Trevali sells Peru hydro plant to zinc miner Volcan

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Wednesday, July 2, 2014

Peru's largest zinc-silver miner Volcan agreed to buy a hydroelectric plant from a unit of Trevali Mining and supply electricity to the Canadian company.

The move will diversify Volcan's income sources in the light of slumping metals prices.

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Volcan's Empresa Administradora Chungar unit will pay US$13.5mn for Trevali Renewable Energy's 1.25MW Tingo plant in Lima region, Volcan said in a corporate filing to securities regulator SMV.

The Tingo plant, which can be expanded to 8.8MW, comes with two power lines totaling 82km that link to Trevali's operations in nearby Pasco region, Volcan said. Tingo has a nine-year agreement to supply electricity to Trevali.

Vancouver-based Trevali, which started up its Santander zinc-lead-silver mine last year, produced 14.6Mlb (6,623t) zinc, 5.4Mlb lead and 268,600oz silver in its first commercial quarter.

Volcan, which is working on a US$1bn expansion of its mining operations, last month sold its 180MW Belo Horizonte hydroelectric project in Huánuco region for US$31.5mn to Brazilian construction firm Odebrecht. Volcan is developing three other hydroelectric plants to cover its energy needs: the 9MW Baños 5 and the Rucuy and Chancay plants totaling 40MW.

Volcan's Alpamarca and Oxidos de Plata projects, started up this year at a combined investment of US$420mn, will help boost zinc production to 290,000t zinc and 27Moz silver in 2015, according to the company. Volcan last year produced 279,634t zinc, 67,434t lead, 20.7Moz silver and 3,248t copper.

The company's first quarter profit plunged 55% year-on-year to US$10.1mn on declining metals prices.