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RBC Capital downgrades Hochschild Mining on valuation
RBC Capital Markets downgraded Hochschild Mining to 'sector perform' from 'outperform' on valuation grounds, keeping the price target at 260p.
It noted the shares have rallied 19% since 31 October versus the London gold stocks up 10%, and are now fair value on the bank's estimates, helped in part by the achievement of two key catalysts which provided rerating potential: approval from the Peruvian government to fully mine the Pablo vein at Pallacanta and debt refinancing.
"We would look to take profits and seek a more attractive entry point," it said.
RBC said that from here, the story becomes one of growing production through mainly brownfields growth driven by exploration, or potentially small scale M&A, alongside deleveraging.
"We think the Hochschild story remains compelling, with attractive exploration upside offered through current drilling programmes at Inmaculada, Pallancata and Arcata. We believe that this will offer further upside potential in the shares, which, in our view, the market will reward as drilling progresses and new resources are upgraded to reserves."
At 1100 GMT, the shares were down 1.8% to 258.20p.
It noted the shares have rallied 19% since 31 October versus the London gold stocks up 10%, and are now fair value on the bank's estimates, helped in part by the achievement of two key catalysts which provided rerating potential: approval from the Peruvian government to fully mine the Pablo vein at Pallacanta and debt refinancing.
"We would look to take profits and seek a more attractive entry point," it said.
RBC said that from here, the story becomes one of growing production through mainly brownfields growth driven by exploration, or potentially small scale M&A, alongside deleveraging.
"We think the Hochschild story remains compelling, with attractive exploration upside offered through current drilling programmes at Inmaculada, Pallancata and Arcata. We believe that this will offer further upside potential in the shares, which, in our view, the market will reward as drilling progresses and new resources are upgraded to reserves."
At 1100 GMT, the shares were down 1.8% to 258.20p.
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Hochschild Mining (HOC) share price |
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