LIMA (Reuters) - The new chief executive of Peru’s biggest precious metals miner, Buenaventura, said on Tuesday that the price of gold would not likely trigger an industry-wide wave of new mining projects until it reached at least $1,350 per ounce.
Victor Gobitz told Reuters in an interview that gold’s recent rally, bringing it to about $1,225 an ounce on Tuesday, had helped bolster Buenaventura’s finances, which he described as “good” and on track to improve in 2017 after an investment spurt last year.
Buenaventura is scheduled to report its 2016 earnings next week. The market has estimated that its net profit was $41 million in the fourth quarter, according to Thomson Reuters I/B/E/S - compared with the $293 million net loss it posted in the same period of 2015.
This year, Buenaventura will work to make progress on turning four advanced-stage exploration projects into medium-sized gold, silver and copper mines in coming years, said Gobitz.
Gobitz was named Buenaventura’s chief executive last month after previously heading polymetallic miner Milpo.
While better metal prices have given new impetus for Buenaventura to push out its pipeline of projects, Gobitz said they had not climbed high enough to support a new global mining boom.
“Metal prices are beneficial to ongoing projects but not necessarily good enough to drive ... new ones,” Gobitz said. The price of gold “isn’t attractive enough to see a new boom in gold projects.”
Gobitz said Buenaventura was studying a long-term business plan with its U.S.-based partner, Newmont Mining Corp, that could include their shelved $4.8 billion gold project Conga in northern Peru, which was derailed by local protests in 2011.
Newmont owns a 51.35 percent stake in Yanacocha, a large, aging gold mine near the Conga deposit in which Buenaventura is a junior partner.
As the Conga project - once expected to help offset dwindling output at Yanacocha - remains on hold, Buenaventura has pushed forward with a series of smaller projects.
Gobitz said Buenaventura’s new mine, Tambomayo in southern Peru, which produced its first bar of gold in December, should reach full capacity of 150,000 ounces of gold and 3 million ounces of silver a year within five weeks.
The silver project Yumpag in Peru’s central Andes could be the next mine that Buenaventura builds, allowing the company to add an estimated 30 million ounces to its silver production per year, Gobitz said.
Buenaventura expects to produce 650,000 to 750,000 ounces of gold this year and 27 million to 30 million ounces of silver.
Reporting by Teresa Cespedes, Writing by Mitra Taj; Editing by Jonathan Oatis and Peter Cooney