Hochschild Mining reported a more than doubling of its adjusted earnings for the first half of the year, driven by a significant increase in gold and silver prices. The London-listed company announced that adjusted earnings surged 119% to $491.5 million in the six months ending June 30, compared to $224.5 million in the same period last year. Revenue also saw a substantial increase, rising 62% to $844.4 million.
The company stated that the higher precious metal prices helped to counteract lower production volumes and increased operating costs. The average realized gold price rose by 47% to $4,166 per ounce, while the realized silver price jumped by 130% to $77.80 per ounce. Hochschild's pre-tax profit for the period climbed to $365.8 million, up from $109.3 million a year prior.
Despite the favorable price environment, overall production fell to 151,830 gold equivalent ounces from 165,176 ounces, primarily due to planned lower grades at the Inmaculada mine in Peru. However, the San Jose mine in Argentina experienced an 8% increase in gold equivalent production, and the company reported progress at its Mara Rosa operation in Brazil.
Chief executive Eduardo Landin noted that while costs for the year are now expected to exceed original guidance, this is largely due to the impact of higher precious metal prices. These prices have increased export taxes in Argentina, workers' profit sharing, royalties, and other production-linked costs, as well as stronger local currencies across the company's operating regions.
Hochschild maintained its annual production guidance at 300,000 to 328,000 gold equivalent ounces. However, it revised its forecast for all-in sustaining costs upwards to $2,380-$2,500 per ounce, an increase from the previous projection of $2,157-$2,320 per ounce.
Strong cash generation enabled the group to move to a net cash position of $51.1 million at the end of June, a significant improvement from a net debt of $20 million at the end of the previous year. Hochschild also increased its interim dividend to 4.0 US cents per share, amounting to $20.6 million, up from 1.0 cent per share a year ago.