Hochschild Mining Investors - HOC

Hochschild Mining Investors - HOC

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Hochschild Mining Plc HOC London Ordinary Share GB00B1FW5029 ORD 25P
  Price Change Price Change % Stock Price Last Trade
-5.60 -2.58% 211.20 13:21:51
Open Price Low Price High Price Close Price Previous Close
217.60 207.00 218.00 216.80
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stevea171: The overall attributable production target for 2021 is 360,000-372,000 gold equivalent ounces or 31.0-32.0 million silver equivalent ounces. [1] 2021 Attributable production split Operation Oz Au Eq Moz Ag Eq Inmaculada 223,000-228,000 19.2-19.6 ---------------- ---------- Pallancata 63,000-65,000 5.4-5.6 ---------------- ---------- San Jose 74,000-79,000 6.4-6.8 ---------------- ---------- Total 360,000-372,000 31.0-32.0 ---------------- ---------- The all-in sustaining cost from operations in 2021 is expected to be between $1,210 and $1,250 per gold equivalent ounce (or $14.1 and $14.5 per silver equivalent ounce). This includes a rise in mine development costs at San Jose in order to increase reserves and an increase in development at Inmaculada. Grades at Inmaculada are expected to be lower due to the delay in mine development resulting from the Covid-19 crisis. 2021 AISC split Operation $/oz Au Eq $/oz Ag Eq ------------ Inmaculada 1,040-1,080 12.1-12.5 ------------ Pallancata 1,440-1,480 16.8-17.2 ------------ San Jose 1,370-1,400 15.9-16.3 ------------ Total from operations 1,210-1,250 14.1-14.5 ------------ The overall capital expenditure budget for 2020 is approximately $120-130 million allocated to sustaining and development expenditure. This includes a $9 million investment in the delayed expansion of the tailings storage facility at Inmaculada as well as increased mine development work at Inmaculada. At San Jose, mine development work to increase reserves is also forecast to rise. 2021 Capital expenditure split Operation Sustaining & development capital expenditure ($m) Inmaculada 67-72 --------------------------------------------- Pallancata 6-8 --------------------------------------------- San Jose (100%) 47-50 --------------------------------------------- Total 120-130 --------------------------------------------- The brownfield exploration budget for 2021 is approximately $34 million with the greenfield and advanced project budget set at approximately $11 million and approximately $14 million for the BioLantanidos rare earth deposit in Chile which includes approximately $5 million of further exploration. Currency option and dividend mandate Shareholders wishing to receive their dividend in US dollars should request a currency election form from the Company's registrars using the contact details provided below. This form should be completed and returned to the registrars by 11 December 2020. The Company's registrars can also arrange for the dividend to be paid directly into a shareholder's UK bank account. This arrangement is only available in respect of dividends paid in UK pounds sterling. To take advantage of this facility in respect of the announced dividend, a dividend mandate form, also available from the Company's registrars, should be completed and returned to the registrars by 11 December 2020. Alternatively, you can register your bank details via Signal Shares, a secure online site where you can manage your shareholding quickly and easily. To register for Signal Shares just visit www.signalshares.com . All you need is your investor code which can be found on your share certificate or a previous dividend confirmation voucher. Shareholders who have already completed a currency election form and/or a dividend mandate form need take no further action. A conference call will be held at 1.00pm (London time) on Friday 20 November 2020 for analysts and investors. Dial in details as follows: UK Toll-Free Number: 0800 279 7204 International Dial in: +44 (0)330 336 9411 US/Canada Toll-Free Number: 888-394-8218 Pin: 3635443# A recording of the conference call will be available on demand on the Company's website: www.hochschildmining.com
stevea171: Market Priming For Another MASSIVE Buying Wave As Silver Eagle Sales Again Surge Higher. November 18, 2020 If we experience the same type of demand next year, we will enter a silver market like never before. While that may sound like hype, the CLUES… by Steve St Angelo of SRSrocco Report The Silver Market is just one step away from another MASSIVE BUYING WAVE and is just waiting for the next leg to drop in the global economy and financial system to do so. With silver investment demand to account for nearly 75% of the global mine supply this year, if we experience the same type of demand next year, we will enter a silver market like never before. While that may sound like hype, the CLUES are all around. I check many of the large online dealers’ inventory, and many are sold out of the fractional silver rounds, or have a minimal inventory. The fractional silver round inventories are normally the first to sell out when there is a large buying wave. I have mentioned several times; the Silver Market is one of the only sectors in the economy that sees INCREASED BUYING when the price goes LOW or