Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Volcan Cia Minera SAA plans to make a series of debt payments through August and to refinance later obligations without imposing losses, said the head of its new controlling shareholder, dismissing speculation over a default or restructuring at the Peruvian zinc miner.
“Absolutely, categorically no haircut is necessary,” said Jose Luis Manzano, the head of Integra Capital. “It’s just changing the maturities and that’s it. The future cash flow doesn’t justify a haircut.”
Volcan’s dollar bonds due in 2026 jumped 5 cents to 69 cents on the dollar late Monday, the highest level since August 2023, according to Trace trading data.
On top of making payments in June and August, Volcan is at an advanced stage in talks to sell its non-core assets that include hydroelectric plants and cement facilities, Manzano said.
Last month, the company pushed back a payment of about $34 million related to a $400 million syndicated loan to June 24 after reaching an agreement with banks. It also has a $7.9 million bond coupon due Aug. 11, according to data compiled by Bloomberg.
Volcan and its bondholders have hired legal and debt advisers to refinance the notes. The announcement of Integra’s acquisition last week sent the debt tumbling 7 cents Tuesday to 61.5 cents on the dollar.
The company is now valued at $410 million on the Lima stock exchange.
Manzano, an Argentine who oversees a diversified holding that ranges from media to energy and mining, made his first foray into Peru when he agreed to acquire a 55% stake in Volcan from Glencore PLC last week for $20 million. Glencore in turn will provide up to $40 million of financing to help resolve pending liabilities.
It’s the second time that Integra has bought a mining asset from Glencore after acquiring a company in northern Argentina a few years ago.
Manzano said he sees good prospects for mining more copper at Volcan mines — including through a joint venture with Antofagasta Plc — as well as zinc and gold.
“I think the market was overestimating the financial risk and underestimating the geological potential,” Manzano said.
(By Jonathan Gilbert and Daniel Cancel)
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