- Shares fell nearly 60% on Monday on plans to close Peru’s mines
- But the Peruvian government scrapped the plans last night
Hochschild Mining shares rose more than 20 percent today after the Peruvian government backed out of plans to cancel deadline extensions for mines in Ayacucho over environmental concerns.
The London-listed business, which saw its share price drop 60 percent on Monday in the wake of the announcement, said its flagship Inmaculada mine and another in Peru’s Ayacucho region would continue to operate under existing structures.
The Inmaculada mine is Hochschild’s largest and represents 60 percent of its cash flow at the time of its 2020 annual report, while both mines represent the bulk of the company’s production.
The Inmaculada mine Hochschild is the largest in Peru, representing a significant portion of its cash flow.
Peru’s Prime Minister Mirtha Vasquez said late on 19 November that the government would close several mines in the southwestern Ayacucho region ‘as soon as possible’.
With mining an essential part of Peru’s economy, which is the world’s second largest producer of copper and silver, the decision led to a conflict with mining authorities over operations in the country.
FTSE 250-listed Hochschild vowed to fight the ‘illegal’ schemes, saying it had never been formally approached by authorities.
But on Wednesday night the Peruvian government backtracked on its proposals and said mining companies could seek permission to scale up operations.
Ignacio Bustamante, Chief Executive Officer of Hochschild, said: ‘We are delighted that our Inmaculada and Pallancata mines can continue to operate without any uncertainty and, in addition, we are committed to increasing our resources and extending our mine life in accordance with current legislation. confirm your goal. ,
Shares of Hochschild rose 18 percent to 143.90p in late morning trading, nearly 15 percent below the level before the Peruvian government’s plans were revealed.
Shares of gold and silver miners have fallen 37.3 per cent since the beginning of 2021.
Hochschild’s Shares Are Far From Last Week’s Price Despite Today’s Rebound