Benguet Corporation Amendments to SEC Form 11-C of the Full Disclosure Rules

February 12, 1998 PSE CIRCULAR FOR BROKERS NO. 120-98 SUBJECT : Benguet Corporation Amendments to SEC Form 11-C of the Full Disclosure Rules Benguet Corporation (the "Company") has furnished the Exchange a copy dated January 29, 1998 of its amended report to the Securities and Exchange Commission (SEC). The said amended report was in response to the SEC's letter to the Company dated January 22, 1998 regarding the Press Releases of the Company on October 13, 15 and 29, 1997. The following are the attachments to the said amended report: LLphil a. Discussion of impact of reported facts/events to the Company's operations/financial position b. Copy of the Tripartite Agreement and Amendment and Kingking Mines, Inc. letter dated October 23, 1997 Reference to the Tripartite Agreement may be made at the Library of the Exchange. (SGD.) MARIA ISABEL T. GARCIA Head, Listing & Disclosures Group DISCUSSION ON IMPACT OF REPORTED FACT OR EVENT I. EXECUTION OF TRIPARTITE AGREEMENT On October 10, 1997, the company executed a Tripartite Agreement with Palm Avenue Realty & Development Corporation and Palm Avenue Holdings Co., Inc. ("Palm Companies"), with the conformity of the PCGG, to offer and for the Palm Companies to purchase by way of private placement, 22,677,701 Common Class A shares and 18,000,000 Common Class B shares of the company. Upon approval by the Sandiganbayan of the agreement, the amount of P275,388,505.00 will be released by the PCGG in two tranches as full payment of the shares. The monies will be sourced from the funds being held in trust by the PCGG under its sequestration power and belonging to the Palm Companies as cash dividends received in previous dividends declarations. The purchased shares to be issued will be delivered to the PCGG and will be put under sequestration, together with the other stockholdings of the Palm Companies. As of September 30, 1997, the issued and outstanding shares of the company totals to 71,744,192 Common Class A out of the 120,000,000 authorized and 42,482,497 Common Class B out of the 80,000,000 authorized. After the private placement, 94,4421,893 Common Class A and 60,482,497 Common Class B shares will be outstanding. Again, as of September 30, 1997, the computed Book Value per share of the company's stocks is P17.43. After completion of the private placement, the pro-forma Book Value per share will decrease to P14.63. This represents an immediate dilution of P2.80 to all stockholders. Furthermore, before the private placement, the Palm Companies has a 28% ownership stake in the company. After the private placement, the company will be 47% owned by the Palm Companies. The company is currently in a tight cash position and management believes that the capital infusion from the private placement will improve its financial condition and sustain its growth. The proceeds of the private placement will be used mainly as working capital to actively pursue exploration activities of existing mineral properties, develop its land assets and other non-mining resources, prolong the productivity of existing operations, and service the regular interest due on loans. II. RETURN OF FULL CONTROL OF KINGKING MINES In a letter dated October 23, 1997, Kingking Mines, Inc. (KMI), which is a joint venture company of Echo Bay Mines, Ltd. and TVI Pacific, Inc., advised the company of its decision not to exercise its option to acquire the Kingking project. Under the Option Agreement executed with the company on October 25, 1995, KMI was given the option to purchase the project for US$67 Million within 180 days from completion of the feasibility study. KMI's decision to withdraw followed its earlier proposal to re-negotiate the terms of the Option Agreement, which proposal was not accepted by the company and the claimowner, Nationwide Development Corporation (NADECOR). With KMI's withdrawal, it forfeited previous option payments made to the company totaling US$30 Million, and full control of the project reverted to the company. In addition, the result of KMI's drilling and exploration activities during the past 24 months will benefit the company since drilling estimate has upgraded geologic resource at more than one (1) billion tonnes grading 0.31% total copper and 0.41 grams of gold per tonne at a cut-off grade of 0.20% T-Cu. The result confirms that the Kingking project is principally a copper-gold mineral property. Having regained full control of the project, the company is now free to re-market the project to other interested parties. One alternative being considered is to form a consortium of capital investors for the project where the company remains as operator responsible for developing and operating the mine. In the long term, the company is optimistic that there will be a significant improvement in its cash flows when the Kingking project is put into commercial operation in consortium with a new counter party or parties. LLphil February 9, 1998, Mandaluyong City.