Member Info for Sotolo

Interesting to see Hochschild, in yesterday’s report, appear to pay 56% tax, while our 50% profit share is all we pay and no further tax, maybe it isn’t so bad…

Eva, I am not surprised at Hoc's fall as certainly not best ever results here, with production down 40% and earnings per share halved, plus forward guidance down on 2019. Also I am not surprised that Hoc analysts come up with such different figures as they are so hard to work out as they give gold equivalent ounce for both output and aisc guidance so hard to work out what applies to silver and what to to gold , particularly as they use an outdated gold silver ratio a third higher than today. It takes a lot of work to crunch Hoc’s opaque numbers, this is what I make it:
2021 gold equivalent oz of 370k, still nearly a quarter down on 2019, but 27% lmore than 2020. Using this figure 2020 Gold oz mined 175k. Silver oz mined 9808k. Add that 27% toutput rise o these and you get 223k gold oz and 12500k silver oz. Now taking the over 10% increased gold and silver equivalent ounce at the wrong ration aisc for 2021 that gives silver profit $150m, and gold profit $120m at current prices. Total $270m less $15m covid, then you have to take off $11m greenfield and $14m for BL rare earth, and a further $7m for the ore sorting pilot plant. That gives $223m. Then apply this year’s 56% tax rate and turn to pounds and I get £75k. At current market cap of £1.1billion you get a PE of 15. There may be more spending to come out, plus it is hard to work it when they use gold equivalent ounces and then quite the wrong gold/silver ratio to apportion them, especially to work out what the aisc on gold and silver ar. But it is the best ballpark I can get to. Not bad and justifies current price as long as exploration goes well enough to be able to get output back to 2019 and costs down to 2019 but fat chance of that I should say. so really a play on gold and silver prices though hard to work out in which proportion. I remain a long term holder out of inertia as I expect prices to fall, as it would seem does the company, for now

but with Covid costs down and production back Hoc’s are largely because resources are running out, so they are mining less more expensively and expensive to find more. I was surprised at rise this am, now price is in effect flat with a bit of a drop for falling PM’s which one would expect to continue now gold 200 and 50 Day have sadly crossed. Boohoo

Partly that and partly as we said first thing results not great so didn’t deserve a rerate. No great exploration results (once pointed out error and corrected) costs way up this year. Same old same old. Sorry but about fair price unless/until gold and silver tumble

Thank you, and I love the name

While industrial commodities rise in a boom, Gold tends to move as the inverse or real interest rates, which rise in that boom. Unfortunately in just the last week 10 year inflation protected bond rate has risen from -1.06 to -.92 which is hefty and explains golds fall and predicts further down as and if this rate rises further, cutting this years profit to maybe zilch tho 2023 may be better if production recovers and costs fall back by then as management hopes and gold doesn’t collapse

Confused you are in good company: “ perhaps the first book on stock exchanges was published in 1688, titled….….. “ Confusion of Confusions “.

Also interesting that Hoc has unusually hedged a third of next two years’ silver at $27

Actually the 25m silver equivalent ounces is less as they use an outdated gold/silver Rio making it even harder to calculate profits, of 86 rather than the current 65, so only found 290k gold ounces so another 8 months at Inmaculada. I will try to spend the morning deciphering their opaque figures but I always think it is bad form when a company report takes hours to dig the figures out, which is why some of my analyst friends avoid this company. Shame, when nothing to hide.

I think Edouardo sale knocked it, not unfairly, about 15%. Presumably he like the board sees silver falling. The share price has recovered that Edouardo fall and seems valued about right now, till silver falls further, or even rises imho

So is Hoc!

Yes, while Hoc plummeted a third, Cey plummeted a half, but Cey have resources to last 20 years and their setback is temporary, Hoc’s initial plumet was on reduced output pre Covid as mines running out. Cey has always paid 3 or 4 times Hoc dividend as increased perceived risk. I moved a hunk from Cey to Hoc when Cey was double now, before its bad news, as Hoc had been unfairly thwacked. Now I am not sure between them as in two years Cey will be sailing again, while Hoc still costs still rising as ounces run out and still scrabbling for more. In the meantime 7.75 is a great divi to keep Cey, though of course if shares recover will be be only double Hoc
On another note I am quite surprised by the rise today on nothing new, bu then I have been surprised at the falls on the same at previous figures

Yes the market is pleased, phew, how fickle she is, also because the divi which is highest annual though still only 2% compared to Cey 7.75%. The exploration ounce muddle doesn’t affect the price, and the hedge is only a sixth of total production in as far as one can work it out with the equivalent ounce muddle and as said could be good if silver tumbles

a. The debt is just as said a month ago so doesn't affect rating
b. It says hedged at $27, my understanding is that means if silver moves to $50 they will still be selling at $27. However if more likely silver falls below $20 and becomes unprofitable they will still be selling at $27. They have hedged about a third which is v unusual for them so must think th likelihood of a fall quite high

Gosh what a muddle, those gold and silver equivalent ounces I was writing about yesteday, that muddle the figures and make it so hard to work out future profit even Hoc have made a muddle of if I am reading it right. I said yesterday the key for me today would be exploration results as we knew the rest.I posted 20’ ago on first reading great exploration results that report said had added:” Inmaculada drilling programme added 25.3 million gold equivalent ounces of reserves”. Further down it says they added 1/60th as much as it was 25.3m silver equivalent Oz, which is only 416k gold ounces or keeping out another year and a bit for all that work. Which was it, bet silver. Unbelievable that nobody has read through the report and corrected such a key figure in the initial summary imho. Means results for me not great and price doesn’t deserve to move apart from with a third of our silver hedged for two years and half production gold we are not quite the play on rising silver of some others, if better protected from the coming fall they expect

Ok results but I don’t see anything great for a retaking at first glance. Better aisc than expected for 2020 but high this year. More resources found at Inmaculada but normally unhedged Hoc has hedged 4m silver oz at $27 for both 2021 and 2022 in expectation we have hit a silver top.

Money has been during out of Silver ETFs this month, yes SLV had an inflow in Jan but the last couple of weeks it has sadly turned: "Since the beginning of February 2020, fund flows in SLV have turned negative and it appears that some investors might have become bearish " sorry. lets hope exploration news saves us, though with Hoc usually it is just chasing its own tail, fingers crossed it will be different tomorrow, though 'this time it is different' are famous last words

Yes also gold is down 20% in sterling since last summer which actually means a halving of sterling profits before hit from mine wall so our share price has held up pretty well, so far

Yes DK you were sadly prescient, as ever. I was sadly hopeful

I reckon there are at least ten newspaper rumours of a takeover for every time one actually happens. The Times was very unspecific, more I reckon that the price is such that a takeover would be good value for the buyer but it has been thus for years, impeded by the Egyptian politics, court case etc. Yes Horgan might be better at feretting one out but personally I am not expecting one, though would like one to get the value now that this should return to in a couple of years, so can put it somewhere more useful. Would need a 50% premium. However I don't expect this as why takeover andhave all the hassle of two years sky high costs and low production, diluting the buyer's shares, with no security that something else won't happen, it usually does with Cey. so imho don't hold your breath and hope gold will eventually rise not tumble

I am hoping for the opposite & silver to rise today. Interesting thought if we could mine 12moz silver at 14.50 cost we would make $156m from silver less tax interest and non aisc capex from silver alone and at $30 $180k