Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF)'s investment case largely depends on the ongoing permitting process at its Inmaculada mine in Peru, according to a research note from RBC Markets.
The Canadian bank believes the company can manage any delays until the end of 2023, and that permitting risks are already reflected in its current valuation.
In a research note, RBC maintained its ‘outperform’ rating and a 100p price target for Hochschild.
The company is still awaiting the environmental impact assessment (EIA) for Inmaculada and expects to receive it in the second quarter of 2023.
RBC's scenario analysis reveals that if the permit is denied or delayed beyond 2023, Inmaculada may need to be placed in care and maintenance, possibly requiring additional financing.
However, it estimates that the company would have sufficient liquidity if the permit is received on time or delayed until the end of 2023.
Inmaculada is a significant contributor to the local economy, accounting for approximately 18% of the area's GDP and employing nearly 2,000 people.
The bank believes the chances of permit approval are high, barring any unknown environmental concerns.
In early afternoon trade, the shares were changing hands for 74.1p, down 1.9%.
Of the eight banks and brokerages following Hochschild, six are positive on the stock, while two are neutral. The consensus price target is 117p, a 55% premium `to the current price.