Cia. de Minas Buenaventura SA (BVN:US), the biggest Peruvian precious-metals miner, said it may increase provisions by $6 million in the second half of the year because it hasn’t received payments for concentrates from Doe Run Peru.
Doe Run’s shuttered zinc and lead smelter owes Buenaventura and its Minera El Brocal unit $16.6 million, Buenaventura Chief Financial Officer Carlos Galvez said today on a conference call with analysts.
Banks halted lending to Doe Run, a unit of Renco Group Inc., in February after metal prices collapsed. On June 2, the smelter shut down all operations after suppliers refused to sell it raw materials. Copper, zinc and lead prices dropped at least 49 percent in London last year, leading to $124 million in Doe Run losses.
“We’ve already provisioned $9.1 million in the first half and still have to provision $5 to 6 million during the rest of the year,” Galvez said. “We only have a 50 percent possibility of collecting these accounts.”
Government-brokered talks with creditors are scheduled for Aug. 3, Doe Run Vice President Jose Mogrovejo said today in a telephone interview from La Oroya, 140 kilometers (87 miles) east of Lima.
“We’ll review the details of our latest cash injection proposal,” Mogrovejo said. “The company has every intention of meeting its debts.”
Newmont Gold Corp. (NEM:US)’s Yanacocha gold mine, in which Buenaventura holds a 44 percent stake, is scheduled to increase production by 11 percent to 2 million ounces this year, Chief Executive Officer Roque Benavides said on the call.
Peru’s government last month approved an environmental impact study for Buenaventura’s Tantahuatay gold and copper deposit, in which Phoenix-based Southern Copper Corp. (SCCO:US) holds a 44 percent stake, Benavides said. The deposit will add 100,000 ounces to annual gold output in 2011.
Buenaventura’s American depositary receipts, each representing one ordinary share, rose 95 cents, or 3.8 percent, to $25.97 at 1:27 p.m. in New York Stock Exchange composite trading (BVN:US). Earlier, the stock touched $26.07, the highest since June 16.
Second-quarter net income rose to $134.4 million, or 53 cents a share, the company said yesterday after markets had closed. Buenaventura was expected to report profit excluding some items of 46 cents, the average estimate of five analysts surveyed by Bloomberg.
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