Buenaventura (BVN) and the Strategic Value of the San Gabriel Gold Project

Compañía de Minas Buenaventura S.A.A. (BVN), Peru's largest precious metals producer, has long been a cornerstone of the country's mining sector. However, the company's recent foray into gold production through the San Gabriel Gold Project represents a pivotal shift in its strategic trajectory. As the project nears completion, investors are increasingly scrutinizing its potential to drive growth, enhance shareholder value, and solidify Buenaventura's position in a competitive global market.

A Catalyst for Growth: San Gabriel's Operational Progress

The San Gabriel Gold Project, located in the Moquegua region of southern Peru, has emerged as a critical growth catalyst for Buenaventura. As of Q3 2025, the project is 96% complete, with production expected to commence in Q4 2025, pending final regulatory approvals. This timeline aligns with the company's earlier guidance, which projected first gold production by year-end 2025. The project's rapid progress is underscored by the successful production of its first doré bar during commissioning, a milestone achieved ahead of securing full operational licenses.

Once fully operational, San Gabriel is expected to produce between 100,000 and 120,000 ounces of gold annually, with a 14-year mine life. This output will not only diversify Buenaventura's revenue streams but also offset declining production from aging copper and silver assets. For context, the company experienced a 12.6% drop in gold production in 2024, a trend San Gabriel is explicitly designed to reverse.

Strategic Diversification and Geographic Expansion

Buenaventura's traditional dominance in copper and silver has exposed it to commodity price volatility and regional operational risks. The San Gabriel project, however, marks a deliberate pivot toward gold-a metal with historically stable demand and higher margins. By anchoring operations in the Moquegua region-a hub for copper mining-Buenaventura is leveraging existing infrastructure, while tapping into a new mineral resource base.

This diversification is not merely operational but also geographic. The Moquegua region's economic profile is poised to benefit from the project, with job creation, infrastructure development, and increased tax revenues expected to follow. For investors, this translates to reduced community resistance and regulatory friction, both of which have historically hindered mining projects in politically sensitive regions.

Financial Projections and Shareholder Value

The San Gabriel project's financial implications are equally compelling. With a $750 million capital investment, the project is projected to generate stable, high-margin cash flows over its 14-year lifespan. By 2026, when the mine reaches full capacity, Buenaventura anticipates processing 2,000 tons per day, significantly boosting its gold output and revenue.

Shareholders are already seeing the benefits of this strategic bet. In Q3 2025, the company maintained a robust leverage ratio of 0.41x, reflecting disciplined capital management. Additionally, Buenaventura approved a $0.1446 per share ADS dividend, signaling confidence in its ability to balance reinvestment and returns. Analysts suggest that San Gabriel's contribution to earnings per share (EPS) will accelerate in 2026, as the project transitions from commissioning to full-scale production.

Competitive Positioning in the Mining Sector

In a sector where operational continuity and cost efficiency are paramount, San Gabriel strengthens Buenaventura's competitive edge. The project's high-margin gold output positions the company to outperform peers reliant on lower-margin base metals. Moreover, the 14-year mine life ensures a long-term production base, insulating the company from short-term commodity cycles.

Buenaventura's strategic focus on gold also aligns with broader industry trends. As global demand for gold-driven by central bank purchases and inflation hedging-remains robust, companies with diversified portfolios are better positioned to capitalize on price resilience. San Gabriel's contribution to this diversification is expected to enhance the company's valuation metrics, particularly as it replaces output from maturing assets.

Conclusion: A Cornerstone of Long-Term Value

The San Gabriel Gold Project is more than a capital-intensive endeavor; it is a strategic cornerstone for Buenaventura's long-term growth. By diversifying its commodity mix, extending its operational lifespan, and generating stable cash flows, the project addresses key risks while unlocking new value for shareholders. As the mine moves toward full production in 2026, investors should closely monitor its impact on EPS growth, dividend sustainability, and the company's broader competitive positioning. For now, the evidence suggests that Buenaventura is well on its way to cementing its status as a leader in Peru's evolving mining landscape.