Shares of Hochschild Mining (LSE:HOC,OTCQX:HCHDF) plummeted more than 20 percent on Tuesday (June 10) after the company announced a six week shutdown of the processing plant at its Mara Rosa gold mine in Brazil.
In a statement, the miner blamed the issue on a combination of “heavier-than-usual seasonal rainfall” and ongoing contractor issues that have hampered access to ore, especially higher-grade material, since early this year.
The company’s initial 2025 guidance for Mara Rosa was 94,000 to 104,000 ounces; however, only about 25,000 ounces had been produced by the end of May — a shortfall that has forced a downward revision in full-year guidance.
“This will have a corresponding impact on the operation’s costs,” Hochschild acknowledged in a market update, noting that revised production forecasts and group-wide guidance will be issued “in due course.”
The British firm’s share price plunged as much as 22 percent on Tuesday. After starting the day’s trading at 269 pence, shares registered their steepest intraday decline since November 2021, falling to 232 pence.
The operational woes come less than two weeks after the sudden resignation of Hochschild’s chief operating officer, adding to investor concerns. CEO Eduardo Landin has stepped in to assume direct oversight of operations and is leading a “comprehensive review of all mining, processing, and disposal activities” at Mara Rosa.
As part of this effort, the company said the six week suspension of the processing plant will be used to carry out general maintenance and critical mechanical filter repairs. Mining activities will continue as planned.
“The wide-ranging measures we are taking at Mara Rosa are focused on achieving a sustainable level of operational performance,” Landin said in the company’s Tuesday press release. “We remain confident in the geological potential of the asset and in Brazil’s role as a key pillar of our long-term growth strategy.”
Located in the Central Brazilian state of Goiás, Mara Rosa entered commercial production in early 2024 and was seen as a cornerstone of Hochschild’s diversification beyond its legacy Andean assets. The mine’s early performance has been closely watched as an indicator of the company’s future expansion strategy outside Peru and Argentina.
However, this year’s extreme weather has compounded earlier issues, particularly delays in mine waste removal from 2024, while complications with filtration technology have further limited throughput.
The extended wet season in Brazil, which has disrupted not only mining, but also transportation and supply chains across central states, has left several companies reeling.
Analysts have been quick to adjust their outlooks. Peel Hunt has downgraded its production forecast for Mara Rosa to 60,000 ounces of gold for the year, down from its prior estimate of 84,000 ounces.
“We hope that the end result (after shutdown) is a more flexible pit, aligned to a debottlenecked plant, allowing more stable throughput and more reliable output,” the firm said in a note to clients.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
