Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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On 8 February 2021, the Group signed agreements to hedge the sale of 4,000,000 ounces of silver at $27.10 per ounce for 2021 and a further 4,000,000 ounces of silver at US$26.86 per ounce for 2022. This is to protect cashflows from the Pallancata mine in the next two years with the existing resource base.
Best to stick to the real figures don't you think regarding the hedge? If silver soars this will too...
BPat890 you can measure a share price from anywhere, actually when a share price passes its previous peak it is a really good sign, however when it regains its all time peak, taking a few years to do so, and then nearly halves that is not only painful but a pretty bad sign. On a more fundamental basis the share price is essentially anticipation of future profit, with our costs up so much, Arcata closing and Pallancata needing to hedge so not be threatened with losing money, delays in rare earths and political challenges in Peru Argentina and Chile the market"s expectations are that profits will fall and so selling like the owner. I do hope that all these experienced people are wrong but PBIT wasn't great given the share price in 2019 but then management hoped for much better, as it turns out looks like 2021 will be a fair bit lower? I still hold but feel pretty stupid not to have joined Eva etc getting out at 270. Remember if silver soars we are less than half silver and half of that is now hedged for next two years so that won't quite save us?
Nice find, wonder why the company haven't announced that yet. Only 6km from a mine that hosts 20 million ounces.
"The SW Pipe Gold Project, strategically located and adjoining claims controlled by Nevada Gold Mines and the Pipeline Mine (refer to Figure 1), is a significant land position covering a known, historical shallow gold system. Publicly available reports indicate that the Pipeline Mine is estimated to contain at least 20 million ounces of gold (comprised of past production plus publicly-reported reserves). The SW Pipe Project covers 84 claims, or approximately 6.5 square km (2.5 square miles), and is reported to host a shallow, sediment-hosted gold system.
https://www.accesswire.com/642111/NV-Gold-Signs-up-to-US10-Million-Option-Deal-with-Hochschild-on-its-100-Controlled-SW-Pipe-Gold-Project
2016 PBIT: $108.3m
2019 PBIT: $103.4m
Any investor worth their salt knows not to measure share price performance from it's peak. We are 140% higher than we were at one point last year but it has little to do with profitability..
Profits from continuing operations even after impairments charges (which are non-cash) were $62m in 2016 vs $60m in 2019. The figures you're using include $27m gross ($18m net) exceptional, ie one off items.
You could have also mentioned the reintroduction of export taxes in Argentina during 2018 being a principal cause ($21m) for the rise in costs. They had been suspended since 2015..
What the company can control, it has done rather well. Operating costs (AISC) were less than $12/oz in 2016 and in 2019.
The latest figures point to production being on track to meet guidance of 31-32moz silver equivalent. Most of the gold and silver sector has been struggling this year as a result of the weak commodity prices that prevailed throughout the first quarter. In the past fortnight there has been a reversal with gold and silver prices beginning to strengthen.
I think the biggest risk right now is the alarming rate of infections around the developing world and this corresponds with the weaker demand for stocks in what are perceived to be riskier jurisdictions.
https://www.mining-journal.com/gold-and-silver-news/news/1409020/hochschild-enters-ususd10m-deal-over-nevada-gold-project small deal but on the right tracks to diversify geography and access more resources
Looks like HOC just did a small deal with NV Gold for a project in Nevada. Good to see management continuing to diversify geographic exposure and hunt out more resources.
Well put it another way, profit 62m in 2016, 42m in 2019 the year you prefer to use rather than the aberrant 2020. It was a period gold rose, problem really is costs rise faster. There is a reason our share price is 40% down, investors who worry about profits decline. I do hope you are right and that ounces exceed prediction and recover to where they were and costs fall back, but latest figures didn’t seem to suggest this, hence the further falls on strongish gold and silver. I SO SO hope Hoc can reverse its decline or that gold and silver soar to help it. Fingers and toes crossed
Why mention earnings per share halving without any context of the one-off drop in production last year owing to covid lockdowns?
Back in 2016 we produced 35 million ounces, last year just 25 million silver equivalent ounces. This versus the 31-32 million expected in the current year. That is the main reason why EPS was low and the main reason why EPS will recover strongly this year (assuming we meet guidance).
We are in a much strong position today in terms of balance sheet and room for growth;
Cash: $230m vs $140m in 2016
Debt: $210m vs $330m debt in 2016
That is net cash of $20m vs net debt of $190m back in 2016. Aside from the balance sheet the Dividend has more than quadrupled from 1.38c to 6.335c and is set to rise further this year thanks to the projected growth in margins, speaking of which;
The price received for gold jumped from $1215/oz in 2016 to $1814/oz last year
The price received for silver has also jumped from $17/oz back in 2016 to $22.3/oz
Silver hedges between $26 and $27 per ounce have since been agreed for the next 12 months and beyond and the current price is trading 15% higher than the average last year. Gold is down about 2% on last years average. When you compare margins and expected production this current year will blow 2016 out of the water!
