ANNU AL REPORT - Atok-Big Wedge Company Incorporated€¦ · ANNU AL REPORT. 1 ATOK-BIG WEDGE CO...

A N N U A L R E P O R T

1 ATOK-BIG WEDGE CO., INC. 2011 Annual Report 1

1

Letter to Shareholders

Company History

Directors & Executive Officers

Disclosures

Statement of Management’s Responsibility

Auditor’s Report

Consolidated Statements of Financial Position

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

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ATOK-BIG WEDGE CO., INC. 2011 Annual Report 1

Contents

A gold ore processing plAnt undergoing

construction in southern lAos.

2 ATOK-BIG WEDGE CO., INC. 2011 Annual Report

ROBERTO V. ONGPINChairman

MARIO J. LOCSINPresident

ERIC O. RECTOVice Chairman

WALTER W. BROWNVice Chairman



Dear Atok Shareholder,

Pursuant to our goal of seeking out projects to put into operation for the company, we continued careful and diligent evaluation of multiple metallic and non-metallic prospects for possible investment throughout the past year. We concentrated our efforts in the Philippines and in Laos, with priority on projects in the advanced stage, but not disregarding greenfield exploration prospects with potential. Negotiations also continued for mines with confirmed potential and previously operated but closed down during the period with low metal prices.

A total of twenty (20) metallic, non-metallic and oil project sites were evaluated during the year, including four (4) projects in the Philippines and sixteen (16) in Laos. Out of these projects, one (1) oil investment materialized, two (2) metallic projects are on continued evaluation/negotiation stage and five (5) projects were considered with potential but in low-priority because they are in the greenfield stage.

In October 2011, the Company acquired 100% of Tidemark Holdings Limited, a Hong Kong company which owns 8,646,757 ordinary shares of Forum Energy plc (“Forum”), representing approximately 25.92% of its outstanding capital. Forum is a United Kingdom-based gas and oil exploration and production company with a portfolio of projects in the Philippines. It has 70% of the equity in Service Contract No. 72 covering the Sampaguita offshore gas project. The project is located off the North West coast of Palawan Island in the Philippines. The ordinary shares of Forum are traded and listed in the Alternative Investment Market of the London Stock Exchange under the ticker symbol - FEP.

Results from the 3D seismic programme of the Sampaguita project and its interpretation performed by independent consultants, Count Geophysics Limited and Oilfield Production Consultants (OPC) Limited, confirmed a mean volume of 3.4 TCF gas in place (GIP) from sands tested in the 3 wells drilled to-date and the extension of the structure to a possible closure of 290 sq. km. giving an upside in these sands alone of 10 TCF (GIP).

In the coming year, we will continue with evaluating potential projects while vigilantly waiting for possible developments in the mining and oil/petroleum industries which we hope will be beneficial to the company as well as to you, our dear shareholders.

Our entry into Forum is the first major step towards our goal to becoming a major contributor to the development of natural resources in the Philippines. We shall continue to be firm on




our commitment to make Atok-Big Wedge Co., Inc. a significant contributor to the national economy. With your continued support, we believe this goal is within reach. January 2012

ROBERTO V. ONGPINChairman





The Early Years: Mining Success Since 1931

Mining in the Philippines has a rich history dating back a couple of centuries. Atok-Big Wedge Co., Inc. was one of the early players in the Benguet mining industry, in particular. The Company originated from a merger on January 1, 1948, of Big Wedge Mining and Atok Gold Mining, both of which were incorporated in the early 1930s. Its predecessors have enjoyed mining success stories since 1931. These include great discoveries such as the Keystone Vein, grading over 0.35 oz, the development of copper-gold ores in the Broadway Vein System, and the “Gold Vein” discovery in 1952, which was followed by happy years ahead. So much gold was milled that it has been said that enough gold bars were produced to build a structure as tall as New York City’s Empire State Building.

Alongside every mining success story were challenging times. These included World War II, the 1990 Baguio Earthquake, labor problems, depressed metal prices, and economic downturns. In June 1996, the Company changed its primary purpose from mining to general investment. The authorized capital was increased from PhP 6,000,000.00 to PhP 60,000,000.00. The Company was also renamed Atok-Big Wedge Co., Inc. and subsequently spun off its mining assets to a wholly-owned subsidiary – Atok Gold Mining Co., Inc.


