November 04, 2014

PX posts 3Q14 core net income of P342m

In a briefing yesterday, Philex Mining Corp (PX) announced 3Q14 core net income of P342m, up 22% higher QoQ despite lower realized metal prices as the company implemented cost cutting measures. The company took a 9% hit on gross revenues QoQ as realized prices for gold averaged $1,219 per ounce vs the $1,311 per ounce realized in 2Q14 while realized prices for copper averaged $2.95 per pound vs. $3.22 per pound realized in 2Q14. This was more than offset however by lower operating costs which dropped 11% as a result of cost control measures.

On its Silangan project, PX said this is currently in the de-risking stage where the company is currently driving tunnels toward the ore body to determine ore characterization. It is also hiring of new consultants to analyze the metallurgy of the ore body.

Our take: While core net income is up due to cost cutting measures, we view this to be a temporary solution as this can only do so much arresting the impact of falling revenues due to lower metal prices and, more importantly, declining ore grades from its Padcal mine. The company needs to ramp up development of its Silangan project and improve productivity as the Padcal mine gets depleted. – WealthSec