitation and decommissioning annually.
Significant estimates and assumptions are made in determining the provision for mine
rehabilitation as there are numerous factors that will affect the provision. These factors include
estimates of the extent and costs of rehabilitation activities, technological changes, regulatory
changes, cost increases, and changes in discount rates. Those uncertainties may result in future
actual expenditure differing from the amounts currently provided. The provision at end of the
reporting period represents management’s best estimate of the present value of the future
rehabilitation costs required. Changes to estimated future costs are recognized in the statement of
*SGVMC407818*

- 20 -
financial position by adjusting the rehabilitation asset and liability. Provision for mine
rehabilitation and decommissioning amounted to P =18.0 million and P =16.9 million as at
December 31, 2009 and 2008, respectively (see Note 11).
Estimating Fair Values of Financial Instruments

PFRS requires that certain financial instruments be carried at fair value, which requires the use of
accounting judgment and estimates. While significant components of fair value measurement are
determined using verifiable objective evidence (e.g. foreign exchange rates, interest rates,
volatility rates), the timing and amount of changes in fair value would differ with the valuation
methodology used. Any change in the fair values of these financial instruments would directly
affect statement of comprehensive income and equity. Fair values of financial assets as at
December 31, 2009 and 2008 amounted to P =69.7 million and P=91.3 million, respectively. Fair
values of financial liabilities as at December 31, 2009 and 2008 amounted to P =502.8 million and
=497.5 million, respectively (see Note 25).
P
2009 2008
Cash on hand and with banks (see Note 24) P
=31,130,833 =70,045,756
P
Short-term cash investments (see Note 24) 20,098,454 –
P
=51,229,287 =70,045,756
P
Cash with banks earns interest at the respective bank deposit rates. Short-term cash investments
are made for varying periods of up to three months depending on the immediate cash requirements
of the Company, and earns interest at the respective short-term cash investment rates.
As at December 31, 2009 and 2008, the Company earned interest from its cash with banks and
short-term cash investments amounting to =
P177,337 and =
P245,425, respectively (see Note 19).
5. Trade and Other Receivables
2009 2008
Trade (see Note 24) P
=12,122,404 =13,191,589
P
Advances to related parties (see Notes 21 and 24) 10,417,753 1,893,155
Advances to officers and employees (see Note 24) 1,585,153 2,752,140
Others 1,116,245 6,800,893
25,241,555 24,637,777
Less allowance for impairment losses (see Note 24) (13,489,151) (13,826,322)
P
=11,752,404 =10,811,455
P
The following are the terms and conditions of the above financial assets:
Trade receivables are noninterest-bearing and are normally settled on 15-30 days terms.
Advances to related parties, advances to officers and employees and other receivables are
noninterest-bearing and have an average term of 30 to 60 days.
*SGVMC407818*

- 21 -
Movement of allowance for impairment losses as at December 31, 2009 and 2008 follows:
Advances to
officers and
2009 Trade employees Total
Beginning balance P
= 12,459,575 P
= 1,366,747 P
= 13,826,322
Provisions during the year – – –
Exchange rate adjustment (337,171) – (337,171)
Balances at end of year P
= 12,122,404 P
= 1,366,747 P
= 13,489,151
Advances to
officers and
2008 Trade employees Total
Beginning balance =–
P =–
P =–
P
Provision during the year 10,924,285 1,366,747 12,291,032
Exchange rate adjustment 1,535,290 – 1,535,290
Balances at end of year =12,459,575
P =1,366,747 =
P P13,826,322
As at December 31, 2009 and 2008, trade receivables amounting to P =12.1 million and
P13.2 million, respectively, and advances to officers and employees amounting to P
= =1.6 million
and =
P2.8 million, respectively, were subject to specific impairment assessment. Based on the
assessment done, the Company recognized allowance for impairment losses amounting to
=13.5 million and P
P =13.8 million, as at December 31, 2009 and 2008, respectively, covering those
receivables considered as individually impaired.
With the foregoing level of allowance for impairment losses, management believes that the
Company has sufficient allowance to cover any losses that the Company may incur from the
noncollection on nonrealization of its trade and other receivables.
6. Inventories
2009 2008
Beneficiated nickel ore - at cost P
=103,502,330 =178,889,322
P
Fuel - at NRV 700,995 704,011
Supplies - at cost – 397,712
P
=104,203,325 =179,991,045
P
As at December 31, 2009 and 2008, the Company provided an allowance for inventory losses
pertaining to fuel amounting to P
=2,231,556.
*SGVMC407818*

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7. Other Current Assets
2009 2008
Input value-added tax P
=52,043,011 =51,094,675
P
Prepaid insurance 1,109,828 1,295,879
Prepaid rent 364,000 308,124
Prepaid income tax 195,650 195,650
Deposits with suppliers 60,000 284,687
Others – 519,544
P
=53,772,489 =53,698,559
P
2009
Mine
and Mining Leasehold Laboratory and Transportation Office Construction
Land Properties Improvements Other Equipment Equipment Equipment In-Progress Total
Costs:
Balances at beginning
of year = 529,900 P
P = 348,371,153 = 236,132,570
P = 183,518,312
P = 25,507,649
P = 25,085,361
P = 17,629,853
P = 836,774,798
P
Additions – – – 7,115,380 – 316,946 172,441 7,604,767
Disposals – – – – (1,177,679) – – (1,177,679)
Reclassificication – – 13,360,792 – – – (13,360,792) –
Balances at end of year 529,900 348,371,153 249,493,362 190,633,692 24,329,970 25,402,307 4,441,502 843,201,886
Accumulated depreciation,
amortization and depletion:
of year – 23,724,699 30,534,217 34,862,864 7,087,412 7,758,068 – 103,967,260
Depreciation, amortization and
depletion for the year
(see Note 18) – – 22,565,887 21,726,477 4,973,948 5,058,919 – 54,325,231
Disposals – – – – (343,490) – – (343,490)
Balances at end of year – 23,724,699 53,100,104 56,589,341 11,717,870 12,816,987 – 157,949,001
Net book values = 529,900 P
P = 324,646,454 = 196,393,258
P = 134,044,351
P = 12,612,100
P = 12,585,320
P = 4,441,502
P = 685,252,885
P
2008
Mine
and Mining Leasehold Laboratory and Transportation Office Construction
Land Properties Improvements Other Equipment Equipment Equipment In-Progress Total
Costs:
of year =459,900
P =340,381,083
P =93,291,900
P = 125,807,365
P =20,011,928
P =20,399,078
P =89,248,168
P =689,599,422
P
Additions 70,000 – 1,191,994 57,627,420 5,495,721 4,686,283 78,103,958 147,175,376
Reclassification – 7,990,070 141,648,676 83,527 – – (149,722,273) –
Balances at end of year 529,900 348,371,153 236,132,570 183,518,312 25,507,649 25,085,361 17,629,853 836,774,798
Accumulated depreciation,
amortization and depletion:
of year – 11,332,134 18,230,969 14,659,136 2,244,951 3,202,143 – 49,669,333
Depreciation, amortization and
depletion for the year
(see Note 18) – 12,392,565 12,303,248 20,203,728 4,842,461 4,555,925 – 54,297,927
Balances at end of year – 23,724,699 30,534,217 34,862,864 7,087,412 7,758,068 – 103,967,260
Net book values =529,900
P =324,646,454
P = 205,598,353
P = 148,655,448
P =18,420,237
P =17,327,293
P =17,629,853
P =732,807,538
P
As at December 31, 2009 and 2008, mining rights, included in the mine and mining properties,
amounting to P=76.1 million, net of accumulated depletion of P=5.8 million, pertains to the
acquisition cost of property rights on the Berong Project (see Note 26).
*SGVMC407818*

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9. Deferred Mine Exploration Costs
2009 2008
Beginning balance P
=15,078,007 =–
P
Additions 3,364,402 15,078,007
P
=18,442,409 =15,078,007
P
Deferred mine exploration cost pertains to exploration and development expenditures related to
the Berong Project. Management has established that economically recoverable reserves exist in
the area, resulting in the decision to develop into a commercial mining operation. Deferred mine
exploration costs were transferred to property and equipment in 2007. In 2008, the Company had
started to explore and develop the adjacent area covering the Berong Project.
10. Trade and Other Payables
2009 2008
Trade (see Note 24) P
=65,200,402 =90,699,462
P
Accrued expenses (see Note 24) 9,475,686 19,262,551
Royalty (see Note 24) 2,151,780 7,513,014
Advances from related party (see Note 21 and 24) 1,741,327 1,175,336
Excise tax 542,244 780,334
Others 493,701 5,671,151
P
=79,605,140 =125,101,848
P
The following are the terms and conditions of the above financial liabilities:
Trade payables and accrued expenses are noninterest-bearing and are normally settled on
7-30 days’ terms.
Royalty payable is paid on or before the deadline agreed with the Berong Aramaywan
Tagbanua Association (BATA; see Note 26).
Excise tax payable is settled within 15 days after the end of the quarter when the beneficiated
nickel ore is shipped.
Other payables are noninterest-bearing and have an average term of 15-30 days.
11. Provision for Mine Rehabilitation and Decommissioning
2009 2008
Balances at beginning of period P
=16,859,263 =15,827,619
P
Accretion expense (see Note 19) 1,098,887 1,031,644
Balances at end of period P
=17,958,150 =16,859,263
P
The Company makes full provision for the future cost of rehabilitating mine sites on a discounted
basis on the development of mines. The rehabilitation provision represents the present value of
rehabilitation costs relating to mine sites, which are expected to be incurred up to 2017. These
provisions have been created on the Company’s internal estimates. Assumptions, based on the
current economic environment, have been made which management believes, are reasonable bases
upon which to estimate the future liability. These estimates are reviewed regularly to take into
account any material changes to the assumptions. However, actual rehabilitation costs will
ultimately depend upon future market prices for the necessary decommisiong works required
*SGVMC407818*

- 24 -
which will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation
is likely to depend on when the mines cease to produce at economically viable rates. This, in
return, will depend upon future ore prices, which are inherently uncertain.
12. Equity
Acquisition of EN
In June 2008, EN acquired from Investika (currently known as Natasa Mining Limited) the
18.7% interest in the Company. In this regard, EN has acquired all the assets and liabilities of
Investika to the Company.
13. Cost of Sales
2009 2008
Outside services P
=– =265,113,159
P
Production overhead – 126,031,801
Personnel costs (see Note 17) – 41,552,644
Depreciation and depletion (see Note 18) – 35,620,318
– 468,317,922
Net change in beneficiated nickel ore 75,386,992 (76,248,927)
P
=75,386,992 =392,068,995
P
14. General and Administrative
2009 2008
Depreciation (see Note 18) P
=54,325,231 =18,677,609
P
Personnel costs (see Note 17) 38,769,527 81,746,295
Management fees (see Note 26) 19,629,549 16,532,567
Transportation and travel 14,101,396 54,641,067
Rentals (see Note 23) 7,598,520 17,922,880
Professional fees 6,565,795 39,085,594
Insurance 3,526,907 3,692,450
Communication, light and water 2,942,842 2,626,931
Taxes and licenses 1,993,354 4,996,992
Environment and community development 1,185,757 2,512,228
Repairs and maintenance 1,090,962 15,171,975
Assay test 563,822 5,856,181
Supplies 513,222 6,397,266
Representastion and entertainment 124,260 348,005
Provision for impairment losses (see Notes 5 and 6) – 14,522,588
Others 2,050,179 3,286,670
P
=154,981,323 =288,017,298
P
*SGVMC407818*

- 25 -
15. Marketing and Shipping
2009 2008
Outside services P
=67,278,651 =125,096,994
P
Others 29,138,915 13,109,980
P
=96,417,566 =138,206,974
P
Others include demurrage, rock watcher’s charges, rock delays and other ore related damage being
claimed by QNPL, which were still under contest by the Company, with total amounting to
=29.0 million in 2009 and nil in 2008.
P
16. Excise Taxes and Royalties

2009 2008
Excise taxes P
=3,425,897 =14,299,846
P
Royalties 1,712,949 7,149,923
P
=5,138,846 =21,449,769
P
17. Personnel Costs

2009 2008
Salaries, wages and allowances P
=33,750,411 =104,099,422
P
Employee benefits 5,019,116 19,199,517
P
=38,769,527 =123,298,939
P
The above is distributed as follows:

2009 2008
=– =41,552,644
P
General and administrative (see Note 14) 38,769,527 81,746,295
P
=38,769,527 =123,298,939
P
18. Depreciation and Depletion

2009 2008
=– =35,620,318
P
General and administrative (see Note 14) 54,325,231 18,677,609
P
= 54,325,231 =54,297,927
P
19. Financial Expenses (Income)
2009 2008
Accretion expense (see Note 11) P
=1,098,887 =1,031,644
P
Interest income (see Note 4) (177,337) (245,425)
Interest expense 151 26,430
Others 85,022 –
1,006,723 =812,649
P
*SGVMC407818*

- 26 -
20. Other Charges (Income)
2009 2008
Foreign exchange - net
Unrealized foreign exchange losses (gains) - net (P
=11,466,155) =42,870,617
P
Realized foreign exchange gains – net (642,891) (4,641,209)
Gain on disposal of property and equipment (347,731) –
Other income (262,955) (388,400)
Bank charges 143,133 653,282
Other charges 1,238,878 9,608,709
(P
=11,337,721) =48,102,999
P
Outstanding advances to related parties and advances from stockholders are as follows:
Trade and
Advances to other payables Advances from
Relationship Related Parties (see Note 10) Stockholders
TMM Management, Inc. (TMM) Under Common
Control of a
Stockholder 2009 = 7,831,993
P = 1,741,327
P =–
P
2008 160,612 1,175,336 –
Under Common
Control of a
Ipilan Nickel Corporation (INC) Stockholder 2009 1,391,322 – –
2008 1,223,645 – –
Under Common
Ulugan Resources Holdings, Control of a
Inc.(URHI) Stockholder 2009 421,537 – –
2008 300,916 – –
TMC Stockholder 2009 508,357 – 256,599,492

2008 – – 216,905,256
NRHI Parent 2009 180,544 – –

2008 120,260 – –
EN Stockholder 2009 84,000 – 72,340,988

2008 84,000 – 63,924,629
ACMDC Stockholder 2009 – – 94,726,895

2008 3,722 – 97,433,378
Totals = 10,417,753
P = 1,741,327
P = 423,667,375
P
Totals =1,893,155
P =1,175,336
P =378,263,263
P
Terms and Conditions of Transactions with Related Parties

The Company charged INC, a related party, for INC’s share in various expenses paid by the
Company. The Company also made various expenses in behalf of TMM, NRHI and URHI for the
operational expenditures and/or various expenses incurred by the latter.
TMM, a management company and a related party, charges the Company for management services
rendered (see Note 26).
*SGVMC407818*

- 27 -
Advances from stockholders pertain to noninterest-bearing cash advances from TMC, ACMDC
and EN to finance working capital requirements of the Company and have no fixed repayment
date.
The Company has no key management personnel. The Company’s financial and administrative
functions are being handled by employees of TMM, as provided in the management agreement.
22. Income Taxes
Effective May 28, 2007, the Company is entitled to Income Tax Holiday (ITH) for four (4) years
as one of the incentives granted by the BOI as a non-pioneer enterprise (see Note 27).
The reconciliation between the provisions for income tax computed at the statutory income tax
rate and the provision for income tax at the effective income tax rates as shown in the statements
of comprehensive income follows:
2009 2008
Tax computed at statutory rate (P
=42,830,989) (P
=51,221,900)
Add (deduct) tax effects of:
Operating loss with ITH (see Note 27) 58,825,545 30,673,456
Change in unrecognized deferred income tax
assets and liability (19,170,692) 20,087,622
Interest income already subject to final tax (53,201) (85,899)
Nondeductible expenses 30,011 –
Effect of change in tax rate 2,869,660 78,103
(P
= 329,666) (P
=468,618)
The tax rates used are 30 and 35% for the periods ended December 31, 2009 and 2008,
respectively.
The Company’s deferred income tax asset amounting to P =1.2 million and =
P 0.9 million as at
December 31, 2009 and 2008, respectively, pertains to temporary difference on the provision for
mine rehabilitation and decommissioning.
The Company did not recognize deferred income tax assets relating to the following temporary
differences because management believes that it is more likely than not that the carryforward
benefits will not be realized in the near future:
2009 2008
Unrealized foreign exchange losses - net P
=– =42,870,617
P
Provision for impairment losses on trade and other
receivables (see Note 5) 12,291,032 12,291,032
Provision for inventory losses (see Note 6) 2,231,556 2,231,556
P
=14,522,588 =57,393,205
P
As at December 31, 2009, the Company has net unrealized foreign exchange gain amounting to
=
P11,466,155 in which no deferred income tax liability is recognized for the Company is still in its
ITH period where the Company expects no income tax liability until such ITH expires.
*SGVMC407818*

- 28 -
Republic Act No. 9337 was enacted into law effective November 1, 2005 amending various
provisions in the existing 1997 National Internal Revenue Code. Among the reforms introduced
by the said RA is the change in corporate income tax rate from 35% to 30% and change in the
nondeductible interest expense rate from 42% to 33% of interest income subject to final tax
beginning January 1, 2009 and thereafter.
On July 7, 2008, R.A. No. 9504, which further amended the provisions of the 1997 Tax Code,
became effective. It includes provisions relating to the availment of Optional Standard Deduction
(OSD). Corporations, except for non-resident foreign corporations, may now elect to claim
standard deductions in amount not exceeding 40% of their gross income. The taxpayer must
signify in his return his intention to avail the OSD. If no indication is made, he shall be
irrevocable for the taxable year for which the return is made. On September 24, 2008, the Bureau
of Internal Revenue issued Revenue Regulation No. 10-2008 for the implementing guidelines of
R.A. No. 9504.
23. Operating Lease Commitments
Company as a Lessee
The Company has entered into property and vehicle leases. These leases have a remaining term
of less than five (5) years. Renewals are subject to the mutual consent of the lessors and the
lessee.
Total rent expense included in general and administrative amounted to P

=7.6 million and
=17.9 million in 2009 and 2008, respectively (see Note 14). The future minimum rental payable
P
under the leases as at December 31, 2009 and 2008 are as follows:
2009 2008
Within one (1) year P
= 7,414,588 =6,735,693
P
After one (1) year but not more than five (5) years 10,813,818 11,921,900
P
=18,228,406 =18,657,593
P
The Company’s principal financial instruments comprise trade and other receivables and advances
from stockholders. The main purpose of these financial instruments is to raise funds for the
Company’s operations. It has various other financial instruments such as cash, MRF, trade and
other payables and dividends payable, which arise directly from its operations.
The main risks arising from the Company’s financial instruments are liquidity risk, credit risk and
foreign currency risk. The Company’s BOD reviews and adopts policies for managing each of
these risks and they are summarized below.
Liquidity Risk
Liquidity risk arises from the possibility that the Company may encounter difficulties in raising
funds to meet commitments from financial instruments.
*SGVMC407818*

- 29 -
The Company seeks to manage its liquid funds through cash planning on a monthly basis. The
Company uses historical figures and experiences and forecasts from its collection and
disbursement. As part of its liquidity risk management, the Company regularly evaluates its
projected and actual cash flows. It also continuously assesses conditions in the financial markets
for opportunities to pursue fund raising activities.
The Company’s objective is to maintain a balance between continuity of funding and flexibility
through the use of advances from stockholders. The Company considers its available funds and its
liquidity in managing its long-term financial requirements. For its short-term funding, the
Company’s policy is to ensure that there are sufficient capital inflows to match repayments of
trade and other payables.
The tables below summarize the maturity profile of the Company’s financial liabilities as at
December 31, 2009 and 2008 based on contractual undiscounted payments.
Less than 3
2009 On Demand Months Total
Trade and other payables
Trade P
=58,319,365 P
=6,881,037 P
=65,200,402
Accrued expenses 9,475,686 – 9,475,686
Royalty 2,151,780 – 2,151,780
Advances from related party 1,741,327 – 1,741,327
Others 76,334 – 76,334
Advances from stockholders 423,667,375 – 423,667,375
Dividends payable 500,000 – 500,000
P
=495,931,867 P
=6,881,037 P
=502,812,904
Less than 3
2008 On Demand Months Total
Trade =34,655,835
P =56,043,627
P =90,699,462
P
Accrued expenses 19,262,551 – 19,262,551
Royalty 7,513,014 – 7,513,014
Advances from related party 1,175,336 – 1,175,336
Others 76,334 – 76,334
Advances from stockholders 378,263,263 – 378,263,263
Dividends payable 500,000 – 500,000
=441,446,333
P =56,043,627
P =497,489,960
P
Credit Risk
Credit risk refers to the potential loss arising from any failure by related parties and customers to
fulfill their obligations, as and when they fall due. It is inherent to the business as potential losses
may arise due to the failure of its related parties and customers to fulfill their obligations on
maturity dates or due to adverse market conditions.
The Company trades only with recognized, creditworthy customers. It is the Company’s policy
that all customers who wish to trade on credit terms are subject to credit verification procedures.
In addition, receivable balances are monitored on an ongoing basis.
*SGVMC407818*

- 30 -
The Company does not require collateral as it usually trades only with recognized third parties.
With respect to credit risk arising from cash and cash equivalents and MRF, the Company’s
Credit risk concentration of the Company according to customer category is summarized in the
following table:
2009 2008
Trade P
=– P732,014
=
Related parties 10,417,753 1,893,155
Officers and employees 218,406 1,385,393
Others 1,116,245 6,800,893
P
=11,752,404 =10,811,455
P
The credit quality and aging analysis of the Company’s financial assets as at December 31, 2009
and 2008 follows:
Neither past Past due but not impaired Impaired

due nor 30 - 60 Financial
2009 Total impaired < 30 days days Assets
Cash with banks and
cash equivalents P50,942,281
= P
=50,942,281 P
=– =–
P P
=–
Trade and other receivables
Trade 12,122,404 – – – 12,122,404
Advances to related
parties 10,417,753 3,706,610 – 6,711,143 –
and employees 1,585,153 – 218,406 1,366,747
Others 1,116,245 104,913 – 1,011,332 –
MRF which is included
under “Noncurrent
assets” 6,701,933 6,701,933 – – –
=82,885,769
P P
=61,455,737 P
=218,406 P
=7,722,475 P
=13,489,151

Cash with banks and
cash equivalents =69,751,778
P =69,751,778
P =–
P =–
P =–
P
Trade 13,191,589 – 732,014 – 12,459,575
Advances to related
parties 1,893,155 1,479,034 414,121 – –
Advances to officer
and employees 2,752,140 72,253 1,313,140 – 1,366,747
Others 6,800,893 90,992 6,709,901 – –
MRF which is included
under “Noncurrent
assets” 10,443,044 10,443,044 – – –
=104,832,599
P P81,837,101
= =9,169,176
P P–
= =13,826,322
P
The credit quality of financial asset is managed by the Company using inernal credit ratings and is
classified into three: High grade, which has history of no default; Standard grade, which pertains
to accounts with history of one ar two defaults; and Substandard grade, which pertains to accounts
with history of atleast three payment defaults.
*SGVMC407818*

