Cia. de Minas Buenaventura SA, the world's seventh-biggest gold miner, said second-quarter profit increased 79 percent, the ninth straight period of growth, on rising gold and silver sales and higher metal prices.
Net income climbed to $138.1 million, or $1.09 per American depositary receipt, from $77.2 million, or 61 cents, a year earlier, the Lima-based company said today. A Bloomberg News survey of 12 analysts had a median forecast of 77 cents. Revenue soared 91 percent to $168.6 million from $88.1 million.
Buenaventura has a 44 percent stake in Yanacocha, the world's second-largest gold mine and controlled by Denver-based Newmont Mining Corp. (NEM:US) The mine boosted production by 6 percent to 750,585 ounces in the second quarter. Some investors are concerned about the policies of President-elect Alan Garcia, who has proposed renegotiating contracts with mining companies after he takes office July 28.
``Yanacocha has tremendous long-term growth potential despite the political risk in Peru,'' Tony Lesiak, an analyst at UBS Securities Canada Inc. who rates the stock ``buy 2,'' said in a phone interview from Toronto.
Gold sales, including those from the Yanacocha mine, rose 27 percent to 460,095 ounces, Buenaventura said. Silver sales increased 25 percent to 4.4 million ounces.
Gold prices averaged $561 an ounce in the second quarter on the Comex division of the New York Mercantile Exchange, up 36 percent from a year earlier. Silver prices rose 72 percent to $12.14 an ounce. Buenaventura's wholly owned mines, including Orcopampa and Antapite, raised gold production by 10 percent to 97,250 ounces. Silver output rose 16 percent to 3.85 million ounces.
Cerro Verde, Peru's third-largest copper mine, boosted second-quarter copper output by 6 percent to 23,598 tons, contributing $25.7 million to Buenaventura's second-quarter net income. Copper prices have more than doubled in the past 12 months.
``Changes in government policies, regulations, tax regimes and political unrest may negatively impact earnings,'' BMO Capital Markets' Geoff Stanley wrote in a July 25 report. Stanley rates the stock ``outperform''.
Buenaventura last year doubled its stake in Cerro Verde to 18.2 percent from 9.2 percent, at a cost of $240 million. Cerro Verde, controlled by Phoenix-based Phelps Dodge Corp., is working on an $850 million expansion, which will triple production capacity by the end of 2007.
Buenaventura's U.S.-traded shares today rose 82 cents, or 3 percent, to $27.93 in New York Stock Exchange composite trading before the earnings were released. The stock has gained 22 percent in the past 12 months.
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