Tumbling precious metal prices, mining delays and a substantial investment programme weighed heavily on Hochschild Mining's (HOC) half-year figures. Adjusted cash profits tumbled 58 per cent to $39.3m (£25.1m) as the average silver price fell a further 18 per cent and mines in Peru were revamped.
The group's debt pile also mounted 78 per cent to $456m as management ploughed funds into the "flagship" new Inmaculada plant. First production commenced in early June at this mine, which is cheaper to operate than peers and expected to deliver between 6m and 7m silver equivalent ounces for the year. With that in mind, management is confident of achieving its overall annual production forecast of 24m silver equivalent ounces.
Given that Hochschild produced 9.2m ounces at the halfway point, that target looks feasible, particularly when considering the disturbances faced at one of its Peruvian operations. Pallancata's ongoing move to thinner veins, coupled with local community resistance to brownfield drilling, saw total production there almost halve to 2.6m. Cantor Fitzgerald reasserted its neutral recommendation off what it called "a solid set of results".
| HOCHSCHILD MINING (HOC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 79p | MARKET VALUE: | £291m | |
| TOUCH: | 79-81p | 12-MONTH HIGH: | 177p | LOW: 61p |
| DIVIDEND YIELD: | nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 207¢ | NET DEBT: | 53% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 282 | 3.4 | -4 | nil |
| 2015 | 190 | -43.4 | -12 | nil |
| % change | -33 | - | - | - |
Ex-div: Payment: £1=$1.57 | ||||
