The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Stanley hardly anybody gets a top or bottom all the time when buying shares. When you do get one its like a hat trick of strikes in ten pin bowling or a hole in one at golf. Sometimes a spare or an eagle will do.
Take a look at HOC's 10 year chart. You buy it cheap (or cheaper)..... but one day it isn't. Look at 2016 and 2020. Once it has a supportive price environment this share motors. While you wait, you have the reasonable dividend, continuing diversification into friendlier American regimes (Brazil/Canada), LOM extensions, and a highly competitive AISC at its main mine.
If you believe that Silver will one day have its day in the sun then it also has the attraction of being a big silver producer on the FTSE. This time next year Rodney, parabolic I tell you.....
"Hochschild is a bit like one of those permanent sale stores used to be, you think you have bought it cheap but you can always get it cheaper!"
Haha, exactly how I feel. I've topped up twice the last lime just below £1 mark and I thought that was cheap :D
Hochschild is a bit like one of those permanent sale stores used to be, you think you have bought it cheap but you can always get it cheaper! My view, at the risk of annoying some who only like a single opinion, is that Hoc is like Cey but 18 months later and without the balance sheet strength. Ie Centamin has already passed its nadir and its share price has begun to anticipate the recovery through 2023 and 2024; I have held on, on the basis that this would happen and being no good at timing. Hoc should begin recovering a year or more later, in 2024 and more so 2025, so I expect the share price to start rising in anticipation mid 2023 with gold staying the same, as long as nothing unforeseen happens as is the case so often with miners. Meantime I shall hold and wait. If gold falls further but recovers then too, as long as Hoc survives this it could be very golden!
Many thanks for all of your replys, much appreciated, yes I meant Amarillo not Aclara and too late Sotolo I am invested in the mining sector including Hochschild.
Thanks Modestus I am hoping the same as said
@Sotolo : Fair enough, but since i started visiting the HOC-board i haven't noticed any contributors "ramping up" the share price. I happen to think this company will reward the patient as its valuation looks compelling to me...and i put my money where my mouth is.
https://seekingalpha.com/article/4535157-hochschild-mining-plc-2022-q2-results-earnings-call-presentation
Modestus you asked why I bought, I bought most of my holding in the years after 2016 when it was looking very good, hence mentioning the chairman’s sale which came after. I am not whining just answering your question and telling it as it is as I have been, and pretty right sadly so far, I expect Hoc to survive and go much higher, why I hold and even occasionally add as you will see from some of my posts, however I feel it incumbent to issue a warning to a potential buyer who muddles up Amarillo, Aclara, Mara Rosa. As said this is not for the faint hearted, and could go belly up, but if you would prefer just to see posts about how this share is about to soar, and would have preferred that for the last two years however untrue, I would be happy to step out, but some people may appreciate an honest view, I know I appreciate different views from different people
@Sotolo : Algos don't recognize value, value is NOT share price. Why do you mention the chairman's sale? That happened December 2020 at a share price of 200p/share. He still owns over 30% of the company. The closing down of Arcata is an example of good management. I am not worried about the repermitting of Inmaculada....Your constant whining is a drag. I hope you sell out or stop whining, nothing personal against you for the rest, how could i? I would prefer the share price to jump in the other direction too, don't get me wrong, but you should know by now this sector is not for the faint hearted. There is risk, but substantial reward seems more likely to me.
I became a shareholder as the shares looked good value, but that was before the Aclara disaster - given shares that cost me and failed permits quartered price - Peruvian election that hammered shared - Palancata doing much worse than expected - Inmaculada repermitting threatened - Mr Hoc wisely selling out a large hunk - Arcata closed - San Jose becoming much more expensive and with Argentinian politics, but I always think the latest setback is in the newly fallen price, and never learn! Sorry. Also the Amarillo purchase wasn't bad, just not a great time to pile on the debt it now turns out imho. There is an awful lot of 'now turns out' about this share, I always think it can't get any worse as now so why sell.. and then not does!
@Sotolo : Why did you ever become a shareholder? Never do i hear you mention something about opportunity....The Amarillo acquisition was not so bad. The acquisition price was reasonable, especially for a project that could be in commercial production by 2024.
This is because the deal valued Amarillo at ~0.36x NPV (5%) at a valuation of $108 million, based on an estimated After-Tax NPV (5%) of ~$300 million at $1,700/oz gold. Assuming a slightly lower After-Tax NPV (5%) to account for inflationary pressures in Brazil, which is much worse than most nations, and higher operating costs than expected, the deal still comes in below 0.50x P/NPV, which is very reasonable.
SorryTornado, yes of course, Hoc acquired Volcan in 2012 and has done little since. It has huge potential but as Aclara shows permitting in Chile can be hard especially with current politics there. Again Volcan will eat capital in an era of v high interest rates, as supposed to churning out much needed cash. A lot is riding on Inmaculada paying for all this, if we return to last year when it seemed Inmaculada would not be allowed to continue by the government it would ruin us. Conversely IIIIIFFFF Inmaculada keeps going as is, and Volcan and Mara Rosa come good and gold goes up oh and is that a pig I see flying….then we shall be singing
There is also HOC's last hope which is Volcan in Chile.
