Peruvian miner Buenaventura ups San Gabriel capex estimate

Peruvian precious metals miner Buenaventura projects higher capex for its San Gabriel underground project, a greenfield initiative in Moquegua region. 

The company now expects to invest US$650mn in the gold project, where progress stands at 57%, up from US$470mn at the beginning of 2024.

“The increase of US$180mn is due to an increase in prices above our initial estimates, which were between 3% to 4% per year. Additionally, we have been making changes to the project sequence and adjusting costs to mitigate the 18-month delay we experienced between 2021 and 2022,” Renzo Macher, Buenaventura’s VP of projects and innovation, told the company’s Q2 conference call.

“We expect to produce our first gold bar by the end of the third quarter of 2024. It is progressing well, and we already have all the updated costs.” 

Macher said the company will provide more details of the cost in its Q3 presentation.

At the end of the first half, engineering work at San Gabriel was 95% complete, procurement 98% and construction 50%. 

The estimated investment for San Gabriel in 2024 was also revised upwards to US$280mn from US$220mn.

Buenaventura reported Q2 revenues of US$277mn, up from US$173mn a year earlier. First half revenues were US$524mn, up from US$359mn. The miner posted H1 earnings of US$132mn compared to US$57.7mn in the first half of 2023 and US$70.7mn in the quarter compared with a loss of US$6.7mn.

According to CEO Leandro García, the company will focus almost 100% on San Gabriel during the following months and still expects commercial operations to start in the second half of 2025.

“For 3Q24, we are monitoring the start of construction of the high-voltage power line, as well as the start of electrical implementation works,” he said. By the end of 2024, the mining company hopes to complete the mineral pipeline.  

García added that capex for San Gabriel will be US$200m next year.

“We are advancing around 10% per quarter, with which we estimate to complete the construction of the project by the beginning of 2Q25. What remains will be activities to ensure the start-up,” added Macher.