UPDATE 1-Crisis hits some Peru mining projects, others safe
Mon Nov 3, 2008 2:47pm EST
reuters.com
(Adds context, other projects)
By Terry Wade and Dana Ford
LIMA, Nov 3 (Reuters) - Inca Pacific (IPR.V: Quote, Profile, Research, Stock Buzz) delayed its Magistral project on Monday, the latest sign that miners, especially small ones, are struggling to bring projects into production as financing dries up and metals prices drop.
Inca Pacific, a Peru-focused junior that earlier this year was seen as a potential takeover target for global miners, said it canceled an order for a ball mill, postponed any new orders for long lead time equipment, and delayed the upgrade of a road to the mine.
It blamed the international financial crisis.
"These decisions may impact the commencement of commercial production," the company said. "Inca Pacific has an obligation to place the Magistral property into production no later than Dec. 31, 2011. Failure to meet this deadline may result in the loss of a key portion of the Magistral property."
Inca Pacific, which had $17.3 million in working capital at the end of August, said it will ask the Peruvian government to extend the deadline because tightening of credit markets are beyond its control.
Like Inca Pacific, Southern Copper Corp (PCU.N: Quote, Profile, Research, Stock Buzz), Candente Resources (DNT.LM: Quote, Profile, Research, Stock Buzz), Strike Resources Ltd (SRK.AX: Quote, Profile, Research, Stock Buzz) and Newmont Mining Corp (NEM.N: Quote, Profile, Research, Stock Buzz) have complained of having to reexamine or delay their projects in Peru because of the global crisis.
Southern Copper has said plans for its Los Chancas would be evaluated, and that it may consider dipping into dividends for project funding.
Candente, a Canadian-based copper company, is looking for a joint venture partner for its Canariaco copper, gold and silver project in Peru.
Two iron ore projects in Peru of Australian miner Strike Resources have been delayed by funding trouble.
And Newmont, one of the world's largest gold miners, has said its Minas Congas project in Peru, a gold and copper deposit, is under review "until we understand the impact of the global financial crisis."
'SAFE' PROJECTS
While the crisis has raised doubts about a number of mining projects, some are still developing as planned.
Last week, precious metals miner Buenaventura (BUEv.LM: Quote, Profile, Research, Stock Buzz)(BVN.N: Quote, Profile, Research, Stock Buzz) said it is moving ahead with its La Zanja gold project, which is slated to start production in 2010.
Southern Copper has promised the crisis will not stall plans to develop its Tia Maria copper property and to expand on Toquepala.
China's Chinalco is moving ahead with its Toromocho mine, a $2.2 billion copper project, that could boost Peru's annual copper output by 25 percent.
Mining giant Xstrata (XTA.L: Quote, Profile, Research, Stock Buzz) is on track developing the Las Bambas copper project, set to start production in 2013 or 2014, and its Antapaccay copper mine.
And Gold Fields Ltd (GFIJ.J: Quote, Profile, Research, Stock Buzz), the world's fourth largest gold miner which in October opened Cerro Corona, its $550 million gold and copper mine in northern Peru, has said its plans are fully funded. (Editing by Christian Wiessner) |
