Apex Mining posts profitable first quarter

News Release
Apex Mining posts profitable first quarter

HIGHLIGHTS

* Revenues grew 153 percent year on year to P665 million on substantial increases in production despite lower gold and silver prices

* Gold production higher by 183% to 11,557 ounces while silver production up by 110 percent to 51,917 ounces

* Better production efficiencies brings cost of production to 66 percent of net revenues compared to 96 percent in the same period last year

* The company rebounded into profitability this quarter with a P100 million net income compared to a P143 million net loss in 1Q2014

* This return to profitability in 1Q2015 comes after eight successive quarters of net losses

Apex Mining Co., Inc. (APX) reported consolidated net income of P100 million in the first quarter of 2015, a significant turnaround from the consolidated net loss of P143 million in the same period last year. This is the first quarter of profitability after net losses posted in the past two years.

The company’s successful efforts in restructuring its Maco gold mine operations in Compostela Valley resulted in significantly higher metal production with gold output having a near three-fold increase to 11,557 ounces and silver output more than doubling to 51,917 ounces. Metal output in the same period last year was 4,086 ounces of gold and 24,776 ounces of silver, which was hampered by 27 days temporary suspension of milling operations.

Revenues for the quarter amounted to P665 million, an increase of 153 percent over revenues of P263 million in the same quarter last year. Revenues would have been higher were it not for lower metal prices averaging $1,211 per ounce gold and $17 per ounce silver this quarter, from $1,308 per ounce of gold and $21 per ounce of silver in the same period last year. Gold accounts for more than 90 percent of the company’s revenues.

During the quarter, 77,287 tons of ore were milled by the Maco gold mine with higher average grades at 6.2 grams of gold and 39.2 grams of silver per ton. In 1Q2014, 45,619 tons of ore were milled with an average grade of 4.2 grams of gold and 24.8 grams of silver per ton. The higher milling tonnage increased cash production cost to P441 million this quarter, from P308.4 million in the same time period last year, although because of higher ore grades, expressed in per ounce of gold produced, cash production cost, net of silver revenue credit, was lower at $785 per gold ounce this year from $1,554 per ounce last year. Improved production efficiencies brought down the cost of production to 66 percent of net revenues compared 96 percent in 1Q2014.

Walter W. Brown, President and CEO, remarks: “We are pleased with the results of the company’s continuing efforts to stabilize and increase its production output. We have gone closer to our current goal of producing monthly at least 4,000 ounces of gold from the milling rate of 1,100 tons per operating day. Additional milling capacity has been set at the Maco mine last December 2014. Additional peripherals are also being installed to fully utilize this added capacity.”

Brown continues, “We are faced with many challenges, but we are confident that we could end the year profitably.”

EBITDA correspondingly amounted to P200 million in the first quarter of 2015, a significant reversal from the negative EBITDA of P54 million in same period last year. The cash earnings were plowed back to operations mostly through capital expenditures which amounted to P190 million this period from P100 million in 1Q2014. The company continues to invest in operating assets as part of its efforts to accelerate mine development for additional sources of ore.

The Company’s consolidated accounts include those of Monte Oro Resources & Energy, Inc. (MORE), a wholly-owned subsidiary acquired in October 2014. MORE has a fully operational processing plant located in Paracale, Jose Panganiban, Camarines Norte, through Paracale Gold Limited. MORE has other mining interests in other countries under Minas de Oro Mongol LLC (in Mongolia), National Prosperity Gold Production Group Ltd (in Myanmar) and Monte Oro Mining Company, Ltd. and MORE Minerals SL (both in Sierra Leone). MORE also owns 30 percent participating interests in Service Contract (SC) 72 for natural gas in the Sampaguita gas field offshore northwest of Palawan in the West Philippine Sea.