TUBA, Benguet – Philex Mining Corp.’s Silangan project, in Surigao del Norte, needs fresh investments of $765 million or P38.4 billion to start operations, which the company is proceeding with despite the presently challenging environment, but not before getting the “blessing” of the government through the Department of Environment and Natural Resources (DENR).
This according to the company’s chief executive and president, Eulalio Austin, Jr., who said that Philex Mining plans to obtain the needed funds through loans and by looking for more investments from among the shareholders and funds from new investors.
“We are proceeding with the Silangan project,” he said Saturday, April 1, at the groundbreaking ceremonies for Philex Mining’s new administration building at its gold-and-copper operations in this town’s Sitio Padcal. “We will inform the DENR that we are proceeding, and we will ask for her [bypassed Secretary-designate Regina Lopez] blessing.”
While Silangan was included among the 75 mining contracts, called MPSA or Mineral Production Sharing Agreement, of large-scale miners that the DENR announced in February as cancelled, allegedly due to their being destructive to watersheds, Austin said the Silangan MPSA was above board and could stand any legal challenge.
Austin said the definitive feasibility study (DFS) of the Silangan project, owned by the Silangan Mindanao Mining Co., Inc. (SMMCI), a wholly-owned subsidiary of Philex Mining, will soon be completed despite the current uncertain regulatory environment, and will be able to proceed to the next stages of project development.
“We need $765 million to start the project, which is good for 10 years, then we will go underground, which is expected to last for 20 to 30 years,” he told more than 100 managers at Padcal mine who attended the ceremonies for the laying of a time capsule at the groundbreaking for a new administration building. “That project will be twice as big as Padcal.”
The construction project came about after the Super Typhoon Lawin hit the northern and eastern Luzon, including Benguet, last October. “Lawin,” internationally known as Haima, had partly damaged Padcal’s current administration building, which is made of wood.
Padcal mine, which has been operating as a responsible miner for the past 60 years, milled 9.4 million tons of ore in 2016, producing 35 million pounds of copper that was 3 percent more than the previous year’s 34.1 million pounds, as copper grades improved to 0.206 percent. Also last year, gold production reached 103,304 ounces, owing to lower grades of 0.417 grams per ton and poor metal recovery, as higher-grade content in the current draw-points got depleted.
Average realized price for copper was 3 percent higher at $2.35 per pound in 2016 from $2.29 per pound in 2015, while average gold price increased 9 percent to $1,254 per ounce from $1,147 per ounce for the same period.
It was also in 2016 that Philex Mining repaid a total of $8.5 million in debt, bringing its total short-term debt to $62 million as of end-2016 from $70.5 million as of end-2015.
The company’s income surged 83 percent to P1.657 billion in 2016 from P905 million a year earlier, while consolidated costs and expenses fell 2 percent to P6.9 billion from P7.011 billion for the same period, owing to continuously improving operational efficiency through innovation, cost rationalization, and manpower development.
Its revenues, meanwhile, rose 12 percent to P10.272 billion from P9.189 billion, with copper accounting for P3.976 billion and, gold, P6.209 billion—both higher than the previous year’s levels by 15 percent and 10 percent, respectively. Also, revenues from silver grew 24 percent to P86.5 million.
Austin said that since Silangan is located in Surigao del Norte, a part of the southern Philippine island of Mindanao, where President Rodrigo Duterte has declared his war against poverty, hunger, and underdevelopment, the gold-and-copper project would help a lot in the development of the province.
Philex Mining expects, for instance, that Silangan will generate P170 billion in revenues, P31 billion in national and local taxes, and at least 8,000 employment opportunities during its first decade of operation from 2020. Silangan Mining is also seen to spend P6 billion over the same 10-year period for social development, infrastructure programs, and environmental protection that will benefit not only Surigao del Norte but the whole of Mindanao.
Austin said Philex Mining secured its MPSA—where the government shares in the production of the contractor (miner), whether in kind or in monetary value—on Silangan with the national government after a thorough review process conducted by all relevant government agencies, and upon the endorsements of the host communities and the local government units.
He added that none of the areas covered by the Silangan MPSA are in a proclaimed watershed forest reserves, where mining is prohibited. “We are confident on this—that our Silangan MPSA could stand challenge in court,” he stressed.
Austin also said that none of the four tenements of another Philex Minding subsidiary, Philex Gold Philippines, Inc. (PGPI), is located in proclaimed watershed forest reserves, contrary to what Lopez, whose confirmation was bypassed by the powerful Senate Commission on Appointments in its latest hearing, had claimed.
By HENT
