Hochschild Mining Share Price (HOC)

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Share Name Share Symbol Market Type Share ISIN Share Description
Hochschild Mining Plc LSE:HOC London Ordinary Share GB00B1FW5029 ORD 25P
  Price Change % Change Share Price Shares Traded Last Trade
  39.00 14.06% 316.40 2,977,678 14:36:48
Bid Price Offer Price High Price Low Price Open Price
316.20 316.80 316.80 283.80 283.80
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Mining 569.81 77.98 6.79 46.0 1,618
Last Trade Time Trade Type Trade Size Trade Price Currency
14:36:48 O 1 316.80 GBX
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Hochschild Mining (HOC) Latest News

Hochschild Mining News

Date Time Source Headline
23/7/202019:04ALNCHochschild Partner Skeena Secures Resource Estimate At Snip
23/7/202009:06ALNCFAlliance News Flash Headline
23/7/202009:00UKREGHochschild Mining PLC Appointment of Director
23/7/202007:00UKREGHochschild Mining PLC Skeena Announces Maiden Resource for Snip
15/7/202010:24ALNCHochschild Mining Production Hit By Covid Operations Halt
15/7/202007:00UKREGHochschild Mining PLC Q2 2020 Production Report
06/7/202010:04ALNCHochschild's Inmaculada Operations On Hold After Positive Covid Test
06/7/202007:00UKREGHochschild Mining PLC Update on COVID-19 cases at Inmaculada
26/6/202013:10UKREGHochschild Mining PLC Report on Payments to Governments 2019
25/6/202011:10ALNCIN THE KNOW: RBC Ups Centamin, Sees Hochschild Pandemic Downside Risks
More Hochschild Mining News
Hochschild Mining Takeover Rumours

Hochschild Mining (HOC) Discussions and Chat

Hochschild Mining Forums and Chat

Date Time Title Posts
05/8/202014:10Hochschild - Silver Mining, the place to be!20,511
05/8/202013:52Hochschild Mining - The Serious Traders Thread4,769
20/3/202006:50Hochschild Mining - Gold (60%- 260k Au) / Silver (40%) + $$$bn in Rare Earths2
28/1/201803:12Hocschild Mining - Long Term Value Proposition52
23/11/201708:16Hochschild Mining5,060

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Hochschild Mining (HOC) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
13:36:48316.8013.17O
13:36:48316.8013.17O
13:36:48316.4087275.27AT
13:36:48316.40191604.32AT
13:36:48316.401,2003,796.80AT
View all Hochschild Mining trades in real-time

