TUBA, Benguet – The management of the Philex Mining Corporation reported a 38 percent improvement in its first quarter income this year when it registered a net income of P420 million compared to the P305 million net income of the company during the same period last year.
Net Income Attributable to the Parent Company was P426 million, which was 30 percent better year-on-year, and translated to an earnings per share of 8.6 centavos. Core net income was 82 percent higher at P389 million (1Q2015: P214 million).
Engr. Eulalio Austin, Philex president and chief executive officer, cited the performance was attributed to the Company’s strong resolve to work efficiently and bring down costs and expenses amid the volatility in metal prices.
Padcal mine operated for 90 days in the first quarter of 2016 and milled 2.325 million tonnes of ore, compared with 88 operating days and 2.221 million tonnes of ore milled in the same period last year. The higher tonnage resulted in a mild improvement in copper production to 8.425 million pounds in the first quarter of 2015: 8.361 million pounds) amid steady ore grades. Gold output, on the other hand, contracted to 24,200 ounces in the first quarter of 2015: 25,997 ounces) as higher grade ore is being naturally depleted.
This operational performance delivered P2.413 billion in revenues in the first quarter of 2015: P2.393 billion), with both gold and copper recording slightly better revenues of P1.427 billion in the first quarter of 2015: P1.423 billion) and P946 million in the first quarter of 2015: P912 million), respectively. Gold revenues benefitted from a recovery in prices, which rose to US$1,239 per ounce in the first quarter of 2015: US$1,189 per ounce), while copper revenue was undermined by depressed prices at US$2.25 per pound (1Q2015: US$2.71 per pound).
Revenues from silver totalled P16.8 million in the first quarter of 2015: P19.4 million), while revenues from petroleum and other sources were affected by the significant drop in oil prices and fell to P23.1 million in the first quarter of 2015: P37.6 million).
Cost and Expense Management
Under the persistent volatile market environment, the Company continued to manage its costs and expenses, enabling it to achieve an 11 percent reduction in consolidated costs and expenses to P1.674 billion from P1.887 billion in the first quarter of 2015.
In particular, production costs went down 8 percent to P1.438 billion (P1.561 billion) as the Company constantly explored new methods and implemented more efficient techniques to further optimize operations. General and administrative expenses also decreased 41 percent to P110.4 million as the Company continued to pursue various cost containment and expense reduction initiatives across the organization.
As a result, on a per tonne basis, the Company’s operating cost dropped 11 percent year-on-year, and has consistently fallen by an average of 3 percent quarterly for the past five quarters, from P844 per tonne in the first quarter of 2015 to P755 per tonne in in the first quarter of 2016.
These campaigns enabled the Company to significantly improve its margins, with operating margin rising to 24 percent in the first quarter of 2015: 14 percent) and net income margin climbing to 19 percent in the first quarter of 2015: 14 percent).
The Company also continued to deleverage its balance sheet as it repaid US$5 million out of its outstanding debt in the first four months of the year, which further brought down the Parent Company’s total debt to US$65.5 million as of end-April.
The encouraging results from the Bumolo project increased confidence on further extending Padcal’s mine life beyond 2022 and, as such, activities will be advanced to the succeeding stages to reinforce the initial findings. In general, exploration activities around Padcal will be intensified to identify new ore bodies, augment existing resources and extend the mine’s life anew.
“Our performance early in the year illustrates the operational and financial impact of the productivity enhancement programs implemented the previous years. We believe that these measures will drive our profitability higher in the years ahead, especially against the backdrop of a much improved pricing environment. On a larger scale, the strategic direction we are pursuing with respect to our most valuable assets to date, from the exploration of Padcal and its vicinity to the ongoing progress with the Silangan project, will be critical in the Company’s long-term value-creation program,” Austin said.
“For our other less core tenements, we are likewise exploring the most appropriate business model, be it in the form of partnership, joint-venture, or farm-in/farm-out agreement, that will generate the best value,” Austin Added.