Americas-focused precious metals miner Hochschild reported record revenue and profit in 2011 despite lower ore grades, as metals prices surged.
Revenue jumped 31% in the 12 months to December 31st, from $752.3m to $987.7m, while operating profit surged 69% from $158.8m to $268.9m.
"A strong precious metals market again played its part in Hochschild's record financial performance in 2011, allowing us to significantly increase profits in the year whilst selectively mining lower ore grades in order to enable us to produce longer term stable future growth in uncertain markets," the firm said.
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Average silver prices increased by 53%, while the value of gold rose 25%.
The firm met its full-year production target of 22.6m attributable silver equivalent ounces in 2011, which consisted of 15m ounces of silver and 127,287 ounces of gold. The drilling programme results in an 11% increase in the resource life of its main operations to almost 10 years.
Costs (unit cost per tonne excluding mine royalties) rose by 14% in 2011 primarily due to an increase in labour costs and higher mining costs.
"I am pleased to report another year of strong financial and operational results in 2011. Not only did we meet our full year production target, but we also continued to make good progress on our organic growth strategy," said Chief Executive Officer Ignacio Bustamante.
Hochschild proposed a 20% increase in the total dividend to 6 cents per share.
SLIGHTLY LOWER PRODUCTION EXPECTED IN 2012
The firm has a production target of 20m attributable silver equivalent ounces for 2012 and has assigned a record exploration budget of $90m for 2012, up from $71m last year.
The 20m-ounce target has taken into account the reduction of almost 300,000 silver equivalent ounces that will not be recovered at Arcata due to the implementation of the group's dore project. Meanwhile, Hochschild is anticipating further declining production at Ares and Moris. Porduction at its core operations is expected to be in line with last year.
The group has recently announced the results of the feasibility studies on Inmaculada (60%-owned) and Crespo (100%-owned) which have the potential to increase our annual production by 50%, or 10m profitable ounces. The commission of both projects is set for the end of 2013.
BC
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