Lepanto incurs P137-M loss in Q2

Lepanto Consolidated Mining Co. incurred a net loss of P136.68 million in the second quarter this year, a reversal of the P19.64-million profit a year earlier, mainly due to lower gold production, aggravated by a labor strike in early June and increasing finance cost.

On a year-to-date basis, Lepanto reported a consolidated net loss of P179.74 million as against a net income of P76.84 million a year ago. This was attributed to lower sales and the settlement of gold hedging losses amounting to P67 million.

Lepanto’s consolidated sales reached P337.62 million in the second quarter, 43.77 percent lower than the year earlier figure of P600.4 million. This brings year-to-date sales to P760.18 million, down by 37.17 percent from P1.21 billion last year.

Gold sales fell to 30,760 ounces compared with 51,387 ounces the previous year, largely due to lower tonnage and metal gold grade.

From an operating income of P91.73 million in the second quarter, Lepanto incurred a loss from operations of P37.76 million. For the first half of the year, operating loss reached P46.5 million compared with an operating income of P207.63 million the previous year.

Loss per share thus amounted to P0.00843 from an earnings per share of P0.00360.

Lepanto said finance cost also went up 5.07 percent to P131.02 million from P124.7 million. This was due to a slight increase in the rates of some lender banks.

However, long-term debt decreased to P1.23 billion brought about by settlements made during the quarter and the transfer of maturing debts to the current position. Lepanto said its losses might increase to P306 million by yearend. This is on account of the reduction of P136 million in hedging loss and an impairment loss provision of P17 million on a roaster plant.

Lepanto said it has yet to fully settle its hedged position with NM Rothschild & Sons (Australia) Ltd. and Dresdner Kleinwort Wasserstein covering a total of 169,043 ounces of gold. It continues discussions with the banks for the restructuring of the hedged position.

In accordance with the hedging facility, Lepanto entered into various forward sales contracts with the banks which provide for the selling or buying of gold in fixed quantities at certain fixed prices for delivery on various maturity dates in the future.