20th Feb 2019 08:23
LONDON (Alliance News) - Hochschild Mining PLC on Wednesday said its profit dropped in 2018 as record production volumes were unable to offset a decline in metals sales prices.
The FTSE 250-listed precious metals producer reported pretax profit of USD38.4 million for the year to the end of December 2018, down 40% from USD64.1 million the year prior.
Revenue fell by 2.5% to USD704.3 million from USD722.6 million due to a decline in the average silver price offsetting small rises in ounces sold of both gold and silver.
Revenue from gold sales in 2018 increased slightly to USD386.2 million from USD381.3 million a year before due to small increase in the total amount of gold ounces sold to 304,510 from 300,210.
Average realised gold price, meanwhile, slipped slightly to USD1,268 per ounce from USD1,270 per ounce in 2017. Average silver price stood at USD15.3 per ounce, down from USD16.9 per ounce a year ago.
Revenue from silver sales fell in 2018 to USD347.0 million from USD377.8 million year-on-year mainly due to a 9% decline in the average silver price received. This was partially offset by a small increase in the total amount of silver ounces sold to 22.7 million ounces versus 22.3 million ounces the year prior.
The direct production cost, excluding depreciation, was higher at USD363.9 million compared to USD345.4 million in 2017, mainly due to higher production volumes. In 2018, Hochschild Mining produced 526,650 gold equivalent ounces, exceeding the revised full year production guidance of 520,000 gold equivalent ounces and prior year's output of 513,598 gold equivalent ounces.
Looking ahead, the company said it expects to produce 457,000 gold equivalent ounces in 2019. This excludes the production from Arcata, located in the US state of California, which will be placed on care and maintenance.
Hochschild Mining proposed a final dividend of 1.959 cents per share, down from 1.965 cents per share paid in 2017.
"2018 results reflect another strong year of record production and prudent cost control," said Chief Executive Ignacio Bustamante.
"In 2019, we anticipate another year of ambitious exploration with exciting drill targets at all our current operations," added Bustamante.
Hochschild Mining shares were trading 1.1% higher on Wednesday at 202.72 pence a share in London.
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