Cia. de Minas Buenaventura SAA, Latin America’s biggest gold producer, climbed to a two-week high in New York after JPMorgan Chase & Co. recommended the stock and said output will recover in 2015 after declines this year and next.
Buenaventura’s American depositary receipts advanced 3.2 percent to $12.14 at 3:24 p.m. in New York, the highest level on a closing basis since Sept. 25.
JPMorgan analysts estimated in a note to clients that gold production will rise to 914,000 ounces in 2015 after falling this year to 883,000 ounces from 1.03 million ounces in 2012. Buenaventura is expected to resolve operational difficulties at its mines, and its partly owned Yanacocha mine will receive authorization to develop new reserves, the analysts wrote.
“We see the problems at its mines as short-term,” analysts John Bridges and Anant Inani said in the note today. Authorities in the Peruvian department of Cajamarca, where the Yanacocha mine is located, will encourage development of new mining areas “rather than risk losing Yanacocha’s jobs.”
The ADRs may reach $19 by the end of 2014, JPMorgan said. The analysts expect output of 855,000 ounces next year.
Newmont Mining Corp., Yamacocha’s majority owner, rose 0.3 percent to $25.69 today in New York.
Buenaventura’s ADRs have tumbled 66 percent this year as operating problems at its Orcopampa and other smaller mines reduced output, JPMorgan said in its report. Expansion of Yanacocha has faced opposition from local community groups on water-supply issues, according to the report.