By Mike Elliott
LONDON, April 16 (Reuters) - Latin American silver and gold miner Hochschild Mining Plc (HOCM.L) is on track to achieve its 2008 output target after a first quarter in line with forecasts and said it was increasing its stake in a Canadian gold miner.
The the world’s fourth biggest primary silver producer reaffirmed on Wednesday that it expected largely flat output this year at around 26 million ounces of silver equivalent.
Hochschild, which aims to become the world’s biggest primary silver producer by 2011 with around 50 million ounces of output, also said it was on track to achieve that target.
The miner produced 5.8 million silver equivalent ounces in the first three months, up 12 percent from last year but down, as expected, from the previous quarter.
That included 3.6 million ounces of silver production and 35,000 ounces of gold, the company said.
“We remain positive for the fundamentals for silver and gold,” Chief Executive Miguel Aramburu told reporters on a conference call.
“In addition to macroeconomic drivers, we believe strong industrial demand for silver will continue to reflect positively on its price,” Aramburu added.
Shares in Hochschild, which have underperformed the UK miners’ index .FTASX1770 by around 14 percent in the past 12 months, were down 0.6 percent at 421 pence at 0730 GMT, valuing the company at around 1.3 billion pounds ($2.56 billion).
“Today’s production report is solid and leaves the company well placed to deliver on its production target for this year,” Cazenove analysts, who have an ‘outperform’ rating on the stock, said in a note.
“Following on from the disappointing full year 2007 production report in January, we believe it was important for Hochschild to hit the targets they have announced to the market,” they added.
Hochschild — which has six mines in Peru, Argentina and Mexico — said it had raised its stake in Canada’s Lake Shore Gold Corp LSG.TO and eventually plans to take control of the gold miner.
Hochschild had acquired a 19.99 percent stake in Lake Shore Gold in February for C$64.6 million ($63.3 million) at C$2.30 a share, and said it would increase that to 40 percent by the end of 2008.
On Wednesday, Hochschild said it had increased its stake by 15 percent to 35 percent by paying C$2.40 a share in return for reducing its standstill agreement — preventing Hochschild from gaining control — to November 2010 from February 2013.
“The current plan is to acquire control,” Aramburu told reporters. (Editing by Elizabeth Fullerton/Rory Channing)