First Pacific : Philex Mining reported Php314 million core net income for 2Q2023; development works in Silangan Project now on high gear

Thursday, 27 July 2023

Philex Mining reported Php314 million core net income for 2Q2023;

Development works in Silangan Project now on high gear

The attached press release was released in Manila by Philex Mining Corporation ("Philex") (PSE: PX), in which First Pacific Group holds an economic interest of approximately 31.2%*.

Philex is a Philippine-listed company engaged in the exploration and mining of mineral resources, and through investment in Philippine-listed PXP Energy Corporation (PSE: PXP), in upstream oil and gas exploration and production.

Further information on Philex can be found at www.philexmining.com.ph and on PXP at www.pxpenergy.com.ph.

• Two Rivers Pacific Holdings Corporation, a Philippine affiliate of First Pacific, holds an additional 15.0% economic interest in Philex.

*	*	*
For further information, please contact:
John Ryan		Tel: [phone]
Associate Director		Mobile: [phone]
Sara Cheung		Tel: [phone]
Vice President
Group Corporate Communications

26 July 2023

PRESS RELEASE

PHILEX MINING REPORTED PHP314 MILLION CORE NET INCOME

FOR 2Q2023;

DEVELOPMENT WORKS IN SILANGAN PROJECT NOW ON HIGH GEAR

HIGHLIGHTS

• 2Q2023 Core Net Income at Php314 million compared to Php657 million in 2Q2022
• 2Q2023 EBITDA at Php553 million lower than 2Q2022 EBITDA of Php1.171 billion
• Tonnes milled for 2Q2023 was 1.825 million tonnes, slightly lower than the 1.859 million tonnes milled in 2Q2022
• Gold prices improved by 6% while Copper dipped by 7% in 2Q2023 versus 2Q2022 levels
• Operating revenues are lower at Php2.051 billion in 2Q2023 compared to Php2.485 billion in 2Q2022
• Silangan east decline portal completed and tunneling works towards the ore body goes full swing

(MANILA, PHILIPPINES) - Philex Mining Corporation (PSE: PX) (the "Company" or "Philex"), is one of the oldest and largest gold and copper producers in Southeast Asia, and a leader in right and principled mining. The Company generated an additional of Php314 million in core net income for 2Q2023, reporting a 1H2023 core net income of Php702 million. EBITDA of Php553 million for 2Q2023 increased 1H2023 EBITDA to Php1.188 billion.

Lower tonnage milled for 2Q2023 when compared to 2Q2022 levels resulted in the contraction of gold and copper output by 21% and 13%, respectively. Slight improvement in gold prices continue to mitigate the negative impact of the softening copper prices when compared to the same period in 2022. The combined negative effect of the lower metal production and softening of the copper prices was mitigated by the slight improvement in gold prices resulted to operating revenues of Php2.051 billion in 2Q2023, 17% lower than the Php2.485 billion for the same period in 2022 and 3% lower than the Php2.105 billion in 1Q2023. Realized gold price at US$1,937 per ounce in the second quarter was higher by 6% when compared to 2Q2022, while realized copper price at US$3.82 per pound was 7% lower when compared to 2Q2022. Prices for gold and copper for the first half of the year averaged at US$1,924 per ounce and US$3.91 per pound, respectively.

2nd Floor LaunchPad, Reliance cor. Sheridan Sts., Mandaluyong City, 1550, Philippines

Tel. Nos. [phone] to 88 • Fax No. [phone] • Email: [e-mail] • http://www.philexmining.com.ph

Operating costs and expenses for 2Q2023 slightly increased by 2% to Php1.701 billion from Php1.663 billion in 2Q2022.

PRODUCTION

The Company milled a total of 1.825 million tonnes during 2Q2023, 7% higher than the 1.706 million tonnes milled in 1Q2023, but 2% lower than the 1.859 million tonnes in 2Q2022. Total tonnage milled for 1H2023 was at 3.531 million tonnes, lower by 4% than the 3.681 million tonnes in the same period last year, as the Company continues to address the unscheduled breakdowns of the ageing equipment at the mill plant. Ore grades for gold and copper for 2Q2023 declined by 14% and 7%, respectively, when compared to the same period in 2Q2022. Gold output for 2Q2023 was 10,300 ounces, higher by 2% than the 10,062 ounces of 1Q2023, but lower by 21% against the 13,116 ounces in 2Q2022. On the other hand, copper output for 2Q2023 at 5.642 million pounds was higher by 2% than the 5.531 million pounds of 1Q2023, but lower by 13% versus 6.461 million pounds in 2Q2022.

