Philex core income up 46% to P2.31 billion in 9 months

MANILA, Philippines – Philex Mining Corp. said its core net income grew 46 percent in the first nine months of the year to P2.31 billion from P1.58 billion in the same period last year on the back of higher metal prices and increased revenue from petroleum.

In a disclosure to the Philippine Stock Exchange (PSE), Philex said its reported net income rose 21.4 percent to P2.115 billlion while revenues expanded by 27.3 percent to P8.63 billion.

In the third quarter alone, Philex posted a net income of P1.1 billion, exceeding its first half earnings and marks its fourth highest quarterly operating result in the past five years.

Philex said higher tonnage of ore milled, improved metal prices and increased revenue from petroleum offset lower ore grades at its Padcal gold and copper mine.

Core earnings per share rose to 46.98 centavos in the first nine months of the year from 32.48 centavos a year earlier. Reported EPS also went up by 14.1 percent to 43.29 centavos from 37.94 centavos a year earlier.

Consolidated revenues amounted to P8.63 billion in the period January to September this year, up 27.3 percent from the previous level of P6.78 billion as copper revenues climbed 33.3 percent to P3.76 billion. Gold revenues improved by 18.04 percent to P4.57 billion from P3.87 billion due to the significant rise in gold prices.

Consolidated revenues this year also included petroleum revenues of P198.7 million, an eight-fold increase from P24.2 million a year earlier, contributed by Forum Energy PLC (FEP), a 51.95 percent owned subsidiary. Revenues from coal amounted to P18.9 million, chipped in by wholly-owned unit Brixton Energy & Mining Corp. (BEMC), which is projected to commence commercial operations before the year ends.

Forum Energy’s revenues came primarily from its share of production from the Galoc oil field offshore northwest Palawan Island. Brixton Energy’s revenues were derived from the sale of its coal purchases.

“We are gratified that we have now been able to overcome the difficulties encountered in the previous quarters on production so much so that the third quarter revenue has posted the highest quarterly level so far in the past five years of the Company’s operations which were actually record years to date in its more than 50 years of operating history,” said Manuel V. Pangilinan, chairman of the board and chief executive officer of Philex.

In recent weeks, spot prices for both gold and copper have broken their previous record levels, reaching record high of $1,381 per ounce and $3.82 per pound, before settling to $1,344 per ounce and $3.74 per pound more recently.

Earnings before interest, tax, deductions and amortization before extraordinary and non-recurring items jumped by 50 percent to P3.91 billion from P2.61 billion a year before.

 “Barring unforeseen circumstances, we are confident that we will be able to keep the production level that we have achieved in this quarter up to the end of the year. We may continue to see good if not better ore grades as well,” said Jose Ernesto C. Villaluna Jr., president and chief operating officer of Philex.

Ore milled in the first nine months of 2010 had an average grade of 0.208 percent copper and 0.520 grams of gold per ton compared with 0.234 percent copper and 0.598 grams of gold per ton in 2009.

Philex benefitted from a stronger realized copper price per pound of $3.26 in the first nine months of 2010 compared with $2.19 the same period a year earlier.

“We have been diligent but very rigorous in looking for new properties and other investment opportunities. In the meantime, we are quite focused on getting the Silangan Project closer to completion of its pre-feasibility study by the first quarter of next year,” Pangilinan said.

The Silangan copper-gold mine in Surigao del Sur Province is estimated to hold significantly more resources than Philex’s Padcal Mine, which has been in operation for a little more than half a century.