Analyst: Keep buying Buenaventura

Monday, May 6, 2002

Peruvian precious metals miner Buenaventura (NYSE: BVN) remains an investment opportunity, according to Banco de Credito analyst Omar Farro.

The company's stock is even more attractive following shareholder approval of a plan to merge the A and B series, which took effect Friday (May 3), he said. Farro sticks to his "buy" recommendation for Buenaventura, despite forecasting lower profits for the company for this year of US$70.8mn compared to his previous estimate of US$79.8mn.

The weaker earnings will be the result of higher cash operating costs at the 2Moz/y Yanacocha gold mine, in which Buenaventura has a 43.65% stake, he wrote. The mine is majority-owned and operated by Denver-based Newmont Mining (NYSE: NEM).

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Farro set a target price for the company's stock of 49.40 soles (ADS US$29.00), representing upside potential of 8%.

Buenaventura posted net profits of 43.7mn soles (US$12.7mn) for 1Q02, down 31% from 63.1mn in same-quarter 2001. The Lima-based company's sales last quarter totaled 137mn soles (US$39.8mn), up from 108mn in 1Q01.

The company operates the Uchucchacua silver mine and the Orcopampa and Antapite gold mines.