Hochschild Mining expects major improvement after earnings collapse
Hochschild Mining's interim results showed adjusted operating profits more than halved, with earnings per share weakening further but the Peruvian miner's management expecting "significantly improved" production in the second half.
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The South American miner said this represented a solid performance as it dealt with a further 18% fall in the average silver price, continued to try and improve mine operations in Peru and reduce group costs.
Hochschild implemented revised mine plans at both its Peruvian operations, producing 9.2m attributable silver equivalent ounces in the six months to 30 June, including first ounces from its new low-cost mine at Inmaculada in Southern Peru.
Chairman Eduardo Hochschild said the full year's 24m silver production target remained on track, with production in the second half expected to be boosted by between 6-7m oz from its Inmaculada mine.
"Early results from the recent resumption of drilling are extremely encouraging for the long term future of the operation."
Main operation all-in sustaining costs per silver equivalent ounce were in line with expectations at $15.0 and management looks forward to the increasing positive impact of low-cost production from Inmaculada in the second half.
Net revenue of $190.3m in the half-year was down by a third compared to the same period last year, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) down 58% to $39.3m.
Losses per share of $0.10 worsened tenfold from $0.01 a year before.
Cash balance at the half-year stood at $84.3m, which is net of $63m of scheduled project capital expenditure executed during the period.
Yuen Low of Shore Capital said the results were as "as poor as could be expected" but that with improved production in the second half will "hopefully will see much improved numbers in that half".
Merrill Lynch said EBITDA was 25% of its full year estimate, and was encouraged that the Inmaculada ramp-up was going well.