Philex Mining Announces P141 Million First Quarter Income

May 25, 1998 PSE CIRCULAR FOR BROKERS NO. 1119-98 PHILEX MINING ANNOUNCES P141 MILLION FIRST QUARTER INCOME Philex Mining Corporation announced a first quarter income of P141 million in the first quarter of 1997 despite lower metal prices. Consolidated revenues amounted to P1.29 billion, 24% higher than the corresponding figure last year. At the Padcal copper/gold operation, tonnage mined increased by 11% while copper output of 13.8 million pounds and gold output of 43,656 ounces were both higher by 20%. The average realized price of copper declined from $1.24 per pound in the first quarter of 1997 to $0.78 per pound while the realized gold price also decreased from $357 per ounce to $310 per ounce. The Padcal mine continues to exhibit a very low cost profile with a total cash cost for the first quarter, net of gold and silver by-product credits, of $0.06 per pound of copper. At the Bulawan gold mine under 81.8%-owned subsidiary Philex Gold Philippines, equivalent gold production during the quarter amounted to 14,355 ounces of gold compared to 36,400 ounces in the prior year. The drop is attributable to low ore grades from the initial mining of the new South Block as anticipated. Ore grades are gradually improving as the block caving progresses to higher grade ore while tonnage should improve as well as the block nears full development, scheduled by the end of the second quarter. The average realized gold price for the quarter amounted to $347 per ounce compared to $353 per ounce for the comparable period last year. Hedging gains on forward sales of both copper and gold cushioned the drop in metal prices. A total consolidated gain of P119 million was recorded in first quarter revenues. For the remainder of 1998, forward sales of 21% of expected copper production at a price of $0.92 per pound and 20% of expected gold production at $355 per ounce remain in place for the Padcal mine. Under Philex Gold, forward sales of about 23% of expected gold production at $357 per ounce also remains in place. For the remainder of the year, the company has also sold forward about 26% of consolidated exports into pesos at an average exchange rate of P43 to $1.00. The average realized foreign exchange rate on the company's first quarter exports amounted to P39.61 compared to P26.35 in the first quarter of last year.