(Corrects typo in reporter name at bottom)
* Co had already last year suspended dividends
* Said no payout until financial situation improves
* Adjusted EBITDA slumps 49 percent to $195.5 million
* Shares down 12.8 percent
LONDON, March 12 Hochschild Mining Plc
has canceled dividend payments until its financial situation
improves, its latest cost-cutting measure as it tackles the
impact of weak precious metals prices on the profitability of
its mainly Peru-based operations.
The gold and silver miner, which paid out a total of 0.06
U.S. cents per share for 2013, had already last year announced a
temporary suspension of its dividends but that has now been
extended as part of a series of cost-saving measures.
Shares in the London-listed company fell 12.8 percent to
172.5 pence by 1259 GMT, marking a sharp reversal following a
rally to near six-month highs in recent sessions.
The company, which last year set out economy measures
including cuts to directors' salaries and reductions in its
exploration budget, as well as the dividend suspension, said
adjusted earnings before interest, tax, depreciation and
amortisation (EBITDA) slumped 49 percent to $195.5
The Thomson Reuters I/B/E/S consensus forecast had been for
EBITDA of $176 million.
Revenue dropped by 24 percent to $622.2 million the company
Spot gold and silver tumbled by 28 percent and
36 percent respectively last year.
"The board proposes to not reinstate the dividend until the
company's cash position improves," said Chairman Eduardo
Hochschild in a statement.
Hochschild, whose Peruvian projects provide the bulk of its
output, said it had identified $200 million in cost-cutting
measures, of which $145 million had already been delivered in
the last six months.
"This year is going to be a continuation of the same
measures in the same areas and we'll also continue to put
pressure on key drivers such as negotiations with contractors,
with suppliers and additional productivity measure," Chief
Executive Ignacio Bustamante said.
The miner targets production of 21 million silver equivalent
ounces in 2014.
It said it was still on track to start commissioning its
Inmaculada gold and silver project in Peru in the last quarter
of this year, which it hopes will help boost its production to
35 million ounces by 2017.
After a 14 percent reduction to $18.6 per ounce in all-in
sustaining costs - a measure which includes elements such as
exploration - Hochschild targets a further 0 to 5 percent
reduction in 2014.
The company has decided to hedge about 20 percent of its
gold and silver production during the period from March to
December 2014 to better manage cashflow and capital needed to
finance its Inmaculada project and to repay debt.
"The group is responding well to the challenges of a lower
silver price and we believe it has done the right thing in
smoothing earnings somewhat with metal hedging," Citi analysts
The Lima-based company booked a $91 million impairment
charge mainly on its San Jose mine in Argentina and its Azuca
and Crespo projects in Peru, on the back of falling precious
(Reporting by Karolin Schaps and Silvia Antonioli; Editing by
Paul Sandle and David Holmes)