Company History

the gold ore processing fAcility, wArehouses, And

office buildings of Atok-big wedge’s gold mine in

itogon, benguet in 1933.

Company History

New Beginning, New Opportunities

Atok and Boerstar Corporation (“Boerstar”) entered into a Deed of Subscription on October 21, 2009. Boerstar subscribed to the remaining unissued 20,881,293 Class “A” common shares, and 13,899,932 Class “B” common shares, or a total of 34,781,225 common shares of Atok, at a subscription price of PhP 1.00 per share, or an aggregate subscription price of PhP 34,781,225.00. This subscription triggered the Mandatory Tender Offer Rule of the Securities Regulation Code. A total of 13,401,059 shares were tendered by a number of Atok’s shareholders during the tender offer period (October 1 to October 29, 2009), enabling Boerstar to acquire a total of 48,182,284 shares, representing around 80.30% of the Company’s resulting issued and outstanding capital stock, consisting of 60,000,000 shares.

The acquisition by Boerstar of a controlling stake in Atok also resulted in a change in leadership. The management of the Company is now being led by Messrs. Roberto V. Ongpin, Eric O. Recto, Walter W. Brown, and Mario J. Locsin.

Recapitalization and Increase in Authorized Capital to PhP 10 Billion

An additional subscription of Boerstar and Progressive Development Corporation (“PDC”) was approved by Atok’s Board of Directors on December 29, 2009. Boerstar agreed to subscribe to 2,391,036,526 shares at par value, of which PhP 527,286,526.00 will be partially paid and PDC agreed to subscribe to 93,963,474 shares at par value, of which PhP 93,963,474.00 will be fully paid.

In addition, with the approval of the Board of Directors on February 15, 2010, North Kitanglad Agricultural Co., Inc. agreed to subscribe to 509,000,000 of the previous shares approved to be subscribed by Boerstar. Boerstar will now subscribe to just 1,882,036,526 shares. Both subscriptions by NKACI and Boerstar will still be at par value and will be partially paid (PhP214,976,840.00 by NKACI and PhP 691,059,686.00 by Boerstar).

Also on the same date, the foregoing subscriptions by Boerstar, NKACI, and PDC were ratified by the shareholders of Atok.

The shares were issued to the respective subscribers after the Securities and Exchange Commission approved Atok’s application to increase its authorized capital stock to PhP 10,000,000,000.00 divided into 10,000,000,000 shares with a par value of one peso per share.

6 ATOK-BIG WEDGE CO., INC. 2011 Annual Report ATOK-BIG WEDGE CO., INC. 2011 Annual Report 7

The following changes to the Company’s Articles of Incorporation were also ratified:

a. To change the primary purpose of the Company from a holding company to that of a company authorized to engage in the business of mining, oil and gas, and the exploration and development of natural resources;b. To declassify and increase the Company’s authorized capital stock from PhP 60,000,000.00 divided into 36,000,000 Class “A” common shares and 24,000,000 Class “B” common shares, with a par value of one peso per share to PhP 10,000,000,000.00 divided into 10,000,000,000 common shares with a par value of one peso per share;c. To change its principal office address to Alphaland Southgate Tower, 2258 Chino Roces Avenue corner EDSA, Makati City; andd. To increase the number of directors from nine to fifteen.

After the increase in authorized capital to PhP 10,000,000,000.00 was approved by the SEC and the foregoing subscriptions implemented, the shareholding structure of Atok became as follows:

Shareholder Shares Percentage Boerstar 1,930,218,810 75.84% NKACI 509,000,000 20.00% PDC 99,865,084 3.92% Others 5,916,106 0.24% Total 2,545,000,000 100.00%

In June 2010, Atok spun off its transfer agency function to its newly incorporated and majority-owned subsidiary, AB Stock Transfers Corporation. ABSTC’s purpose, among others, is to establish, operate, and act as a transfer agent and registrar of corporations.

