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Silver and gold producer Hochschild posts half-year loss as production hit by permit delay

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(Kitco News) - South America-focused precious metals producer Hochschild (LSE: HOC) (OTCQX: HCHDF) today announced its H1 2023 attributable production of 136,878 gold equivalent ounces, a decrease of 13% compared to H1 2022 (157,380 gold equivalent ounces).

The company said its Inmaculada mine in Peru was temporarily impacted by the delay in the approval of the modified environmental impact assessment (MEIA) affecting mine development, which was eventually approved on 1 August 2023 for an additional 20 years.

The company’s all-in sustaining costs from operations in H1 2023 were $1,572 per gold equivalent ounce (H1 2022: $1,466 per gold equivalent ounce), higher than H1 2022 mainly due to lower tonnage at Inmaculada and lower grades at San Jose, partially offset by higher grades at Inmaculada.

Hochschild reported H1 2023 revenue of $314.0 million (H1 2022: $347.8 million), adjusted EBITDA of $99.5 million (H1 2022: $130.5 million), profit before income tax (pre-exceptional) of $0.8 million (H1 2022: $15.3 million), loss before income tax (post-exceptional) of $66.1 million (H1 2022: profit of $5.4 million), as well as basic loss per share (post-exceptional) of $0.09 (H1 2022: $0.01).

The company explained that its H1 2023 financial results were primarily impacted by lower silver and gold production due to the Inmaculada permit delay, as well as higher costs. 

The company also announced its revised 2023 guidance, which mainly reflects the impact of MEIA delays on Inmaculada and accelerated mine development costs at San Jose.

In 2023, the company expects to produce 289,000-303,000 gold equivalent ounces (previous target: 301,000-314,000 gold equivalent ounces) at all-in sustaining costs of $1,490-$1,580 per gold equivalent ounce (previous target: $1,370- $1,450 per gold equivalent ounce).

Hochschild said that its Mara Rosa project in Brazil is advancing on schedule and on budget with first production on track for H1 2024, adding that a brownfield programme has commenced in the surrounding areas of all three mines.

"The first half of the year was challenging for the company as we reached the final stages of the process in securing Inmaculada's MEIA which, regrettably, impacted in the short-term our operational and exploration strategy. However, following the recent welcome approval of the MEIA by the Peruvian government, the company is now in an excellent position to optimize the Inmaculada mine and unlock its impressive geological potential, complete construction of our new Mara Rosa operation in Brazil and advance the new Royropata discovery at Pallancata,” said CEO Eduardo Landin.

Hochschild Mining is a precious metals company with a primary focus on the exploration, mining, processing and sale of silver and gold. The company currently operates three underground epithermal vein mines, two located in southern Peru and one in southern Argentina.

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