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UPDATE 2-Miner Hochschild cuts board size, salaries in cost drive
July 17, 2013 / 6:42 AM / 4 years ago

UPDATE 2-Miner Hochschild cuts board size, salaries in cost drive

* Two directors to leave, cuts boardroom salaries

* Miner plans update on cost-cutting plans next month

* Shares gain as much as 10 pct

By Clara Ferreira-Marques and Sarah Young

LONDON, July 17 (Reuters) - Latin American miner Hochschild has reduced the size of its board and slashed directors’ salaries, in an investor-pleasing show of its commitment to cutting costs as it battles plunging gold and silver prices.

Shares in the company, which produces silver and gold from mines in Peru and Argentina, jumped as much as 10 percent in morning trade on Wednesday, topping Britain’s midcap index.

Hochschild has lost two-thirds of its market value since the beginning of the year as gold and silver prices saw their sharpest drops in a generation, and the company - like other precious metals miners - has sought to cut costs.

The group said on Wednesday that two non-executive directors out of a 10-strong board - former JP Morgan executive Fred Vinton and one-time deputy governor of the Bank of England Rupert Pennant-Rea - would be standing down at the end of the month and would not be replaced.

It said the salary of its chairman, Eduardo Hochschild, and non-executive directors would be cut by 30 percent, while Chief Executive Ignacio Bustamante would take a 10 percent cut.

Hochschild, which plans to update the market next month on its cost plans, said it had also further reduced capital expenditure and its exploration budget.

“The rhetoric was that they’ll be able to save a lot on costs and that should feed through (to profits),” Numis analyst Cailey Barker said.

At 0920 GMT, shares in Hochschild were up 6 percent and trading at 144 pence.

“We are confident that the (cost-cutting) programme will deliver material savings in the second half of 2013 and more fully in 2014,” Bustamante said in a statement.

The measures were announced alongside a dip in quarterly production, though it said output was in line with expectations and it remained on track to hit its 2013 target.

Hochschild posted output of just under 5 million silver equivalent ounces in the quarter, compared with 5.16 million ounces in the same quarter a year ago.

Shares in larger precious metals rival Fresnillo - also reviewing spending and exploration plans - also rose on Wednesday, up 2 percent, after it said it would miss its 2013 gold target but silver output was on track.

The price of gold was down 23 percent in the April-June period while silver posted an even steeper drop.

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