South-American miner Hochschild said it expects silver production to be lower in 2012 than last year and to see a rise in production costs.
The company's production target for this year is 20m attributable silver equivalent ounces, down from the 22.6m ounce target it hit in 2011.
But the company has put its faith in its mines for its long-term future, slating a $90m budget for exploration in 2012, the biggest in the firm's history.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Hochschild expects an increase in overall 2012 unit cost per tonne at its Peru operations to be around 15% excluding royalties and the increased refining cost due to the effects of its dor project at Arcata.
The main factors in this increase are anticipated to be a combination of expected local industry inflation of 10% and the increasing number of stopes at core operations, the firm said.
In Argentina, the rate is expected to continue to be higher as a result of ongoing local industry inflation of around 25-30%.
However, it stressed it was in a strong financial position, with total cash of approximately $627m on the balance sheet as at 31 December 2011, up from $530m the year before.
"We continue to believe that exploration is our main source of profitable growth for the long term," said chief executive Ignacio Bustamante.
"Our $90m exploration budget for 2012...will be invested in our brownfield, Advanced Projects and greenfield exploration programmes, which encompass drilling campaigns in 26 different locations across the Americas."
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