- 31 -
Accordingly, the Company has assessed the credit quality of the following financial assets:
Cash with banks and cash equivalents and MRF, were assessed as high grade. Cash with
banks and short-term cash investments are deposited in reputable banks approved by BOD,
and which have a low probability of insolvency.
Trade receivables, which pertain mainly to receivables from sale of ore, were assessed as high
grade. These were assessed based on past collection experience, which is being collected
within one (1) week or one (1) to two (2) months after the invoice date.
Advances to related parties were assessed as standard grade because amounts are settled
several days after the incurrence of the liability.
Advances to officers and employees are high grade and are usually collected through salary
deduction when not liquidated on time.
Other receivables were assessed as standard grade because amounts are settled several days
after due date.
Foreign Currency Risk

The Company has transactional foreign currency exposures. Such exposure arises from sale of
beneficiated nickel ore in United States (US) dollar. All of the Company’s sales are denominated
in US dollar, while substantially all of the costs are denominated in Philippine peso. Transactions
with companies outside the Philippines are carried out with currencies that management believes
to be stable such as the US dollar. The Company does not generally believe that active currency
hedging would provide long-term benefits to stockholders.
Foreign currency denominated assets and liabilities follow:
2009 2008
Dollar Peso Dollar Peso
Assets:
Cash US$567,027 P26,196,629
= US$1,298,407 =61,700,293
P
Trade and other receivables 262,390 12,122,404 15,416 732,015
US$829,417 =38,319,033
P US$1,313,823 =62,432,308
P
Liabilities:
Trade and other payables US$1,077,955 P=49,801,519 US$1,782,725 P=84,715,096
Advances from stockholders 9,170,290 423,667,375 7,960,086 378,263,263
US$10,248,245 =
P473,468,894 US$9,742,811 =
P462,978,359
The exchange rates used per US$1.00 were P

=46.20 and P
=47.52 as at December 31, 2009 and 2008,
respectively.
The following table demonstrates the sensitivity to a reasonably possible change in the US dollar
exchange rate, with all other variables held constant, of the Company’s income before tax (due to
changes in fair value of monetary assets and liabilities) as at December 31, 2009 and 2008:
Sensitivity to
Peso Strengthens Net Loss
(Weakens) (Income)
December 31, 2009 P
=0.72 (P
=6,781,556)
(0.72) 6,781,556
December 31, 2008 0.77 6,490,321
(0.96) (8,091,828)
*SGVMC407818*

- 32 -
There is no other impact on the Company’s equity other than those already affecting the statement
of comprehensive income.
Capital Management
The primary objective of the Company’s capital management is to ensure that the Company has
sufficient funds in order to support their business, pay existing obligations and maximize
shareholder value. As at December 31, 2009 and 2008, the Company considers advances from
stockholders, amounting to = P423.7 million and =P378.3 million, respectively, and total equity,
amounting to P=411.2 million and P=553.7 million, respectively, as capital.
The Company manages its capital structure and makes adjustments to it, in light of changes in
additional advances from stockholders, return capital to shareholders or issue new shares. No
changes were made in the objectives, policies or processes during the periods ended 2009 and
2008.
Fair Value Information and Categories of Financial Instruments

The tables below present a comparison by category and class of carrying values and fair values of
the Company’s financial assets and liabilities as at December 31, 2009 and 2008:

2009 2008 2009 2008
Financial Assets
Cash and cash equivalents P
=51,229,287 =70,045,756
P P
=51,229,287 =70,045,756
P
Trade – 732,014 – 732,014
Advances to related parties 10,417,753 1,893,155 10,417,753 1,893,155
and employees 218,406 1,385,393 218,406 1,385,393
Others 1,116,244 6,800,893 1,116,244 6,800,893
MRF which is included under
“Noncurrent assets” 6,701,933 10,443,044 6,701,933 10,443,044
P
=69,683,623 P91,300,255
= P
=69,683,623 P91,300,255
=
Trade P
=65,200,402 P90,699,462
= P
=65,200,402 P90,699,462
=
Accrued expenses 9,475,686 19,262,551 9,475,686 19,262,551
Royalties 2,151,780 7,513,014 2,151,780 7,513,014
Advances from related party 1,741,327 1,175,336 1,741,327 1,175,336
Others 76,334 76,334 76,334 76,334
Advances from stockholders 423,667,375 378,263,263 423,667,375 378,263,263
Dividends payable 500,000 500,000 500,000 500,000
P
=502,812,904 =497,489,960
P P
=502,812,904 =497,489,960
P
*SGVMC407818*

- 33 -
The following methods and assumptions were used to estimate the fair values of each class of
financial instruments for which it is practicable to estimate such value:

Cash and cash equivalents include cash on hand and with banks and short-term cash investments.
Cash with banks earns interest at the respective bank deposit rates. Short-term cash investments
are made for varying periods of up to three months depending on the immediate cash requirements
of the Company, and earns interest at the respective short-term cash investment rates. The
carrying amount of cash approximates its fair value due to the short-term maturity of this financial
instrument.
Trade and Other Receivables, Trade and Other Payables, Advances from Stockholders and
Dividends Payable
The historical cost carrying amounts of trade and other receivables, trade and other payables,
advances from stockholders and dividends payable, which are all subject to normal trade credit
terms, approximate their fair values due to the short-term maturity of these financial instruments.
MRF
The carrying amount of MRF approximates their fair value since they are restricted cash with
banks that earns interest based on prevailing market rates repriced monthly.
26. Significant Agreements and Other Matters
Sales Agreements
a. Agreement with QNPL
On August 15, 2007, the Company entered into a sales agreement with QNPL to sell
shipments of laterite ore. The agreement has a term of five (5) years from commencement
date and may be extended thereafter by up to five (5) further calendar years by notice in
writing no later than one (1) year prior to the expiry of the initial period. In 2009 and 2008,
about 100% and 83% of the Company’s sales were made to QNPL.
b. Agreement with JC Minerals Trading Limited (JC Minerals)

On April 5, 2008, the Company entered into a sales agreement with JC Minerals for the sale of
its ore products. Under the terms of the agreement, the base price of the ore products for a
specific shipment shall be based on LME. In 2009 and 2008, about nil and 12% of the
Company’s sales were made to JC Minerals in 2009 and 2008. The agreement is applicable
only for one shipment.
Venture Agreement
On January 19, 2005, ACMDC, Minoro Mining and Exploration Corporation (MMEC), Investika
and TMC entered into a Venture Agreement (VA) covering all mining tenements or applications
for mining tenements, MPSA and Exploration Permits covering the areas known as the Berong
Mineral Properties and the Ulugan Mineral Properties held by ACMDC and/or Anscor Property
Holdings, Inc. (Anscor) and/or Multicrest Mining Corporation.
The VA provides that ACMDC and/or MMEC grant to Investika and/or TMC the right to earn a
percentage equity in the Company upon fulfillment of certain conditions, including the granting of
advances to the Company and ACMDC. ACMDC and MMEC shall transfer the title or mining
rights or applications over the Berong Mineral Properties (collectively “mining rights”) held and
maintained either by ACMDC or Anscor to the Company from the funds provided equally by
TMC and Investika. By virtue of the VA, the Company acquired the mining rights amounting to
=20.2 million in 2007, P
P =3.4 million in 2006 and =
P 58.4 million in 2005 (see Note 8).
*SGVMC407818*

- 34 -
Management Agreement
On January 19, 2005, the Company entered into a management agreement with TMM wherein
TMM will manage the operations of the Company with respect to the Mineral Properties and to
any and all of the MPSA which shall be executed by the Company and the Government of the
Republic of the Philippines. In consideration for such services, the Company will pay a monthly
management fee of = P0.2 million.
On July 1, 2008, the Company amended the management agreement wherein TMM shall be
entitled to charge an additional monthly fee equivalent to up to five percent (5%) of the operating
costs and expenses incurred at the end of each calendar month. Provided, further, that TMM may
charge an additional fee for other special services outside the scope of the agreement at a rate to be
agreed upon in advance by the parties. The rate will depend on the specialized nature of such
services that the Company may require from TMM from time to time.
TMM charged the Company management fees of = P19.6 million in 2009 and P
=16.5 million in 2008
in consideration for the services rendered during the period (see Note 14).
Agreement with Ivy Michelle Trading and Construction

On May 15, 2006, the Company entered into an agreement with Ivy Michelle Trading and
Construction (Contractor) to haul materials and use the Contractor’s equipment to construct,
rehabilitate, maintain and repair roads and other facilities of the Company. The Contractor’s
services will be extended upon the request of the Company under the same conditions embodied in
the contract regarding cost and equipment usage subject to the fluctuation of oil prices.
Environmental Compliance Certificate

On June 14, 2006, the DENR, through the Environmental Management Bureau, granted the
Company, the Environmental Compliance Certificate (ECC) for the Project.
The Company, in compliance with the terms of the ECC, has set up an Environmental Trust Fund
(ETF) on April 27, 2007, in the amount of =P0.2 million at the Landbank of the Philippines (LBP)
Makati Branch. The ETF is a readily replenishable fund for compensation or indemnification of
damages to life and property that may be caused by the project. The fund is included under “Other
noncurrent assets” account in the statement of financial position.
Agreement with Leighton Contractors (Philippines), Inc. (Leighton)

On July 13, 2006, the Company entered into an agreement with Leighton for undertaking site
preparation and loading 30,000 Dry Metric Ton metallurgical bulk sample shipment. In
June 2008, the Company ceased the contract with Leighton.
Service Agreement with China Nickel Corporation (CNC)

On April 13, 2007, the Company entered into a service agreement with CNC, wherein CNC will
provide marketing support services to the Company which includes identification of material and
equipment sourcing opportunities, monitoring of nickel industry developments, advice on
appropriate methods of marketing ore and procuring sales contracts, and identification of
investment opportunities. All such services will be provided outside the Philippines. CNC
charged the Company for marketing support services amounting to P =30.1 million in 2009 and
=89.7 million in 2008.
P
*SGVMC407818*

- 35 -
Mine Rehabilitation Fund

Pursuant to Section 181 of the Implementing Rules and Regulations of the RA No. 7492, better
known as the “Philippine Mining Act of 1995”, the Company has opened a Rehabilitation Cash
Fund (RCF) on November 22, 2007, amounting to = P5.0 million at the LBP Makati Branch. Such
trust fund is set to ensure compliance with the approved rehabilitation activities and schedules of
the project. In addition to RCF, the Company has also set up a Monitoring Trust Fund (MTF)
amounting to P =0.1 million at the LBP Makati Branch on April 27, 2007. Such fund shall be used
to cover the maintenance and other operating budget of the MTF Committee and is subject to
periodic replenishments. The fund is included under “Other noncurrent assets” account in the
statement of financial position.
Memorandum of Agreement (MOA) with Tagbanua Indigenous Peoples (IP)/Indigenous Cultural

Community (ICC)
In 2005, the Company, Tagbanua IPs/ICCs and National Commission on Indigenous Peoples
entered into a MOA. The MOA relate exclusively to the areas applied for and disclosed to the
Tagbanua IPs/ICCs of Berong Aramaywan, Quezon, Province of Palawan and shall cover and
apply exclusively to all the activities, processes, operations and other related issues under the
MPSA application of the Company.
Under the MOA, the Tagbanua IPs/ICCs has the right to receive from the Company a royalty
payment equivalent to 1% of the gross revenues based on the provisions of the Mining Act subject
to devaluation of the Philippine peso. The said royalty is paid to BATA, a formal organization
created by the IPs upon signing of the MOA, who is responsible in determining the share of every
individual member in accordance with their customary laws and practices.
In 2009 and 2008, total royalty payments to BATA amounted to P

=7.1 million and =
P 12.9 million,
respectively.
27. Registration with the Board of Investments
On May 28, 2007, the Company was registered with the BOI as a new producer of beneficiated
nickel ore on a non-pioneer status.
The terms and conditions of the registration, as well as the fiscal and non-fiscal incentives
available to the registered project are as follows:
Significant Terms and Conditions
The Company shall start commercial operations in May 2007.
The Company shall comply with all the provisions of RA No. 7942, Philippine Mining
Act of 1995, its implementing rules and regulations, the Company’s SMP and MPSA.
The Company shall increase its authorized, subscribed, and paid-up capital stock to at
least =
P303.75 million, and shall submit proof of compliance prior to availment of ITH
incentive.
Observance of a specified production and sales schedule and project timetable.
*SGVMC407818*

- 36 -
Fiscal and Non-fiscal Incentives
ITH for a period of four (4) years from May 2007 or actual start of commercial operations,
whichever is earlier, but in no case earlier than the date of registration.
Additional deduction from taxable income of fifty percent (50%) of the wages
corresponding to the increment in number of direct labor for skilled and unskilled
workers, for the first five (5) years from the date of registration, provided that this
incentive shall not be availed of simultaneously with the ITH.
Employment of foreign nationals for five (5) years from the date of registration.
Tax credit equivalent to the national internal revenue taxes and duties paid on raw
materials and supplies and semi-manufactured products used in producing its export
product and forming part thereof for ten (10) years from the start of commercial
operations.
Simplification of customs procedures for the importation of equipment, spare parts, raw
materials and supplies.
Access to Customs Bonded Manufacturing Warehouse (CBMW).
Exemption from wharfage dues, any export tax, duty, impose and fees for ten (10) years
from date of registration.
Importation of consigned equipment for a period of ten (10) years from date of
registration.
Exemption from taxes and duties on imported spare parts and consumable supplies for
export producers with CBMW exporting at least seventy percent (70%) of production.
Certification for Value Added Tax (VAT) Zero-Rated Status

On January 27, 2009, BOI issued a certification pursuant to Revenue Memorandum Order
No. 9-2000 entitled “Tax Treatment of Sales of Goods, Properties and Services made by
VAT-registered Suppliers to BOI registered Manufacturers-Exporters with 100% Export Sales”.
The certification is valid from January 1 to December 31, 2009 and renewable annually, unless
sooner revoked by the BOI Governing Board.
On January 22, 2010, the Company received the renewed certification of BOI for the VAT zero-
rated status, which is valid until December 31, 2010.
*SGVMC407818*

CARMEN COPPER CORPORATION
(A Majority Owned Subsidiary of
Deposit for Future

Additional Stock Retained Earnings
Capital Stock Paid-in Capital Subscription (Deficit) Total
BALANCES AT DECEMBER 31, 2007 = 1,238,611,323 =

P P2,153,386,418 =–
P (P
= 658,754,241) =2,733,243,500
P
Issuance of capital stock (Note 14) 278,227,099 1,375,176,119 – – 1,653,403,218

Net income for the year – – – 691,928,120 691,928,120
Other comprehensive income for the year – – – – –
BALANCES AT DECEMBER 31, 2008 1,516,838,422 3,528,562,537 – 33,173,879 5,078,574,838
Subscribed shares (Note 14) 84,811,387 254,434,161 – – 339,245,548

Deposit for future stock subscription (Note 19) – – 1,232,683,023 – 1,232,683,023
Net income for the year – – – (1,662,284,137) (1,662,284,137)
Other comprehensive income for the year – – – – –
BALANCES AT DECEMBER 31, 2009 = 1,601,649,809 =

P P3,782,996,698 = 1,232,683,023
P (P
= 1,629,110,258) = 4,988,219,272
P
SGVMC310104


2009 2008
= 1,662,241,928) =691,952,906
P
Adjustments for:
Unrealized mark-to-market loss (gain) on derivative
liabilities (assets) (Note 6) 1,143,661,918 (876,818,678)
Interest expense (Note 12) 218,994,750 18,374,308
Net unrealized foreign exchange loss (gain) (161,190,461) 505,964,730
Depreciation and depletion (Note 9) 85,527,734 124,524,178
Probable losses (Note 10) 59,526,178 –
Loss on asset disposal 1,007,455 –
Interest income (Note 4) (789,776) (19,600,569)
Operating income (loss) before working capital changes (315,504,130) 444,396,875
Decrease (increase) in: `
Receivables (219,740,787) (156,690,856)
Inventories 306,986,385 (198,565,110)
Other current assets 193,146,661 (908,177,597)
Increase in accounts payable and accrued liabilities 578,376,165 911,560,290
Retirement benefits costs (Note 20) 23,173,400 28,578,700
Cash generated from operations 566,437,694 121,102,302
Interest paid (207,629,770) (9,507,772)
Interest received 869,528 50,155,330
Benefits paid (423,200) –
Income taxes paid (24,786) –
Net cash from operating activities 359,229,466 161,749,860
Acquisitions of property, plant and equipment (Notes 9 and 24) (1,874,546,455) (5,663,597,612)
Increase in other noncurrent assets (373,693,460) (14,273,186)
Cash used in investing activities (2,248,239,915) (5,677,870,798)
Proceeds from:
Advances from related parties (Notes 11 and 19) 951,887,377 1,285,410,185
Issuance of capital stock (Note 14) 339,245,548 1,653,403,218
Loan drawdown from a bank (Note 12) 6,280,022 –
Cash from financing activities 1,297,412,947 2,938,813,403
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 25,547,465 (8,122,585)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (566,050,037) (2,585,430,120)
AT BEGINNING OF YEAR 796,016,237 3,381,446,357
AT END OF YEAR (Note 4) P
= 229,966,200 =796,016,237
P
SGVMC310104

1. Corporate Information, Business of Operations and

Authorization for the Issuance of the Financial Statements
Carmen Copper Corporation (CCC or the Company) is a 64.94%-owned subsidiary of Atlas
Consolidated Mining and Development Corporation (ACMDC or the Parent Company), while the
remaining 33.49% and 1.57% are owned by CASOP Atlas BV (CASOP BV) and CASOP Atlas
Corporation (CAC), respectively. The Company was incorporated and registered with the
Philippine Securities and Exchange Commission (SEC) on September 16, 2004, primarily to
engage in the business of searching, prospecting, exploring and locating ores and mineral
resources, and to conduct all ground and airborne geophysical surveys, geochemical surveys and
other work or means commonly regarded as exploration work for the purpose of determining the
existence of mineral resources, extent, quality and quantity and the feasibility of mining them for
profit or applying for exploration permit, mineral production sharing agreement and other mineral
agreements and of mining, milling, concentrating, converting, smelting, treating, refining,
preparing for market, manufacturing, buying, selling, exchanging and otherwise producing and
dealing in all kinds of ores, metals and minerals.
The registered office address of the Company is 7th Floor, Quad Alpha Centrum, 125 Pioneer
The Company is duly registered with the Board of Investments on a non-pioneer status as a new
producer of copper concentrate to be upgraded to pioneer status upon receipt of endorsements
from other concerned government agencies.
As a registered company, the Company is entitled, among others, to the following incentives:
a. Income tax holiday (ITH) for a period of four years from November 2007 or actual start of
commercial operations, whichever is earlier, but in no case earlier than the date of the
registration;
b. For the first five years from the date of registration, the Company shall be allowed an
additional deduction from taxable income of fifty percent (50%) of the wages corresponding
to the increment in number of direct labor for skilled and unskilled workers, subject to certain
conditions;
c. Employment of foreign nationals;
d. Tax credit equivalent to the national internal revenue taxes and duties paid on raw materials
and supplies and semi-manufactured products used in producing its export product and
forming part thereof for ten years from the start of commercial operations;
e. Simplified customs procedures for importation of equipment, spare parts, raw materials and
supplies;
f. Access to Customs Bonded Manufacturing Warehouse (CBMW), subject to Customs rules

and regulations provided that the Company exports at least 70% of the production output;
SGVMC310104

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g. Exemption from wharfage dues, any export tax, duty, imposts and fees for a ten-year period
from the date of registration;
h. Importation of consigned equipment for a ten-year period from date of registration; and
i. Exemption from taxes and duties on imported spare parts and consumable supplies for export
producers with CBMW exporting at least 70% of its production.
Deed of assignment and exchange of assets for shares of stock

On May 5, 2006, ACMDC and the Company entered into an Operating Agreement (the
Agreement) whereby ACMDC conveyed to the Company the possession, occupancy, use and
enjoyment of the Toledo Mine Rights which include the operating rights pertaining to the mining
claims covered by the Mineral Production Sharing Agreement (MPSA) 210-2005-VII (the Mining
Rights). The parties have agreed that pursuant to such conveyance, the Company shall recognize
additional paid-in capital corresponding to the agreed value of the Mining Rights covered by the
Agreement. However, at the time of the execution of the Agreement, the value of the Mining
Rights had not been determined by a third party independent appraiser accredited by the SEC, and
thus, the parties have not yet set the agreed value of the Mining Rights.
On October 23, 2007, the Company and ACMDC executed a Deed of Assignment and Exchange
of Assets for Shares of Stock (the Assignment) pursuant to Section 3.1 of the Agreement. The
Assignment was intended to cover certain immovable and movable assets of ACMDC which are
referred to in the Agreement as Fixed Assets.
On January 18, 2008, a duly accredited third-party independent appraiser issued a complementary
reasonably represented as United States dollar (US$)127.90 million (or P =5.47 billion). The related
agreed value of Mining Rights transferred to the Company amounted to = P 1.20 billion. The
determination of the final agreed values used for the Assignment resulted to the subsequent
issuance of common stock and an increase in additional paid-in capital amounting to
=
P809.16 million and P =855.83 million, respectively.
On July 9, 2008, ACMDC signed MPSA 264-2008-VII (MPSA 264) with the Government to
provide for the rational exploration, development and commercial utilization of copper, gold and
other associated mineral deposits existing within the Contract Area. The said MPSA 264 is
covered by the Agreement entered into by the Company with ACMDC on May 5, 2006.
On July 18, 2008, ACMDC executed a Deed of Assignment in favor of the Company covering the
assignment of the MPSA 264.
Operating Agreement with ACMDC

On May 5, 2006, the Company entered into an agreement with ACMDC wherein the latter
conveyed to the former its exploration, development and utilization rights under certain mining
rights and claims and the right to rehabilitate operate and/or maintain certain of its fixed assets.
In consideration for the use of the Mining Rights and Fixed Assets, the Company will pay
ACMDC a fee equal to 10% of the sum of the following:
royalty payments to third party claim holders of the Toledo mine rights;
lease payments to third party owners of the relevant portions of the parcels of land covered by
SGVMC310104

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real property tax payments on the parcels of land covered by the surface rights and on the
Under the Agreement, the Company shall have the exclusive and irrevocable right and option at
any time during the life of the Agreement to purchase outright all or part of Mining Rights, title, or
interest in any of the fixed assets and the surface rights by giving ACMDC written notice of its
intention. The purchase of Mining Rights shall be in the form of the Company’s shares of stock.
Business of Operations
Updates on the Toledo Mining Project
(CASOP) drawdown and loans from Deutsche Bank, the first phase of full rehabilitation of the
Toledo Mining Project commenced in September 2007. The initial phase of the rehabilitation was
focused on four major facilities needed to bring the mine into production at the earliest possible
time or within the 10-month target, namely: (a) the Carmen Concentrator; (b) the Land-based
Tailings Disposal (LBTD) System; (c) the South Lutopan open pit; and (d) the Sangi concentrate-
loading pier facility.
Phase I of the rehabilitation of the Company’s Toledo mine facilities was completed in
September 2008, enabling it to commence commercial operations thereafter at the initial milling
rate of 20,000 metric tons of copper ore per day. The first shipment of copper concentrates
weighing 5,625.86 wet metric tons (wmt) was made on December 29, 2008.
The Company completed 12 copper concentrate shipments in 2009 totaling 59.49 million dmt.
in the People’s Republic of China under different consignees. The Company-owned port became
fully operational at the start of the current year.
The major developments on the Company’s project and associated support facilities include:
containing 40.24 million pounds (lbs.) of copper, 5,715 ounce (oz.) of gold and 54,330 oz. of
was dismantled.
SGVMC310104

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Completion of the 1.80-kilometer long underground launder tunnel for the land-based tailings
The Company’s manpower totaled 3,642 personnel comprising 3,442 regulars,
192 probationary and 8 project-hired.

