Philex net income down 33% on higher costs, lower metal prices

MANILA, Philippines - Listed Philex Mining Corp. reported a 33 percent decrease in its net income in the first quarter of the year despite higher metal production because of prevailing low metal prices and higher operating expenses.

The Pangilinan-led firm reported its net income in the first three months of the year fell to P267.4 million from P403.3 million in the same period last year.

The company’s Padcal mine in Benguet operated uninterrupted in the first quarter resulting to higher output and increased revenues.

Total revenues rose 228 percent to P2.913 billion in the first quarter of the year from P889.3 million in 2013.

Milling tonnage in the first quarter of the year rose to 2.40 million tons against 611, 801 tons in the same period last year. The daily milling tonnage in the first quarter of the year was placed at 26, 623 tons, higher by four percent than the 25, 492 average daily tonnage in 2013.

The company’s gold production in the first quarter of 2014 rose 2.5 percent to 26, 442 ounces from the same period last year. Revenues from gold sales rose 227 percent to P1.610 billion in the first quarter from last year.

Realized gold prices during the first quarter, however, remained lower year-on-year at $1, 371 per ounce against $1, 595 per ounce last year.

Copper production rose to 9.47 million pounds in the first quarter from last year, leading to a 246 percent increase in revenues from copper sales to P1.178 billion even realized prices for copper fell to $2.85 per pound from $3.42 per pound last year.

Combined revenues from silver, coal and petroleum rose to P124.4 million from P55.3 million last year.

Because of the higher number of operating days, the company’s operating costs and expenses in the first quarter rose to P2.274 billion from P682.8 million.

The company expects to operate the Padcal mine for 12 months this year after two successive years of partial operations.

“Our rehabilitation initiatives at Padcal affirm our strong commitment to ensure the maximum safety of all our people and facilities, and full compliance with all the applicable laws governing our operations,” said Philex Mining president and chief executive officer Eulalio Austin.

The Mines and Geociences Bureau (MGB) has allowed Philex to operate on a temporary capacity as it rehabilitates mine infrastructure that was damaged when the mine suffered a massive tailings spill in August 2012.

“We believe the company has completed all the remedial measures and investments required to improve the water management system at Padcal last year, these new facilities were commissioned,” said Austin.

The company also reported that the pre-feasibility study for its Silangan Project in Surigao del Norte is expected to be completed in the second quarter of the year.

The Silangan Project involves the development of the Boyongan and Bayugo deposits through the company’s wholly-owned subsidiary Silangan Mindanao Mining Co. Inc.