Member Info for TheOracleofOmaha

Spot silver just briefly passed $50 (December contract currently at $48.75)

Its just hoc's style. Gold up $45, silver up much the same and passed symbolic 4k figure and hoc ticks slightly down for the day. We're a slow bunch gives us time to think 🤔 haha

Hoc can and will fluctuate all over the place, i cant predict its movements day-to-day. That said hoc 3.5% of its start of week high is a little odd given gold spot has risen almost $100 since then.

If today's pm prices end up as the average price for 2026, then inmaculada alone would have a gross profit of around $470m

Oh boy, 4k is a good quality image

Https://youtube.com/@cpmgroup

Try this guy, only guy that has an ok record both long and short precious metals.

Good mornin' 😀

Look at the trades and you'll see where each is getting it from. Vast majority of shares traded at £3.51

Gold and silver now both very close to being up 100% in price over the last trailing 2yrs/24months (gold 99.19% and silver 98.66%).

Well done to any smart macro observers that added precious metal exposure 2yrs ago 😀

Hochschild's position in aclara was worth £33.5m at the start of the month, right now its worth £64.5m

Throws me off when ever silver equivalent ounces is used, I'm so used to geo i read it as that, next to a massive number haha

Silver ounces around 8.2m this year. However Royropata is said to be 150k geo now, of which 8.7m ounces will be silver. (I expect based on grade, plant capacity and total reserves, they may be overly conservative with this still)

...

san jose (61k production and 2275 aisc) = silver $13.6m & gold $26.2m, total £39.8m

Mrosa (11.58k madness and aisc 3,600 too low for h2 if that guidance isnt beat)= -£1.25m

group total = roughly $214m

indirect costs (I'll assume slightly higher admin/explore/other expenses and lower hedge costs than h1) = $75m (tricky assumption to make based on limited public info, actual will likely vary)

given profit before tax of $139m for h2 or $279m for full year (including h1 $30m volcan balance sheet adjustment)

tax is tricky, chatgpt insists 40% is a conservative effective tax rate, so I'll use this for sake of simplicity.

h2 after tax profit of around $83m and full yr around $167m. (all attributable to shareholders as all san jose figs that i used are 51% adjusted)

How do peers compare? - I have only gone through a handful it takes a lot of time to come to a conclusion with a decent enough degree of confidence. I'm no saint and will withhold that till there is more of a give and take on these boards ;) , (all i'll say is there are reasons as to why I haven't brought gold mining industry wide exposure and HOC is my only major holding today).

Try to calculate future years profits, similar to as shown above based on your own assumptions. At some point Monte and Pallacanta will have a large impact of profits, risk adjust there profit contributions to account for appropriate development risks. Once you have all the years that you feel comfortable predicting with a decent level of confidence (HOC give life of mine guidance for each active mine and planned mines), adjust each respective year with an appropriate discount rate. The accumulative discounted cashflows will then give you the intrinsic value of the business based on your underlying assumptions.

Respectively, I have no desire to convince you to invest. The free market is meritocratic and the world is a more productive place when capital systemically concentrates in the hands of those who best allocate it.

Of course I'm willing to share due diligence, thoughts and reasons (to an extent). As prior investments I've been lucky to have competent, generous and intelligent communities that share enormous amounts of detailed research (tech industry investments). To date I'm content with the return i've had in this investment (first couple shares in summer of 2021, with a large position by mid 2022) but disappointed by the lack of thoughtful due diligence shared anywhere about HOC. Obviously, its not a multi-billion $ tech company so I was never expecting nearly the same level but for a company of this size there is next to no competent assessment shared.

For h1 2025 you don't need my help on determining profits as we have the results published. H1 profit attributable to shareholders =£90.9m (with £30.8m of this being a impairment reversal of the volcan project, essentially to make the value sitting on the balance sheet less inaccurate.

Beyond this we have Other comprehensive income, which shows a change in fair value of hedges of -$119m, the recycling of loss on hedge of +£41.4m (this could be the 21k pushed back, not sure) and the deferred tax benefit on hedges of +£25.8m. These figures are derived from the change in market value of ALL hedges held, not the hedges of 2025 which i get the impression some people believe. The costs of the hedges for h1, I'm pretty sure, fall within the finance costs of £16.6m. (altho i think there may be a small chance a portion falls within COS, should be finance costs).

How do they compare to the projections in the company accounts? - Well the company give no profit guidance, only production and AISC guidance (and they struggle to even do that accurately)

What are the financial profits for the future? - well i run through back of napkin numbers for h2 and you can do the same for future years with your own assumptions on production, aisc and gold prices.

gold price h2 average lets say $3,600, silver $42.

ill assume we sell at a 3% discount on spot for gold dore and silver dore discount of 5%, therefore $3,492 and $39.9 respectfully.

Taking Hoc's own (midpoint) guidance, (i use my own as i like to lean conservative and one part of the guidance i find hard to believe):

inmac (205k-106k)*0.664 = 65.6k gold & (205k-106k)*(1-0.664)*83= 2.755m silver

(using aisc guidance given for year, which should be roughly inline for inman for h2, too high for san jose and far too low for Mrosa if production guidance is to be believed)

inmac aisc $1655 - operating profit of ((39.9-(1655/83))*2.755m = $55m & (3492-1655)*65.6k= $120.5m or £175.5m inmac total

continued...

Look a couple comments back and you have the same answer as to why its wrong.

Hedges for 2025 are (in total 88k):

1. 29k at 2117 (average gold price being $3070.86) or $883 below spot for the period. (You need to check for most up-to-date information as what you posted is prior position)

2. 60k at 2485 (this is the ceiling price met throughout the entire year) with an unknown average gold price for the full year. We dont know exactly when the hedges come due throughout the year or the closing of them and therefore don't know the loss on hedge (still got 3months of year to go). The average gold price will most likely be under $3485 given the ytd average gold price. So obviously even for the 60k it wont cost $1300 per ounce. Again most likely below $1000.

Most importantly hedges are a cash settled insurance policy. They have no impact on operations and are no reflection of the productivity of Hochschild's operations. They appear under the short-term and long-term liabilities section of the balance sheet, as they should, just like every other business that utilises them.

None of this is difficult to understand its all fairly basic and should be understood at first sight. I have explained this to sotolo countless times (the first couple of times quite politely and patiently).

TLDR Safe to assume anything that old charlatan post is factually incorrect.

Incorrect 🤡

Whoop whoop

Cash settled.

(29+60)/319 =~ 28%

It works out to under $1000 per ounce. Again its a hedge, not operational and all gold dore is sold at competitive market price. If anyone with a brain would like to actuall read the financial statements, you will find the hedges appropriately accounted for in short and long term liabilities.

Cpm group latest comment was $4000 au by end of yr "quite likely". Hoc is conservatively worth £3b at today's pm prices.

Wrong. Hedges are financial instruments that are cash settled. 200k is wrong arithmetic. Thats before the 21k h1 2025 hedge rolled forward to 2028, which you're probably clueless about. Which would make your error in basic arithmetic wrong be a larger margin.

How very convincing