Take physic, pomp

Regarding Buenaventura (BVN) at San Gabriel (ex-Chucapaca), from IKN344

This was in Sunday’s edition of the Weekly. The only thing that’s changed is the chart, which is a 10 day chart updated to today and shows the considerable drop BVN took yesterday Monday, too.


Buenaventura (BVN): As this five day chart shows, at
the end of Thursday there was a rough 2% gap between BVN and the GDX
benchmark, but come the end of Friday that gap was up to nearly 8%.

The reason
may be that BVN just sucks, but it’s more likely that the negative news from
its San Gabriel project (13a) was already filtering through. The simple
equation is…
Community known to be difficult +
company with poor community relations record = accident waiting to happen
… so in a
nutshell, last week BVN was due to hold its Environmental/Social Impact
Presentation to the community of Ichuña regarding its San Gabriel (previously
known as Chucapaca) gold project in the Southern Moquegua region of Peru.
The day
arrived, as did the local authorities, representatives of the national
government and the mining ministry (MEM), the BVN team and an estimated 1,000
members of the local population to attend to presentation, but before it could
start the local authorities and BVN got into a “strong discussion” and after a
prolonged discussion (that apparently happened in the police station) the
meeting was eventually called off before it could begin. Adding to the mess,
the locals who were to attend weren’t let into the meeting hall at any point
(doors blocked by guards touting guns) and had to mill around in the main
square, waiting for a yea or nay decision on the meeting happening for a few
hours (until the nay was announced). Also, adding insult to injury the MEM
representative, one Abel Díaz Berrios, told the local authorities that they could
be subject to criminal prosecution if they continued to block the meeting from
happening. That message went down like a lead balloon and hilarity ensued
(though no meeting). In the words of regional council member Máximo Ramos Apaza
who was part of the local authority group, “You don’t enter somebody’s else
house and then treat them with a lack of respect. But the most important is
that the people’s decision is respected”. According to reports, locals were
upset about the lack of social outreach and communication from BVN up to last
week and considered the company was trying to push through its obligatory
Environment and Social meeting on the sly without having done enough
It’s fair
to call BVN’s track record in community relations as “patchy at best”, for
example it has some of its non-core assets up for sale because locals want the
mines to go back into operation, but not under the command of BVN. For another
example, Conga. It has got to decent agreements and cordial relationships with
some of its communities, for one example it manages to keep working at
Tantahuatay in Cajamarca which is no mean feat, for another the word from its
new Tambomayo project is positive. But you never know with this Roque Benavides
guy (who could do with a lesson or two from his cousin, I think).  Then again, it’s also fair to call the
population of Ichuña difficult, as even a company with a strong track record of
community relations success such as Rio Alto made no progress there (when it
took the option on a different Ichuña property held by Duran Ventures at the
time, only to hand it back with no progress made).
The upshot
is that BVN, once again, has a community problem on its hands that could be
serious enough to block a key development project. The share price drop of
Friday probably doesn’t reflect all of that yet. I still like the idea of
buying into BVN due to its leverage to gold, but I’m also glad that I haven’t
bit at it yet.

Leave a Reply

Your email address will not be published.

Hello, you are not in a chatroom, you are in my living room. Opposing views and criticisms welcome, insults or urinating on furniture unwelcome. Please refrain from swearing if possible, it is not needed.