The following amendments to the Company’s By-Laws were also approved by the SEC on July 2010:

• Annual Stockholders’ Meeting to be held on the last Friday of May, or as otherwise set by the Board;• Chairman of the Board of Directors designated as the Chief Executive Officer of the Company;• Provision for an Office of the Vice Chairman who will serve as the Chief Executive Officer, in the absence of the Chairman of the Board;• The President designated as the Chief Operating Officer

The Philippine Stock Exchange also approved in October 2010 an additional listing

Company History


application of the Company for a total of 928,744,699 common shares (“Private Placement Shares”) issued in favor of Boerstar, NKACI and PDC. The common shares of Atok are traded at the PSE under the ticker symbol “AB”.

In November 2010, the Company filed a complaint for specific performance against Intex Resources ASA, a company publicly listed in the Kingdom of Norway, for the latter’s failure to honor its agreement to sell 100% of Intex Resources AS for USD 10,000,000 cash and 300,000,000 new Atok shares. Intex Resources AS owns and controls a nickel mining project in Mindoro.

Towards Historical Greatness

Over the past seven decades, Atok has established a strong foundation in the Philippine mining industry. With a new beginning and changes being implemented, the Company has its sights set firmly on the future.

To date, Atok has studied 39 mining and oil and gas investments, 17 of which are located in the Philippines, while the remainder found within the neighboring Indochina region. Now equipped with substantial funding and management, Atok is set to capitalize on the thriving natural resources found in the Philippines as well as the larger Asian region and restore the Company to its historical greatness.

Company History


Directors& ExecutiveOfficers

EXECUTIVE OFFICERS ROBERTO V. ONGPINChairman




MARRIANA H. YULOChief Financial Officer

RODOLFO MA. A. PONFERRADACorporate Secretary

JESUSA LORETO A. ARELLANO-AGUDAAssistant Corporate Secretary

BOARD OF DIRECTORS

ROBERTO V. ONGPIN

ERIC O. RECTO

WALTER W. BROWN

MARIO J. LOCSIN

MARRIANA H. YULO

MARIO A. ORETA

MICHELLE S. ONGPIN

DENNIS O. VALDES

DELFIN J. WENCESLAO, JR

VICTOR R. KALAW

RODOLFO MA. A. PONFERRADA

REYNALDO G. DAVIDIndependent Director

MARGARITO B. TEVESIndependent Director


pArt of An exposed gold-rich hydrothermAl vein

system cutting through the country rock in

xiengkhoAng province, centrAl lAos.

ROBERTO V. ONGPINChairman of the Board and Director

Mr. Ongpin is the Chairman of the following Philippine listed Corporations: PhilWeb Corporation, Alphaland Corporation, ISM Communications Corporation, and the Philippine Bank of Communications. He is also a Director of San Miguel Corporation, Ginebra San Miguel, Inc., and Petron Corporation. In Hong Kong, he is a Non-Executive Director of Shangri-La Asia and the Deputy Chairman of the South China Morning Post, both listed in the Hong Kong Stock Exchange. He is also the Chairman of Acentic GmbH (Germany) and a Non-Executive Director of Forum Energy PLC (United Kingdom). Mr. Ongpin joined SGV & Co. in 1964 and was Chairman and Managing Partner of the firm from 1970 to 1979. He served as the Minister of Trade and Industry of the Republic of the Philippines from 1979 to 1986. Mr. Ongpin graduated cum laude in Business Administration from the Ateneo de Manila University, is a Certified Public Accountant and has an MBA from the Harvard Business School.

ERIC O. RECTOVice Chairman and Director

Mr. Recto is the Co-Chairman and a Director of the Philippine Bank of Communications, Vice Chairman and a Director of PhilWeb Corporation and Alphaland Corporation, the President and a Director of Petron Corporation and ISM Communications Corporation, a Director of Manila Electric Company and San Miguel Corporation, a Member of the Board of Supervisors of Acentic GmbH, and the President and Director of Top Frontier Investment Holdings, Inc., and Q-Tech Alliance Holdings, Inc. Prior to joining the Company, Mr. Recto served for three years as an Undersecretary of the Department of Finance of the Philippine Government in charge of handling both the International Finance Group and the Privatization Office. Before his work with the government, he was the CFO of Alaska Milk Corporation and prior to that, Belle Corporation. Mr. Recto has a degree in Industrial

Engineering from the University of the Philippines, as well as an MBA from the Johnson School, Cornell University.

