Philex Jan-Sept profit plunges ‘only’ 53%

MANILA, Philippines – The financial impact of suspending operations at Philex Mining Corp.’s only working mine was “better than expected,” its parent firm reported late Tuesday, October 30.

Net income from January to September reached P2.03 billion, or 53% lower than the P4.35 billion earned in the first 9 months in 2011. Core income in the same period plunged 43% to P2.26 billion, according to First Pacific Co. Ltd.’s disclosure to the Hong Kong stock market.

The financial consequence of the closure of Padcal mine in Benguet following an almost one-month-long waste leakage at its tailings pond in August was felt in the July-to-September quarter.

Net losses during the quarter reached only P1.57 billion. Core net income actually was in the black at P153.2 million, largely due to the “hedging gain from the pre-termination of the Company’s outstanding hedge contracts,” First Pacific said.
 
These gains “mitigated the remediation expenses” poured into plugging the leak that spilled mine wastes to river systems that leads to San Roque River, which powers and irrigates parts of Luzon.

“Both financial and operating results for this quarter are better than what has been anticipated, given the unexpected setback in our Padcal operations. There were struggles, but I am pleased that the Company responded positively to the accident,” Philex chair and CEO Manuel V. Pangilinan said in the disclosure.

In a previous #TalkThursday interview, Pangilinan said the mine is set to remain shut until the end of 2012, resulting in a “severe and substantial” financial impact, which he said meant wiping over P2.5 billion off the firm’s 2012 profits.

“[We] had forecasted profits for this year of about P4 billion its likely to drop to something between P1.5 to P1.7 billion. It’s a significant decrease,” he said then.

Watch the interview below.

Philex is contesting the govenment’s over P1 billion fine imposed as a consequence of the mine spill. Philex is citing force majeure due to historically unprecedented heavy rains brought about by typhoons Ferdie and Gener.

The country’s biggest gold producer reported an all-time high net income of P5.77 billion in 2011, up 46% and driven by higher metal prices and production output.

Total ore milled at Padcal in the 3rd quarter reached only 880,808 dry metric tonnes (DMT), bringing total ore milled in the last 9 months to 5.54 million DMT, which was 21% lower than the 7.04 million tonnes of ore milled from January to September in 2011.

The mined ore produced 22.31 million pounds of copper, 71,297 ounces of gold, and 67,704 ounces of silver and resulted in operating revenues amounting to P9.11 billion in the first 9 months. Revenues for the quarter reached only P1.64 billion. – Rappler.com

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