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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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.

London’s leading gold forecaster: gold to average $1321 in 2015
By Tom Winnifrith | Saturday 17 January 2015

Over the past 15 years Ross Norman of Sharps Pixley has been the forecaster with the best record in the LBMA for predicting gold price moves so you should take his gold price forecasts seriously. Ross writes, "We are going out on a limb this year." Indeed.

AVERAGE : $1321

HIGH : $1450

LOW : $1170

If markets move on what you don't know today, but will know tomorrow then it follows that many factors such as a US interest rate rises should already be factored into the current price... it also begs the question what the new drivers for 2015 will be. We see ongoing declines in economic growth prompting central banks to fight deflation by resorting to inflationary pressures in H2.

If our outlook for gold in dollar terms is bullish, in emerging currencies it may be even more so as investors seek to insure or hedge against currency debasement. As such, we foresee good demand for the physical.

Most annoyingly for bulls in 2014, gold exhibited 'rally fade' despite a global economy that was as fragile as ever. Our forecast is predicated on gold becoming price inelastic (as it was in the early 2000's) and able to sustain the momentum. I say annoyingly because arguably never before have savers potentially so needed an asset with the wealth preservation qualities that gold provides ... yet the price performance these last few years has disappointed.

In short, we see gold demonstrating that it has turned a corner and investor flows return with a vengeance, aided by short covering and fresh longs in the futures markets. Perhaps most disappointingly though we are unlikely to see runaway prices beyond the $1450 level without either significant new product innovations or without the sort of black swan events in the economy that few of us would wish for.

SILVER

AVERAGE : $18.56

HIGH : $21.75

LOW : $14.50

With a firm outlook for gold, it follows that our expectations for silver would be similar ... and a little more so... such is silver's propensity to follow gold in a exaggerated fashion. Investors will take comfort from

silver ETF holdings which have remained firm (unlike gold) coupled with retail sales of the physical coins and bars which have remained robust.

Even mine production looks set for a modest decline back to levels last seen in 1999. With 75% of silver being produced as a by-product of base metals mining, the weaker global economy may well prompt some cut-backs in mining those host metals. Equally, demand from industrial applications will be correspondingly weaker, but investors (... or more likely speculators) are normally on hand to fill the void.

Like gold, silver does seem to struggle to sustain momentum to the upside as it experiences 'rally fade' for this reason we do not see the likelihood of runaway prices just yet.

Gold miners are starting to look good again – but expect a rough ride

By: Dominic Frisby
14/01/2015

http://moneyweek.com/gold-miners-look-good-again-but-expect-a-rough-ride/

CHARLES STANLEY BROKERS

Commodities

Gold (1279.81) – the surge in the gold price continues, aided by the Swiss currency move
(the Swiss are widely seen as buyers of the precious metal) and by its safe-haven
characteristics. Last week’s 4.66% advance is notable for the fact that it resulted in a clear
move above the long-term downtrend and the extent of the break has changed the basis
somewhat, to the extent that further strength now appears to be a realistic expectation
(notwithstanding the fact that the price has become somewhat overbought of late). The next
upside target is last August’s intermediate high, at $1313 or so.

Going great guns, good call gf.
2517

well done sticks

Loads errrrrrr money doodlemug.

Cheers lads.

HOC

24 Oct Numis Hold 128.50 140.00 140.00 Reiterates

RESULTS AHEAD OF FORECASTS........

Hochschild Mining Q4 Production Report

RNS

RNS Number : 6872C
Hochschild Mining PLC
21 January 2015






__________________________________________________________________________________

21 January 2015

Production Report for the 12 months ended 31 December 2014


2014 Highlights

§ Full year production of 22.2 million attrib. silver equivalent ounces substantially exceeding 21.0 million target
§ Main operation all-in sustaining costs per silver equivalent ounce expected to fall by up to 5% in 2014, within guidance (2013:$18.6/oz)
§ Total cash of approximately $115 million as at 31 December 2014

2015 Outlook

§ Further progress achieved at Inmaculada Advanced Project:
o 2015 production target of 6-7 million silver equivalent ounces remains in place despite some construction delays
o Overall project 86% complete
o Plant construction 85% complete vs 57% in Q3; contractor expected to commission plant in Q2 2015
o Key underground development plan ahead of schedule - 157,449 tonnes of development mineral already stockpiled
o Remaining construction capital expenditure of $72 million in 2015
§ Core operation mine plans revised to deliver profitable ounces in lower precious metal price environment
§ 2015 attributable production target of 24.0 million silver equivalent ounces
§ 2015 all-in sustaining costs expected to be $15-16 per silver equivalent ounce
§ 6.0 million silver ounces sold forward for 2015 at $17.75 per ounce
§ 38,000 gold ounces already sold forward for 2015 at $1,300 per ounce

Ignacio Bustamante, Chief Executive Officer commented:
"Despite the complex precious metal environment, our core assets have once again surpassed their annual target, this time by almost 6%. Several cost cutting initiatives were also successfully implemented during the year materially improving our operations' competitiveness for the year ahead. The Company will grow its production to 24 million silver equivalent ounces in 2015 while maintaining the management´s focus on reducing costs and improving efficiencies.

Our flagship Inmaculada project is close to completion, with the mine itself already ramping up and the plant construction moving towards its final stages. We are excited about Inmaculada as it will not only be the cornerstone of our production base in Peru but also will contribute significantly to reinforcing our strong cash cost position."
__________________________________________________________________________________

A conference call will be held at 2.30pm (London time) on Wednesday 21 January 2015 for analysts and investors.

Dial in details as follows:
UK: +44 (0) 20 3139 4830
Pin: 16963109#

BRIEF – Hochschild says exceeds 2014 production target
21 Jan 2015 - 07:20

Jan 21 (Reuters) – Hochschild Mining Plc

2015 production target of 6-7 million silver equivalent ounces for Inmaculada mine (not whole co) remains in place despite some construction delay
Full year production of 22.2 million attributable silver equivalent ounces substantially exceeding 21.0 million target
Main operation all-in sustaining costs per silver equivalent ounce expected to fall by up to 5 pct in 2014, within guidance
2015 all-in sustaining costs expected to be $15-$16 per silver equivalent ounce
Source text for Eikon: ... Further company coverage: HOCM.L

((Bengaluru Newsroom +91 806 749 1136);)

The market is not impressed.

HOCHSCHILD MINING



Last Signal:SELL


Last Pattern:BEARISH THREE GAP UPS



Last Close:
115.5000


Change:
-15.0000

Percent change
-11.49%






Signal Update

Our system’s recommendation today is to SELL. The BEARISH THREE GAP UPS pattern finally received a confirmation because the prices crossed below the confirmation level which was at 126.1250, and our valid average selling price stands now at 125.9250. The previous BUY signal was issued on 24/12/2014, 28 days ago, when the stock price was 81.3500. Since then HOC.L has risen by +54.79%.

Market Outlook

The market ran out of steam and the traders are now more in agreement about the bearishness. The evidence is strong enough to prompt the closing of long positions. The bearish pattern that was previously identified is finally confirmed and a SELL signal is generated. You still have time to follow the signal and then you may start checking other securities for a bullish bet.

21/01/2015