Hochschild - the world’s third largest silver producer - owns and operates six silver mines in south and central Latin America. Five of these are underground mines, with four in southern Peru (one Pallancata 60 per cent owned) and one (half owned San Jose) is in southern Argentina. It also owns and operates an open pit silver mine in northern Mexico.
These figures certainly reflect last year’s high silver and gold price, together with an 8 per cent increase in production to 28m attributable silver equivalent ounces (seo). Silver and gold production increased significantly at both Pallancata and San Jose and there was an 11 per cent cut in production costs per tonne against a target reduction of 6 per cent. Helping that were economies of scale from various mine expansions completed at the end of 2008. The figures are, however, complicated by a number of other income items, such as export incentives and expenses items - these include deposit impairments with Icelandic banks. Overall, 2009 was a year of acquisition activity, while the exploration budget jumped by three-quarters to $50m (£34m). For 2010, the group is targeting production of 29m seo.
Broker JP Morgan Cazenove expects 2010 revenues of $639.5m and underlying EPS of 33.3¢.
HOCHSCHILD MINING (HOC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 267p | MARKET VALUE: | £902.7m | |
| TOUCH: | 267-268p | 12-MONTH HIGH: | 371p | LOW: 168p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 215¢ | NET DEBT: | 32% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2005 | 161 | 40.4 | 15.0 | nil |
| 2006 | 211 | 65.0 | 17.0 | 0.74 |
| 2007 | 305 | 117 | 28.0 | 9.20 |
| 2008 | 434 | -2.27 | -8.00 | 4.00 |
| 2009 | 540 | 155 | 31.0 | 4.00 |
| % change | - | - | - | – |
Ex-div: 28 Apr Payment: 27 May £1 = $1.4913 | ||||
