"Padcal produced lower gold output in the first half this year compared to last. This has result in a decline of our first semester revenues, which impacted our profits and EBITDA. However, gold grade realized and gold output have improved starting in June and continued in July as access to better gold grade has opened. A better gold output in the second half compared with the first half is expected," said Philex Mining Corporation President and Chief Operating Officer Eulalio Austin, Jr. "Copper production for the first six months is similar to that last year, as it will be for the balance of the year."
Production output amounted to 58,681 ounces of gold and 18,340,282 pounds of copper. Last year's production amounted to 72,784 ounces of gold and 18,661,406 pounds of copper at realized prices of US$1,398 per ounce and US$4.09 per pound.
Our hedging strategy mitigated the downward effect of softening metal prices with realized gold prices for the period of US$1,618 per ounce and copper prices at US$4.05 per pound. As of 30th June 2012, gold and copper prices stood at US$1,599 per ounce and US$3.45 per pound, respectively.
Philex Mining has entered into various metal and foreign currency hedging contracts in order to protect its future revenues from fluctuations in metal prices. Operating revenue for the first half was augmented by the net gain of P353.2 million from metal and currency hedging contracts, comprising P401 million gained from copper, but partially offset by P50.1 million loss from gold.
The company's unaudited financial statements show a consolidated Core Net Income of P2.109 billion and Reported Net Income of P2.036 billion between January and June 2012, falling 26% from P2.836 billion and 37% from P3.219 billion, respectively, during the same period last year.
Operating revenue, meanwhile, amounted to P7.472 billion from January to June, making it the company's second-highest operating revenue for a first-half period, the highest being last year's P8.150 billion. Revenue from gold and copper were at P4.071 billion and P3.260 billion, respectively, from P4.401 billion and P3.318 billion a year earlier; revenue from silver dropped to P67.7 million from P100.4 million for the same period due to lower prices.
The company noted that, along with the decrease in gold production volume for the same period, marketing charges declined by 12% to P360.6 million from P409.7 million.
However, costs and expenses climbed 17% to P4.051 billion from P3.455 billion mainly due to higher power rates, resulting in Income from Operations of P3.060 billion, or 29% lower than P4.286 billion.
For the first six months of the year, the company also posted earnings before interest taxes, depreciation, and amortization (EBITDA) of P3.391 billion, a decline of 30% from P4.836 billion a year ago.
Philex Mining's revenue from its petroleum business decreased to P57.8 million during the first six months from P328.9 million a year earlier, owing to lower income by Forum Energy Plc from the Galoc oil field, which temporarily suspended production form its operations off Palawan from November 2011 to March 2012 to allow upgrading of its Floating Production, Storage and Offloading vessel. Forum Energy is a 60.5% controlled subsidiary of Philex Petroleum Corporation.
Revenue from coal rose, however to P15.7 million, owing to the sale of 4,900 tons of coal from January to June, by Brixton Energy and Mining Corporation, wholly-owned subsidiary of Philex Petroleum. This compares with revenue of P1.3 million representing 462 tons of coal sold a year ago.
"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 will nonetheless be slightly lower in volume terms compared with last year. Copper volume should be maintained at levels with that of last year. Our hedging position vis-a-vis gold and copper prices is excellent, and should help mitigate anticipated slightly lower gold output for the entire year," concluded Manuel V. Pangilinan, Philex Chairman.
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