Philex plans P1-B mine expansion

Philex Mining Corp. is planning to spend P1 billion for the extension of its Padcal copper-gold mining operations in Tuba, Benguet.

"We intend to extend the mine life of Padcal by a minimum of three years after the programmed mine life expires by 2011," said Philex president and chief operating officer J. Ernesto G. Villaluna.

Villaluna said Philex is still studying the possibility of stretching the Padcal mine life to take advantage of high metal prices in the global market.

Market analysts have predicted gold prices to hit $800 per ounce by the end of the year. In recent months, it has breached the $600 per pounce level due to concerns about supply amidst increasing demand for emerging economic powerhouses India and China.

"We will firm up our plans in a couple of months but all this will depend on the behaviour of metal prices. If current prices are sustained, it will certainly encourage us to pursue extending the mine life of Padcal," said Villaluna.

In the first quarter, improved metal prices and larger volume sales allowed Philex to post a consolidated net income of P574.489 million in the first quarter, 337 percent higher or almost five times its net of P120.379 million during the same period last year.

Philex said the company’s first quarter operating revenue went up P2.1 billion from P1.2 billion in the previous year.

The mining firm attributed the increase in its operating revenue to increased concentrate shipments to 20,082 metric tons (MT) that contained 9.4 million pounds of copper and 25,425 ounces of gold, up from 19,427 MT containing 9.3 million pounds of copper and 20,741 ounces of gold shipped in the previous quarter.

Favorable metal prices also bolstered the company’s bottomline with metal prices averaging $1.49 per pound for copper and realized metal prices at $405 per ounce of gold.

At the same time, income from operations for the quarter amounted to P671 million, a significant improvement from the previous quarter and the whole year’s operating income of P75.3 million and P136.3 million, respectively.

The company said the improvement in operating income was augmented by other income from the stronger peso pegged at P51.28 to $1 in 2006 from P53.09 to $1 in 2005. This resulted in net foreign exchange gain of P82.4 million in the first quarter compared to P58 million in 2005 from its dollar denominated loans.

The company operates the Padcal mines in Tuba, Benguet.

With gold prices currently above $600 per ounce, the company expects to further boost its net income in the coming months. The price of copper is also at an all-time high of about $2.60 per pound.