Berenberg nudges up target price on Hochschild Mining

Analysts at Berenberg slightly raised their target price on silver and gold miner Hochschild Mining from 90.0p to 100.0p on Wednesday as it incorporated higher production levels and lower-than-expected costs into its model following the group's fourth-quarter trading update earlier in the week.

Berenberg stated Hochschild's attributable fourth-quarter silver-equivalent production of 7.0m ounces was in line with its 7.1m ounces estimate, split between 4.7m ounces from its Inmaculada mine in Peru, as well as 800,000 ounces from Pallancata and 1.6m ounces from its San José project in Argentina.

"The better-than-expected production comes from Inmaculada guidance of 16.9-17.5Moz versus our 15.4Moz expectation, alongside slightly improved production from the rest of the portfolio," said Berenberg.

All-in sustaining costs for 2022 were in line with guidance of $18.50-19.00 per ounce but below the analysts' estimate of $19.20 per ounce due to its Inmaculada project.

The German bank noted that the company did caution that its guidance was dependent on receiving a permit for the environmental impact assessment at Inmaculada and that, if this was not granted, guidance would need to be revised.

"The permit is expected to be granted at the end of Q1, a minor delay versus previous commentary of within Q1. This remains the key catalyst for the shares," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com