What Rout? This Gold Miner’s Getting Near Record-High PricesBy
Peso is worst performing Latin American currency in 3 months
Mineros is expanding acquisition search to North America
While other gold companies have been stung by an 11 percent drop in prices in the past year, Colombia’s biggest producer is getting near-record high prices for its output thanks to its sinking local currency.
Colombia’s peso has lost 39 percent in the past year amid slumping prices of coal and oil, the country’s main exports. That’s shielding Mineros SA from bullion declines that are forcing cutbacks at other mining companies.
“It’s going to be a good year,” Chief Executive Officer Andres Restrepo said Monday in an interview from his offices in Medellin.
Mineros continues to hunt for new assets in Latin America and has extended its search to Canada and the U.S. as part of a goal to lift production from 183,296 ounces in 2014 to as much as 500,000 ounces by 2020. It bought a 90 percent stake in Hemco Nicaragua SA in March 2013 and has budgeted $200 million for one or two more acquisitions, anywhere from Alaska to Patagonia.
Mineros shares, up 2.1 percent in Bogota on Tuesday, have jumped 30 percent in the past three months while a peer group tracked by Bloomberg fell 18 percent. The Colombian peso is down 18 percent against the dollar in the same span, the worst performance among major Latin American currencies.
“As long as we have healthy operations we will be safe to invest in new ones,” Restrepo said. Even so, finding existing mines or mature projects with significant expansion potential isn’t easy, he said.
Gold is trading at about $1,140 an ounce, or about 3.5 million pesos. A year ago, the price was $1,287, or 2.5 million pesos. After hedging, Mineros is getting about 3 million pesos an ounce from its Colombian mines, which is close to a record for the company, Restrepo said. The peso closed at 3,113 to the dollar on Tuesday.
“Nobody expected the peso to reach 3,100 to the dollar this year,” he said.
Output from both the Colombian and Nicaraguan operations is sold to refineries in Europe and the U.S.
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