Barclays upgrades Hochschild Mining after selloff

Barclays upgraded its stance on Hochschild Mining on Wednesday to ‘overweight’ from ‘equalweight’, arguing that this week’s selloff presents a value opportunity.

Shares in the gold miner tanked on Tuesday after Hochschild said it would fight plans by the Peruvian government to shut its mines there on environmental grounds.

Barclays said: "The selloff in the shares this week in response to the threat of mine closures presents a significant value opportunity, in our view.

"While we cannot completely rule out risks of mines being shut (downside scenario delivers -61% to 45p/share), we believe the subsequent softening of the Peruvian government's tone suggests the around 60% valuation discount versus peers on P/NPV and 2022E EV/EBITDA presents a significant risk-reward opportunity."

The bank also highlighted "significant" further upside potential from Inmaculada reserve upgrades, a value unlock from the Aclara demerger and upside risks to precious metals pricing.

Barclays cut its price target to 165p from 185p.