Hochschild Mining hit by delays in Peru

Precious metals group Hochschild Mining has said that it now expects to get the construction permits for its Inmaculada and Crespo projects in the second half of 2013 following delays by the Peruvian government.

As announced in August with its first-half results, Hochschild said that due to changes made by Peru to the submission requirements for construction permits will (together with the number of industry applications being processed) "lead to a longer-than-anticipated permitting process".

Final mill construction permits for both projects are now expected in the second half of 2013 with commissioning for the work now scheduled for the second half of 2014.

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The company said that total capital expenditure (capes) for Inmaculada is anticipated to be around $350m, but the delays, combined with the strengthening of the Peruvian Sol, are expected to add $20m to that total.

Estimated capex at Crespo has been maintained at $110m despite the delays.

Hochschild's Chief Executive Officer Ignacio Bustamante said: "We have made significant progress during 2012 in the development of both projects and in obtaining the government approval for the Environmental Impact Study at Inmaculada and are confident that on receipt of the final mill construction permits, now expected in the second half of 2013, we will be in a good position to rapidly advance towards production.

"Despite this delay, both projects continue to be very profitable even at long term analyst consensus prices and are expected to generate significant value for the company whilst we also remain excited by their strong geological upside."