Minsur has announced plans to issue up to US$400 million of senior unsecured notes due 2024 as part of its long-term growth and diversification programme. The company has embarked on a roadshow to present its plans to investors in the USA and other countries, supported by Bank of AmericaMerrill Lynch, JP Morgan and Scotiabank. The credit rating of the notes has been assessed as BBB- by Fitch and Baa3 by Moody’s.
Both ratings agencies indicated that Minsur could be upgraded as it diversifies its activities and reduces its risk exposure to fluctuations in tin prices. Tin accounted for 96% of mining revenue in 2012, although this is expected to have dropped to 75% last year, with the newly opened Pucamarca gold mine contributing 17% and the remaining 8% coming from tantalum and niobium produced by the Pitinga mine in Brazil. By 2020 copper could account for a half of revenues, following the planned start-up of the Mina Justa project in which it has a 70% stake.
Looking at Minsur’s tin assets, Fitch noted in a press release that the low operating cost advantage in Peru could be improved: “Minsur’s leading cost position will be enhanced over the next few years through Bofedal II, a brownfield expansion project that will process San Rafael mine’s old high grade tailings that have Sn content of 1.1%. Bofedal II is due to begin production in 2016 with annual tin production of around 6,300/MT per year. The expected cash cost of production for the project is very economical at USD1,800/MT with total capex of USD165 million.
Bofedall II is expected to increase the company’s reserves and resources of tin by an additional 65,700/MT in 2014 to a total of 676,000/MT for Minsur’s combined tin assets.” Cash operating costs at the San Rafael mine in the first three quarters of 2013 were reported to be US$7,779/tonne. According to Fitch, Minsur’s refined tin production at its Funsur plant in 2013 was 24,132 tonnes.
