Peru backtracks on Hochschild threats
HOCHSCHILD Mining sparkled after Peru appeared to backtrack on plans to close the company’s flagship silver mines.
Last Friday Peru’s prime minister Mirtha Vasquez said the government would move to shut and refuse crucial permit extensions for several mines – including two of Hochschild’s – on environmental grounds.
The mining group’s shares crashed on Monday, at one point halving in value.
But after several days of solid rises, Hochschild’s stock was turbocharged yesterday when Peru’s Presidency of the Council of Ministers said it intends to uphold the rule of law and allow companies to request extensions and changes to existing mining permits.
This was what investors wanted to hear, though analysts cautioned that it might not all be done and dusted yet.
Peel Hunt analysts said they saw the comments as a ‘partial clarification’. Analysts said: ‘The real issue for us is “if” the government will approve those requests and “at what speed”. We still see potential for the government to squeeze miners, while we also continue to believe that selective closure was never a realistic option as a broader policy.’
Shareholders were reassured enough to send Hochschild up 14.3pc, or 17.4p, to 139.4p.
It has regained much ground since Monday’s nosedive – though it is still some way from the 165p it was worth at last Friday’s close.
The tumble could, as analysts are now pointing out, cost Hochschild its place in the FTSE 250.
Index overseer FTSE Russell will use companies’ market value at the close on Tuesday to determine which firms will be in the FTSE 100 and 250 – and which will be booted out. Darktrace (down 1.9pc, or 9.4p, to 479.6p) is among the favourites to lose its place in the Footsie reshuffle, which comes into effect in December.
Meanwhile chemicals maker Johnson Matthey’s decision to exit the electric battery market could also cost it its place in the blue-chip index. Johnson Matthey was flat at 2135p last night.
The indexes had a muted but ultimately positive day with the FTSE 100 rising 0.33pc, or 24.05 points, to 7310.37, and the midcap FTSE 250 by 0.49pc, or 112.90 points, to 23279.96.
The boss of Cake Box (down 7.4pc, or 30p, to 375p) and his wife will land a £10.5m payday after selling down their stake in the egg-free bakery chain.
Sukh Chamdal and his wife Santosh sold 3m shares in the group ‘in response to investor demand’, though they still have a 25pc holding worth around £36m.
Mitchells & Butlers rose 3.6pc, or 8.4p, at 244.4p after the pub and restaurant group – which owns Harvester and All Bar One – said sales had improved markedly in August and September and were 2.7pc ahead of the same period in 2019. In the retail sector Mothercare (up 3.1pc, or 0.58p, to 19.4p) returned to profit in the first half of the financial year after it implemented measures to improve profitability. The embattled High Street retailer booked a £3.6m profit in the six months to September 25, bouncing back from a £13.2m loss a year earlier.
Crowne Plaza and Holiday Innowner Intercontinental Hotels Group (up 2.8pc, or 135p, to 5042p) received a rare double upgrade, courtesy of Jefferies, which also highlighted Premier Inn-owner Whitbread (up 2.8pc, or 84p, to 3108p) as another top pick in the leisure sector in an upbeat broke note. The pair were among the top Footsie risers.
Airport services group John Menzies rallied 2pc, or 5.5p, to 288p after it landed an extension to a long-standing arrangement with Easyjet across 21 airports in Europe. Under the renewed contract, Menzies will take on tasks such as cabin cleaning and deicing for the carrier, which it has worked with for 15 years.