Mandaluyong—(PHStocks)—The Board of Directors of Philex Mining Corp. (PSE: PX) has announced that the company generated a core net income of PhP1.657 billion, 83 percent higher than the previous year’s PhP905 million. In the same manner, reported net income more than doubled to PhP1.567 billion (FY2015: PhP776 million) with net income attributable to equity holders of the parent company growing 77 percent to PhP1.589 billion (FY2015: PhP896 million).
FINANCIAL AND OPERATING RESULTS
The FY2016 performance was attributed to better copper output, higher metal prices and favorable exchange rates. Last year’s copper concentrate production of 73,107 dry metric tons (DMT) was the highest recorded since 2008, which was generally attributed to operational improvements. Meanwhile, foreign exchange rates averaged PhP47.80/$1 in 2016 against PhP45.31/$1 the previous year.
Padcal mine operated for 362 days during the period (FY2015: 358 days) and milled 9.4 million tonnes of ore (FY2015: 9.2 million tonnes). The tonnage translated to 35.0 million pounds of copper produced, which was 3 percent more than the previous year’s 34.1 million pounds as copper grades improved to 0.206% (FY2015: 0.205%).
Gold production, on the other hand, reached 103,304 ounces (FY2015: 107,887 ounces) due to lower grades of 0.417 grams/tonne (g/t) (FY2015: 0.438 g/t) and metal recovery as higher-grade content in the current drawpoints gets depleted.
Revenues for 2016 increased 12 percent to P10.272 billion (FY2015: P9.189 billion), with copper accounting for P3.976 billion (FY2015: P3.450 billion) and gold contributing P6.209 billion (FY2015: 5.670 billion) – both higher than the previous year’s levels by 15 and 10 percent, respectively. Revenues from silver amounted to P86.5 million (FY2015: P69.7 million), which was 24% higher from year-ago levels.
The performance was attributed to improved average metal prices during the year. The average realized price for copper was 3 percent higher at $2.35 per pound (FY2015: $2.29 per pound), which complemented the increase in copper output. The average gold price, on the other hand, was 9 percent higher at $1,254 per ounce (FY2015: $1,147 per ounce), which more than offset the lower gold output.
Costs, Expenses and Debt
Despite the 2 percent increase in tonnage, the Company continued to vigilantly manage its costs and expenses, resulting in a 2 percent reduction in consolidated costs and expenses to PhP6.900 billion (FY2015: PhP7.011 billion), with general and administrative expenses (GAE) declining another 10 percent to PhP373 million (FY2015: P414 million). From 2013-2016, GAE declined by an average of 9 percent annually as a result of the Company’s relentless pursuit to constantly improve operational efficiency through innovation, cost rationalization and manpower development.
Meanwhile, the company repaid a total of $8.5 million in debt during the period, which brought total short-term debt to $62.0 million (PhP3.083 billion) as of end-December 2016, from $70.5 million (PhP3.318 billion) as of end-December 2015.
Based on the 2016 results, the Company also declared cash dividends of four centavos per share (PhP0.04/share) to shareholders on record as of March 14, 2017, which will be payable on March 27, 2017.
The Silangan project’s Definitive Feasibility Study (DFS) is expected to be completed soon and despite the current uncertain regulatory environment, the Company’s wholly-owned subsidiary, Silangan Mindanao Mining Co., Inc. (SMMCI) will be able to proceed to the next stages of project development.
“Contrary to media pronouncements, we are confident that Silangan’s MPSA is valid and legal because it is not within any proclaimed watershed forest reserves or critical watersheds, where mining is prohibited, and was issued following all relevant legal requirements and procedures, including regulatory clearance, that the area covered by the MPSA is open to mining and DENR took its action and made its announcement with no legal basis whatsoever,” said SMMCI President Yulo E. Perez.
PARTNER FOR DEVELOPMENT
“Specifically, we contributed PhP117 million to our Social Development Management Program (SDMP) in 2016, which was 7 percent more than what we laid out in 2015. Since 2011, we have funded PhP454 million for our SDMP projects to further our goal of financial inclusion and social progress within our areas of operation. In addition, we contributed PhP447 million to our Environmental Protection and Enhancement Program (EPEP) initiatives last year, which included the reforestation of 52 hectares of new areas, maintenance of 150 hectares of existing plantations, care over 75 hectares of agro-forestry land and planting of around 180,000 new seedlings of various species in upland and coastal areas across the different areas where we are present. This brought our total outlays to PhP2.158 billion from 2011-16 to ensure that the natural surroundings around our areas of operations are maintained and restored,” said Eulalio B. Austin, Jr. President and CEO of Philex Mining.
In an earlier statement, PX said, “The company and its subsidiaries are strong partners of the government in protecting the environment and in its fight against poverty and unemployment.”
On top of the EPEP and SDMP expenses, the company paid PhP1.35 billion in taxes, which funds national and local government projects. “We constantly look for ways to improve our operational platform, organizational framework, governance structure, and compliance level to enable us to achieve long-term sustainability and consistently pursue our objective of being a responsible and conscientious mineral resource development company, amid the turmoil in the local mining industry,” added Austin.
In 2016, the company paid a total of PhP1.914 billion in taxes, royalties, SDMP, EPEP and other fees to the national and local governments and the surrounding communities, which was 22% higher than the reported net income for the period.