(Alliance News) - Hochschild Mining PLC on Thursday reported a sharp drop in revenue in 2020, as the miner struggled with mine closures despite rocketing commodity prices, but saw its total annual payout for the year triple.
Shares in the FTSE 250-listed Americas-focused silver and gold miner were 4.1% higher in London on Thursday morning at 228.55 pence each.
For 2020, Hochschild reported pretax profit of USD62.9 million, down 18% from USD76.8 million in 2019, as revenue fell 18% to USD621.8 million from USD755.7 million.
The miner blamed "significantly lower" production versus 2019 for the drop in revenue, despite a 28% rise in the average realised gold price achieved and a 35% rise in the silver price.
Full year attributable gold equivalent production dropped 38% to 289,293 ounces from 465,340 ounces - which Hochschild noted was at the top end of guidance of between 280,000 and 290,000 gold equivalent ounces.
Silver equivalent production dropped to 24.9 million ounces from 40.0 million ounces, again at the top end of guidance of 24.0 million and 25.0 million ounces.
Chief Executive Ignacio Bustamante said: "We have delivered strong financial results in 2020, despite the impact of the Covid-19 related stoppages. Higher precious metals prices combined with strong free cashflow generation saw us finish the year in a net cash position for the first time in eight years. We have also made solid progress on our ongoing brownfield strategy with an increase in reserves at Inmaculada and promising results at the Corina, San Jose and Arcata deposits."
All-in sustaining costs from operations per gold equivalent ounce rose to USD1,098 from USD990 in 2019. Per silver equivalent ounce, the costs rose to USD12.8 from USD11.5 - both figures were below revised full year cost guidance of USD1,200 to USD1,250 per gold equivalent ounce or USD14.0 to USD14.5 per silver equivalent ounce.
The miner declared a 2.335 cents final dividend, giving Hochschild a total dividend of 6.335 cents - tripling from 2.00 cents in 2019.
Bustamante continued: "This year, another ambitious programme is already underway with further exciting drill targets at all our current operations and projects throughout our southern Peru cluster. In addition, we look forward to progressing our greenfield and strategic alliance portfolio across the Americas."
For 2021, Hochschild has a production target of 360,000 to 372,000 gold equivalent ounces and 31.0 to 32.0 million silver equivalent ounces.
It noted 4 million ounces of silver hedged for both 2021 and 2022 at an average price of approximately USD27 per ounce to protect cashflows in Peru - which it said will ensure profitable production from existing resources, mainly at Pallancata whilst brownfield exploration team continues to look for additional near-term resources
All-in sustaining costs for 2021 are guided to be USD1,210 to USD1,250 per gold equivalent ounce, and USD14.1 to USD14.5 per silver equivalent ounce.
Hochschild's total sustaining and development capital expenditure expected to be about USD120 to USD130 million.
By Paul McGowan; paulmcgowan@alliancenews.com
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Hochschild (HOC)