Hochschild Mining (HOC) Top Chat Posts

DateSubject
05/8/2020
09:20		Hochschild Mining Daily Update: Hochschild Mining Plc is listed in the Mining sector of the London Stock Exchange with ticker HOC. The last closing price for Hochschild Mining was 277.40p.
Hochschild Mining Plc has a 4 week average price of 180.30p and a 12 week average price of 138.60p.
The 1 year high share price is 313.40p while the 1 year low share price is currently 80.40p.
There are currently 511,414,725 shares in issue and the average daily traded volume is 1,566,125 shares. The market capitalisation of Hochschild Mining Plc is £1,582,317,159.15.
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24/7/2020
14:38		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
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03/6/2020
16:04		cassini: Sam, HOC rose strongly a couple of weeks ago and as I pointed out at the time on this thread, it usually has a tendency to pull back for a while after a strong rise. Added to that silver has taken a bit of a kicking this week and that hasn't helped (silver has had a strong rise too - in fact the HOC price and the silver price are sometimes in lockstep). Sometimes it pays just to wait for a decent entry point. Of course, you can't know for sure you'll get one but there's always another opportunity IMO. The other thing I find useful is not to go all in on a first buy*. Say you buy at 200p and then annoyingly it falls to 160p - if you staged your buys into two tranches you get an average price of 180p instead of 200p, a price easier to recover from in that particular scenario (* do not use this technique on 'falling knives'). Sure the share price looked like it was trying to rise over the last two days - not particularly convincingly IMO. Now where will it go? I have no idea, but if silver keeps leading down then probably so will HOC for a bit. I'm looking to reenter HOC, after selling out at 216p but still am not happy about rebuying at the moment. If it gets down a bit further (like 180p or lower) I'll probably buy back in. At the moment I'm just stiffing it out waiting for an 'opportunity'. Part of the problem with investing pscychology is that people don't want to buy when a share is down and out as they are fearful it'll go lower. Then after a strong rise they feel bolder and buy in - just as all the traders bail out for a profit, sending the price tanking again. Half of share investing is about pyschology I reckon... It'll recover, hang in there.
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29/5/2020
12:04		sotolo: Trader I do believe your worries are in the price. In the second week of August 2017 Hoc share price was 338p while gold which is our majority metal was $1270 and silver was also lower than now at $16.90. I think lower output and higher aisc are well in the price. As you say it is great to get different views on this board but whilst you have been calling Hoc down I have been buying more over the last months as it continues to climb. I believe that despite a dire year now, the need to explore etc, the much higher gold price and a silver price about to break out will more than save us and I think Hoc has the potential to be a great performer. As said the high risk is more than accounted for in the near halving of share price in the last three years. One day you will be right but you will have missed making an awful lot of money on the way
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22/5/2020
16:42		risa5: As Hochschild Mining hits a yearly high, is it too late to buy shares? Stockopedia21 May 2020 With shares in Hochschild Mining (LON:HOC) currently trading close to a 52 week high, a question many on the sidelines probably have is: "was I too late to buy them"? The share price is up by around 45.4% over the past week. On a one-month basis, the Hochschild Mining price has risen by 71.9%. Will this continue however? We can briefly look at the psychology and research around 52-week highs. Do prices tend to continue rising after a 52-week high is hit? 52 week highs are always good news. But, surprisingly, research shows investors become hesitant about bidding their high performing shares any higher – even with further positive earnings news. Psychologists call this anchoring. As humans, we tend to take our time when it comes to changing our opinions in the face of new information - even when it's good news. We become 'anchored' to the new price and cannot easily fathom a reality in which it could get any better. This emotional tug-of-war often ends with the ‘new high’ stock drifting higher in price over the coming weeks and months. The upward trend is called “post earnings announcement drift”. As the news sinks in, momentum takes over and the price moves higher and higher (as fear of missing out sets in). A look at Hochschild Mining’s StockReport could offer more insight into what’s driving the momentum in its share price - and whether that might continue. What we do know however is that statistically speaking, prices continue to rise after a new 52-week high is hit – which may be a reason to consider getting into Hochschild Mining even with the current high.
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14/5/2020
10:04		sotolo: Of course I don’t want financial advice but opinion, which is what we give on these boards, on this share and others day in day out. You share my view on Hoc v Cey, tho actually I think in the long term Hoc may get back to its more usual one and a half (or more) Centamin’s price, especially if exploration goes well. I think the shutdown is in the price as said before. So I plan to reinvest Cey divi in Hoc as I said, and hope Hoc price stays down long enough for tomorrow’s Cey divi to paid by useless Barclays SmartInvestor; they take the divi in dollars not sterling that this time for once is good, even if it delays its arrival. I will eventually move that money from Hoc to Cey as I love the Cey divi especially in ISA and SIPP, it is shrinking as a percentage as the share price rises, but then should rise back with increased profits if the new boss doesn’t go mad on exploration. I don’t own Sandstorm, used to own another royalty company silver Wheaton, but actually I think Cey is even better for churning out the cash.
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24/4/2020
19:34		trader365: We're on the verge of the biggest global recession since 1929. Lets have some predictions backed by technical or fundamental analysis of where HOC share price will be in six months? 2008 and 2016 HOC fell into 30's will that be the case this or next year??
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16/4/2020
