Hochschild Mining Discussion

Topping up

Warren Buffoon — Thu, 10 May 2012 06:06:00 GMT

Been holding these since 2009 but topping up today because at this price I think they will continue to be an excellent long term opportunity. . . . . no debt, history of paying out dividends, p/e ratio of 14.7, strong cash flow. . . . .

WB By Warren Buffoon

600p

gilotron — Wed, 21 Mar 2012 08:53:00 GMT

Event

Hochschild has released its preliminary results for 2011.

Investment Opinion

Guidance for 20 Moz Ag equivalent 2012 - Hochschild produced 14.8 Moz of silver and 127.3 koz of gold in 2011and it expects to produce 20 Moz on a silver equivalent basis in 2012. Cash costs were up 14% in Peru, which was in line with expectation and 18% in Argentina, which was lower than the 30% the company had guided for due to a 6% weakening of the Peso and lower mine development costs. Cost inflation guidance for 2012 is 15% for Peru and up to 30% in Argentina, although this assumes a flat Peso US$ exchange rate.

EPS of US$0.50/share, dividend of US$0.06/share - EPS was US$0.50/share for 2011E compared to our expectation of US$0.55/share. The difference was principally due to more exploration expenditure being expensed than we forecast. The company raised the total dividend 20% to US$0.06/share, (0.8% yield). Management justify this low yield because of the US$90 million exploration budget and company's capital expenditure commitments in Peru. Given the US$627 million year end cash position and gearing of <10% there is clearly the scope for greater distribution in the future. Group Resources increased by 22.2% to 821 Moz on a silver equivalent basis, however, Reserves declined 4.4% to 115.6 Moz with a 20.6% fall at the Pallancata mine to 41Moz Ag equivalent. The company expects to reverse this decline at Pallancata in 2012.

Project progress and exploration will be key - The main value drivers over the next twelve months will be sustaining the momentum towards production at both Inmaculada and Crespo, completing the exploration at Azuca and advancing the company's earlier stage 'company maker' projects across Latin America. Production should increase by 50% to 30 Moz/year on a silver equivalent basis by 2015E based on the company's current growth plan.

Valuation

We value Hochschild at 600p based on a blend of 1.4x NAV and 9x cash flow, in line with historical silver producer averages. We retain our Outperform recommendation and Above Average risk qualifier. The company remains our preferred London listed silver play on the basis of its growth profile, solid balance sheet and gearing to the silver price.
By gilotron

numis

gilotron — Tue, 20 Mar 2012 14:50:00 GMT

Numis: Hochschild Mining (Hold, TP: 480p) FY results keep the cash piling

FY results are more or less in line. EPS up 75% y-o-y at $0.49, a smidge light on our $0.51 and consensus at $0.50. Cash costs came in as expected at $13/oz, and, with a healthy EBITDA margin of 57%, the business remains very profitable. The balance sheet remains strong with $830m in net debt and investments. Perhaps the only disappointment is the modest divi with the money being held onto for exploration and project development. Stock is currently trading at 2x NAV and 6.5x CF vs. the peer group at 1.5x NAV and 8.7x CF. We maintain our HOLD recommendation and 480p TP.

FY results in line. EPS up 75% y-o-y at $0.49, a smidge light on our $0.51 (consensus $0.50). NPAT of $167m vs. our $173m. Mainly on the back of higher metal prices offset by lower production and higher costs. Total cash costs bang in line with our forecast at $13/oz (co-product basis), up 40% y-o-y. Costs better held in Peru with around 15% increase but Argentina (San Jose) continues to taint the numbers, expected to be 25-30% up in FY12. Adjusted EBITDA of $563m better than our expected $531m due to lower G&A, leaving a healthy 57% margin. We have made some minor immaterial tweaks to our numbers.
Balance sheet strong. Cash-in-hand reiterated at $628m plus $353m in investments, leaving HOC fully funded for its development projects ($425m over next 2 years). Final divi of $0.03, bringing total to $0.06, lower than our forecast and leaving a pretty modest yield of <1%. Divi unlikely to be increased in our view, given capex and exploration spend, debt payments and buffer for potential M&A. HOC stated in the results presentation that it doesn't feel pressured to raise the divi or do M&A despite the bulging cash.
Projects tick along. FY12 guidance as before at c. 20Moz. Nothing particularly new on the exploration front other than an increase in “company maker” projects to 13. $90m budget for 2012. Inmaculada is the main future for company with some decent upside potential for production and mine life, expected to start end 2013. Organic growth seems more likely than M&A with better chance of adding cheaper ounces. By gilotron

Silver gold price manipulation

Max Legroom — Sun, 18 Mar 2012 08:08:00 GMT

Most of the messages on most of the boards that people read are just noise.

