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Buenaventura posts Q3 loss on Cerro Verde tax charge

Bnamericas Published: Monday, October 30, 2017

Peruvian miner Buenaventura posted a US$12mn loss in Q3 compared with a US$24.7mn loss a year earlier as sales jumped 37% to US$369mn.

Freeport-McMoRan's Cerro Verde copper mine, in which Buenaventura holds a 19.58% stake, saw a US$377mn third quarter tax charge as part of a royalties dispute with the Peruvian government, according to a statement.

Buenaventura's stakes in Cerro Verde, Newmont Mining's Yanacocha gold mine and Southern Copper's Tantahuatay gold operation handed the company a US$37.9mn loss compared with an US$11.9mn loss a year earlier.

General and administrative expenses rose 20% to U$20.2mn, even as the company trimmed exploration spending to US$4.4mn in the quarter from US$6.4mn a year earlier. Exploration focused on the San Gabriel and Marcapunta Norte projects and the La Zanja mine's Emperatriz target, the company said.

Realized gold prices fell 4% to US$1,282/oz in the quarter from year earlier, while those of silver dropped 21% to US$16.39/oz, the company said. Zinc prices increased 27% to US$3,115/t, lead rose 26% to US$2,458/t and copper 37% to US$6,618/t.

Gold sales rose 14% to 197,464oz, while those of silver jumped 44% to 7.15Moz and lead by 41% to 10,079t. Zinc sales slid 2% to 14,798t and those of copper were little changed at 11,273t.

Buenaventura's equity gold production rose 12% to 176,516oz, while silver output was up 13% to 6.88Moz and lead jumped 33% to 9,418t, the company said. Copper climbed 4% to 32,312t, while zinc was little changed at 13,203t.

A debottlenecking process at four of the company's operations, including drainage at its Uchucchacua silver mine, will increase production in Q4, CEO Victor Gobitz said on a conference call to discuss financial results

Yanacocha, in which Buenaventura holds a 44.65% stake, saw output drop 4% to 141,923oz, while Cerro Verde produced 128,644t copper, up 7%, both on a 100% basis.

Freeport completed a US$4.6bn expansion at Cerro Verde in December 2015, while Buenaventura finished a US$473mn expansion at its El Brocal zinc unit in 2014 and started up at its US$362mn Tambomayo gold-silver mine in December 2016.

Cerro Verde is expected to produce 500,000-550,000t of copper in 2017, while Yanacocha is forecast to produce 530,000-560,000oz gold.

Buenaventura produced 627,434oz gold, 24.7Moz silver, 51,465t zinc, 28,531t lead and 128,051t copper last year.

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