Showing posts with label Peru. Show all posts
Showing posts with label Peru. Show all posts

Monday, June 8, 2015

Minera IRL Announces US$70 Million Bridge Loan and Mandate Letter for Up to US$240 Million for Ollachea Project Financing

LIMA, PERU--(Marketwired - Jun 8, 2015) - Minera IRL Limited ("Minera IRL", or the "Company") (IRL.TO)(MIRL.L)(MIRL.L), announces that it has arranged a US$70 million secured finance facility (the "Bridge Loan") structured by the Peruvian state-owned development and promotion bank, Corporación Financiera de Desarrollo S.A. ("COFIDE") and syndicated through Goldman Sachs Bank USA. The Bridge Loan is expected to be the first step towards a senior project credit finance facility of up to US$240 million, described in a Mandate Letter signed by COFIDE and Minera IRL ("Senior Project Debt Facility"). The Senior Project Debt Facility will be structured by COFIDE, in conjunction with Minera IRL, to build the Company's Ollachea gold project in the Puno Region, southern Peru ("Ollachea", or the "Ollachea Gold Project"). The Company has agreed to COFIDE's participation on the Minera IRL board of directors, subject to the required approvals.

Highlights:

  • The key terms of the Bridge Loan:
    • Interest rate: LIBOR plus 6.17%, payable quarterly in arrears
    • Term: 24 months
    • Structuring and Disbursement Commission of 2.25% along with a US$300,000 upfront fee, paid on the disbursement of the Bridge Loan
    • The Bridge Loan is expected to be repaid from the follow-on Senior Project Debt Facility, but is repayable at any point, subject to a 0.75% fee
  • The Company is applying the Bridge Loan funds towards consolidating debt and will apply net proceeds towards advancing the development of Ollachea as well as funding a limited resource expansion drilling campaign. Use of proceeds are expected to include:
    • Repayment of the Macquarie Bank debt facility
    • Final property payment to Rio Tinto
    • Commencing the detailed engineering and design of the Ollachea plant
    • Pre-construction project development work
    • Resource expansion drilling at the Minapampa Far East Zone at Ollachea
    • Continue its commitment to social and environmental programs
    • Financing and advisory expenses
    • General corporate expenses and working capital
  • The Company has signed a Mandate Letter with COFIDE to structure a Senior Project Debt Facility for up to US$240 million which includes retirement of the Bridge Loan.
  • Minera IRL expects to seek equity participants to reduce the amount of debt and leverage on the project to what the Company determines to be an acceptable level, and will include input from COFIDE and potential debt and equity providers.
  • It is expected that one or more financial institutions will be invited to participate in the Senior Project Debt Facility.
  • Although there can be no guarantee on the timing and terms, it is the intent of COFIDE and Minera IRL to have the Senior Project Debt Facility in place prior to the end of 2015.
  • The Bridge Loan is secured by the Ollachea Gold Project's assets, mining reserves, mining concessions and rights, guarantees from Minera IRL S.A., and a pledge of the shares of the Company's subsidiary Compañía Minera Kuri Kullu S.A., which owns 100% of the Ollachea Gold Project.
  • Specifics of the Macquarie debt repayment and Rio Tinto property payment include:
    • Repayment of US$30 million Macquarie Bank debt facility (plus accrued interest) and release of associated security.
    • Payment of US$12.9 million of the US$15.1 million outstanding to Rio Tinto, under the Ollachea Mining Rights Transfer Contract, and release of associated security. The remaining US$2.2 million outstanding has been be converted into an unsecured promissory note, accruing interest at a rate of 7% per annum, payable by 31 December 2015, either in cash or ordinary shares of Minera IRL, at the discretion of the Company (the "Agreement Regarding Payment").

Transaction Considerations

In addition to the Structuring and Disbursement commissions outlined above, Minera IRL has committed payments totalling US$2.6 million for services relating to legal assessment, technical and financial advisory. Likewise, the Company has granted 11.6 million options (exercisable for a year following the commencement of commercial production from the Ollachea Gold Project at an exercise price of C$0.20) and a 0.9% net smelter return over the Ollachea Gold Project. The Company has a right of first refusal on the sale of the royalty and can repurchase the royalty, at its option, up until the date that Minera announces final commissioning of the project.

Related Party Transaction

Under the AIM Rules, Rio Tinto is deemed to be a related party of Minera IRL due to its substantial shareholdings in the Company. As such, the Agreement Regarding Payment is deemed to be a related party transaction under the AIM Rules. The directors of Minera IRL consider, having consulted with the Company's Nominated Adviser, Canaccord Genuity Limited, that the terms of the Agreement Regarding Payment is fair and reasonable insofar as shareholders are concerned.

Commenting on the Ollachea financing package, Daryl Hodges, Minera IRL's Executive Chairman, stated, "This transaction is an important first step for Minera IRL and is the culmination of efforts of the Minera IRL team, working closely with COFIDE and its advisors. Minera IRL can now focus on taking final steps toward financing its flagship project to production. With support from COFIDE, the Company is in a much better position to arrange financing for Ollachea, build the project, deliver on its commitments to the local community to create jobs, wealth for the benefit of the region, and create new opportunity for its shareholders. We cannot neglect to mention that this was the dream of Courtney Chamberlain, whose untimely passing was felt by all."

Dr. Diego Benavides, Minera IRL's Interim CEO and Executive President of Minera IRL S.A., continued, "The financial backing from COFIDE is the result of over 18 months of discussions, comprehensive project evaluation, and due diligence by independent consultants. The support of COFIDE is an endorsement of the technical quality of our Ollachea Gold Project and its importance to the Ollachea Community and the Puno region. We now have the opportunity to focus on working with the Ollachea community, our true long-term partners, in developing an outstanding modern mining operation providing key economic benefits to the Puno region and, indeed, to Peru."

Mr. Jorge Ramos, General Manager of COFIDE, commented, "We are very pleased to be able to offer this financing package to Minera IRL. Ollachea represents an economically robust gold project and this is an excellent opportunity for COFIDE's first mine project financing. We have confidence that the Minera IRL team will ensure that the Ollachea Gold Project will be a great success, which will have important benefits for the Ollachea community and Peru."

Mr. Juan Luis Valeriano, President of the Community of Ollachea, stated, "After eight years of working in partnership with Minera IRL, indeed sharing a close friendship, we are glad that COFIDE, an institution of the Peruvian Government, is providing the financing for the development of the Ollachea mine. The new mine will provide long-term benefits to our local economy, especially towards job creation, social projects, and spin-off business opportunities for many of our citizens. Ollachea will also be Peru's first 'Partner Community' with a mining company with the community holding a 5% shareholding in the project."

