Moody's: Volcan notes Baa3

Moody's Investors Service said it assigned a Baa3 senior unsecured rating to Volcan Compania Minera SAA's up to $600 million of proposed senior unsecured notes due in 2021.

The outlook is stable.

Moody's said the Baa3 rating on the proposed notes reflects (a) Volcan's low debt leverage for its rating category, pro forma for the proposed notes; (b) its competitive cost position, which should support the company's earnings and credit metrics even at prices for its main metals more moderate than current levels; (c) its operational diversity in terms of number of mines and concentrators and mining complexes and (d) its position as a leading producer of zinc and silver globally.

Constraining the company's ratings are (a) its moderate reserve position; (b) its higher capital expenditure program over the next several years to grow its metal production and metal diversity, (c) its low regional diversity; and (d) its relatively modest revenue size, as compared to global peers.

The company's ownership and the political landscape in which it operates in Peru are further considerations, Moody's said.

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