Philex remains in the red

Plummeting production at its Philippine gold operations continues to plague Philex Gold (PGI-T), with the junior reporting yet another quarterly loss.

For the three months ended Sept. 30, Philex lost US$3.3 million (or 8 cents per share) on revenue of US$4.6 million, compared with earnings of US$55,000 on US$8.3 million in the equivalent period of 1997.

It was the fourth straight quarter in which the junior producer ended in the red, and Philex places the blame on low metal output and weak prices. The recent quarter was, however, cushioned by gold-hedging gains of US$2.3 million and a foreign-exchange translation gain of US$42.2 million.

Cash flow from operations for the third quarter was $636,000, compared with $859,000 in the similar period a year ago.

Philex pulls most of its gold from the Bulawan mine on Negros Island, where 13,916 oz. were produced in the recent quarter at a cash cost of US$280 per oz., compared with 25,0741 oz. at US$221 per oz. a year ago. The recovery rate from the carbon-in-leach plant rose to 86% from the 81% achieved in previous quarters and served to offset lower-than-average head grades.

Production during the quarter was below plan, at 2,800 tonnes daily. However, output topped 6,900 oz. in October, as a result of various improvements, including the use of an additional conveyor system and access to higher-grade ore.

Stress-related problems at the adjacent Recovery block continue to hinder mining there, with only minimal tonnage extracted in the past quarter. Remaining tonnage from that source will be mined in the latter part of next year.

A planned production increase at Philex’s other mine, the Sibutad heap-leach operation on Mindanao, is being deferred. While governmental permits to increase mining rates above the current allowable rate of 2,000 tonnes per day are expected in the next few months, depressed metal prices render such a production rate unfavorable. Construction of a second leach pad has therefore been halted and mining is being switched to the higher-grade Lalab deposit in order to achieve the permitted rate.

Sibutad cranked out 2,882 oz. in the third quarter — 895 oz. less than a year ago. Heavy rains hindered mining, resulting in the mining of only 1,600 tonnes per day during the recent quarter. Exploration is continuing on a reduced scale, with drilling having been suspended in October at the Bulawan and Korokan deposits. Infill drilling at the Main Lalab deposit, however, is continuing apace, with 74 reverse-circulation holes planned for the remainder of the year.