Hochschild Mining Reports 151,830 Gold Equivalent Ounces in H1 2026 Amid Operational Turnaround and Cost Challenges

Inmaculada Mine Meets Production Targets Amid Safety Incident

Hochschild's Inmaculada mine in southern Peru, one of its two main underground epithermal vein operations, produced 93,686 gold equivalent ounces in H1 2026, including 63,677 ounces of gold and 2.3 million ounces of silver. In Q2 2026, the mine processed 358,667 tonnes of ore at average grades of 2.89 grams per tonne gold and 108 grams per tonne silver, generating 45,404 gold equivalent ounces. Production was in line with expectations, with slightly higher tonnage offset by marginally lower grades, keeping the mine on track to meet full-year targets.

However, a fatal accident involving a contractor shift supervisor occurred at Inmaculada in June. Operations in the affected development area were suspended pending a thorough investigation. Lessons learned have been disseminated across all Hochschild sites. This incident highlights the inherent risks of underground mining, especially at Inmaculada’s high-altitude location of approximately 4,200 metres.

San Jose Joint Venture Sees Production Growth

The San Jose underground epithermal vein mine in southern Argentina produced 58,801 gold equivalent ounces in H1 2026, up from 54,318 ounces in the same period of 2025. Hochschild holds a 51% stake, with McEwen Mining Inc. owning the remainder. In Q2 2026, San Jose produced 20,647 ounces of gold and 859,000 ounces of silver, equivalent to 31,814 gold equivalent ounces. Tonnage slightly exceeded forecasts while grades were marginally below expectations. The mine remains on course to meet annual production guidance.

During H1 2026, Hochschild distributed $58 million in dividends to McEwen Mining Inc., reflecting San Jose’s strong cash flow contribution and its strategic importance to Hochschild’s financial flexibility and shareholder return policy.

Mara Rosa Mine Shows Operational Improvement Following Contractor Change

Mara Rosa, the company’s open-pit gold mine in Goiás, Brazil, produced 28,158 gold equivalent ounces in H1 2026, compared to 28,494 ounces in H1 2025. Production increased sequentially from 13,551 ounces in Q1 to 14,610 ounces in Q2 2026, driven by improved plant stability and progress in the operational turnaround after the new mining contractor’s mobilisation.

Performance remains affected by legacy issues from the previous contractor and transition challenges, including limited access to higher-grade ore, haulage constraints, filtration limitations, and water management difficulties. Management is focused on better mine sequencing, accelerating waste movement, expanding access to higher-grade ore, reducing haulage distances, and enhancing ore control. Plant reliability improved and commissioning of a tailings thickener began late in Q2, expected to enhance water management and processing stability. The new contractor’s mobilisation is strengthening site leadership and operational routines, with further improvements anticipated in H2 2026. Mara Rosa remains on track to meet its annual guidance of 67,000 to 80,000 gold equivalent ounces.

All-in Sustaining Costs Elevated by Commodity Prices and Currency Strength

Hochschild’s attributable all-in sustaining costs are currently 5–10% above the guided range of $2,157 to $2,320 per gold equivalent ounce. Key cost drivers include increased royalties, workers’ profit sharing, and selling expenses linked to higher precious metal prices. Additionally, stronger local currencies in Peru, Argentina, and Brazil inflated local currency-denominated costs when converted to US dollars. Argentina’s macroeconomic environment also contributed to elevated net cost inflation.

The company plans to update annual cost guidance at its H1 2026 results announcement in August. Investors should note that while royalties scale with commodity prices—providing a partial hedge—local currency exposure remains a significant operational risk in emerging markets.

Royropata Environmental Impact Assessment Submission Imminent

Hochschild is advancing its growth pipeline with the Royropata project in Peru. The company expects to submit a revised Environmental Impact Assessment (EIA) to the new Peruvian government shortly. This submission aligns with engagement efforts to meet updated regulatory requirements. Royropata represents a significant growth opportunity within Hochschild’s core Peruvian operations.

Environmental permitting is typically the longest phase in South American precious metals projects. The imminent EIA submission signals anticipated regulatory progress in H2 2026. Investors should monitor government responses and any conditions attached to environmental approvals.

Monte Do Carmo Project Progresses Toward Investment Decision

The Monte Do Carmo advanced project in Brazil continues moving toward an expected investment decision in H2 2026. In Q2, Hochschild completed key workstreams including value engineering validation, benchmarking against Mara Rosa, integrated basic engineering, risk assessments, and execution readiness reviews with updated capital phasing. These milestones advance the project toward capital commitment.

