Atlas Consolidated Mining and Development Corp. will reduce copper production by 33 percent in 2016 and 2017 due to the slump in copper prices in the world market.
Atlas said in a disclosure to the stock exchange its board of directors approved to implement a comprehensive plan to reduce mill throughput at the Carmen copper mine in Cebu province from its nameplate capacity of 60,000 tons per day to 40,000 TPD.
Atlas approved revised milling and mining plan in response to the recent decline in copper prices. The average copper prices dropped significantly to $3.11 a pound in 2014 to $2.49 in 2015 and to $2.11 in the first quarter of 2016.
“Management continues to vigorously pursue measures to reduce operational and administrative costs as well as to achieve improved levels of operational efficiency,” Atlas said.
“While the board of director views the long term outlook for copper positively, in the short term the company must respond to current market conditions to optimize cash flow, while protecting its large mineral resources for the longer term and to position the company to enhance performance and throughput when copper prices improve,” it added.
The mining company in 2013 embarked on an aggressive program to expand Carmen’s existing 40,000 ton-per-day capacity by 50 percent to 60,000 with a capital expenditure of about P5.4 billion.
Carmen Copper Corp., a wholly-owned unit of Atlas said in 2014 it secured $90 million worth of loans from local and foreign banks.
Atlas Mining signed loan agreements with Security Bank Corp. for P1.1 billion, Maybank Philippines Inc. for $10 million, Maybank International Labuan Branch for $10 million, Rizal Commercial Banking Corp. for $19.5 million and United Overseas Bank Limited for $25 million.
“The proceeds of the loans will be used by Carmen Copper to fund its capital expenditures and to refinance its outstanding short-term loan obligations,” Atlas said.
Carmen Copper operates the Toledo copper mine covering 1,674 hectares in Toledo City, Cebu.
Meanwhile, Atlas will seek shareholders’ approval to cut the par value of the stock to P1 apiece from P8 per share, which will result in the reduction in the company’s authorized capital stock to P3 billion from P24 billion.
Atlas said it would again increase the company’s authorized capital stock to P6 billion from P3 billion after the decrease to enable it to have sufficient shares of stock to allow it to raise fresh funds if deemed necessary.
“With the available and sufficient unused capital, the corporation will have the capability for any future capital initiative,” Atlas said.
Atlas booked in 2015 a net loss of P814 million, a turnaround from a profit of P397 million registered in 2014. Revenues declined 28 percent to P9.9 billion from P14.87 billion.