21st Jul 2016 08:12
LONDON (Alliance News) - Hochschild Mining PLC on Thursday said production for 2016 will be higher than previously expected, whilst costs will decline further than originally planned after delivering substantial rises in gold and silver production in the first half.
Hochschild shares were down 0.5% to 211.66 pence per share on Thursday morning.
"The first half of 2016 has proved to be pivotal in Hochschild's recent history with the delivery of strong production results, continued cost reduction, further debt repayments and recently, re-entry into the FTSE 250 Index," said Chief Executive Ignacio Bustamante.
Our Inmaculada operation has performed above expectations and is on track to exceed its production and cost targets for the year emphasising its world class competitive position," he added.
The miner has operations in Peru, Chile and Argentina and has upped its production guidance for 2016 by 6.3% to 34.0 million ounces of silver equivalent from the previous target of 32.0 million ounces.
If Hochschild can deliver that new goal then it will have made a significant step up as the miner only produced 27.0 million ounces in 2015 - 26% less than the new target. Notably, production last year was ahead of guidance, and the miner would have still hit a record level of production this year with its original production target.
Costs will be lower than first thought as Hochschild guided an average all-in sustaining cash cost of USD11.0 to USD11.50 per ounce over the course of the year, around 8.4% lower than the previous target of USD12.0 to USD12.5 per ounce.
In the previous year, the all-in cost was USD13.7 per ounce, meaning costs should be 16% to 20% lower this year if Hochschild delivers its new target.
The adjustment to guidance has been made following a strong first half, particularly in the second quarter when production comfortably exceeded guidance and rose substantially from the first quarter.
Attributable production of silver equivalent in the first half was 83% higher year-on-year to 17.0 million ounces from 9.3 million ounces.
Hochschild said it has repaid USD70.0 million worth of debt since the start of the year. At the end of June, cash stood at USD103.0 million compared to USD84.0 million last year, whilst net debt fell to USD280.0 million from USD366.0 million at the end of June 2015.
By Joshua Warner; [email protected]; @JoshAlliance
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