The Hochschild (LSE: HOC) share price has had a stunning run. The FTSE 250 stock is up 52% over the last 12 months and a staggering 523% over three years.
Given that Hochschild Mining is a Latin America-focused precious metals company specialising in silver and gold exploration, the reasons are obvious.
Gold stock on a silver streak
The gold price has skyrocketed thanks to geopolitical anxiety, central bank buying, a slightly weaker dollar and its own breakneck momentum, hitting one record high after another.
The yellow metal has itself jumped 50% in the last year and 145% over three. Silver hasn’t been left behind, up 44% in the last 12 months. Buying Hochschild has, at various points, been a better bet than buying gold itself.
Many investors, including me, will have felt they’ve missed their opportunity. But now they may have been handed a new one, as the gold and silver rally takes a breather.
After peaking at a new record high of $4,338 on 17 October, gold has retreated to around $4,026. Hochschild shares have slipped in step, falling 12% over the past week. Other miners, like FTSE 100-listed Fresnillo, have also fallen. Long-term investors are still sitting on massive paper gains, but the dip may prompt a rethink. Some may consider booking their profits, while others may spy an opportunity to grab a piece of the action at a lower price.
Mining stocks tend to magnify gold’s moves because other factors such as operational performance, costs, and output directly affect profits. Production interruptions, political risk, and currency swings all add to the potential volatility.
Today (22 October) we learned that Hochschild’s operational progress remains solid in Q3. Updating investors, the board confirmed it remains on track to meet its revised 2025 production guidance of between 291,000 and 319,000 gold equivalent ounces. It reports steady progress at its Mara Rosa gold mine in Brazil and continued strong output from its Inmaculada and San Jose operations in South America.
FTSE 250 growth opportunity
Its Mara Rosa mine in Brazil is optimising mining processes, while Inmaculada and San Jose continue their strong recent performance. Cash flow is expected to rise in Q4 as Mara Rosa ramps up.
The company ended the quarter with $92m in cash, down from $110m in June, and net debt of $246m. These reflect temporary working capital increases in Argentina, a $13m buyback of the Monte do Carmo streaming agreement from Sprott, and a $5m interim dividend. Net debt-to-EBITDA sits at a modest 0.5.
Iin contrast to gold itself, Hochschild pays income in the shape of dividends. The trailing yield is now a lowly 0.5%, that’s partly down to the roaring share price. It’s dividend history is pretty patchy too, with some major cuts in recent years.
Hochschild isn’t cheap, with a price-to-earnings ratio of 25, but that’s modest compared with Fresnillo at more than 77. I’m personally wary of Fresnillo at that dizzying price but think investors might consider buying Hothschild, particularly if they missed the initial gold rally and expect a recovery.
I won’t be jumping in. Volatility remains high, and geopolitical uncertainty could easily reverse recent gains. But if someone wants exposure to gold, Hochschild’s the first stock guide I think they should consider buying.