The financial statements of the Company as of and for the years ended December 31, 2009 and 2008
were authorized for issue by the Board of Directors (BOD) on March 19, 2010.
2. Basis of Preparation
The financial statements have been prepared using historical cost basis except for derivative
financial instruments that have been measured at fair value. The financial statements are
presented in Philippine Peso (Peso), which is the Company’s functional currency. All values are
rounded to the nearest Peso, except when otherwise indicated.
The financial statements of the Company have been prepared in compliance with Philippine
Financial Reporting Standards (PFRS).
Amendments to PAS 1, Presentation of Financial Statements, separate owner and non-owner

to present a single statement of comprehensive income.

recorded at fair value are to be disclosed by source of inputs using a three-level fair value
SGVMC310104

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Adoption of the following new, revised and amended PFRSs and Philippine Interpretations and
improvements to PFRSs did not have any significant impact to the Company.


PAS 41, Agriculture


Has inventory risk
SGVMC310104

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The Company assessed its revenue arrangements against these criteria and concluded that it is
acting as principal in all arrangements. Accordingly, no change was made in the Company’s
revenue recognition policy.

and amended PFRSs, PAS and Philippine Interpretations to have significant impact on Company’s
Effective in 2010

Transactions
Revised PFRS 3, Business Combinations, and Amendments to PAS 27, Consolidated and
transactions with non-controlling interests.
PFRS 3 will be applied prospectively while PAS 27 will be applied retrospectively with a few
exceptions.

Hedged Items
SGVMC310104

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This interpretation provides guidance on the following types of non-reciprocal distributions of
assets by an entity to its owners acting in their capacity as owners: (a) distributions of non-
cash assets (e.g. items of property, plant and equipment, businesses as defined in IFRS 3,
ownership interests in another entity or disposal groups as defined in IFRS 5); and (b)
Philippine Interpretation IFRIC 18, Transfers of Assets from Customers, clarifies the
requirements of PFRS for agreements in which an entity receives from a customer an item of
property and equipment that the entity must then use either to connect the customer to a
network or to provide the customer with ongoing access to a supply of goods or services (such
as a supply of electricity, gas or water). Under this interpretation, when the item of property
and equipment is transferred from a customer meets the definition of an asset under the IASB
Framework from the perspective of the recipient, the recipient must recognize the asset in its
financial statements. If the customer continues to control the transferred item, the asset
definition would not be met even if ownership of the asset is transferred to the utility or other
recipient entity. The deemed cost of that asset is its fair value on the date of the transfer. If
there are separately identifiable services received by the customer in exchange for the transfer,
then the recipient should split the transaction into separate components as required by PAS 18.
Improvement to PFRSs Effective 2010

The omnibus amendments to PFRSs issued in 2009 were issued primarily with a view to removing
beginning on or after January 1, 2010 except when otherwise stated. The Company has not yet
on the Parent Company financial statements.

July 1, 2009.


maker.

its classification.
SGVMC310104

-8-

PAS 17, Leases


reporting purposes.

intangible assets as a single asset provided the individual assets have similar useful lives. It
also clarifies that the valuation techniques presented for determining the fair value of

a. The amendment clarifies that a prepayment option is considered closely related to the host
b. The amendment clarifies the scope exemption for contracts between an acquirer and a
vendor in a business combination to buy or sell an acquiree at a future date applies only to
binding forward contracts, and not derivative contracts where further actions by either
party are still to be taken; and
c. The amendment clarifies that gains or losses on cash flow hedges of a forecast transaction
that subsequently results in the recognition of a financial instrument or on cash flow
hedged forecast cash flows affect comprehensive income.


hedging instruments may be held by any entity or entities within the group, including the
SGVMC310104

-9-
Effective in 2012

undertake the construction of real estate directly or through subcontractors. This
Interpretation requires that revenue on construction of real estate be recognized only upon
completion, except when such contract qualifies as construction contract to be accounted for
under PAS 11, Construction Contracts, or involves rendering of services in which case
revenue is recognized based on stage of completion. Contracts involving provision of services
with the construction materials and where the risks and reward of ownership are transferred to
the buyer on a continuous basis will also be accounted for based on stage of completion.

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash with original maturities of three
months or less from the dates of acquisition and that are subject to an insignificant risk of change
in value.
Date of recognition

On initial recognition, the Company classifies its financial assets in the following categories:
financial assets at FVPL, loans and receivables, held-to-maturity (HTM) investments and
available-for-sale (AFS) financial assets, as appropriate. Financial liabilities, on the other hand,
are classified as financial liability at FVPL and other financial liabilities, as appropriate. The
classification depends on the purpose for which the investments are acquired and whether they are
quoted in an active market. Management determines the classification of its financial assets and
financial liabilities at initial recognition and, where allowed and appropriate, re-evaluates such
designation at each balance sheet date.
The Company has no AFS financial assets and HTM investments as of December 31, 2009 and
2008.
SGVMC310104

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models.
Day 1 difference
whose variables include only data from observable market, the Company recognizes the difference
between the transaction price and fair value (a Day 1 difference) in profit or loss unless it qualifies
for the recognition as some other type of asset. In cases where use is made of data which is not
observable, the difference between the transaction price and model value is only recognized in
profit or loss when the inputs become observable or when the instrument is derecognized. For
each transaction, the Company determines the appropriate method of recognizing the amount of
‘Day 1 difference’.

and considered as effective hedging instruments. Assets and liabilities classified under this
category are carried at fair value in the balance sheet. Changes in the fair value of such assets are
accounted for in profit or loss.
As of December 31, 2009, the Company’s FVPL consist of derivative assets and derivative
liabilities. In December 31, 2008, the Company’s FVPL consist only of derivative assets.

effective interest rate method less any allowance for impairment. Gains and losses are recognized
in profit or loss when the loans and receivables are derecognized or impaired, as well as through
the amortization process. Loans and receivables are included in current assets if maturity is within
12 months from the balance sheet date. Otherwise, these are classified as noncurrent assets.
As of December 31, 2009 and 2008, the Company’s loans and receivables consist of cash and cash
equivalents and receivables.
SGVMC310104

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cost using the effective interest method. Amortized cost is calculated by taking into account
any issue costs, and any discount or premium on settlement. Gains and losses are recognized in
the Company’s profit or loss when the liabilities are derecognized as well as through the
accrued liabilities and long-term debt.

Derivative financial instruments (e.g., currency and commodity derivatives such as forwards,
swaps and option contracts to economically hedge exposure to fluctuations in copper prices) are
initially recognized at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is
positive and as liabilities when the fair value is negative.
value on derivatives are taken directly to net profit or loss for the year, unless the transaction is a
designated and effective hedging instrument.
For the purpose of hedge accounting, hedges are classified as:
a) fair value hedges when hedging the exposure to changes in the fair value of a recognized asset
or liability; or
b) cash flow hedges when hedging exposure to variability in cash flows that is either attributable
to a particular risk associated with a recognized asset or liability or a forecast transaction; or
c) hedges of a net investment in a foreign operation.
A hedge of the foreign currency risk of a firm commitment is accounted for as a cash flow hedge.
At the inception of a hedge relationship, the Company formally designates and documents the
hedge relationship to which the Company wishes to apply hedge accounting and the risk
management objective and strategy for undertaking the hedge. The documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of the risk
being hedged and how the entity will assess the hedging instrument’s effectiveness in offsetting
the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged
risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value
or cash flows and are assessed on an ongoing basis to determine that they actually have been
highly effective throughout the financial reporting periods for which they were designated.
Hedges which meet the strict criteria for hedge accounting are accounted for as follow:
Fair value hedges

Fair value hedges are hedges of the Company’s exposure to changes in the fair value of a
recognized asset or liability or an unrecognized firm commitment, or an identified portion of such
an asset, liability or firm commitment, that is attributable to a particular risk and could affect
profit or loss. For fair value hedges, the carrying amount of the hedged item is adjusted for gains
and losses attributable to the risk being hedged, the derivative is remeasured at fair value and gains
and losses from both are recognized in profit or loss.
SGVMC310104

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For fair value hedges relating to items carried at amortized cost, the adjustment to carrying value
is amortized through profit or loss over the remaining term to maturity. Any adjustment to the
carrying amount of a hedged financial instrument for which the effective interest rate method is
used is amortized to profit or loss. Amortization may begin as soon as an adjustment exists and
shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value
attributable to the risk being hedged.
When an unrecognized firm commitment is designated as a hedged item, the subsequent

cumulative change in the fair value of the firm commitment attributable to the hedged risk is
recognized as an asset or liability with a corresponding gain or loss recognized in profit or loss.
The changes in the fair value of the hedging instrument are also recognized in profit or loss The
Company discontinues fair value hedge accounting if the hedging instrument expires or is sold,
terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the
Company revokes the designation. Any adjustment to the carrying amount of a hedged financial
instrument for which the effective interest method is used is amortized to profit or loss.
Amortization may begin as soon as an adjustment exists and shall begin no later than when the
hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
Cash flow hedges

Cash flow hedges are hedges of the exposure to variability in cash flows that is attributable to a
particular risk associated with a recognized asset or liability or a highly probable forecast
transaction and could affect profit or loss. The effective portion of the gain or loss on the hedging
instrument is recognized directly in other comprehensive income, while the ineffective portion is
Amounts taken to equity are transferred to profit or loss when the hedged transaction affects profit
or loss, such as when hedged financial income or financial expense is recognized or when a
forecast sale or purchase occurs. Where the hedged item is the cost of a non-financial asset or
liability, the amounts taken to equity are transferred to the initial carrying amount of the non-
financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously recognized in equity
are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or
exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts
previously recognized in equity remain in equity until the forecast transaction occurs. If the
related transaction is not expected to occur, the amount is taken to profit or loss.
An embedded derivative is separated from the host financial or nonfinancial contract and
SGVMC310104

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The Company assesses whether embedded derivatives are required to be separated from host
contracts when the Company first becomes a party to the contract. Reassessment only occurs if
there is a change in the terms of the contract that significantly modifies the cash flows that would
otherwise be required.
financial assets or financial liabilities at FVPL. Changes in fair values are included in profit or
loss.
As of December 31, 2009, the Company recognized bifurcated derivative assets arising from the
provisionally-priced commodity sales contracts.

assets and liabilities are presented gross in the statement of financial position.

The Company assesses at each reporting date whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or a group of financial assets is
deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one
or more events that occurred after the initial recognition of the asset (an incurred ‘loss event’) and
that loss event (or events) has an impact on the estimated future cash flows of the financial asset or
the group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the contracted parties or a group of contracted parties is experiencing significant
financial difficulty, default or delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganization, and where observable data indicate
that there is measurable decrease in the estimated future cash flows such as changes in arrears or
economic conditions that correlate with defaults.

The Company first assesses whether objective evidence of impairment exists individually for
assets that are not individually significant.
shall be recognized in profit or loss.

SGVMC310104

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In relation to receivables, a provision for impairment is made when there is objective evidence
(such as the probability of insolvency or significant financial difficulties of the debtor) that the
Company will not be able to collect all of the amounts due under the original terms of the invoice.
The carrying amount of the receivable is reduced through use of an allowance account. Impaired
debts are derecognized when they are assessed as uncollectible.

Financial assets
the rights to receive cash flows from the asset have expired; or
obligation to pay them in full without material delay to a third party under a ‘pass through’
arrangement; or
asset.
on asset measured at fair value, the extent of the Company’s continuing involvement is limited to
the lower of the fair value of the transferred asset and the option exercise price.
SGVMC310104

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Inventories
Mine products inventory, which consists of copper concentrates containing copper and gold, and
materials and supplies used in the rehabilitation of the assets, are valued at the lower of cost and
net realizable value (NRV). Cost is determined using the weighted average method.
NRV for mine products is the selling price in the ordinary course of business, less the estimated
costs of completion and estimated costs necessary to make the sale. In the case of materials and
supplies, NRV is the value of the inventories when sold at their condition at the reporting date.
Input Value-Added Tax (VAT)

Input VAT represents VAT imposed on the Company by its suppliers for the acquisition of goods
and services as required by Philippine taxation laws and regulations.
The input VAT is recognized as an asset and will be used to offset against the Company’s current
output VAT liabilities and any excess will be claimed as tax credits. Input VAT is stated at its
estimated NRV.
Deposits
Deposits are recognized to the extent of the amount paid and refundable.
Property, Plant and Equipment

Items of property, plant and equipment are carried at cost less accumulated depreciation and
depletion and any impairment in value.
Upon completion of mine rehabilitation, the assets are transferred into property, plant and
equipment. The initial cost of property, plant and equipment comprises its purchase price,
including import duties, taxes, and any directly attributable costs of bringing the property, plant
and equipment to its working condition and location for its intended use. Expenditures incurred
after the property, plant and equipment have been placed into operation, such as repairs and
maintenance costs, are normally recognized in profit or loss in the period they are incurred.
When assets are sold or retired, the cost and related accumulated depletion and depreciation are
removed from the accounts and any resulting gain or loss is recognized in the profit or loss.
Depreciation of property, plant and equipment, except mine development costs, is computed using
the straight-line method over the estimated useful lives of the assets as follows:
Number of Years
Roadways and bridges 5 - 40
Tank, dams and diversions 5 - 25
Transportation equipment 5-7
Furniture and fixtures 5
Depreciation or depletion of an item of property, plant and equipment begins when it becomes
available for use, i.e., when it is in the location and condition necessary for it to be capable of
operating in the manner intended by management. Depreciation or depletion ceases at the earlier
of the date that the item is classified as held for sale (or included in a disposal group that is
classified as held for sale) in accordance with PFRS 5, Noncurrent Assets Held for Sale and
Discontinued Operations, and the date the asset is derecognized.
SGVMC310104

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The estimated recoverable reserves, useful lives, and depreciation and depletion methods are
reviewed periodically to ensure that the estimated recoverable reserves, periods and methods of
depreciation and depletion are consistent with the expected pattern of economic benefits from the
items of property, plant and equipment.
Property, plant and equipment also include the estimated costs of rehabilitating the mine site, for
which the Company is constructively liable. These costs, included under mine development costs,
are amortized using the units-of-production method based on the estimated recoverable mine
reserves until the Company actually incurs these costs in the future.
of property and equipment.
An item of property, plant and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in profit or loss in the year the asset is derecognized.
The asset’s useful lives and methods of depreciation are reviewed and adjusted, if appropriate, at
each balance sheet date.
Mine Development Costs and Construction in Progress

Mine development costs and construction in progress are stated at cost, which includes cost of
construction, property and equipment, borrowing costs and other direct costs. Construction in
progress are transferred to the related property, plant and equipment account when the
construction or installation and related activities necessary to prepare the property, plant and
equipment for their intended use are complete and the property, plant and equipment are ready for
service. Mine development costs, except for cost attributable to current operations, and
construction in progress are not depreciated or depleted until such time as the relevant assets are
completed and become available for use. Mine development costs attributed to operations are
depleted using the units-of-production method based on estimated recoverable reserves in tonnes.
Major Maintenance and Repairs

Expenditures on major maintenance refits or repairs comprise the cost of replacement assets or
parts of assets and overhaul cost. Where an asset or part of an asset that was separately
depreciated and is now written off is replaced, and it is probable that future economic benefits
associated with the item will flow to the Company through an extended life, expenditure is
capitalized. Where part of the asset was not separately considered as a component, the
replacement value is used to estimate the carrying amount of the replaced assets which is
immediately written off. All other day to day maintenance costs are expensed as incurred.
Deferred Mine Exploration and Development Costs

Expenditures for mine exploration work prior to drilling are charged to profit or loss.
Expenditures for the acquisition of mining rights, property rights and expenditures subsequent to
drilling and development costs are deferred. When exploration work and project development
results are positive, these costs and subsequent mine development costs are capitalized and carried
under Mine Development Costs. When the results are determined to be negative or not
commercially viable, the accumulated costs are written off.
As of December 31, 2009 and 2008, there were no exploration costs that were capitalized.
SGVMC310104

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Mining Rights
Mining rights represent the legal right to explore for minerals in a particular property, occurring in
the same geological area of interest. Mining rights are carried at cost. As mining rights do not
provide current economic benefits, there is no need to allocate its cost against current revenue and
hence, no need for amortization. However, mining rights are tested for impairment under
PAS 36, Intangible Assets, and PFRS 6, Exploration for and Evaluation of Mineral Resources, if
there is an indication of impairment under such standards.
Borrowing Costs
Borrowing costs are recognized generally as expense in profit or loss when incurred. Borrowing
costs are capitalized if they are directly attributable to the acquisition or construction of a
qualifying asset. Capitalization of borrowing costs commences when the activities to prepare the
assets are in progress and expenditures and borrowing costs are being incurred. Borrowing costs
are capitalized until the assets are substantially ready for their intended use. If the carrying
amount of the asset exceeds its estimated recoverable amount, an impairment loss is recorded.
Where funds used to finance a project form part of general borrowings, the capitalized interest is
calculated using weighted average rates applicable to relevant general borrowings of the Company
during the period. All other borrowing costs are recognized in profit or loss in the period in which
they are incurred.

The Company assesses at each reporting date whether there is an indication that a nonfinancial
asset may be impaired. If any such indication exists, or when annual impairment testing for an
asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell
and its value in use and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets. Where the
carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and
is written down to its recoverable amount. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. Impairment losses of
continuing operations are recognized in the Company’s profit or loss in those expense categories
consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication
exists, the recoverable amount is estimated. A previously recognized impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount
since the last impairment loss was recognized. If that is the case the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the carrying amount
that would have been determined, net of depreciation, had no impairment loss been recognized for
the asset in prior years. Such reversal is recognized in profit or loss unless the asset is carried at
revalued amount, in which case the reversal is treated as a revaluation increase. After such a
reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised
carrying amount on a systematic basis over its remaining useful life.
Liability for Mine Rehabilitation

Rehabilitation of the mined-out areas is performed progressively and charged to costs as part of
normal operating activity. In addition, an assessment is made at each operation of the discounted
cost at reporting date of any future rehabilitation work that will be incurred as a result of currently
existing circumstances and regulations, and a provision is accumulated for this operation. This
SGVMC310104

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provision is charged on a proportionate basis to production over the shorter of the life of the
operation or the term of the mining rights. The estimated cost of rehabilitation is assessed on a
regular basis. Rehabilitation costs include reforestation of areas affected by operations, clean-up
of polluted materials, dismantling of temporary facilities and monitoring of sites for a period of
five (5) years after completion of operations. Any changes in estimates are dealt with on a
prospective basis.
Revenue Recognition
Company and revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebates, and sales taxes or duty, as applicable. The
Company assesses its revenue arrangements against specific criteria in order to determine if it is
acting as principal or agent. The Company has concluded that it is acting as principal in all of its
revenue arrangements.
Copper and gold concentrate sales

Contract terms for the Company’s sale of copper and gold in concentrate allow for a price
adjustment based on final assay results of the metal concentrate by the customer to determine the
content. Recognition of sales revenue for the commodities is based on most recently determined
estimate of metal in concentrate and the spot price at the date of shipment.
The terms of metal in concentrate sales contracts with third parties contain provisional pricing
arrangements whereby the selling price for metal in concentrate is based on prevailing spot prices
on a specified future date after shipment to the customer (the “quotation period”). Adjustments to
the sales price occur based on movements in quoted market prices up to the date of final
settlement. The period between provisional invoicing and final settlement can be between one and
six months. The provisionally priced sales of metal in concentrate contain an embedded
derivative, which is required to be separated from the host contract for accounting purposes. The
host contract is the sale of metals in concentrate while the embedded derivative is the forward
contract for which the provisional sale is subsequently adjusted. Accordingly the embedded
derivative, which does not qualify for hedge accounting, is recognized at fair value, with
subsequent changes in the fair value recognized in profit or loss until final settlement, and
presented as “mark-to-market gain (loss) on derivative assets (liabilities). Changes in fair value
over the quotation period and up until final settlement are estimated by reference to forward
market prices for gold and copper.
Interest income
Interest income is recognized as the interest accrues using the effective interest method.
Deferred Stripping Costs

Stripping costs incurred in the development of a mine before production commences are
capitalized as part of the cost of constructing the mine and subsequently amortized over the
estimated life of the mine on a units of production basis. Where a mine operates several open pit
that are regarded as separate operations for the purpose of mine planning, stripping costs are
accounted for separately by reference to the ore from each separate pit. If, however, the pits are
highly integrated for the purpose of the mine planning, the second and subsequent pits are
regarded as extensions of the first pit in accounting for stripping costs. In such cases, the initial
stripping, (i.e., overburden and other waste removal) of the second and subsequent pits is
considered to be production phase stripping relating to the combined operation.
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Stripping costs incurred subsequently during the production stage of its operation are deferred for
those operations where this is the most appropriate basis for matching the cost against the related
economic benefits and the effect is material. This is generally the case where there are
fluctuations in stripping costs over the estimated life of the mine. The amount of stripping costs
deferred is based on the strip ratio obtained by dividing the tonnage of waste mined either by the
quantity of ore mined or by the quantity of minerals contained in the ore. Stripping costs incurred
in the period are deferred to the extent that the current period ratio exceeds the estimated life of the
mine strip ratio. Such deferred costs are then charged to profit or loss to the extent that, in
subsequent periods, the current period ratio falls short of the life of mine (or pit) ratio. The
estimated life of mine (or pit) ratio is based on economically recoverable reserves of the mine (or
pit). Changes are accounted for prospectively, from the date of the change. Deferred stripping
costs are included as part of ‘Mine and mining properties’. These form part of the total investment
in the relevant cash generating units, which are reviewed for impairment if events or changes of
circumstances indicate that the carrying value may not be recoverable.


date of the transaction. Outstanding monetary assets and monetary liabilities denominated in
foreign currencies are restated using the rate of exchange at the reporting date. Foreign currency
gains or losses are recognized in the profit or loss.
Leases
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- 20 -
a. there is a change in contractual terms, other than a renewal or extension of the arrangement;
b. a renewal option is exercised or extension granted, unless that term of the renewal or
c. there is a change in the determination of whether fulfillment is dependent on a specified asset;
or
d. there is a substantial change to the asset.
as operating leases. Operating lease payments are recognized as an expense in the Company’s
profit or loss on a straight-line basis over the lease term.
When an operating lease is terminated before the lease period has expired, any payment required
to be made to the lessor by way of penalty is recognized.
Income Taxes
Current income tax
Current tax assets and current tax liabilities for the current and prior periods are measured at the
laws used to compute the amount are those that have been enacted or substantively enacted as of
the balance sheet date.
Deferred income tax

carrying amount for financial reporting purpose. Deferred income tax assets are recognized for all
deductible temporary differences, carryforward benefits of the excess of minimum corporate
income tax (MCIT) over the regular corporate income tax (RCIT) [excess MCIT] and unused tax
losses from net operating loss carryover (NOLCO), to the extent that it is probable that sufficient
future taxable profits will be available against which the deductible temporary differences and the
carryforward benefits of excess MCIT and NOLCO can be utilized. Deferred income tax liabilities
are recognized for all taxable temporary differences.
SGVMC310104

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the proceeds.
Deposit for future stock subscription

Deposit for future stock subscription generally represents funds received by the Company, which
it records as such with the view to applying the same as payment for future additional issuance of
shares or increase in capital stock.
Retained earnings
The amount included in retained earnings includes profit attributable to the Company’s equity
holders and reduced by dividends on capital stock. Dividends on capital stock are recognized as a
liability and deducted from equity when they are approved by the Company’s stockholders.
Interim dividends are deducted from equity when they are paid. Dividends for the year that are
approved after the balance sheet date are dealt with as an event after the balance sheet date.
Retained earnings may also include effect of changes in accounting policy as may be required by
the standard’s transitional provisions.
Retained earnings are appropriated for any plan for power plant expansion, investments and
funding of certain reserve accounts to be established pursuant to the requirements of the lenders in
accordance with the Omnibus Agreement. When the appropriation is no longer needed, it is
reversed.
Marketing Charges, and Cost and Expenses Recognition

Marketing charges, and cost and expenses are recognized in the profit or loss in the year they are
incurred.

obligation. If the effect of the time value of money is material, provisions are discounted using a
current pre-tax discount rate that reflects, where appropriate, the risks specific to the liability.
as interest expense. When the Company expects a provision or loss to be reimbursed, the
and its amount is estimable. The expense relating to any provision is presented in profit or loss,
net of any reimbursement.
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Contingent liabilities are not recognized in the financial statements but are disclosed unless the
are not recognized in the financial statements but disclosed in the notes to financial statements
when an inflow of economic benefits is probable. Contingent assets are assessed continually to
ensure that developments are appropriately reflected in the financial statements. If it has become
virtually certain that an inflow of economic benefits will arise, the asset and the related income are
recognized in the financial statements.

