Hochschild Mining (LON: HOC) (OTCQX: HCHDF) shares are up 16% in London this morning. HOC shares rose on an announcement about the environmental licence at Inmaculada in Peru. The lesson from this is that with a mature miner - especially in a mature market like gold and silver - a major determinant of value is in that permitting process. There can be all the lovelies in the world in those rocks but if you can’t gain - or keep - the licence to get them out then you’ve got bupkiss. Which, in turn, means that if the licence is expanded then you have got something.
As to what is done at Hochschild: “Hochschild Mining plc, a precious metals company, engages in the exploration, mining, processing, and sale of gold and silver in the Americas. The company holds 100% interests in the Inmaculada gold/silver underground operation and Pallancata silver/gold property, which are located in the Department of Ayacucho in southern Peru. It also holds a 51% interest in the San Jose silver/gold mine located in Argentina.”
Immaculada provides a significant portion of the company’s output: “Q2 2023 attributable production: 43,622 ounces of gold, 2.4 million ounces of silver Or, 72,364 gold equivalent ounces or 6.0 million silver equivalent ounces.” And “ Inmaculada's second quarter production was 30,639 ounces of gold and 1.3 million ounces of silver which amounts to a gold equivalent output of 46,297 ounces.” So, yes, this one flagship mine is a significant portion of total production.
Hoschchild Mining share price from Google Finance
This is what makes this announcement so important: “Inmaculada's Modified Environmental Impact Assessment approved for an additional 20 years. Enables development of high-grade reserves and resources close to Inmaculada's operations. Resumption of brownfield exploration strategy at Inmaculada. Hochschild Mining PLC ("Hochschild" or the "Company") (LSE: HOC) (OTCQX: HCHDF) is pleased to announce that the Modified Environment Impact Assessment ("MEIA") for its Inmaculada operation in southwest Peru has received regulatory approval from SENACE, Peru's National Service of Environmental Certification for Sustainable Investments.”
Effectively, they’ve now got a licence which allows them to carry on doing this for another 20 years. Which is, well, sure, obviously that’s value additive and thus the 16% share price rise this morning.
The larger point here being that those licences and permits are the important thing in mining. Without those you’ve got nothing at all, with them there’s some value.
