Production numbers for Q4 and the full year show a robust growth in output of both gold and silver for Hochschild (HOC). Total silver equivalent ounces for the year rose 31% to 35.5m ounces on the back of a rise in gold output to 246kozs while silver output rose to 17.3mozs. AISC costs per equivalent ounce of Ag are looking to come in at $11/oz-$11.50/oz. Cash grew by almost US$60m to US$140m over the year.
Forward guidance is rather conservative with growth of 2mozs to a 37moz target. AISC costs are predicted to rise about $1/oz to above US$12/oz due to increased exploration budgets and capex on the Pablo vein development.
We see Inmaculada mine is proving its production worth for the company but also is its corporate vulnerability; being its flagship operation and significant source of cashflows. It will be interesting to see what HOC may do with its rising cash on M&A opportunities in coming months.