Hochschild stocks rebound as Peru scales back on mine-closing ambitions

Hochschild shares bounce 20% as miner gets extension of Peruvian operations

  • Shares fell about 60% Monday on Peruvian plans to close mines
  • But the Peruvian government last night watered down the plans

Shares of Hochschild Mining are up more than 20 percent today after the Peruvian government backtracked on plans to rule out timeline extensions for mines in Ayacucho on environmental grounds.

The London-listed company, which saw its share price plunge by as much as 60 percent on Monday following the announcement, said its flagship Inmaculada mine and another one in Peru’s Ayacucho region would continue to operate under current frameworks.

The Inmaculada mine is Hochschild’s largest, accounting for 60 percent of cash flow at the time of its 2020 annual report, with both mines accounting for the majority of the company’s production.

The Inmaculada mine in Peru is Hochschild’s largest and accounts for a significant portion of cash flow

Peruvian Prime Minister Mirtha Vasquez said in late November that the government would close several mines in the southwestern region of Ayacucho “as soon as possible”.

Because mining is an essential part of the economy of Peru, the world’s second largest producer of copper and silver, the decision caused a clash with mining managers with operations in the country.

FTSE 250-listed Hochschild vowed to challenge the “illegal” plans, adding that no formal contact with authorities had ever been made.

But on Wednesday evening, the Peruvian government watered down its proposals and said mining companies could seek permission to expand their operations.

Hochschild chief executive Ignacio Bustamante said: “We are pleased that our Inmaculada and Pallancata mines can continue to operate without further uncertainty and furthermore reaffirm our aim to increase our resources and extend our lifespan, in line with current legislation. ‘

Shares of Hochschild rose 18 percent in late morning trading to 143.90 pence, remaining about 15 percent below levels before the unveiling of the Peruvian government’s plans.

Shares of gold and silver miners have fallen by 37.3 percent since early 2021.

Hochschild shares remain well above last week's price despite today's rally

Hochschild shares remain well above last week’s price despite today’s rally