- Government says it has "absolute and unrestricted respect" for business rights within current laws
- Hochschild Mining share price back over 150p
Hochschild Mining's (HOC) stressful week looks largely to be at an end after it confirmed the government of Peru's commitment to following its own mining code.
The company's future looked at risk earlier this week after the president of the council of ministers, Mirtha Vasquez, had said she would work to shut four mines in the Ayacucho region east of Lima over environmental concerns.
This was a blindside to Hochschild, and its valuation dived on the news.
On Thursday morning the gold and silver miner welcomed a "clarification" from the government, which said the miner could indeed apply to extend the licences of the Inmaculada and Pallancata mines, its two most important operations. Hochschild's share price recovered to almost 150p, compared to its pre-closure announcement level of 165p.
"We are pleased that our Inmaculada and Pallancata mines can continue to operate without further uncertainty and, furthermore, we reaffirm our goal to increasing our resources and extending our mine lives, in accordance with current legislation," said Hochschild chief executive Ignacio Bustamante.
RBC Capital Markets analyst Tyler Broda said the "uncomfortable" incident could actually be a positive for the miner. "[This] may in the end serve to de-risk Peru, and in the end enhances our confidence in the Hochschild investment case," he said.
After shifting the miner to a neutral rating on Monday, we move it back to a buy recommendation. Buy.
Last IC View: Hold, 100p, 22 Nov 2021
