Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) reported a 34% drop in interim earnings on lower gold and silver output and higher production costs across all operations.
Adjusted EBITDA fell to US$130.5mln from US$198.5mln in the first half of 2021. Revenue declined 12% to US$347.8mln on lower average realised silver prices and lower silver and gold production.
READ: Hochschild Mining output falls but remains on track to meet 2022 target
“In the first half of 2022, we have once again seen a period of global turmoil which has significantly impacted both commodity markets and the local political and economic environments in which Hochschild operates,” said chief executive Ignacio Bustamante.
“Following the Russian invasion of Ukraine in late February, all commodities rose strongly in response to expected supply deficits or as stores of value with gold passing US$2,000 per ounce in early March. But since then, with inflation increasing substantially and the resulting steep interest rate rises likely to lead to dollar strength and global recession, we have seen a major pullback in our underlying commodities with gold and silver prices falling substantially from their recent peaks,” he said.
Hochschild reiterated that it was on track to meet its 2022 production and all-in sustaining cost targets.
The company, which completed the acquisition of Amarillo Gold during the period, ended the first half with net debt of US$109.3mln. It had net cash of US$86.3mln at the end of 2021.
Still, it kept its interim dividend unchanged at 1.95 US cents per share.
Hochschild noted that the political, social and economic risks in Latin America as a whole remain elevated and that it was closely monitoring any new legislative, regulatory and local initiatives which could impact its exploration and operational activities.
“Nonetheless, we look forward to the second half which will feature further investment in our exciting Mara Rosa project as well as a pre-feasibility study at the Snip project,” said Bustamante.
“In addition, in Peru we can expect the completion of the modified environmental impact study for Inmaculada and further brownfield exploration at Pallancata which aims to secure the medium-term future of the mine whilst we assess the short-term geological viability of the current mining area.”