How is the debottlenecking program progressing at Buenaventura’s main operations?

The program is moving along well. We have had very good results in Tambomayo, where we have simplified the metallurgical process while we have also optimized mine preparation. In Uchucchacua we have improved efficiency in the underground mine as well, and in both mines the program is resulting in significant cost savings. Orcopampa is a different case, because we have resized the operation, and a big focus now is on the exploration front. Finally, at Marcapunta we should reap the benefits of the program during 2020.

To what extent is declining gold production being offset by higher gold prices?

Buenaventura’s gold production profile follows the declining trend of the Peruvian gold segment. We are seeing production fall in Orcopampa and La Zanja; Yanacocha’s production did not decrease in the past year but it will over the next years. So, in the medium term San Gabriel will be a key project for us as it will be a breaking point; while Yanacocha, Tantahuatay and La Zanja will become gold-copper producers and not just gold producers.

What is the current status of the San Gabriel gold project?

San Gabriel is in Moquegua, southern Peru. It is a project for an underground mine that belongs 100% to Buenaventura. The EIA is approved and we have the land agreements in place, however we are facing some delays due to the prior consultation process. We hope we can have this done during the first months of 2020, because feasibility is already completed. During the last year we solved the issues regarding rock quality, so we are ready to take an investment decision if the prior consultation process goes well.

How advanced is the company in terms of Tantahuatay’s copper sulfides development, and how can  you use your experience as a copper producer in El Brocal?

El Brocal’s Marcapunta, which produces between 40,000 and 50,000 tonnes of copper per year (mt/y) is an underground mine, but Tantahuatay will be an open pit mine, therefore our experience in copper applies more to the concentrate sales than the operation as such. Having said that, we are making good progress in our Río Seco project. Río Seco is a chemical plant where we currently process Uchucchacua’s lead-silver concentrates that have high manganese content. By means of a leaching and atmospheric pressure process, we produce manganese sulfate (used in the agribusiness), while we increase lead and silver grades. Now, we are carrying out a pilot to remove arsenic from copper concentrates. During 2020 this project, for which we have a patent in the U.S, should reach the feasibility stage. Once we apply the process to Marcapunta successfully, we can also use Rio Seco eventually for Tantahuatay and Yanacocha as well. At Tantahuatay there is less arsenic than in Marcapunta in any case, and by the end of 2020 we expect to define the copper reserves in this operation.

What was the rationale behind your recent investment in Tinka Resources?

The company’s vision is to have assets that can be in production for at least 10 years. Ayawilca is a high-grade zinc project, equidistantly located between El Brocal and Uchucchacua. In both plants we have the capacity to produce lead and zinc concentrates. Therefore, it makes sense to think that Ayawilca, rather than being developed as a standalone project, could be developed as a satellite mine to feed those plants. El Brocal has a plant capacity between 18,000 and 20,000 tonnes per day (mt/d), while Uchucchacua is a 4,000 mt/d plant with an EIA approved to go to 6,000 mt/d, although we are still at an engineering phase before we approve this expansion.

How are base metals playing an increasing role in Buenaventura’s production profile?

Buenaventura has a 66-year history. It started in silver, with Julcani; then the focus was strongly on precious metals, with several mines across the country, and of course Yanacocha. Then, the company invested in copper and base metals with Cerro Verde and El Brocal, so today’s production profile is quite diversified. The idea is that Buenaventura should be a long-lasting investment vehicle with consistent financial results. In this respect, it is easier to find larger deposits in base metals than in precious metals. We will always have a big focus on gold and silver, but industrial metals are becoming increasingly important.

Gold price has gone up sharply in recent months, but it is not the same for silver. What is your view of metal prices?

Primary silver mines represent just 30% of the total world production, while the remaining 70% comes to the market as a by-product. Therefore, silver production is very stable regardless of the price – that is why gold and silver prices have decoupled. In gold, there is a big challenge worldwide to find large deposits, which explains the recent M&A with Barrick and Randgold on one side, and Newmont and Goldcorp on the other. Futhermore, gold is a haven for investors in times of instability. Unfortunately, in gold there are the ETFs, a financial product that generate further volatility in the market. Copper looks like a very safe bet, in the trend towards a greener world. Perhaps in less than a couple of decades, most countries will have 100% electric car fleets.