20-F: Cementos Pacasmayo Reveals Technical Details on Key Quarry and Plant Operations

Cementos Pacasmayo provides a technical overview of its Virrila quarry and Piura cement plant, detailing resources, reserves, and operational strategies.

Summary

• Cementos Pacasmayo S.A.A. (CPSAA) has released a technical report summarizing a pre-feasibility study of the Virrila quarry and Piura Cement Plant.
• The Virrila quarry supplies coquina, the main raw material for cement production, and is located 192 km from the Piura plant.
• The quarry operates in a temperate and humid climate with average annual temperatures between 17.8 C and 29.5 C.
• Mining operations at Virrila quarry began on September 17, 2015.
• The report details exploration activities, sample preparation, data verification, and mineral processing at both the quarry and the plant.
• Coquina Resources and Reserves have been estimated, with Proven Reserves totaling 40.3 million tonnes at 51.87% CaO.
• The mining plan considers an average annual production of 1.43 million tonnes of coquina over the next 30 years.
• The Piura plant has a clinker/cement ratio of 0.71 and relies on the national grid for electricity.
• The economic analysis projects an NPV of 1,664 million Soles at an 11.56% discount rate, with an average sales price of 687.8 Soles per ton of cement.
• The report concludes that the operation at the Virrila quarry and Piura plant is technically and economically feasible.

Sentiment

Score: 7

Explanation: The document is largely factual and technical, presenting data and analysis. The sentiment is neutral to slightly positive due to the confirmation of resources and reserves and the economic feasibility of the operations.

Positives

• Cementos Pacasmayo has mining rights for exploration, development, and production of coquina.
• The company has an agreement with Fundacin Comunal San Martn de Sechura for land use.
• Cementos Pacasmayo has complied with ISO-9001 standards since 2015.
• The company has a quality assurance system with sample preparation methods, procedures, analysis, and security.
• The validated information is congruent with the geological models.
• The cement plant has all the equipment and facilities available to produce cement.
• The company has a Social Responsibility area that generates relationships of trust with local communities.
• The operation at the Virrila quarry and Piura plant is technically and economically feasible.
• The sensitivity analysis shows that the operation is economically robust.

Negatives

• From May to September 2023, the Virrila quarry stopped operations due to traffic interruption caused by the overflow of the La Nia lagoon provoked by cyclone Yaku.
• The Piura plant stopped its clinker production operations from July to September 2023 to avoid exceeding strategic inventories.

Risks

• The report identifies capital and operating cost estimation risks, though they are considered low due to the nature of the operations.
• The quality factors are considered the most sensitive factors that, by their nature, can affect the Reserve estimates.
• The public road to Bayovar Bay, the transmission line owned by a third party company, and an oil supply pipeline that ends at the port of Petro Peru pass through our mining concessions.

Future Outlook

The report projects increasing cement demand due to the high infrastructure deficit in the northern region, with a sustained growth of 2% per year until maximum cement production capacity is reached.

Industry Context

The report provides context on the Peruvian cement market, highlighting the geographic segmentation and key players, including Cementos Pacasmayo, UNACEM, and Cemento Yura.

Stakeholder Impact

• The report highlights the company's commitment to improving the quality of life in surrounding communities through social responsibility initiatives.
• The company has a strong relationship with its communities and has identified their main needs such as health, education, urban development and local development.

Next Steps

• Develop a geological exploration program surrounding the Virrila quarry.
• Maintain the QaQc program for exploration, development and production activities.
• Carry out the geological interpretation of the data generated during the 2023 diamond drilling campaign.
• Update and standardize the geological model with the information generated by the diamond drilling campaign.
• Control the stripping ratio during the operation in order to achieve a reduction in production costs.

Key Dates

Keywords

Cementos Pacasmayo, Virrila Quarry, Piura Plant, Technical Report Summary, Mineral Resources, Mineral Reserves, Coquina, Limestone, Cement Production, Mining, Geology, Economic Analysis