Hochschild Mining Shares Drop As Production Hurdles Outweigh Revenue Growth

Hochschild Mining shares (LON:HOC) have fallen 12.8% into the close today, after reporting a robust 33% increase in revenue for the first half of 2025. This saw the firm deliver $520.0 million compared to $391.7 million in the same period last year.

However, operational challenges, particularly at the Mara Rosa mine, have led to a revision of the company's full-year production guidance, casting a shadow over the positive financial results.

Adjusted EBITDA also saw a significant uplift, climbing 27% to $224.5 million from $177.1 million in H1 2024. Pre-exceptional profit before income tax rose to $109.3 million, up from $83.1 million, while post-exceptional profit before income tax surged to $140.1 million from $69.4 million. Basic earnings per share followed suit, with pre-exceptional EPS at $0.12 (H1 2024: $0.10) and post-exceptional EPS at $0.18 (H1 2024: $0.08).

The company's balance sheet remains healthy, with cash and cash equivalents at $109.8 million, whilst the company also  declared an interim dividend of $0.01 per share, totalling $5.1 million, rewarding shareholders despite the operational headwinds.

When balancing the strong financial performance with concerns over the revised production targets, future uncertainty wins out. Markets will be scrutinizing the company's ability to address the issues at Mara Rosa and manage costs effectively in the face of inflationary pressures.

Takeaways

Revenue Growth: Primarily driven by increased production across key assets, with attributable production reaching 161,597 gold equivalent ounces or 13.4 million silver equivalent ounces (H1 2024: 152,792 gold equivalent ounces or 12.7 million silver equivalent ounces).

Mara Rosa Challenges: Mechanical filter repairs and operational improvements at the processing plant are underway, impacting production ramp-up.

Cost Pressures: All-in sustaining costs (AISC) have risen to $1,914 per gold equivalent ounce (H1 2024: $1,432) due to operational issues in Brazil and inflationary pressures in Argentina.

If you AskTraders : The revised production guidance for Mara Rosa is a clear negative, likely to weigh on the stock in the short term. However, the underlying strength of Hochschild's other assets, its solid balance sheet, and the resistance around the mid 260 level could provide a cushion against further downside.

CEO Eduardo Landin acknowledged the challenges, stating, “Looking ahead, Hochschild remains focused on maintaining stability across its operations whilst carefully managing operational challenges in Brazil and the corresponding cost pressures… we have revised our production forecast for the asset to 35,000-45,000 ounces for 2025 (previously 94,000-104,000 ounces).”

The company has revised its full-year attributable production target to 291,000-319,000 gold equivalent ounces (previously 350,000-378,000 ounces) and increased its AISC target to $1,980-$2,080 per gold equivalent ounce (previously $1,587-$1,687 per gold equivalent ounce).