WALTER W. BROWNVice Chairman and Director

Dr. Brown is the Chairman of A Brown Company, Inc., Palm Thermal Consolidated Holdings Corporation, International Cleanvironment Systems, Inc., North Kitanglad Agricultural Company, Inc., PhiGold and A Brown Energy & Resources Dev’t. Inc., President of Monte Oro Resources and Energy Inc., and Director of ISM Communications Corporation, Forum Energy PLC, and PBJ Corporation. He was the Chairman and Chief Executive Officer of Philex Mining Corporation from January 2004 to December 2009. He has two undergraduate degrees: B.S. Physical Science (1959) and B.S. Geology (1960), both from the University of the Philippines, and post graduate degrees from Stanford University: M.S. Economic Geology (1963), and Ph.D. in Geology, and Major in Geochemistry (1965). He was a candidate in Master of Business Economics (1980) from the University of Asia & the Pacific (formerly Center for Research & Communications). He is Chairman and Director of Family Farm School (PPAI), Chairman and President of Studium Theologiae Foundation, Vice Chairman of the Board of Trustees of Xavier University, and Member of the Chamber of Mines of the Philippines Inc. and the Geological Society of the Philippines.

MARIO J. LOCSINPresident and Director

Mr. Locsin is currently a Director and the Executive Vice President of ISM Communications Corporation, Vice Chairman and a Director of the Philippine Bank of Communications, and the President of Alphaland Heavy Equipment Corporation and Inpilcom, Inc. He is a Director of PhilWeb Corporation and Alphaland Corporation. In the past, he served as the President and COO of Eastern Telecommunications Philippines,

Board of Directors & Executive Officers



Inc., a Director of Belle Corporation, APC Group, Southwest Resources, Philippine Long Distance Telephone Co., and Pilipino Telephone Co., as well as a Director, Executive Vice President and COO of Philippine Airlines. Mr. Locsin is a consultant of Acentic Asia Ltd. He holds a degree in LIA-Honors Math from De La Salle University and a Master in Business Administration from the University of San Francisco.

MARRIANA H. YULODirector

Ms. Yulo is also currently the Head of Corporate Finance of the Company and a Director of Alphaland Corporation. She is the Chief Financial Officer of Alphaland Corporation and the Head of Corporate Finance for PhilWeb Corporation and ISM Communications Corporation. She is a Business Administration major in Management graduate of Palawan State University. She has an MBA from the University of St. La Salle and has successfully completed Level I of the Chartered Financial Analyst Program.

MARIO A. ORETADirector

Mr. Oreta is the President and a Director of Alphaland Corporation, Alphaland Development, Inc., Alphaland Balesin Island Resort Corporation, Alphaland Makati Place, Inc., Alphaland Makati Tower, Inc., The City Club at Alphaland Makati Place, Inc., Alphaland Balesin Island Club, Inc., Alphaland Marina Corporation, Alphaland Marina Club, Inc., Aklan Boracay Properties, Inc., and Alphaland Property Management Corporation, the Vice Chairman and Director of Alphaland Heavy Equipment Corporation and Alphaland Reclamation Corporation, and Chief Operating Officer of Jet Eagle International Limited, Inc. He is Chairman of Major Holdings, Inc., Major Properties, Inc., and Major Homes, Inc. He is also a Director of PhilWeb Corporation and ISM Communications Corporation.

He was a Founder and Managing Partner of Tanjuatco Oreta and Factoran Law Offices.

MICHELLE S. ONGPINDirector

Ms. Ongpin is a Senior Vice President of the Company and a Director of Alphaland Corporation. She is a Senior Vice President of Alphaland Corporation, PhilWeb Corporation, and ISM Communications Corporation. She has an MA in Communication Sciences from the University of Vienna and a postgraduate degree from the Diplomatic Academy in Vienna.