HIGH. Normally, investors tend to sell when the price of a stock or asset is declining. Not the silver market. Due to the ongoing disintegration of the U.S. financial system and economy, precious metals investors realize THERE IS NO PAPER SOLUTION to what’s coming. Thus, LOW and HIGH silver prices motivate more buying. I wrote about this in my article below: For example, Silver Eagles sales continue to be very strong in November as another 750,000+ coins were sold in the last week. The total Silver Eagle sales so far in November are now 3,456,000 versus a total of 463,000 for the entire month last year. Furthermore, the U.S. Mint sold another 25,000 oz of Gold Eagles over the past week to reach a total of 769,000 oz for the year, compared to 152,000 oz for full-year 2019. Because the price of silver is approximately 75 times less than gold, investors can buy a great deal more silver bullion. Thus, when the next BUYING WAVE comes next year, it may be one for the RECORD BOOKS. hTTps://www.silverdoctors.com/silver/silver-news/market-priming-for-another-massive-buying-wave-as-silver-eagle-sales-again-surge-higher/
risa5: 2 FTSE 250 stocks I’d buy for a second wave of the coronavirus Friday, 16th October, 2020 | More on: HOC IGG Striking FTSE 250 gold In times of crisis, investors flock to gold. Although the price of the yellow metal dipped as investors sold everything in March this year, it was not hit as hard as oil or stocks. In fact, the first wave of the coronavirus was positive for gold: its price is up 24% since the start of the year, and an all-time high price of $2,063 per troy ounce was hit in August. Higher gold prices are good for the companies that mine and sell it, like Hochschild Mining. Investors might flock to safe-havens, like gold again if economies stutter in the second wave of the coronavirus. Investors bidding up the gold price would be positive for Hochschild Mining’s share price. Beyond the coronavirus, there is the possibility of inflation returning, which is positive for the price of gold. Hochschild also mines silver which is used in things like solar cells. Net-zero targets and ‘green recovery’ packages bode well for the long-term price of silver. Higher silver prices are good for shareholders of FTSE 250-listed Hochschild Mining. https://www.fool.co.uk/investing/2020/10/16/2-ftse-250-stocks-id-buy-for-a-second-wave-of-the-coronavirus/
risa5: Riverside Resources' Mexico Project Samples 9.1 g/t Gold Maurice Jackson Riverside Resources CEO Dr. John Mark Staude and Senior Geologist Erika Sweeney talk with Maurice Jackson of Proven and Probable about recent exploration results at the company's Los Cuarentas project in Sonora. Los Cuarentas Map Maurice Jackson: Joining us for a conversation is the CEO of Riverside Resources Inc. (RRI:TSX.V; RVSDF:OTCQB), Dr. John Mark Staude, along with senior geologist Erika Sweeney. Riverside Resources has some very important developments coming from the Los Cuarentas Gold-Silver project, located in Sonora, Mexico, which has an earn-in option agreement with Hochschild Mining. Dr. Staude, before we go onsite, please share the details of the agreement and the potential presents for shareholders. Dr. John Mark-Staude: For Riverside, we're so excited. We follow the prospect generator model and in this case work with Hochschild Mining. Where for an US$8 million investment into the project that Riverside's operating, Hochschild can earn a 51% interest, and then, by spending another $3 million in the ground, it could get to 75% interest. The best part for us is that we can sell our minority interest for up to $20 million, and keep a royalty. Whether we make a joint venture or go forward with them, or for us, that type of spending from our market cap provides an amazing upside. So we're so excited with Erika and the team and the potential we have at the Cuarentas project. Maurice Jackson: Speaking of the market cap as a shareholder, I have to applaud you on the business and geological that we have before us on the Los Cuarentas. Riverside has several generative projects throughout Canada and Mexico, with a market cap under $18 million. And Los Cuarentas, just by itself, has the potential to almost double that with cash in the treasury, along with a royalty. Kudos to you, sir. Dr. John Mark-Staude: Great to have a good team and it's so important in these COVID times to work as a team. Thank you. Maurice Jackson: Mrs. Sweeney, you're on site at Los Cuarentas, which is surrounded by several gold producing mines in the region. To gain a better appreciation for today's press release, can you show us on the map, some of your neighbors and the successes they've had, and where they are in relation to Los Cuarentas? Los Cuarentas Overview map Erika Sweeney: The Los Cuarentas project is located within a 50-kilometer radius of a number different projects such as Premier's Gold Mine, the Mercedes Mine, that looks very similar to Los Cuarentas. When you look at the grade, up to 34 grams per ton, very good intercept. Then you go to the north about 30 kilometers there, you're going to have Santa Gertrudis that is owned by Agnico Eagle. And about 40 kilometers to the south, you're going to find Las Chispas, which was a pretty significant