The figures which I've sourced from the 2016 FY report support the more general point I would make that HOC are attractively priced today and as a longer term investment for a silver play paying increasingly generous dividends.
BREAKTWISTER, Hoc earning per share have just about halved in the last 5 years, despite rising PM prices, but of course you are right that IF they could find loads of gold (and silver) in Inmaculada and get it out at lower prices and in so doing double earnings per share we would be back where we were. However that is a pretty tall order? Of course the other thing that would do it is soaring PM prices, tho of course if those continue falling, however much we find won’t help. Anyway quite good news on Inmaculada exploration holes but need far more so we can stop being hand to mouth with falling ounces, rising costs and falling earnings, particularly with rare earths falling behind schedule and demanding capital too. Imho
Sotolo, Immaculada is a beast, many more veins now looking excellent. See last RNS for Angela, the market not really factoring in. If they can increase tonnage at Immac expansion at Palla and San Jose is irrelevant.
Breaktwister, sorry but I thought ounces had fallen and aisc risen over the last few years, speeded by rising Arcata costs forcing closure and Pallancata costs forcing hedgeing. However I’ll check the figures later and of course apologise if actually overall Hoc ounces have been rising and aisc falling over last few years. All best
Nonsense, they are adding more oz at Immaculada than they are mining.
You are right all mines run out and as they do all their costs rise but Hoc is doing more so than most and is nowhere near being tier 1. “Many people” who buy or sell was I thought obviously investors and I will use that term in future if helpful. They are the ones that count for me, not analysts or pundits who all have their own agenda but people, sort investors, putting real money on the table or taking it off. Have a good weekend all. Ps just listened to the post results presentation which seemed to say the rare earths were delayed and a bit more difficult than thought if I understood it right which might account for some people, nay investors selling, any thoughts?
You certainly can make the same argument re grades and increasing costs as most miners are going through a period of rising costs etc. It makes you wonder when you have such negative commentary from some professing to be shareholders. Very transparent... I picked up a few yesterday and will continue to do so at these prices.
Trouble is you can make the same arguments re grades/cost etc at most/all of the big PM/Copper miners, not just at HOC. I'm spreading my money around big uns (except FRES - that's a huge mcap already ...) and some smaller producers/junior explorers.
Not sure where these "many people" are that you keep suggesting think the Silver price will fall.
Interesting to see BTC crater last night as the threat of high crypto taxation plus doubled CGT was doing the rounds with the PM crews pointing out that taxes on PMs are much lower/non-existent.
In a high tax, high inflation environment, which is surely the future for the forseeable, I don't see how anything priced in Dollars, or seen as an inflation/taxation hedge ala Gold/Silver can fail to rocket in the coming months/years.
This is all very, very promising narrative for PMs - and it's the narrative that counts in this game.
Thanks OWLS, interesting to note that most of the decline and mines running down have been silver, so we now mine nearly 50% more gold ounces than silver. Shame as the silver has been more profitable. Hoc is now mainly a gold miner, so even with half our silver hedged only 20% of our overall ounces are hedged. We should move with the price of gold much more than silver as gold price movements with the hedging are bout 5 times more important to Hoc than silver’s but the market always takes a while to catch up. Also was it new in last week’s report that we had not only hedged silver for 2021 but also 2022 at a slightly lower price, as our main silver mine Pallancats’s costs are so high the board worried about it slipping to loss when silver tumbles as many expect it will.
Well said SOTOLO, so much nonsense on here about MM manipulation. Strangely it's always when the price goes down. No mention yesterday when it went up so much.
all, i have said it ten times before and I will say it again and it is my gut feeling only so do not hold me to it.. I think there is a buyer here and this is getting ready to be sold. I know I have no evidence. Today for zero reason drops to 193 and then back up to almost 2... makes no sense. FRES went ex divi which I can understand but this ?? or silver is about to try another attempt at 30$
Sotolo; " ultimately the price is falling because more people want to sell like the bosses than buy,". I understand that lse figures are not the most reliable but at around 3.45 pm today they showed about 1.4 million buys to less than 700,000 sells !!! Surely lse can not be that far out with the numbers to force a drop in the sp ??
It is what it is - if you're a believer then it's just another opp :)
MM’s just make a price where they can both buy and sell so ultimately the price is falling because more people want to sell like the bosses than buy, we just have to hope those sellers are wrong in their expectation of PM’s and hoc, sadly so far they have been proved right
I think the MM are taking the **** with this share