MANILA, Philippines - Shares of Philex Mining Corp. plunged to its lowest since March 30, 2011 after cutting its full-year profit forecast by more than 150 percent with the continued closure of its Padcal mine until the end of the year.
Philex sank 6.44 percent to close at P14.82 per share as investors unloaded the stock following the announcement of the mining firm’s chairman Manuel V. Pangilinan that the company might only earn a third of its 2012 profit guidance due to the tailings spill of the Padcal mine.
“We forecast P4 billion profit for the year. That will go down to P1.5 billion to P1.7 billion as the Padcal mine will remain closed until the end of the year,” Pangilinan said in a pre-taped interview shown at a mining conference in Manila Thursday.
A total of 12.07 million shares valued at P181.08 million changed hands Friday.
Philex estimates around P30 million in foregone revenues a day due to the closure of the Padcal mine.
The company reported a net income of P2.04 billion in the first half of the year, down 37 percent from the same period in 2011 due to reduced gold output at Padcal.
Philex, however, remains on track to begin commercial production at its Silangan copper-gold project in Surigao del Norte by 2017. The company is aggressively pursuing the pre-feasibility study and mine development.
The feasibility study will be completed as scheduled by February 2013.
Philex is banking on the Silangan mine to sustain its survival and continued profitability ahead of the end of mine life of its main mine in Padcal, Benguet.
Meanwhile, Pangilinan said he believes the new mining policy and the accompanying implementing rules and regulation (IRR) is causing uncertainty in the industry because the bias of the new policy is not clear.
The industry, he said, is also increasingly concerned about issues on revenue sharing and the provision of the IRR for the renegotiation of existing mining agreements.
In a pre-recorded interview shown on Thursday, the last day of the Philippine Mining Conference, Pangilinan said that while the new policy has a “noble” goal of balancing the interests of environmentalists and those of investors, the bias of the policy is unclear.
“It adds a little bit more uncertainty to investments… But the question is whether that balance is promotive of the business interest and promotive of the future of mining in the country,” he said.
“At the end of the day, it should be made clear what is the bias, what is the direction of the mining policy should be clear. If the bias is not for mining then so be it. From that bias, it will show how you would want to regulate a particular business. From this point, it is not clear. The attempt to balance interests causes these concerns,” he added.
The Chamber of Mines of the Philippines (COMP) said mining companies would legally oppose Section 9 of the implementing rules and regulations (IRR) of the new mining policy which stipulates that the terms of mining contracts would be renegotiated after the first 25 years, potentially shortening the lifespan of a project which is guaranteed a maximum of 50 years under the existing law.
COMP president Benjamin Romualdez has called the provision “patently illegal.” He said mining companies would file individual cases to oppose the provision in the IRR.
Romualdez said the IRR violated section 32 of the Mining Act which states that permit extension would have the same terms as the first 25 years of operations.