Newmont Mining (NYSE: NEM) could reallocate project funds if an ongoing evaluation of the environmental impact study (EIS) for its $4.8 billion Conga mine turns economically unfavourable, CEO Richard O'Brien said in a conference call to discuss Q1 results.
But Bloomberg is reporting that Newmont will have to increase its spending on the copper-gold project in Peru's Cajamarca region anyway if it wants to advance the stalled development, quoting Newmont’s partner Cia de Minas Buenaventura’s (NYSE:BVN) CEO, Roque Benavides:
“It will be a higher capital expenditure, but it won’t be a substantial amount compared to the overall cost of the project,” Bernavides said. “The company is essentially evaluating and doing our best to offer additional alternatives.”
"We continue to evaluate," said Friday Newmont’s O’Brien, adding the company will be able to make a decision once the project's new cost structure is clear.
The Conga mine project has faced strong opposition from residents of the gold-rich northern state of Cajamarca since the government approved its EIS in October 201. Some residents fear for their water supply, especially after a group of international experts, hired by the Peruvian government, concluded that Conga’s environmental impact statement (EIS) needed “substantive improvements”, including the expansion of a series of water reservoirs.
Newmont and Buenaventura, which together own 95% of the Conga mine project, have said they hope to begin production either in 2014 or 2015, generating between 155 and 235 million pounds of copper a year at the site, if it gets permission from the Peruvian government.
Construction was halted in November last year, after violent protests forced Peru’s government to declare a state of emergency in the area.