ochschild Mining's share price slumped around 7% on Wednesday despite positive results for the first half of 2024, driven by high gold prices and good operational performance.

The London-listed miner's shares were trading around 180p on Wednesday afternoon, down around 7% from the previous session.

Hochschild reported revenue of $391.7 million for the first half of 2024, up 25% from $314 million in the same period last year.

Adjusted EBITDA was up 78% at $177.1 million, compared to $99.5 million the year before, and profit before tax reached $83.1 million, compared to $0.8 million in 2023.

Attributable production was at 152,792oz of gold equivalent, at an all-in sustaining cost of $1,510/oz of gold equivalent – an improvement from the 136,878oz at $1,572/oz in the first half of 2023. Production was up due to better-than-expected performance at the Inmaculada mine in Peru and the first production from the Mara Rosa project in Brazil.

"I am pleased to report on an encouraging first-half performance," chief executive Eduardo Landin said. "We are delighted to have brought Mara Rosa into commercial production, an asset that underpins our strategy of increasing production and lowering costs. With Inmaculada enjoying a strong 2024 so far, as well as higher underlying commodity prices, we have delivered substantial improvements in our financial metrics compared to last year."

It's been a year since Landin was appointed as chief executive of Hochschild, leading a new strategic path that focuses on the precious metals producer's core business. Since Landin took the helm, the miner's share price has soared over 99%.

Landin said the second half of 2023 was all about setting a strategic vision, while the first half of this year saw the first stages of delivering that strategy.

Mara Rosa development

Mara Rosa, which Hochschild acquired through a C$135 million deal with Amarillo Gold in 2021, achieved commercial production in mid-May. Since then it has produced 14,354oz of gold at an AISC of $1,495/oz.

"The second half [of 2024] will be the key two quarters of this year when the mine should be at full production," Charlie Gordon, Hochschild's head of investor relations, said.

Despite issues with the ramp-up, involving the plant's mechanical availability and the mining contractor's performance, that resulted in starting the third quarter behind schedule, Hochschild expects no significant impact.

"With Inmaculada delivering better-than-expected output due to the company's optimisation projects helping to increase tonnage, the company reiterates that overall 2024 production and cost guidance will not be impacted," Landin said.

"We've done a number of efficiency initiatives, which really started to pay off," Gordon added. "Therefore, the production [at Inmaculada] looks like it's going to be above expectations. That's why we're not changing the guidance for the year."

Gordon explained that there would be "stronger production" from Mara Rosa in the second half and that the "costs will keep coming down as it normalises".

"We had quite an aggressive timeline in terms of ramping up. We did start a little later than internal expectations. We'd said to the market that we would reach commercial production in the first half of the year, and that we did, but we're around six weeks behind schedule," Gordon told Mining Journal, adding that the company will update the market further on progress at Mara Rosa in the third quarter results.

Exploration

Hochschild reported that its 2024 Brownfield drilling program began with "encouraging early results" from Inmaculada, Mara Rosa, and the San Jose mine in Argentina.

"Exploration remains a key focus and, after a disrupted exploration program in 2023, our brownfield team has made a good start to this year's plans with almost 10,000m drilled at Inmaculada and some exciting results indicating that we are on track to add substantially to our resource base at the mine," Landin said.

In March, Hochschild signed a deal with Cerrado Gold for the option to acquire the Monte Do Carmo project in Brazil. The project would be a potential opportunity to repeat the Mara Rosa development process, with roughly 100,000ozpa of gold, according to Gordon.

"Technical and drilling work at the project has started and we are aiming to make a decision on the option in the near future," he said. "We're doing lots of work to decide whether to exercise the option; we have until early next year to make that decision."

"I think for the second half, everyone should watch the production of Mara Rosa and what we do in terms of the option on the [Monte Do Carmo] project," Gordon concluded. "And really just delivering a couple of quarters of good, solid cash flow."

Hochschild's full-year guidance remains unchanged, with a production target of 343,000-360,000oz of gold equivalent and an all-in sustaining cost target of $1,510-1,550/oz. Total sustaining and development capital expenditure is expected to be around $171-178 million.