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Philex core net income jumps 116% to Php1.865 billion in three quarters

by Philippine Resources - October 31, 2021

Photo credit: Redjie Melvic Cawis

Despite the challenges posed by the Covid-19 pandemic, production and favorable metal prices for gold and copper have been sustained since 1Q2021. As a result, the Management and the Board of Directors of Philex Mining Corporation recently announced that the Company generated another quarter of positive results. Philex recorded a Core Net Income of Php716 million for the quarter, higher by 55% than the same period in 3Q2020, mainly due to higher copper prices, favorable foreign exchange rates and managed operating expenses. The 3Q2021 Core Net Income of Php716 million rides on the positive and upward profit trend from the Php540 million achieved in 1Q2021 and the Php610 million posted in 2Q2021. This brings the 9M2021 core net income to Php1.865 billion, higher by 116% over the same period of 9M2020, attributable to favorable metal prices, sustained metal output and efficient deployment of operating costs and expenses.

On the other hand, 3Q2021 EBITDA at Php1.168 billion continue to maintain the positive trend during the first two quarters EBITDA of Php2.027 billion, to top up 9M2021 EBITDA to Php3.194 billion, a 57% rise from the same period 9M2020.

Reported net income for 3Q2021 is Php721 million, a 46% increase over the same period 3Q2020, while 9M2021 Reported net income reached Php1.880 billion, a 105% increase from 9M2020.

Production and Revenues

The Company generated higher tonnage in the third quarter of the year. For 3Q2021, total tonnage milled was at 2.006 million tonnes slightly higher compared to 1.985 million tonnes in 3Q2020 and 1.943 million tonnes of 2Q2021.

Philex produced slightly lower gold output at 14,270 ounces in 3Q2021 when compared to 3Q2020 due to lower gold grades while the slightly higher copper grades produced higher copper output at 6.54 million pounds, which mitigated the impact to the total revenues.

The Company was able to maintain a positive trend in metal output since 1Q2021 for both gold and copper mainly due to the resilient execution of the mining plan that resulted to better blended metal grades and sustained level of metal output.

The favorable prices for both gold and copper attributed to the higher revenues for 3Q2021 at Php2.656 billion, a 13% increase over the revenues of the same period of 3Q2020 at Php2.350 billion. The favorable foreign exchange rate contributed to higher revenues in 3Q2021. For the 9M2021 period, revenues at Php7.742 billion was higher by 22% from revenues of 9M2020 at Php6.332 billion. This is attributable to the significant increase in the realized price of copper since 3Q2020 resulting into a higher contribution of revenues from copper at 52% of total revenues for 9M2021 from 40% of total revenues for 9M2020. On the other hand, revenues contribution from gold declined from 59% in 9M2020 to 47% in 9M2021 mainly due to the slightly lower gold output, from 43,136 ounces in 9M2020 to 41,295 ounces in 9M2021.

Operating Costs and Expenses

The Company’s operating cost and expenses for 3Q2021 stood at Php1.603 billion, higher than 3Q2020 of Php1.582 billion. The slight increase is consistent with the slightly higher tonnage milled in 3Q2021 versus 3Q2020. Materials and supplies usage at Php454 million accounting for 28% of operating cost remained almost the same level. Power costs, accounting for 18% of operating cost, was higher at Php290 million, an of 7% when compared to 3Q2020. Overall, the Company continue to manage operating cost efficiently.

For the 9M2021, operating cost inched up by 3% to Php4.843 billion from Php4.686 billion in 9M2020 as a result of higher power and labor costs from higher tonnage milled, and higher excise taxes attributed to the higher total revenues. For the nine months period ended September 30,2021, the Company recorded its share in the net losses of its associates amounting to Php510 million, inclusive of the Company’s share in the PXP Energy Corporation provision for impairment of assets and goodwill related to Peru block Z-38, net of proceeds from the settlement agreement with third party. As a result of the extension of the Padcal mine life from December 31,2022 to December 31,2024, the Company recognized a net reversal of the previously recorded impairment provision in its mining assets amounting to Php374 million.

Positive outlook and extension of Padcal life of mine

By itself, 3Q2021 ushered in a more stable and continuing positive outlook for the mining industry, brought about by significant developments in the previous quarter. In April 14, President Rodrigo Roa Duterte issued Executive Order No. 130 which amended Section 4 of Executive Order No. 79 and lifted the moratorium on mineral agreements that had been existing for the past 9 years. This will pave the way for the development of stalled mining projects, leading to renewed investor’s interest in our Silangan Project.

The Company is currently exploring options on viable financial packages that would bankroll a phased development approach (In Phase Development) of Silangan.

The extended Life of Mine from December, 2022 to December, 2024 will ensure the continuous employment of 1,831 Padcal employees and support the social development of the Host Local Government Units (LGU) and neighboring communities especially in this time of COVID- 19 Pandemic. It will also give more time for the Company to bring the Silangan Project to development and commissioning stages.

“In response to this global trend of strong demand and strong metal prices, as well as responding to the Government challenge for the revitalization of the mining industry, Philex will keep improving on how we do things and undertake innovative initiatives related to the promotion of right and principled mining,” according to Eulalio B. Austin Jr., President and CEO. “The pursuit for excellence is a continuous journey and we have to keep raising the bar.”

“With higher metal prices and a better economic outlook for the mining industry moving forward, we can maintain the momentum of last year’s exemplary performance into this year, notwithstanding the pandemic and the challenges we have faced in our operations,” concluded M.V. Pangilinan, Chairman. “Time and again, the women and men of Philex have proven their resilience during tough times. With the extension of Padcal mine life for another two years, the prospect of a viable financial package for our Silangan project, and the rollout of our vaccination program for our employees and their dependents, it looks like the full year 2021 will produce excellent results for your Company.”

 

Article courtesy of the Philippine Stock Exchange


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