Hochschild flags lower production and higher costs

Hochschild Mining cut its production target for 2020 and said costs would be higher than expected, mainly caused by Covid-19 disruption.

The FTSE 250 miner said its flagship Immaculada mine in Peru was operating at full capacity after reopening from coronavirus shutdown, allowing it to reinstate guidance for the year.

Hochschild cut its 2020 production target to 280,000-290,000 gold equivalent ounces or 24-25 million silver equivalent ounces because of stoppages and temporary delays to mine sequencing.

Cost from operations is expected to be $1,250-$1,290 per gold equivalent ounce or $14.5-$15 per silver equivalent ounce. The increase reflects reduced production, temporary lower grades and transport restrictions at its San Jose mine in Argentina.

The company did not give details about its previous targets. In July Hochschild said it was not providing revised 2020 guidance while Immaculada was closed.

Ignacio Bustamante, Hochschild's chief executive, said: "I am pleased to report that the team has carried out a successful remobilisation and ramp-up at our flagship Inmaculada operation and that we are now running the mine at full capacity. We have also reinstated our guidance for 2020 which reflects the impact of the ongoing restrictions in both Peru and Argentina but is expected to deliver a solid second half of production with strong expected cashflow generation."

Capital spending will be $110m-$120m based on deferred mine development at Immaculada and San Jose because of stoppages offset by increased infill drilling. The exploration budget has increased to about $37m including $9m for greenfield and advanced projects.