In late February, the Peruvian government’s Supervisory Board for Investment in the Energy Sector (OSINERGMIN) imposed a sanction on Monterrico Metals’ Río Blanco copper mine project. This was due to the failure to comply with promises made in their environmental evaluation, including a failure to implement measures to control erosion.
Furthermore, Zijin, the Chinese consortium which owns a majority shareholding in Monterrico Metals, stated that it would delay construction and scale down spending on the project. Zijin’s chairman said that the revised plan would be more economical and environmentally friendly. However, production would be maintained at 200,000 tonnes of copper a year as originally planned.
Presumably as a reaction to the recent, and ongoing, credit crisis, Monterrico Metals shares have tumbled from 300 pence on March 12th to around the 150p mark. The company says that it is not aware of any undisclosed commercial reason for the 50 per cent drop in its share price over the past week.
In early March, the firm released a statement saying that following a change in management in June 2007, it was conducting a complete review of the Detailed Feasibility Study (DFS) for its wholly owned Rio Blanco copper/molybdenum project in Piura (Northern Peru).
The new study is expected to be completed in the second half of 2008, when a revised timetable for the project will be announced.
Current CEO Xiaodong Huang said that “although this will inevitably cause some delay to start the construction of the project, I am confident that the new options being prepared for evaluation by the trade off study will provide opportunities to unlock considerable value from Rio Blanco”.