Published On: Thu, Jan 16th, 2014

Colombia’s Top Gold Miner Sees Output Rebound After FARC Attacks

(Bloomberg) Mineros SA (MINEROS), Colombia’s top gold producer, expects output to rise this year after lower prices and rebel attacks hurt profit in 2013, its chief executive officer said.

Gold production will increase at the company’s underground La Ye mine and Nicaraguan operations, while its deposits in the valley of Colombia’s Nechi River will be similar to 2013, said CEO Beatriz Uribe.

“In production terms, we’re going to be better this year,” Uribe said today in a telephone interview. “But it’s possible that the price of gold could be worse.”

A 2.5-month long strike at La Ye, attacks on electricity infrastructure by the Revolutionary Armed Forces of Colombia, or FARC, and the slide in gold prices curbed last year’s profit, Uribe said.

“The balance will be less good than 2012,” Uribe said, declining to elaborate. “We’re not talking losses. The company continues to have a very good Ebitda,” referring to earnings before interest, taxes, depreciation and amortization.

The company posted profit of 64 billion pesos ($33 million) and Ebitda of 122 billion pesos in the third quarter. Mineros produced 118,401 ounces in 2012, of which 24,295 ounces were from the La Ye mine.
Seeking Acquisitions

As part of the company’s growth plan, Mineros is looking at gold assets across Latin America where price tags have fallen.

In March last year the Medellin, Colombia-based company bought 90 percent of Nicaraguan miner Hemco Nigaragua SA for an undisclosed amount.

“We’re interested in buying projects that are already producing,” Uribe said. “The options for this are not very clear in Colombia. We’re eyeing Latin America.”

Mineros sees gold prices this year averaging between $1,200 and $1,250 per ounce, Uribe said. Gold rose 0.5 percent to $1,242.5 an ounce at 3:07 p.m. in New York.

Gold fell 28 percent last year in the biggest drop since 1981 as the U.S. recovery and surging equities prompted some investors to lose faith in the metal as a store of value. The lower price coupled with the global credit squeeze could cause smaller mining companies to leave Colombia, Uribe said.

“Prices are always cyclical,” Uribe said. “As the global economy recovers, gold will cease to be a place of refuge and return to being a commodity.”

Plans to introduce environmental licenses for mining exploration in Colombia would create a further complication for companies operating there, Uribe said.

In an interview with local newspaper El Tiempo this month, Colombian Environment Minister Luz Sarmiento discussed the possibility of introducing the new licenses. Environmental permits are currently required for production.

“It will greatly reduce exploration in this country,” Uribe said.


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