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Philex Earnings Grow in Q1

by Philippine Resources - May 03, 2021

Philex Mining Corp.'s first-quarter earnings were boosted dramatically by the gold and copper prices, as the group became more optimistic about the mining industry after the government ended a nine-year-old ban on new mining investments.

In the first three months of this year, the Pangilinan-led firm's net income was P559.6 million, more than five times higher than a year before, the company told the stock exchange.

Philex shares were up 5.83 percent as of 10:55 a.m. on the last trading day of the week, indicating that investors were pleased with the news. Despite the disturbances caused by the coronavirus pandemic, the company attributed its strong financial results to "higher operating profits resulting from higher gold and copper prices."

“The higher prices of gold and copper helped the Company maintain its uninterrupted operations despite the challenges brought about by the pandemic,” Eulalio Austin Jr., company president and chief executive, said in a statement.

“God willing, the favorable gold and copper prices will continue up to the end of the year, as the pandemic is still with us and many more challenges may lie ahead,” Austin added.

According to Philex's data, realized gold prices increased by an annualized 11% to $1,781 per ounce on average from January to March, while realized copper prices remained stable at $3.95 per pound, up 68 percent year-over-year.

As a result, gross operating sales, excluding smelting costs, increased 38 percent year over year to P2.3 billion in the fourth quarter. Philex claimed to have produced 13,413 ounces of gold and 6.770 million pounds of copper during those three months.

Expenditures, on the other hand, remained within reasonable bounds. From January to March, the firm announced a 6% increase in operational costs and expenditures to P1.6 billion, owing to “higher tonnage milled.”

President Rodrigo Duterte's executive order, which lifted his predecessor's moratorium on new mining deals, would "undoubtedly establish a favorable environment for the mining industry," Philex said. The group is hoping that the drive to liberalize the mining industry would help it expand its Silangan mine, a large-scale high-grade copper-gold project in Surigao del Norte that has had difficulty attracting investors because of the pandemic.

“We are here not just to survive, but to thrive,” Manuel Pangilinan, company chairman, said.

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Philex Still Searching for Strategic Partners

In the development of the Silangan copper and gold project in Surigao del Norte, Philex Mining Corporation has continued its search for strategic partners, saying that it is currently in discussion with potential investors. “We are closely working with our financial advisors in the search for a strategic partner and this includes several major Chinese mining companies,” Philex said. Philex president and CEO Eulalio Austin earlier said that Morgan Stanley is helping the firm with its search.  However, searching for the right investors has proved to be challenging as the firm earlier targeted to raise at least $350 million by the first half of 2020, which was to be raised as equity, and the balance of $400 million through loans. “The pandemic has slowed down global M&A (merger and acquisition) transactions and the investors for Silangan project is no exception,” Philex said. In December, the Department of Environment and Natural Resources (DENR) has renewed its mineral production sharing agreement (MPSA) - which covers another 25 years of its wholly-owned subsidiary, Silangan Mindanao Mining Co. Inc., the operator of the $750-million Silangan copper and gold project. Austin said that the firm is working closely with the financial advisor to bring Silangan into operation and to also optimize its Padcal mine. The firm also added that with the recent trend in costs, the long-erm prospective for copper and gold has also tremendously increased the interest of global investors in the Silagan project.  Philex noted that its core net income jumped from P156 million in 2019 to P1.16 billion in 2020. The costs of gold were at the highest in the third quarter, which has reached $1,915 per ounce, and copper was at $3.43 per pound in December 2020. Operating revenues went from P6.79 billion to P7.8 billion.  In the first and third quarter of 2020, tonnage milled at an average of 1.985 million tons per quarter. In the fourth quarter, this decreased to 1.881 million tons because of the impact of COVID. In spite of this, the production of gold went up to 56,000 ounces, and also produced 26.38 million pounds of copper. In total, Philex produced 56,000 ounces of gold and 26.379 million pounds of copper. 

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