25th Nov 2021 08:54
(Alliance News) - Hochschild Mining PLC on Thursday "welcomed" the move by the presidency of the Council of Ministers in Peru, which the miner believes clarified comments made late last week by the head of Cabinet.
On Wednesday the Peruvian government backtracked on earlier plans to shutter mines.
Shares in the gold miner soared 23% on Thursday morning in London to 150.61 pence. However, the stock is still down 28% this year.
The stock tanked on Monday after Hochschild noted the risk that the Peruvian government may close two of its three running gold and silver mines, one of which is its largest in terms of production and has represented around three-quarters of its cashflow.
"In particular, the company notes the government's commitment to upholding the rule of law and that its express recognition of the continued rights of mining companies to request extensions and modifications of existing permits for mining and exploration activities," Hochschild said.
"In line with the announcement, the company's operations in southern Ayacucho, Pallancata and Inmaculada will continue to operate under the existing legal framework."
Hochschild reasserted its goal of increasing resources and extending mine lives in line with legislation.
The government on Wednesday reaffirmed its respect for the current legal framework.
"We rule out the closure and request for the unilateral withdrawal of the operations of the mining units, which comply with the legal requirements and conditions established in national and sectoral legislation, and which have the corresponding permits in force," the government said.
Mining companies can request extensions or modifications to their permits in line with current regulations, the government added, and these requests will be evaluated in accordance with legislation.
Hochshild Mining operates three underground mines, two located in southern Peru, being the Pallancata and Inmaculada mines, and one in southern Argentina called San Jose.
By Will Paige; [email protected]
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