London-listed Hochschild Mining said on Monday that it would "vigorously defend" its rights to operate its Pallancata and Inmaculada mines, in Peru, after an announcement that certain mines in the Ayacucho region would be shut down.

Peruvian Prime Minister Mirtha Vasquez reportedly said at the weekend that four mines, including the two Hochschild ones, would be “closed as soon as possible”.

A commission has reportedly been established to negotiate the timetable and terms of the closing of certain mining projects over alleged environmental complaints. The head of Cabinet has indicated that approvals will no longer be granted to facilitate additional mining or exploration activities in relation to these mining operations.

"Hochschild is surprised by this unilateral announcement by the head of Cabinet,” CEO Ignacio Bustamante said, stating that the company had not received any formal communication from the government regarding the matter.

“We are prepared to enter into a dialogue with the government in order to resolve any misunderstandings with respect to our mining operations. However, given the illegal nature of the proposed action, the company will vigorously defend its rights to operate these mines using all available legal avenues,” he added.

Under Peruvian law, mines have an expected closure date, although those dates could be modified if regulators allowed it.

"Our goal is to continue investing in Peru, growing our resources and extending mine lives, in accordance with the Peruvian legal framework," said Bustamante.

Hochschild pointed to long-term investment plans that it had to further develop its mining assets, an example being Inmaculada, where a modified environmental impact assessment had been submitted for approval and which, once obtained, would see the continuation of mining activities to deliver benefits to the region and its communities.

Hochschild also rejected claims of environmental pollution and said that its operations were regulated and supervised by several Peruvian regulatory bodies.

The company noted that communities located close to the affected operations, as well as the trade unions representing the operations' workforce, had issued formal statements in support of Hochschild. Further, a number of reputable institutions, including the National Confederation of Private Business and the National Society of Mining, Energy and Oil, had declared their support for Hochschild.

The company's shares tumbled on the news and were down 54% at 75.55p each by 08:38 GMT.

In 2020, the Immaculada mine produced 15.14-million silver-equivalent ounces and the Pallancata mine produced 4.79-million silver-equivalent ounces.