Events after the balance sheet date that are not adjusting events are disclosed when material.
The preparation of the financial statements in accordance with PFRS requires management to
Accounting assumptions, estimates and judgments are continually evaluated and are based on
historical experience and other factors, including expectations of future events that are believed to
be reasonable under the circumstances.
Judgments
on the amounts recognized in the financial statements.
Determination of functional currency

The Company has determined that its functional currency is the Peso. It is the currency of the
primary economic environment in which the Company operates. It is the currency that mainly
influences the Company’s sales and cost and expenses.

The Company exercises judgment in classifying financial instruments in accordance with PAS 39.
The Company classifies a financial instrument, or its components, on initial recognition as a
classification in the Company’s balance sheets.

a. Financial assets at FVPL
b. Loans and receivables
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The Company determines the classification at initial recognition and re-evaluates this
classification, where allowed and appropriate, at each balance sheet date.
Units-of-production depreciation/depletion
Estimated recoverable reserves are used in determining the depreciation/depletion or of mine
specific assets. This results in a depletion/depreciation charge proportional to the depletion of the
anticipated remaining mine life. Each item’s life, which is assessed annually, has regard to both
physical life limitations and to present assessments of economically recoverable reserves of the
mine property at which the asset is located. The calculations require the use of estimates of future
capital expenditure. The Company uses the tonnes of ore produced as the basis for
depletion/depreciation. Any change in estimates is accounted for prospectively.
Production start date

The Company assesses the stage of each mine development project to determine when a mine
moves into the production stage. The criteria used to assess the start date of a mine are determined
based on the unique nature of each mine development project. The Company considers various
relevant criteria to assess when the mine is substantially complete, ready for its intended use and
moves into the production phase. Some of the criteria include, but are not limited to the
following:
the level of capital expenditure compared to construction cost estimates;

completion of a reasonable period of testing of the mine plant and equipment;
ability to produce metal in saleable form; and
ability to sustain ongoing production of metal.
When a mine development project moves into the production stage, the capitalization of certain
mine construction costs ceases and costs are either regarded as inventory or expensed, except for
capitalizable costs related to mining asset additions or improvements, mine development or
mineable reserve development. It is also at this point that depreciation and depletion commences.

reporting date, that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year follow:
Estimating fair values of financial assets and financial liabilities

PFRS requires that certain financial assets and liabilities be carried at fair value, which requires
the use of accounting judgment and estimates. While significant components of fair value
measurement are determined using verifiable objective evidence (e.g., foreign exchange rates,
interest rates, and volatility rates), the timing and amount of changes in fair value would differ
with the valuation methodology used. Any change in the fair value of these financial assets and
financial liabilities would directly affect net income. Fair values of financial assets and financial
liabilities amounted to P=651,157,990 and P =7,422,573,201, respectively, as of December 31, 2009
and =P1,841,661,132 and = P8,263,716,159, respectively, as of December 31, 2008 (see Note 22).
Estimation of allowance for doubtful accounts

The Company evaluates individual accounts where the Company has information that certain
customers are unable to meet their financial obligations. Factors such as the Company’s length of
relationship with the customers and the customers’ current credit status are considered to
determine the amount of allowance that will be recorded in the trade and other receivables
SGVMC310104

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account. In addition to specific allowances against individually significant accounts, the Company
also makes a collective impairment allowance against exposure which, although not specifically as
requiring a specific allowance, has a greater risk of default that when originally granted. These
reserves are re-evaluated and adjusted as additional information becomes available. As of
December 31, 2009 and 2008, no provision for impairment loss was recognized by the Company.
Measurement of NRV of mine products inventory

The NRV of mine products inventory is the estimated selling price in the ordinary course of
business less cost to sell. The selling price estimation of mine products inventory is based on the
London Metal Exchange (LME), which also represents an active market for the product. The
Company concurrently uses the prices as agreed with MRI Trading and the weight and assay for
metal content in estimating the selling price of mine products inventory. Any changes in the assay
for metal content of the mine products inventory is accounted for and adjusted accordingly. As of
December 31, 2009 and 2008, the cost of mine products inventory is lower than its NRV since the
remaining inventories are to be sold at an agreed price which is higher than its cost. Hence, no
allowance for decline in value of mine products inventory was recorded by the Company for both
years (see Note 7).
Estimation of useful lives of property, plant and equipment

Useful lives of property and equipment are estimated based on the period over which these assets
are expected to be available for use. The estimated useful lives of property and equipment are
reviewed periodically and are updated if expectations differ from previous estimates due to asset
utilization, internal technical evaluation, technological changes, environmental and anticipated use
of the assets tempered by related industry benchmark information. It is possible that future results
of operation could be materially affected by changes in these estimates brought about by changes
in factors mentioned. Any reduction in the estimated useful lives of property and equipment
would increase the Company’s recorded operating expenses and decrease noncurrent assets.
There is no change in the estimated useful lives of items of property and equipment during the
year. Net book values of property, plant and equipment as of December 31, 2009 and 2008
amounted to = P9,300,177,944 and = P8,022,526,711, respectively. Depreciation expense recognized
in 2009 and 2008 amounted to P =85,527,734 and P=124,524,178, respectively (see Note 9).
Impairment of property, plant and equipment, and mining rights

present. Determining the value of property, plant and equipment and mining rights, which require
the determination of future cash flows expected to be generated from the continued use and
ultimate disposition of such assets, further requires the Company to make estimates and
assumptions that can materially affect the Company’s financial statements. Future events could
cause the Company to conclude that the property, plant and equipment and mining rights are
impaired. Any resulting impairment loss could have a material adverse impact on the Company’s
financial condition and results of operations.
No impairment loss was recognized by the Company in 2009 and 2008 since there is no indication
of impairment.
Impairment of nonfinancial assets

The Company determines whether its nonfinancial assets are impaired at least on an annual basis.
This requires an estimation of recoverable amount, which is the higher of an asset’s or
cash-generating unit’s fair value less cost to sell and value-in-use. Estimating the value-in-use
requires the Company to make an estimate of the expected future cash flows from the
cash-generating unit and to choose an appropriate discount rate in order to calculate the present
SGVMC310104

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value of those cash flows. Estimating the fair value less cost to sell is based on the information
available to reflect the amount that the Company could obtain as of the balance sheet date. In
determining this amount, the Company considers the outcome of recent transactions for similar
assets within the same industry.
Realizability of deferred income tax assets

The Company reviews the carrying amounts of deferred income tax assets at each balance sheet
date and reduces deferred income tax assets to the extent that it is no longer probable that
sufficient future taxable profits will be available to allow all or part of the deferred income tax
assets to be utilized. As of December 31, 2009 and 2008, the Company has deductible temporary
differences, NOLCO and excess MCIT amounting to = P1,217,779,118 and = P719,477,184,
respectively, for which deferred income tax assets have not been recognized since management
believes that it is not probable that sufficient future taxable profits will be available against which
benefits of deferred income tax assets can be utilized (see Note 15).

factors could affect reported fair values of financial instruments.
Estimation of mine rehabilitation costs

The Company estimates the costs of mine rehabilitation based on previous experience in
rehabilitating fully mined areas in sections of the mine site. These costs are adjusted for inflation
factor based on the average monthly inflation rate as of adoption date or date of re-evaluation of
the asset dismantlement, removal or restoration costs, and are measured at present value using the
market interest rate for a comparable instrument adjusted for the Company’s credit standing.
While management believes that its assumptions are reasonable and appropriate, significant
differences in actual experience or significant changes in the assumptions may materially affect
the Company’s depletion and obligations for mine rehabilitation. Liability for mine rehabilitation
recognized as of December 31, 2009 and 2008 amounted to = P104,014,895 and P=70,533,402,
Measurement of mine products sales

Except when the shipment is price-fixed, mine products sales are provisionally priced such that
these are not settled until predetermined future dates based on market prices at that time. Revenue
on these sales are initially recognized based on shipment values calculated using the provisional
metals prices, shipment weights and assays for metal content less deduction for insurance and
smelting charges as marketing. The final shipment values are subsequently determined based on
final weights and assays for metal content and prices during the applicable quotation period. Total
mine product sales, net of marketing charges, amounted to = P4,110,720,660 in 2009 and
=
P193,947,898 in 2008.
Estimation of retirement benefits costs

The determination of the Company’s obligation and cost of pension is dependent on the selection
of certain assumptions used by actuaries in calculating such amounts. Those assumptions are
described in Note 20 and include, among others, discount rates and future salary increase rates.
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Actual results that differ from the Company’s assumptions are accumulated and amortized over
future periods and therefore, generally affect the Company’s recognized expenses and recorded
obligation in such future periods. While management believes that its assumptions are reasonable
and appropriate, significant differences in the actual experience or significant changes in the
assumptions may materially affect the Company’s retirement benefits liability. Retirement
benefits liability amounted to P
=57,590,500 and = P34,840,300 as of December 31, 2009 and 2008,
Estimation of mineral reserves and resources

Mineral reserves and resources estimates for development projects are, to a large extent, based on
the interpretation of geological data obtained from drill holes and other sampling techniques and
feasibility studies which derive estimates of costs based upon anticipated tonnage and grades of
ores to be mined and processed, the configuration of the ore body, expected recovery rates from
the ore, estimated operating costs, estimated climatic conditions and other factors. Proven
reserves estimates are attributed to future development projects only when there is a significant
commitment to project funding and execution and for which applicable governmental and
regulatory approvals have been secured or are reasonably certain to be secured. All proven
reserve estimates are subject to revision, either upward or downward, based on new information,
such as from block grading and production activities or from changes in economic factors,
including product prices, contract terms or development plans.
Estimates of reserves for undeveloped or partially developed areas are subject to greater
uncertainty over their future life than estimates of reserves for areas that are substantially
developed and depleted. As an area goes into production, the amount of proven reserves will be
subject to future revision once additional information becomes available. As those areas are
further developed, new information may lead to revisions.
Provisions and contingencies

The estimate of the probable costs for the resolution of possible claims has been developed in
consultation with outside counsel handling the Company’s defense in these matters and is based
upon an analysis of potential results. The Company is a party to certain lawsuits or claims arising
from the ordinary course of business. However, the Company’s management and legal counsel
believe that the eventual liabilities under these lawsuits or claims, if any, will not have a material
effect on the Company’s financial statements. Accordingly, no provision for probable losses
arising from contingencies was recognized in the Company’s financial statements for the years
ended December 31, 2009 and 2008.
Cash on hand and in banks amounted to P =229,966,200 and P=796,016,237 as of December 31, 2009
and 2008, respectively. Cash in banks and cash equivalents earn interest at respective bank
deposit rates and investment rates. Interest income from cash in bank and cash equivalents
amounted to = P789,776 and P
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5. Receivables
2009 2008
Trade (Note 6) P
=220,745,127 =143,183,346
P
Nontrade 21,183,755 19,863,473
Subscription receivable (Note 14) 138,503,354 –
Advances to officers and employees (Note 19) 8,039,565 5,699,646
Interest – 79,752
P
=388,471,801 =168,826,217
P
Interest receivables pertain to accrued interest income from short-term investments of the
Company. Nontrade receivables are noninterest-bearing advances to subcontractors and third
parties for their working capital purposes and are due and demandable.
As of December 31, 2009 and 2008, no receivables were impaired. Accordingly, no allowance for
impairment was recorded.
6. Derivative Assets and Liabilities
Freestanding Derivatives
On August 21, 2008, the Company entered into a contract with MRI Trading AG (MRI) wherein
the Company agreed to sell 60,000 dmt of copper concentrates in six lots of deliveries of
10,000 dmt each from November 2008 to June 2009. On October 17 and 24, 2008, the first
30,000 dmt was price-fixed. On October 24, 2008, both parties agreed to enter into a net
settlement of a portion of the price fixing agreement prior to the delivery of the goods. Pursuant to
the agreement, MRI paid the difference between the contracted and the prevailing copper price for
the agreed settlement date at the time of closeout, discounted back to a present value at an agreed
discount rate. The rapid, substantial and unexpected collapse in copper prices in late 2008 resulted
in the Company having a mark-to-market credit exposure, which the Company sought to reduce
by terminating a portion of the agreement. As of December 31, 2008, the Company recognized a
derivative asset and an unrealized mark-to-market gain amounting to = P 876,818,678 for the
outstanding commodity forward to be delivered. Total mark-to-market gains realized in 2008
amounted to =P720,669,516.
On December 29, 2008, the Company had its first delivery totaling to 5,038.165 dmt at a fixed
price of US$7,666 per metric ton.
On March 20, 2009, the Company entered into another contract with MRI whereby it agreed to
sell 50,000 dmt of copper concentrates in 10 lots of deliveries of 5,000 dmt each, from
September 2009 to February 2010. As of December 31, 2009, 10,000 dmt has been price-fixed at
a range of US$4,107 to US$7,545 per dmt.
On September 1, 2009, the Company agreed to sell 10,000 dmt of copper concentrates to MRI.
The copper concentrates are expected to be delivered in the second quarter of 2010 in lots of
approximately 5,000 dmt. Another contract was entered by the Company with MRI on
October 6, 2009, whereby 20,000 dmt of copper concentrates would be delivered in lots of
5,000 dmt in the second quarter of 2010. As of December 31, 2009, 3,000 dmt has been price-
fixed at US$6,142 per dmt.
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Pricing agreement
The prices to be paid will be based on the LME as published in the Metal Bulletin and as averaged
over the quotational period (QP) together with the weight and assay for metal content to be
determined by an appointed independent surveyor. The Company will have the option to price-fix
in advance of the QP month, adjusted to the actual QP month with MRI, the payable copper
contents pertaining only to the first 30,000 dmt of concentrate shipped, with MRI’s LME Desk.
Any volume after the first 30,000 dmt will be priced as per contractual QP. If the Company
exercises the right to price-fix prior to the QP month, the prices will have to be mutually agreed
with MRI and confirmed in writing advising the volume and price. Thereafter, an addendum will
be issued to the contract confirming the volume of payable copper priced.
The revenue arising from the contract with MRI amounted to = P4,519,010,381 and P =207,995,910 in
2009 and 2008, respectively. Total trade receivables outstanding as a result of the foregoing
transactions amounted to =
P220,745,127 and = P143,183,346 as of December 31, 2009 and 2008,
respectively.
As of December 31, 2009, the Company recognized a derivative liability amounting to

=
P294,562,146 for the outstanding commodity forward to be delivered subsequent to 2009 while as
of December 31, 2008, the Company recognized a derivative asset amounting to P
=876,818,678.
Payment arrangement
MRI shall make a first provisional payment to the Company in dollars by telegraphic transfer for
the 90% of the estimated value of each shipment of approximately 5,000 to 10,000 dmt after the
presentation of the provisional commercial invoice, bills of lading, Certificate of Origin and
Weight, and the provisional analysis certificate issued by the Company. The final payment shall be
made within seven days by MRI when all the final details relating to weight, assays and prices
became known, and against the final commercial invoice. The Company may request MRI to
provide advance provisional payments for concentrates stockpiled at the mine site or loading port
in an acceptable facility to MRI at a minimum lot size of 1,000 dmt. In consideration for MRI
providing the Company with advance payment, MRI shall be credited, by way of a deduction
against the price, an amount equal to the advance payment multiplied by the one month LIBOR
rate in effect on the date of each advance payment plus two percent per annum from the date the
Company’s bank receives the payment until when it would otherwise be made.
As a result of the pricing agreement, as discussed above, wherein copper sales will be
provisionally priced at delivery subject to price and quantity adjustment after the quotational
period, the MRI contracts which are not price-fixed have been assessed as having embedded
derivatives that are not clearly and closely related once the commodities have been delivered,
hence required to be bifurcated on said date.
Total advances from MRI as of December 31, 2009 and 2008 recorded under “Accounts payable
and accrued liabilities” account in the balance sheet amounted to =
P423,924,209 and
=
P105,062,004, respectively (see Note 11).
As of December 31, 2009, the Company recognized a derivative asset and unrealized mark-to-
market gain amounting to P
=32,719,989 to record the value of the bifurcated derivative related to
the last shipment made by the Company in 2009.
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7. Inventories
Inventories consist of mine products, and materials and supplies amounting to P

=491,789,042 and
=182,501,463 as of December 31, 2009, and =
P P219,642,672 and P =105,566,818 in 2008,
respectively. Mine products and materials and supplies have costs that are lower than their NRV,
thus, these are recorded at cost as of December 31, 2009 and 2008.
2009 2008
Deposits to suppliers P
=311,598,076 =281,344,226
P
Prepaid insurance – 109,571,977
Prepaid fees and advances 64,809,787 153,992,524
P
=376,407,863 =544,908,727
P
Deposits to suppliers are advance payments made by the Company, as required by the suppliers, to
serve as insurance in case of default in payment by the Company. Included in the “Prepaid fees
and advances” account is the cost of equipment and supplies in transit paid in advance by the
Company amounting to nil and P =153,278,901 as of December 31, 2009 and 2008, respectively.
During 2009, the Company made an advance payment for the guarantee fee pertaining to its loan
agreement with Deutsche Bank. This amounts to =
P53,853,053 which is included as part of
“Prepaid fees and advances” account.
9. Property, Plant and Equipment
December 31, 2009:

Mine Machinery Roadways Furniture Buildings
Development and and Transportation and and Construction
Costs Equipment Bridges Equipment Fixtures Improvements in Progress Total
Cost:
January 1 =1,989,660,218
P = 2,324,507,243
P = 162,264,120
P = 102,554,079
P = 2,412,142
P = 809,290,908
P P3,144,152,501
= =8,534,841,211
P
Additions 22,592,754 – – – – – 2,143,258,491 2,165,851,245
Disposals – (1,106,000) – (6,112,613) (836,662) – – (8,055,275)
Reclassifications 25,827,656 2,960,854,530 10,371,571 2,798,587 544,428 124,192,372 (3,124,589,144) –
December 31 2,038,080,628 5,284,255,773 172,635,691 99,240,053 2,119,908 933,483,280 2,162,821,848 10,692,637,181
Accumulated
Depreciation,
and Depletion:
January 1 69,077,544 328,835,808 20,283,018 22,883,008 1,597,076 69,638,046 – 512,314,500
Depreciation for
the year 11,930,173 33,872,508 12,421,805 3,021,184 980,387 23,301,677 – 85,527,734
Disposals – (466,542) – (2,613,906) (599,579) – – (3,680,027)
Reclassifications – – – – – – – –
Capitalized depreciation 51,707,078 623,612,083 8,522,407 18,371,950 – 96,083,512 – 798,297,030
December 31 132,714,795 985,853,857 41,227,230 41,662,236 1,977,884 189,023,235 – 1,392,459,237
Net Book Values =1,905,365,833
P = 4,298,401,916
P = 131,408,461
P = 57,577,817
P = 142,024
P = 744,460,045
P = 2,162,821,848
P = 9,300,177,944
P
December 31, 2008:

Mine Machinery Roadways Furniture Build ings Tanks,
Development and and Transportation and and Dams and Construction
Costs Equipment Bridges Equipment Fixtures Improvements Diversions in Progress Total
Cost:
January 1 = 264,675,217
P =1,296,521,860
P = 88,397,095
P = 73,660,389
P =2,804,570
P =345,652,309
P =28,414,000
P = 563,006,823 P
P =2,663,132,263
Additions 246,404,121 677,293,600 – 26,612,977 – – – 4,921,398,250 5,871,708,948
Reclassifications 1,478,580,880 350,691,783 73,867,025 2,280,713 (392,428) 463,638,599 (28,414,000) (2,340,252,572) –
December 31 1,989,660,218 2,324,507,243 162,264,120 102,554,079 2,412,142 809,290,908 – 3,144,152,501 8,534,841,211
(Forward)
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Mine Machinery Roadways Furniture Build ings Tanks,

