Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) was the biggest faller across the FTSE 350 on Wednesday morning, plunging over 16% as management gave an update on production and the cost outlook.
The overall production target for 2025 is 350,000-378,000 gold equivalent ounces, with an all-in-sustaining cost (AISC) target of $1,587-$1,687 per gold equivalent ounce.
In the fourth quarter of last year, gold equivalent output was 98.3k ounces, with its San Jose mine's output better than expected on higher grades and rates of ore processing, offset by lower gold recoveries at Inmaculada.
Net debt was US$216 million, higher than the consensus forecast of US$175 million.
"Combined with the higher AISC expectations from management, it suggests higher ongoing costs across the operations," said Peter Malin Jones at Peel Hunt.
"Net, the leverage ratio implies reported EBITDA (pre-exploration expense) at US$424 million, well below Visible Alpha consensus at US$448 million."
While initial 2025 output guidance compares well with his estimate, the analyst says the higher costs implied in the increased AISC levels for 2024 "look to roll forward into 2025 and combine with higher capex relative to our current estimates. We suspect the market will need to adjust to the higher costs and balance sheet."