Philex Mining Posts 124% Increase in Core Net Income
Philex Mining Corp. (PSE: PX) has achieved a core net income of PhP4.151 billion for 2010, up 124% from the PhP1.85 billion in the previous year. Record price levels for gold and copper during the year raised the company’s revenue from the Padcal gold and copper mine. The favorable price levels combined with higher metal production resulting from record level of tonnage milled since 1990 enabled revenue to rise by 48% to PhP13.394 billion from last year’s PhP9.055 billion. This was achieved despite ore grades being slightly lower this year.
Reported net income similarly posted a record improvement, reaching PhP3.945 billion, higher by 44% from the PhP2.735 billion reported net income generated in 2009. Income in the second half of 2010 amounted to PhP2.98 billion, an increase of 309% over the same period in the previous year. In per share terms, core income per share stood at 84.45 centavos this year, up from 37.99 centavos a year ago, an increase of 122%. Reported income per share was correspondingly higher at 80.64 centavos from 58.15 centavos recorded in 2009, an increment of 39%.
Cash dividend of 16 centavos per share was declared. Record date for shareholders entitled to the dividend has been set for 10 March 2011. Payment date shall be 5 April 2011. Both core net income and reported net income for 2010 represented the second highest in the company’s history. Cash and cash equivalents as at year-end 2010 stood at PhP3.782 billion, up 31% over last year.
Operating revenue, on the other hand, reached a record PhP13.394 billion, an increase of 48% from PhP9.055 billion a year ago. Gold revenue rose by 41% to PhP7.209 billion, while copper revenue improved 53% to P5.721 billion. Revenue from gold contributed 54% of total, with copper accounting for 43% and the balance of 3% attributable to silver, coal, and petroleum. The contribution from petroleum (through Forum Energy) and coal has continued to improve but remains relatively small part of the Group’s revenue. The company continues to explore ways of developing this portion of the business and has continued with the exploration activities associated with SC 72.
Spot prices for gold and copper both reached record highs of $1,431 per ounce and $4.60 per pound, respectively. As of 22nd February 2011, gold price closed at $1,397 per ounce and copper at $4.31 per pound.
Income from operations increased 156% to PhP6.065 billion from PhP2.365 billion in 2009. Earnings before interest, tax, depreciation, and amortization (EBITDA) and before exceptional and nonrecurring items increased 58% to PhP6.566 billion this year from PhP4.159 billion last year.
“The record results in profitability, EBITDA, and revenue for the year are indeed gratifying,” said Manuel V. Pangilinan, Chairman and Chief Executive Officer of Philex. “Despite a slow start in the first half, the company boosted its performance across-the-board in the second half, producing a number of high numbers.” Ore milled in 2010 averaged 0.552 grams per tonne production, lower than the 0.567 grams per tonne average ore grade in 2009. Copper grade was 0.210% lower than the 0.228% average grade in 2009. With 14% higher tonnage of 9.364 million tonnes mined in 2010 from 8.197 million tonnes in 2009, concentrate production was 5% higher at 65,340 dry metric tons this year compared with 62,458 dry metric tons last year. Recovering from lower tonnage in the early part of the year, total tonnage milled for the whole year of 2010 actually reflects the highest level achieved in over 10 years of Padcal’s operation.
Accordingly, gold production rose to 133,516 ounces in 2010 from 119,171 ounces in 2009, up by 12%. Copper production similarly improved to 35.6 million pounds from 33.8 million pounds in the year, up 5%. The higher metal production benefited from the stronger realized prices of $1,217 per ounce gold and $3.63 per pound copper, up from $946 per ounce and $2.24 per pound a year ago (net of amortization of hedging costs of $68 per ounce and $0.14 per pound in 2010 and $44 per ounce and $0.29 per pound in 2009 of gold and copper, respectively).
Capital expenditures for this year on existing operations in Padcal and in the Zamboanga del Norte coal mine reached PhP1.398 billion compared with PhP1.48 billion last year. Exploration survey and drilling expenditures in 2010 for new mining projects amounted to PhP1.246 billion compared with PhP855 million in 2009, a significant increment of 46%.
With this year’s higher production volume, total operating costs and expenses rose by 10% from PhP6.013 billion in 2009 to PhP6.615 billion in 2010. On a per tonne mined basis, however, operating cost and expenses were lower at P686 per tonne this year compared with P700 per tonne last year. Expressed in per ounce gold produced and after deducting copper revenue as a by-product credit, operating cost per ounce of gold was lower by 77% at $92 in 2010 from $404 in 2009.
“Our robust performance in 2010 provides an excellent platform for Philex to search for new and interesting properties and commence the development of our Silangan gold and copper mine. Silangan is currently our principal and most mature exploration project, and it estimated to hold significantly more resources than what Padcal had when it started operations more than fifty (50) years ago. At the same time, we have already begun to do exploratory work in the areas surrounding Padcal. As well, steps are being taken to optimize Padcal’s existing operations such that mine life can possibly be extended beyond 2017. Capital expenditures for existing operations and exploration expenditures for new projects are likely to rise in 2011 and beyond. But with gold and copper prices remaining high at the start of 2011 – higher than those we realized in 2010 – we are cautiously optimistic about prospects for the new year,” Pangilinan concluded.
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