Development and and Transportation and and Dams and Construction
Costs Equipment Bridges Equipment Fixtures Improvements Diversions in Progress Total
Accumulated
Depreciation,
and Depletion:
January 1 =–
P =93,278,006
P =1,710,194
P =4,447,214
P =418,904
P =47,244
P = 858,729
P =–
P =100,760,291
P
Depreciation for
the year 69,077,544 16,747,732 21,396,734 7,691,973 1,239,712 8,370,483 – – 124,524,178
Reclassifications – (6,315,104) 905,973 2,531,982 (88,831) 3,824,709 (858,729) – –
Capitalized
depreciation – 225,125,174 (3,729,883) 8,211,839 27,291 57,395,610 – – 287,030,031
December 31 69,077,544 328,835,808 20,283,018 22,883,008 1,597,076 69,638,046 – – 512,314,500
Net Book Values =1,920,582,674
P =1,995,671,435
P =141,981,102
P = 79,671,071
P =815,066
P =739,652,862
P =– P
P =3,144,152,501 P
=8,022,526,711
Mine development costs consist of the following as of:
December 31, 2009:
Mine
Mine and Mining Development Rehabilitation
Properties Costs Costs Total
Cost:
January 1 P
=1,001,948,680 P934,379,228
= P
=53,332,310 P
=1,989,660,218
Additions and reclassifications (203,917,367) 229,745,023 22,592,754 48,420,410
December 31 798,031,313 1,164,124,251 75,925,064 2,038,080,628
Accumulated Depletion:
January 1 68,776,999 – 300,545 69,077,544
Depletion for the year 68,541,885 11,698,237 2,691,661 82,931,783
Reclassifications (30,107,745) 10,813,213 – (19,294,532)
December 31 107,211,139 22,511,450 2,992,206 132,714,795
Net Book Values P
=690,820,174 P
=1,141,612,801 P
=72,932,858 P
=1,905,365,833
December 31, 2008:
Mine
Mine and Mining Development Rehabilitation
Properties Costs Costs Total
Cost
January 1 =–
P P261,339,684
= P3,335,533
= =264,675,217
P
Additions and reclassifications 1,001,948,680 673,039,544 49,996,777 1,724,985,001
December 31 1,001,948,680 934,379,228 53,332,310 1,989,660,218
Accumulated Depletion
January 1 – – – –
Depletion for the year 68,776,999 – 300,545 69,077,544
December 31 68,776,999 – 300,545 69,077,544
Net Book Values =933,171,681
P =934,379,228
P =53,031,765
P =1,920,582,674
P
In 2008, prior to production, the Company capitalized some of its expenses such as personnel
costs, borrowing costs, mine site supplies, power and other related expenses incurred during its
rehabilitation stage. Since the Company’s commercial operations commenced on the last quarter
of 2008, expenses incurred by the Company are allocated between rehabilitation and operations.
Those expenses which pertain to rehabilitation were capitalized and recorded as part of the
“Construction in progress” account under the “Property, plant and equipment” account in the
Company’s balance sheet. Those which were charged to operations were recorded as part of the
“General and administrative expenses” account in the profit or loss.
Total costs which are recorded as part of construction in progress and as operating expenses
amounted to =P2,162,821,848 and =P206,485,760 in 2009, and P =3,144,152,501 and = P152,658,568,
in 2008, respectively.
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10. Other Noncurrent Assets
2009 2008
Input VAT - net P
=994,558,559 =684,952,448
P
Mine rehabilitation fund 5,212,199 4,067,279
Others 14,773,841 11,357,589
P
=1,014,544,599 =700,377,316
P
In 2009, the Company recognized an allowance for impairment loss on input VAT amounting to
=
P59,526,178. No allowance for impairment loss on input VAT was recorded in 2008.
Mine rehabilitation funds include the rehabilitation trust funds which receive cash contributions to
accumulate fund for the Company’s rehabilitation liability relating to the eventual closure of the
mine site and to ensure payment of compensable damages caused by mine waste. The
rehabilitation trust funds are deposited in a government depository bank and withdrawal from such
funds shall be upon written approval from the appropriate authority. The rehabilitation trust funds
were opened by virtue of the requirements of the Mine Rehabilitation Fund Committee -
Department of Environment and Natural Resources (DENR) Reg. VII.
2009 2008
Trade P
=641,012,134 =647,085,829
P
Advances from MRI (Note 6) 423,924,209 105,062,004
Advances from related parties (Notes 19 and 20) 1,242,140,113 1,396,772,386
Royalties payable 87,599,730 –
Nontrade 129,279,352 77,811,889
Accrued expenses 615,678,808 468,642,409
P
=3,139,634,346 =2,695,374,517
P
Trade payables are noninterest-bearing and are normally settled on a 30 to 60-day term. Accrued
expenses substantially consist of various expense accruals for utilities and professional fees.
Royalties payable pertain to the consideration for the Parent Company’s conveyance to the
Company of certain rights of ACMDC over the Toledo Mine Rights, the Fixed Assets and the
Surface Rights covered by the Operating Agreement contracted by the two parties.
12. Long-term Debt
Long-term debt consists of loans from:
2009 2008
Total debt P
=4,629,180,000 =4,752,000,000
P
Less current portion 1,395,180,000 475,200,000
Noncurrent portion P
=3,234,000,000 =4,276,800,000
P
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Loan Agreement - Trade and Investment Development Corporation of the Philippines

On December 17, 2009, the Company entered into a loan agreement with Trade and Investment
Development Corporation of the Philippines, also known as Philippine Export-Import Credit
Agency (PhilEXIM), for a principal amount of = P471,180,000 or the Peso equivalent
ofUS$10,000,000 at the time of disbursement. The proceeds of the loan shall be used only for the
purpose of bridge financing the portion of the principal amortization on the PhilEXIM
guaranteedUS$100,000,000 loan from Deutsche Bank, AG amounting toUS$10,000,000 which
was due for payment on December 22, 2009. The Company shall pay monthly interest on the
principal amount at the rate equal to PhilEXIM’s transfer pool rate plus 1.5% with monthly re-
pricing. The principal amount including all accrued but unpaid interest shall be paid on the date
falling 360 days from the date of disbursement of the entire proceeds of the loan.
The interest expense for this loan as of December 31, 2009 amounts to =
P1,587,865.
Loan Agreement - Deutsche Bank

On May 25, 2007, the Company entered into a loan agreement for US$100,000,000 with Deutsche
Bank AG, Singapore Branch. The proceeds of the loan were primarily designated for capital
expenditure and financing of general working capital requirements for the rehabilitation of the
Company’s Toledo Mining Project. The rate of interest for this loan is equal to the sum of
(i) the 7-year United States (US) Swap Rate, (ii) the 5-year Credit Default Swap rate of the
Republic of the Philippines and (iii) a fixed margin of 0.965%. The interest period is for a period
of six (6) months which will start on June 22, 2007 and to be paid within 7 years after utilization
date on or before June 23, 2014. The Company shall repay the loan in ten (10) equal semi-annual
installments, which shall fall due on the last day of the fifth interest period to the final maturity
date. The Company paid the first principal amortization including the accrued interest on
December 21 and 22, 2009 totalingUS$13,805,231.
As of December 31, 2009 and 2008, the Company capitalized the interest related to this loan
amounting to P
=238,859,238 and P
=395,665,706, respectively. Interest expense charged to
operations amounted to =
P157,836,856 and nil for 2009 and 2008, respectively.
13. Liability for Mine Rehabilitation Cost
2009 2008
January 1 P
=70,533,402 =14,554,576
P
Additions during the year 22,592,754 49,996,776
Accretion of interest 10,888,739 5,982,050
December 31 P
=104,014,895 =70,533,402
P
Discount rates used by the Company for the accretion of interest are 7.1% and 4.9% for 2009 and
2008, respectively.
14. Capital Stock

The Company’s authorized, issued and subscribed capital stock follow:
December 31, 2009 December 31, 2008
No. of Shares Amount No. of Shares Amount
Authorized - P
=1 par value:
Common 2,773,050,677 P
=2,773,050,677 2,773,050,677 =2,773,050,677
P
Preferred 426,949,323 426,949,323 426,949,323 426,949,323
Total 3,200,000,000 P
=3,200,000,000 3,200,000,000 =3,200,000,000
P
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December 31, 2009 December 31, 2008

No. of Shares Amount No. of Shares Amount
Issued:
Common 1,089,889,099 P
=1,089,889,099 1,089,889,099 =1,089,889,099
P
Preferred 426,949,323 426,949,323 426,949,323 426,949,323
Total 1,516,838,422 P
=1,516,838,422 1,516,838,422 =1,516,838,422
P
Subscribed:
Common 84,811,387 84,811,387 – –
Preferred – – – –
Total 84,811,387 84,811,387 – –
The movements of shares outstanding as of December 31, 2009 and 2008 are as follow:
2009 2008
January 1 1,516,838,422 1,238,611,323
Issuances of common shares – 278,227,099
Subscribed common shares 84,811,387 –
December 31 1,601,649,809 1,516,838,422
On May 5, 2006, the Company entered into a Convertible Loan and Security Agreement
(“CLSA”) with ACMDC and CASOP Atlas II, Ltd (“CASOP”). CASOP extended the loan to the
Company in the principal amount of US$5 million (“Initial Loan”). The Initial Loan was accreted
at 5% per annum. Under the CLSA, unless the Initial Loan had been previously converted, the
Company should repay the Initial Loan two (2) years from the date of the CLSA or such other date
as may be separately agreed upon in writing by CASOP and the Company. The Initial Loan was
convertible at any time prior to maturity date or to the date of early repayment into not less than
5.17% and not more than 5.70% of the total issued and outstanding shares of the Company. The
proceeds of the Initial Loan were used by the Company solely and exclusively for the:
(1) procurement of equipment to dewater the Atlas Mine, which is a copper mining facility located
in Toledo, Cebu in the Philippines, (2) conduct of additional metallurgy tests, and (3) other uses
key to the development of the Atlas Mine. The payment of the Initial Loan was secured by a first
mortgage constituted over all the rights, title and interests in and to certain properties pursuant to
the mortgage, a pledge of the shares of stock of the Company owned by ACMDC, and assignment
by way of security over the assigned collateral. On May 12, 2006, the proceeds of the
US$5 million Initial Loan were disbursed by CASOP to the Company.
The CLSA prohibited the Company, among others, from entering into management contract or
materially change the nature of its business, create a lien on any of its present and future assets,
property or revenue, declare or pay dividends or make any other distributions to stockholders
(other than dividends or distributions payable solely in shares of its capital stock), purchase or
repurchase indebtedness of any person, extend or grant loans or advances to its affiliated
companies, issue any preferred stock of any other class of stock, options, rights or warrants, except
for the shares that may be issued to CASOP and to Atlas under the Operating Agreement.
On October 11, 2006, the parties entered into an Amendment to the CLSA (the “Amendment”)
that increased the amount of the convertible loan by US$13 million (“Additional Loan”) making
the total loan to US$18 million (In aggregate, the “CCC Loan”) and incorporated certain
provisions of the Quick Production Side Letter. The Amendment modified the use of the CCC
Loan to (1) procurement of equipment and labor to carry out the initial rehabilitation of the Atlas
SGVMC310104

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Mine, including the copper processing mill facility within the mine, (2) the conduct of additional
metallurgy tests, (3) other uses key to the development of the Atlas Mine. Under the Amendment,
the parties agreed that CASOP was eligible to convert the CCC Loan into not less than 18.62%
and not more than 19.15% of the total issued and outstanding shares of the Company of
US$96.67 million, depending on the total outstanding Initial Loan of US$5 million, together with
any outstanding accretion thereon, plus the amount of the Additional Loan of US$13 million
(without accretion) and any all other amounts due to CASOP under the Agreement. On
October 12, 2006, the proceeds of the Additional Loan of US$13 million were disbursed by
CASOP to the Company.
Under the Amendment, CASOP was obligated to convert the CCC Loan upon: (1) the
procurement of a commercially viable financing facility for the Company and (2) a decision with
capability being made to reopen the Atlas Mine, which decision included, but was not limited to,
the approval or authorization by the Company’s BOD to proceed with the copper mine
rehabilitation.
In an Assignment Agreement dated March 16, 2007, CASOP assigned the CCC Loan to CASOP
BV. On the same date, CASOP BV assigned the CCC Loan to CAC.
In an Assignment Agreement dated August 23, 2007, CAC assigned 98% of its rights and
obligations to the CCC Loan. For the remaining balance of 2% of the CCC Loan, the provisions
of the Assignment Agreement dated March 16, 2007 remained in effect.
Considering the above stated agreements in 2007, the following BOD Resolution was resolved
during the special meeting of the BOD of the Company last September 19, 2007:
The CASOP Subscription Price has been fully paid by CASOP BV by way of the conversion into
equity of:
a. the Peso equivalent of the CCC Loan under the CLSA dated May 5, 2006 among the
Company, ACMDC and CASOP, as amended on October 11, 2006, amounting to an
aggregate ofUS$17.64 million;
b. the Peso equivalent of the accrued interest on the Initial Loan under the CLSA amounting to
US$0.32 million; and
c. the Peso equivalent of a portion of the Subscription Price under the Amended and Restated
Subscription Agreement dated May 24, 2007 among the Company, Atlas and CASOP,
amounting toUS$5.00 million.
The CAC subscription price has been fully paid by CAC by way of the conversion into equity of
the Peso equivalent of the CCC Loan under the CLSA dated May 5, 2006 among the Company,
ACMDC and CASOP, as amended on October 11, 2006 amounting to an aggregate of
US$0.36 million and the accrued interest of the Initial Loan under the CLSA of US$6,500.
On September 19, 2007, the BOD of the Company amended its articles of incorporation to
increase its authorized capital stock to P
=3.20 billion. This was approved by the SEC on
December 31, 2007.
In October 2008, ACMDC agreed with CASOP to a schedule of cash advances for infusion to the
Company amounting to US$48 million. The advances are to be made on scheduled dates until
January 2009 and on a pro-rata basis. A shareholder has the right to infuse the contribution of the
other if the latter fails to make the contribution. The advances may be converted into equity at a
SGVMC310104

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later date. At the end of 2008, a total of US$28 million has been infused by the stockholders into
the Company with CASOP contributing US$26 million. Of the amount contributed by CASOP,
US$24.95 million is convertible at the option of CASOP into 308,170,751 of the Company’s
common shares the issuance of which shall be subject to the Company’s compliance with the legal
and regulatory requirements enforced by the Philippine SEC with respect to the conversion of debt
into equity.
In October and November 2009, CASOP issued notices to the BOD that it would exercise its right
to convert its advances into common shares of the Company. Advances amounting to US$24.95
million would be converted to 308,170,751 common shares. The conversion by CASOP of its
total convertible advances would result in CASOP owning 45.54% of the Company’s outstanding
capital stock. The advances from CASOP, which will eventually be converted to common shares
of the Company, were reclassified to “Deposit for Future Stock Subscription” account which is
presented under the equity section of the balance sheet.
On December 18, 2009, the Company, ACMDC, CABV, and CAC entered into a Subscription
Agreement whereby the Company shall issue and sell to the subscribers, based on their equity
shareholding ratio, 84,811,387 common shares for a total consideration of P
=339.2 million
(US$7.3 million) at the subscription price of P
=4 per share.
As of December 31, 2009, subscription receivable of = P138,503,354 was recognized for the unpaid
portion of the stock subscription. The subscription receivable was subsequently paid on
January 22, 2010. The Company issued common shares according to the following distribution:
ACMDC 46,188,281
CABV 19,311,553
CAC 19,311,553
Preferential rights of preferred shareholders

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, holders of preferred shares shall be entitled to receive out of the total assets of the
Corporation, before any distribution of assets is made to the other holders of shares, distributions
in the amount of the issue value per outstanding share, plus declared and unpaid dividends until
the date of distribution.
15. Income Taxes
a. The provision for current income tax represents MCIT in 2009 and 2008.
b. The Company has the following deductible temporary differences, NOLCO and excess MCIT
for which no deferred tax assets were recognized in the balance sheets as management
believes that it is more likely that the Company will not be able to realize the carryforward
benefits of excess MCIT and NOLCO in the future or prior to their expiration.
2009 2008
NOLCO P
= 1,205,264,961 =703,969,116
P
Retirement benefits liability 12,447,162 10,644,441
Excess MCIT 66,995 24,786
Termination payable – 4,838,841
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c. As of December 31, 2009, the Company’s NOLCO and excess MCIT that can be claimed as
deduction against future taxable income and income tax payable, respectively, follow:
Year Incurred Available Until Excess MCIT NOLCO

2009 2012 =42,209
P =643,839,279
P
2008 2011 24,786 141,320,872
2007 2010 – 420,104,810
=66,995
P =1,205,264,961
P
The following are the movements in:
NOLCO:
2009 2008
January 1 P
=703,969,116 =578,153,007
P
Additions 643,839,279 141,320,872
Expirations (142,543,434) (15,504,763)
December 31 P
=1,205,264,961 =703,969,116
P
Excess MCIT:
2009 2008
January 1 P
=24,786 =–
P
Additions 42,209 24,786
Expirations – –
December 31 P
=66,995 =24,786
P
d. The reconciliation of provision for (benefit from) income tax computed at the statutory income
tax rates with the provision for income tax is as follows:
2009 2008
Provision for (benefit from) income tax at
statutory income tax rates (P
=498,672,578) =242,183,517
P
Adjustments to (reductions in) income tax
resulting from:
Income subject to ITH 283,993,714 (295,441,987)
Deductible temporary differences, NOLCO and
excess MCIT for which no DTA were
recognized in the current year 193,734,809 51,021,085
Nondeductible expenses 21,223,197 9,122,370
Interest income already subjected to final tax (236,933) (6,860,199)
=42,209 =24,786
P
e. Republic Act (RA) No. 9337 or the Expanded-Value Added Tax (E-VAT) Act of 2005 took
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f. On July 7, 2008, RA 9504, which amended the provisions of the 1997 Tax Code, became
16. Mining and Milling Costs, and Mine Products Taxes and Royalties
2009 2008
Mining and milling costs consist of:
Materials and supplies P
=1,156,312,366 =103,448,296
P
Communications, light and water 1,192,021,646 161,541,697
Depletion and depreciation (Note 9) 656,067,403 116,578,799
Personnel costs (Note 18) 471,062,018 61,922,921
Contracted services 64,936,382 2,031,110
Other costs 19,398,717 1,153,290
P
=3,559,798,532 =446,676,113
P
Mine products taxes and royalties consist of:

Excise taxes P
=77,890,854 =9,708,876
P
Royalties 77,890,854 9,708,876
P
=155,781,708 =19,417,752
P
2009 2008
Personnel costs (Note 18) P
=175,757,965 =35,303,027
P
Depletion and depreciation (Note 9) 85,527,734 55,747,179
Professional fees 49,435,023 28,573,626
General consumption items 29,288,782 1,919,023
Insurance 26,932,807 3,226,840
Communications, light and water 15,317,227 703,088
Entertainment, amusement and representation 13,586,134 6,459,440
Taxes and licenses 4,899,105 2,399,562
Repairs and maintenance 4,309,741 1,303,661
Office supplies 3,119,673 267,536
Rental 2,553,642 479,940
Transportation and travel – 1,664,404
Others 21,862,703 14,611,242
P
=432,590,536 =152,658,568
P
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18. Personnel Costs
2009 2008
Salaries and wages P
=551,701,611 =43,792,554
P
Retirement benefits costs (Note 20) 20,920,224 6,466,183
Other employee benefits 69,413,898 35,120,332
P
=642,035,733 =85,379,069
P
In addition to the related party transactions discussed in Note 11, the Company’s transactions with
ACMDC consist mainly of advances for administrative and operating expenses such as advertising
and promotions, professional fees, salaries and wages, transportation and travel, and other
miscellaneous expenses. These amounts are due and demandable, and to be paid when sufficient
funds are available.
Advances to officers and employees amounting to P =8,039,565 and =P5,699,646, as of December

31, 2009 and 2008, respectively, pertain to the unliquidated portion of advances made by the
Company to its officers and employees and are collectible upon demand.
In a BOD meeting held on May 6, 2009, ACMDC and CASOP were given the authority to extend
to the Company cash advances not exceeding US$20 million, each contributing based on the
agreed ACMDC/CASOP equity ratio of 54.50% and 45.50%, respectively. As of December 31,
2009, total advances made by ACMDC and CASOP were $10.9 million andUS$9.1 million,
respectively.
In 2009, CASOP made a down payment amounting to =

P126,163,373 for an equipment to be used
in the Company’s operations.
2009 2008
Advances from ACMDC P
=631,314,798 P111,362,201
=
Advances from CASOP 610,825,315 1,285,410,185
P
=1,242,140,113 =1,396,772,386
P
Compensation of Key Management Personnel of the Company

The Company considers all senior officers as key management personnel. The compensation of
key management personnel for 2009 and 2008 are as follows:
2009 2008
Short-term benefits costs P
=18,631,740 =13,218,287
P
Retirement benefits costs 8,912,855 2,314,998
P
=27,544,595 =15,533,285
P
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20. Retirement Benefits Costs
The Company has an unfunded defined benefits retirement plan covering substantially all of its
employees.
The following tables summarize the components of retirement benefits costs and liability
recognized in the Company’s profit or loss and balance sheets, respectively.
a. The details of retirement benefits costs follow:
2009 2008
=17,821,300 =27,196,500
P
Interest cost 2,868,482 1,132,700
Amortizations for:
Past service cost (vested benefits) 6,349,500 –
Past service cost (non-vested benefits) 29,100 –
Actuarial loss (gain) (854,625) 249,500
Curtailment gain (3,040,357) –
P
=23,173,400 =28,578,700
P
2009 2008
January 1 P
=34,840,300 P6,261,600
=
Retirement benefits costs for the year 23,173,400 28,578,700
December 31 P
=57,590,500 =34,840,300
P
c. Changes in the present value of the defined benefits obligation as of December 31 follow:
2009 2008
January 1 P
=18,984,000 =11,115,700
P
Current service cost 17,821,300 27,196,500
Interest cost 2,868,482 1,132,700
Actuarial loss (808,682) (20,460,900)
Effect of curtailment (1,759,300) –
Past service cost 6,698,800 –
December 31 P
=43,381,400 =18,984,000
P
d. The details of accrued retirement benefits cost are as follow:
2009 2008
Defined benefits obligation = 43,381,400
P =18,984,000
P
Fair value of plan assets – –
43,381,400 18,984,000
Unrecognized net actuarial gains 14,209,100 15,856,300
= 57,590,500
P =34,840,300
P
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The principal assumptions used for the Company’s defined benefits retirement plan as of
January 1 follow:
2009 2008
Discount rate 15.11% 10.19%
Future salary increase 8.00% 8.00%
Average future working years of service 15 11
Amounts for the current and previous periods are as follow:

2009 2008
Present value of defined benefits obligation P
=43,381,400 =
P18,984,000
Unfunded retirement benefits obligation 43,381,400 18,984,000
Experience adjustment on benefit obligation (808,682) (20,460,900)
The latest actuarial valuation of the plan is as of December 31, 2009. The discount rate as of
December 31, 2009 is 10.26%.
The Company’s main financial instruments are cash and cash equivalents, long-term debt, and
derivative assets and liabilities. It has various other financial assets and liabilities such as
receivables and accounts payable and accrued liabilities which arise from the Company’s
operations.
The main risks arising from the Company’s financial instruments are liquidity risk, foreign
currency risk, commodity price risk and credit risk. The BOD reviews and adopts relevant
policies for managing each of these risks and they are summarized below.
Liquidity risk
Liquidity risk is defined as the risk that the Company may not be able to settle or meet its
obligations on time or at a reasonable price. Management is responsible for liquidity, funding as
well as settlement management.
The Company manages its liquidity risk on a consolidated basis based on business needs, tax,
capital or regulatory considerations, if applicable, through numerous sources of finance in order to
maintain flexibility.
The Company’s objective is to maintain a balance between continuity of funding and flexibility
through the availment of loans and stockholders’ advances. In managing its long-term financial
requirements, the Company includes conversion option into its capital stock on the outstanding
debt instruments.
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The following tables show the maturity profiles of the Company’s financial liabilities as well as
the undiscounted cash flows from financial assets used for liquidity purposes as of:
December 31, 2009:

1 year 3 years
On demand Less than 1 year to < 3 years to < 5 years Total
Loans and Receivables:
Cash and cash equivalents =229,966,200
P =–
P =–
P =–
P = 229,966,200
P
Receivables:
Trade 220,745,127 – – – 220,745,127
Nontrade 2,567,809 15,016,746 3,599,200 – 21,183,755
Subscription receivable 138,503,354 138,503,354
employees 8,039,565 – – – 8,039,565
=461,318,701
P = 153,520,100
P = 3,599,200
P =–
P = 618,438,001
P

liabilities:
Trade =641,012,134
P =–
P =–
P =–
P = 641,012,134
P
Nontrade 76,284,433 – – – 76,284,433
Accrued expenses 615,678,808 – – – 615,678,808
Advances from related parties 1,242,140,113 – – – 1,242,140,113
Long-term debt – 1,759,669,837 2,411,225,975 1,738,664,842 5,909,560,654
Financial liabilities at FVPL:
Derivative liabilities – 294,562,146 – – 294,562,146
= 2,575,115,488
P = 2,054,231,983 P
P = 2,411,225,975 P
= 1,738,664,842 = 8,779,238,288
P
December 31, 2008:

