Lepanto Consolidated Mining Co. received a decision from the Makati Regional Trial Court (RTC) upholding to rule in favor of the listed company’s decision to cancel out its gold hedging contracts with N.M. Rothschild & Sons Australia Ltd.
“The RTC found that the subject hedging contracts were wagering contracts and therefore null and void,” Lepanto said of the recent regulatory filing by the court in response to the miner’s complaint against the Australian finance firm back in 2005.
The complaint is referring to N.M. Rothschild’s declaration of nullity of Lepanto’s gold hedging contracts on the ground that they wagering contracts under Article 2018 of the Civil Code.
In December 1998, Lepanto signed forward gold sales contracts with the Aussie company to buy and sell gold in fixed quantities at fixed prices for delivery in various maturity dates – a condition set as a hedge agreement for the $30-million loan the Filipino miner acquired from several banks for its Victoria project in Benguet.
This agreement would soon be invalidated by Lepanto, who in 2005 reportedly filed a complaint against N.M. Rothschild upon discovering the terms of the contracts are disadvantageous with the price of gold quoted in the deal was lower than the current market price.
Lepanto sought to revise the contracts with N.M. Rothschild but to no avail.
The Victoria Project was originally an enargite copper mine until 1997 and has since shifted to gold bullion production in 1998 in the municipality of Mankayan, Benguet.
Gold produce through the Victoria Project are then sold worldwide, namely in Hong Kong, Mainland China, Canada, and Peru.