Tuesday, May 26, 2015

Why Ricardo Carrión And Alberto Arispe Are Optimistic About Mining In Peru

By Kevin Michael Grace of The Gold Report

Despite headlines about deadly protests and the collapse of funding for juniors, Ricardo Carrión and Alberto Arispe of Kallpa Securities in Lima remain steadfastly optimistic about the future of mining in Peru. In this interview with The Gold Report, Arispe and Carrión highlight the mining-friendly government, the new production from many sources and point to several juicy projects that lack only the means to further unlock Peru's mineral riches.

The Gold Report: Canadian and Australian miners have realized a 25–30% premium due to the strong U.S. dollar. How has the U.S. dollar affected Peruvian miners?

Ricardo Carrión: Peruvian miners have realized a similar benefit due to currency exchange. This factor has resulted in lower costs for the Peruvian industry. In addition, miners have also benefited from lower prices in oil. But the question is has this cost reduction offset lower metal prices, and the answer is no. Lots of companies are still struggling with current market conditions.

TGR: How has the mining industry fared since President Ollanta Humala was elected in 2011?

Alberto Arispe: Humala ran in 2011 on a radical, antimarket platform. Presidential elections in Peru use the runoff system, so in order to win a majority in the second round of voting, he had to moderate his tone and make alliances with more moderate parties.

He then raised royalties and taxes on the mining industry. These were modest increases, however, made after much consultation with the industry. Given how radical Humala seemed at first, the industry was relieved. Since 2013, Humala's administration has become openly market friendly and has worked to solve the problems faced by, for instance, Newmont Mining Corp. (NMC:TSX; NEM:NYSE) over its Conga project.

TGR: The Peruvian government is more mining friendly, but what about the Peruvian people? Last month, several protestors were wounded and one was killed in the dispute over Southern Copper Corp.'s (SCCO:NYSE) Tia Maria mine.

AA: This is not a national problem. It is a more localized problem fomented by some NGOs, radicals and some politicians. Two or three big projects are having local difficulties, but many big projects are moving quickly to production without these difficulties. HudBay Minerals Inc.'s (HBM:TSX; HBM:NYSE) $1.8 billion ($1.8B) Constancia mine is almost finished. Next door, Las Bambas, a $5.2B project that MMG Ltd. (1208:HKSE) bought from Xstrata Plc (XTA:LSE), should be producing in 2016. Freeport-McMorRan Copper & Gold Inc.'s (FCX:NYSE) Cerro Verde copper mine is basically doubling its capacity. Peru's copper production will soon double from what it was in 2014.

TGR: President Humala is not eligible to run again in 2016. Is this a cause for concern?

AA: It's too early to worry about that. Let's see what the polls are saying at the start of next year. Right now, the leading candidates are very market friendly.

The main worries that Peruvian mining faces are lower gold, silver and copper prices and the collapse of financing for projects owned by juniors.

TGR: Will the dearth of financing lead to an increase in mergers and acquisitions?

RC: I already mentioned the Las Bambas takeover. It is rumored that Southern Peru Copper will make a move on Anglo American Plc's (AAUK:NASDAQ) large Quellaveco project. But this is only a rumor that was later denied by Southern Peru Copper.

Among the juniors, Indico Resources Ltd. (IDI:TSX.V) just got into an agreement for 70% of its Ocaña copper project to a private concern, Aruntani S.A.C., for $18.6 million ($18.6M). This is an interesting deal, which we have valued at about $0.10 per pound ($0.10/lb) of copper, which is high given current market conditions.

TGR: Which Canadian juniors are having legal problems with the Peruvian government?

RC: Bear Creek Mining Corp. (BCM:TSX.V) is running an arbitration process with the government of Peru over the license to operate the Santa Ana project, its 47 million ounce (47 Moz) silver project. Just to clarify, the government did not expropriate the project but revoked the license to operate in a border zone. All foreign companies need this permit to start a project. Barring a resolution, this dispute will be adjudicated in Washington, D.C., in September 2016. The legal experts will testify in favor of Bear Creek, but the decision to seize Santa Ana was a political one, and a decision to give it back would have political consequences.

I expect a good result for Bear Creek, perhaps by the end of 2015, which would be a good omen for the mining community in Peru. Santa Ana is an excellent project, with an after-tax net present value (NPV) of $80.2M and an internal rate of return (IRR) of 24.9%. Its capital expenditure (capex) is low, only $70.8M, and can start production very quickly.

TGR: How much of an overhang does Bear Creek suffer as a result of Santa Ana?

RC: When you analyze junior companies, you give higher valuations to those with good assets ready to start construction. In late 2010, Bear Creek shares were trading around $12. After the expropriation and the market crisis, shares fell to $1.05. Obviously the collapse in the silver price also affected Bear Creak heavily, along with many other companies in the industry.

TGR: Bear Creek has another Peruvian silver project, Corani. When will we get a feasibility study of that?

RC: Real soon. This will be an update of the 2011 feasibility. That showed a resource of 270 Moz silver, 3.1 billion pounds lead and 1.7 billion pounds zinc. It showed an initial capex of $574M, an after-tax NPV of $463 and a 17.6% IRR. The updated feasibility will adapt Corani to current market conditions and lower the capex.

TGR: Will Corani get financing?

RC: Bear Creek is talking to several parties and examining several strategies. There are various alternatives: streaming and offtake agreements, joint ventures (JVs). I'm pretty sure a combination of these will finance Corani.

TGR: Bear Creek's market cap is $112M. Is it a takeover target?

RC: Any small company with well-advanced projects—meaning good assets—could face hostile takeover attempts. Bear Creek is one example, Panoro Minerals Ltd. (PML:TSX.V: PZM:FSE; PML:BVL) is another.

TGR: Explain how the Peruvian government has regulated artisanal mining.

RC: There are two types of artisanal mining in Peru. There is flat-out illegal mining, which is often harmful to the environment. And there is also "informal" mining, which refers to miners seeking to fully regularize. The government has worked diligently to eliminate illegal mining and establish a process whereby all ore is processed by regulated mills. Progress is being made, but this will take some time.

TGR: Assuming that all or most of artisanal mining was regularized, how much bigger would the official mining industry become?

RC: We don't know exactly how large artisanal mining is, but it is big. I'll give you an example. Peru's main gold producer is not a company. It's a region called Madre de Dios where most of the gold produced comes from illegal and informal mining.

TGR: Has this new regulatory regime resulted in many companies processing artisanal ore on a tolling basis?

RC: Toll mining is growing everywhere in the world, not just in Peru. Mining companies are seeking lower risk, and processing ore presents lower risks than exploration and mining. Here in Peru, we have five or six TSX Venture-listed companies in tolling. Dynacor Gold Mines Inc. (DNG:TSX) has been doing this for a while, and it has been doing pretty well. The company has a market cap of $77M and processes in the range of 250–350 tons per day (250-350 tpd). Dynacor has one plant at Huanca and another on the way at Chala.

TGR: How much bigger will its operations be after Chala goes online?

RC: Dynacor is seeking to achieve 1,000 tpd and will become a very important player.

