Philex Mining slumps to P295-M loss in 2012

MANILA, Philippines - Philex Mining Corp. reported a net loss of P295 million last year because of the continued closure of its Padcal copper-gold mine in Benguet and the losses incurred by subsidiary Philex Petroleum when it wrote off its 2012 oil and gas investments.

In a disclosure to the local bourse, Philex Mining said the net loss was a reversal from a net income of P5.8 billion in 2012 as Philex Petroleum reported a net loss of P1.086 billion in 2012 compared to a net income of P538 million in 2011.

Forum Energy, a subsidiary of Philex Petroleum, wrote off P389 million of its investments in the North Cebu oil field under Service Contract 40. Another subsidiary Brixton Energy & Mining Corp., wrote off P578 million of its coal assets under Coal Operating Contract 130 in Zamboanga Sibugay.

Philex Mining generated a core net income of P1.705 billion in 2012, down 69 percent from P5.568 billion in 2011 because of the continued suspension of its Padcal mine since Aug. 1, 2012.

The core net income for 2012 was arrived at after provisioning of the P1.024-billion penalty imposed by the Mines and Geosciences Bureau (MGB) for the tailings spill that occurred in the Padcal mine last year.

The company has also set aside a provision amounting to P413 million to cover the expenses for the rehabilitation of the areas affected by the spill and the fine imposed by the Pollution Adjudication Board (PAB) for violations under the Clean Water Act of 2004.

PAB has imposed on the company a penalty of P92.8 million for the tailings that seeped into the waterways in the surrounding area of the mine.

“We are at a situation where we can regard Philex’s lower core income for the year as not entirely negative, considering the prolonged suspension of our Padcal operations,” said Manuel V. Pangilinan, chairman and CEO of Philex Mining.

“Since that regrettable tailings accident last Aug.1 — where we immediately decided to shut down the mine—effort has been made by Philex to remediate and rehabilitate the tailings pond and the affected areas, and restore operations and the environment to normalcy as quickly as we could. I believe we have gone a long way in the effort and that the performance of Philex will be restored as soon as Padcal recommenced operations,” he added.

The suspension of mine operations caused the company’s operating income to fall 57 percent to P3.44 billion in 2012 from P7.943 billion in 2011.

Ore mined from Padcal was reduced to 5.5 million tons, producing 71,297 ounces of gold and 22.3 million pounds of copper in 2012 against 9.5 million tons last year from which 140,113 ounces of gold and 38 million pounds of copper was produced.