Philex scores huge profits from ‘large-scale’ mining


Emeterio Sd. Perez

(First of a series)
Public investors, who trade on listed stocks, need only to access the website of the Philippine Stock Exchange for a summary of information about Philex Mining Corp., a listed company that uses PX as its market symbol.
Under “company information,” Philex explains the primary purpose of its corporate existence. Incorporated on July 19, 1955, it is “primarily engaged in mining activities.”

“The company and its subsidiaries,” Philex informed investors through the PSE website, “are organized into two main business groupings.” It said it the metals business is “under PX, Philex Gold Philippines Inc. (PGPI) and Silangan Mindanao Mining Co. Inc. (SMMCI). The energy and hydrocarbon business is “under Philex Petroleum Corp.”

Philex Petroleum has been renamed PXP Energy Corp., which, like Philex which owns it, is also a listed company. (More on PXP in another Due Diligencer.)

If Philex’s mining activities are comprehensive, perhaps, they could also be described as “intensive.”

Is Philex, by the way, also engaged in restoring the mountains, where it had profited from finds such as gold, silver and copper, to their “pristine glory?”

Indirect owner

The Indonesian-owned First Pacific Co. Ltd. is not listed among Philex’s top 100 stockholders but is an indirect stockholder of the Philippines’ biggest mining company through its subsidiaries and affiliates. One of them, Asia Link B.V., even topped the list as of Dec. 31, 2016 with 1.023 billion PX common shares, or 20.71 percent.

However, Twin Rivers Pacific Holdings, a significant stockholder, is identified as “Filipino,” when, in fact, it belongs to the First Pacific group. It holds 738.871 million PX common shares, or 14.96 percent.

Hasn’t anyone noticed any relation between Twin Rivers and First Pacific by the former’s use of “Pacific” in its corporate name?

If the public investors are interested to know how an Indonesian company is related to Philex, they should ask the officials of the Securities and Exchange Commission. If they don’t have any access to anyone among the regulators but have extra funds to spend to satisfy their curiosity, they can do their own research by going over the corporate files of Philex’s top 100 stockholders.

‘Large-scale’ mining

Through the PSE website, Philex defined for the public investors its mining activities by emphasizing that “PX and its subsidiaries are primarily engaged in large-scale exploration, development and utilization of mineral resources.”

Philex found mining for gold and silver and copper very profitable. Otherwise, it could have abandoned one site where it has been operating for more close to 60 years.

“The company,” Philex said, referring to itself, “operated the Padcal mine for the past 58 years using the underground block-cave method.” It described the site as “one of the oldest operating mines in the country and produces copper concentrates, containing copper, gold and silver.”

In addition to Padcal, Philex said “PGPI operated the Bulawan mine in Negros Occidental until the second quarter of 2002. Silangan Mindanao Exploration Inc, through SMMCI, owns the Silangan project covering the Boyongan and Bayugo deposits in Surigao.”

PGPI, of course, is a Philex subsidiary but, unlike the parent, is not a listed company.

No board seat for public

In a public ownership report (POR), Philex attributed to public stockholders their ownership of 1.649 billion PX common shares, or 33.37 percent of 4.94 billion outstanding PX common shares. As significant stockholders, they should have elected at least three directors to Philex’s 11-person board.

Do Philex and its majority owners recognize the right of public stockholders to board membership?

Like other listed companies, Philex religiously reports the ownership of its public stockholders through PORs. If it does this, why does it deny its public stockholders a directorship? Does First Pacific play a role in the selection and appointment of nominees to the board, including independent directors?

By the way, the public investors, who trade on listed stocks, are also indirect stockholders of Philex if they are members of the Social Security System (SSS). As a significant stockholder, SSS is No. 2 on the list of Philex’s’s top 100 stockholders with 999.354 million PX common shares, or 20.23 percent.

At PX common shares’ last traded price of P9.38 per share, SSS can boast of a paper wealth of more than P9.327 billion. What a huge wealth that the public stockholders can never own!


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