TGR: Dynacor also has a copper-gold exploration project, Tumipampa.

RC: When a tolling company reaches 1,000 tpd, it needs to secure a consistent supply of ore. This is Dynacor's plan for Tumipampa.

TGR: What are the margins for toll miners in Peru?

RC: It depends on where you are in Peru and what the grade is. Also, in order to keep the ore coming, toll miners must be fair with small miners. The industry standard is about 40–50% now, but that will probably fall over time to 35–40%.

TGR: What can you tell us about the other Peruvian toll miners?

RC: Inca One Gold Corp. (IO:TSX.V) has a good model and has built a 100 tpd plant. Equity financing was a problem, so the company elected to go with debentures and notes. It has $7–8M in debt, which it should be able to restructure in the near future. Inca One is in the middle now of a $1.5M convertible-loan financing, which will give it working capital. This is crucial for toll miners, because in order to build market share with small miners, you need to pay them quickly.

Standard Tolling Co. (TON:TSX.V) plans to achieve production in June with a plant processing 100–150 tpd. The company is fully financed and progressing very well. This story is similar to Inca One.

Anthem United Inc. (AFY:TSX.V) plans to begin processing this year. Its plant will cost around $10M. It's a big project, and the company intends to go immediately to 350 tpd. Processing above that level requires additional permitting. Anthem is also financing with debt.

Montan Mining Corp. (MNY:TSX.V) has an agreement to buy an already producing 150 tpd plant. It's a manageable deal in a nice location. Unlike its rivals, this company will have the capacity to process copper as well. This could be an excellent play.

Duran Ventures Inc. (DRV:TSX.V; DRV:BVL) has a location and basic permits but needs to invest $1–1.5M to build its plant from scratch. Construction is five to eight months away.

TGR: Duran has five exploration projects. Are they all on the back burner?

RC: Duran's long-term plan is to develop these projects, but first it needs cash flow, which is why it is going into tolling. Once cash flow is achieved, that money can be leveraged to pay for exploration.

TGR: Which Peruvian zinc producers are your favorites?

RC: There are two. The first is Trevali Mining Corp. (TV:TSX; TV:BVL; TREVF:OTCQX). It has the producing Santander mine in Peru and advanced-stage projects, Caribou and Stratmat, in New Brunswick in Canada. This is the only publicly traded zinc junior.

Caribou will begin production this quarter. Stepout assays from this project released in April included 5.08% zinc, 1.76% lead, 0.37% copper, 59 grams per ton (59 g/t) silver and 1.63 g/t gold over 50.9 meters. Canada will reveal Trevali's real value. In Peru, Trevali has an offtake agreement with Glencore International Plc (GLEN:LSE) but no such obligations in Canada.

TGR: And what is the other Peruvian zinc play you like?

RC: Sierra Metals Inc. (SMT:TSX) has Yauricocha in Peru, an extremely nice asset generating good cash flow. The company has two very good prospects in Mexico. Sierra has been flying under the radar because of liquidity problems, but I'm pretty sure the company will solve those problems. It published Mexico silver assays over 300 g/t in December, but few investors noticed that. It's hard to buy Sierra Metal shares, but it has good properties and also pays a divided.

TGR: Let's talk about other junior gold producers in the region.

RC: Luna Gold Corp. (LGC:TSX; LGC:BVL) has its asset in Brazil, but has many Peruvian investors. It was forced to suspend its Aurizona gold mine in Brazil because it was running out of mixed soft and hard saprolite ore. On May 8, the company announced a $30M financing with a fund called Pacific Road Resources, $20M debt, $10M equity. Luna also renegotiated its contract with Sandstorm Gold Ltd. (SSL:TSX.V), which previously held a streaming contract for the life of the mine: 17% of production at $400 per ounce ($400/oz). This has been replaced with a 3–5% net smelter royalty (NSR).

This is an excellent deal for the company as this will trigger more exploration work to improve the reserve calculation and restart the plant. There's still a big challenge to finance the expansion of the plant, but it is important to understand that there is already a sunk cost and it is only a matter of finding the necessary funding to have Luna up and running again—under a much better financial structure: the new deal with Sandstorm, a solid equity position and a debt with a better structure.

TGR: Which near-term junior gold producer do you follow?

RC: Lupaka Gold Corp. (LPK:TSX.V; LPK:BVL). It has the Invicta project, which is ready to produce gold at 10–15 g/t. This is a well-known asset in an excellent location near Lima. Lupaka does need a mill, however. It makes sense for it to get an agreement with an existing plant to process its ore while evaluating the construction of its own plant.

TGR: Let's discuss some other companies you follow.

RC: Minera IRL Ltd. (IRL:TSX; MIRL:LSE) invested over $40M in a project in Argentina. The company sold it for $10M, but given the conditions in Argentina, this was the best of a bad deal. In Peru, it has the 1 Moz Ollachea project. It's ready, but the capex is $164.7M, and that will be tough to raise for a company with a market cap of $20M. Doing it with equity would result in a tremendous dilution. Several financial institutions have told me they like Ollachea, so perhaps it will go ahead with a combination of equity, plus debt, plus a JV.

Panoro Minerals released a preliminary economic assessment (PEA) for its Cotabambas project last month. It forecasts annual production over 19 years of 143 Mlb copper, 88,000 oz (88 Koz) gold and 967 Koz silver at a cost of $1.26/lb copper, with credits. The after-tax NPV is $627.5M, and the initial capex is $1.38B. What is interesting about this is that there are nine targets, but the PEA focused on only one. I think this was a wise decision. From here on in, Cotabambas can only look better. But this is another company with a small market cap: $34M. This project needs about $40–50M to get to bankable feasibility.

TGR: Does it make sense for Panoro to bring on a JV partner or partners?

RC: It's a matter of valuation. It makes sense to bring in a JV partner based on the value of Cotabambas, not on Panoro's current market cap. It also matters who the JV partner is. If it's a well-known company with sufficient funding to develop a $1.38B project, that would be good.

TGR: What's the final company you wanted to discuss?

RC: Candente Copper Corp. (DNT:TSX; DNT:BVL) has the Cañariaco Norte deposit. This is another example of a company that is fighting with the market. Cañariaco is one of the most advanced junior copper projects in Peru. It's a big project, with a capex of $1.6B. Candente ran out of cash a year ago and is stuck in the middle of the feasibility study. The challenge for it is to go to the market to get $10M to complete it. I think the best way forward is to find a JV partner or sign a streaming contract. This project has faced social problems in the past, but we know that this region is not as difficult as it once was. Cañariaco is a nice project.

TGR: Despite the current financing problems for juniors, are you optimistic about their prospects in Peru for the rest of the decade?

RC: Absolutely. We are near the end of a cycle. I believe we will see a real recovery in the market starting in 2016.

TGR: Ricardo and Alberto, thank you for your time and your insights.


