Philex copper, gold output declined in Q1

PHILEX Mining Corp. said its gold and copper output in the first quarter fell by 20 percent and nearly 9 percent, respectively, despite a 10-percent hike in total milling tonnage.

The company, led by businessman Manuel V. Pangilinan, said the decline in production slashed its net income in the January-to-March period by nearly 30 percent.

In its disclosure to the local bourse on Thursday, the miner attributed the cut in its metal production to “[lower] ore grade, lower recoveries and equipment repairs.”

Output declined despite the expansion of total milling tonnage by 10 percent to 2.2 million metric tons, from 2 MMT a year ago.

“This was achieved as production-related issues, such as bouldery ore, manpower shortage and ground conditions, were generally addressed during the course of 2017,” the
company said.

Philex said its total gold output in the three-month period sank by 20.06 percent to 17,947 ounces, from 22,451 ounces recorded in the same period last year. The company said its average gold ore grade reached 0.329 grams per metric ton, 21.85 percent lower than the 0.209 grams per MT recorded a year ago. Its metal recovery fell to 79 percent from 84 percent recorded last year.

“Revenue from gold, on the other hand, amounted to P1.237 billion [from last year’s P1.426 billion] as higher average gold prices, which reached $1,338 per ounce [from last year’s $1,264 per ounce], partially offset the impact of lower output,” the company said.

The miner said its copper production in the first three months of the year reached 7.1 million pounds, 8.97 percent lower than the 7.8 million pounds recorded a year ago.

The miner added that its average copper ore grade went down by 11.48 percent to 0.185 percent, from 0.209 percent last year. Its copper metal recovery declined to 79 percent, from 84 percent a year ago.

“However, with realized copper prices averaging $3.10 per pound during the period [from last year’s $2.77 per pound], revenue from copper totaled P1.117 billion [from last year’s P1.094 billion], despite lower copper production,” it said.

Philex said its total revenue from silver production in the first quarter declined by 14.15 percent to P18.8 million, from the P21.9 million recorded a year ago. This brings the company’s consolidated operating revenues during the period to P2.373 billion, 6.65 percent lower than the P2.542 billion recorded amount in the first quarter of 2017.

Philex said it was able to reduce its cash costs and expenses by 2.12 percent to P1.288 billion, from P1.316 billion, as production costs during the period slid to P1.064 billion, from P1.112 billion recorded a year ago. This was attributed to “lower cost of power and raw material expenses.”

The miner said its general and administrative expenses also declined by 13.02 percent to P81.5 million, from P93.7 million “as the company continued to prudently manage its resources.”

However, the company said it suffered from higher depletion and depreciation charges, as well as higher excise taxes “due to the effectivity of the 100-percent increase in excise tax rates under the Tax Reform for Acceleration and Inclusion law Package 1.”

Philex said its depletion and depreciation charges rose by 16.27 percent to P408.8 million, while excise taxes went up by 29.38 percent to P143.1 million. These boosted the miner’s consolidated operating costs and expenses to P1.697 billion, 1.74 percent higher than the P1.668 billion amount recorded a year ago. As a result, Philex said, its net income in the first quarter sank by 29.95 percent to P302.8 million, from the
previous year’s P432.3 million.

“The results of the first three months of the year reveal the challenges for Padcal as it mines the fringes of its current ore body. This makes achieving an extension to mine life imperative to sustain operations and continue our commitment to our stakeholders,” Eulalio B. Austin Jr., Philex president and CEO said in a statement.

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