1 year 3 years
On demand Less than 1 year to < 3 years to < 5 years Total
Cash and cash equivalents =796,016,237
P =–
P =–
P =–
P =796,016,237
P
Receivables:
Trade 143,183,346 – – – 143,183,346
Nontrade 11,754,799 8,108,674 – – 19,863,473
employees 5,699,646 – – – 5,699,646
Interest 79,752 – – – 79,752
=956,733,780
P =8,108,674
P =–
P =–
P =964,842,454
P

liabilities:
Advances from related parties =1,396,772,386
P =–
P =–
P =–
P =1,396,772,386
P
Trade 647,085,829 – – – 647,085,829
Accrued expenses 468,642,409 – – – 468,642,409
Nontrade 65,263,855 – – – 65,263,855
Long-term debt – 835,861,023 2,441,692,788 2,647,730,907 5,925,284,718
=2,577,764,479
P =835,861,023
P =
P2,441,692,788 =
P 2,647,730,907 =8,503,049,197
P
Foreign currency risk

Foreign currency risk is the risk to earnings or capital arising from changes in foreign exchange
rates. The Company has transactional currency exposures from purchases of equipment
denominated in US$. Transactions with companies outside the Philippines are carried out with
currencies that management believes to be stable such as the US$. To mitigate the risk of
incurring foreign exchange losses, foreign currency holdings are matched against the potential
need for foreign currency in financing equity investments and new projects.
SGVMC310104

- 42 -
As of December 31, 2009 and 2008, foreign currency denominated assets and liabilities follow:
2009 2008
Foreign Currency Peso Equivalent Foreign Currency Peso Equivalent
Financial assets:
Cash and cash equivalents US$2,001,697 P
=92,478,561 US$4,440,863 =211,029,806
P
Interest receivable (Note 5) – – 1,678 79,752
Derivative assets 705,842 32,719,989 18,451,572 876,818,678
2,707,539 125,198,550 22,894,113 1,087,928,236
Financial liabilities:
Accrued interest 168,428 9,369,250 187,142 8,893,008
Accrued insurance 817,342 37,888,690 2,210,901 105,062,004
Long-term debt 90,000,000 4,158,000,000 100,000,000 4,752,000,000
Derivative liabilities 6,354,348 294,562,146 – –
97,340,118 4,499,820,086 102,398,043 4,865,955,012
(US$94,632,579) (P
=4,374,621,536) (US$79,293,930) (P
=3,778,026,776)
Accrued interest and accrued insurance are included as part of accrued expenses included within
the “Accounts payable and accrued liabilities” account in the balance sheets.
The exchange rates were P

=46.20 per US$1.00 as of December 31, 2009 and = P47.52 per US$1.00
as of December 31, 2008. Net foreign exchange gains and net foreign exchange losses amounting
to =
P73,616,774 and P
=481,222,265 are charged to operations on December 31, 2009 and 2008,
respectively.
The tables below demonstrate the sensitivity to a reasonable change in the US$ exchange rate,
with all other variables held constant, of the Company’s income (loss) before income tax (due to
the changes in the fair value of the foreign currency denominated assets and liabilities).
December 31, 2009:
Change in Peso-Foreign Effect on Loss

Exchange rate Before Income Tax
Increase by 2.31% P
= 100,993,782
Decrease by 2.31% (100,993,782)
December 31, 2008:
Change in Peso-Foreign Effect on Income

Exchange rate Before Income Tax
Increase by 2.15% (P
=78,968,742)
Decrease by 2.15% 78,968,742
There is no other impact on the Company’s equity other than those affecting profit or loss.
Commodity price risk

The Company’s copper concentrate revenue are based on international commodity quotations (i.e.,
primarily on the LME) over which it has no significant influence or control. This exposes the
Company’s results of operations to commodity price volatilities that may significantly impact its
cash inflows. The Company enters into derivative transactions as a means to mitigate the risk of
fluctuations in the market prices of its mine products.
SGVMC310104

- 43 -
Shown below is the Company’s sensitivity to changes in the copper prices arising from its copper
derivatives as of:
December 31, 2009:

Effect on Loss
Increase by 10% (P
=79,000,968)
Decrease by 10% 79,000,968
December 31, 2008:

Effect on Income
Increase by 10% (P
=60,437,029)
Decrease by 10% 60,437,029
Credit risk
Credit risk is the risk that the Company will incur a loss if its counterparties fail to discharge their
contractual obligations. The Company manages and controls credit risk by doing business only
with recognized, creditworthy third parties. Receivable balances are monitored in an ongoing
basis resulting to an insignificant exposure to bad debts.
With respect to credit risk arising from the other financial assets of the Company, the Company’s
The table below summarizes the gross maximum credit risk exposure for the components of the
Company’s balance sheets as of December 31, 2009 and 2008:
2009 2008
Cash and cash equivalents P
=228,951,009 =795,373,628
P
Trade receivables 220,745,127 143,183,346
Nontrade receivables 159,687,109 19,863,473
Advances to officers and employees 8,039,565 5,699,646
Interest receivables – 79,752
Financial asset at FVPL:
Derivative assets 32,719,989 876,818,678
P
=650,142,799 =1,841,018,523
P
The Company ensures that sales of services are made to customers with appropriate credit history
and has internal mechanism to monitor the granting of credit and managements of credit
exposures. The Company has no significant concentration risk to a counterparty or group of
counterparties.
SGVMC310104

- 44 -
The aging analysis of loans and receivables and credit quality of the Company’s financial assets
based on their historical experience with the corresponding third parties as of:
December 31, 2009:

Past due
Neither past
due nor Less than More than
impaired 30 days 30 to 60 days 60 days Total
Cash and cash equivalents, –
excluding cash on hand = 228,951,009
P =–
P =–
P P228,951,009
=
Trade receivables 220,745,127 – – – 220,745,127
Nontrade receivables 2,567,809 153,520,100 – 3,599,200 159,687,109
employees 8,039,565 – – – 8,039,565
Derivative assets 32,719,989 – – – 32,719,989
P
=493,023,499 = 153,520,100
P =–
P = 3,599,200
P =650,142,799
P
Neither past due nor impaired

Standard Substandard
High Grade Grade Grade Past due Total
Cash and cash
equivalents, excluding
cash on hand P228,951,009
= P–
= =–
P =–
P = 228,951,009
P
Nontrade receivables – 2,567,809 – 157,119,300 159,687,109
employees 8,039,565 – – – 8,039,565
=490,455,690
P =2,567,809
P =–
P = 157,119,300
P = 650,142,799
P
December 31, 2008:
Past due but not impaired

Neither past due Less than More than
nor impaired 30 days 30 to 60 days 60 days Total
excluding cash on hand =795,373,628
P =–
P =–
P =–
P P795,373,628
=
Nontrade receivables 11,754,799 923,534 406,814 6,778,326 19,863,473
employees 5,699,646 – – – 5,699,646
Interest receivables 79,752 – – – 79,752
P
=1,832,909,849 =923,534
P =406,814
P =6,778,326
P = 1,841,018,523
P
Neither past due nor impaired Past due or

High Grade Standard Grade Substandard Grade Impaired
excluding cash on hand =795,373,628
P =–
P =–
P =–
P =795,373,628
P
cash on hand
Nontrade receivables – 11,754,799 – 8,108,674 19,863,473
employees 5,699,646 – – – 5,699,646
Interest receivables 79,752 – – – 79,752
=1,821,155,050
P =11,754,799
P =–
P =8,108,674
P =1,841,018,523
P
SGVMC310104

- 45 -
As of December 31, 2009 and 2008, the Company has no impaired financial asset.
Cash in banks are classified as high grade since these are deposited in reputable banks and can be
withdrawn anytime. Advances to officers and employees are classified as high grade since these
can be collected upon demand as these officers and employees are still employed by the Company.
before the maturity date. Standard grade receivables include those that are collected on their due
dates even without any collection effort from the Company while receivables which are collected
on their due dates after persistent reminders are included under substandard grade receivables.
Past due receivables refer to those that are past due but still collectible and are not considered
impaired.
Fair Values of Financial Instruments

The following table shows the carrying values and fair values of the Company’s financial assets
and liabilities as of December 31 of each year:

2009 2008 2009 2008
Cash and cash equivalents P229,966,200
= =796,016,237
P P229,966,200
= =796,016,237
P
Receivables 388,471,801 168,826,217 388,471,801 168,826,217
Financial asset at FVPL:
Derivative assets 32,719,989 876,818,678 32,719,989 876,818,678
=651,157,990
P =1,841,661,132
P =651,157,990
P =1,841,661,132
P
Other Financial Liabilities:

accrued liabilities P2,498,831,055
= =2,695,374,517 =
P P2,498,831,055 =2,695,374,517
P
Long-term debt 4,629,180,000 4,752,000,000 4,629,180,000 5,568,341,642
Derivative liabilities 294,562,146 – 294,562,146 –
=7,422,573,201
P =7,447,374,517 P
P =7,422,573,201 =8,263,716,159
P
Cash and cash equivalents, receivables and accounts payable and accrued liabilities
The carrying amounts of cash and cash equivalents, receivables, and accounts payable and accrued
liabilities approximate their fair values due to the short-term nature of these financial instruments
accounts.
Long-term debt
The carrying value approximates fair value because of recent and regular repricing based on
market conditions.
Fair values of commodity forwards and embedded derivatives are obtained using the “forward
versus forward” approach using copper forward prices and discounted at the appropriate LIBOR.
SGVMC310104

- 46 -
The Company uses the following hierarchy for determining and disclosing the fair value by
valuation technique:

inputs) (Level 3).
The fair value hierarchy of the financial assets and liabilities as of December 31, 2009 is presented
in the following table:
Level 1 Level 2 Level 3 Total

Derivative assets =–
P =32,719,989
P =–
P =32,719,989
P
Derivative liabilities – 294,562,146 – 294,562,146
Total =–
P =327,282,135
P =–
P =
P327,282,135
There were no transfers between levels of fair value measurement as of December 31, 2009.
The Company maintains a capital base to cover risks inherent in the business. The primary
objective of the Company’s capital management is to decrease its deficit or capital deficiency to a
low level and eliminate it in full in the long run.
2009 2008
Capital stock =1,601,649,809 =
P P1,516,838,422
Additional paid-in capital 3,782,996,698 3,528,562,537
Advances from related parties 1,242,140,113 1,396,772,386
Deposit for future stock subscription 1,232,683,023 –
Retained earnings (Deficit) (1,629,110,258) 33,173,879
=6,230,359,385 P
P =6,475,347,224
Currently, the Company manages its capital structure and makes adjustments to it in the light of
changes in the economic conditions in order to meet its capital management objective.
SGVMC310104

- 47 -
24. Note to Statement of Cash Flows
The table below summarizes the non-cash investing activities related to acquisition of property,
plant and equipment that were used in the development of certain projects:
2009 2008
Capitalized depreciation P
=142,229,627 =208,111,336
P
Payment of PPE acquisition by CASOP 126,163,372 –
Increase in deferred asset retirement cost 22,592,754 –
Accrued capitalized interest 319,037 –
P
=291,304,790 =208,111,336
P
SGVMC310104

NICKELINE RESOURCES HOLDINGS, INC.
Deposits for
Future Stock
Subscription
Capital Stock (Note 6) Deficit Total

P =1,341,269
P (P
=24,189) =3,817,080
P
Total comprehensive loss – – (70,881) (70,881)
Balances at December 31, 2008 2,500,000 1,341,269 (95,070) 3,746,199

P =1,341,269
P (P
=160,483) =3,680,786
P
*SGVMC407817*


2009 2008

Net loss (P
=65,413) (P
=70,881)
Adjustment for interest income – (5,084)
Decrease in accrued expenses (165) (48,627)
Net cash used in operations (65,578) (124,592)
Interest received – 5,084
Net cash flows used in operating activities (65,578) (119,508)

Increase in amounts owed to related parties 64,978 124,293
NET INCREASE IN CASH (600) 4,785
CASH AT BEGINNING OF YEAR 2,553,006 2,548,221
CASH AT END OF YEAR = 2,552,406

P =2,553,006
P
*SGVMC407817*

Nickeline Resources Holdings, Inc. (the Company), was registered with the Philippine Securities
and Exchange Commission (SEC) on August 15, 2005 primarily to subscribe for, receive,
purchase or otherwise acquire, obtain an interest in, own, hold, pledge, hypothecate, mortgage,
assign, deposit, create trusts with respect to, deal in, exchange, sell and otherwise dispose of, alone
or in syndicates or otherwise in conjunction with others, and generally deal in and with any kind
of shares and securities and to exercise all the rights, powers and privileges of ownership or
interest in respect to them.
The Company is 60% owned by Ulugan Resources Holdings, Inc. and 40% owned by Toledo
Mining Corporation (TMC). Its ultimate parent is Atlas Consolidated Mining and Development
Corporation (ACMDC).
The Company’s financial and administrative functions are being handled by employees of TMM
Management Inc. (TMI) and Berong Nickel Corporation (BNC).
As at December 31, 2009, the Company has not yet started commercial operations.
The financial statements of the Company as at and for the years ended December 31, 2009
and 2008 were authorized for issue by the Board of Directors (BOD) on March 3, 2010.

Policies
The Company’s financial statements have been prepared on the historical cost basis and are
presented in Philippine peso, which is the functional and presentation currency. All values are
rounded to the nearest peso, except as otherwise indicated.
The Company’s financial statements have been prepared in compliance with Philippine Financial
Reporting Standards (PFRS).


*SGVMC407817*
-2-
Liquidation
Entity or Associate
PFRS 2, Amendment - Vesting Conditions and Cancellations


benefits related to future services that arise from plan amendments. Amendments to plans that
result in a reduction in benefits related to future services are accounted for as a curtailment.
obligation.
Except for the adoption of amendments to PAS 1 and PFRS 7, the above changes in PFRS did not
have any significant effect to the Company.
*SGVMC407817*
-3-

Effective in 2010:


beginning on or after January 1, 2010 except as otherwise stated. The Company has not yet
*SGVMC407817*
-4-

operations.
taken; and
*SGVMC407817*
-5-

Effective in 2012:

Date of Recognition

initially measured at fair value. Except for financial assets at fair value through profit or loss
(FVPL), the initial measurement of financial assets includes transaction costs. The Company
classifies its financial assets in the following categories: financial assets at FVPL, held-to-maturity
(HTM) investments, available-for-sale (AFS) investments, and loans and receivables. The
classification depends on the purpose for which the investments were acquired and whether they
are quoted in an active market. The Company’s financial assets are in the nature of loans and
receivables.
The Company has no financial assets classified as financial assets at FVPL, AFS and HTM
investments as at December 31, 2009 and 2008.
and appropriate, re-evaluates such designation at every financial reporting date.
*SGVMC407817*
-6-

prices)
financial reporting date are based on quoted market prices or binding dealer price quotations
hierarchy.
within level 2.

in current assets if maturity is within twelve (12) months from the financial reporting date.
are an integral part of the effective interest rate. The amortization is included in the “interest
Included under this category are the Company’s cash as at December 31, 2009 and 2008
(see Note 10).
*SGVMC407817*
-7-


statement of comprehensive income. Included under this category are the Company’s accrued
expenses, advances to EN and amounts owed to related parties as at December 31, 2009 and 2008
(see Note 10).

The Company assesses at each financial reporting date whether a financial asset or group of

*SGVMC407817*
-8-

Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
arrangement; or
asset.
different terms, or the terms of an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognized in the statement of
*SGVMC407817*
-9-
Investment in a Subsidiary
Investment in a subsidiary is accounted for at cost, in accordance with PAS 27, Consolidated and
Separate Financial Statements. The Company has an investment in shares of stock of BNC, a
company incorporated under the laws of the Republic of the Philippines, amounting to
=110,575,332. This represents 60% interest in BNC as at December 31, 2009 and 2008. The
P
investment is carried at cost in the Company’s statement of financial position (see Note 4).
Impairment of Investment in a Subsidiary

The Company determines at each end of the reporting date whether there is any objective evidence
that the investment in a subsidiary are impaired. If this is the case, the Company calculates the
amount of impairment being the difference between the fair value of the investment and the
acquisition cost and recognize the amount in the Company’s statement of comprehensive income.
Fair value is determined with reference to its market prices at the end of the reporting period.

simultaneously.
Provisions
General
discounting the expected future cash flows at a pretax rate that reflects current market assessment
accretion expense.
Foreign Currency Transactions

Transactions in foreign currencies are initially recorded using the functional currency rate of
exchange prevailing at the date of transaction. Outstanding monetary assets and liabilities
denominated in foreign currencies are restated at the closing exchange rate at the financial
reporting date. All differences are taken to the statement of comprehensive income. Nonmonetary
items measured at fair value in a foreign currency are restated using the exchange rates at the date
when the fair value was determined.
Revenue Recognition
Company and the revenue can be reliably measured.
Interest Income
Interest income is recognized as it accrues, taking into account the effective yield on the assets.
Income Taxes
Current Income Tax
laws used to compute the amount are those that are enacted or substantively enacted as at the
financial reporting date.
*SGVMC407817*
- 10 -
Deferred Income Tax

at the financial reporting date between the tax bases of assets and liabilities and their carrying
where the deferred income tax liability arises from the initial recognition of goodwill or of
an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries,

associates and interests in joint ventures, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences,
carryforward benefits of unused net operating loss carryover (NOLCO) and unused tax credits, to
the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carryforward benefits of unused tax credits and unused NOLCO
can be utilized except:
where the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries,

associates and interests in joint ventures, deferred income tax assets are recognized only to
the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary differences can be
utilized.
The carrying amount of deferred income tax assets is reviewed at each financial reporting
date and reduced to the extent that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized
deferred income tax assets are reassessed at each financial reporting date and are
recognized to the extent that it has become probable that future taxable profit will allow the
deferred income tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realized or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at the financial reporting date.
*SGVMC407817*
- 11 -
Contingencies
Contingent liabilities are not recognized in the financial statements. These are disclosed in the
notes to financial statements unless the possibility of an outflow of resources embodying
economic benefits is remote. Contingent assets are not recognized in the financial statements but
disclosed in the notes to financial statements when an inflow of economic benefits is probable.
Events After Financial Reporting Date

Post year-end events that provide additional information about the Company’s position at the
financial reporting date (adjusting events) are reflected in the financial statements. Post year-end
events that are not adjusting events are disclosed in the notes to financial statements when
material.
income and expenses and disclosure of contingent assets and contingent liabilities. The estimates
and assumptions used in the financial statements are based upon management’s evaluation of
relevant facts and circumstances as at the date of the Company’s financial statements. Future
events may occur which will cause the assumptions used in arriving at the estimates to change.
The effects of any change in estimates are reflected in the financial statements as they become
reasonable under the circumstances. However, actual outcome can differ from estimates.
Judgments
following judgments, apart from those involving estimations, which have the most significant
effect on the amounts recognized in the financial statements.

operates.

*SGVMC407817*
- 12 -

The Company reviews the carrying amounts of deferred income tax assets at each financial
reporting date and reduces deferred income tax assets to the extent that it is no longer probable
that sufficient taxable income will be available to allow all or part of the deferred income tax
assets to be utilized. The Company has NOLCO amounting to = P252,018 and = P186,605 as at
December 31, 2009 and 2008, respectively, for which no deferred income tax asset has been
recognized because management believes that the carryforward benefit would not be realized prior
to its expiration since the Company has not yet started commercial operations (see Note 7).

uncertainty at the financial reporting date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year is
discussed below.
Assessing Impairment of Investment in a Subsidiary

present. Determining the fair value of investment in a subsidiary, which requires the
determination of future cash flows expected to be generated from the continued use and ultimate
disposition of such asset, requires the Company to make estimates and assumptions that can
materially affect its financial statements. Future events could cause the Company to conclude that
the investment is impaired. Any resulting impairment loss could have a material adverse impact
on the statement of financial position and statement of comprehensive income. No impairment
loss has been recognized on investment in a subsidiary in 2009 and 2008 since the recoverable
amount of investment is higher than its cost (see Note 4).
Estimating Fair Values of Financial Assets and Liabilities

measurement are determined using verifiable objective evidence (e.g. foreign exchange rates,
interest rates, volatility rates), the timing and amount of changes in fair value would differ with the
valuation methodology used. Any change in the fair value of these financial assets and liabilities
would directly affect net income or loss and equity. Fair value of financial asset as at
December 31, 2009 and 2008 amounted to P =2,552,406 and P
=2,553,006, respectively. Fair values
of financial liabilities as at December 31, 2009 and 2008 amounted to = P109,446,952 and
=109,382,139 (see Note 10).
P
4. Investment in a Subsidiary
The Company has an investment in shares of stock of BNC, a company incorporated under the
laws of the Republic of the Philippines, amounting to P=110,575,332. This represents 60% interest
in BNC as at December 31, 2009 and 2008. The Company acquired the said investment from
ACMDC and Minoro Mining and Exploration Corporation (Minoro) at cost amounting to
=1,500,000, as part of the Joint Venture Agreement entered into between ACMDC, Minoro,
P
Investika Limited and TMC on January 19, 2005. On December 3, 2007, the Company has
increased its investment in shares of stock to BNC by P=109,075,332. The investment is carried at
cost in the Company’s statement of financial position.
*SGVMC407817*
- 13 -
The summarized financial information of BNC are as follows:
2009 2008
Total assets P
=932,973,448 =1,074,407,454
P
Total liabilities 521,730,665 520,724,374
Revenues 178,823,766 742,310,398
Total comprehensive loss 142,440,297 145,879,668
As at December 31, 2009 and 2008, amounts owed to related parties amounting to P =93,056,575
and P
=92,991,597, respectively, represent noninterest-bearing cash advances from TMC for the
conduct of the Company’s business and which has no fixed repayment date. It also pertains to
taxes and licenses and other expenses paid by TMC, BNC and Ulugan Nickel Corporation (UNC)
in behalf of the Company.

