TUBA, Benguet – The Board of Directors of Philex Mining Corporation recently announced that its first quarter 2015 financial and operating performance yielded a Net Income of P305 million, 14 percent higher than 2014’s P267 million. Net Income Attributable to the Equity Holders of the Parent Company was P329 million, which was 30 percent higher year-on-year. This was achieved despite the continued slump in metal prices and lower ore grades in Padcal. Core Net Income for the period amounted to P214 million (1Q2014: P278 million).
After securing the permanent lifting of the suspension order from the Mines and Geosciences Bureau, Padcal mine officially resumed normal operations in August last year and operated for 88 days in the first three months of 2015 compared with 90 days in 2014. During the same period, metal prices were depressed, with average realized prices for gold plummeting 13 percent to US$1,189 per ounce (1Q2014: US$1,371 per ounce) and copper prices dropping 5 percent to US$2.71 per pound (1Q2014: US$2.85 per pound).
In addition, the natural depletion of higher grade ores resulted in lower metal output. Specifically, gold grades were at 0.435 (1Q2014: 0.439) and copper at 0.204 (1Q2014: 0.223) which translated to a 2 percent decline in gold output to 25,997 ounces (1Q2014: 26,442 ounces) and 12 percent fall in copper production to 8.361 million pounds (1Q2014: 9.468 million pounds).
These resulted in revenues of P1.423 billion for gold and P912.4 million for copper, 12 percent and 23 percent lower, respectively, from the previous year.
Meanwhile, revenues from silver totaled P19.4 million (1Q2014: P22.1 million) while revenues from petroleum and other sources were affected by the significant drop in oil prices and fell 63% to P37.6 million. Total consolidated revenues for the period amounted to P2.393 billion (1Q2014: P2.913 billion).
The Company effectively managed costs and expenses across all fronts, especially at the head office and Padcal mine site. Consolidated operating costs and expenses in the first three months of 2015 was contained at P1.887 billion, which was 17 percent below the previous year.
Production costs went down 14 percent to P1.561 billion and general and administrative expenses decreased 34 percent to P188.5 million. These were the results of the Company’s operational enhancement initiatives and strict cost containment.
Other income amounted to P110.0 million in 2015 and reversed the P49.1 million in other charges reported the previous year due to one off gains. In particular, Philex booked a gain for the sale of its investments in Indophil Resources as the Company continued to look for ways to generate income to offset the impact of the low metal price environment.
The Company likewise sustained its balance sheet clean-up as it repaid P705 million in outstanding debt from local banks during the period. This brought down the Company’s total debt to P3.6 billion as of April 16, 2015 from P4.3 billion as at end December 2014.
Outlook
Last week, the Company received an Order from the Department of Environment and Natural Resources (DENR), through the Mines and Geosciences Bureau (MGB), dated April 10, 2015 approving the Declaration of Mining Project Feasibility (DMPF) of the Silangan Project. This authorizes Silangan Mindanao Mining Co., Inc. (SMMCI), the Company subsidiary which owns the project, to proceed to the Development and Operating Periods of Mineral Production Sharing Agreement (MPSA), subject to compliance with the conditions of the Order.
“This is indeed a very welcome news for the Company, amidst the overhang of weak global metal prices. The approval of the DMPF will facilitate the initial stages of mine development and bring us closer to the targeted commissioning of the project by 2018. We expect the project’s Definitive Feasibility Study also to be completed by the second half of this year, which will enable us to finalize the financial requirements for the project,” Philex President and CEO Eulalio B. Austin, Jr. said.
The Company also announced an additional 110.9 million tonnes of estimated mineral resources identified from the 800-600 meter levels (ML) in its Padcal Mine, corresponding to incremental contained metal of 473.0 million pounds of copper and 1.342 million ounces of gold. This development increases the possibility of extending Padcal’s declared life of mine, which extension is now the subject of an on-going technical study.
