Mine firm records higher income in 2015


TUBA, Benguet  – The management of the Padcal-based Philex Mining Corporation reported that operations for the full year of 2015 delivered a Net Income of P776 million, 10 percent better than 2014’s P703 million.

Engr. Eulalio B. Austin, Jr., Philex president and chief executive officer, said that strict implementation of cost reduction programs and tight expense management enabled the Company to mitigate the impact of low metal prices. Core Net Income for the year reached P905 million (2014: P1.122 billion) while Net Income Attributable to Equity Holders of the Parent Company amounted to P896 million (2014: P1.006 billion).

In 2015, the Padcal mine operated for 357 days (2014: 359 days) and milled 9.2 million tonnes of ore (2014: 9.5 million tonnes). This translated to 107,887 ounces of gold produced (2014: 105,008 ounces) as recovery improved to 83.2 percent (2014: 78.4 percent) amid steady ore grades at 0.438 grams/tonne (g/t). Copper output, on the other hand, reached 34.1 million pounds (2014: 35.4 million pounds) as the higher recovery rate of 82.1 percent (2014: 79.8 percent) failed to offset the impact of lower ore grades at 0.205% (2014: 0.211%).

“We continue to improve on our metal recovery rates as we implement a more strategic approach in sourcing ore from newly developed draw points, coupled with operational enhancements, judicious maintenance and equipment upgrades,” Austin stressed.

The Philex official underscored total consolidated revenues for 2015 amounted to P9.362 billion (2014: P10.898 billion).

Further, he pointed out the metals business accounted for P8.353 billion (2014: 9.733 billion). Revenues from gold totaled P5.670 billion (2014: P5.889 billion) as average realized prices went down by 10 percent to US$1,147 per ounce (2014: US$1,270 per ounce). Copper revenues reached P3.450 billion (2014: P4.615 billion) as average copper prices fell by 23 percent to US$2.29 per pound (2014: US$2.98 per pound). These levels remain as the lowest points over the last five years. Meanwhile, revenues from silver amounted to P69.7 million (2014: P78.1 million).

On the other hand, Austin revealed the energy and hydrocarbon business, meanwhile, suffered from lower output from Galoc Phase II project and the continued weakness in average crude oil prices. These factors resulted in revenues of P172.3 million from P315.7 million the previous year.

With the persistent pressure on metal prices, Austin emphasized the Company continues to manage costs and reduce expenses. As a result, consolidated operating cost and expenses in 2015 came in substantially lower at P7.324 billion (2014: P8.415 billion).  Specifically, cash production costs declined by 10 percent to P4.615 billion (2014: P5.143 billion) while general and administrative expenses decreased by 33 percent to P628.6 million (2014: P943.0 million). On a per tonne basis, the Company’s operating cost has dramatically declined from an average of P859/tonne in 2014 to P844/tonne in 1Q2015 to P785/tonne by 4Q2015.

Meanwhile, the Parent company retired US$25.8 million of its outstanding debt in 2015, which brought total debt to US$70.5 million as of end-December 2015. An additional US$3.0 million was paid out in February this year, further bringing down total debt to US$67.5 million as of end-February 2016.

“The recent modest improvement in gold prices is a welcome development but the overall global economic environment remains volatile and will continue to put pressure on metal prices and the Company’s revenue generation. As such, we shall continue to explore ways to contain our costs and expenses without sacrificing output and efficiency. Innovation on how we do things will always be our topmost priority. We shall also look for other means to augment the Company’s revenue, such as disposal of non-core assets,” Austin.

“Despite the challenging times, we will never lose sight of our goals of upholding and endorsing responsible mining in the country, leveraging on our strengths in the field of corporate governance and corporate social responsibility. This includes improving operational efficiency, extending further Padcal’s life of mine and bringing the Silangan project into commercial operation. In this regard, the Company is pleased to announce the maiden Inferred Resource Estimate of 21.7 million metric tonnes for its Bumolo Project, confirming the potential we have been prospecting the past years. The preliminary Inferred Resource Estimate already exceeds our initial expectations and, as a result, we can look forward to additional years of exploration around the Padcal mine. The official report will be released in due time,” Engr. Austin, Jr. added.

Meanwhile, the development of the Silangan project is progressing broadly as expected. “Most permits and licenses have been issued and the remainder has been covered by completed applications submitted to the relevant government agencies. While there has been some delay in the issuance of certain permits and licenses and approval of some components of the Definitive Feasibility Study (DFS), we are still targeting the DFS report to be completed within this year,” said Yulo E. Perez, President of Silangan Mindanao and Mining Co., Inc. (SMMCI).

By Dexter A. See