TMC Stockholder P
= 92,867,304 =92,867,304
P
BNC Subsidiary 180,544 120,260
Under common control
UNC of a stockholder 8,727 4,033
P
= 93,056,575 =92,991,597
P
functions are being handled by employees of TMM and BNC without any fee considerations.
6. Deposits for Future Stock Subscription
As at December 31, 2009 and 2008, the Company has deposits for future stock subscription as
follows:
ACMDC =1,223,603
P
TMC 122,666
1,346,269
Less withdrawal of deposits (5,000)
=1,341,269
P
This account pertains to deposits for future stock subscription of stockholders which are intended
to be converted to equity in the future.
*SGVMC407817*
- 14 -
7. Income Taxes
The Company has no provision for current income tax in 2009 and 2008 due to its net loss
position. Furthermore, the Company is subject to minimum corporate income tax of 2% based on
gross income starting January 1, 2009.
The reconciliation between the income tax computed at the statutory income tax rate and the
provision for income tax at the effective income tax rate follows:
2009 2008
Tax at effective rate:
At 30% (P
=19,624) =–
P
At 35% – (24,808)
Change in unrecognized deferred income
tax asset on NOLCO 19,624 26,587
Interest income already subject to final tax – (1,779)
P
=– =–
P
The Company did not recognize deferred income tax asset on temporary difference pertaining to
NOLCO amounting to = P252,018 and P=186,605 as at December 31, 2009 and 2008, respectively,
because management believes that the carryforward benefits would not be realized in the future.
Movements in NOLCO follows:
2009 2008
Balances at beginning of year P
=186,605 =110,640
P
Additions 65,413 75,965
=252,018 =186,605
P
Republic Act (RA) No. 9337 was enacted into law effective November 1, 2005 amending various
by the said RA is the change in corporate income tax rate from 35% to 30% and in the
beginning January 1, 2009, and thereafter.
The Company’s principal financial instruments comprise advances from EN and amounts owed to
related parties. The main purpose of these financial instruments is to raise funds for the
Company’s operations. The Company has other financial instruments such as cash and accrued
expenses which arise directly from its operations.
The main risks arising from the use of financial instruments are liquidity risk and credit risk. The
Company’s BOD reviews and approves the policies for managing each of these risks and they are
summarized below.
Liquidity Risk
*SGVMC407817*
- 15 -
Liquidity risk is the main financial risk affecting the Company considering that it is not yet in
operation. The Company’s BOD reviews and agrees policies for managing this risk. The
Company’s objective is to maintain a continuity of funding until the Company commences
commercial operations. The policy is to first exhaust lines available with related parties before
credit lines with banks are availed of.
As at December 31, 2009 and 2008, the Company’s accrued expenses are expected to be settled
within three (3) months and the amounts owed to related parties has no fixed repayment date.
Credit Risk
Credit risk refers to the potential loss arising from any failure by counterparties to fulfill their
obligations, as and when they fall due. It is inherent to the business as potential losses may arise
due to the failure of its counterparties to fulfill their obligations on maturity dates or due to
adverse market conditions.
Credit risk on cash arises from default of the counterparty, with a maximum exposure equal to the
carrying amount of this instrument. The Company’s gross maximum exposure to credit risk is
equivalent to its carrying value since there are no collateral agreements for this financial asset.
Cash is assessed as high grade since it is deposited in a reputable bank duly approved by BOD.
shareholder value. The Company considers total equity as capital.
changes were made in the objectives, policies or processes in 2009 and 2008.
The table below presents a comparison by category and class of carrying amounts and fair values
of the Company’s financial assets and liabilities as at December 31, 2009 and 2008:
Carrying Amounts Fair Values

2009 2008 2009 2008
Financial Assets
Cash = 2,552,406
P =2,553,006
P =2,552,406
P =2,553,006
P
Accrued expenses =71,234
P =71,399
P =71,234
P =71,399
P
Advances to EN 16,319,143 16,319,143 16,319,143 16,319,143
Amounts owed to
related parties 93,056,575 92,991,597 93,056,575 92,991,597
=109,446,952
P =109,382,139
P = 109,446,952
P =109,382,139
P
*SGVMC407817*
- 16 -
The following methods and assumptions were used to estimate the fair value of each class of
financial instrument for which it is practicable to estimate such value:
Cash
Cash includes only cash with bank. Cash with bank earns interest at floating rates based on daily
bank deposit rates. The carrying amount of cash approximates its fair value due to the short-term
maturity of this financial instrument.
Accrued Expenses, Advances from EN and Amounts Owed to Related Parties

The historical cost carrying amounts of accrued expenses, advances from EN and amounts owed
to related parties, which are all subject to normal credit terms, approximate their fair values due to
the short-term nature of these financial instruments.
11. Other Matter
In June 2008, EN acquired from Investika Ltd (currently known as Natasa Mining Limited) the
18.7% interest in BNC. In this regard, EN has acquired all the assets and liabilities of Investika
Ltd to the Company and accordingly, the Company reclassified the intercompany advances from
Investika Ltd to EN. The outstanding balance is noninterest-bearing and has no fixed repayment
date.
*SGVMC407817*
TMM MANAGEMENT INC.
Deposits for
Future Stock
Subscription Retained
Capital Stock (Note 8) Earnings Total
Balances at December 31, 2007 =500,000

P =3,139,505
P =180,273
P =3,819,778
P
Total comprehensive income – – 1,231,314 1,231,314
Balances at December 31, 2008 500,000 3,139,505 1,411,587 5,051,092
Total comprehensive income – – 2,429,171 2,429,171
Balances at December 31, 2009 =500,000

P =3,139,505
P =3,840,758
P =7,480,263
P
See accompanying Notes to Financial Statements
*SGVMC407806*

TMM MANAGEMENT INC.

2009 2008

Income before income tax P
=3,474,593 =1,890,035
P
Adjustments for:
Depreciation (Note 6) 612,091 616,912
Interest income (390) (919)
Operating income before changes in working capital 4,086,294 2,506,028
Trade and other receivable (12,423,195) 696,600
Other current assets (980,946) (2,607,796)
Increase in accrued expenses and other payables 992,289 836,041
Net cash from (used in) operations (8,325,558) 1,430,873
Interest received 390 919
Income taxes paid (1,057,522) (643,902)
Net cash flows from (used in) operating activities (9,382,690) 787,890
CASH FLOWS FROM INVESTING ACTIVITY

Decrease (increase) in amounts owed by related parties 134,753 (134,753)
Acquisitions of property and equipment (Note 6) – (27,994)
Net cash flows from (used in) investing activities 134,753 (162,747)
CASH FLOWS FROM FINANCING ACTIVITY

Increase in amounts owed to related parties 9,685,208 160,612
NET INCREASE IN CASH 437,271 785,755
CASH AT BEGINNING OF YEAR 1,249,423 463,668

=1,686,694 =1,249,423
P
See accompanying Notes to Financial Statements
*SGVMC407806*

TMM MANAGEMENT INC.
1. Corporate Information
TMM Management Inc. (the Company) was registered with the Philippine Securities and
Exchange Commission on September 28, 2004, primarily to act as managers or managing agents
of persons, firms, associations, corporations, partnership and other entities, to provide
management, investment and technical advice for commercial, industrial, manufacturing and other
kinds of enterprises, and to undertake, carry on or participate in the promotion, organization,
management, liquidation or reorganization of operations, partnerships and other entities, except
the management of funds, securities, portfolios and other similar assets of the managed entity.
The Company is 60% owned by Atlas Consolidated Mining and Development Corporation
(ACMDC) and 40% owned by Toledo Mining Corporation (Toledo).
The registered office address of the Company is 3rd Floor, Philam Building, 100 C. Palanca cor.
Dela Rosa Streets, Legaspi Village, Makati City.

Policies


*SGVMC408486*

-2-
Liquidation
Entity or Associate


obligation.
*SGVMC408486*

-3-

Effective in 2010:


*SGVMC408486*

-4-
beginning on or after January 1, 2010, except as otherwise stated. The Company has not yet

operations.
*SGVMC408486*

-5-
taken; and

Effective in 2012:

Date of Recognition

*SGVMC408486*

-6-
are quoted in an active market. The Company’s financial assets are in the nature of loans and
receivables.
The Company’s financial liabilities as at December 31, 2009 and 2008 are in the form of “other
financial liabilities”.

prices)
hierarchy.
within level 2.

*SGVMC408486*

-7-
Included under this category are the Company’s cash, trade and other receivables and amounts
owed by a related party as at December 31, 2009 and 2008 (see Note 13).


expenses and other payables and amounts owed to related parties as at December 31, 2009 and
2008 (see Note13).


*SGVMC408486*

-8-

Financial assets
arrangement; or
asset.
*SGVMC408486*

-9-

simultaneously.

Property and equipment is stated at cost, excluding the costs of day-to-day servicing, less
accumulated depreciation and any accumulated impairment in value. Such cost includes the cost
of replacing part of such property and equipment when that cost is incurred if the recognition
criteria are met.
Depreciation is calculated on a straight-line basis over the useful lives of the assets, as follows:

Furniture and fixtures 5
Office equipment 5
Computer equipment 5
Communication equipment 5
changes in circumstances indicate that the carrying value may not be recoverable.
the asset) is included in the statement of income in the year the asset is derecognized.
The asset’s useful lives and methods are reviewed, and adjusted if appropriate, at each financial
year end.
Impairment of Non-Financial Assets

Non-financial assets such as property and equipment are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. If any such indication exists and where the carrying amount of an asset exceeds its
recoverable amount, the asset or cash-generating unit is written down to its recoverable amount.
The estimated recoverable amount is the higher of an asset’s net selling price and value in use.
The net selling price is the amount obtainable from the sale of an asset in an arm’s-length
transaction less the costs of disposal while value in use is the present value of estimated future
cash flows expected to arise from the continuing use of an asset and from its disposal at the end of
its useful life. For an asset that does not generate largely independent cash inflows, the
*SGVMC408486*

- 10 -
recoverable amount is determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognized in the statement of comprehensive income.
Recovery of impairment losses recognized in prior periods is recorded when there is an indication
that the impairment losses recognized for the asset no longer exist or have decreased. The
recovery is recorded in the statement of comprehensive income consistent with the function of the
impaired asset. However, the increased carrying amount of an asset due to recovery of an
impairment loss is recognized to the extent it does not exceed the carrying amount that would have
been determined (net of depreciation and amortization) had no impairment loss been recognized
for that asset in prior periods.
Provisions
General
accretion expense.

denominated in foreign currencies are restated at the closing exchange rate at the balance sheet
date. All differences are taken to the statement of comprehensive income. Nonmonetary items
measured at fair value in a foreign currency are restated using the exchange rates at the date when
the fair value was determined.
Revenue Recognition
Company and the revenue can be reliably measured. The following specific recognition criteria
must also be met before revenue is recognized:
Management Fee
Management fee is recognized when the related services have been performed.
Interest Income
Leases
the arrangement and requires an assessment of whether the fulfillment of the arrangement is
dependent on the use of a specific asset or assets and the arrangement conveys a right to use the
asset.
A reassessment is made after the inception of the lease only if any of the following applies:
(a) There is a change in contractual term, other than a renewal or an extension of the arrangement;
*SGVMC408486*

- 11 -
(b) A renewal option is exercised or extension granted, unless the term of the renewal or
(c) There is a change in the determination of whether fulfillment is dependent on a specified asset;
or
(d) There is a substantial change to the asset.
When a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for scenarios (a), (c) or (d) and at the date of
renewal or extension period for scenario (b).
Operating Leases
Operating leases represent those leases under which substantially all risks and rewards of
ownership of the leased assets remains with the lessors. Noncancellable operating lease payments
are recognized as expense in the statement of comprehensive income on a straight-line basis over
the lease term.
Income Taxes
Current Income Tax
Deferred Income Tax


carryforward benefits of unused tax credits and tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences, and the
carryforward benefits of unused tax credits and tax losses can be utilized except:
*SGVMC408486*

- 12 -

utilized.
The carrying amount of deferred income tax assets is reviewed at each financial reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax
assets are reassessed at each financial reporting date and are recognized to the extent that it has
become probable that future taxable profit will allow the deferred income tax asset to be
recovered.
that have been enacted or substantively enacted at the financial reporting date.
Contingencies

material.
reasonable under the circumstances. However, actual outcome can differ from these estimates.
*SGVMC408486*

- 13 -
Judgments

operates. It is the currency that mainly influences the Company’s revenue, costs and expenses.
Operating Lease Commitment - Company as a Lessee

The Company has entered into commercial property lease on its office premises. The Company
has determined that it does not retain all the significant risks and rewards of ownership of this
property which is leased on operating leases.

Assessing of Realizability of Deferred Income Tax Assets

The Company reviews the carrying amounts of the deferred income tax assets at each end of the
reporting period and reduces deferred income tax assets to the extent that it is probable that future
taxable profits will be available against which these can be utilized. Significant management
judgment is required to determine the amount of deferred income tax assets that can be
recognized, based upon the likely timing and level of future taxable profits together with future tax
planning strategies. The Company has unrealized foreign exchange loss amounting to = P10,535
and nil as at December 31, 2009 and 2008, respectively, for which no deferred income tax asset
has been recognized since management believes that the carryforward benefit would not be
realized prior to its expiration.

uncertainty at the end of the reporting period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets within the next financial year are discussed below.
Estimating Allowance for Impairment Losses on Trade and Other Receivables

The Company evaluates specific accounts where the Company has information that certain
customers are unable to meet their financial obligations. Factors such as the Company’s length of
relationship with the customers and the customers’ current credit status are considered to ascertain
the amount of allowances that will be recorded in the trade and other receivables account. In
addition to specific allowances against individually significant accounts, the Company also makes
a collective impairment allowance against exposures which, although not requiring a specific
allowance, have a greater risk of default than when originally granted. These allowances are re-
evaluated and adjusted as additional information becomes available. The Company has
determined that all receivables are collectible at the end of the reporting period and has not
provided any allowance as at December 31, 2009 and 2008. Trade and other receivables
amounted to = P12,432,195 and =P9,000 as at December 31, 2009 and 2008, respectively
(see Note 4).
*SGVMC408486*

- 14 -
Estimating Useful Lives of Property and Equipment

The Company estimates the useful lives of property and equipment based on the period over
which assets are expected to be available for use. The estimated useful lives of property and
limits on the use of assets. In addition, estimation of the useful lives of property and equipment is
based on collective assessment of industry practice, internal technical evaluation and experience
with similar assets. It is possible, however, that future results of operations could be materially
affected by changes in estimates brought about by changes in factors mentioned above. The
amounts and timing of recorded expenses for any period would be affected by changes in these
factors and circumstances. As at December 31, 2009 and 2008, the net book values of property
and equipment amounted to P =253,304 and
=865,395, respectively (see Note 6).
P
Estimating Impairment Losses on Property and Equipment

present. Determining the value of property and equipment, which require the determination of
future cash flows expected to be generated from the continued use and ultimate disposition of such
assets, requires the Company to make estimates and assumptions that can materially affect its
financial statements. Future events could cause the Company to conclude that the property and
equipment is impaired. Any resulting impairment loss could have a material adverse impact on
financial condition and results of operations. No impairment loss was recognized in 2009 and
2008. As at December 31, 2009 and 2008, the net book values of property and equipment
amounted to = P253,304 and =P865,395, respectively (see Note 6).

would directly affect net income or loss and equity. Fair values of financial assets as at December
31, 2009 and 2008 amounted to P =14,118,889 and =
P1,393,176, respectively. Fair values of
financial liabilities as at December 31, 2009 and 2008 amounted to P =10,643,416 and P =858,974,
4. Trade and Other Receivables
2009 2008
Trade P
=12,408,995 =–
P
P
=12,432,195 =9,000
P
Trade receivables are noninterest-bearing and are normally settled on 30-days term. This account
represents the Company’s management fees from Berong Nickel Corporation (BNC) of = P200,000
per month, Ipilan Nickel Corporation (INC) of P =50,000 per month, and an additional fee for other
special services outside the scope of the agreement at a rate to be agreed upon by both parties.
*SGVMC408486*

- 15 -
Advances to officers and employees are noninterest-bearing and are subject to liquidation within
30 days. As at December 31, 2009 and 2008, no allowance for impairment losses was recognized.
The Company assessed these receivables as collectible and in good standing.
2009 2008
Creditable withholding taxes P
= 4,249,526 =3,456,133
P
Rental deposit (Note 9) 598,869 307,644
Prepaid rent 414,996 505,240
Input tax – 51,970
Others 123,719 85,177
P
= 5,387,110 =4,406,164
P
2009
Furniture Office Computer Communication
and Fixtures Equipment Equipment Equipment Total
Cost:
Balances at beginning and
end of year = 815,254
P = 554,091
P = 1,526,270
P = 216,313
P = 3,111,928
P
Accumulated depreciation:
Balances at beginning of year 628,909 353,126 1,121,991 142,507 2,246,533
Depreciation 153,822 110,818 304,189 43,262 612,091
Balances at end of year 782,731 463,944 1,426,180 185,769 2,858,624
Net book values = 32,523
P = 90,147
P = 100,090
P = 30,544
P =253,304
P
2008
Furniture Office Computer Communication
and Fixtures Equipment Equipment Equipment Total
Cost:
Balances at beginning of year =788,554
P =554,091
P =1,524,976
P =216,313
P =3,083,934
P
Additions 26,700 – 1,294 – 27,994
Accumulated depreciation:
Balances at beginning of year 471,198 242,308 816,870 99,245 1,629,621
Depreciation 157,711 110,818 305,121 43,262 616,912
Net book values =186,345
P =200,965
P =404,279
P =73,806
P =865,395
P
7. Accrued Expenses and Other Payables
2009 2008
Accrued expenses P
=797,596 =698,362
P
Others 1,632,905 739,850
P
= 2,430,501 =1,438,212
P
Accrued expenses are noninterest-bearing and are normally settled on 30 days’ term.
Other payables are noninterest-bearing and have an average term of 15 to 30 day’s term.
*SGVMC408486*

- 16 -
The Company had the following transactions from related parties as at December 31, 2009 and
2008:
a. For the years ended December 31, 2009 and 2008, the Company charged management fee of P
=
31,528,584 and P=24,506,703, respectively, to companies under its management, in
consideration for the services rendered during the year (see Note 14).
b. Amounts owed by INC and Ulugan Nickel Corporation (UNC) represents various operational
expenditures paid by the Company on behalf of these related parties which amounted to nil
and P
=134,753 as at December 31, 2009 and 2008, respectively.
c. Amounts owed to related parties represents advances from Berong Nickel Corporation (BNC)
and INC for legal fees and taxes and licenses amounting to P
=7,829,930 and
=2,015,890 as at December 31, 2009, respectively, P
P =160,612 and nil, respectively, as at
December 31, 2008.
d. The advances amounting to P =3,139,505, which are intended to be converted into equity in the
future, was classified as “Deposits for future stock subscription”, under the equity section of
the statement of financial position.
9. Lease Commitment
The Company leases its office premises under operating lease. On September 23, 2009, the
Company entered into a lease agreement with a new lessor. The new lease agreement is for a
period of one year, commencing on September 24, 2009 to September 23, 2010 and renewable
annually.
Rent expense in 2009 and 2008 amounted to P

=1,548,366 and P
=1,212,576, respectively. Rental
deposit as at December 31, 2009 and 2008 amounted to P
=598,869 and P
=307,644, respectively.
10. Income Taxes
The provision for income tax in 2009 and 2008 represents regular corporate income tax. The
reconciliation of pretax income computed at the statutory tax rate to provision for income tax
follows:
2009 2008
At 30% P
= 1,042,378 =–
P
At 35% – 661,513
Adjustments to income tax resulting from:
assets 3,161 –
Interest income already subjected to final tax (117) (322)
Change in future tax rate – (2,470)
P
= 1,045,422 =658,721
P
*SGVMC408486*

- 17 -
As at December 31, 2009 and 2008, the Company recognized deferred income tax liability
amounting to P
=2,719 and P
=14,819 which pertains to unrealized foreign exchange gains for the
year.
beginning January 1, 2009, and thereafter. Due to the enactment of the RA, the deferred income
tax liability as at December 31, 2009 and 2008 was measured at 30%.
The Company’s principal financial instrument consists of amounts owed to related parties. The
main purpose of this financial instrument is to raise funds for the Company’s operations. The
Company has other financial instruments such as cash, trade and other receivables, amounts owed
by a related party, accrued expenses and other payables, which arise directly from its operations.
summarized below.
Liquidity Risk
The Company’s objective is to maintain a balance between continuity of funding and flexibility.
The policy is to first exhaust lines available with related parties before credit lines with banks are
availed of. The Company ensures that it has sufficient current assets to settle its current liabilities.
The tables below summarize the maturity profile of the Company’s financial liabilities as at
December 31, 2009 and 2008 based on contractual undiscounted payments.
2009 On demand 3 to 12 months Total

Accrued expenses and other
payables P
=676,476 P
=121,120 P
=797,596
Amounts owed to related
parties 9,845,820 – 9,845,820
P
=10,522,296 P
=121,120 P
= 10,643,416
2008 On demand 3 to 12 months Total

payables =171,108
P =295,077
P =466,185
P
Amounts owed to related parties 160,612 – 160,612
=331,720
P =295,077
P =626,797
P
*SGVMC408486*

- 18 -
Credit Risk
Credit risk refers to the potential loss arising from any failure by related parties and customers to
fulfill their obligations, as and when they fall due. It is inherent to the business as potential losses
may arise due to the failure of its related parties to fulfill their obligations on maturity dates or due
to adverse market conditions.
The Company trades only with recognized, creditworthy related parties and customers. It is the
Company’s policy that all customers who wish to trade on credit terms are subject to credit
verification procedures. In addition, receivable balances are monitored on an ongoing basis with
the result that Company’s exposure to bad debts is not significant.
The Company does not require collateral as it usually trades only with recognized related parties
and customers. With respect to credit risk arising from cash, advances to officers and employees,
other receivables and amounts owed by a related party, the Company’s exposure to credit risk
arises from default of the counterparty, with a maximum exposure equal to the carrying amount of
these instruments.
The credit quality of financial assets is managed by the Company using internal credit ratings and
is classified into three: High grade, which has history of no default; Standard grade, which pertains
to accounts with history of one or two defaults; and Substandard grade, which pertains to accounts
with history of at least three payment defaults.
The credit quality and aging analysis of the Company’s financial assets as at December 31, 2009
and 2008 follows:

Cash P
=1,686,694 P
=1,686,694 P
=– P=– P
=–
Trade 12,408,996 12,408,996 – – –
and employees 23,200 – – 23,200 –
P
=14,118,890 P
=14,095,690 P
=– P
=23,200 P
=–

due nor 30 – 60 Financial
Cash =1,249,423
P =1,249,423
P =–
P =–
P =–
P
employees 9,000 – – 9,000 –
Amounts owed by related
parties 134,753 – – 134,753 –
=1,393,176
P =1,249,423
P P–
= P143,753
= P–
=
Accordingly, the Company has assessed the credit quality of the following financial assets that are
neither past due nor impaired:
Cash with banks was assessed as high grade since these are deposited in reputable banks
duly approved by BOD, and which have a low probability of insolvency.
Trade receivables, which pertain mainly to receivables from managed companies, were
assessed as high grade due to high probability of collection based on historical experience.
*SGVMC408486*

- 19 -
Advances to officers and employees were also assessed as high grade since these are
collectible through salary deduction when not liquidated on time.
Other receivables, which are due and demandable, were assessed as standard grade since
amounts are settled after due date.
Amounts owed by related parties was assessed as high grade since amounts are settled
several days after the incurrence of the liability.
The Company has no significant concentration of credit risk with any single counterparty or group
or counterparties having similar characteristics.
shareholder value. The Company considers total equity as capital which amounted to
=7,480,263 and P
P =5,051,092 as at December 31, 2009 and 2008, respectively.
Fair Value Information and Categories of Financial Instruments


2009 2008 2009 2008
Financial Assets
Cash = 1,686,694
P =1,249,423
P =1,686,694
P =1,249,423
P
Trade 12,408,995 – 12,408,995 –
employees 23,200 9,000 23,200 9,000
parties – 134,753 – 134,753
=14,118,889
P =1,393,176
P =14,118,889
P =1,393,176
P
payables = 797,596
P =698,362
P =797,596
P =698,362
P
parties 9,845,820 160,612 9,845,820 160,612
=10,643,416
P =858,974
P =10,643,416
P =858,974
P
*SGVMC408486*