09:06		sotolo: Trader, I don’t think the bulletin boards have any effect on shares in Dotson 350 companies, but I agree that holders can get angry at negative opinion, I along term holder of Hoc and Cey - I have been positive on Cey as now, and negative when costs were soaring and gold falling, getting lots of criticism for that. Markets are made up of a tussle between buyers who view the share positively and sellers, vive versa. ITIS so useful to hear both views on this board, Trader you are appreciated on this board for your chart informed views as is Steve with his knowledge, long may you continue to spar. Seems to me just now that Hoc is valued about right assuming production slowly gets going again, if it is slower than expected Hoc should tumble, if silver rises , despite lower industrial demand, then Hoc should rise. I am more positive on Cey first as it is mainly gold, second as it has a long term mine, third as it is far more profitable, fluir the as it has lower costs,and finally as it should be on a PE of around 10 with lowered costs (not affecting Hoc that isn’t mining) and higher gold (likewise). Just my opinions. Historically Hoc share price has been around 60% higher than Cey, now the same, as a question mark over the company with its diminishing resources, and almost no income just now.
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15/4/2020
08:35		trader365: Peter Schiff and Sprott have no bearing on the HOC share price. The fact is the company is hemorrhaging money and likely to issue a profit warning in the near future
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29/2/2020
15:24		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
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24/2/2018
22:03		stevea171: 23/2/2018. Seeking Alpha. Hochschild Mining Has Some Problems, But It's Not The End Of The World Summary Last year, Hochschild delivered on its promises. But the company has taken a small step back. However, the second half of 2017 was better than the first one. In this article I discuss a few issues the company is struggling now (particularly the problems at Arcata). In the final section of the article I present a simplified valuation model based on conservative assumptions. Hochschild (OTCPK:HCHDF) is a mid-cap gold/silver producer running three mines in Peru and one mine in Argentina. Most recently this former mostly silver producer increased its exposure to gold but the company still has big exposure to silver prices (last year silver accounted for 48.4% of total production). Yesterday, Hochschild released its 2017 annual report. This release plus the guidance for 2018 (published in January) received a cool reception. As a result, Hochschild shares are once again at their strong support making the company's investors wondering about Hochschild's future: In my opinion, each miner has its problems, big or small, and Hochschild is no exception. However, I would not say that this company is in serious trouble. Anyway, in this article I am discussing a few problems Hochschild has encountered most recently. In the final section I am trying to show that according to a simplified discounted cash flow model, the company's shares are slightly undervalued now. Arcata problems Last year, the company encountered a number of problems at its oldest Peruvian operation called Arcata. First of all, look at this chart: Chart 2 It may be easily spotted that for many years Arcata's reserves has been going down (the red arrow). Fortunately, since 2013 the grades have been in their upward trend but a general impression is as follows -- there is less and less stuff to mine at Arcata. The company tries to mitigate this negative impression and in its presentations very often discloses this chart: Chart 3 I generally agree. Underground mines, particularly those exploiting epithermal deposits, are erratic. For example, it is nothing strange that a mine demonstrating the current mine life of three to five years may operate for next twenty years or even longer. By the way, Arcata started its operations in 1964, so I am not surprised to see Hochschild management playing down the problem. But not so fast: To solve any problem you have to invest some of your resources (time, money, goodwill, etc.). In the case of a mine you have to explore it to keep it going, for instance. And here is a problem because management is spending less and less cash on Arcata. For example, in 2016 the company spent $20.8M on Arcata but last year it was only $17.6 million. This year Hochschild wants to spend only $7M so I am skeptical about this operation going forward. What's more, here is an excerpt from the 2017 annual report (page 47): A restructuring plan has been established for the Arcata mining unit that includes the dismissal of approximately 165 employees. This reduction is aligned with the exploitation plan 2018, which is lower than budgeted in 2017, and is scheduled to take place between the months of January and February 2018. Well, it looks like they are going to put Arcata on care and maintenance than focus on problem solving. And I would not be surprised. According to the guidance for 2018, Arcata is supposed to burn cash this year. The all-in sustaining cost of production (AISC) is estimated to be between $18.0 and $18.5 per ounce of silver equivalent so, keeping in mind that today silver is trading at $16.5 an ounce, the mine is set to burn cash this year. To summarize, if I were to give the company advice, I would say: "Put Arcata on care and maintenance and focus on brown-field exploration." Other operations The company's flagship property is Inmaculada, an excellent mine operating since 2015. Inmaculada is not only the largest producer in the company's portfolio (accounting for 46.6% of total production in 2017), but the lowest-cost one as well (AISC of $9.7 per ounce of silver equivalent in 2017). However, this year Inmaculada is supposed to slow down a little bit and deliver a similar amount of metals as last year. On the other hand, Pallancata, the third mine located in Peru, should be a growth factor. The company plans to ramp up mining operations at a new vein called Pablo, which, according to this excerpt from the 2016 annual report (page 24), may give a major boost to Hochschild performance this year: … the addition of resources from the Pablo vein at Pallancata which is now over 40 million ounces with silver equivalent grade improving significantly to 529 silver equivalent grams per ton. This year Pallancata should increase its production to 9.5 million ounces of silver equivalent (from 7.7 million ounces in 2017), which is a very positive surprise. To remind readers, last year Pallancata made a big step forward increasing its production by 117% (compared to 2016), so