Business

Depressed Metal Prices Weigh Down Philex Mining 1H 2015 Net Income

Manila—(PHStocks)—Philex Mining Corp. (PSE: PX) has announced that its first half 2015 financial and operating performance delivered a net income of PhP565 million, 6 percent lower than 2014’s PhP600 million, as global metal prices continued to slump.

Net income attributable to equity holders of the parent company was at PhP607 million (1H2014: PhP627 million) while core net income amounted to PhP520 million (1H2014: PhP559 million).

Production and revenues

Padcal mine operated for 178 days in the first six months of 2015 and milled 4.47 million tonnes of ore. The tonnage translated to 53,689 ounces of gold produced (1H2014: 52,286 ounces) as grades improved to 0.442 grams/tonne (g/t) (1H2014: 0.436 g/t). Meanwhile, copper output reached 16.9 million pounds (1H2014: 18.2 million pounds) with copper grades slightly lower at 0.206% (1H2014: 0.218%).

These resulted in revenues of PhP2.894 billion for gold (1H2014: PhP3.088 billion) and PhP1.870 billion for copper (1H2014: PhP2.453 billion) as average realized prices for gold were lower by 11 percent at $1,190 per ounce (1H2014: $1,341 per ounce) and while copper prices were lower by 16 percent at $2.61 per pound (1H2014: $3.09 per pound). These price levels were the lowest recorded in the last five years.

Revenues from petroleum and other sources, which were affected by lower output and volatility in world crude prices, fell to PhP83.5 million (1H2014: PhP197.8 million) while revenues from silver amounted PhP37.6 million (1H2014: PhP43 million).

Total consolidated revenues for the period amounted to PhP4.886 billion (1H2014: PhP5.782 billion).

Costs and expenses

As the external environment remained extremely challenging, the Company remained relentless in managing its costs and reducing expenses across all fronts. As a result, consolidated operating cost and expenses in the first half of 2015 were 17 percent lower year-on-year at PhP3.728 billion (1H2014: P4.468 billion). Specifically, cash production costs went down 14 percent to PhP2.335 billion (1H2014: PhP2.706 billion) while general and administrative expenses decreased 33 percent to PhP363.8 million (1H2014: PhP540 million).

This translated to an improved EBITDA margin of 34 percent (1H2014: 33 percent), with operating margin maintained at 17 percent (1H2014: 17 percent).

Net other income amounted to PhP62.5 million in 1H2015 and reversed the PhP62.3 million in net other charges reported in 1H2014. In particular, net interest charges were reduced to PhP8.3 million compared with PhP153.4 million in the same period last year, attributed to the company’s debt curtailment strategy started late last year.

As of end-June 2015, Parent Company short-term loans amounted to PhP3.630 billion from PhP4.308 billion as of end-December 2014.

Outlook

“As we navigate through the turbulent global developments, we remain focused on maximizing our operating mine and at the same time setting our sights on the development of the Silangan project. Right now, we are benefitting from our cost-containment measures and are confident that the results of these initiatives will be more pronounced in the longer term,” Philex President and CEO Eulalio B. Austin Jr. said.

Yulo E. Perez, President of Silangan Mindanao and Mining Co., Inc. (SMMCI), for his part said, “the Silangan project is progressing, with the necessary permits and documentation being secured to enable the team to proceed with the next critical steps under SMMCI’s early works program.”

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