Peruvian polymetallic miner Volcan expects production rebound in H2

Peruvian polymetallic miner Volcan expects zinc and silver production to rebound in the second half of the year and will continue to divest non-core assets as part of its debt restructuring and refinancing process.

The company, which has five mining units in Peru – 11 mines and eight processing plants – expects zinc production to exceed 62,000t this quarter and 63,000t in 4Q24, up from 52,800t in Q2, and silver output of up to 4Moz in each of the quarters compared with 3.2Moz in Q2.

The zinc rebound will come after a difficult first half of the year with operations halted at the San Cristóbal, Carahuacra and Ticlio mines from March 19 to April 20, which also affected silver production.

According to the company’s Q2 results presentation, annual production is estimated as follows:

Metal	Estimated production
Zinc	228,100-234,100t
Silver	10.2-14.2Moz
Lead	48,700-54,700t
Gold	8,600-10,600oz

Source: Based on Volcano figures

In the first half, Volcan reported sales of US$395mn, down 9.1% compared to US$434mn a year earlier due to the lower production. Despite this, the company posted Ebitda of US$132mn, up from US$121mn in the same period last year, partly on lower production costs. It posted an H1 loss of US$8.8mn, down from US$11.0mn a year before.

According to the presentation, the company's average unit cost fell from US$53.2/t in 2Q23 to US$46.2/t in 2Q24. Capex was down from US$42.7mn to US$32.9mn.  

ASSET SALES

Volcan also announced – as part of its financial restructuring – the sale of non-core assets and said it will continue with this process in the following months.

According to the presentation, in 2Q24 the mining company sold its subsidiary Empresa de Generación Hidroeléctrica Río Baños (EGERBA) for almost US$30mn and its Huanchor hydroelectric plant for US$46.8mn.

However, sales of its stake in Chilean cement company Polpaico, a set of real estate assets, and a package of mining exploration projects are still pending. Volcan says that, including the assets already sold, between US$120mn and US$170mn could be obtained in total.

ROMINA

Regarding Romina, a US$147mn project currently in the pipeline, Volcan says construction will begin in 2025. This year, US$20mn will be invested but the focus will be on seeking alternative financing.

According to the company, in 2025 Volcan will invest around US$86mn to begin construction of the mine. In 2026, US$41mn is planned to be invested, focusing on transportation of the ore to the Alpamarca processing plant, and commercial operations are due to start that year.

According to the energy and mines ministry, Romina is a greenfield zinc project located north of Lima and will have a 12-year mine life. Annual production is expected to be 49,000t, and it has 9.3Mt of measured and indicated resources grading 5.3% zinc, 2.9% lead, 0.1% copper and 1.4oz/t silver.