discovery in the past couple of years. So, this is very exciting. There's a lot of proven gold and silver discoveries in this area. Maurice Jackson: Well, it sounds like the right place and the right time. Erika, Riverside just released some news regarding new channel sampling and soil sampling results taken along several of the planned drill targets at Los Cuarentas. What can you share with us? Erika Sweeney: We did some trenches, we're doing some channel as well. And the channel got back with 32.9 grams per ton over almost a meter. This is very exciting because this is included within a wider zone of 3.4 meters of 9.1 g/t gold. So, those are very significant results. This is not the only one, there are multiple high-grade zones up to 21 g/t in the Santa Rosalia zone. So we're very, very excited about that. Erika Sweeney: Then we also did a soil sampling campaign and this soil, same thing was very, very important because it happened to be between our two primary targets. Two drilling targets that are coming up. And what we found out is that we have almost 1 g/t gold in our soil sampling, which is extremely high. And it just happened that we had this perfect continuity between our Santa Rosalia and Santa Rosalia Sur, our drilling target. And we can now, thanks to the soil sampling, merge into at least a 1.7 kilometer target. Which is pretty amazing, and Riverside looks forward to the next drill program. Maurice Jackson: Erika, I know you can't see me, but I'm smiling from ear to ear, just like you are. Alright, now that Riverside has demonstrated its proof of concept on Los Cuarentas, what are the next steps, and when will those next steps commence? Erika Sweeney: This is very important. As of next week, we're going to be drilling. We're going to start with the main targets, Santa Rosalia, and we're going to drill areas where on surface we found 25 and 21 g/t gold. So this is very exciting, we're going to see the continuity at depth. So, that's what you can expect, and what investors can expect will be results from the drilling, trenches, and more channel and soil samples. Investors have a lot to look forward to in the coming months. Maurice Jackson: John Mark, we've heard Erika demonstrate the impressive results at Los Cuarentas. I believe you have some samples to show us. Maurice Jackson: John Mark, leaving Los Cuarentas, what are some of the catalysts that you see before us in Riverside Resources? Dr. John Mark-Staude: Riverside shareholders are set up for a wonderful next quarter. Maurice Jackson: It's truly been a banner year this year for Riverside Resources. You know, we're talking about Hochschild right here at Los Cuarentas, Capitan Mining, several catalysts working for you there with Cecilia, and throughout Canada now, and Ontario, truly exciting times for Riverside. And as a shareholder, I commend you for all the work you're doing. Let me ask you this, can you walk us through the capital structure right now for Riverside? Dr. John Mark-Staude: Riverside has a very nice capital structure. We have fewer than 69 million shares out, we're tightly held with ourselves being large shareholders, and more than 50% of that being institutions largely from Europe. We're in a very good position. We also have a good cash position of over $3 million cash and of course no debt. So, Riverside's in a very good capital position moving into 2021. Maurice Jackson: John Mark, any parting words for current and prospective shareholders? Dr. John Mark-Staude: I am so excited about having a team with Erika. So many of our team out on the field in Mexico. This is one of the best times for Riverside looking forward. The gold markets here, we're able to operate and we have multiple partners working on multiple targets. So for me, I'm holding my shares, buying more shares, and very excited about the potential. It's super bright. We want to put on the sunglasses. Https://www.streetwisereports.com/article/2020/10/09/riverside-resources-mexico-project-samples-9-1-g-t-gold.html
risa5: Stock market crash: A dividend stock whose share price could surge in August! Royston Wild 19 July 2020, 7:38 am You should always look to buy companies with a view to how they’ll likely be performing several years from now. The most successful share investors following the 2020 stock market crash are likely to be those with long-term strategies. Buying shares based on what you’ll think their share prices will do over a short time horizon often spells trouble. That’s not to say that investors shouldn’t buy shares today in the hope of meaty share price gains. Provided you buy companies with bright long-term futures, and strong balance sheets to help them navigate temporary problems for the global economy, then adding shares to your investment in expectation that they’ll gain value in August remains a good idea. Even if another stock market crash happens next month, companies of true quality should still furnish you with terrific returns over the long run. Navigating the stock market crash I’d certainly buy Hochschild Mining (LSE: HOC) shares on hopes of a silver price surge in August. The business hasn’t fallen in value as part of the broader stock market crash. In fact the FTSE 250 miner has gained 18% in