--Buenaventura, Gold Fields Working on Lowering Costs at
Chucapaca
--Original feasibility study called for investment of about $2.1
billion in Chucapaca
--New plan looks at building an underground mine with lower
capex and operating costs
By Ryan Dube
LIMA--The Chucapaca gold project in southern Peru could require
an investment of approximately $1 billion, about half of a previous
estimate, as the owners of the deposit look to reduce costs amid
the recent decline in metal prices.
Late last year, Gold Fields Ltd. (GFI), which owns 51% of
Chucapaca, and Compania de Minas Buenaventura S.A.A. (BVN,
BUENAVC1.VL), which has 49% of the project, announced that the
original plan to build a large, open-pit gold mine was unfeasible
due to costs. Since then, the companies have been working on a new
feasibility study to lower the capex and operating costs of the
project.
After years of enjoying record-high metal prices, many mining
companies in Peru and other jurisdictions are now cutting costs due
to the sharp declines in prices for copper, gold and other metals
in recent months. Some companies have also suspended projects as a
result of the fall in commodity prices.
In a telephone interview late Tuesday, Buenaventura Chief
Financial Officer Carlos Galvez said the new feasibility study for
Chucapaca is on track to be completed by the end of this year,
denying a local media report the project was put on hold.
"We haven't abandoned anything," Mr. Galvez said. He said the
new plan for Chucapaca involves building an underground mine with
throughput of about 5,000 tons per day, compared to the 30,000 tons
per day envisioned in the previous mine plan.
"Before, we were looking at a large project with a capex of $2.1
billion. Today, we are looking at an underground project that is
going to require half of that capex, or less," Mr. Galvez said.
Chucapaca has about 8 million ounces of gold resources.
Buenaventura is Peru's largest publicly traded precious-metals
mining company. It operates several mines and has a number of other
projects.
In addition to Chucapaca, Buenaventura also has a minority stake
in the $5 billion Minas Conga copper and gold project. Minas Conga
has faced stiff opposition from residents and politicians in the
northern region of Cajamarca over concerns about its impact on the
local water supply.
Buenaventura has a 43.65% stake in Minas Conga, while Newmont
Mining Corp. (NEM) has a 51.35% stake and the International Finance
Corp. holds the remainder.
The most recent round of protests against Minas Conga occurred
this month, when opponents took to the streets to pressure the
companies to stop the construction of reservoirs that would provide
water to residents and replace mountain lakes that are to be
drained.
Mr. Galvez said participation in the most recent protests
appeared to be less than earlier demonstrations.
"The number of people [protesting] was down. There was less
conviction," he said.
Write to Ryan Dube at ryan.dube@dowjones.com
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