Buenaventura Mining Company's increased attention to costs and discipline in capital spending will help it maintain a solid financial profile, Moody's Investors Service has affirmed.
Likewise, the company will not need to depend on its affiliates to cover its financial and investment needs for at least the next couple of years.
It should be noted the diversity of metals that Buenaventura produces will help the business withstand price volatility in any given commodity.
"We project that the spread of
Buenaventura's portfolio will remain fairly stable during 2018-19 with a slight decline in sales of
gold, the largest contributor to Buenaventura's sales," Moody's expressed.
Likewise,
Buenaventura's mines are themselves diverse, in terms of both ownership and contents. The company owns five mines outright, and holds majority stakes in two more, along with sizeable stakes in certain large assets including
Cerro Verde —the world's largest copper mine— and Yanacocha —the largest gold mine in Latin America.
"While El Brocal —Buenaventura's largest fully-owned mine— generated 27% of the company's revenue in 2017, we expect that Tambomayo will increase its contribution to Buenaventura's revenue in 2018 during its first year operating at full capacity," the credit rating agency added.
Furthermore, the business has some flexibility to shift the metal mix for at least two of its mines.
At Uchucchacua, the company has recently increased production within a certain area of higher grade lead and zinc but lower silver content, a benefit to profitability at today's relatively low silver prices.
El Brocal features an open pit as well as an underground mine, and Buenaventura can also adjust its production mix there to some extent.
Editor's note: Based on information provided by Moody's.
(END) NDP/DTK/MVB