Hochschild reports strong cashflow but profits slide $13.9m
Higher precious metal prices combined with strong free cashflow generation saw Hochschild finish 2020 with a $231.9 million net cash position for the first time in eight years.
But the leading Latin American precious metal producer recorded a pre-tax profit (post-exceptions) of $62.9 million, down from $76.8 million; an adjusted EBITDA of $270.9 million, down from $343.3 million in 2019; and revenues fell from $755.7 million to $621.8 million.
The final proposed dividend of 2.335 cents per share ($12 million) brings the full-year total dividend to $32.6 million (2019: $10.2 million).
CEO Ignacio Bustamante said it delivered strong financial results in 2020, despite the impact of the Covid-19 related stoppages.
"We have also made solid progress on our ongoing brownfield strategy with an increase in reserves at Inmaculada and promising results at the Corina, San Jose and Arcata deposits.
"This year, another ambitious programme is already underway with further exciting drill targets at all our current operations and projects throughout our southern Peru cluster. In addition, we look forward to progressing our greenfield and strategic alliance portfolio across the Americas."
In its year-end production report for 2020, the company mined:
- 175,241 ounces of gold
- 9.8 million ounces of silver
- 289,293 gold equivalent ounces (versus revised guidance of 280,000-290,000 gold equivalent ounces)
- 24.9 million silver equivalent ounces (versus revised guidance of 24.0-25.0 million silver equivalent ounces
The company restarted limited operations at San Jose in December, following a lockdown of various mines in the region as a result of COVID-19 infections.
Its production target for 2021 is 360,000-372,000 gold equivalent ounces and 31-32 million silver equivalent ounces, with a brownfield exploration budget of around $34 million.
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.