UPDATE 2-Hochschild H1 EPS flat, eyes H2 costs

(Adds analyst comment, conference call, shares)

By Eric Onstad and Mike Elliott

LONDON, Aug 21 (Reuters) - Latin American silver and gold producer Hochschild Mining Plc (HOCM.L) reported flat first-half EPS on Thursday as one-off items hit the bottom line and said it would continue to keep a lid on costs in the second half.

Analysts said profits were slightly below expectations, but a rebound in gold and silver prices boosted the firm's shares.

The shares, which have slid 40 percent this year, gained 2.7 percent to 261.50 pence by 1141 GMT versus a 1.8 percent rise in the UK mining index .FTNMX1770.

"Overall results (are) below expectations and we believe HOCM is fully valued versus its peers," said Citigroup analyst Liam Fitzpatrick in a note, which reiterated a "hold" rating.

Shares were helped by metals markets where gold prices XAU= rose 2 percent, touching a one-week high on a weaker dollar, while silver prices XAG= gained 3 percent.

The world's fourth-biggest primary silver producer said earnings per share were unchanged at 11 cents even though adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) jumped 86 percent.

This was due to $6.1 million of extraordinary items, including writedowns on investments in other mining firms, and higher operating and finance costs.

COSTS

Hochschild expects to hold the line on costs in the second half after good performance in the first six months, Chief Financial Officer Ignacio Rosado told a conference call.

"I think the second half will have a similar behaviour as the first half in terms of costs," he said.

The firm said average unit costs per tonne rose 5.7 percent at its five underground mines in the first half compared with the second half of last year.

Citibank's Fitzpatrick said this worked out to a 12 percent increase on an annualised basis, which was in line with industry cost rises.

The company said it was on track to achieve its 2008 output target of 26 million silver equivalent ounces, up from 25.7 million last year.

Hochschild, which has six mines in Peru, Argentina and Mexico, aims to boost annual output to 50 million silver equivalent ounces by 2011.

The miner also announced on Thursday it was acquiring a 50 percent interest in the Liam Regional joint venture -- a 282,000 hectare land package in southern Peru -- from Newmont Mining Corp (NEM.N) for $33.3 million in cash.

"Hochschild has operated successfully in southern Peru for over 40 years and the Liam JV will further strengthen our position in this key mining district," Executive Chairman Eduardo Hochschild said.

"The acquisition supports our cluster consolidation strategy, focusing exploration efforts in areas where we already have operations." (Reporting by Eric Onstad and Mike Elliott; editing by Erica Billingham and Sue Thomas)