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Investing.com -- Hochschild Mining lowered its full-year production outlook after disappointing output from its Mara Rosa mine in Brazil, sending its shares tumbling around 14% in London trading.
The company now expects just 35,000–45,000 ounces of gold from the site in 2025, less than half of its earlier 94,000–104,000 ounce forecast.
Overall attributable production guidance was cut to 291,000–319,000 gold equivalent ounces, from 350,000–378,000 previously, while cost expectations were raised to $1,980–$2,080 per ounce from $1,587–$1,687.
The group also projected higher spending at Mara Rosa, with sustaining and development capex seen at $29–30 million, including $18 million for remedial work.
Full-year capital expenditure guidance has been lifted to $215 - 226 million.
RBC Capital Markets trimmed their price target on the stock to 320p from 340p.
"Although the guidance downgrades do not catch us by surprise, the cost levels guided for 2025 drive a recalibration to our future forecasts and take our price target from 340p to 320p," they said.
Analysts said they “continue to see HOC as offering compelling exposure to gold/silver” and expect the shares to re-rate as production at Mara Rosa ramps up, with free cash flow yield projected to return to double-digit levels in 2026.
For the first half (H1) of the year, Hochschild said its revenue jumped 33% year-on-year to $520 million, while adjusted EBITDA rose 27% to $224.5 million.
Adjusted profit before tax came in at $109.3 million, compared with $83.1 million a year earlier. Adjusted earnings per share increased to $0.12 from $0.10 in the first half of 2024.
Hochschild produced 161,597 gold equivalent ounces in H1, up from 152,792 a year earlier, equal to 13.4 million silver equivalent ounces versus 12.7 million previously.
Chief Executive Eduardo Landin acknowledged the operational difficulties in Brazil but said the company is taking corrective steps. “Whilst challenges at our Mara Rosa mine affected first-half performance, we are confident that we now have the right team in place to drive a turnaround.”
He added that the operational review and plant suspension “will enable us to set a foundation for reliable production.”