Lower silver prices take the shine off Hochschild

Pre-tax profit fell to $38.4m from $64.1m on the back of a 3% fall in revenues to $704.3m.

Revenue from silver sales fell to $347m from $377.8m year-on-year mainly due to a 9% decline in the average silver price received. The average gold price received was flat , the company said.

Full year attributable production of 526,650 gold equivalent ounces exceeded positively revised full year production guidance of 520,000 ounces.

A final dividend of 1.959 cents a share was declared for a total dividend payout of $20m, up from last year's $17m.

Hochschild forecast 2019 output of 457,000 gold equivalent ounces excluding production from the now suspended Arcata mine.

“This figure...represents a further 2% increase on 2018 and will be driven by: 242,000 gold equivalent ounces from Inmaculada; a further increased contribution of 10.2m silver equivalent ounces from Pallancata with the Pablo vein in full production; and 7.5m ounces from the dependable San Jose mine.”

The company added that all in sustaining costs for operations were expected at $960 - $1,000 per gold equivalent ounce. This included a $15m investment at the Inmaculada mine to begin development of the resources discovered in 2018 and the effect of removing the high cost Arcata operation.

“Our cost position has remained under control and despite a deteriorating price environment in the second half of the year, we were still able to generate healthy cashflow,” the company said.

“Over the year, we have therefore been able to repay a further $198m in debt including, the early redemption of our senior bonds in January 2018.”

Hochschild said the bond repayment would allow it to save “materially” on interest payments, giving it more flexibility to sustain commitment to exploration programmes, “execute a number of attractive option agreements and continue to return capital to our shareholders”.