Lepanto bares P409.5-M loss in 2005

Labor problems hounded Lepanto Consolidated Mining Co. last year, resulting in a net loss of P409.532 million in 2005 as the mining firm was constrained from increasing its minerals production.

In a disclosure to the Philippine Stock Exchange (PSE), Lepanto said its gold and silver sales dropped to P1.399 billion from P2.251 billion because of a four-month strike that hampered the company’s operations from June 2 to Sept. 11.

It said minerals milled decreased by 40 percent from 784,720 tons in 2004 to 471,710 tons in 2005 due to the mine strike, resulting in a five percent decrease in mill head grade. On the other hand, its ore extraction rate averaged 1,667 tons per day or 24 percent lower in 2004.

Due to these factors, Lepanto said it was forced to reduce gold production by 42 percent, and was unable to take advantage of the 10 percent increase in gold prices. Its gross revenue went down 38 percent to P852 million from P2.251 billion in the previous year.

Because of the 40 percent drop in tons processed, total production also went down by 10 percent to P1.705 billion, from P1.9 billion in 2004.

The company reported a retrenchment cost of P51 million and a P114-million impairment losses which were part of production costs in 2005.

Also, operating income plunged 186 percent to negative P304 million in 2005 from P352 million in the previous year.

Lepanto began its operations in 1936 and had been a major copper producer until it shut down in 1997. It then shifted to gold production through its Victoria Project. It now operates two mines, the Victoria and the Teresa projects, both in Mankayan, Benguet.

The company also runs three wholly-owned subsidiaries, Shipside Inc, Diamond Drilling Corp. and Lepanto Investment and Development Corp. (LIDC). Through LIDC, Lepanto owns 80 percent of Diamant Board Philippines Inc. and 60 percent of Far Southeast Gold Resources Inc. – Rocel Felix