Hochschild reports higher profits despite drop in 2011 gold, silver output
Hochschild Mining forecasts 2.6 million-ounce decline in silver equivalent ounces for 2012 as production drops at Ares and Moris.
Posted: Wednesday , 21 Mar 2012
RENO (MINEWEB) -
Latin American precious metals miner Hochschild Mining Tuesday reported a 75% increase in after tax profit of $165.9 million for 2011 and a proposed final dividend of 3-cents per attributable share.
During a conference call Tuesday to discuss 2011 results, Hochschild CEO Ignacio Bustamante noted earnings per share also increased 75% to 49-cents per share last year, compared to 28-cents per share in 2010.
The company reported full-year production of 22.6 million attributable silver equivalent ounces, in line with production targets.
However, attributable 2011 silver production was 14,980,000 ounces, down 16% from the 17,768,000 attributable silver ounces reported for 2010. Attributable gold production last year also decreased 12% from 144,000 attributable ounces in 2010 to 127,300 ounces in 2011.
Hochschild's production target for this year is 20 million attributable silver equivalent ounces taking into account the reduction of almost 300,000 silver equivalent ounces that will not be recovered at Arcata as a result of implementation of the company's dore project. "The 2012 production target consists of similar levels of production at each of the core operations to those of 2011, with anticipated further declining production at Ares and Moris," said Bustamante.
During the conference call, Bustamante said he anticipates that mine life for Hochschild operations will increase 67% in three years.
The company has also doubled its exploration budget to $90 million this year, he noted, after Hochschild expanded its total resources by 29% last year to 593 million silver equivalent ounces.
Meanwhile, Bustamante said the company has already had a very busy start this year with the completion of the Inmaculada and Crespo feasibility studies. "We are excited that following the board's approval of these projects and sanction of their capital expenditure requirements, the key stages of project construction can begin in earnest."
The Peruvian projects are expected to add 10 million attributable silver equivalent ounces annually with production expected to commence at both projects at the end of 2013.
Hochschild reported an attributable net profit of $165.9 million or 49-cents per share in 2011, up 75% from the attributable net profit of $94.9 million or 28-cents per share reported in 2010. Net profit last year was reported at $268.9 million, up 69% from net profit of $158.8 million in 2010.
However, the company also reported a 14% increase in unit cost per ton at its main Peruvian operations to $60.80 per tonne, due to increased labour costs, higher mining cost and a high proportion of production from narrower veins.
In Argentina, unit cost per tonne excluding royalties increase 18% to $169.6 per tonne, mainly as a result of location inflation impacting labour and materials costs and a higher consumption of plant reagents that improved metallurgical recoveries by 5% last year.