Lepanto allots P700M for Victoria gold mine development

MANILA, Philippines - Lepanto Consolidated Mining Co. will spend P700 million for a five-month development program for its Victoria gold mine in Mankayan Benguet beginning this month, the company said yesterday.

In a disclosure to the Philippine Stock Exchange, Lepanto said the program is intended to address the previous year’s problem of insufficient development that caused low productivity and consequent losses.

The mill will process previously stock-piled low-grade ore to produce approximately 5,000 ounces of gold. When full mining operations resume in the last quarter, production will double from 1,000 to 2,000 ton per day for an estimated monthly production of 5,000 ounces.

 “The program consists of over 16 kilometers of internal ramps, level drives and stope development to fully delineate the production panels way ahead of extraction to ensure efficient mining operations for the next two years,” Lepanto said.

 “Underground personnel and equipment will be concentrated towards achieving the critical development targets. Mining operations will be curtailed during the development period,” the company added.

The company will use proceeds from a recent stock rights offering which raised P3 billion to fund the development of the Victoria mine.

Lepanto said the program also involves a reduction of the company’s manpower by about 400 employees through a retrenchment program. The affected employees will be appropriately compensated.

For this year, Lepanto expects to produce 25,000 ounces of gold, translating to a net income of P100 million from a loss of P21 million in 2010.

In the first quarter of 2011, the mining firm reported a net income of P29 million, a reversal of the P110.9 million loss incurred the previous year on the back of surging gold prices and increased output.

Lepanto produced 7,000 ounces of gold and 12,000 ounces of silver while gold prices averaged a high of $1,380 per ounce compared with $1,111.83 a year earlier.