Hochschild On Target Short and Long Term

PUBLISHED: 18 Oct 2012 @ 14:25 | Comments (0) | More info about Lou Gutheil

Shares in Hochschild Mining (LSE:HOC) continued their upward trend this morning on the company’s third quarter results. Up 5.00 pence to 515.50 from yesterday’s close by 10:30, the share price faded back to 512.50 by 14:00. Though the stock has a pattern of spiking in both directions, still it is up 39% from 385.80 as of 30 December 2011 and up 689% from its five-year low back on 04 December 2008. The stock has been trading above its 30-day average since 21 August and above its 90-day average since 06 September.

This morning Hochschild announced that, in the short term, it is on target to meet its operational expectations for the entire year and presented a solid long-term outlook for several brownfield projects currently under development. Hochschild is an FTSE 250 company that was originally floated on the LSE on 08 November 2006. It has a current market cap of £1,570.76. Its revenue more than trebled between FY2006 and FY2011 from £305.2 million to £987.66 million. Hochschild’s operations are focused in South and Central America, primarily in Peru and Argentina.

“Hochschild remains firmly on track to achieve its annual production target of 20.0 million attributable silver equivalent ounces after another solid operational performance in the third quarter,” according to Ignacio Bustamante, Chief Executive Officer. Third quarter production was 5.1 million silver equivalent ounces.

While expressing his satisfaction with current production, Bustamante used the terms “particularly pleased”, “exciting results” and “strong potential” in reference to exploration and development at the company’s brownfield projects. He expressed particular pride in the Immaculata project in Peru. During the third quarter “four drill rigs were in operation and a total of 13.5 thousand metres of drilling was carried out, focused on the Lourdes, Angela NE, Marina and Martha veins, as well as the newly discovered Susana vein.” The environmental impact study was positive, the contract to build the plant has been awarded, the main access road is under construction, power lines are being run, the equipment has been ordered, and 13,500 metres of drilling has been completed. The company has opened over 2,000 metres of tunnel access in three tunnels.

All of the brownfield projects are returning positive results at this point, with company expectations anticipating significant production increases within the next seven years. Development of the brownfield projects is aim not only for increased production quantity, but it is focused just as much on improving quality of mined material.

Hochschild may not be a household name in the mining industry today, but it is certainly on the way to becoming one.

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