Hochschild Mining swings to net cash, shares among top FTSE-250 gainers

By Shanima A

(Reuters) - Hochschild Mining on Thursday said a boost from higher metal prices helped it to a net cash position for the first time in eight years, driving its shares up nearly 6% though full-year core earnings dropped on pandemic-driven disruptions.

The precious metals miner said its average realised prices for gold rose 28% in 2020 as the coronavirus crisis spurred investors to buy into bullion's relative safety. Spot gold jumped almost 25% last year, while silver prices gained 47.8%.

"We have delivered strong financial results in 2020, despite the impact of the Covid-19 related stoppages. Higher precious metals prices combined with strong free cashflow generation saw us finish the year in a net cash position for the first time in eight years," Chief Executive Officer Ignacio Bustamante said.

Shares in the company were among the top gainers on London's midcap index, up 6.6% at 234.2 pence by 0803 GMT.

Peel Hunt analysts said with the cash, the company "can now also afford to drive forward a few projects in 2021 like BioLantanidos (rare earth deposit in Chile) and hopefully focus more on Pallancata drilling (south Peru)."

Hochschild also proposed a final dividend of 2.335 cents per share.

The London-listed miner's full-year attributable silver and gold production dropped 42% and 35%, respectively, in 2020. However, the company backed its production target of 360,000-372,000 gold equivalent ounces for 2021.

Hochschild, which operates two mines in southern Peru and one in Argentina, halted all operations between mid-March and May last year, with its flagship Inmaculada gold-silver mine in Peru suspended again in July as some of its workers tested positive for COVID-19.

Its San Jose mine in Argentina was also shut temporarily in November following regional lockdowns.

The company's adjusted earnings before interest, tax, depreciation and amortization fell to $270.9 million from $343.3 million last year.

RBC Capital Markets analysts said the earnings were ahead of its $262 million estimate.

(Reporting by Shanima A in Bengaluru; Editing by Devika Syamnath and Emelia Sithole-Matarise)