--Buenaventura CEO says fundamentals to support gold price
remain
--Buenaventura looking at ways to lower costs
--Buenaventura CEO: Looking at placing corporate bonds
By Ryan Dube
LIMA, Peru--Peruvian precious metals miner Compania de Minas
Buenaventura SAA (BVN, BUENAVC1.VL) said Thursday that development
plans for its Minas Conga copper and gold project could be further
complicated due to lower mineral prices.
Minas Conga, which is being developed by a joint venture that
also includes Newmont Mining Corp. (NEM), is one of Peru's biggest
mining projects, requiring an investment of $5 billion. The project
has come under stiff opposition from local politicians and
residents, who say they are concerned about its potential impact on
the local water supply.
Violent protests last year against Minas Conga resulted in most
of the work at the project being put on hold. The company has
looked to ease the concerns over the project by building water
reservoirs that will increase the supply of water to local
populations before it starts mine construction. One of the
reservoirs is to be completed this month.
The project's development plans could be further impacted by the
fall in copper and gold prices, said Buenaventura Chief Executive
Roque Benavides.
"In a project such as Conga we may have an impact because of the
price of gold and lower price of copper," Mr. Benavides said
Thursday in an interview at the World Economic Forum. Mr. Benavides
said he doesn't have further information on the possible impact "at
this point in time."
Buenaventura has a 43.65% stake in Minas Conga and Newmont has a
51.35% interest. The International Finance Corp. holds the
remainder.
Metal prices have seen sharp declines recently after years of
gains. Earlier this month the price of gold fell to its lowest
level in two years following new signs of a slowdown in the global
economy, including China's weaker-than-expected growth in the first
quarter.
Mr. Benavides said that the selloff was an overreaction,
pointing to a recovery in prices in recent sessions. He said that
the fundamentals to support gold prices remain. "There was an
overreaction and obviously that made the price of gold go down and
now it's going up," he said. "I think the fundamentals are still
there for the price of gold to be a safe haven for many
investors."
Buenaventura has been studying ways to lower costs at its
operations as metal prices decline, Mr. Benavides said. He said the
company identified areas to improve efficiency at its Uchucchacua
silver mine, and is now looking at how to cut costs at its
Orcopampa gold mine.
Mr. Benavides said he is confident the Chucapaca gold project is
also expected to proceed despite the decline in gold prices.
Buenaventura announced late last year that its original feasibility
study to develop the project was unfeasible due to costs.
Mr. Benavides said a new feasibility study is expected towards
the end of this year, and that could include lower capex costs for
the project. "We are looking very seriously at the possibility to
reduce the capex," he said. "The resource is feasible in some way,"
he added.
Buenaventura operates several of its own mines in Peru and also
has a minority stake in the Yanacocha gold mine. Mr. Benavides said
that Yanacocha is expected to produce about 1 million ounces of
gold this year. Yanacocha turned out 1.35 million ounces of gold in
2012.
Mr. Benavides also said the company is looking at placing
corporate bonds to take advantage of lower interest rates.
"Buenaventura has essentially zero net debt," he said. "We think we
have the capacity to raise some debt and obviously benefit from
some of the lower interest rates."
Buenaventura is Peru's largest publicly-traded precious metals
mining company. It produced 1.03 million ounces of gold last year,
including a portion of the output from Yanacocha. It also produced
18.6 million ounces of silver, as well as some copper, lead and
zinc.
Write to Ryan Dube at ryan.dube@dowjones.com