I thought that another big jump in production was rather unlikely. Of course, development costs money so investors should not expect particularly impressive results very soon. According to the company, this year the average AISC should stand at $13.0-$13.5 per ounce of silver equivalent. But when the mine development is over, I expect the AISC to be reduced to $10.6 per ounce, so patience is advised. The last mine, San Jose, is shared with McEwen Mining (MUX), with Hochschild holding a 51% stake in this operation. Similarly to Inmaculada, this year San Jose is supposed to produce a similar amount of metals, compared to 2017 (7.0 million ounces of silver equivalent) but at a slightly higher cost (AISC of $14.5 - 15.0 per ounce of silver in 2018 vs. $14.0 in 2017). Last year was worse than 2016, but the second half of 2017 was really good An investor studying the 2017 annual report would see these unpleasant figures: Table 1 Simply put, last year the company, despite higher revenue, incurred significantly higher costs than in 2016. As a result, all profits across the board were lower than in 2016. There were two culprits: Arcata: a direct cost per ounce of silver equivalent went up from $8.6 in 2016 to $11.4 in 2017 San Jose: an increase in costs from $7.6 to $9.1 per ounce However, the table below shows what an average investor cannot see -- a comparison between the first and the second half of 2017: Table 2 I think that this picture looks a bit better than the previous one. Interestingly, in the second half of 2017 there were two mines responsible for this improvement -- San Jose (yes, this operation is really decent and in 2H 2017 it delivered a gross margin of $24.8M, compared to $18.4M in 1H 2017) and Pallancata (nothing strange, in fact). To summarize, despite some kind of regression (2017 final results worse than in 2016), the second half of 2017 was quite decent. Hochschild quits its hedging policy Generally, I do not like gold/silver producers hedging their production with forward contracts, options, etc. Hochschild used to be such a company, but last year they had withdrawn from this policy. The red row on the graph below depicts the company's losses incurred due to hedging policy in 2016: It may be easily spotted that last year the company abandoned its hedging policy. I like it. Simple valuation model I have no idea for how long Hochschild is going to operate. However, keeping in mind that epithermal deposits are, generally, long-term operations, I have prepared a simple valuation model to assess the value of the company's shares. Here are my main assumptions: Table 3 The figures disclosed in the table are taken from Hochschild reports and the guidance for 2018. There is only one exception -- I assume that Pallancata, after completing its development, is going to produce gold and silver at AISC of $10.6 per ounce of silver equivalent. This cost matches sustaining capital expenditures disclosed in 2016 when the mine was ahead of the Pablo vein development. It means that, if I am correct, a typical operating year should end with the total free cash flow of $197.3M. Now, apart from operating four mines, the company also incurs fixed costs (administration, selling costs plus a few other issues). I roughly estimate that these costs should not be higher than $80M a year. In other words, the total free cash flow delivered by Hochschild should stand at around $117.3M a year. Furthermore, lets assume that Hochschild is going to operate for twenty years from now on (Arcata has been operating for fifty four years, so why not to assume twenty years?). A discount rate I am using is 5% (all mines are well-established businesses located in a safe jurisdiction so a low discount rate is acceptable, in my opinion). After discounting the free cash flow of $117.3M over twenty years I have arrived at Hochschild business value of $1,458M. Now, as of the end of 2017, the company held cash of $265M and debt of $360M; the share count was 449.5 million. As a result, one share of Hochschild is worth $3.04. Today these shares are trading at $2.83, so they are slightly undervalued. However, note that my assumptions are conservative. First of all, I assume that Arcata will be always a laggard. I am pretty sure that in a few years (or even sooner) this mine should return to profitability driving the company's value up (if not, it should be put on care and maintenance which should drive the value up as well). Moreover, Inmaculada and Pallancata (particularly Inmaculada) present impressive upside potential (Hochschild is continuously exploring this mine), so investors should expect the good news going forward. If I am right, we should see Inmaculada operating at higher capacity soon (Hochschild plans to increase throughput at Inmaculada from the current 3,850 tons per day to 5,000 tons). Summary Last year Hochschild delivered on its promises -- production and costs of production (AISC) were in line with expectations. However, compared to 2016, last year the company made a small step back. As a result, Hochschild shares went out of fashion and now they are very close to the long-term support (look at Chart 1). Despite these negatives, I am still confident that Hochschild is one of best precious metals mining companies in the entire industry. It runs two excellent mines (Inmaculada and Pallancata) that should drive the company's results up in the coming years. The third mine, San Jose, is a decent operation supporting Inmaculada and Pallancata. Unfortunately, the fourth mine, a long-life operation called Arcata, is in trouble now and I do not expect it returning to profitability soon. However, in my opinion, all these negatives seem to be already priced in. According to my simplified calculations, one share of Hochschild is worth around $3.0 so, at current share prices of $2.83, these shares are slightly undervalued. Finally, the chart below compares the price action of Hochschild shares against its peers: Chart 4 Note: I have created an index replicating the share price action of eleven silver producers (Endeavour Silver, First Majestic, Fortuna Silver, Pan American, Silvercorp, Great Panther, Impact Silver, Excellon, Hochschild, Frenillo and Avino Silver). Note that since the beginning of the current bull market in precious metals, Hochschild shares have been outperforming their peers (the dotted, red line). Interestingly, now Hochschild shares are once again very close to this trendline. https://seekingalpha.com/article/4150075-hochschild-mining-problems-end-world?page=1
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Hochschild Mining share price data is direct from the London Stock Exchange
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