Hochschild Mining: Steady progress toward 2024 production goals

Hochschild Mining reports significant gold production increase, supporting 2024 targets. First-quarter output rose to 45,937 ounces, compared to 39,730 in 2023. New Mara Rosa mine in Brazil contributes.

Hochschild Mining, a prominent UK-based precious metals producer, has kicked off the year on a positive note, reporting a notable increase in gold production that significantly contributes to maintaining its production targets for 2024. In the first three months of the year, gold production amounted to 45,937 ounces, compared to 39,730 ounces in the same period in 2023. This surge is partly driven by the recent addition of the Mara Rosa gold mine in Brazil, where the first gold was poured in February, with commercial production anticipated in the coming weeks.

Total production, measured in gold equivalent ounces, grew by 8.1%. This increase is a positive sign for Hochschild, viewing these preliminary figures as a solid foundation for achieving its annual goals.

However, it hasn't been all positive, as silver production has experienced a slight decline, from 2.06 million ounces in the first three months of 2023 to 1.98 million ounces in the same period this year. This decline is primarily attributed to the absence of production from the Pallancata mine in Peru, which was placed on care and maintenance at the end of last year. Fortunately, this impact was partially offset by slightly higher-than-expected production at the flagship Inmaculada mine in Peru and the San Jose mine in Argentina.

From a financial perspective, Hochschild appears optimistic. Eduardo Landin, the company's CEO, highlighted that despite the increase in debt over the past year, mainly attributed to Mara Rosa's construction costs, the company maintains a solid balance sheet. With precious metal prices on the rise and production running at full capacity in Brazil, robust free cash flow is expected throughout the remainder of the year.

Although dividends were suspended in 2022, resuming these payments remains a priority for the company. However, Landin mentioned that restoring the final dividend would be "inappropriate" given the current level of debt, which reached $282 million at the end of March, compared to $258 million at the end of 2023. The company plans to reassess the possibility of capital return in the August interim results, by which time Mara Rosa would have reached commercial production.

Hochschild has kept its annual production targets unchanged, aiming to produce between 343,000 and 360,000 gold equivalent ounces, with an all-in sustaining cost between $1,510 and $1,550 per gold equivalent ounce. These objectives reflect the company's confidence in its ability to maintain efficient and economically viable production.