Marcventures reports 71% drop in profit

MANILA, Philippines - Listed miner Marcventures Holdings Inc. (MHI) yesterday reported a 71-percent drop in its net income in the second quarter of the year because of the suspension of the mining operations of its subsidiary in Surigao del Sur.

MHI reported a consolidated net income of P95.17 million in the three months ending June 30, against P330.92 million in the same period last year.

In the second quarter, its subsidiary Marcventures Mining and Development Corp. (MMDC) sold 376, 396 wet metric tons (WMT) of nickel ore compared to 787, 961 WMT sold in the comparative period last year.

“The significant drop in the second quarter volume was primarily due to the suspension of extraction activities in compliance with the suspension order issued by the MGB (Mines and Geosciences Bureau) in April 2014,” said MHI in an exchange filing yesterday.

MHI registered total revenues of P410.65 million from the sale of nickel ore in the second quarter, down 47.57 percent from P695.6 million in the same period last year.

Because of lower shipment volume in the second quarter, MHI said it was unable to take advantage of the increase in the average nickel prices during the period.

In April, the MGB ordered MMDC to stop its mining operations in Surigao del Sur after it was found that the company was mining outside of the government-approved area.

MMDC has  a mineral production sharing agreement (MPSA) covering 4, 900 hectares that straddle the towns of Cantilan and Carrascal in which it is allowed to develop 300 hectares in Cantilan.

In issuing the suspension order, the MGB said MMDC was found to have been mining in Carrascal, making its source of ore “illegal.”

Before stopping the company’s operations in Carrascal in April, the MGB had already suspended the company’s operations in Catilan because of “unsystematic operations.”

MMDC also faced a strong anti-mining lobby led by tribesmen in Cantilan. In fact, the investigation on MMDC’s operations stemmed from their petition before the Department of Natural Resources (DENR) to cancel the company’s MPSA.

In May, MMDC filed a motion for reconsideration before the MGB, asking it to lift the suspension order on its operations in Cantilan, saying it has already “complied with all the necessary measure within its control for its operations” in the area.

The company also submitted to the MGB an application for amendments to its Declaration of Mining Project Feasibility (DMPF) to cover both the Carrascal and Cantilan mining areas.

The company’s motion is still under view.