UPDATE: Adds comments from Equity Development
EMED Mining (LON:EMED, TSE:EMD) shares shot up almost 20 percent today after it reached another permitting milestone in its path towards the start-up of the Rio Tinto mine in Andalucía.
The AIM-listed mine developer is working to restart the large historic copper mine in Spain. But currently much of its work has been administrative in nature as it tries to cut through the red-tape in what has thus far been a complicated and protracted process.
Once operational the Rio Tinto mine is expected to produce around 37,000 tonnes of copper concentrate from 9 million tonnes of ore each year.
This morning EMED told investors that it has now received formal approval from the department of Culture and Heritage at the Andalucían government – which is also known as the Junta de Andalucía.
The company highlighted that this is the first formal approval it has received from the Andalucían government. It is currently working with the Department of Environment and the Department of Industry to secure the remaining approvals so that it can to restart the mine.
EMED said that it is in a full and constructive consultation with regulators, local municipalities and unions. “We are all working together to expedite the start-up," said managing director Harry Anagnostaras Adams.
Investors reacted positively to the news. On AIM the shares gained 1.875 pence, almost 20 percent, each to trade at 11.5 pence a share. The rally is welcome relief for the stock, which like many other junior resource stocks, has come under pressure in recent weeks.
Fairfax Securities mining expert John Meyer said that the latest announcement is another positive for the company. The analyst emphasised that EMED is continuing to make progress as it moves along what has proven to be a very long and frustrating road.
“Local support for the project remains strong and we look forward to more positive news flow in due course,” Meyer added.
Equity Development analyst Conor Fahy said that he expects the remaining approvals will be expedited and EMED will achieve its goal, of first production in 2012.
In a note to investors the analyst repeated a punchy 41 pence medium term price target, and a 55 pence long term target.
Commenting on the political situation the analyst noted that the Socialists (PSOE) were hammered by the right wing (PP) in the recent local elections in an expected reaction to high unemployment and economic depression.
However he highlighted that the election did not take place in Andalucia. Importantly Fahy emphasised that pressure is on the PSOE, and EMED’s Rio Tinto mine is the largest employment project in the Andalucia region.
In this morning’s statement EMED claimed that it has support from both major political parties.
"We are pleased with the approval received from the Department of Culture and Heritage and in particular appreciate the stated commitment of the Andalucían Government to facilitate the re-start of production," Anagnostaras Adams said.
He added: "At the mine, EMED Mining has started engineering work for tender documentation in respect of plant repair and improvement programs so that site works can begin by the end of 2011.
"This would enable production to start as early as possible in 2012, subject to the timing of the permit approvals amongst other things."