Total gold output for 1H2023 stood at 20,361 ounces while copper output was at 11.173 million pounds, lower by 19% and 12%, respectively when compared to the same period in 2022.

OPERATING EXPENSES

Operating costs and expenses for 2Q2023 at Php1.701 billion was higher than the same period in 2Q2022 at Php1.663 billion, despite lower tonnage milled. The continued implementation of efficiency measures in operations offset the increases in the purchase costs of the materials and supplies as well as equipment parts and repairs. Higher power costs, however, continued to increase operating costs and expenses despite lower production level.

Total operating costs and expenses for 1H2023 at Php3.338 billion was almost the same as the Php3.318 billion in 1H2022.

SILANGAN PROJECT

Despite the current challenges in Padcal mine operations, the Company is still on track with development works on the Silangan Project in Surigao del Norte. The construction of the east decline portal has been completed and the arrival of tunnelling equipment, such as low profile loaders, jumbo drill and accessories allowed for the commencement of tunnelling works as programmed. The ongoing tunnelling works is on its second month and is necessary for the development of the mine production levels as well as ventilation openings. The preparatory works, including permitting works for the tailings storage facility ("TSF") is simultaneously being undertaken. More recently and in line with the project timelines, the tender documents for the construction of the process plant had been issued to potential contractors.

The Company is in the final stage of negotiation and documentation of the syndicated debt facility to complete the funding requirement of the Silangan project. The debt syndication is spearheaded by BDO Capital and Investment Corporation and targets to raise a minimum of US$100 million. This new credit facility completes the full funding requirement for the Silangan Project after the stock rights offering (SRO) last year and the capital infusion from the Company out of its cash reserves.

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OUTLOOK

"Cautious optimism is still the name of the game," according to Philex President and CEO Eulalio B. Austin Jr. "The first half of the year was challenging, no doubt, but we are still confident that, with the Silangan Project and other prospects in the pipeline, the situation would improve. We are all geared up for mining opportunities moving forward."

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Disclaimer on Forward Looking Statements

This press release may contain forward looking statements with respect to the results of operations and business of Philex Mining Corporation ("PX"). Such forward looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual performance of PX to be different from any future performance implied.

For further information, please contact:

Romeo B. Bachoco - Chief Finance Officer

Email: [e-mail]

Phone: [phone]

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PHILEX MINING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Amounts in Peso Thousands, except Par Value Per Share)
		June 30		December 31
		2023			2022
	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash and cash equivalents	P	4,717,096		P	3,925,296
Accounts receivable - net		479,454			580,621
Inventories - net		1,518,972			1,151,089
Derivative assets		22,805			-
Other current assets - net		1,072,902			765,754
Total Current Assets		7,811,229			6,422,760
Noncurrent Assets
Deferred exploration costs		29,992,103			29,491,920
Investment in associates - net		3,593,614			3,605,677
Property, plant and equipment - net		3,010,974			2,729,865
Pension asset - net		339,340			340,725
Financial assets measured at fair value through other
comprehensive income (FVOCI)		145,207			145,207
Other noncurrent assets		545,355			522,595
Total Noncurrent Assets		37,626,593			36,835,989
TOTAL ASSETS	P	45,437,822		P	43,258,749
LIABILITIES AND EQUITY
Current Liabilities
Loans payable	P	1,711,200		P	1,616,895
Accounts payable and accrued liabilities		2,869,415			2,670,983
Subscription payable		2,767			2,767
Income tax payable		53,837			124,351
Dividends payable		290,429			343,346
Total Current Liabilities		4,927,648			4,758,342
Noncurrent Liabilities
Loans and bonds Payable		7,333,215			5,907,961
Deferred tax liabilities - net		1,691,467			1,720,847
Provision for losses and mine rehabilitation costs		2,342			2,342
Total Noncurrent Liabilities		9,027,024			7,631,150
Total Liabilities		13,954,672			12,389,492
Equity Attributable to Equity Holders of the Parent Company
Capital stock - P1 par value		5,782,399			5,782,399
Additional paid-in capital		2,885,163			2,885,163
Retained earnings
Unappropriated		9,078,333			8,493,736
Appropriated		10,500,000			10,500,000
Net unrealized gain on financial assets measured at FVOCI and
derivative		84,166			54,870
Equity Conversion option		857,863			857,863
Equity Reserves		367,655			367,655
Net revaluation surplus		1,849,971			1,849,971
Effect of transactions with non-controlling interests		77,892			77,892
		31,483,442			30,869,549
Non-controlling Interests		(292)			(292)
Total Equity		31,483,150			30,869,257
TOTAL LIABILITIES & EQUITY	P	45,437,822		P	43,258,749	4