Hochschild keeps targets after strong H1, hints at capital return next year

(Sharecast News) - Americas-focused precious metals producer Hochschild Mining has reiterated its output guidance despite operations at its newly opened Mara Rosa mine running slowly, as it swung into profit for the first half on the back of rising commodity prices, lower costs and a reduction in impairment charges. The company also said it would "reevaluate the scope for capital returns" when it reports its full-year results early next year, as it expected to generate "substantial" cashflow in the second half.

Profit before income tax totalled $69.4m in the six months to 30 June, up from a loss of $66.1m the year before. The bottom line includes exceptional charges of $12.5m, compared with a $48.3m hit the previous year as impairment charges lessened.

Meanwhile, all-in sustaining costs were $1,510 per gold equivalent ounce down from $1,572 the year before.

Revenues in the first half jumped 25% year-on-year to $391.7m, helped by an 18% increase in gold ounces sold to 118.25k and a 13% jump in realised gold prices. Silver sales fell 6% to 5,114k ounces, but prices rose 18%.

Since the period-end, Mara Rosa in Brazil, which achieved commercial production in May, is running behind schedule due to recent mechanical availability issues at the plant and the mining contractor's delayed ramp-up.

However, with Hoschchild's flagship operation in Peru, Inmaculada, delivering better-than-expected output, full-year targets for production and costs should not be impacted.

"I am pleased to report on an encouraging first-half performance," said chief executive Eduardo Landin.

"We continue to focus on our extensive brownfield exploration programme, with encouraging progress being made across our portfolio, and are pleased to reiterate our full-year 2024 guidance of producing 343,000-360,000 gold equivalent ounces at an AISC of $1,510-$1,550 per gold equivalent ounce."