TORONTO (miningweekly.com) – London-listed, Latin America-focused Hochschild Mining remains on track to produce its targeted 28-million silver-equivalent ounces this year, an increase of 7% compared with 2008, chairperson Eduardo Hochschild said on Wednesday.

The figure breaks down to 19,1-million ounces of silver and 148 200 oz of gold.

However, on top of that, the firm expects another 720 000 attributable oz from Lake Shore Gold, in which Hochschild owns 40%.

The company, which operates five mines in Peru, Argentina and Mexico, reported a first half profit of $24,7-million, a decline of 24% compared with last year, but still at the upper end of analyst estimates.

Production in the six months increased by 17%, to 13,9-million attributable silver-equivalent ounces, costs per ton were down 10% and Hochschild was able to cut administrative expenses by 34%.

The company has “aggressively” focused on cutting costs and improving profitable ounces, Hochschild.

However, these gains were offset by an average 22% fall in silver prices year on year.

Still, “despite current market volatility, we continue to believe in the fundamentals for precious metals,” he said.

The company had a cash balance of $58,9-million, which Hochschild indicated could be used for “carefully selected” merger and acquisition activity, as well as for exploring and developing the firm's current assets.

During the first six months of the year, Hochschild already spent $56,7-million on corporate activity, including $18-million to increase its holding in Lake Shore, $33-million for a bigger stake in Gold Resource Corporation, the acquisition of Southwestern Resources and the purchase of the 30% in its Moris mine that it didn't already own, for $1,5-million.

Lake Shore Gold's main assets are the Timmins mine, in Ontario, Canada, and the nearby Bell Creek mill.

Hochschild now owns 24,1% of GRC, which has projects in southern Mexico, while Southwestern Resources was acquired for its land package in southern Peru.

Shares in Hochschild Mining rose 3,9% on Wednesday, to 276,2p, by the close of trade in London.

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