Hochschild sees lower H1 profit on surging costs
Peruvian precious metals miner Hochschild Mining last year saw its first half profit slump by half, as rising costs offset higher production and stronger gold prices.
Hochschild reported a US$18.2mn profit in H1 compared with a US$36mn profit the previous year, the Lima-based company said in a statement. Revenue was fairly flat at US$341mn compared with US$340mn a year earlier, it said.
All-in sustaining costs climbed to US$12/oz silver equivalent in the first half from US$10.90/oz a year earlier, as port rates rose in Argentina and the company increased exploration spending, according to Hochschild. Administrative costs rose 17% in the half, while the company posted a US$500,000 FX loss compared to a US$400,000 FX gain in 1H16.
The company said it sold 10.5Moz silver at US$17.10/oz and 143,420oz gold at US$1,251/oz in the first half, compared with 10.1Moz silver at US$17.10/oz and 146,100oz gold at US$1,236/oz a year earlier.
Hochschild, which also has operations in Argentina, Mexico and Chile, produced 17.92Moz silver equivalent in H1, including 8.94Moz silver and 121,430oz gold, compared with 8.21Moz silver and 118,120oz gold a year earlier.
Hochschild, which plans to allocate US$120-130mn to capex this year, said it remains on track to meet 2017 production guidance of 37Moz silver equivalent, with AISC ranging from US$12.20-12.70/oz. The company produced 35.5Moz silver equivalent last year, including 17.28Moz silver and 246,080oz gold.
Hochschild, which sold US$350mn in bonds in 2014, said it had US$145mn in cash and US$165mn in debt through June 30. The company said it paid off US$18.5mn of debt in H1.
EXPLORATION
The firm, which plans 40,000m of exploration drilling in the second half, drilled 15,000m at its Arcata mine in Peru this year, with highlights including 2.5m of 12.2g/t gold and 399g/t silver at its Socorro vein.
Also in Peru, Hochschild added it has identified 1Moz silver equivalent at the Pallancata mine's Marco vein after drilling 1,000m this year. Highlights of 4,837m of drilling at the San José mine in Argentina, meanwhile, included 2.8m of 0.3g/t gold, 40g/t silver, 7% lead and 6% zinc at the property's Aguas Vivas target, the company said.
Hochschild's exploration push comes amidst a revival in drilling activity by local companies including Volcan, Buenaventura, Milpo and Minsur.
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