Indophil has entered into a Heads of Agreement with Geophilippines Inc., which covers the Balatoc copper-gold project located approximately 500km by road from Manila in Northern Luzon. The agreement provides Indophil with the opportunity to earn up to an 85% interest in this project. Geophilippines has an agreement with the Balatoc Resources Exploration Corporation (BREC), an organisation established by the Balatoc indigenous people. BREC has submitted two applications for exploration permits over the project area in accordance with the Philippines Indigenous People’s Rights Act (IPRA). This act gives indigenous people priority rights over resources on ancestral lands.

The applications under IPRA, which confers priority rights to the Indigenous applicant, were lodged after the Philippines Mining Development Corporation allowed its mining leases over the area to expire and the recognition of the ancestral domain rights of the Balatoc Sub-tribe of Kalinga by the National Commission on Indigenous Peoples of the Government of the Philippines.

It should be noted that the BREC applications were not accepted by the Mines and Geosciences Bureau due to competing tenement applications and granted tenements resulting in adverse claims by competitors, however this decision was appealed by BREC.  A Department of Environment and Natural Resources’ Panel of Arbitrators established to hear the appeals ruled in favour of BREC in December 2008 on one application area and a decision on the second area is still awaited.  It is anticipated that competitors will further appeal the Panel of Arbitrators decision as the issues surrounding the title are complex and involve a number of government departments for resolution. Given the rights under the Philippines constitution for indigenous people, there are strong grounds to suggest the application will ultimately be successful.

The Balatoc Project lies on the western flank of the northern extension of the Philippine Fault, the major structure which is interpreted to control many of the most significant copper and gold deposits in the Philippines. It consists of a tight cluster of porphyry copper-gold deposits with late stage epithermal vein style gold mineralisation.

Historical studies carried out by previous owners indicate that the Balatoc Project has exploration potential for a copper deposit in the range of 80-90 million tonnes grading 0.6-0.7% copper, 0.2-0.3g/t gold plus exploration potential for a gold deposit in the range of 0.8-1.2 million tonnes grading 10-15g/t gold.