Ricardo Carrión is the managing director for capital markets and corporate finance for Kallpa Securities in Lima, Peru. He served as a senior analyst of Banco de Credito in the areas of corporate banking, corporate finance and capital markets and was an adviser to Lima's Stock Exchange. Carrión holds a bachelor's degree in business administration from Universidad de Lima with specialization in finance and capital markets.

Alberto Arispe is CEO of Kallpa Securities SAB, a Peruvian brokerage and boutique investment house. Previously, he was a vice president of emerging markets institutional equity sales at Fox-Pitt Kelton. Arispe has more than 18 years of experience in capital markets. He has a Master of Business Administration from the Stern School of Business at New York University and a bachelor's degree in economics from the Universidad Catolica del Peru. He is a professor of finance at Universidad de Lima.

Friday, May 22, 2015

Minera IRL Limited: Appointment of Interim CEO and Non-Executive Director and Update on Filing of 31 December 2014 Financial Statements

LIMA, PERU--(Marketwired – - May 5, 2015) - Minera IRL Limited ("Minera IRL" or the "Company") (IRL.TO) (MIRL.L) (MIRL.L) is pleased to announce the appointment of Dr Diego Benavides as interim CEO and Mr Robin Fryer as an independent non-executive director of the Company with immediate effect.

Dr Benavides is a founding executive of the Company and has to-date held the following positions in the Company's subsidiaries: Executive President/General Manager of Minera IRL S.A. (Peru) and Compañía Minera Kuri Kullu S.A (Peru); Chairman of the Board of Minera IRL Argentina S.A. and Minera IRL Chile S.A. He is a lawyer by training with extensive experience in the Latin American mining industry.

Mr Fryer had a long and distinguished career with Deloitte LLP where he led the global mining and metals industry practice. He is a chartered accountant and US certified public accountant, and is an independent non-executive director and chair of the audit committee of Shanta Gold Limited.

Further details on Dr Benavides and Mr Fryer are set out in the Appendix to this release.

Commenting on the appointments, Mr. Hodges, Executive Chairman of Minera IRL, stated: "This has been a difficult period for Minera IRL, and challenges remain, however with these appointments, we are moving forward to continue building towards the future.

The board is pleased that Diego has agreed to assume the role of interim CEO and looks forward to working with him in this new capacity, and on behalf of all of the directors we are delighted to welcome Robin to Minera IRL. We are fortunate to have secured someone with Robin's financial experience, which importantly includes an understanding of mining operations in South America."

Updated notice of its results for the financial year ended 31 December 2014

The Company expects to announce its audited results for the financial year ended 31 December 2014 within the required filing deadline of 30 June 2015 (previously announced the end of April 2015). Minera IRL is considered a "designated foreign issuer" as such term is defined by Canadian Securities Regulators in National Instrument 71-102 - Continuous Disclosure and Other Exemptions Relating to Foreign Issuers, and as such is subject to the foreign regulatory requirements of the AIM market of the London Stock Exchange plc ("AIM"). Under the AIM Rules for Companies, the Company is required to publish its annual audited accounts which must be sent to shareholders within six months of its financial year end.

Appendix: Diego Francisco Helge Pablo Christian Benavides Norlander

 

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In terms of the appointment of Dr Diego Francisco Helge Pablo Christian Benavides Norlander (aged 62) to the Board, there is no further information that is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules for Companies, save for the following:

Current directorships/partnerships:

Ingeniería y Tecnología Minero Metalúrgica S.A.

Past directorships/partnerships:

None

Under Peruvian law, all assets earned during a marriage, with a few exceptions, are commonly held in a legal entity separate from the two people within the marriage (the "Marriage"). On 25 April 2000, the Marriage of Diego Pablo Francisco Helge Christian Benavides Norlander and his then wife (from whom he was subsequently divorced) was declared insolvent under Peruvian law. That situation has been addressed by Mr. Benavides, who paid all the creditors in full. Therefore Mr. Benavides has never personally been declared insolvent and is completely able, without any limitations, to exercise fully his powers and rights under Peruvian law, including acting as officer, executive or director of companies.

Dr Benavides currently holds 1,782,600 shares and 1,100,000 options in Minera IRL Limited.

Appendix: Robin Anthony Fryer

In terms of the appointment of Mr Robin Anthony Fryer (aged 68) to the Board, there is no further information that is required to be disclosed pursuant to Schedule 2 paragraph (g) of the AIM Rules for Companies, save for the following:

Current directorships/partnerships:

Shanta Gold Limited

Past directorships/partnerships:

Partner of Deloitte LLP until 31 May 2009

About Minera IRL Limited

Minera IRL Limited is an AIM, TSX and BVL listed precious metals mining and exploration company with operations in Latin America. Minera IRL is led by a management team with extensive operating experience in South America. In Peru, the Company operates the Corihuarmi Gold Mine and is advancing its flagship Ollachea Gold Project towards production. For more information, please visit www.minera-irl.com.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

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Contact:

Minera IRL
Daryl Hodges (Executive Chairman)
+1 (647) 271-3817
Minera IRL
Diego Benavides (Interim CEO)
+ (511) 418-1230
Minera IRL
Brad Boland (CFO)
+1 (416) 907-7363
Canaccord Genuity Limited
(Nominated Adviser & Broker, London)
Henry Fitzgerald-O'Connor
Chris Fincken
+ 44 (0)20 7523 8000
Buchanan (Financial PR, London)
Bobby Morse
Gordon Poole
+44 (0)20 7466 5000

Friday, May 1, 2015

Minera IRL receives approval to build gold mine Ollachea

 

Minera IRL Limited is the TSX, AIM and BVL (TSX:IRL)(AIM:MIRL)(BVLAC:MIRL), Lima listed holding company of precious metals mining and exploration companies focused in Latin America. Minera IRL is led by an experienced senior management team with extensive industry experience, particularly in operating in South America. The Group operates the Corihuarmi Gold Mine and the emerging Ollachea Gold Project in Peru as well as the Don Nicolas Project in Argentina.

Peru approved the construction IRL gold gold mine Ollachea, giving the last authorization required for the start of the project in which it plans to invest about 180 million dollars, said Monday that focuses mining production in Latin America.


The mine, located in the southern region of Puno in Peru, the sixth largest producer of gold-, would produce between 100,000 and 115,000 ounces of gold annually in the first years of operation, the company said.


The building permit from the Peruvian Government will let you start the project, "which will be implemented after obtaining the necessary financing for the second quarter of 2015," IRL said in a statement.


According to the latest data from the company, the Ollachea mine has probable reserves of 9.2 million tonnes grading 3.4 grams of gold per tonne of material.
The mine is scheduled to produce 930,000 ounces during the first nine years of life, an average operating cost of about $ 507 per ounce of gold produced, the company said.


The right of use of the site is for 30 years.


The IRL mining, which is listed on the Lima, London and Toronto, operates the small Corihuarmi mine in southern Peru and takes the gold plan folder Don Nicolas in Argentina.

