At its 60th year, Philex Mining soars

Let’s talk about Philex Mining’s story this time. A story of success amidst the uncertainties the mining industry is facing at this time. In fact we can say that it thrives under pressure. From its humble motto – “A gift of God, a work of man” – it is basking on an un-official title as the “poster boy of the mining industry.” But hold it! Let us look at its story and where it is now.

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The famous company motto of “A gift of God, a work of Man” continues to resonate both in the hearts and minds of its stakeholders to this day. Indeed, it could not only have been Divine Providence that led the Philex founders to the Santo Tomas II mineral deposit in Benguet province and from which the company derives its main source of revenue through the years. Philex was incorporated in the Philippines on July 19, 1955, and subsequently listed the Philippines Stock Exchange on November 23, 1956. The company and its subsidiaries were organized into two main business groupings: the metals business, directly under PMC itself, Philex Gold Philippines Inc., and Silangan Mindanao Mining Co. Inc.; and the energy and hydrocarbon business, under Philex Petroleum Corporation (PXP), now called PXP Energy Corp, or PEC.

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The company operates the Padcal mine, located in the municipalities of Itogon and Tuba in Benguet province, which is one of the oldest operating mines in the country, using the underground block caving method for the past 58 years. Though commercial production commenced in August of 1958, with a tonnage of 800 tons per day, the first ever shipment of gold bullion was made with the Nippon Mining Company in 1957.

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It was in 1959 that the first full-year of commercial operations, using open-pit and block stopping systems, was completed. The first concentrator plant was also constructed at Padcal during this time in what used to be an abandoned saw mill half a kilometer away from the ore body. In 1960, the underground mining method shifted to block-caving using the slusher system. In 1963, the Banget mill was commissioned with an initial capacity of 12,000 tonnes per day. Likewise, the Poro Point Conveyor Loading Pier was completed in March 1996 to serve as a shipment point for the copper concentrated from Padcal.

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The 1970s were considered as the golden years of Philex in terms of production, profit, safety and social development. Under Project 24,000, the Banget mill’s capacity was expanded to 24,000 tonnes a day. In 1975, Project Gold was launched and, one year after, the first commercial gold bullion was sold. In addition to this, a total of 5,397 kilograms or 173,517 ounces of gold were produced, making Philex the largest gold producers in the Philippines.

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The 1980s saw the expansion of mill throughout and the driving of a cable belt tunnel for the ore transport system. The cable belt conveyor (CBC) was finally commissioned in April of 1989 and the use of locomotive system for ore delivery was fully phased out in 1997. The 1990s were all about the development and modernization of mining technology at the Padcal mine, where mechanized underground mining was realized in 1994 and full Load Haul Dump (LHD) block cave mining was made operational by 1999.

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In 1997, Philex became the largest copper and gold producer in the Philippines.

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“There is life in mining.” The turn of the century and the years that followed saw Philex experience some of its highest and lowest points in its corporate history. In 2010, the First Pacific Group under Manuel V. Pangilinan gained control over PMC. When asked as to why First Pacific decided to invest in Philex, Mr. Pangilinan, or MVP as he is “widely known, said that First Pacific has chosen PMC as the company vehicle to enter (into natural resources) “because of Philex’s reputation in the industry as a responsible and profitable operator…”

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The challenge for Philex at this time was to show that it, too, was of great benefit to the community and to peoples, beyond the revenue earned for its shareholders and its employees. It had to prove that it was more than a responsible miner, and that there was life to be offered in and from mining to its various stakeholders. Indeed, amid the tight pricing environment and very stringent regulatory climate, coupled with a public indifference, if not negative sentiments, towards mining, Philex continued to be one of the best-performing and most awarded mining companies in the country in the last three years, at least.

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Based on the complete data from the PSE, Philex was the most profitable listed metallic-mining companies in the country as of the first six months of 2016 registering also the best return-on-assets and return-on-equity figures during the period. In addition, Philex has consistently improved its net income from P312 million in 2013 to P776 million as of end-2015 despite the lethargic metal price performance. In the first nine months of this year, the company already registered a net income of P1.1 billion, which already exceeded 2015’s full-year figure.

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The company was also a recipient of various corporate governance (PSE Bell Awards in 2015-2016; One of Top 15 PLCs in Corporate Governance – 2016 Investor’s Forum; Top 3 in the Country and Top 50 in the Region in the 2015 ACGS awards; Corporate Governance Company of the Year in 2014 Asia CEO Awards) corporate social responsibility (Top CSR Advocates in Asia-2015 ACES Awards; 3rd Best at CSR – 2016 Finance Asia Poll), and management performance Awards (The asset Excellence Awards 2014-2016; 4th Best Managed Company in the Philipines-2016 Finance Asia Poll; 2015 Best CEO in Mining- Eulalio B. Austin, Jr. – The Asset Magazine).

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Philex CEO and President Eulalio B. Austin, Jr. said: “Philex believes that corporate governance is a journey and this mindset has been the driving force behind the Company’s continuous improvement in its CG programs. We are convinced that compliance with the highest level of CG prescribed best practices strengthens the organization, on one hand, and transforms it into an attractive investment instrument for investors, on the other, thus further enhancing its shareholder value.”

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With the improved cost structure and reduced expenses, an additional 20 million tonnes of ore reserves were declared in October 2015 within the current ore body, which will extend the mine’s life by two more years from 2020 to 2022 and help sustain the company’s shareholder value-creation initiatives. In February 2016, the company likewise divested from PEC to focus its resources on its core competency of metallic mining. Over the next five years, Philex will be pursuing the following initiatives to ensure the long term sustainability of operations: (a) Constantly improve operational efficiency at Padcal; (b) Extensively explore the vicinity of Padcal to extend further its mine life; (c) Pursue the commissioning of the Silangan Projet; and (d) Embrace the challenge of being the face of responsible mining in the country.

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As PMC celebrates its 60th anniversary of being a publicly-listed company (PLC), it has shown that, indeed, Philex has lived on its tradition of not just successful management and corporate social and environmental responsibility as well. (Source: Philex Mining Corp. 60th Anniversary Special Supplement, Nov. 2016)

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