Photo: Underground Workers haul ore at an underground rock-breaking site of the Padcal operation of Philex Mining Corp. - Photo by Ev Espiritu
Philex Mining Corporation, one of the oldest and largest gold and copper producers in Southeast Asia, and a leader in right and principled mining, generated Php388 million Core Net Income and EBITDA of Php635 million for 1Q2023 against the backdrop of favorable gold prices and foreign exchange rates that kept them within safe margins as a continuation from the previous year. However, lower metal output held back these positive trends.
The production level in 1Q2023 realized operating revenues of Php2.105 billion, lower than the Php2.528 billion for the same period in 2022. Gold prices in first quarter were higher at US$1,889 per ounce while copper was slightly lower at US$4.00 per pound. Operating costs were slightly lower than 1Q2022 at Php1.636 billion.
PRODUCTION
Tonnage milled for 1Q2023 was 6% lower at 1.706 million tonnes from 1.822 million tonnes in 1Q2022 as the Company continues to address issues with the grinding equipment at the mill plant. The requested replacement parts have already been ordered. Ore grades for Gold and Copper continue to hold to the same levels as in 1Q2022. Gold output for 1Q2023 was 17% lower at 10,062 ounces versus 12,097 ounces in 1Q2022. On the other hand, Copper output for 1Q2023 was 11% lower at 5.531 million pounds versus 6.181 million pounds in 1Q2022.
OPERATING EXPENSES AND EBITDA
Total operating costs and expenses for 1Q2023 stood at Php1.636 billion, at a similar level for the same period in 1Q2022 at Php1.655 billion. The increases in the purchase costs of the materials 3 and supplies as well as equipment parts and repairs were offset by the continued implementation of the efficiency measures in operations. Higher power rates increased operating costs and expenses despite lower production level. EBITDA generated for 1Q2023 reached Php635 million, or 46% lower than the Php1.182 billion in 1Q2022.
OUTLOOK AND THE SILANGAN PROJECT
The current global commodity outlook has turned bullish for Gold – in the face of geopolitical risks, recession and economic uncertainty – but bearish for Copper, in spite of the latter’s foreseen surge in demand due to its use in green technology. Price levels though were sustained within safe margins, has provided the Company with the breathing space to pursue its recovery program and much-needed repairs on its ageing equipment.
Development works on the Silangan Project in Surigao del Norte are currently underway and are on schedule with completion of the construction of the east decline portal towards the end of the 1Q2023. Final preparations for the commencement of the development of the tunnel is on-going with the arrival of tunnelling equipment and accessories. Tunnelling works will commence in May 2023.
The Company will likewise continue with its funding plan for Silangan commenced last year with the Stock Rights Offering. This involves a debt syndication effort and fresh capital infusion from the Company’s cash reserves. The Company is in the final stages of the debt syndication process with several financial institutions.
“We will continue to push the frontier of the Silangan development, pursue improvements towards our recovery program and sustain the extension of the life of our Padcal mine,” according to Philex President and CEO Eulalio B. Austin, Jr. “Resilience is still the name of the game as we look for other business opportunities and for more participation in the ‘green metals space’. Time and again, the Company and its people have shown that they were able to withstand the challenges of the times with much fortitude, and this year won’t be any different.”
