PIONEER YEARS

Philex Mining Corporation was born in July 1955. Most Philexians assume that the first
ton of ore was mined in the same year. However, the 1st 2 years of the company was
mainly concentrated on the exploration activities and mine development in the field and
paper works in Manila.

About 9,000 feet of diamond drill cores and 1,530 feet of auditing/crosscuts outlined the
Sto. Tomas II ore body measuring 400 feet by 1,000 feet by 600 feet depth with 18 million
tons mineable reserve. A portion of thaty reserve was extractable via open pit method.
The Padcal Mill (now the area occupied by the Mine Engineering/ Safety, Administration,
Security, Padcal Time Keeping, Corehouse and Adjacent buildings) was constructed
by1957 to initially process 2,000 tons ore daily.

Stripping works in the open pit area exposed the mineable ore. By 23rd June 1958, the
Padcal Mill was inaugurated and 800 tons per day of ore were delivered and processed.
By March 1959, the mine delivery doubled. Exploration works continued to find more ore
(until today). By the end of 1958, the mineable reserve increased to 22.50 million tons at
0.81% Cu and 0.933 g Au/t of which 5 million tons are available at the open pit. The
stripping ratio was 1:2:5 (2.5 tons waste stripped to expose 1 ton of ore). Mining
engineers were evaluating the plans of extracting the rest of the mineable reserve via
underground methods.

While the mine delivered open pit ore to the mill, mine development was underway to
extract the bulk of the ore by block caving – slusher system of ore extraction. By mid –
1959, Philex became the first mine in the country to employ block caving in ore extraction.
Exploration drilling also confirmed the ore body extension down to 3700’ level. For the
next 3 years, the – run – of mine ore came from open pit and the 4,700’ (now called 1425
ml). Mine development of 4,300’ (1320ML – next mine lift) was in progress.

The 4700’ Level was reported as depleted by 1966. However, high metal prices by that
time warranted returning to the said level and developing the unmined blocks in the
northern portion. Mine and mill capacity kept increasing. The planning staff also deferred
the commissioning of the next lift (3850’ – 1190ML) until 1973 due to abundance of
available ore at the existing production levels (4700’ and 4300’).
Backfilling at the open pit to divert rainwater was implemented following the underground
flooding brought about by typhoon “Gening” in June 1976. Twenty- one (21) miners
drowned while the 4300’ Level remained flooded for 41 days.

Engineers foresaw the ore production source gradually becoming lower then the Padcal
mill in terms of elevation. Instead of driving hoisting shafts to elevate the lower elevation
ore to the Padcal Mill, they decided to construct a larger mill at lower elevation than the
underground levels. The Banget Mill (elevation 1020ML) was designed and constructed
by the late 60’s to supplement the Padcal Mill. The 1020ML Rail Haulage Level Systems
was likewise developed. The Banget Mill was commissioned into operation by 1970-71.

In 1973, the Padcal Mill ceased operations when the 4700’ Level was finally declared
depleted. After 1973, all the mined ore were delivered to the Banget Mill thru the
1020ML Rail Haulage.

The Philex concept of block caving using high ore column dates as early as 1974. A
couple of blocks at 3850’ (1190ML) were designed with ore columns extending up to the
surface while some of the unmined ore reserves were incorporated into the 1020ML.
These 1020ML blocks are located et the Southwest (SEFW and GSW super blocks) had
ore columns in excess of 400 meters and extends up to the surface.

The 1020ML, the 4th production level, started producing by 1978. Caving of ore above
1020ML was relatively easy due to fragmented nature of the deposit. In spite of the ease
of caving, early mine operations also encountered dilution problems, watery openings,
heavy grounds, etc. The1020ML became the mine level with the most tonnage extracted.
High metal prices and availability of high-grade ore by the early 1980’s made a Padcal
Mine a profitable entity. Employees received fringe benefits and bonuses beyond the
13th month! Exploration also enlarged the geologic resources at 1020ML.

Geologic resources below 1020ML posed challenges to the management. Geologically,

the materials at 908ML and below are massive and bulky in nature. The slusher system
that has serves Philex adequately for decades will not be an efficient method for such
materials. A new block caving approach capable handling large rocks will have to be
restored to. On the operation side, the ore extracted below1020ML by 1944 will have to
be hoisted to the 1020ML for the delivery to the Banget Mill. Three options were
considered for the 2nd challenge, a) drive a hoisting shaft, b) relocate the present mill to the
745ML area and c) use the Cable Belt Conveyor (CBC) system. As we all know, the last
option was considered.

THE NINETIES

The July 1990 earthquake also affected the production. The underground water inflow
became excessive and caused operational delays brought about by mud rush, rail car
derailment, very watery ore and other water associated problems.

Declining metal prices after 1990 forced more copper mines in the country to shut down
their operations. Philex did not cease production but was not exempted from this crisis.
As a survival strategy, there was a workforce reduction, a 5-2 scheme (work – restday)
temporarily implemented and others. Though gold is present in the ore body, the metal
prices were at the lowest. The 1020ML had fewer remaining high – grade reserves by
1992 and the next mining level (908ML) is not due for production mill 1994. The Dukot
Stopes at 1975ML were proposed in 1992 to supplement the mill with better ore grades
until the 908ML could produce. As a response to the massive and blocky nature of the
908ML materials, the pilot F&G& LHD (Load – Haul _ dump) block at 1015ML was
commissioned in 1995.

The 908ML started producing in November 1994 through the slushers blocks near the Sta.
Fe Fault area. The ()*ML LHD blocks (North Area followed starting July 1996. The
1020/1015ML produced ore until 1999. After that year, the 908ML became the only
source. The collapsed openings and ground pressure at the 908ML slusher blocks
prompted an extraction at the 89-ML.

THE FUTURE

After nearly 9 years of production, the 908ML still have some reserves available until the
end of the mine by 2011. Drive accesses are now being driven into the last mine level of
Sto. Tomas II (782ML). The last mine level is expected to produce by early 2006. The
782ML still have high-grade ores available for extraction.

All things have a beginning and an ending. The Sto. TomasII Ore body began in 1958 and
will hopefully provide ore until 2011, depending on many factors (economic,
environmental, social, etc.) By human standards, the orebody would have turned 53 years
old by 2011. As of October 2003, more than 255 million tons of ore were mined and
processed.

The Padcal mine is expected to cease mining by 2011. It is up to each one of us to prolong
the mine operations being core value _ oriented. Or we could shorten the life of the mine
by not being efficient, cost effective and careful.

San Roque Dam from Tapaya South of Philex