Release Date: March 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hochschild Mining PLC (HCHDF, Financial) reported its best financial results in 13 years, with revenues nearing $1 billion and EBITDA increasing by 54%.
- The company successfully added 2.8 million ounces of gold resources, significantly enhancing its asset base.
- Hochschild Mining PLC (HCHDF) has reestablished its dividend policy, offering a base dividend of $10 million per year, reflecting strong cash generation.
- The company has secured a new $300 million green financing facility, providing flexibility for debt repayment and growth projects.
- Hochschild Mining PLC (HCHDF) has focused on core assets by divesting non-core projects, allowing it to concentrate on high-potential sites like Inmaculada and Royropata in Peru, and Mara Rosa and Monte Do Carmo in Brazil.
Negative Points
- The company's costs increased by 19%, partly due to inflation in Argentina and increased production volumes.
- Hochschild Mining PLC (HCHDF) recorded an FX loss due to the devaluation of the Argentinian peso and Brazilian real.
- The ramp-up of the Mara Rosa project was slower than expected, impacting cost efficiency.
- The company faces challenges in Argentina, including cash repatriation issues and macroeconomic uncertainties.
- Despite strong results, the company's stock valuation remains low compared to peers, indicating potential market undervaluation.
Q & A Highlights
Q: How should we think about the medium-term CapEx profile for Hochschild Mining, particularly for 2026 and 2027?
A: Eduardo Noriega, CFO, stated that while specific guidance for 2026 and 2027 is not provided, the 2025 guidance includes around $30 million of one-off projects. Future all-in sustaining costs will depend on metal prices, mine plans, and new resource additions. Exploration programs are yielding high-quality resources, which may impact costs but add value.
Q: Is there any update on the cash flow situation in Argentina, particularly regarding repatriation and fiscal terms?
A: Eduardo Noriega explained that the market does not expect further devaluation in Argentina, with the government focused on controlling inflation. The company is prepared for any scenario and is focused on cost control. Excess cash will be used for dividends and local growth opportunities.
Q: Can you provide more details on the dividend policy and how it will be applied at interim periods?
A: The interim dividend will be based on the forecast for the year, with a conservative approach if there is uncertainty in prices. Theoretically, 30% of the estimated free cash flow will be paid as an interim dividend, with the final dividend based on actual results.
Q: What is the long-term CapEx expectation for Hochschild Mining, considering Brownfield exploration and sustaining CapEx?
A: Eduardo Noriega indicated that while specific long-term guidance is not available, the 2025 all-in sustaining cost should be adjusted for non-recurring CapEx. The company aims to achieve efficiencies and add value through projects and new area developments.
Q: Are there any plans to sell the San Jose asset, given its cost structure and exploration potential near Cerro Negro?
A: Eduardo Landin, CEO, stated that there are no current plans to sell San Jose. The company sees significant exploration potential and believes Argentina is entering a positive period, making the asset valuable for future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
