MANILA, Philippines - Philex Mining Corp., the country’s largest mining firm, is allotting P2 billion for its capital expenditures this year.
In a filing with securities regulators, Philex said P885 million of the programmed capital budget will go to exploration projects.
Philex has recently acquired full control of the Boyongan copper-gold property in southern Philippines after buying out its Anglo-Dutch partner for $55 million.
A pre-feasibility study conducted by Philex showed that the Boyongan copper-gold mine would have a positive net present value of $150 million and a payback of three years, using long-term metal prices of $2.75 per pound for copper and $700/ounce for gold.
Based on the pre-feasibility study, the mine life could be up to 14 years at a constant millfeed rate of five million metric tons of ore a year.
Philex posted a net profit of P2.8 billion last year, down 78.6 percent from the previous year’s record high of P5 billion. The decline was attributed to higher taxes and royalties and general administrative expenses, as well as mark-to-market losses amounting to P470.1 million.
Other charges of P111.6 million compared with only P7.9 million in 2007 also contributed to the lower net income.
Despite higher realized gold prices, consolidated operating revenue fell to P9.72 billion from P12.22 billion. This was due to the significant decline in copper revenue from the combined effect of lower metal production and lower copper price which saw a steep decline starting in the second half of 2008 as the global economic crisis took its toll on the metal.
“The current global financial crisis has negatively affected copper price which has become quite volatile and uncertain for the near term outlook. The company believes, however, that this is a transitory reaction to the situation and in time, the price level will recover but could remain, for much while, lower than previous year’s record level,” Philex said.
With the life of Philex’s mine in Padcal, Benguet set to expire in 2014, the Boyongan mine can ensure that Philex can continue mining operations for another 15 to 20 years.