Hochschild Mining Plc (LON: HOC) ended more than 10% down on Thursday after reporting a massive hit to its 2022 profit before tax due to lower production.
Hochschild stock down on production outlook
Investors also punished the U.K. stock because the mining company said weakness in terms of production will continue this year as well.
Hochschild expects to produce 301,000 to 314,000 gold equivalent ounces in 2023 at an all-in sustaining cost of $1,370 to $1,450 per gold equivalent ounce.
In comparison, it produced 358,826 gold equivalent ounces in the recent year at an all-in sustaining cost of $1,364 per gold equivalent ounce. Production was already down and cost was up in 2022 versus the prior year.
Year-to-date, Hochschild stock is still up roughly 8.0% at writing.
Hochschild had expected lower production
Lower production, however, did not come as a surprise. Hochschild had expected “scheduled grade reductions at Inmaculada and Pallancata” to weigh on production in 2022.
For the full year, the metals mining company reported $24.3 million of pre-tax profit excluding exceptional items – a sharp decline from $148.7 million in 2021. Revenue also slipped 9.0% to $735.6 million. In the press release, CEO Ignacio Bustamante said:
We’ve recently taken advantage of precious metal price strength to hedge a total of 29,250 ounces of gold at a forward price of $2,047 per ounce to realise cashflow certainty for the remainder of the year.
Hochschild stock currently pays a dividend yield of 4.44%.
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