Like many areas of life, succeeding in business is all about getting the timing right. Thanks to strong management and some good fortune, that's exactly what has happened at Hochschild Mining (HOC), which transformed in 2015 just in time for the start of a recovery in precious metal prices. The South America-centred high-grade miner can now boast a significantly strengthened balance sheet, a new world-class deposit and falling costs. And with gold and silver spot prices both significantly up since January, we think Hochschild's shares are primed for a re-rating in 2016.
- Improved outlook for precious metals
- Strengthened balance sheet
- Inmaculada mine operational
- Argentina cost savings
- Commodity volatility
- No dividend
The picture was a lot cloudier at the half-year stage midway through 2015. At that point, Hochschild had racked up a debt pile of $456m (£319m) after ploughing cash into the flagship Inmaculada plant. Production only commenced in June, by which point net debt stood at a heady 5.8 times cash profit. This was all the more daunting given battered silver prices had slimmed cash-flow forecasts.