- Precious metal miner’s shares hit new all-time high
- Miner suggests output could drop and production costs rise in 2026
- Rising gold and silver prices a huge boost
- Shares not as cheap as they were on a net asset value basis
“It is barely six months since Hochschild Mining unveiled disappointing first-half results, as its precious metal output forecasts undershot expectations and its cost of production exceeded them, but the share price has just hit a new all-time high after its full-year production update for 2025,” says AJ Bell investment director Russ Mould.
“The 2025 production and cost numbers contained no new nasty surprises, which helped, but the 2026 forecasts for both suggest there is work to be done, so it is really soaring commodity prices that are doing the heavy lifting when it comes to the share price.
Source: LSEG Refinitiv data
“All seems to be going to plan at the Inmaculada mine in Peru and the 51%-owned San Jose site in Argentina, both of which produce silver and gold, even if output of both fell slightly at each mine in 2025 and looks set to gently decline again in 2026.
“The real problems seem to lie at the Mara Rosa gold mine in Brazil, 350 kilometres north of Brasilia, acquired in 2022. First gold was poured there in early 2024 and commercial production levels reached in spring, only for issues with a mining contractor and faulty mechanical filters to take the shine off proceedings.
“Mara Rosa managed output of 63,770 gold equivalent ounces in 2024, below targets of 83,000 to 93,000, and did so at an all-in sustaining cost of $1,408 per ounce, way above Hochschild’s initial expectations of between $1,090 and $1,120.
“Hochschild has inserted a new management team at Mara Rosa, but they clearly have had their work cut out.
“In 2025, difficulties at Mara Rosa prompted a summer trading alert as it undershot output and exceeded cost estimates for the second year in a row.
“Production slumped to 40,060 ounces in 2025 and the expected rebound in 2026 still only comes to between 67,000 and 80,000 gold equivalent ounces in production.
“As a result of the reduced output, production cost per ounce will increase again in 2026 across Hochschild Mining as a whole, even if oil and energy costs remain helpfully subdued.
“For the whole group, management had initially budgeted in 2025 for an all-in sustaining cost of production of $1,587 to $1,687 per gold equivalent ounce, or $19.1 to $20.3 per silver equivalent ounce. That eventually came in at around $2,080 per gold equivalent ounce and management has laid down a target of between $2,157 and $2,320 for 2026.
Source: Company accounts, management guidance for 2025E and mid-points of management guidance for 2026E
“Investors now have to decide for themselves whether Hochschild can turn around Mara Rosa and capitalise more effectively upon the prevailing silver and gold prices (and any retreat in those would be a further complication). That said, surging commodity prices are persuading them to embrace Hochschild anyway, not least as the prevailing gold price of around $4,870 massively outstrips that expected gold equivalent production cost range of $2,157 and $2,320 for 2026.
Source: LSEG Refinitiv data
“This is despite a valuation that is starting to look full, in relative and absolute terms, on the basis of price to book, or net asset, value per share, a metric often used instead of earnings, owing to the profit volatility that tends to characterise mining companies. It looks cheaper than Fresnillo, another London-listed miner, but is not in the bargain basement category when compared to other major silver miners around the world, although if the silver price stays where it is then profits are likely to rocket and drag net asset value higher.
Source: Company accounts, Marketscreener, consensus analysts’ forecasts
Source: Company accounts, Marketscreener, consensus analysts’ forecasts
“The additional slant toward gold output represented by Mara Rosa is one explanation for this, but then Hochschild needs to prove it can run that asset properly and generate maximum value from it, across the current expected initial 10-year mine life.
“Equally, markets have shown very strong tendencies to trending in the past few years, and some investors may be reluctant to stand against the strong price momentum currently on offer from precious metals and their producers.”