 

pict

The mine, located in Puno, would produce between 100,000 and 115,000 ounces of gold annually in the first years of operation, the company said.

http://www.minera-irl.com

 

Tuesday, March 12, 2013

Peru’s gold, silver and copper output fall in January 2013—Mining Ministry

Peru’s Ministry of Energy and Mines reported increased production of iron, lead and zinc in the first month of this year.

Author: Dorothy Kosich

Peru’s Ministry of Energy and Mines reported Monday the country’s gold production plunged 25.12% in January, as total silver production declined 7.27% and total copper output dipped 4.41% during the same period.

However, the ministry also noted that iron ore production was up nearly 13%, while zinc output increased 8.83% and lead was up 6.15% during the first month of this year.

In the first month of this year, Peru’s gold production was 11,762,163 grams (378,162 troy ounces), down from 15,708,384 grams (505,036 troy ounces) in January 2012. Minera Yanacocha reported a 25% decrease in gold production in January 2013.

The country’s silver production was 266,981 kilograms (8,583,638 troy ounces) during the first month of the year, 7.27% lower than the 287,918 kilograms (9,256,778 ounces) of silver production reported in January 2012.

Peru’s copper production was reported at 93,469 metric tons in January of this year, a 4.41% drop from the same period of 2012.

The Directorate of Mining Promotion of the ministry’s mining department noted that zinc production in January 2013 was 111,308 metric tons, up 8.83% from 102,280 metric tons of zinc output in January 2012.

Peru’s lead production was 19,837 metric tons in January 2013, a 6.15% increase compared to January 2012 lead output total of 18,689 metric tons.

The ministry reported that the country’s iron ore production for the first month of this year was 589,902 long tons, up 12.91% from 522,433 long tons for January 2012.

Source: Miniweb

Wednesday, February 27, 2013

New projects in Peru to add $3.6 billion to overall mining investment for 2013

New mining projects in Peru will attract over $3.6 billion in investments this year, adding to the overall industry forecast of $10 billion, said Wednesday the president for the country’s National Society of Mining, Oil and Energy (SNMPE), Eva Arias.

The South American nation’s extractive sector, which accounts for some 60% of the economy, saw investments for $8.5 billion last year and is expected to bring $53 billion over the next decade, added Arias.

According to LPBnews (in Spanish), mining investment jumped 18% last year compared to 2011 despite large-scale protests against exploration and extraction activities that swept the country in 2012.

SNMPE warned in September last year that, as a result of non-stop anti-mining protests in different regions of the country, investors had started looking for greener pastures and so mining investment in the South American nation was expected to fall.

Although that didn’t happen, the body said Peru did fall to third place from second in the list of world’s top copper and silver producers.

Friday, February 1, 2013

Xstrata confirms Las Bambas spend of US$5.2bn

Xstrata plc said that the estimated cost of its 400,000t/y Las Bambas copper project in Peru would be US$5.2bn.

The estimate reconfirms its prediction in August 2012, which was a 7% increase on a previous assessment.

Xstrata is close to completing a US$33 billion deal that will see it taken over by Glencore International plc. The only remaining hurdle is approval by the Chinese regulator.

Analysts at Liberum Capital said the Las Bambas disclosure should allay any fears of a “capital expenditure blowout”.

“Nevertheless, we don’t rule out modifications to the project following the capital allocation review which we expect to follow merger completion.”

Las Bambas is now in the full construction phase having committed almost 65% of the project’s construction capital cost by the end of December 2012, Xstrata said.

It could start producing 400,000t/y of copper from 2015 for at least the first five years, it added.

“Las Bambas represents the next major stage in Xstrata Copper’s Peruvian development plans that will result in combined annual production levels [including its Antapaccay project] in the country of around 700,000t of high margin copper from 2015,” said Charlie Sartain, chief executive of Xstrata Copper.

Friday, January 25, 2013

Newmont investing US$150mn in Conga this year but won't build mine without community support - CFO

Newmont Mining (NYSE: NEM) plans to spend US$150mn in 2013 on its 51.35%-owned US$4.8bn Minas Conga gold-copper project in Peru's Cajamarca region, CFO Russell Ball said Thursday at CIBC's 16th annual Whistler Institutional Investor Conference.

On an attributable basis, the company looks to invest US$80mn in equipment, US$40mn in reservoir construction and about US$30mn for community and social costs.

"We have downsized significantly, and we are reviewing capital cost estimates as we go forward," Ball said.

Newmont voluntarily suspended construction on the Conga project in November 2011 following violent protests which prompted the government to declare two states of emergency in Cajamarca, but has continued work on related reservoirs.

"Until we can generate acceptable project returns and we get local community and government support, we're not going to progress the project," Ball confirmed.

Newmont continues to follow its "water first approach" announced in August 2012 to focus first and foremost on the construction of four reservoirs it has agreed to build in Cajamarca to give community members a year-round supply of water.

"We do have about 2,000 people on site today building some of the sediment structures and reservoirs, and finalizing the camp construction," Ball said.

Conga is one of the biggest investment projects in Peru's US$53.7bn mining portfolio. Average output over the first five years is estimated at 650,000-750,000oz/y gold and 160M-210Mlb/y (72,575-95,254t) copper, at cash costs of US$300-400/oz and US$0.95-1.25/lb, respectively.

Local miner Buenaventura (NYSE: BVN) and the World Bank's International Finance Corporation (IFC) also hold a 43.65% and 5% stake, respectively, in the project's operator Yanacocha.

Thursday, January 17, 2013

Changing regulations delaying mining investments in Peru - Lumina Copper

Chinese joint venture Lumina Copper's US$2.5bn Galeno project in Peru's Cajamarca region has been delayed due to changing permitting regulations, and CEO Richard Graeme expects other mining companies are in the same boat.

"Government has been talking about [environmental impact study] approval changes and with that the information needed also changes, and who is going to review it, and I'm not exactly rushing to do things until I have some sort of direction," Graeme told BNamericas.

"To submit something to an agency which would not have the final say, I think would be ill-advised," he added.

The creation of a new government agency, Senace, in charge of evaluating environmental impact studies (EIS) has been the main cause for delay in completing Galeno's EIS, according to Graeme.

The company planned to submit Galeno's EIS in 2011, but community protests originally delayed submission and the company is now hesitant to submit the EIS during this time of transition. Lumina is now forecasting it will submit the EIS for evaluation in 2014-16.

"You must know who your audience is," Graeme said, adding that the uncertainty of whether or not the evaluation parameters will change has left the company in the dark.

Senace's creation was passed by congress in November 2012 and the agency is expected to begin operating in mid-2013. The related regulations and an implementation plan are due to be released next month.

Once regulation of the law is complete, the new agency will likely work together with the mines and energy ministry (MEM) for a period of time while the task of EIS evaluation is transferred over, according to former deputy environmental minister José de Echave.