Trawling through the dross however ocaccasionally turns up a nugget such as this ..

http://www.netcastdaily.com/broadcast/fsn2012-0317-2.mp3

For years I have been listening to people suggests that gold, silver and other stock prices are manipulated but I have never encountered a compelling decscription of the mechanism until I listened to the above

Enjoy By Max Legroom

Re: Div paid in metal

kbikes — Thu, 15 Mar 2012 07:30:00 GMT

Thats interesting I've just bought into HOC and would love to get my divi in silver coins,will be interesting to find out what the VAT and or tax implications are. By kbikes

Div paid in metal

Thomas Tallis — Wed, 14 Mar 2012 22:14:00 GMT

HOC is a large shareholder in GORO

http://www.silverseek.com/article/silver-and-gold-dividends-be-paid-gold-resource-corp-nyse-amex-goro
By Thomas Tallis

Re: HOC Chart Looks Bullish

the old trout — Tue, 28 Feb 2012 14:49:00 GMT

Yes I'm back in now too. Silver going mental now @ $36.45 and FRES is putting on a big surge this afternoon so I am confident this will follow suite.

GLA,

Tot By the old trout

HOC... BROKER RECOMMENDATIONS

oldjoe1 — Fri, 24 Feb 2012 14:17:00 GMT

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.

By oldjoe1

HOC Chart Looks Bullish

oldjoe1 — Fri, 24 Feb 2012 10:07:00 GMT

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.

http://charting.webs.com/hoc%2010.JPG By oldjoe1

Re: Fox Davies Capital-Broker Note

oldjoe1 — Fri, 24 Feb 2012 09:24:00 GMT

Recent broker note..

http://www.uploadlibrary.com/foxdavies/HochschildFlashnote2February2012.pdf By oldjoe1

Re: Fox Davies Capital-Broker Note

oldjoe1 — Fri, 24 Feb 2012 09:23:00 GMT

Gone long here been tempted in by silver price. By oldjoe1

Re: Fox Davies Capital-Broker Note

fegga2 — Fri, 03 Feb 2012 08:53:00 GMT

thats a nice upgrade from previous

"Our BUY recommendation remains with a target price of £5.92/share..."

thanks spikey By fegga2

Fox Davies Capital-Broker Note

SpikeyDT — Thu, 02 Feb 2012 14:31:00 GMT

Hothschild Mining
February 02, 2012 - Fox-Davies Capital
http://bit.ly/xcfTpp By SpikeyDT

numis

gilotron — Thu, 26 Jan 2012 15:55:00 GMT

Numis: Hochschild Mining (Hold, TP: 480p) Project promise

Project presentation. Neutral to positive. Much needed project growth will increase production by 50%. We believe Inmaculada is a solid project with potential to increase mine life plus possibly scale, offset by cost and capex pressure. We see Crespo as less promising but should make the cut at current metal prices. We believe Azuca needs more work before going ahead. We keep a watch on future exploration results but no change to our numbers at this stage.

Inmaculada positive - Good project economics, expected to produce 194koz gold eq. at $530/oz. Mine development has already started.
Risks minor. Still some risks around permitting and power, which is predicated on a new line build. However, we expect these to be overcome and expect the project to start on track at end 2013. However, mining may be challenging, in our view, giving the poor rock conditions.
Good potential. We see good potential to increase mine life from the initial 6.3 years, with 5 years of inferred resources and a newly acquired land package between Inmaculada and Pallancata. However, we are unlikely to see these converted into the mine plan until production starts.
Capex and cost pressure. Capex figure is hefty at $315m, 85% higher than originally expected, due to a larger plant, leaching circuit and cost inflation. HOC thinks it can improve on it, however. Cash costs may be under pressure like their other ops, in our view, so we may see this number creep up.
Crespo to make it. Crespo less good, producing 45kozpa gold eq. at $750/oz. Open pit so less risky technically but high strip ratio at 15:1. We believe the risks over permitting etc. are the same so Q3 2013 start-up is unlikely to be impacted. Capex $111m also higher due to larger plant, lower recoveries and inflation. Potential to increase resources to some degree but less than Inmaculada, in our view.
Azuca out. Azuca needs to increase better quality resources following the previous downgrade, before going ahead. It will do another year of exploration and has some promising results but needs a larger, more consistent vein. Some potential upside from Millo property which is in arbitration. We exclude Azuca from our numbers. By gilotron

Gold surges as Fed comments hit US dollar...

SpikeyDT — Thu, 26 Jan 2012 15:33:00 GMT

Gold surges as Fed comments hit US dollar
January 26. at 4:06 pm
http://bit.ly/yZFeaO By SpikeyDT