Sierra Gorda could be hit by losses on low metal prices - Citi

Analysts at Citi Research have said “large net losses” could be reported by the Sierra Gorda copper-molybdenum project in Chile because of low metal prices.

The project is 55% owned by KGHM Polska Miedz through subsidiary KGHM International, 31.5% by Sumitomo Metal Mining and 13.5% Sumitomo Corporation. According to the analysts, KGHM management has said there may be capex cuts if copper prices dip below $5,000 per tonne and silver below $15 per oz. “It also flagged the risk of impairments if prices stay low for longer [and] the biggest risk would be for KGHM International assets in our view,” the analysts said in a note. “Management mentioned that the Sierra Gorda project would use accelerated depreciation, which would be some $400 million per year, visibly higher than what we have been estimating so far – about $230 million during the phase 1 of the project.” The company has said Sierra Gorda’s molybdenum C1 cash cost would be $1.20 per lb assuming prices...


Claire Hack

August 18, 2015

00:45 GMT

New York