Berenberg nudges up price target on 'hold' rated Hochschild Mining

Berenberg said Hochschild's operations appeared to be on track following its last trading update, with a slight beat versus its own estimates after the firm delivered 81,000 ounces of gold and 5.3m ounces of silver.

The German bank pointed out that Hochschild's Inmaculada mine was the driver of the beat, coming in ahead of estimates due to stronger grades and throughput, but did note that the Pallancata project posted a slight miss versus forecasts. San Jose was in line.

And while Hochschild expected to meet its 2019 production guidance of 457,000 oz gold equivalent on an attributable basis, Berenberg said that would require "a material downward drift in grades" during the fourth quarter of the year.

So with the company's management having provided clarity on the grade outlook for 2019 at Inmaculada, and assuming Hochschild's other mines were broadly steady, Berenberg now anticipated attributable production of 38.5m oz versus guidance of 37.0m oz.

Berenberg also adjusted its model for Q3 actuals and made positive revisions to its gold and silver price forecasts, which were accretive to its earnings and valuation. It also adjusted for currency weakness in Argentina and sterling strength.

But in any case, with the company's equity trading at 1.41 times the company's net asset value, the analysts said that the shares were fully valued and maintained their 'hold' rating.