value in 2020 thanks to rocketing metal values. And I’m encouraged of more gains by City brokers steadily ramping up their silver price forecasts. The number crunchers at Jefferies are the latest to upgrade their expectations on strong investment demand. They now expect silver – which just spiked above the $19 per ounce marker – to keep rising to average $19.50 in quarter four. They think it’ll average 20 bucks an ounce in 2021, too. Buy into this silver star Buying Hochschild Mining shares is a great way to ride the rocketing silver price. News from the business, which digs for metal all over the Americas, hasn’t been that brilliant of late. Silver production crashed in the first half due to Covid-19-related shutdowns. But the bright silver price has allowed it to avoid sinking amid the broader stock market crash. Normalising work conditions more recently suggest that the business is over the worst of it. Indeed, I’d buy Hochschild as production at its flagship Inmaculada asset in Peru goes from strength to strength and exploration at the mega mine continues to yield terrific results. I’d also buy because of the bright outlook for silver prices beyond the medium term, first on expectations of strong safe-haven demand and secondly on the likelihood of improving industrial demand as the global economy steadily improves. Hochschild doesn’t carry the biggest dividend yields out there. These sit at 1% and 1.7% for 2020 and 2021 respectively. But City brokers expect dividends to explode over the medium term as profits improve. And I expect them to keep rocketing as silver prices likely keep on improving. I’d buy this FTSE 250 dividend stock today and hold it for years. https://uk.finance.yahoo.com/news/stock-market-crash-dividend-stock-063840736.html
risa5: Bull market rules ... ■ Unprecedented QE programmes. All the major central banks have launched game changing QE programmes. The Bank of England has committed to a £200bn QE programme (9 per cent of UK GDP) to lift its holdings of UK government gilts to £645bn and the European Central Bank (ECB) has unleashed a €1.35 trillion (£1.2 trillion) bond bazooka (12.6 per cent of eurozone’s GDP) to offset a forecast 8.7 per cent contraction in the currency bloc’s economy this year. The US Federal Reserve has gone one step further, announcing a QE infinity balance sheet expansion through “purchases of Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions.” Factor in the Federal Reserve’s maiden move into corporate bonds through the purchase of investment-grade securities in primary and secondary markets and exchange-traded funds, and many other measures, too, and the US central bank is on course to double the size of its pre-Covid-19 crisis US$4.3 trillion (£3.4 trillion) balance sheet. Japan’s central bank has doubled down on stimulus, too, unveiling a ¥117 trillion (US$1.1 trillion) package in May. In aggregate, the G10 countries and China have announced total government and central bank stimulus programmes worth US$16 trillion and rising, a hefty sum in relation to the World's Bank US$9 trillion estimate of lost global economic output this year. Importantly, ramping up QE will help soak up the additional sovereign debt issuance resulting from Covid-19 pandemic induced budget deficits and the huge fiscal stimulus packages of governments. It's worth remembering that the primary aim of QE is to drive long-term bond yields lower, force investors up the risk curve in search of higher returns, relative to bonds, boost asset prices and create a positive wealth effect. But this is more than simply a liquidity driven process as cheaper money is being recycled directly back into the real economy to support investment. As was the case during previous QE programmes, equities are a major beneficiary, even more so now given that the yield alternatives are woefully thin on the ground for fixed income investors in a zero-interest rate policy (Zirp) environment. This factor and the scale of the money printing programmes are the primary reasons why I expect equities to perform even better than they did during the US Federal Reserve’s first instalment of QE. To recollect, the MSCI World index soared 39 per cent between November 2008 – when chairman Ben Bernanke signalled the US central bank’s intention to pursue this line of monetary policy – and March 2010 when QE1 ended. The FTSE 350 performed even better, rising by 43 per cent. ■ QE creates dollar weakness. One consequence of the Federal Reserve’s QE programme is to drive strong capital flows overseas – which can be seen in rising foreign exchange reserves. In turn, emerging market authorities tend to print domestic currency to buy US dollars, to prevent excessive currency appreciation. This raises deposits at banks, inducing a lending boom, which is commodities intense – bullish for commodities, with knock-on effects on commodity currencies and speculative flows. Movement of capital flows overseas is important because the offshore US dollar non-bank lending market is worth US$18 trillion, a sum equating to around a fifth of global GDP. This market had been under increasing stress following a 15 per cent appreciation in the US dollar index in the preceding two years before the stock