DENNIS O. VALDESTreasurer and Director

Mr. Valdes is the President and a Director of PhilWeb Corporation, a Director of Alphaland Corporation and ISM Communications Corporation. His previous work experience includes 10 years with the Inquirer Group of Companies, as a Director of the newspaper, and also expanding their Internet, printing, and ink-making operations. Prior to that, he spent six years with The NutraSweet Company developing their businesses in Asia. He is a Certified Public Accountant, graduated magna cum laude in Business Administration and Accountancy from the University of the Philippines, and has an MBA from the Kellogg School of Management, Northwestern University.

DELFIN J. WENCESLAO, JR.Director

Mr. Wenceslao is the Chairman and President of D.M. Wenceslao & Associates, Inc., Aseana Holdings Inc., President and Director of Bay Dredging, Inc., and Bay Resources and Development Corporation, a Managing Director of R-I Consortium, and a Director of Private Infrastructures Development Corporation (PIDC), PhilWeb Corporation, and



Alphaland Corporation. He is Chairman of the Capitol Jaycee Senate foundation and the Katipunan ng Mamamayan ng Bagong Parañaque. Mr. Wenceslao graduated from the Ateneo de Manila University with a Bachelor of Science Degree in Economics (1964) and earned his MBA and DBA from the Pamantasan ng Lungsod ng Maynila.

VICTOR R. KALAWDirector

Mr. Kalaw graduated from the Ateneo de Manila University with a Bachelor of Arts Degree major in Economics in 1962 and obtained his Master’s degree in Business Administration, major in Finance, from the Wharton School of the University of Pennsylvania in 1967. Mr. Kalaw holds various positions with the Araneta Group of Companies. He is the Director and Executive Vice President - Treasury of the Araneta Center, Inc., Director and President of the Araneta Center Hotel, Inc., and Atok Gold Mining Co., Inc., Executive Vice President - Treasury of Philippine Pizza Inc., Chairman of the Board of Uniprom Inc., and TicketNet Inc., a Director and Treasurer of Associated Sugar, Inc., and a Trustee of the Binibining Pilipinas Charities, Inc.

REYNALDO G. DAVIDIndependent Director

Mr. David is an Independent Director of Petron Corporation and ISM Communications Corporation. He was the President & CEO of the Development Bank of the Philippines from October 2004 to June 30, 2011. He received his degree in Liberal Arts - Commerce (1963) from the De La Salle University. He undertook the Advance Management Program (1974) at the University of Hawaii. He has been a recipient of Honorary Doctorate degrees from Palawan State

University (2005) and West Visayas State University (2009). Mr. David is a Certified Public Accountant.

MARGARITO B. TEVESIndependent Director

Mr. Teves is the Chairman of Think Tank, Inc., Member of the Board of Advisers of Metro Bank and Trust Company, and Member of the Board of Directors of Landbank Countryside Development Foundation. He is an Independent Director of Alphaland Corporation. He was formerly Secretary of the Department of Finance, Landbank President and CEO, and a Member of the House of Representatives (representing the 3rd District of Negros Oriental). He obtained a Higher National Diploma (HND) in Business Studies (equivalent to a BSC in Business Economics) from the City of London College and a Master of Arts (MA) in Development Economics from the Center for Development Economics, Williams College in Massachusetts, USA. He was recently conferred an Honorary Degree of Doctor of Laws by Williams College, and named Senior Adviser to the China-Asean Economic and Culture Research Center, and Visiting Professor at the Guilin University of Electronic Technology in China.

RODOLFO MA. A. PONFERRADACorporate Secretary and Director

Mr. Ponferrada is the Corporate Secretary and Corporate Information Officer of the Company, Alphaland Corporation, ISM Communications Corporation, and the Philippine Bank of Communications, a Senior Vice President of PhilWeb Corporation, and a Member (representing the private sector) of the Board of Directors of the Social Housing Finance Corporation. Mr. Ponferrada is a Member of the Philippine Bar.


Disclosures

29 Mar 2011 Atok-Big Wedge Co., Inc. set the Annual Meeting of the Stockholders on May 26, 2011 at 4:00 p.m. at The Tents, 6th floor, Alphaland Southgate Mall, 2258 Chino Roces Avenue corner EDSA, Makati City. The record date for stockholders who were eligible and entitled to vote at the said meeting was set to April 12, 2011.