Graeme expects the process to take no less than 14-15 months, and for that reason does not see the company submitting Galeno's EIS ahead of that timeframe.

According to the head of Peru's mines, oil and energy society SNMPE, a total of 20 mining projects planned for 2012-15, representing investments of over US$25bn, have been delayed due to social conflicts and bureaucracy.

The Galeno copper-gold-molybdenum porphyry property is expected to produce 144,000t/y of copper in concentrates over a 22-year mine life.

Lumina Copper is a 60:40 JV between China Minmetals and Jiangxi Copper.

Source: BNAmericas

Wednesday, January 9, 2013

HudBay sees lower copper output in 2013, Peru mine on track

HudBay Minerals said on Wednesday that copper production will be lower in 2013 following the closure of two of its Canadian mines.

The Toronto-based miner produced 39 587 t of copper concentrate in 2012, near the top end of its forecast of 35 000 to 40 000 t, and expects 2013 copper output of 33 000 t to 38 000 t.

HudBay also said its $1.5-billion Constancia copper development in Peru remains on track for first output in late 2014 and commercial production in the second quarter of 2015.

The company will spend some C$901-million on construction and development at Constancia in 2013, with its total capital spending budget for the year set at C$1.24-billion.

Edited by: Creamer Media Reporter

Saturday, December 22, 2012

Minera IRL gets community nod for Peru gold project

Following the approval by the Ollachea community general assembly of the environmental impact assessment (EIA) for Minera IRL’s Ollachea gold project, in Peru, the company on Friday said it has now submitted the EIA to Peruvian authorities for assessment.

Minera IRL said it based the EIA on its recently completed Ollachea feasibility study and expects to receive a development permit by the middle of 2013.

"We have received outstanding support from the Ollachea community with a general assembly unanimously approving the EIA thus fulfilling the first requirement of the permitting process,” Minera IRL executive chairperson Courtney Chamberlain said.

The project involves a 1.1-million ton a year underground mine and conventional gold processing plant to produce an average of 113 000 oz of gold a year at full capacity. Building the project would carry a price tag of $177.5-million and a life-of-mine cash operating cost of $499/oz.

Operations are scheduled to start early in 2015.

The company has completed comprehensive environmental baseline studies over the past three years and the information gleaned from these was incorporated into the details of the projected mine, processing and infrastructure plans to evaluate the environmental impact of the operation.

The Ollachea mine would be an underground mine with reduced surface disturbance and impact. The process tailings will be filtered and dry-stacked, further reducing the environment footprint and rehabilitation will blend with the local environment.

A water treatment plant will ensure that all water releases comply with the rigorous Peruvian standards and the company added that careful attention has been given to the key aspect of socio-economic impacts, including planned sustainable development projects.

The project developer said it had used, internationally recognised environmental guidelines in all scenarios to reduce impacts.

The company’s Toronto-listed stock traded at 82 Canadian cents apiece on Friday afternoon.

Edited by: Creamer Media Reporter

Thursday, November 29, 2012

Peru’s copper, silver production up; gold, moly fall in Sept

Peru’s molybdenum production fell by half in September 2012 as lead and zinc output improved, says the country’s mining ministry.

Author: Dorothy Kosich

Peru’s Ministry of Energy and Mines reported copper production increased 9.58% in September while iron ore was up 81.55% and silver increased 8.65%.

The ministry reported copper production was up 5.46% during the period of January to September 2012 from 898,875 metric tons from January to September 2011 to 947,922 metric tons. For September 2012 copper production was 113,615 metric tons, up 9.58% from 103,680 tons metric for September 2011.

The increased copper output was attributed to higher production from Sociedad Minera El Brocal, Compania Minera Antamina and Compania Minera Milpo.

Iron ore production for September 2012 was reported at 892,478 long tons (906,799 metric tons), up 81.55% from 491,580 long tons (499,498 metric tons). For the period from January to September 2012, Peru’s iron ore production totaled 5,371,234 long tons (5,457,425 metric tons), up 2% from 5,266,475 long tons (5,350,985 metric tons) during the same period of January to September 2011.

Peru’s silver output increased by 3.65% in September 2012 from 282,348 kg fine (9,077,699 troy ounces) in September 2011 to 292,677 kg fine (9,409,784 ounces). Increased silver production for September of this year was reported at Minera Argentum, Cerro Manager and Compania Antamina.

For the period from January to September 2012, the mining ministry reported cumulative silver production of 2,588,775 kg (83,231,050 ounces), 2.55% higher than 2,524,488 kg (81,164,174 ounces) of silver output reporting during the same period of last year.

Gold production for September 2012 was reported at 12,822,724 grams (412,260 troy ounces), down 9.12% from the 14,108,776 grams (453,607 ounces) reported in September 2011. Gold production for September of this year declined at Minera Laytaruma and Minera La Zanja.

During the period from January to September 2012, Peru reported total gold production of 124,273,608 grams (3,995,489 ounces) up 0.17% than the same period of 2011 for total production of 124,068,705 grams (3,988,901 ounces).

The mining ministry reported zinc production of 108,810 metric tons for September of this year, up 15.69% from 94,058 metric tons of production for September 2011. Increased production at Minera Antamina, San Ignacio de Morococha and Ancash Nyrstar was reported in September 2012.

For the period from January to September 2012, Peru reported total zinc output of 974,924 metric tons, up 2.29% from 953,076 metric tons of zinc production reported during the same period of last year.

Peru’s lead production fell by 4.12% from 20,578 metric tons in September 2011 to 19,730 metric tons in September of this year. The decrease was attributed to lower production at Empresa Administradora Cerro, Minera Atacocha and Minera Santa Luisa.

From January to September of this year, Peru reported total lead output of 188,442 metric tons, up 10.88% from 169,951 metric tons of lead production reported during the same period of 2011.

The mining ministry reported molybdenum production plunged 50.6% from 2,167 metric tons in September 2011 to 1,071 metric tons in September 2012. Peruvian moly is mined by Southern Peru Copper.

For the period from January to September 2012, Peru’s moly output declined 7.19% from 13,644 metric tons from January to September 2011 to 12,663 metric tons.

The mining ministry reported that Peru’s sole tin producer, Minsur, reported a 21.26% decline in production in September 2012 from 2,707 metric tons in September 2011 to 1,071 metric tons.

For the first nine months of this year, Peru reported total tin production of 19,522 metric tons, down 9.92% from 21,672 metric tons during the same period of last year.

Source: Mineweb

Wednesday, November 28, 2012

Trevali to start Peruvian plant commissioning early in 2013

Zinc-focused miner Trevali Mining reported development at its Santander zinc/lead/silver mine, in west-central Peru is in the final phase with initial mining and milling operations scheduled to start early in 2013.

The company said all critical mill and processing infrastructure was now in place and underground development continued to progress, with 1.8 km of ramp completed.

