Hochschild reports solid production progress in first quarter

Precious metals miner Hochschild Mining said in an update on Wednesday that it extracted 45,937 ounces of gold and two million ounces of silver in its first quarter, totaling 69,758 gold equivalent ounces and 5.8 million silver equivalent ounces.

The FTSE 250 company said the figures aligned closely with its 2024 guidance, maintaining a trajectory towards a production target ranging from 343,000 to 360,000 gold equivalent ounces.

Additionally, in terms of cost efficiency, all-in sustaining costs were projected to range between $1,510 and $1,550 per gold equivalent ounce.

Hochschild said it had made significant progress in project development and exploration efforts, with the Mara Rosa mine poised to commence commercial production in the coming weeks.

Moreover, the company's brownfield drilling campaign at the Inmaculada project had yielded promising results thus far.

In a strategic move, Hochschild said it had secured an option to acquire the Monte do Carmo project in Brazil, underscoring its commitment to expanding its portfolio.

Drilling activities had also started at San Jose, Pallancata, and Monte do Carmo, signalling proactive exploration initiatives.

In alignment with its environmental, social and governance (ESG) commitments, Hochschild said that while its lost time injury frequency rate and accident severity index had experienced slight increases compared to the prior year, it said it had made progress in reducing water consumption and maintaining a consistent level of domestic waste generation, as it achieved an ECO score of 5.77 out of six.

In terms of financial standing, Hochschild said it was maintaining a solid position with around $73m total cash as of 31 March, reflecting strategic investments in the Mara Rosa project, payment for the Monte do Carmo option, and temporary working capital changes.

Despite a slight increase in net debt from the prior period, the company's current net debt-to-last 12 months EBITDA ratio stood at about 0.90x, indicating a stable financial outlook.

“We have delivered a good start to 2024 with production and costs at Inmaculada and San Jose on track to meet guidance for the year,” said chief executive officer Eduardo Landin.

“The Mara Rosa mine started operations during the quarter, on time and on budget, and we are currently completing the final phase of the ramp-up process with the start of commercial production expected very soon.

“Hochschild's balance sheet remains strong and, with rising precious metal prices and full production in Brazil, we expect to generate robust free cashflow during the remainder of the year.”

At 1156 BST, shares in Hochschild Mining were up 1.06% at 153p.

Reporting by Josh White for Sharecast.com.