November 08, 2006
Hochschild Gives A South American Boost To Londons Mining Sector


Quite a feather in Londons cap to have Hochschild Mining taking a full listing. At first glance Toronto or New York might have seemed a more logical destination, but the Sabanes-Oxley Act has meant that compliance requirements in North America have reached stratospheric levels and London looked more attractive, though a full listing on the LSE is certainly no walkover. Geographically, also, it has advantages as both JP Morgan Cazenove and Goldman Sachs International, the joint sponsors, joint global co-ordinators and joint bookrunners for the IPO are both based in London, as are Canaccord Adams the co-lead manager and Nomura International, the co-manager. The shares were placed at 350 p each to raise around 270 million from institutional investors in the UK, Europe, the US and Canada. On this basis its market capitalisation is just over 1 billion which takes it straight to 99th position in the FTSE 250 Index and makes it worthy of consideration by all types of investors.

The history of this Peruvian mining company is fascinating as it comprises the mining operations of the Hochschild Group which was founded in Chile in 1911 by Mauricio Hochschild. After World War 1 it expanded into Bolivia where the target was tin and it did not start its Peruvian operations until 1925. Even then it stuck to metal trading and beneficiation until the 1940s and during the 2nd World War the Group was a key supplier of tin and other metals to the allied forces. The next major advance came in the 1960s when the Arcata mine was developed in Peru and it is still in production today. Over the next ten years or so more mines were opened in Brazil, Peru and Chile such as the well known Mantos Blancos copper mine in Chile.

It is here that the history gets a bit complicated as in November 1984 Anglo American bought the South African mining operations of Hochschild Group and immediately sold the Peruvian operations to Luis Hochschild who is clearly a descendant of the founder, though the exact relationship is not clear. Anyway it is his son Eduardo who is now executive chairman of the company, having started as a safety assistant at Arcata in 1987 and working his way up to be boss of the company 12 years later. At the executive level he is supported by Roberto Danino as deputy chairman and Alberto Beeck which is director of strategy and corporate development.

The operations sold back to Luis became the basis of Hochschild Mining which then launched an aggressive expansion campaign in Peru as well as in Mexico, Argentina and Chile. In order to spread the financial risk joint ventures were agreed with other local and overseas mining partners to develop the San Jose, Pallacanta, Mina Moris and San Felipe projects. Hochschild Mining is now the fourth largest silver producer in the world with an output of around 10.5 million ounces plus just under 250,000 ounces of gold in 2005. In that year its cash costs of production amounted to US$2.65/oz for silver and US$169/oz for gold which puts it in the first quartile of the 2005 global cost curve for both metals.

Its specialisation is in epithermal vein deposits and it currently has three underground mines Arcata, Ares and Salene - in production in southern Peru. Next up are two advanced and two early stage development projects in Argentina, Mexico and Peru and then a swathe of prospects at various stages. The overall strategy is to bring a sequence of these projects into production and the aim is to push towards annual production of 50 million silver equivalent ounces, or 830,000 gold equivalent ounces if preferred, by 2011. This is quite an uplift from the 2005 figures, but Hochschild is not the sort of company which would risk undershooting a declared target, so it may err on the conservative side.





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I see Citigroup have downgraded this from hold to sell, has anyone read the full report?

Gone long on HOC on back of increasing silver price.

HOC ForecastsYear Ending Revenue (m) Pre-tax (m) EPS P/E PEG EPS Grth. Div Yield

31-Dec-11 570.90 284.24 42.40p 11.7 0.1 +144% 5.97p 1.2%


144% increase in earnings by year end DEC.

Wonder what it is now with the new high of silver!!!!!!!!!!!


(digital look)

Solid update.


http://www.proactiveinvestors.co.uk/companies/news/30895/hochschild-mining-firmly-on-track-despite-fall-in-silver-output--30895.html

FLASH: Numis upgrades Hochschild Mining from reduce to hold, target price unchanged at 550p
Story provided by StockMarketWire.com

Collins Stewart responded positively to Hochschild Minings (LON:HOC) production update, saying it is bang in line and contained no surprises.

In a note to clients, analyst John Mcgloin said: The company can take a particular positive out of the fact that the high grade San Jose mine in Argentina performed well despite a work stoppage at the mine due to a pay dispute. The shares have rebounded well recently on a rally in silver and gold prices but Mcgloin reckons that, outside metal price appreciation, Hochschild now lacks short to medium share price catalysts.

Meanwhile John Meyer, mining analyst at Fairfax Securities, said: These production results put the company on track to achieve their full year numbers the company should benefit from higher prices which should offset some of the slowing production



http://www.proactiveinvestors.co.uk/columns/broker-spotlight/5957/

Broker note out............... lovely

Hochschild Mining
FTSE 250
Basic Materials
Buy
617
507.5
21.6%
Fox-Davies Capital

Target SP 617p 21.6% upside.

Been tempted back in here and opened a long . Silver price is heading higher it would seem.

Recent broker note


http://www.uploadlibrary.com/foxdavies/HochschildFlashnote2February2012.pdf

HOC Hochschild (silver and gold producer)

We have a breakout of the SP from
a bullish FLAG pattern on the chart.

First SP target is the last high around
545p and then further highs as silver
and gold prices increase.

HOC Hochschild Mining

Brokers recommendations bullish.

Forward P/E for 2013 19.2 compared to
Fresnilo its peer of 27 to 2013 shows
the stock to be significantly undervalued.

Hochschild Mining PLC

FORECASTS 2011 2012
Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)

Numis Securities Ltd
27-01-12 HOLD 257.26 27.25 8.98 184.55 19.94 7.05
Broker Name Withheld 3 (Bank Of America)
18-01-12 BUY 31.91 33.86

2011 2012
Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)

Consensus 257.26 29.54 8.98 184.55 26.77 7.05

1 Month Change 0.00 0.00 0.00 0.00 0.00 0.00
3 Month Change -0.95 1.06 2.88 -126.14 -8.30 1.83


GROWTH
2010 (A) 2011 (E) 2012 (E)

Norm. EPS 38.85% 33.76% -9.38%
DPS 0.77% 244.74% -21.42%

INVESTMENT RATIOS
2010 (A) 2011 (E) 2012 (E)

EBITDA £136.64m £320.04m £221.87m
EBIT £135.33m £257.78m £163.51m
Dividend Yield 0.50% 1.73% 1.36%
Dividend Cover 8.48x 3.29x 3.80x
PER 23.50x 17.57x 19.39x
PEG 0.60f 0.52f -2.07f
Net Asset Value PS 167.75p p p

Hemscott premium.

Ouch! Brokers' recommendations of a year ago a country mile off!

Like the look of these as they seem to be bouncing from a 155p low. Have bought 4000 at 156p as results out tomorrow. Also strong director buying and rising RSI.

Good day for HOC up 8.1p (5.13%) at 166.
First target price 180
Stop at 150

Down today after Fridays good rise. Still in profit with a finish of 163.90.
I firmly believe (hope!) that the 155p was a floor for this share. The silver price has been priced in but not the potential.

Gone long today and already well into profit.

Just check the chart.