Hochschild Posts Record H1, But Costs Climb With Prices and a New Era in Peru
Record revenue and a swing to net cash mask a raised cost outlook; permitting progress and a new government shift the growth narrative.
HOC.L · Earnings Call · 2026-08-26
A Record Half, Driven by Metals Prices
Hochschild Mining delivered the strongest first half in its history. CEO Eduardo Landin opened the call with emphatic language:This is a stark contrast to prior periods where the company was focused on balance sheet repair and asset optimization. The driver is straightforward: “Revenue was up 62%. That was mainly driven by higher prices, gold and silver prices. That was partially offset by scheduled lower ounces produced.” — Eduardo Noriega, Chief Financial Officer (CFO) · 2026-08-26 The company's higher prices have flowed through to every line, including a 300% increase in the interim dividend to $0.04 per share and a swing from $20 million net debt to a net cash position of $51 million. The balance sheet is now positioned for the next phase of investments, particularly in the Mara Rosa turnaround and the Monte do Carmo project.We have, on H1, the strongest ever half-year financials. We have produced 150,000 oz, a little bit more. Revenues went up 62%, up to $844 million. Our adjusted EBITDA went up 119% to $492 million. The EPS went up 208% to $0.37.
The Cost of Success: Higher Prices, Higher Costs
However, the same price strength is now feeding into costs. The company raised its full-year all-in sustaining cost guidance to $2,380-$2,500 per ounce, and CFO Eduardo Noriega was explicit about the split:This is a classic mining paradox: robust commodity prices boost revenue but also inflate expenses through profit sharing, royalties, and local currency appreciation. The company is countering with its efficiency program, but the revised guidance underscores the input cost pressure. The cost pressure is most acute in Argentina, where net inflation is running at 16% and the peso has not devalued as expected. At San José, all-in sustaining costs were $2,944 per ounce, reflecting both lower grades and higher local costs. The company is trying to offset this with productivity gains, but it remains a key watch item.The revised all-in sustaining cost, as I said, includes the higher prices and FX/local inflation. From the increase, around 60% has to do with higher prices at a total level, and 40% has to do with FX/local inflation in Argentina.
Peru: A New Political Window
Perhaps the most significant strategic update came from Peru. The election of Keiko Fujimori in July has brought a government that CEO Eduardo Landin describes as technical and investment-friendly. The immediate tangible result is the submission of the Royropata environmental permit. Landin noted: “We have been able to file the environmental permit with the new Peruvian government. Also, as you know, we have been able to build this document. We have worked with specialist consultants.” — Eduardo Landin, Chief Executive Officer (CEO) · 2026-08-26 This is a meaningful departure from the past, when permitting was a chronic bottleneck. In a prior call, an analyst asked for the timeline: “Can you just walk us through the permitting time line and requirements, key deadlines, key dates needed to achieve the 2027 kind of start-up?” — Q - Dan Major, Analyst · 2024-03-13 And in 2023, Landin himself said the permit would take three years:Now, with the permit submitted, the company expects approval around August 2027, and production could start in 2028, potentially adding more than 100,000 ounces per year. This is a tangible acceleration. The new government also brings stability on the economic side, with Julio Velarde reappointed to the central bank and Elmer Cuba as economy minister. That should reduce the FX volatility that has hurt costs. Even with these positive signals, the company remains disciplined on capital allocation. When asked about the interim dividend, CFO Eduardo Noriega explained that they are not applying the annual policy to the interim, but modeling full-year scenarios: “We are actually looking at the overall, the entire year, modeling four different scenarios on prices. You know prices could stay, could go up, could go down. Who knows? So we save some room for that situation.” — Eduardo Noriega, Chief Financial Officer (CFO) · 2026-08-26 This was a point of contention among analysts in prior quarters, as seen in this 2025 question: “But how should we think about it mechanically at the interims? Obviously, you don't know what the full year forecast will be.” — Ian Rossouw, Analyst · 2025-03-12 The company is clearly balancing shareholder returns with the need to fund Monte do Carmo and Royropata.we can we can say that we expect to have around three years.