UPDATE 2-Hochschild's 2012 production ahead of target

Wed Jan 23, 2013 10:06am GMT

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LONDON Jan 23 (Reuters) - Latin American precious metals firm Hochschild Mining posted 2012 production slightly ahead of its forecast and guided that it was maintaining the same target for the coming year.

The Lima-based company said on Wednesday that it produced 20.3 million silver equivalent ounces last year, beating guidance of 20 million silver equivalent ounces.

Production of 20 million silver equivalent ounces would also be targeted for 2013, the company said.

Hochschild, which has projects in Argentina and Chile but whose south Peruvian mines provide the bulk of its production, said that it expected the cost of extracting each tonne to rise by 15 percent in 2012, in line with its forecast.

The unit cost per tonne in Peru will rise 15-20 percent this year, it said, excluding royalties and a higher refining cost at one of its mines.

The company said in November that output from two new projects, Inmaculada and Crespo, which are seen as key because they are expected to deliver a 50 percent increase in its production, would be delayed until 2014 due to changes to the permitting process.

Shares in the FTSE 250 company, which have fallen 9 percent in the past month, traded down 0.1 percent to 438.1 pence.

Canaccord analyst Dmitry Kalachev, who has a "buy" rating on the stock, said the 2013 production target was conservative.

"The main factor, which holds back the stock price is the final mill construction permits for Inmaculada and Crespo that were previously delayed and are expected to be received in the second half of 2013," he said.

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