Philex ends 2015 with higher income despite lower metal prices

MANILA, Philippines – Philex Mining Corporation, the country’s biggest gold producer, saw its net income surge by 10% in 2015, with tight expense management and cost reduction programs cushioning the impact of low metal prices.

Its board of directors told the Philippine Stock Exchange on Wednesday, February 24, that Philex’s 2015 operations delivered a net income of P776 million ($16.29 million), 10% higher than 2014’s P703 million ($14.76 million).

Its core net income, however, declined to P905 million ($19 million) last year, from 2014’s P1.12 billion ($23.52 million).

In 2015, the Padcal mine operated for 357 days compared to 2014’s 359 days and milled 9.2 million tonnes of ore from 2014’s 9.5 million tonnes.

This translated to 107,887 ounces of gold produced versus 2014’s 105,008 ounces.

“We continue to improve on our metal recovery rates as we implement a more strategic approach in sourcing ore from newly developed draw points, coupled with operational enhancements, judicious maintenance, and equipment upgrades,” Philex said in a statement.

But Philex’s total consolidated revenues for 2015 declined to P9.36 billion ($196.56 million), from 2014’s P10.90 billion ($228.80 million).

This was after its revenues from its metal, gold, and copper businesses recorded lowest points over the last 5 years.

Its energy and hydrocarbon business, meanwhile, suffered from lower output from the Galoc Phase II project and the continued weakness in average crude oil prices.

With pressure on metal prices, Philex Mining continues to manage costs and reduce expenses. 

As a result, consolidated operating cost and expenses in 2015 came in substantially lower at P7.32 billion ($153.64 million) from 2014’s P8.41 billion ($176.52 million).

Continued pressure on metal prices

“The recent modest improvement in gold prices is a welcome development, but the overall global economic environment remains volatile and will continue to put pressure on metal prices and the company’s revenue generation,” Philex president and CEO Eulalio Austin Jr said in the disclosure.

The Philex CEO said his company will continue to explore ways to contain the company’s costs and expenses without sacrificing output and efficiency. 

“Innovation on how we do things will always be our topmost priority. We shall also look for other means to augment the company’s revenue, such as disposal of non-core assets” Austin said.

Despite the challenging times, the Philex chief said his firm will continue improving operational efficiency, extending further Padcal’s life of mine and bringing the Silangan project into commercial operation. 

“In this regard, the company is pleased to announce the maiden Inferred Resource Estimate of 21.7 million metric tonnes for its Bumolo Project, confirming the potential we have been prospecting the past years. The preliminary Inferred Resource Estimate already exceeds our initial expectations and, as a result, we can look forward to additional years of exploration around the Padcal mine. The official report will be released in due time,” Austin said.

Meanwhile, Philex said the development of the Silangan project is progressing broadly as expected. 

“Most permits and licenses have been issued and the remainder has been covered by completed applications submitted to the relevant government agencies,” Silangan Mindanao and Mining Company, Incorporated president Yulo Perez said.

“While there has been some delay in the issuance of certain permits and licenses and approval of some components of the Definitive Feasibility Study (DFS), we are still targeting the DFS report to be completed within this year,” Perez said. – Rappler.com

$1 = P47.64