market crash. Moreover, banks outside the USA have dollar debts exceeding the total liabilities of those banks operating within USA, so their funding is vulnerable to any dollar liquidity shock. That’s exactly what happened in March as financial markets became dysfunctional. However, the massive injection of liquidity into the global financial system alongside the Federal Reserve’s barrage of new liquidity programmes (to help keep the market functioning) has eased financial stress and cut debt servicing costs of corporate borrowers, too. It’s no coincidence that the US dollar has declined almost 6 per cent on a trade weighted index since the US central bank announced its QE infinity programme. I expect the greenback to continue to weaken as the Federal Reserve dramatically increases the supply of dollars in circulation. https://cms.investorschronicle.co.uk/comment/2020/06/08/bull-market-rules/
stevea171: Silver Coin & Bar Supply May Totally Dry Up When The Next Global Financial Crisis Hits. June 5, 2020 by Steve St Angelo of SRSrocco Report. If investors are waiting for much lower premiums to purchase silver bullion products, they may be waiting for quite some time. Due to the global contagion, investors have bought a record amount of silver bullion. However, as supply disruptions and lack of availability impacted the market, premiums on many silver bars and coins surged higher and continue to remain elevated. However, the overwhelming majority of online dealers were charging $11-$13 premium on Silver Eagles early on, but these have now fallen to the $7-$10 range. Regardless, I believe the silver market will continue to suffer from high premiums due to surging investor demand during the next FINANCIAL CRISIS that will make the 2008-2009 Financial Crisis seem quite DULL and BORING. So, here’s the real question… What happens when the next MAJOR FINANCIAL CRISIS hits?? While it can be stated that the financial crisis has already hit the United States and World, evidenced by the Fed and central bank monetary policy, INVESTOR PSYCHOLOGY hasn’t digested it yet. But, it will. This is when I believe investors will finally get PRECIOUS METALS RELIGION. Unfortunately, the world is still worshiping their HIGH-TECH GOD, but that won’t last much longer as the world begins to head further over the ENERGY CLIFF. Without growing global oil production (demand), the entire world economy and the financial system begins to implode. hTTps://www.silverdoctors.com/silver/silver-news/when-the-next-global-financial-crisis-hits-silver-coin-bar-supply-may-totally-dry-up/
risa5: Hochschild Mining - A Precious Opportunity For Long-Term Value Feb. 28, 2020 12:05 PM ET Summary Hochschild Mining is a gold and silver miner with a track record of production growth and cost control. The company offers upside and optionality with greenfield and exploration projects including an exciting rare earths deposit project. Capital allocation is a sensible split between returns to investors via increasing dividends and investment in innovation and growth projects. Gold and silver bull markets provide support for near-term stock price momentum to continue. In these uncertain times, exposure to precious metals is a sensible portfolio hedge. Precious metals prices are rising as investor sentiment shifts firmly to risk-off mode. The easy option would be to simply hold ETFs linked to the prices of these metals. The Global Investor thinks it’s worthwhile to take a bit more risk and own precious metal mining stocks instead as they both benefit from rising commodity prices, and if picked carefully have growth profiles in their own right. In a recent article, I talked about why I was bullish on Centamin (OTCPK:CELTF) thanks to the emergence of gold sector M&A - see Centamin Is A Golden Opportunity. In this article, I introduce a new precious metals miner I’m bullish on, Hochschild Mining (OTCPK:HCHDF), as it boosts output levels and reduces its all-important all-in sustaining costs. 2019 results takeaways In its 2019 full-year results released on 19th February, Hochschild Mining produced a strong set of financial results: EBITDA increased by 28%, EPS increased 80% and its dividend was increased by 19%. This was driven by the company having record production at its largest mine, Inmaculada, just as commodity prices were trending upwards. Output at the San Jose mine was also at a record level. In all, Hochschild’s mines produced 16.8m ounces (oz) of silver and 269,892 oz of gold last year, or 38.7m oz silver equivalent. Production and resource growth Commodity producers are driven by two factors: prices and production. To get exposure to prices we can just buy ETFs, but it’s the growth in production that adds value to owning the right mining stocks. Production comes from reserves and resources ultimately, and Hochschild added 12m oz net to Inmaculada’s resources, once 2019 production is considered. Hochschild also finally got the nod from the government to explore two brownfield areas key to extending life at the Pallancata mine in Peru. CEO Ignacio Bustamante noted the Inmaculada team had been "very successful" hunting for high-grade areas: We have found an additional 46m ounces of silver equivalent material with an