Hochschild Mining has shocked investors after slashing its production guidance for 2025, leading to a steep sell-off in its stock. The precious metals producer, with key operations in Latin America, revised its annual targets downward, citing operational issues at its Brazilian mine, Mara Rosa. The announcement wiped out nearly 20 percent of its market value in a single trading day, making it one of the biggest losers on the London market.
Lower Production Forecast
The company cut its full-year 2025 production guidance to a range of 291,000 to 319,000 gold-equivalent ounces, a significant drop from its earlier forecast of 350,000 to 378,000 ounces. The sharp downgrade is mostly due to problems at the Mara Rosa mine in Brazil, which was initially expected to produce between 94,000 and 104,000 ounces this year. That estimate has now been slashed to just 35,000 to 45,000 ounces.
Hochschild admitted that Mara Rosa has faced setbacks linked to contractors and weather conditions. These issues led to disruptions and a temporary suspension of processing earlier in the year. Although operations have now restarted, the reduced targets show the extent of the challenges.
Rising Costs Add More Pressure
The downgrade was not only about lower output. Costs are also rising steeply, particularly in Argentina where inflation continues to put pressure on mining operations. Hochschild now expects all-in sustaining costs to be between 1,980 and 2,080 dollars per ounce, compared with its earlier guidance of 1,587 to 1,687 dollars per ounce.
Sustaining and development capital expenditure at Mara Rosa is projected at 29 to 30 million dollars this year, of which at least 18 million will be used for remedial work. These higher costs will squeeze profit margins and add to investor concerns about the company’s near-term financial performance.
Market Reaction
The market wasted no time in punishing the stock. Shares in Hochschild fell as much as 19 percent following the announcement, trading at around 246 pence at one stage. Even by the close of the session, the stock remained down by about 14 percent, making it the worst performer in the FTSE 250 index that day.
Analysts were quick to adjust their outlook. RBC Capital Markets lowered its price target on the stock to 320 pence from 340 pence, citing the lower production guidance and higher costs. Investor sentiment remains cautious until there is clearer evidence of a sustainable recovery at Mara Rosa.
Strong First-Half Results Provide Some Relief
Despite the negative outlook for the rest of the year, Hochschild did report strong results for the first half of 2025. Revenue rose 33 percent to 520 million dollars, compared with 391.7 million dollars in the same period last year. Adjusted earnings before interest, tax, depreciation and amortization increased 27 percent to 224.5 million dollars.
Pretax profit after exceptional items doubled to 140.1 million dollars, up from 69.4 million dollars a year earlier. Adjusted profit before tax also improved by 32 percent to 109.3 million dollars. These results underline that, outside of Mara Rosa, other operations performed strongly.
The company also declared an interim dividend of one cent per share, amounting to a total payout of 5.1 million dollars. Net debt fell to 202.3 million dollars from 215.6 million dollars at the end of 2024, showing an improvement in the balance sheet. Group attributable production rose to 161,597 gold-equivalent ounces from 152,792 ounces last year.
Company Response and Management Steps
To tackle the setbacks at Mara Rosa, Hochschild temporarily suspended processing earlier in the year to carry out a review and operational overhaul. Management has since restarted the plant and appointed a new country manager for Brazil to oversee recovery efforts and ensure more reliable output in the months ahead.
Chief Executive Eduardo Landin said that the suspension allowed the company to make key improvements that will help set a foundation for stable production. However, he acknowledged that the revised guidance reflects the reality of the difficulties the mine has faced in its early stages.
Investor Implications
For investors, the situation presents a mix of risks and opportunities. On the one hand, the company is dealing with a major setback at Mara Rosa, rising costs across its portfolio, and cautious analyst sentiment. On the other hand, its existing operations continue to deliver solid results, and the balance sheet is relatively healthy.
Much will depend on how quickly Mara Rosa can stabilize and whether the company can bring down its all-in sustaining costs. If output recovers and inflation pressures ease, sentiment could turn positive again. Until then, the share price may remain volatile.
Key Factors to Watch
- Progress at Mara Rosa: Investors will closely track monthly and quarterly updates to see if the mine can deliver on its revised targets.
- Cost Control: Rising operating expenses threaten profitability. Cost-saving measures across Argentina and other operations will be crucial.
- Analyst Forecasts: Updated research and price targets from banks and brokerages could influence short-term trading.
- Market Confidence: Dividend stability and debt reduction efforts may reassure investors despite current challenges.
Conclusion
Hochschild Mining cuts guidance, and the impact has been severe. While the company delivered strong first-half results, the steep downgrade to its annual production outlook overshadowed those positives. The problems at Mara Rosa, combined with higher costs across its portfolio, triggered a heavy sell-off in the stock and left investors questioning the near-term growth story.
For now, the company is working on stabilizing operations in Brazil and maintaining financial discipline. Investors will need to watch closely whether Hochschild can meet its revised targets and restore confidence in its longer-term strategy.
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