Latin American gold and silver producer Hochschild Mining Plc posted a 16 percent rise in first-quarter output on Wednesday, boosted by mine expansions, and said it was looking for more acquisitions.
As a result of the measures we implemented at the end of 2008, the company is well placed to benefit from new acquisition opportunities which may arise from current market conditions, Chief Executive Miguel Aramburu said in a statement.
London-listed Hochschild said on March 10 it had agreed to buy Southwestern Resources for $17.5 million in cash and in February increased its stake in Gold Resource Corp (GRC) to 15 percent from 5 percent.
Hochschild's attributable production for the first three months of the year was 6.7 million silver equivalent ounces, up from 5.8 million ounces last year.
Production -- comprising 4.4 million ounces of silver and 37,400 ounces of gold -- rose mainly due to expansions at the Arcata and Pallancata mines.
The firm reiterated that it was on track to achieve this year's production target of 28 million attributable silver equivalent ounces, up 7 percent from 2008.
On March 27, the firm said brief strikes at all four of its Peru mines ended and they would have no impact on the target.
The numbers indicate a solid start to the year, despite the strike in March, with silver production 23 percent of our FY09E forecast and gold production 24 percent in what is typically the lowest production quarter for the company, Cazenove analyst Fraser Jamieson said in a note, repeating his in-line rating.
Hochschild shares -- which have nearly doubled so far this year after sliding 75 percent in 2008 -- rose 2.7 percent to 210.5 pence by 1045 GMT, in line with the UK mining index
SEES LOWER COSTS
Hochschild, which has six operating mines in Peru, Mexico and Argentina, also said good progress had been made in controlling costs and it expected unit costs per tonne in 2009 to be at least 5 percent lower than last year.
In November, Hochschild said it was cutting 150 corporate jobs, delaying its San Felipe project and reviewing capital spending to conserve cash amid the downturn.
Hochschild, which swung to an annual loss in 2008 after an impairment charge, said the labour settlement would cost about $8 million and would be recorded as an exceptional item.
The firm locked in prices by selling forward 38 percent of its 2009 attributable silver equivalent production, but since those prices were lower than the market prices in the first quarter, it would record a $1.7 million loss on the contracts.
Exceptional items, however, would also include a $5.5 million gain after the price of its GRC shares rose.
The company reiterated that it may close its small Selene mine in Peru, which has declining ore grades, and a decision would be made by June.
Spot silver prices have rebounded this year by about 10 percent, but are still 35 percent down from a peak touched last July. The metal was quoted at $12.51 per ounce on Wednesday morning.
(Reporting by Eric Onstad; Editing by John Stonestreet and Simon Jessop)
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