Philex Mining reports sharp decline in H1 net incomeBy Amy R. Remo
Philippine Daily Inquirer
MANILA, Philippines—Philex Mining Corp., the country’s largest gold and copper producer, suffered a 26-percent decline in its core net income in the first half of 2012, netting P2.1 billion compared with P2.84 billion a year ago, due mainly to lower gold output.
In a disclosure to the Philippine Stock Exchange, Philex explained that gold production from its Padcal mine during the first six months of 2012 fell by 19 percent to 58,681 ounces from 72,784 ounces in the first half of last year because of lower-grade ore.
“The lower gold output resulted from our lower grade ore. But starting June, we are beginning to see some recovery in grade and total output. We expect gold production volume to be better this second half, but it will nonetheless be slightly lower in volume terms compared with last year. Copper volume should be maintained at levels with that of last year,” said Philex Mining chairman Manuel V. Pangilinan.
Philex Mining disclosed that it had earlier entered into various metal and foreign currency hedging contracts in order to protect its future revenues from fluctuations in metal prices. This strategy allowed the company to realize higher gold prices and copper prices that were similar to last year’s levels, despite the softening global metal prices.
Realized gold and copper prices stood at $1,618 per ounce and $4.05 per pound, respectively, while prices of gold and copper in the global market as of end-June stood at a lower $1,599 per ounce and $3.45 per pound, respectively.
According to Philex Mining, it recorded an operating revenue of P7.472 billion in the first half, which was augmented by a net gain of P353.2 million from these metal and currency hedging contracts, comprising P401 million gained from copper, but partially offset by P50.1 million loss from gold.
“Our hedging position vis-à-vis gold and copper prices is excellent, and should help mitigate anticipated slightly lower gold output for the entire year,” Pangilinan said.
Revenue from gold and copper stood at P4.071 billion and P3.260 billion, respectively, from P4.401 billion and P3.318 billion a year earlier; while revenue from silver dropped to P67.7 million from P100.4 million for the same period due to lower prices.
Philex Mining posted earnings before interest, taxes, depreciation, and amortization (Ebitda) of P3.391 billion, a decline of 30 percent from P4.836 billion a year ago.
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