Philex Mining Corp. is allotting P4 billion in capital expenditures this year, bulk of which will be given to the pre-development of Silangan copper-gold project in Surigao del Norte while the balance will cover the operating costs of Padcal mine in Benguet and other exploration expenses, its top official said Wednesday.
“Bulk of [the capex] or P3.2 billion will be devoted to the development of Silangan mine and about P600-P800 million for Padcal and exploration expenses,” chairman Manuel V. Pangilinan told reporters after the company’s stockholders’ meeting at the Crowne Plaza in Quezon City.
The budget for Padcal can be financed through operational cash flows, but funding for Silangan may require other sources.
“There’ll be a bit of borrowing this year. Silangan mine is a big number for Philex, so we may have to borrow,” Pangilinan said.
Philex Mining is pre-developing the Silangan copper-gold mine in Surigao del Norte through wholly-owned subsidiary Silangan Mindanao Mining Co. Inc. The project is expected to go into commercial production by 2018.
CEO Eulalio Austin told stockholders the pre-feasibility for Silangan will start next July and the company is expects results to be “higher than Padcal mine.”
The study will determine if Philex would need a partner for the project, and if open-pit mining is better than underground mining, Pangilinan noted.
“We might need a partner because it is a big mine,” he said in the vernacular, noting they will wait for results of the pre-feasibility study before talking to possible partners.
“We’re looking at the possibility of open-pit in Silangan. There’s a team studying that to bring operations by say, 2018,” Pangilinan added.
Open-pit mining would entail huge savings for the company, compared with underground mining. The company pegged underground mining to cost between $1.3 billion to $1.5 billion.
“At least in first phase… first eight years, it will be significantly lower than underground… About roughly a billion if we go open-pit,” Pangilinan said.
For Padcal mine, the company is also studying the possibility of extending the mine life beyond 2020.
“Survey efforts are being done to determine additional resources. I believe there’s a good chance we can discover more resources out there in Padcal,” Pangilinan said.
“We’re optimistic the mine life can be extended beyond 2020. Right now mine life is estimated to last until 2020,” he added.
In a June 9 resolution, the Pollution Adjudication Board gave the Philex Mining the green-light to resume operations over at the Padcal in Itogon, Benguet after rehabilitating the waterways that were affected by a massive tailings spill in August 2012.
On June 5, Philex Mining paid a P188.6-million penalty for violating the Clean Water Act of 2004, which is on top of the P1.034 billion the company settled with the Mines and Geosciences Bureau (MGB) in February 2013 for violating the 1995 Mining Act.
In August 2012, a tailings pond at Padcal caved in at the height of enhanced monsoon rains and released more than 20 million tons of mine waste that polluted Agno River and Balog Creek.
The government also imposed a penalty of more than P1.03 billion, which was settled in February 2013.