There’s not too much more investors could have asked from Hochschild Mining (HOC) in the first half of 2018. Gold and silver output climbed 14 and 8 per cent respectively, and is on course to hit 38m silver-equivalent ounces in 2018. All-in sustaining costs of $11.90 (£9.38) per silver-equivalent ounce, buttressed by record production from the Inmaculada mine in Peru, are in line with full-year guidance. Exploration is even starting to boost long-term resources.
The latter had been a particular worry, so long-term holders will no doubt cheer news of “good progress” at the Arcata mine in Peru, and the addition of 59.2m silver-equivalent ounces at Inmaculada. And while second-half exploration costs are forecast to increase by a third to $80m, January’s bond redemption means full-year interest costs will be contained to just $7m, more than two-thirds down on the 2017 figure.
The $11.4m premium paid to retire those bonds was the largest exceptional item in the period, and explains the drag on half-year earnings. Lower silver prices provided the other blip in an otherwise solid set of results, despite a tightening market for the grey metal.
On average, analysts expect pre-tax profit of $179m and adjusted EPS of 4.8¢ this year, rising to $239m and 13.3¢ in 2019.
HOCHSCHILD MINING (HOC) | ||||
ORD PRICE: | 167p | MARKET VALUE: | £ 850m | |
TOUCH: | 166.7-167p | 12-MONTH HIGH: | 333p | LOW: 167p |
DIVIDEND YIELD: | 1.9% | PE RATIO: | 35 | |
NET ASSET VALUE: | 144¢ | NET DEBT: | 8.3% |
Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
2017 | 341 | 39.9 | 5.0 | 1.380 |
2018 | 372 | 38.6 | 3.0 | 1.965 |
% change | +9 | -3 | -40 | +42 |
Ex-div: | 30 Aug | |||
Payment: | 20 Sep | |||
£1=$1.27 |