Philex closes Padcal mine on safety issue

Posted at 08/03/12 10:19 AM

Share price falls 7.6%

MANILA (UPDATE)- The Philippines' biggest gold and copper producer Philex Mining Corp said on Friday it had closed its main mine in the northern Benguet province after weeks of heavy rains caused an "accidental discharge" from an underground tunnel.

Philex shares fell as much as 7.6 percent following the company's announcement. The broader main index was flat.

The state regulator had ordered the company to cease operations at the Padcal mine until it assures the safety of its tailings pond.

"As a precautionary measure, Philex took the prudential step of stopping the operation of its Padcal mine (from Wednesday) for the purpose of conducting a full inspection of the tailings pond and the surrounding areas," the company said.

Philex said water and sediment from its tailings pond at Padcal were safe and non-toxic, adding no injuries or fatalities have been reported as a result of the incident.

Philex, controlled by Hong Kong-listed conglomerate First Pacific Co Ltd , sells about 60 percent of Padcal's output to Japan's biggest copper smelter, Pan Pacific Copper, part of JX Holdings Inc. The rest is sold to smelters in South Korea and China.

Padcal's gold output of 4,358 kg (4.358 tonnes) last year accounted for about 15 percent of total gold production in the Philippines, according to government data. The mine's output last year was valued at P9.2 billion ($219.8 million).

Safety and environment concerns are among the issues fuelling strong anti-mining sentiment in the Philippines, which has largely untapped metallic mineral resources estimated to be worth about $1 trillion.

President Benigno Aquino recently issued a new set of rules governing mine operations and investments.

Philex is exploring ways to extend production at Padcal, its main source of revenue and one of the country's oldest mines, beyond 2020 - the estimate end of its mine life.

Philex posted a 37 percent decline in net profit in the first half this year to P2.04 billion, with revenue slipping from last year's record levels due to lower gold grade and output from Padcal.