Hochschild Mining hit record production, beating targets in its 2016 year-end production report.
The British-based mining company said it produced 17.3m ounces of silver and 246,100 ounces of gold. It produced 35.5m silver equivalent ounces, up 31 per cent on 2015, and 479,600 gold equivalent ounces, up from 365,400 ounces.
Its flagship low-cost Inmaculada mine had a strong first year of production, exceeding its original forecast.
All-in sustaining costs remain "on track" to meet $11 to $11.5 per ounce guidance, which had been revised down.
Total cash was approximately $140m for the year compared with $84m last year. Net debt is approximately $183m, as $127m in debt was repaid.
The company's share price has gone up more than three per cent in morning trading.
Why it's interesting
Hochschild's record annual attributable production beat a raised guidance. Now, the company is upping its guidance for next year to a target of 37m silver equivalent ounces from 35m ounces.
Increased brownfield exploration investment and one-off investment to develop its Pablo vein at Pallancata will bring all-in sustaining costs to be $12.2 to $12.7 per silver equivalent ounce in the year ahead.
After a strong end to 2016, market analysis from Barclays said the metals sector has been trading on unprecedentedly cheap valuation reflecting the view that all metal prices have to fall, but Barclays disagrees and retains a positive view of the industry.
What Hochschild Mining said
Ignacio Bustamante, chief executive, said:
We are pleased that we have achieved a historic production record for the company whilst exceeding our annual production targets and maintaining our guidance on full year costs.
In addition, we maintained our focus on debt reduction and used excess cash flow to materially reduce our leverage ratio, beyond the guidance provided for the year.
Looking ahead, he said:
In 2017, we will continue our focus on cost effective organic growth with the start of production from the new Pablo vein as well as an increase in brownfield drilling as part of our recently announced exploration programme. We are also targeting a fifth consecutive year of production increases and, despite the rise in brownfield investment, cost control at all our mines will remain a priority.