Philex Mining Corp. on Wednesday said its net income dropped by more than a third in the first three quarters of the year due to lower ore grades and depressed metal prices.
In a disclosure to the Philippine Stock Exchange, Philex reported a net income of P950.6 million in the first nine months, 34.27 percent down from P1.44 billion a year ago.
Core net income amounted to P901.2 million in the first three quarters, down by 39 percent from P1.47 billion in 2013. Last year’s figures also came with insurance proceeds related to business interruption arising from the tailings storage facility accident, which was booked under core income.
The company’s revenue, on the other hand, increased to P7.74 billion in the first nine months, from P7.26 billion a year ago, as weak metal prices prevailed despite the slight improvement in gold output.
Consolidated revenues increased to P8.378 billion, from P7.73 billion in 2013, as the higher number of operating days in 2014 delivered higher metal output. This, however, was offset by the decline in ore grades and metal prices.
For the third quarter alone, gold production totaled 26, 458 ounces, or 2 percent higher than the 25,844 ounces produced in the previous quarter as gold grades improved.
“This was a result of operational adjustments aimed at bringing in better ore grade sources and maximizing metal recoveries,” the company said.
Copper output also continued to be affected by low grade sources and declined to 8,642,509 pounds from 8,728,904 pounds in the second quarter.
Amid lower ore grades in Padcal copper-gold mine, Philex President and CEO Eulalio Austin Jr. said that they remain committed to the future of Philex especially after receiving the permanent lifting of the suspension order from the Mines and Geosciences Bureau last August.
“This provides us more confidence and a better perspective on the way forward,” said Austin.
“Our cost streamlining measures across the entire organization thus far are delivering the desired results. However, we believe that more needs to be done moving forward to curtail the impact of low grades and weak metal prices on our bottomline. In addition, we are extensively exploring areas within and outside Padcal to extend the mine’s life beyond 2020,” Austin said.
Austin said that Philex is conducting drilling operations in three target sites adjacent to the main Padcal mine as part of a five-year plan to maximize revenues from its tenements. The drilling results from the ongoing exploration is expected to be finalized next year.
Philex is currently mining just five percent of its 14,000-hectare mining tenement in Benguet, making it possible that further mineralization with higher ore grades can exist within the contract area.
As the mine ages, lower grade ores are extracted from the production side, prompting Philex to raise the daily ore production tonnage to 27,000 metric tons per day from 25,000 MT per day previously.
For the Silangan project, which is the company’s next big prospective mine, Austin said that they are proceeding as planned after the pre-feasibility study confirmed the project’s viability.
“We are on-track with completing the bankable or definitive feasibility study (DFS) for Silangan to de-risk the project and further increase our confidence level. We expect the DFS to be completed by mid-next year and are also looking forward to secure the remaining regulatory approvals to commence production,” he said.
The company plans to employ the open-pit mining method, which involves the excavation of the surface of the ground to extract minerals while underground mining requires the digging of tunnels to reach the mineral zones.
Silangan project is located in Surigao del Norte, at the northern part of Mindanao. It combines the development of Boyongan and Bayugo deposits, which are comprised of gold, copper, and silver.
Philex allotted P4 billion in capital expenditure this year, of which P3.4 billion will be spent for exploration works at the Silangan project. The remaining amount will be used for the exploration and other development works in Padcal. James Konstantin Galvez