Hochschild scraps dividend as Covid-19 takes shine off profits
South America-focused miner Hochschild reported a sharp fall in profits and scrapped its interim dividend on Wednesday as operations were shuttered during the coronavirus lockdown.
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Adjusted core earnings almost halved to $80.65m as revenue fell to $232m from $354m a year ago, despite higher gold and metal prices. The company recorded a pre-tax loss of $9m from continuing operations compared to a $16.7m profit year on year.
Hochschild said it hoped to cash in on record commodities prices in the second half “provided our people are able to operate safely and experience less disruption”.
Production was 126,835 gold equivalent ounces, down from 239,090 gold equivalent ounces a year ago as mines in Chile and Argentina were forced to close for more than two months.
The company had to stop operations at the Inmaculada mine in Peru for most of July when a number of employees tested positive for the coronavirus. At Inmaculada, production was down 40% year on year at 79,600 ounces with production having restarted on 28 July and full capacity expected to be reached by the end of August.
At Pallancata, also in Peru, production fell 63% to 1.8m ounces, while at Argentina's San Jose mine, production was down 40% at 4.4m ounces, reflecting a shorter stoppage with operations restarting on 27 April.
Hochschild said current Argentinian government restrictions on movement "led to a slow and difficult remobilisation and ramp up process that is now expected to be complete by the end of the third quarter".
"This year has seen precious metal prices continuing the strong rise which started in mid-2019 with fresh impetus coming from the significant fiscal and monetary stimulus initiated by governments and central banks in response to the Covid-19 crisis," the company said.
"Gold has recorded an all-time high recently and silver has reached its highest price level in seven years and we are therefore hopeful of delivering a strong rebound in profitability in the second half of the year...we intend to provide updated guidance when we have assessed the full impact of the suspensions."