19th Aug 2015 07:12
LONDON (Alliance News) - Hochschild Mining PLC Wednesday said its pretax loss widened in the first half of the year after being hit by lower production, lower commodity prices and higher costs but said production in the second half of the year is set to substantially increase.
The miner reported a pretax loss of USD43.4 million in the first half of 2015, widening from a USD11.7 million loss a year earlier as revenue tanked to USD190.3 million from USD282.0 million.
The company booked a USD35.9 million pretax loss before exceptional items, swinging from a USD9.1 million profit a year earlier whilst earnings before interest, tax, depreciation, amortisation and exceptional items came in at USD39.3 million after falling from USD94.3 million.
Silver production in the period fell to 6.3 million ounces from 8.5 million ounces whilst gold production followed and dropped to 41,000 ounces from 55,000 ounces. Silver sales decreased to 7.8 million ounces from 10.1 million ounces and gold sales fell to 58,000 ounces from 76,290 ounces.
The fall in production was compounded by falling commodity prices and rising costs, with the average silver price dropping to USD16.9 per ounce from USD20.5 per ounce a year earlier and gold prices dropping to USD1,227 per ounce from USD1,328. Its total operating unit costs rose to USD138.3 per tonne of ore in the half compared to only USD104.6 per tonne a year earlier.
Hochschild said it expects a large ramp up in production in the second half and reiterated its full year guidance of 24.0 million ounces of silver equivalent as its Inmaculada mine is set to increase production and drive down costs to improve its margin in the second half, it said.
"Production for the second half of 2015 is scheduled to include the first material contribution from Inmaculada and a stronger contribution from San Jose, with all-in sustaining cost expected to meet guidance of between USD13 to USD14 per silver equivalent ounce," it said.
"During this year, we have been completing the investment in Hochschild's new flagship low cost Inmaculada mine. I am delighted that in June we reached a milestone for our company with the production of our first ounces from this crucial project and I am confident that, as we move through the remainder of 2015, we will start to see the fruits of our long term investment strategy," said Chairman Eduardo Hochschild.
Hochschild shares were up 0.5% to 83.12 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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