Buenaventura Mining

Buenaventura Mining is a major with production of 15 million oz of silver and 165,000 oz of gold (50% of revenue), plus significant copper (47% of revenue) and zinc (3% of revenue). They have a pipeline of 6 projects, but are giving guidance to remain at these production levels for the next 5 years.

Their gold breakeven cost per oz is around $1900, and their silver breakeven is around $27. Plus, they are dependent on base metal demand (copper and zinc) to keep those costs down. They have a lot of debt at $710 million, but $650 million in cash.

One positive is that 27% is owned by a single family, and they like their dividends (20% of net income is paid as dividends). Expect this stock to be a cash flow and dividend machine as gold and silver prices rise. And if copper and zinc remain in demand that will help this stock, or conversely it will hurt it.

All of their properties are in Peru (8 producing mines). This could be a good income stock. If they go back to their 2010 valuation ($55 share price), the dividend could be around 5 percent from an investment today.

It's highly leveraged for higher gold/silver/copper prices. If copper prices rise, they will suddenly become a FCF machine. So, they have a lot of leverage. Plus, they receive over $100M a year in dividends from equity they own in other companies. They received $147M in 2023, which was a down year for dividends.

Note: They recently made a deal to acquire a large copper miner in Peru. If you like copper, then you should like this stock. If it were cheaper, I might like it as a gold/silver stock.


DD