Hi Freedom, I am not sure you should be buying Hoc till you understand a bit more about it, though I know that isn’t easy as they like to keep it obfuscated in a web.
Aclara is their rare earth mine that they floated off, giving us separate shares. These shares tumbled when they failed to get permissions, Hoc has just written off $10m and it ended up actually costing us as they did gave us shares in a way that the likes of me paid 38% tax on the shares at a value 4 times today. Pretty very annoying, to say the least and typical of a lack of care or interest in minority shareholders.
Mara Rosa is an Amarillo mine, so the same thing - I think you are confusing Amarillo and Aclara - we bought Amarillo as many of our own mines are running out, and our ounces produced are falling each year while costs rise. This is the main reason for the huge share price fall, alongside worries politics will make this worse. Mara Rosa is at least Brazil not Peru. However we paid a lot for it when the gold price was higher, worse we are now heavily geared again having borrowed to pay for it and it won’t deliver for a couple of years IF all goes to plan which is rare for Hoc. Most unfortunate to become heavily borrowed again as we were before 2015 just as interest rates soar. However if we survive till Mara Rosa delivers, which depends on gold not tumbling as expected, ounces and profits should rise again.
Snip is a worn out Barrick mine if I remember right that they got rid of. We now hope to find more there. It is not huge but is in Canada so safer.
So we are thrashing about in an effort to escape expiring mines and Peruvian politics. But the share price reflects this and the possibility we may be one of those companies that expires in this coming crash…unless gold was to turn. ( we also mine some silver but that is rapidly falling)
Many thanks Tony, Agricore and Sotolo for taking the time to reply, can someone give some information on the Aclara acquisition, is the mine producing? I find it strange that they paid 123.4m, surely it has to be production stage for it to have been at such a high cost! Can I get some information on Mara Rose and Snip aswell, many thanks.
I think the market is looking at $1500 gold, aisc rising another 10% with inflation, and fewer oz with Pallancata closed so little profit and none after all the capex not all of which is in aisc. Of course if things turn out better Hoc will rise, but a lot of the future is speculative….
Freedom, leaving aside the H1 numbers for a moment and going with the forecast 2022 guidance:
2022 outlook (I'm using gold equivalent throughout for simplicity)
§ On track to deliver overall 2022 production target of 360,000-375,000 gold equivalent ounces or 26.0-27.0 million silver equivalent ounces
§ 2022 AISC on track to meet guidance of $1,330 - $1,370 per gold equivalent ounce or $18.5-$19.0 per silver equivalent ounce
Taking a "worst case" of $1700 gold price, $1370 top end AISC, lower end ounces mined 360000, that gets me to a $118.8m PBT for 2022. (Before exceptions) Or a 3.7 Price Earnings at today's 72p (£372.56m market cap)
Taking a "best case" of $1900 gold price, $1330 AISC, 375000 ounces (equivalent) that gets me to $213.75m PBT so a PE of just 2.1.
> Back to the real world there are exceptions notably the Aclara ($10m) loss. (Could that reverse in H2? REE are coming back into fashion).
> There is exploration cost that "should" be capitalised. Or is it? Appears to be going straight to the P&L? Makes future AISC lower if it going straight to P&L but from our point of view it makes profits appear smaller (than they truly are)
https://www.accaglobal.com/uk/en/student/exam-support-resources/dipifr-study-resources/technical-articles/ifrs6.html
> Production actually ahead of 2022 guidance (Double 198.74KoZ ev. and in my optimistic scenario profit rises to $225m and PE falls below 2)
> Ignacio very positive about Pallancata drilling/extensions ("no I do not think we should put it in C&M" he said)
> Quite a bit of closure, care and maintenance, broken belts and retirement costs = $25m cost.
> Mara Rosa coming on stream in 18 months and will make a big difference.
> Ignacio presented well I felt.
Some reasons to feel optimistic here. Why does the market not rate HOC?
Freedom
We do not know how the next four months plays out. I suspect the company delivers around $18M net profits with some good drill results to add a better back drop on recovery some of what they mined out in year. The upside surprise which needs higher precious metal prices then present is your $30M figure. I thought they were spending $19-20M on exploration outside of AISC costs. Like yourself happy to be corrected. All of us will have different figures to what HOC will earn as we use different gold/silver price expectations and annual production figures to derive what we think may happen as well as the gold/silver ratio which the company quoted in their previous RNS guidance. So it can only be opinion. All the best Tony
Money after AISC was 56m for gold, 28.4m for silver, totalling 84.4m which matches Centamins 86m. I found 33.5m that could of been profit which was an extra 6m on exploration expenditure, one off 6.7m selling expense, extra 1.8m on impairments, extra 9.1m on other expenses and the 9.9m exceptional item. In January 22 market screener estimated FY profit close to 100m, eps 20, but most recently estimated FY profit 58m and eps 10. With gold way above AISC and silver hedged I expected around 30m H1 profit, could the board of managed better, possibly splitting these costs between H1 and H2, exploration expenditure is a choice and the rest appear to be one off expenses. I am trying to work out what has occurred, can you add to or correct this please.