REUTERS SUMMIT-Buenaventura sees output up; has hopes for Conga

Tue May 21, 2013 6:32pm EDT

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By Teresa Cespedes and Mitra Taj

LIMA May 21 (Reuters) - Peru's top precious metals miner, Buenaventura, sees a rise in output in 2013 and said the stalled $4.8 billion Conga gold mine project it owns a stake in could advance after a community reservoir is built at the end of the year.

Buenaventura's Chief Executive Roque Benavides said on Tuesday during the Reuters Latin America Investment Summit that the mines the firm owns directly will produce at least 13 percent more gold and nearly 6 percent more silver.

In 2012 Buenaventura produced 440,996 ounces of gold and 17 million ounces of silver, he said.

"Looking ahead (past 2013) we expect to maintain the level of production if not raise it slightly, but there won't be any big jumps in output," Benavides said.

He also said the proposed Conga gold mine in northern Peru - put on hold last year amid community opposition - could go forward after construction of the second of four reservoirs for local towns wraps up at the end of this year.

Newmont Mining Corp is the majority shareholder in the Conga project, which would be Peru's biggest mining investment ever. Buenaventura owns a 43.65 percent stake.

Communities say they fear the mine would pollute and deplete nearby lakes, and Newmont and Buenaventura have halted construction of mining facilities while they build reservoirs to assure locals of water supplies.

"We think showing people that they will have more water than they have today will convince them we're building a good project," said Benavides.

He said construction of the first reservoir was scheduled to finish on Monday and that pumping water into the second reservoir will be a turning point.

The second reservoir will draw water in part from a nearby lake that locals want to protect.

"If that is viable from a social standpoint we can go forward with construction of the mine," he said.

Buenaventura, which operates 12 mines in Peru directly, has been focusing on trimming costs and boosting efficiency as global metal prices have slipped, Benavides said.

He said he thinks market speculation has driven down the price of gold.

"I don't see anything that has changed in the gold market to merit the price falling like this," said Benavides. "I think there has been an overreaction and am convinced the fundamentals are there for the price to go up again."

Benavides also said lengthy government approvals and widespread social conflicts are holding up mining investments in Peru and contributing to an economic slowdown in recent months.

Peru is a top global producer of copper, gold, silver and zinc, but its traditional mineral exports have been hit by lower metal prices. Earlier this month the Andean nation posted its first quarterly trade deficit in more than four years.

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