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Hochschild Mining cuts 2020 production forecasts

By Frank Prenesti

Date: Wednesday 15 Jan 2020

(Sharecast News) - Hochschild Mining cut 2020 gold production forecasts despite a strong final quarter driven by its Inmaculada mine in Peru.
The company on Wednesday said it expected to produce 422,000 gold equivalent ounces in the current financial year, down from its November forecast of 432,000.

Gold production for 2019 fell 9.4% to 477,400 gold equivalent ounces, as the company shuttered its operations at the Arcata mine in south west Peru in early 2019.

Gold production fell 4.1% to 78,050 ounces in the final quarter of 2019 compared with the prior three months, but rose 6.8% year on year, helped by a "better than expected" performance from Inmaculada.

Fourth quarter silver production in the fourth quarter was 12% lower quarter on quarter at 4.6m ounces. Year-on-year silver output fell to 20,163 ounces from 22,720.

Peel Hunt analysts said the production beat and slightly higher realised prices had resulted in the company reporting net debt at just $34m at year-end versus the broker's own $73m forecast.

"This implies a strong free-cash-flow generation of $40m - $50m on our estimates in the end of the year. It is also worth noting a big plus is that Hochschild has received the exploration permits for both Pablo Sur and Cochaloma and will start its exploration program at both permits in Q1 2020. A good end to the year," Peel Hunt said in a note.


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