Philex allots P4B for capex

MANILA, Philippines - Listed Philex Mining Corp. has earmarked P4 billion for capital expenditure this year to finance the operations of the Padcal copper gold mine in Benguet and the pre-development of the Silangan copper-gold project in Surigao del Norte.

Interviewed on the sidelines of the company’s annual stockholder’s meeting in Ortigas yesterday, Philex Mining chairman Manuel V. Pangilinan said they are putting on hold the planned P12 billion stock rights offer and would source this year’s capital needs from operational cash flow and bank borrowings.

“As a whole for Philex consolidated, the capital expenditure would be P4 billion for the year. The bulk of that, about P3.2 billion will be devoted to the development of the Silangan Mine in Surigao del Norte. While about P600 million to P800 million will be for exploration activities for Padcal,” said Pangilinan.

Pangilinan ruled out any equity sale this this year.

“Not yet, not this year,” he said. “There will be a bit of borrowing but the capital expenditure for Padcal can be funded with operational cash flows. But the capital expenditure for Silangan is a big number for Philex so we may need to borrow Philex is bent on ramping up production in the Padcal mine, and extending its lifespan beyond 2020.

“There are continuous survey efforts being undertaken to determine additional resources. I believe there is a good chance of discovering more resources in Padcal. I’m quite optimistic that the mine life can be extended beyond 2020,” said Pangilinan.

Philex president and CEO Eulalio Austin said drilling operations are now being conducted beyond the lowest level of the mine to find additional resources

“We are pursuing the declaration of additional resources in Padcal to ramp up production and extend the mine life. The area beneath the lowest level of the mine is being explored,” Austin reported to stockholders.

Additional reserves are also being determined in the company’s defunct Bulawan gold project in Negros Occidental and Sibutad gold project in Zamboanga del Norte.

The company also intends to complete the pre-feasibility study for the Silangan Project next year.

Pangilinan said the company would be needing a partner for the development of the Silanagn mine because of the immense capital needed to develop the project but would begin talks with potential investor after

“This is a big project. Maybe if the finish the bankable feasibility next year we can present the final numbers,” he said.

The company is also studying if an underground mining method is feasible for the project or if an open-pit mining method should be used.

Pangilinan said it would be cheaper and faster to bring the mine into operation using the open-pit mining method.

“The expenditure would be significantly lower than using the underground method,” he said.

It would cost the company around $1.5 billion to operate the Silangan project.