11 Apr 2011 Atok submitted to the Philippine Stock Exchange the Certification of the Mines and Geosciences Bureau verifying the existence and validity of the mining claims made by its subsidiary, Atok Gold and Mining Co., Inc.

26 May 2011 Atok informed the Exchange, Inc. of the results of the Annual Stockholders’ Meeting. Elected as members of the Board of Directors for 2011-2012 were: Messrs. Roberto V. Ongpin, Eric O. Recto, Mario J. Locsin, Walter W. Brown, Victor R. Kalaw, Mario A. Oreta, Rodolfo Ma. A. Ponferrada, Dennis O. Valdes, Delfin J. Wenceslao, Jr., Reynaldo G. David (independent) and Margarito B. Teves (independent) as well as Ms. Michelle S. Ongpin and Ms. Marriana H. Yulo.

At the Organizational Meeting of the Board of Directors held


finAl stAge of tin processing in centrAl lAos, wherein

crushed ore pAsses through shAking tAbles removing

wAste rock And producing minerAl concentrAtes.

immediately afterwards, Mr. Ongpin was elected Chairman of the Board and CEO, Mr. Recto as Vice Chairman and Mr. Locsin as President. Other corporate officers and the members of the various board committees were also elected.

30 May 2011 Atok informed the Exchange of the veracity of the news article entitled “ONGPIN MINING FIRM EYES NEW PROJECTS” published in the May 30, 2011 issue of the Philippine Daily Inquirer.

3 Jun 2011 Atok informed the Exchange that it sold its entire interest in Atok Gold to Progressive Development Corporation of the Araneta Group.

3 Oct 2011 Atok informed the Exchange that it acquired 100% of Tidemark Holdings Limited (Tidemark). Tidemark owns 8,646,757 ordinary shares of Forum Energy PLC. FEP has 70% of the equity in Service Contract No. 72, in which the Sampaguita offshore gas discovery is situated. The block is located off the Northwest coast of Palawan in the Philippines.

11 Oct 2011 Atok submitted the financial statements of Tidemark to the Exchange. It then requested the lifting of the trading suspension imposed on its shares.

21 Oct 2011 Atok informed the Exchange that Dr. Brown was appointed as Vice Chairman (in addition to Mr. Recto).

Disclosures


18 ATOK-BIG WEDGE CO., INC. 2010 Annual Report All contents are Copyright © 2010 ATOK-BIG WEDGE CO., Inc. All rights reserved. This document is ATOK Public Information.


contAct between underlying copper minerAlized ore body

with the overlying mAssive limestone in vAngvieng district,

vientiAne province, centrAl lAos.

Auditors’ Report


22 ATOK-BIG WEDGE CO., INC. 2010 Annual Report All contents are Copyright © 2010 ATOK-BIG WEDGE CO., Inc. All rights reserved. This document is ATOK Public Information.

Consolidated Financial Statements

cliff side in centrAl lAos where the top of A potentiAl

copper ore body is exposed.

Financial Position


Comprehensive Income


Changes In Equity


Cash Flows


hydrothermAlly-Altered country rocks exposed on

A ridge within the prospect AreA in the bicol region.

APPENDIXNotes to the ConsolidatedFinancial Statements

hydrothermAlly-Altered country rocks exposed on A ridge

within the prospect AreA in the bicol region.

Notes


Notes


Notes


LEGAL COUNSELPONFERRADA ORBE & ALTUBAR LAW OFFICES

INDEPENDENT PUBLIC AUDITORSREYES TACANDONG & CO.

BANKSBANK OF COMMERCE

BANCO DE ORO UNIBANKPHILIPPINE BANK OF COMMUNICATIONS

STOCK TRANSFER AGENTAB STOCK TRANSFERS CORPORATION

ATOK-BIG WEDGE CO., INC. IS LISTED ON THEPHILIPPINE STOCK EXCHANGE.

TICKER SYMBOL : AB

10th Floor, Alphaland Southgate Tower2258 Chino Roces Avenue corner EDSA,Makati City, Metro Manila, Philippines

T:+632.304.6282F: +632.310.7100

www.atokbigwedge.com

ANNU AL REPORT - Atok-Big Wedge Company Incorporated€¦ · ANNU AL REPORT. 1 ATOK-BIG WEDGE CO...

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