About 100 000 t of ore averaging 5.6% zinc, 0.65% lead and 1.65 oz/t silver has been stockpiled on the surface for processing when commissioning of the 2 000 t/d plant starts.

Trevali said all core site infrastructure is also complete and fully operational, including accommodation units, catering facilities, and various mine planning and site offices.

Construction of the project's 65 km transmission line to the national grid has also been completed and energising the power line is currently being coordinated with the Peruvian regulator in order to reduce disruptions with local end-users.

The company expected the Santander mine to access power from the Peruvian grid before the end of the year. Before this takes place, the site is being powered by the company's run-of-river power station at Tingo and supplemented by a combination of generators and excess power from a neighbouring mining unit.

Underground development has found several zones of potentially significant footwall satellite mineralisation sites that would require additional drilling and, depending on the results, might provide additional mill-feed.

The company’s Toronto-listed shares on Tuesday closed almost 2% higher at C$1.03 apiece.

Edited by: Creamer Media Reporter

Thursday, November 22, 2012

Gold Fields weighs alternatives for Peru’s Chucapaca mine

Cecilia Jamasmie

South African miner Gold Fields (NYSE, JSE:GFI) revealed its initial plan to develop a gold deposit into an open-pit mine in isn't feasible.

The miner, world’s number 4 gold producer, is working on the nearly $1.2 billion Chucapaca gold project in a 51%-49% venture with local miner Buenaventura.

"The partners have studied the viability of a large open-pit operation capable of sustaining a 30,000 tonnes per day throughput. A first draft of the feasibility study has been completed and as a result of relatively high capital and operating costs this option would not have delivered acceptable project returns," the companies said in a joint press release.

Gold Fields said that future studies would focus on other options to develop the deposit, including underground mining or a combined model of open pit and underground.

Earlier this year, the South African company said it expected to start producing gold in Chucapaca in the second half of 2015, depending on negotiations with communities and regulatory permits.

Chucapaca has estimated resources of 7.6 million ounces of gold and equivalents.

Friday, November 16, 2012

Peru to resume talks on Newmont’s $4.8 billion Conga mine

Peru's government is considering resuming talks with opponents of the $4.8 billion Minas Conga copper and gold mining project in the northern region of Cajamarca, Environment Minister, Manuel Pulgar Vidal, said in a TV interview on Sunday night.

The authority added the regional president of Cajamarca, Gregorio Santos, should participate in the talks, as he has been one of the most vocal adversaries of the Conga project, leading the latest protests against it.

According to the minister, Catholic priests Miguel Cabrejos and Gaston Garatea will restart negotiations with all the parties involve with the controversial project, majority-owned by Newmont Mining Corp. (NYSE:NEM).

Minas Conga is being developed in the Cajamarca region of northern Peru by Minera Yanacocha, of which Newmont Mining, the world's number two gold producer, holds a 51.35% interest and Compañía de Minas Buenaventura a 43.65%. The IFC owns the remaining stake.

Newmont had said it hoped to begin production either in 2014 or 2015, generating between 155 and 235 million tons of copper a year at the site, provided it gets permission from the Peruvian government.

The U.S.-based miner had proposed four high altitude lake reservoirs be substituted with artificial lakes, which triggered massive strikes and protests that ended up forcing Newmont to suspend the project in November last year and the Peru’s government to declare a state of emergency in the area.

Political minefield

The contentious Conga, which was to begin production in early 2015, was designed basically as an extension of the Peru's Buenaventura's nearby Yanacocha, Latin America's largest gold mine, which is approaching the end of its life.

Conga is capable of producing up to 350,000 ounces of gold and 120 million pounds of copper per annum with a 19-year life of mine.

The project is the largest ever single private investment in the country and has turned into a political minefield for President Ollanta Humala’s administration, with many in the opposition and within his own party calling for drastic changes to his handling of recent protests.

But negative reactions to mining projects are not unusual in Peru. Large-scale protests against exploration and extraction activities have swept the country in recent years, making of social conflicts the main risk for investors in the local industry.

Peru’s extractive sector, which accounts for some 60% of the economy, is expected to bring the country $50 billion in future investment over the next decade.

Wednesday, November 14, 2012

Valley High Mining reports positive results from its Machacala Project

Valley High Mining Company today announced that it has received initial internal test results on the tailings pile at its Machacala Project located in the district of Carabamba, Julcan Province, La Libertad, Peru.

The average gold grade over the multiple tests on the tailings exceeded previous sampling in historical reports. The average silver grade of the multiple tests on the tailings came in less than findings in previous studies on the property.

Valley High CEO Andrew Telsey stated, "We were expecting a gold grade of around 1.2g/T, but the results came back with an average grade of 1.71g/T.

We were expecting a silver grade of around 2.44oz/T, but the results came back with an average grade of 1.84oz/T. Generally speaking, we were very pleased with these results."

The Company believes that the combination of all the sample results validated the premise that production of the tailings is economical and viable.

While no assurances can be provided, on the basis of the test results the Company believes it can recover approximately 85%+ of the gold and approximately 40--50% of the silver in the 210,000 tons of tailings with the plant it plans to put into operation.

Gold Fields says Peru openpit JV project not feasible

Gold Fields said more work was needed on the Chucapaca exploration project, which it is developing with joint venture (JV) partner Buenaventura, after a feasibility study found a 30 000 t/d openpit design not feasible.

A first draft of the feasibility study found that high capital and operating costs associated with an openpit operation would not be compatible with satisfactory project returns.

Gold Fields said in a statement on Wednesday that further study work would be required, which would focus on value-engineering the $1.2-billion project to achieve the expected returns.

The JV would analyse different options for mine development, including an underground or a combined openpit underground operation, as well as alternative throughput levels.

Attention would also be given to reestablishing exploration to add resource flexibility once the required permits were granted and optimising capital and project operating costs.

Gold Fields, which owns 51% of the Chucapaca JV, previously said it expected operations at the mine to start by the end of 2015.

Edited by: Mariaan Webb

Sunday, November 4, 2012

Peruvian gold producer bulks up Colombia-focused junior exposure

Another South American miner takes an interest in Canadian juniors operating in Colombia following recent takeovers by AUX

Author: Kip Keen

As it pursues growth beyond Peru, Consorcio Minera Horizonte, a leading Peruvian gold producer, is bulking up on Canadian juniors with Colombian gold assets. After recently announced financings Consorcio Minera Horizonte (CMH) will own a majority of Antioquia Gold's outstanding shares and is set to buy a controlling stake in Batero Gold.

CMH started investing in Canadian juniors with a Colombia focus back in 2010. It began by striking a strategic alliance with Antioquia Gold, which owns the high-grade gold Cisneros project, as part of an initial private placement for 16.2 million shares @ C$0.20.

Since then, through notably lean times for junior financings, CMH's appetite for Antioquia Gold shares has remained strong. In subsequent private placements - the most recent in late October - CMH's position in Antioquia Gold has grown to 66.2 million common shares or 81.5 million shares outstanding, which represents a 54-percent interest in Antioquia Gold.

