Hochschild Mining plunges after slashing production guidance

[Underground train in mine, carts in gold, silver and copper mine.]
TomasSereda/iStock via Getty Images

Hochschild Mining (OTCQX:HCHDF [https://seekingalpha.com/symbol/HCHDF]) (OTCPK:HCHDY [https://seekingalpha.com/symbol/HCHDY]) -11.9% in Wednesday's trading after cutting its full-year production forecast [https://www.hochschildmining.com/investors/results-reports-presentations/] by more than half and raising cost expectations for the Mara Rosa mine in Brazil after facing ongoing delays to the project.

Hochschild (OTCQX:HCHDF [https://seekingalpha.com/symbol/HCHDF]) (OTCPK:HCHDY [https://seekingalpha.com/symbol/HCHDY]) said it now sees full-year Mara Rosa production at 35K-45K oz, down from previous guidance of 94K-104K oz, which lowers full-year group production guidance to 291K-319K gold equivalent oz from a previous target of 350K-378K gold equivalent oz.

The weaker production raised the company's all-in sustaining cost guidance, with Hochschild (OTCQX:HCHDF [https://seekingalpha.com/symbol/HCHDF]) (OTCPK:HCHDY [https://seekingalpha.com/symbol/HCHDY]) now expecting AISC of $1,980-$2,080 per gold equivalent oz compared to its previous forecast of $1,587-$1,687 per gold equivalent oz.

Hochschild (OTCQX:HCHDF [https://seekingalpha.com/symbol/HCHDF]) (OTCPK:HCHDY [https://seekingalpha.com/symbol/HCHDY]) shares sank more than 20% in June [https://seekingalpha.com/news/4456911-hochschild-mining-tumbles-20-after-cutting-guidance-for-brazilian-project] after it temporarily suspended processing activity at Mara Rosa for about six weeks to carry out repairs.

RBC Capital Markets analysts said Hochschild's (OTCQX:HCHDF [https://seekingalpha.com/symbol/HCHDF]) (OTCPK:HCHDY [https://seekingalpha.com/symbol/HCHDY]) downgrades are not surprising [https://www.wsj.com/business/earnings/hochschild-mining-cuts-guidance-shares-tumble-6cc09fa5], and until the company can fully fix the problems at Mara Rosa, it will operate 15%-40% below capacity, although the shares should re-rate once production at the mine ramps up, likely in early 2026.

Hochschild's (OTCQX:HCHDF [https://seekingalpha.com/symbol/HCHDF]) (OTCPK:HCHDY [https://seekingalpha.com/symbol/HCHDY]) stock swoon comes despite reporting H1 2025 pretax profit of $140.1M, up from $69.4M a year earlier, and adjusted EBITDA jumped 27% to $224.5M, as revenues rose by a third to $520M.

MORE ON HOCHSCHILD MINING

* Hochschild Mining: Printing Cash At $3,100 Gold [https://seekingalpha.com/article/4774450-hochschild-mining-printing-cash-at-3100-gold]
* Financial information for Hochschild Mining [https://seekingalpha.com/symbol/HCHDF/income-statement]