Making the most of declining junior miners
Miners are underperforming gold despite getting support from the stock market.
Work at Chucapaca. (Image from archives)
South Africa’s Gold Fields (NYSE, JSE:GFI) continues to divest non-core assets with the sale of its 51% stake in an exploration project in Peru to partner Buenaventura (NYSE:BVN) for $81 million in cash plus royalty payments.
The southern Peru’s Chucapaca gold, copper and silver deposit was originally planned to commence production by the end of 2015, mining 500,000 ounces of gold a year.
“This acquisition fits perfectly with Buenaventura’s expertise to develop [operation that] permit the maximization of shareholders’ value, adding precious metal resources to our portfolio,” said in a statement the chairman and CEO of Buenaventura Roque Benavides.
Buenaventura added that it would develop the deposit as an underground mine, instead of as an open-pit project that the two companies once deemed too costly.
Gold Fields previously put the cost of investing in Chucapaca at more than $1.2 billion.
The company is one of Peru’s biggest precious metals mining companies. It also owns a 43.7% stake in Newmont Mining’s (NYSE:NEM) aging Yanacocha gold mine in northern Peru.
3 Comments
Joeitz
Well done gold fields!! Invest $1.2 billion for an $81 million return. You boys sure know how to spoil your shareholders!
Mining company advisor
They have not invested 1.2Billio, that is thge3 expected capital cost of the mine, they have probably invested around $80 Million in drilling over the last 7 years, so they have got their money back, plus a royalty. A wise decision in my mind, given that the time required to satrt and then ramp up an underground operation in Peru to 500,000 Oz / year would be 7-10 years, as an absolute minimum, given poltics, social, depth of orebody, and any unexpected ground conditions. Well done Nick Hoilland, from my 26 year mining career, 4 or which has been in Peru, you have made a wise decision for tboth the short and the long term for your shareholders.
Mining company advisor
Apologies for the spelling below (!), in my mind Nick Holland continues to make very wise decisions for his employees, shareholders and investors, based on my substantial experience………in mining.