- 20 -
Cash
Cash includes cash on hand and with banks. Cash with bank earns interest at floating rates based
on daily bank deposit rates. The carrying amount of cash approximates its fair value due to the
short-term maturity of this financial instrument.
Trade and Other Receivables, Amounts Owed by Related Parties, Accrued Expenses and Other
Payables and Amount Owed to Related Parties
The historical cost carrying amounts of trade and other receivables, amounts owed by a related
party, accrued expenses and other payables and amounts owed to related parties, which are all
subject to normal credit terms, approximate their fair values due to the short-term nature of these
financial instruments.
a. On January 19, 2005, ACMDC, Minoro Mining and Exploration Corporation (MMEC),
Investika and Toledo entered into a venture agreement (Agreement) covering all mining
tenements or applications for mining tenements, Mineral Production Sharing Agreements
(MPSA) and Exploration Permits covering the areas known as the Berong Mineral Properties
and the Ulugan Mineral Properties (Mineral Properties) and held by ACMDC and/or MMEC
and/or Anscor Property Holdings, Inc. and/or Multicrest Mining Corporation. The Agreement
provides that ACMDC and/or MMEC grant to Investika and/or Toledo the right to earn a
percentage equity in BNC upon fulfillment of certain conditions, including the granting of
advances to BNC to be disbursed by the Company.
Also on January 19, 2005, the Company entered into a management agreement with BNC and
UNC, wherein the Company will manage the operations of BNC and INC with respect to the
Mineral Properties and to any and all of the MPSA which shall be executed by BNC and INC
and the Government of the Republic of the Philippines. In consideration for such services, the
Company will receive a monthly management fee of P =200,000 and P=50,000, respectively.
On July 1, 2009, the agreement with BNC was amended with an additional fee equivalent to
up to five percent (5%) of the operating costs and expenses at the end of each calendar month,
over and above its fixed monthly fee of P=200,000.
b. On August 14, 2008, the Company entered into a management agreement with INC, wherein
the Company will manage the operations of the latter with respect to the Mineral Properties
and to any and all of the MPSA which shall be executed by INC and the Government of the
Republic of the Philippines. In consideration for such services, the Company will receive a
monthly management fee of P =50,000.
On July 1, 2009, the agreement was amended with an additional fee equivalent to up to five
percent (5%) of the operating costs and expenses at the end of each calendar month, over and
above its fixed monthly fee of P
=50,000.
*SGVMC408486*

ULUGAN NICKEL CORPORATION
Deposits for
Future Stock
Subscription

P P
=15,015,270 (P
=4,059,914) P
=13,455,356
Decrease of deposits during the year – (4,755) – (4,755)
Balances at December 31, 2008 2,500,000 15,010,515 (4,474,667) 13,035,848

P P
=15,010,515 (P
=5,172,805) P
=12,337,710
*SGVMC407805*


2009 2008

=692,099) (P
=358,592)
Adjustment for interest income (329) (6,162)
Amounts owed by related parties (9,388) (8,066)
Other current assets – 4,469
Increase (decrease) in:
Accrued expenses and other payables 35,361 (46,776)
Amounts owed to related parties – 1,016
Net cash flows used in operations (666,455) (414,111)
Interest received 329 6,162

Decrease in deposits for future stock subscription – (4,755)
NET DECREASE IN CASH (666,126) (412,704)

=2,602,101 =3,268,227
P
*SGVMC407805*

Ulugan Nickel Corporation (the Company), was registered with the Philippine Securities and
Exchange Commission on June 23, 2005 for the purpose of exploring, developing and mining
Atlas Consolidated Mining and Development Corporation (ACMDC)’s Ulugan Mineral Properties
and the exclusive privilege and right to explore, develop, mine, operate, produce, utilize, process
and dispose of all the minerals and the products or by-products that may be produced, extracted,
gathered, recovered, unearthed, or found within the mineral properties, inclusive of direct shipping
project, under a Mineral Production Sharing Agreement (MPSA) with the Government of the
Philippines or under any appropriate rights granted by law or the Government of the Philippines.
The Company is 60% owned by Ulugan Resources Holdings, Inc. and 40% owned by Toledo
Mining Corporation, Plc (TMC). The Company’s ultimate parent is ACMDC.
The financial statements of the Company as at and for the years ended December 31, 2009
and 2008 were authorized for issue by the Board of Directors (BOD) on March 3, 2010.

Policies


*SGVMC407805*

-2-
Liquidation
Entity or Associate


obligation.
*SGVMC407805*

-3-

Effective in 2010:


*SGVMC407805*

-4-

operations.
*SGVMC407805*

-5-
taken; and

Effective in 2012:

Date of Recognition

*SGVMC407805*

-6-
(HTM) investments, available-for-sale (AFS) investments, and loans and receivables.

The classification depends on the purpose for which the investments were acquired and whether
they are quoted in an active market. The Company’s financial assets are in the nature of loans and
receivables.

prices)
hierarchy.
within level 2.

*SGVMC407805*

-7-
Included under this category are the Company’s cash, amounts owed by related parties and
advances to Multicrest as at December 31, 2009 and 2008 (see Note 8).


expenses and other payables as at December 31, 2009 and 2008 (see Note 8).


*SGVMC407805*

-8-


Financial assets
arrangement; or
asset.
*SGVMC407805*

-9-
different terms, or the terms of an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original liability and the recognition of a new

simultaneously.
Provisions
General
accretion expense.

Revenue Recognition
Interest Income
Income Taxes
Current Income Tax
*SGVMC407805*

- 10 -
Deferred Income Tax

where the deferred income tax liability arises from the initial recognition of goodwill
or of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss;
and
in respect of taxable temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, where the timing of the reversal
of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
carryforward benefits of unused net operating loss carryover (NOLCO) and unused
tax credits, to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, and the carryforward benefits of unused
tax credits and unused NOLCO can be utilized except:
where the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a
business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, deferred income tax assets are
recognized only to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each financial reporting
date and reduced to the extent that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized
deferred income tax assets are reassessed at each financial reporting date and are
recognized to the extent that it has become probable that future taxable profit will allow the
deferred income tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realized or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at the financial reporting date.
*SGVMC407805*

- 11 -
Contingencies

material.
reasonable under the circumstances. However, actual outcome can differ from estimates.
Judgments
In the process of applying the Company’s accounting policies, management has made judgments,
apart from those involving estimations, which have the most significant effect on the amounts
recognized in the financial statements.

operates.

classification in the statements of financial position.
*SGVMC407805*

- 12 -

The Company reviews the carrying amounts of deferred income tax assets at each financial
reporting date and reduces deferred income tax assets to the extent that it is no longer probable
assets to be utilized. The Company has NOLCO amounting to P =4,611,207 and = P4,013,615 as at
December 31, 2009 and 2008, respectively, for which no deferred income tax asset has been

uncertainty at the financial reporting date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year is
discussed below.

the use of accounting judgments and estimates. While significant components of fair value
would directly affect net income or loss and equity. Fair values of financial assets as at
=13,276,293, respectively. Fair
values of financial liabilities as at December 31, 2009 and 2008 amounted to P =218,070 and
=184,284, respectively (see Note 8).
P
In 2009 and 2008, management fees paid to TMM Management, Inc. (TMM), a management
company, amounted to = P437,619 and P
=351,023, respectively, in consideration for the services
rendered during the period.
Amounts owed by related parties, which are noninterest-bearing and are due and demandable,
pertains to various expenses paid by the Company on behalf of Nickeline Resources Holdings,
Inc. and Ulugan Resources HoIdings, Inc., companies under common control of a stockholder,
amounted to = P 17,454 and P
=8,066 as at December 31, 2009 and 2008, respectively.
functions are being handled by employees of TMM and Berong Nickel Corporation.
TMC =14,413,265
P
ACMDC 597,250
=15,010,515
P
*SGVMC407805*

- 13 -
6. Income Taxes
The reconciliation between the tax loss computed at the statutory income tax rate and the
2009 2008
At 30% (P
= 207,630) =–
P
At 35% – (125,507)
asset 213,768 193,185
Change in future tax rate – (9,360)
Interest income already subject to final tax (99) (2,157)
P
= 6,039 =56,161
P
As at December 31, 2009 and 2008, the Company did not recognize deferred income tax assets on
temporary differences pertaining to NOLCO which amounted to = P4,611,207 and = P4,013,615, and
unrealized foreign exchange losses which amounted to =
P 114,964 and =
P3,007, respectively,
because management believes that the carryforward benefits would not be realized in the future.
Movement in NOLCO follows:
2009 2008
= 4,013,615 =3,559,852
P
Additions 597,592 551,958
Expirations – (98,195)
= 4,611,207 =4,013,615
P
As at December 31, 2009 and 2008, the Company recognized deferred income tax liability
amounted to =
P62,200 and P
=56,161 which pertains to unrealized foreign exchange gains for the
year.
The Company’s principal financial instrument is cash. The Company has other financial
instruments such as amounts owed by related parties, advances to Multicrest and accrued expenses
and other payables which arise directly from its operations.
*SGVMC407805*

- 14 -
summarized below.
Liquidity Risk
operation. The Company’s BOD reviews and agrees policies for managing this risk. The
As at December 31, 2009 and 2008, the Company’s financial liabilities are expected to be settled
within three (3) months.
Credit Risk
equivalent to its carrying value since there are no collateral agreements for this financial asset.
Cash with bank is assessed as high grade since it is deposited in a reputable bank duly approved
by BOD.
The credit risk concentration of the Company pertains to advances to Multicrest which amounted
to =
P10,000,000 as at December 31, 2009 and 2008 and amounts owed by related parties which
amounted to = P17,454 and P=8,066 as at December 31, 2009 and 2008, respectively.

2009 2008 2009 2008
Financial Assets
Cash = 2,602,101
P =3,268,227
P =2,602,101
P =3,268,227
P
parties 17,454 8,066 17,454 8,066
Advances to Multicrest 10,000,000 10,000,000 10,000,000 10,000,000
=12,619,555
P =13,276,293
P =12,619,555
P =13,276,293
P
(Forward)
*SGVMC407805*

- 15 -

2009 2008 2009 2008
payables = 218,070
P =184,284
P =218,070
P =184,284
P
Cash
Cash include cash on hand and cash with bank. Cash with bank earns interest at floating rates
based on daily bank deposit rates. The carrying amount of cash approximates its fair value due to
the short-term maturity of this financial instrument.
Amounts Owed by Related Parties, Advances to Multicrest and Accrued Expenses and Other
Payables
The historical cost carrying amount of amounts owed by related parties, advances to Multicrest
and accrued expenses and other payables, which are subject to normal credit terms, approximates
their fair values due to the short-term nature of these financial instruments.
a. On November 3, 2004, ACMDC entered into a Heads of Agreement (the Agreement) with
Multicrest to acquire 100% interest in the rights and interests attached to the Exploration
Permit Application (EPA) that Multicrest has lodged with the Mines and Geosciences Bureau
Region IV. The EPA covers an area situated in the City of Puerto Princesa in the province of
Palawan. The EPA, denominated as EPA IVB-11, is known as the Tagkawayan Project (the
Project), with an approximate area of 16,130.4 hectares. Under the Agreement, ACMDC will
pay =P500,000 for the right to exercise the option to acquire 100% interest in the Project. As a
consideration, ACMDC will be granted the exclusive right to explore or work in the Project
for two (2) years from the issuance of the Exploration Permit and its renewal, subject to
extension. If by November 3, 2006, the second anniversary of the Effective Date, ACMDC
has not exercised the option to purchase, ACMDC may continue to maintain its rights and
interests in the Project and work for another two (2) years by payment to Multicrest the sum of
=1,400,000 and P
P =550,000 on every anniversary of the Effective Date until the start of
Commercial Production under an MPSA of Financial or Technical Assistance Agreement
(FTAA) that may be granted.
*SGVMC407805*

- 16 -
On July 19, 2007, the Company advanced the amount of = P10,000,000 to Multicrest which is
chargeable against the amount due under the Agreement and subject to the condition that the latter
will assist the Company to secure all required endorsements and clearances for the approval of
Exploration Permit. In the event that no Exploration Permit is issued or the option is not
exercised, then Multicrest will repay the whole amount upon demand by the Company.
b. On January 19, 2005, ACMDC, Minoro Mining and Exploration Corporation, Investika
Limited, and TMC entered into a Joint Venture Agreement, whereby ACMDC granted the
Company the exclusive privilege and right to explore, develop, mine, operate, produce, utilize,
process and dispose of all the minerals and the products and by-products that may be
produced, extracted, gathered, recovered, unearthed, or found within the Project under an
Exploration Permit, or MPSA, or with the FTAA Government of the Philippines.
*SGVMC407805*

ULUGAN RESOURCES HOLDINGS, INC.
Deposits for
Future Stock
Subscription

P =3,121,863
P (P
=577,314) =5,044,549
P
Balances at December 31, 2008 2,500,000 3,121,863 (719,984) 4,901,879

P =3,121,863
P (P
=844,287) =4,777,576
P
*SGVMC407807*


2009 2008

Net loss (P
=124,303) (P
=142,670)
Adjustment for interest income (2,607) (8,608)
Increase (decrease) in accrued expenses 1,595 (153,971)
Net cash used in operations (125,315) (305,249)
Interest received 2,607 8,608

Increase in amounts owed to related parties 125,315 304,949
NET INCREASE IN CASH 2,607 8,308

=2,562,575 =2,559,968
P
*SGVMC407807*

Ulugan Resources Holdings, Inc. (the Company) was registered with the Philippine Securities
and Exchange Commission on June 23, 2005 for the purpose of generally dealing in and with
personal properties and securities of every kind and description of any government,
municipality, political subdivision or agency, corporation, association or entity; exercising
any and all interest in respect of any of such securities; and promoting, managing, and
participating in and act as agent for the purchase and sale of any securities as may be allowed
by law.
The Company is 70% owned by Atlas Consolidated Mining and Development Corporation
(ACMDC) and 30% owned by Toledo Mining Corporation (TMC).
The Company’s financial and administrative functions are being handled by employees of TMM
Management Inc. (TMI) and Berong Nickel Corporation (BNC).

Policies


*SGVMC407807*

-2-

Liquidation
Entity or Associate


obligation.
*SGVMC407807*

-3-

Effective in 2010:


*SGVMC407807*

-4-

operations.
*SGVMC407807*

-5-
taken; and

Effective in 2012:

Date of Recognition

*SGVMC407807*

-6-
are quoted in an active market. The Company’s financial assets as at December 31, 2009 and
2008 are in the nature of loans and receivables.

prices)
hierarchy.
within level 2.

*SGVMC407807*

-7-
Included under this category are the Company’s cash as at December 31, 2009 and 2008
(see Note 10).


expenses and other payables and amounts owed to related parties as at December 31, 2009 and
2008 (see Note 10).


*SGVMC407807*

-8-

Financial assets
arrangement; or
asset.
*SGVMC407807*

-9-

simultaneously.
Investments in Subsidiaries
Investments in subsidiaries are accounted for at cost, in accordance with PAS 27, Consolidated
and Separate Financial Statements. A subsidiary is an entity that is controlled by the Company.
The investments are carried in the statement of financial position at cost less any impairment in
value. The Company is 70% owned by ACMDC, its ultimate parent, and is therefore exempted
from preparation of consolidated financial statements, since ACMDC prepares the consolidated
financial statements in accordance with PFRS.
Nature of Status of Place of % of Ownership

Subsidiaries Business Operation Incorporation 2009 2008
Nickeline Resources Holdings, Holding
Inc. (NRHI) Company Preoperating Philippines 60 60
Ulugan Nickel Corporation (UNC) Mining Preoperating Philippines 60 60
Impairment of Investments in Subsidiaries

The Company determines at each end of the reporting period whether there is any objective
evidence that the investments in subsidiaries are impaired. If this is the case, the Company
calculates the amount of impairment being the difference between the fair value of the investments
and the acquisition cost and recognize the amount in the Company’s statement of comprehensive
income. Fair value is determined with reference to its market prices at the statement of financial
position.
Provisions
General
discounting the expected future cash flows at a pre-tax rate that reflects current market assessment
accretion expense.

*SGVMC407807*

- 10 -
Revenue Recognition
Interest Income
Income Taxes
Current Income Tax
Deferred Income Tax


carryforward benefits of unused net operating loss carryover (NOLCO) and unused tax credits, to
the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carryforward benefits of unused tax credits and unused NOLCO
can be utilized except:

utilized.
*SGVMC407807*

- 11 -
The carrying amount of deferred income tax assets is reviewed at each financial reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax
assets are reassessed at each financial reporting date and are recognized to the extent that it has
become probable that future taxable profit will allow the deferred income tax asset to be
recovered.
that have been enacted or substantively enacted at the financial reporting date.
Contingencies

material.
reasonable under the circumstances. However, actual outcome can differ from the estimates.
Judgments
following judgments, apart from those involving estimations, which have the most significant
effect on the amounts recognized in the financial statements.
*SGVMC407807*

- 12 -

operates.


The Company reviews the carrying amounts of deferred income tax assets at each end of the
reporting period and reduces deferred income tax assets to the extent that it is no longer probable
assets to be utilized. The Company has NOLCO amounting to P =610,599 and P =681,657 as at
December 31 2009 and 2008, respectively, for which no deferred income tax assets has been

uncertainty at the end of the reporting period, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below.
Assessing Impairment of Investments in Subsidiaries

present. Determining the fair value of investments in subsidiaries, which requires the
determination of future cash flows expected to be generated from the continued use and ultimate
disposition of such asset, requires the Company to make estimates and assumptions that can
materially affect its financial statements. Future events could cause the Company to conclude that
the investment is impaired. Any resulting impairment loss could have a material adverse impact
on the statement of financial position and statement of comprehensive income. There are no
impairment losses recognized in 2009 and 2008.
Estimating Fair Values of Financial Asset and Liabilities

would directly affect net income or loss and equity. Fair values of financial asset as at
=2,559,968, respectively. Fair values
of financial liabilities as at December 31, 2009 and 2008 amounted to = P784,999 and = P658,089,
*SGVMC407807*

- 13 -
4. Investments in Subsidiaries
NRHI =1,500,000
P
UNC 1,500,000
=3,000,000
P
The summarized financial information of NRHI are as follows:
2009 2008
Total assets P
=113,127,738 =113,128,338
P
Total liabilities 109,446,952 109,382,139
Income – 5,084
Total comprehensive loss 65,413 70,881
The summarized financial information of UNC are as follows:
2009 2008
Total assets P
=12,619,555 =13,276,293
P
Total liabilities 281,845 240,445
Income 20,457 193,366
Total comprehensive loss 698,138 414,754
ACMDC =3,006,106
P
TMC 115,757
=3,121,863
P
Amounts owed to related parties pertain to taxes and licenses and other expenses paid by TMC,
UNC and Berong Nickel Corporation (BNC), in behalf of the Company, which are
noninterest-bearing and are payable on demand.
functions are being handled by employees of TMM and BNC without any fee considerations.
*SGVMC407807*

- 14 -
8. Income Taxes
The reconciliation between the tax loss computed at the statutory income tax rate and the
2009 2008
At 30% (P
=37,291) =–
P
At 35% – (P
=49,934)
assets on NOLCO 38,073 52,947
Interest income already subject to final tax (782) (3,013)
P
=– =–
P
The Company did not recognize the deferred income tax asset on temporary difference pertaining
to NOLCO amounting to =P610,599 and P =681,657 as at December 31 2009 and 2008, respectively,
because management believes that the carryforward benefits would not be realized prior to its
expiration.
Movement in NOLCO follows:
2009 2008
=681,657 =628,574
P
Additions 126,910 151,278
Expirations (197,968) (98,195)
=610,599 =681,657
P
*SGVMC407807*

- 15 -
The Company’s principal financial instrument consists of amounts owed to related parties. The
main purpose of this financial instrument is to raise funds for the Company’s operations. The
Company has other financial instruments such as cash and accrued expenses, which arise directly
from its operations.
summarized below.
Liquidity Risk
operation. The Company’s BOD reviews and approves policies for managing this risk. The
As at December 31, 2009 and 2008, the Company’s financial liabilities are expected to be settled
within three (3) months.
Credit Risk
equivalent to its carrying values since there are no collateral agreements for this financial asset.
Cash is assessed as high grade since it is deposited in a reputable bank duly approved by BOD.
*SGVMC407807*

- 16 -

2009 2008 2009 2008
Financial Assets
Cash = 2,562,575
P =2,559,968
P =2,562,575
P =2,559,968
P
payables = 112,000
P =110,405
P =112,000
P =110,405
P
parties 672,999 547,684 672,999 547,684
= 784,999
P =658,089
P P784,999
= =658,089
P
Cash
Cash includes only cash in bank. Cash in bank earns interest at floating rates based on daily bank
deposit rates. The carrying amount of cash approximates its fair value due to the short-term
maturity of this financial instrument.
Accrued Expenses and Amounts Owed to Related Parties

The historical cost carrying amounts of accrued expenses and amounts owed to related parties,
which are all subject to normal credit terms, approximate their fair values due to the short-term
nature of these financial instruments.
*SGVMC407807*


ATLAS - Ar. 17A Apr2010

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COVER SHEET

A N D D E V E L OPME N T COR POR A T I ON

(Company's Full Name)

NOEL T. DEL CASTILLO (632) 635-4495

Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of Borrowings

Total No. of Stockholders Domestic Foreign

To be accomplished by SEC Personnel concerned

Document I.D. _______________________________

Remarks = pls. use black ink for scanning purposes

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SEC FORM 17  A, AS AMENDED

ANNUAL REPORT PURSUANT TO SECTION 17 OF THE SECURITIES

1. For the fiscal year ended DECEMBER 31, 2009

2. SEC Identification Number 115 PRE WAR

3. BIR Tax Identification No. 000-154-572-000

4. ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION

6. (SEC Use Only)

8. (632) 635-23-87 and (632) 635-4495

Number of Shares of Common Stock

11. Are any or all of these securities listed on a Stock Exchange?

Philippine Stock Exchange - Common Stock

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PART II  OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuers Common Equity And Related

PART III  CONTROL AND COMPENSATION INFORMATION

Item 9. Directors and Executive Officers of the Issuer 24

PART IV  CORPORATE GOVERNANCE

Item 13. Corporate Governance 29

PART V  EXHIBITS AND SCHEDULES

Item 14. A. Exhibits 30

INDEX TO FINANCIAL STATEMENTS AND

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2009 2008 2007

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Tabulated below is a breakdown of the Groups mineral properties.

10-month full rehabilitation

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ii) MPSA APPLICATION:

iii) EXPLORATION PERMIT APPLICATION

C. AGUSAN DEL SUR/SURIGAO DEL SUR

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ii) MPSA APPLICATION

iii) EXPLORATION PERMIT APPLICATION

ii) EXPLORATION PERMIT APPLICATION

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Properties Location Developments Nature of Interest

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ITEM 3. LEGAL PROCEEDINGS

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II  OPERATIONAL AND FINANCIAL INFORMATION

ITEM 5. MARKET FOR ISSUERS COMMON EQUITY AND RELATED

Warrant Holder No. of Shares Covered by Exercise Period

The price as of 14 April 2010 is PhP10.50 per share.

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Following are the Top 20 stockholders as of December 31, 2009:

Name No. of Shares Percent

ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

2009 Compared with 2008

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SEC FORM 17 A, AS AMENDED

PART II OPERATIONAL AND FINANCIAL INFORMATION

Item 5. Market for Issuers Common Equity And Related

PART III CONTROL AND COMPENSATION INFORMATION

PART IV CORPORATE GOVERNANCE

PART V EXHIBITS AND SCHEDULES

Tabulated below is a breakdown of the Groups mineral properties.

PART II OPERATIONAL AND FINANCIAL INFORMATION

ITEM 5. MARKET FOR ISSUERS COMMON EQUITY AND RELATED

ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Current portion of long-term debt/Long-term debt net of current portion

PART IV CORPORATE GOVERNANCE

July 16, 2009 Item 9 Other events Issuance of Warrants to Spinnaker

Statement of Managements Responsibility for Financial Statements 35