average rate of 475 grams per tonne. That's a clear indication that the higher grades are there and we are going to go at full speed during the year. Brownfield exploration capex will grow by almost 30 percent in 2020, to $36m. 2019’s results would have been even better had it not been for some exceptional costs impacting 2019 profits. But these costs, including the $12m in layoff costs at the closed Arcata mine, other mine closure costs and $15m impairment from delayed production at its Pallancata mine, were related to optimizing performance. Higher profitability meant higher tax payments too. The company also managed to improve its debt position and refinance some debt at lower interest rates. It’s easy for a management team to talk up a company’s prospects, and every company does this. But the real sign of walking the walk is in the dividend. Hochschild has shown its confidence by raising its final dividend by 19 percent to 2.3¢ a share, which took the total payout for 2019 to 4.3¢. This was above the analyst consensus of 4.0¢. Biolantanidos: Rare earths, a long term optionality Hochschild’s dividend yield is nothing special, but that’s because the company is investing in more attractive opportunities in exploration and launched an exciting rare earths project for $56m. The rare earths project will largely depend on the results of a feasibility study scheduled for 2021, but this investment gives investors significant optionality in an early-stage rare earths project that Finance Director Ramón Barúa said at the 2019 results presentation would effectively be the largest rare earths deposit outside China. Hochschild plans to spend $7m on this project in 2020 and hired a separate management team to manage this development in order not to distract its group management from running the core gold and silver operations. Rare earths are used in magnets needed in renewables, electric vehicles, and defense technology. They have become a strategic material in recent years and China controls the majority of the world’s supply and processing capability, meaning any production outside of China has extra significance. If the feasibility study brings positive results, then the deposits will incur new investment requirements before production comes online. So at this stage it’s we can assign little value to the asset but instead view it as a call option on rare earths, i.e. a project with limited downside and much larger upside. Hochschild, which has gold and silver production in Argentina, is aware of the political risks in that country and is, therefore, increasing investments in Peru as well as some focusing on exploration properties across Canada, the United States, and Chile. In the short term, the strength of the company’s core gold and silver business, with growing production and growing margins, provides cash to return to investors and invest in growth projects. This is exactly how a mining company should be run: producing cash that should then be allocated between returns to shareholders and growth opportunity investments. Innovation in reducing costs Pretty much every commodity producer is a price-taker and has no influence over commodity prices. However, every producer does have some control over its costs. One aspect The Global Investor really likes about Hochschild is it has managed its all-in sustaining costs to be at the lower end of guidance in 2019, which was a small reduction on 2018 costs, and AISC guidance for 2020 is set to be lower again (excluding some costs on a tailings storage facilities project). The company also is investing in a program of innovation throughout the value chain. There are two parts to this: ore sorting and mine digitization. Ore sorting means mined material can be better split between mineral holding ores and waste, which enhances the yield from the processing stage. This is still in a pilot stage but has the potential to reduce costs in the future as well as making more efficient use of water and chemicals in the processing stage of mining, something very important in the new ESG era. The second innovative project Hochschild is working on is mine digitization. This means by using sensors at the mines, data can be collected more accurately and quickly, and the result is that drilling and scooping could become 30-40% more productive, allowing for a reduction in fleet size and costs. Again, this not only reduces costs but reduces the impact on the environment. These two innovations have the potential to produce significant operational and project upside. Risks As with any mining company, exploration is highly risky. While a good track record helps, it's no guarantee of future success. Production is also risky, as mineral grade decline can hit sections of the mine, reducing metal recovered from the processing stage. Another risk is that the company mostly operates in Peru, Chile, and Argentina, and investors could suddenly increase the country risk premium associated with these emerging markets, which would then push the share price down. While exposure to Argentina is especially a risk now, given the country’s hard-left government, Hochschild has been in Argentina for many years, under several government regimes, without incurring