Now it has a second junior in its sights. Within a couple days of taking a majority stake in Antioquia Gold, it and Batero Gold inked a strategic alliance along with a C$20 million financing. In two private placements, subject to shareholder approval, CMH is to buy a 35-percent stake in Batero, giving it a controlling interest in a junior that owns the La Cumbre gold project.

"It's good for the company," said one analyst, familiar with Batero. The analyst echoed Batero's rationale for the deal, that the junior is getting a knowledgeable miner as a partner to help it push its La Cumbre gold project forward. La Cumbre is a multimillion ounce gold deposit that Batero has outlined as a low-grade bulk tonnage project with potential for heap-leaching.

The analyst, who preferred not to be named, also noted it was a "tough time for financings right now" and agreed with the notion Batero would have been hard pressed to do a better financing than the one it has put together with CMH. The financing with CMH, @ C$0.65, comes at a premium to Batero's average shareprice in October, though still falls far short of the shareprice heights Batero reached earlier this year before it released a multimillion ounce resource estimate in February.

After the resource came out, which disappointed analysts on grade, Batero's shareprice cratered from over C$2.50 to the C$0.50 range where it has traded ever since.

But clearly CMH sees potential in La Cumbre. Likely it, as Batero, has its eye on the possibilities for higher grade gold within La Cumbre's six million ounces in global resources. In the La Cumbre deposit, one of several comprising the wider resource, Batero has shown strong recoveries in oxide and low-sulfur transitional ore. (@ La Cumbre deposit Batero counts 1.5 million ounces gold @ 0.73 g/t gold at a 0.5 g/t Au cutoff in indicated resources and a further 2.3 million ounces @ 0.56 g/t Au in inferred resources.) Further, as previously noted in these pages, the deposit looks to have a nice shape for mining, were that day to come, with a strip ratio possibly in the 0.75:1 range.

Such points will not, of course, have escaped CMH.

And this point should not escape Colombia watchers. CMH's increasing interest in Canadian juniors follows recent
takeovers of two Canadian juniors with a Colombia focus by Eike Batista's AUX, a Brazilian miner. Thus mergers and acquisitions of juniors in Colombia are for being driven not by Western firms, but South American miners looking to grow gold production.

Source: Mineweb

Thursday, November 1, 2012

Buenaventura Q3 earnings lower, beats expectations

Peru-based precious metals miner Compañia de Minas Buenaventura has reported 11% lower year-on-year third-quarter net income, on weaker gold production.

The company’s net income was $185.6-million, compared with $208.7-million in the same period a year earlier, mainly the result of lower volumes of gold sold from the company’s operations and owing to lower silver and base metal prices, which hurt its earnings, as contractor expenses and supply costs rose during the period.

Buenaventura controlled 43.7% of Yanacocha, one of Latin America's biggest gold mines, and also owns an 18.7% interest in the copper mine Cerro Verde.

The company’s NYSE-listed shares closed on Wednesday at $35.76 apiece, having risen 1.94% in value.

Edited by: Creamer Media Reporter

Sunday, October 28, 2012

Conga delay undermines Peru perception

The suspension of the Conga mining project – which would have been Peru’s largest foreign investment ever – is undermining the country’s perception among investors. However, Conga will likely go ahead as planned eventually, mining officials say.

“A case like this can affect investor perception of Peru,” says Pedro Martinez, chairperson of Peru’s National Mining Society, which groups all the leading mining companies in the country.

He adds that he also expects it to negatively impact the yearly ranking from the Fraser Institute. Peru ranks as the third-most attractive mining country in Latin America after Chile and Mexico on the latest Policy Potential Index from the institute.

The Conga gold mine was being developed by US-based Newmont Mining and local miner Buenaventura – the same companies that own Yanacocha, the world’s second-largest gold mine. Development of Conga was originally estimated at a cost of up to $4.8-billion, or the equivalent of 63% of what Peru received in total foreign direct investments last year.

Construction on Conga started in July 2011, but were suspended in November 2011 at the request of the Peruvian government following violent protests from antimining activists led by the head of the Cajamarca region, where Conga and Yanacocha are located. The opponents claim Conga will pollute the waters used by the local farmers for agriculture.

Construction was further delayed as the Peruvian government waited for an independent expert review of Conga’s previously approved environmental-impact assessment, which was handed in in April. The three experts confirmed the data used for the original approval.

However, in August the government of President Ollanta Humala announced that it would suspend the development. The decision came as a surprise after Humala had earlier taken a hard line against the protestors and had appeared to respect the expert findings.

Neither Newmont nor Buenaventura answered questions from Mining Weekly Online on the future of Conga or the delay’s impact on financials. Buenaventura referred to Newmont, which, in turn, sent a short statement on its general commitment to Peru.

However, in its latest yearly report for 2011, Newmont states that “any inability to continue to develop the Conga project or operate at Yanacocha could have an adverse impact on our growth if we are not able to replace its expected production… Should we be unable to continue with the current development plan at Conga, we may reprioritise and reallocate capital to development alternatives in Nevada, Australia, Ghana and Indonesia.”

According to Newmont’s 2011 annual report, $1-billion had been invested in Conga as of December 31, 2011. This year, it is investing $440-million, according to a separate fact sheet.

According to the same fact sheet, Newmont’s top priority now is developing the water reservoirs for Conga.

“The company will take a slower development approach – which is intended to foster a more suitable political and social environment – by focusing on the construction of reservoirs for downstream communities,” it says. “Construction on the Conga project will only continue if it can be done in a safe, socially and environmentally responsible manner with risk-adjusted returns that justify future investment.”

Once Newmont and Buenaventura finish the water developments, Martinez expects the Conga project to be back on track. “Once the reserve construction has finished, the population will realize that there is more and better quality water,” Martinez says.

Plans call for boosting water to help local farmers, he says.

“The change of perception is only a matter of time, during which the arguments from the radical opponents will remain without merit … and the Conga project will finally be approved,” Martinez says.

American Chamber of Commerce in Peru executive director Aldo Defilippi points out that the large mining companies are providing big benefits to areas with little or no Peruvian State infrastructure. They include well-paid jobs with insurance and special preferences at local banks.

Meanwhile, thousands of indirect jobs have been created. Those benefits stand in stark contrast to illegal miners, informal loggers, drug traffickers and terrorists that operate in Cajamarca.

“They prey; pollute; exploit the locals, including children; don’t provide any labour rights; don’t pay taxes; etc.,” he says. For them, formal mining companies are seen as a hindrance to their activities, Defilippi adds.

Notwithstanding the Conga delay, there are several juniors interested in Peru, according to Martinez.

“They understand that these problems are part of an unfortunate constant, but shouldn’t affect substantially the plans of new investors,” he says.

Edited by: Henry Lazenby