Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) said both of its mines in Peru can continue to operate under the existing legal framework following an announcement yesterday from the Presidency of the Council of Ministers.
The FTSE-250 company noted the government's commitment to upholding the rule of law and its express recognition of the continued rights of mining companies to request extensions and modifications of existing permits for mining and exploration activities.
The announcement clarified reported statements made by Peru’s recently appointed Prime Minister, Mirtha Vásquez, on Friday that the government could close certain mining projects in the southern Ayacucho region, including the company's Pallancata and Inmaculada mines.
The two mines accounted for 80% of Hochschild’s attributable production in 2020 and shares in the precious metal producer plummeted as much as 58% this week in response.
READ: Hochschild shares plunge as the mining industry faces a reckoning in Peru
"We welcome yesterday's clarification from the Peruvian government,” said chief executive Ignacio Bustamante. “This has been the result of discussions between senior members of the cabinet and representatives from the mining industry.
“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.
“We would like to thank our communities, our employees, and those institutions and businesses who spoke out in support of legal certainty, employment, and private investment in the country.”
Peru is world’s second-biggest producer of copper, silver and zinc as well as a significant producer of gold and lead.