Shares in Hochschild are tumbling after profit dropped in the first half

Courtney Goldsmith
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Jose Gonzales, 14, pushes a wheelbarrow
Hochschild was hit by increased mining costs (Source: Getty)

Shares in FTSE 250 firm Hochschild Mining slid more than 17 per cent today after the company revealed its half-year profit dropped more than 30 per cent due to higher costs.

The figures

The precious metals miner reported a pre-tax profit of $39.9m (£30.9m) for the six months to the end of June compared with $60.3m the previous year.

Hochschild's attributable silver production increased nine per cent to 8.9m ounces while gold production rose three per cent to 121,000 ounces.

The miner said it was on track to deliver attributable production of 37m silver equivalent ounces for 2017.

The company's shares fell 17.5 per cent to 270.6p in morning trading.

Read more: Hochschild silver output on track

Why it's interesting

Hochschild, which mines in Peru, Chile and Argentina, was hampered by higher costs in the first half of the year. It said all-in sustaining costs rose 10.1 per cent to $12 per silver equivalent over the period. However, that was below the company's estimates of between $12.20 and $12.70 per ounce.

The rise in costs was caused by the company's increased investment in brownfield exploration as well as the elimination of benefits from a Patagonian port last year and higher costs at one of its mines in Peru.

Read more: Bosses at miner Hochschild take a 30pc pay cut

What Hochschild said

Ignacio Bustamante, chief executive, said:

Hochschild Mining continues to deliver a robust operational performance with both production and cost targets for 2017 on track.

I am confident that our company has the financial and operational flexibility to meet our upcoming debt commitment, fund an extensive brownfield programme and assess value accretive opportunities as they arise.

Read more: Hochschild Mining beats targets to hit record production of gold and silver

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