Critical activities during Q2 included tailings storage facility land easement negotiations, waste rock facility peer reviews, infrastructure design, permitting progress, and early engineering for equipment procurement. An investment decision would precede detailed engineering, procurement, and construction phases, with timelines and capital requirements disclosed thereafter. Monte Do Carmo is Hochschild’s most advanced greenfield development and could significantly increase production capacity.

Brownfield Exploration Campaign Yields Promising Results

Hochschild’s 2026 brownfield exploration across its mines delivered encouraging results. At Inmaculada, 3,708 metres of drilling targeted multiple veins including Melisa, Lili, Melisa Techo, Melisa NE, and Lady Sur. Highlights included 4.1 metres grading 3.2 g/t gold and 69 g/t silver in Melisa Techo, and 1.6 metres grading 4.3 g/t gold and 12 g/t silver in Lili. An additional 3,500 metres of resource drilling is planned in Q3 2026.

At San Jose, 10,935 metres of drilling covered 15 vein targets in the Saavedra area. Notable intersections included 1.4 metres grading 36.9 g/t gold and 5,782 g/t silver in the HVC vein, and multiple intervals grading 7.1 to 9.9 g/t gold in the Mari vein. At Mara Rosa, 6,375 metres of drilling across six targets yielded resource-style results such as an 18.7-metre intersection grading 0.7 g/t gold with an internal 1.0-metre section grading 9.9 g/t gold in the Posse/Passo area. These findings indicate continuity and extension potential within existing concessions.

Net Cash Position Strengthens to $51 Million Despite Dividends

Hochschild’s financial position improved significantly in H1 2026 despite substantial dividend payments. Cash, cash equivalents, and short-term investments totaled approximately $309 million as of 30 June 2026, slightly down from $317 million at 31 December 2025. More importantly, the company shifted from a net debt position of $22.7 million at end-2025 to a net cash position of about $51 million at end-H1 2026, a $73.7 million improvement driven by strong operational cash flow.

During H1 2026, Hochschild paid a $26 million final dividend for 2025 to shareholders and $58 million in dividends to McEwen Mining Inc. related to San Jose’s cash generation. Temporary working capital movements of approximately $96 million mainly reflected 2025 tax payments and workers’ profit sharing and bonuses. The cash balance includes $142 million held in Argentina, with $20 million invested in financial instruments to mitigate inflation and devaluation risks, plus $36 million held in Tiernan Gold to support the Volcan project. The net cash to last-twelve-months EBITDA ratio stands at approximately 0.06x, indicating strong capacity for growth investments or shareholder returns.

Environmental and Safety Metrics Show Mixed Results

Hochschild reported several ESG metrics for H1 2026. The lost time injury frequency rate improved to 0.85 per million labor hours from 0.97 in FY 2025, indicating better safety performance. Freshwater usage per tonne of ore processed improved to 0.21 cubic metres from 0.27 cubic metres in FY 2025, reflecting operational efficiencies. Recycled waste increased to 82.4% from 81.6%, demonstrating progress toward circular economy goals.

The local workforce proportion rose to 67.1% from 65.9%, and women’s representation increased to 11.0% from 10.6%, showing gradual improvements in community engagement and diversity. However, the fatal accident at Inmaculada remains a significant safety concern. Hochschild’s investigation and sharing of lessons learned across operations reflect appropriate incident management, underscoring the risks of underground mining in remote, high-altitude locations.

Precious Metals Prices Boost Revenue Amid Cost Pressures

Average realizable prices in Q2 2026 (before commercial discounts) were $3,861 per ounce for gold and $65.8 per ounce for silver, versus $2,940 and $34.4 respectively in Q2 2025. For H1 2026, average prices were $4,167 for gold and $77.8 for silver, compared to $2,832 and $33.8 in H1 2025. This substantial price appreciation supports higher revenues despite stable or lower production volumes.

However, higher precious metal prices also increase costs through royalties, profit sharing, and selling expenses, creating a paradox where unit costs rise alongside revenues. This dynamic has contributed materially to all-in sustaining costs exceeding guidance by 5–10%. Investors should closely monitor precious metals prices as they significantly influence both revenue and cost outcomes for the remainder of 2026.