significant damage. Gold and silver prices are sensitive to interest rates, inflation rates, and changes in investor risk appetite, and the company has no control over the prices of these two commodities. Valuation As an asset-heavy company, Hochschild Mining can be valued and compared against peers using the EV/EBITDA multiple. On a trailing basis, Hochschild's EV/EBITDA stands at just 5.2x, which is very cheap compared to the gold and silver sector median of 8.9x, according to Seeking Alpha data. London listed gold and silver peers include Centamin trading at 6.6x, Polymental International trading at 12.6x, and Fresnillo trading at 7.2x EV/EBITDA. Summary In summary, Hochschild Mining offers a track record of free cash flow generative production, operational cost control, exploration, and green-field optionality with a strong balance sheet enabling strategy execution and future shareholder returns. Rising gold and silver prices are just a bonus. Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in HCHDF over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. https://seekingalpha.com/article/4328198-hochschild-mining-precious-opportunity-for-long-term-value
stevea171: Gold books biggest daily slide in nearly 7 years with nearly 5% drop By Myra P. Saefong and Mark DeCambre. Published: Feb 28, 2020 2:22 p.m. ET Investors rush to sell gold and generate cash to cover stock market losses Gold futures dropped by nearly 5% on Friday, suffering the sharpest daily slide since June 2013. Investors rushed to sell the precious metal to generate cash to cover losses in the stock market, which continued to plunge on rampant worries about the spread of COVID-19 epidemic and its effect on the global economy, analysts said. “Investors absolutely see gold as a safe-haven, but the yellow metal is now succumbing to deleveraging pressure,” said Peter Grant, vice president of precious metals at Zaner Metals. “This is when investors sell profitable positions to raise cash during a market rout. Frequently the cash is used to cover margin calls in other markets.”
risa5: Global Central Banks Fueling a Ponzi Market Ultimately, investors will awaken to the rising tide of defaults and downgrades. January 20, 2020 | By Scott Minerd, Global CIO One of the topics that I am focused on in Davos is the deterioration in the quality of the corporate bond markets. The disturbing trend is that despite the rally in risk assets in the prior year, the number of defaults rose by approximately 50 percent, according to data compiled by J.P. Morgan. Additionally, the number of distressed exchanges increased by 400 percent. This correlates well with our observation that the number of idiosyncratic defaults has been increasing. Ultimately, markets will need to reprice for this rising risk with increased bond spreads relative to Treasury securities. However, that day of reckoning when spreads rise is being held off by the flood of central bank liquidity and international investors fleeing negative yields overseas. And let’s not forget downgrade risk of BBBs: today 50 percent of the investment-grade market is rated BBB, and in 2007 it was 35 percent. More specifically, about 8 percent of the investment-grade market was BBB- in 2007 and today it is 15 percent. It has more than quintupled in size outstanding, from $800 billion to $3.3 trillion. We expect 15–20 percent of BBBs to get downgraded to high yield in the next downgrade wave: This would equate to $500–660 billion and be the largest fallen angel volume on record—and would also swamp the high yield market. Ultimately, we will reach a tipping point when investors will awaken to the rising tide of defaults and downgrades. The timing is hard to predict but this reminds me a lot of the lead-up to the 2001 and 2002 recession. The prolonged period of tight credit spreads experienced in the late 1990s lulled investors into unwittingly increasing risk at a time they should have been upgrading their portfolios. This brings to mind the famous observation by economist Hyman Minsky, who stated that stability is inherently destabilizing. That is to say that long periods of relative stability in risk assets causes investors to keep upping the risk during a long period of calm. Ultimately, this leads to what he called a Ponzi Market where the only reason investors keep adding to risk is the fear that prices will be higher tomorrow (or in the case of bonds, yields will be lower tomorrow). Daniel Kahneman observed this behavior in his own work, when he identified that investors’ fear of missing an opportunity induces them to buy when they should be selling. Even though the recession clearly has been put off until 2021 and perhaps 2022, in the lead-up to the 2001 recession, credit deterioration started to be evidenced three years earlier in 1998 as defaults and credit spreads were rising. This would sound like good news for yield starved investors and I would agree. But patience will lead to bigger opportunities for disciplined investors who don't wander off into exotic asset classes or chase current returns. Https://www.guggenheiminvestments.com/perspectives/global-cio-outlook/global-central-banks-fueling-a-ponzi-market
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