Gold Strike Dims Production Outlook at Top Colombia MinerAndrew Willis
Mineros SA, the most resilient stock among gold-mining peers this year, said it will cut output estimates and revise profit forecasts after prices slumped and as a strike at one of its Colombian mines enters an eighth week.
Workers at the underground La Ye mine in the country’s northwest have been on strike since May 16, reducing output by about 2,000 ounces a month, Chief Executive Officer Beatriz Uribe said yesterday in a telephone interview from Medellin. The company’s 5.1 percent wage increase offer was rejected.
“We really don’t know what’s going to happen,” Uribe said about the industrial dispute. “It’s in their hands to accept the company’s offer. So far we’ve had a long silence.”
With inflation running at about 2 percent, the company’s offer wasn’t enough, union official Alberto Solano said by telephone from Barranquilla, Colombia.
Mineros has weathered gold’s 25 percent plunge this year better than 15 similar stocks tracked by Bloomberg. The shares have lost 18 percent compared with a 46 percent peer-group average. Before the strike, Mineros had forecast 2013 output of 123,000 ounces in Colombia, up from 118,000 ounces in 2012. Colombia’s gold exports rose tenfold in the past five years, overtaking coffee to become the top export after oil and coal.
Uribe declined to give the revised production estimate. The company’s other operations in Colombia and Nicaragua are meeting output targets, she said.
Gold futures for August delivery gained 0.7 percent to settle at $1,251.90 an ounce in New York yesterday.
Management is now assuming an average price of $1,200 over the next two years and is studying cost-cutting measures to allow for “an adequate level of profitability,” Uribe said. The company plans to channel exploration spending into its most developed projects, keeping others on “standby,” she said.
Mineros, Colombia’s biggest gold producer, agreed in March to buy Nicaraguan miner Hemco and is still on the hunt for new assets across Latin America. Mineros would study the merits of buying the AUX gold mining company controlled by Brazilian billionaire Eike Batista if it became available, Uribe said.
“If he wants to sell assets in Colombia, we would be interested,” she said.