Philex racks up more losses

Plummeting production at its Philippine operations has resulted in the third straight quarterly loss for Philex Gold (PGI-T).

For the 3-month period ended June 30, the Toronto-based company posted a net loss of US$1.4 million (or US3 cents per share) on revenue of US$5.1 million, compared with earnings of US$1.9 million (5 cents per share) on US$11.2 million in the corresponding period last year.

Philex pins the blame on a drop both in metal output and prices, though the loss was cushioned by gold-hedging gains of US$671,000 and a foreign-exchange translation gain of US$2.2 million.

Cash flow from operations during the second quarter was US$1.7 million (US4 cents per share), compared with US$6 million (US15 cents per share) a year ago.

At its Bulawan mine on Negros Island, Philex produced 15,541 oz. gold in the second quarter at a cash operating cost of US$292 per oz. gold, compared with 33,056 oz. at US$153 per oz. a year ago. The recovery rate from the carbon-in-leach plant was maintained at 81%.

The recent quarter’s production was, however, an improvement over the first quarter of 1998, when the mine yielded 14,355 oz. at a cash operating cost of $326 per oz.

The bulk of ore mined at Bulawan during the second quarter was derived from the South block, with initially low average grades. The grades are improving, however, as the cave moves into higher-grade ore. While the block cave at the South block is progressing satisfactorily, only limited tonnage was mined from the Recovery block, owing to stress-related problems. Tonnage from the Recovery block will be extracted by front caving, and any remaining tonnage will be transferred to the Central block and mined later.

An El Nino-related drought from April to mid-May, combined with a 6-day shutdown in June for the re-lining of Bulawan’s semi-autogenous-grinding mill, had the effect of lowering throughput during the quarter.

Open-pit mining of the adjacent Korokan deposit, which serves as low-grade feed for heap-leaching, was suspended as a result of low gold prices at the end of the quarter. In the meantime, exploration drilling has resumed in an attempt to outline Kokoran’s extensions.

At Philex’s other mine, the Sibutad heap-leach operation on Mindanao, mining by a new local contractor at a daily rate of 2,000 tonnes resumed late in the quarter, and stacking of ore on both the original pad and the extension is ongoing.

Gold production at Sibutad in the second quarter amounted to 1,631 oz., resulting from continued leaching of stacked ore. Mining was suspended at Sibutad at the end of last year.

Construction of a larger agglomerator drum is nearly complete, as is a larger-capacity adsorption-desorption-recovery plant. The building of a second storm pond is under way.

Philex says its exploration activities have been scaled back to focus on producing properties.