Weak peso, copper revenue boost Philex’s income in 2017

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PHILEX Mining Corp., the country’s biggest gold producer, pointed to copper as the driver of its growth last year as revenue and most output of ores it mine declined last year. The company, led by businessman Manuel V. Pangilinan, was also apparently saved by a weak peso.

In its disclosure on Wednesday to the local bourse, Philex said its gold production in 2017 reached 84,638 ounces, 18.07 percent lower than the 103,304 ounces registered volume in 2016.

Meanwhile, its total copper output last year fell by 14 percent to 30.1 million pounds, from 2016 recorded output of 35 million pounds.

The company attributed the decline in its metal output to lower ore grades mined and other production-related issues, as its total tonnage in 2017 fell by 7.32 percent year-on-year to 8.673 million metric tons.

The firm said average ore grade mined last year fell to 0.377 gram per metric ton for gold, from 0.417 gram per MT in 2016, while copper grade declined slightly to 0.192 percent from 0.206 percent.

“While overall output was lower for the year, the last four months of 2017 showed a 15-percent improvement in tonnage compared with the average in the first eight months due to engineering interventions and additional manpower,” Philex said in a statement. “These measures partially addressed the issues that affected production from January to August 2017.”

Despite the lower metal output, its total revenue from copper last year reached P4.475 billion, 12.55 percent higher than the P3.976 billion recorded in 2016.

Meanwhile, its gold revenue declined by 12.51 percent to P5.432 billion, from P6.209 billion recorded in 2016, despite better global prices. Philex said its revenues from silver production also posted a 10.75-percent decline to P77.2 million.

Total operating revenue last year amounted to P9.985 billion, which is 2.79 percent lower than the P10.272 billion in 2016, according to Philex.

Philex said it was able to see a reduction in consolidated costs and expenses in 2017 by 1.76 percent to P6.778 billion, from P6.9 billion recorded in 2016.

“In particular, cash production costs were P4.412 billion, from P4.614 billion in 2016, as the cost of power, contracts and other expenses showed a combined 16-percent reduction to P1.708 billion,” Philex said. In 2016 the cost of power, contracts and other expenses hit P2.041 billion.

Meanwhile, Philex said its general and administrative expenses decreased for the fourth straight year to P363 million, 2.68 percent lower than the P373 million spent in 2016, “due to sustained spend management and cost-rationalization programs.”

The firm’s foreign-exchange losses due to the depreciation of Philippine peso against the greenback narrowed to P39.5 million, from P145.2 million in 2016.

“As a result, reported net income improved by 6 percent to P1.658 billion, while core net income rose by 2 percent to P1.686 billion due mainly to lower cash costs and other charges,” Philex said.

In 2016 Philex reported a net income of P1.567 billion, while core net income that year was at P1.657 billion.

“With 2017’s financial performance, the company sustained the increase in net income for the fifth consecutive year since 2012, amid volatile metal prices and a challenging regulatory environment,” Philex added. 

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