19th Aug 2020 08:20
(Alliance News) - Hochschild Mining PLC on Wednesday said its profit sharply declined in the first half of 2020 after the Covid-19 pandemic resulted in stoppages at all mines between mid-March and late May.
Shares in the FTSE 250-listed miner were down 4.5% at 265.60 pence in London in early morning trading.
The Americas-focused company posted a USD6.5 million pretax profit for the six months ended June 30, a fraction of the previous year's USD29.5 million profit.
Moreover, the company swung to a basic loss per share after exceptional items of USD0.02 from earnings per share of USD0.03 the year before.
"Hochschild's output in the first half was impacted by Covid-19 related stoppages at all our mines lasting from the middle of March until the restart was announced towards the end of May," the company's chief executive, Ignacio Bustamante, explained.
Revenue dropped 35% year-on-year to USD232.0 million from USD354.5 million as production shrank 47% to 126,835 gold equivalent ounces from 239,090 gold equivalent ounces.
This included a 40% drop in production at Inmaculada, Peru to just 79,604 gold equivalent ounces from 132,915 ounces the prior year. Also in Peru, production at Pallancata fell 64% to 1.8 million silver equivalent ounces from 5.0 million ounces.
In Argentina, the San Jose mine had a shorter stoppage time and production restarted April 27, but restrictions on the movement of people meant the remobilisation and ramp-up process was slow and is not expected to complete until the end of the third quarter. Production fell 41% to 4.4 million silver equivalent ounces from 7.4 million ounces.
Bustamante said: "This year has seen precious metal prices continuing the strong rise which started in mid-2019 with fresh impetus coming from the significant fiscal and monetary stimulus initiated by governments and central banks in response to the Covid-19 crisis. Gold has recorded an all-time high recently and silver has reached its highest price level in seven years and we are therefore hopeful of delivering a strong rebound in profitability in the second half of the year provided our people are able to operate safely and experience less disruption. We intend to provide updated guidance when we have assessed the full impact of the suspensions.
"We have a very busy second half of brownfield and greenfield activity planned with the aim of adding reserves and resources and identifying new projects for our pipeline. We continue to assess value accretive acquisitions throughout the Americas and are also carrying out development work on our suite of early-stage projects such as Azuca, Volcan and BioLantanidos."
The CEO also commended on the company's dividend, saying: "In April, owing to the uncertainty caused by the crisis, the board decided to withdraw the proposal to pay the 2019 final dividend. With Inmaculada currently still in a ramp-up phase and the Covid-19 crisis continuing to cause uncertainty in the countries where Hochschild operates, the board has concluded that it would be inappropriate to pay a distribution to shareholders at this time."
By Anna Farley; [email protected]
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