March 12 (Bloomberg) -- Hochschild Mining Plc said it sees some cost relief from the devaluation of the Argentine Peso as it battles a collapse in silver prices.
“The devaluation we are seeing in Argentina is exceeding our expectations for the year,” Ignacio Bustamante, chief executive officer, said in an interview today. “That is not part of the guidance we have given so that is something that should help us achieve or exceed our guidance.”
Hochschild, which mines for silver in Argentina and Peru, is seeking to cut costs after a slump in precious metal prices pushed the company to report a loss last year and saw its stock tumble 71 percent. The company, which lowered so-called all-in sustaining costs by 14 percent last year, is targeting further cuts of as much as 5 percent this year.
Argentina devalued the peso by 19 percent in January, the biggest drop in 12 years. Inflation in Argentina, where the company operates its biggest mine, may erode some of the gains, Bustamante said.
“We need to see how inflation turns out in Argentina. We need to see what the net impact is going to be,” the CEO said by phone from London. “The critical part is going to be in our most important cost driver, which is labor. We’re starting the negotiation in the coming weeks.”
Hochschild today reported a full-year loss of $50.3 million after silver prices fell 36 percent last year. The company said sales fell 24 percent to $622.2 million and suspended its dividend.
Hochschild fell 12 percent, the steepest intraday decline since September, to 175 pence by 9:42 a.m. in London. It was the worst performer on the FTSE All-Share Mining Index.
The company, which produced 20.5 million ounces of attributable silver-equivalent last year, is targeting output of about 35 million ounces by 2017 as it develops the Inmaculada mine in Peru.
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