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Newmont's Conga Gold Project in Peru Faces Cost Increases

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April 30 (Bloomberg) -- Newmont Mining Corp. will have to increase spending on a proposed $4.8 billion Peruvian gold mine if it wants to advance the stalled project.

Newmont and partner Cia. de Minas Buenaventura SAA expect to reach “an additional agreement” with the government on Minas Conga, Buenaventura Chief Executive Officer Roque Benavides said on a conference call with analysts today. A review commissioned by the government recommended expanding the site’s reservoir capacity.

“It will be a higher capital expenditure, but it won’t be a substantial amount compared to the overall cost of the project,” Benavides said. “The company is essentially evaluating and doing our best to offer additional alternatives.” Lima-based Buenaventura holds a 49 percent stake in the project.

Peru suspended the project and commissioned an environmental review after Andean farmers, concerned that the project would dry up water supplies, blocked roads and destroyed Newmont’s installations in November.

Newmont has “other options” if the report’s recommendations make Conga too expensive to build, Richard O’Brien, chief executive officer of the Greenwood Village, Colorado-based company said April 27.

Newmont fell 0.5 percent to $47.61 at 3 p.m. in New York. Buenaventura dropped 2.2 percent to $41.37.

To contact the reporter on this story: Alexander Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net

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