Hochschild meets output targets, dividends uncertain

Hochschild Mining (LSE: HOC) said on Wednesday it’s on track to achieve its production targets for 2024 after an increase in gold output boosted its overall first-quarter production.

The U.K.-based precious metals producer said gold production increased to 45,937 oz. in the first three months of the year from 39,730 oz. in the same period in 2023, with a small initial contribution from the Mara Rosa gold mine in Brazil. First gold at the operation was poured in February and the mine is anticipated to begin commercial production in the next few weeks, according to Hochschild. Overall production, measured in gold-equivalent ounces, grew by 8.1%.

Hochschild saw silver output decline to 1.9 million oz. in the first three months of the year from just over 2 million in the same period of 2023. 

“We have delivered a good start to 2024,” CEO Eduardo Landin said. “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.”

The South America-focused miner attributed the slight fall in silver to the absence of contribution from the Pallancata mine in Peru, which was placed in care and maintenance late last year. Offsetting this, production from both its flagship Inmaculada mine in Peru and from San Jose in Argentina were slightly better-than-expected.

The company’s debt rose last year due to construction costs at Mara Rosa. Dividend payments, suspended in 2022, remain high on the company’s agenda, but not likely to resume before the fall.

Landin said in March it would be ‘inappropriate’ to restore the final dividend given the company’s debt level, which reached US$282 million by the end of March, up from US$258 million at the end of 2023. 

The executive added Hochschild would “reassess the potential for capital return” at the interim results in August, as Mara Rosa would have hit commercial production by then. 

Hochschild kept its full-year production targets unchanged at 343,000 to 360,000 gold-equivalent oz. and an all-in sustaining cost of between US$1,510 and US$1,550 per gold-equivalent ounce.

Company shares were up 1.7% on Wednesday to £1.54 (US$1.92) apiece, valuing the company at £793.6 million. Its shares traded in a 52-week range of £6.7 and £1.55.