Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Shares in precious metals producer Hochschild Mining (LON: HOC) jumped on Wednesday after it posted its best quarterly performance in almost five years, thanks mainly to its Mara Rosa mine in Brazil.
Shares were up 7.3% at £2.50 each in early morning trading in London, stabilizing by mid-afternoon at around £2.38 each, leaving the company with a market capitalization of £1.24 billion ($1.6bn).
The South America-focused miner said it mined 16% more gold and silver in the third quarter of the year than it did in the same period of 2023, with 96,327 ounces on a gold-equivalent basis. The company uses equivalent ounces to reflect an amalgamation of both gold and silver production.
Gold production in the three months to the end of September increased 40%, boosted by the continuing ramp up of its Mara Rosa mine in Brazil, which started production early this year.
Output from the company’s flagship Inmaculada mine in Peru rose 6%, resulting from the implementation of continuous improvement projects at site. This increase helped offset a silver production fall of 17%.
Strong gold and silver prices boosted Hochschild’s cash flow, helping the miner to pay down $45 million of its net debt in the quarter.
“Hochschild Mining’s third quarter has been the strongest in almost five years,” chief executive officer Eduardo Landin said in a statement.
The company reaffirmed its annual production and cost targets, anticipating output of 343,000 to 360,000 gold equivalent ounces at all-in sustaining costs of $1,510-1,550 per gold equivalent ounce.
Hochschild Mining has operations in Peru, Argentina and Brazil and development projects in Chile and Peru.
