Philex posts lower output

A production shortfall has cut deep into the bottom line of Philex Gold (PGI-T).

For the three months ended March 31, the junior lost US$2.7 million on revenue of US$11.6 million, compared with earnings of US$228,000 on US$23.1 million in the corresponding period of 1999.

Gold output between the two periods fell to 11,555 from 23,090 oz., while cash operating costs increased 84% to US$306 per oz. The company realized US$297 per oz. for its production in the recent quarter, and cash flow was negative US$1.8 million.

Philex pulls its gold from the Bulawan mine in the Philippines, where production of late has suffered from poor ground conditions on the 70-metre level in the Central deposit. Repairs are under way.

To offset the shortfall, miners have been drawing from an 85-metre undercut, using front caving methods, as well as tapping into remaining reserves at the South deposit. During the quarter, 56% of mill feed came from the South zone; the remainder, from the Central zone.

Meanwhile, seven holes were sunk at the North block (the next source of ore) to test for mineralized extensions. Once results are received, the ore block will be remodeled.

Meanwhile, drilling has begun at the North project, on the island of Mindanao. Particular attention is being given to the Bagacay area, where exploration has uncovered widely distributed floats of mineralized porphyry containing quartz stockworks running up to 9.5 grams gold per tonne and 1% copper. This area, as well as others, is coincident with geophysical anomalies.

Funding is being provided by the Philippine arm of South African-based Anglo American (AAUK-Q) as part of its requirements to earn a 40% interest in the project. The major is required to spend US$2.2 million on the project over five years.