Apex Mining swings to profit in H1 on higher output


Listed Apex Mining Co. Inc. swung to a profit in the first half, reversing the heavy losses incurred last year, on the back of higher gold and silver production and better ore grades.

The company reported a consolidated net income of P81.7 million in the first six months, reversing the net loss of P279 million recorded in the same period last year.

In a disclosure to the Philippine Stock Exchange, Apex said revenue for the second quarter amounted to P511.4 million, bringing revenue in the first half to P1.2 billion, an increase of 72 percent over the P685.1 million booked in the same period of 2014.

The parent company’s net income was P102.7 million, before reflecting the net loss of P25.5 million from wholly owned subsidiary, Monte Oro Resources and Energy Inc. and subsidiaries, in the consolidated company accounts.

The company’s consolidated accounts include those of Monte Oro Resources & Energy, Inc. (MORE), a wholly-owned subsidiary acquired in October 2014. MORE has a processing plant located in Paracale, Jose Panganiban, Camarines Norte, through Paracale Gold Ltd.

MORE has other mining interests in other countries under Minas de Oro Mongol LLC (in Mongolia), National Prosperity Gold Production Group Ltd (in Myanmar), Monte Oro Mining Company, Ltd. and MORE Minerals SL (both in Sierra Leone), and the Gold Mines of Uganda Ltd. (in Uganda).

MORE also owns 30 percent participating interests in Service Contract (SC) 72 for natural gas in the Sampaguita gas field offshore northwest of Palawan in the West Philippine Sea.

Meanwhile, as the company’s Maco mine in Compostela Valley focused more on mine development activities, net income generated by the parent company in the second quarter amounted to P5.8 million, 94 percent lower than the income of P101.5 million in the first quarter of this year, but a significant turnaround from the loss of P131.5 million in the second quarter of 2014.

While average metal prices were lower at $1,215 per ounce gold and $17 per ounce silver this year compared to the average prices of $1,295 per ounce gold and $20 per ounce silver last year, the company said that increased production output — to 20,334 ounces gold and 107,036 ounces silver t his year from 11,430 ounces gold and 64,660 ounces silver last year — more than compensated for the unfavorable downtrend in metal prices.

Despite greater efforts geared towards developing more ore sources for mining this year, ore milled was 44 percent higher at 152,136 tons in the first half period from the 103,405 tons of ore milled in 2014. Ore grades were also better at 5.57 grams of gold per ton and 32.41 grams of silver per ton, compared to 4.39 grams of gold per ton and 26.78 grams of silver per ton in 2014.

Because of higher milling tonnage, cash production cost increased to P793.4 million in 2015 from P686.8 million in 2014. On a per ton of ore milled basis, however, cash production cost was 20 percent lower at $117 this year compared to the cost of $147 in 2014.

Combined with the higher ore grade mined, cash production cost per ounce gold, net of silver revenue credit, improved by 37 percent to $791 this year from $1,250 in 2014.

“The P2.25-billion loan granted by BDO has enabled us to procure the necessary capital equipment to push forward our mine development activities towards our goal of milling at the rate of least 1,500 tons per day this year,” said Walter Brown, president and chief executive of Apex Mining.

“Hopefully by the fourth quarter, we would be reaching this important milestone in our thrust to elevate the Maco mine’s operating capability to deliver 4,000 ounces of gold a month,” Brown said.

In June 2015, the company acquired 98 percent control over Itogon-Suyoc Resources Inc. (ISRI) at the total purchase price of P182.7 million, consisting of P32.7 million in cash and P150 million in Apex shares valued at P2.91 per share, thereby expanding the company’s asset base and further increasing available mineral resources for operation.

ISRI has mining claims in both Itogon and Suyoc, Benguet, with existing mill and production facilities in Sangilo. Apex has infused P238 million in new equity in ISRI to pay down its debts and to reopen its Sangilo mine.

“We should be producing at 75 tons a day from this mine by year-end, and at 200 tons a day by next year. This will further boost the company’s production output and provide additional buffer to counter the declining trend in metal prices,” Brown said.


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