Silver miner Hochschild Mining Plc said it would cut production and spending at two mines in southern Peru in 2015 as a way to stay profitable at a time of weak metal prices.
The sharp drop in bullion prices last year hit miners hard, putting stress on balance sheets and forcing many to cut costs.
Hochschild responded by halting dividend payments, slashing directors’ salaries and cutting costs at its mines – measures that have helped it save more than $270 million this year.
Silver, which fell 36 percent in 2013, has lost another 16.5 percent since the start of the year, while gold has fallen a further 1.1 percent after tumbling 28 percent last year.
Hochschild said on Friday it now expected to produce a total of 24 million silver equivalent ounces next year after reducing plant throughput at its Arcata and Pallancata underground mines to 1,500 tonnes and 1,800 tonnes per day respectively.
Arcata currently handles 1,750 tonnes per day and Pallancata 3,000 tonnes. Throughput at the San Jose mine in Argentina will continue at its current level, Hochschild said.
The new production target is still above the 21 million silver equivalent ounces that the company plans to produce this year. Output in 2015 will be boosted by the 6-7 million ounces that the new Inmaculada mine in Peru is expected to contribute.
Inmaculada is due to start production at the end of this year.
Hochschild’s shares were down 2.8 percent at 95 pence at 1047 GMT on Friday. Up to Thursday, the shares had lost 31 percent since the start of the year.
The company said it would focus on mining in more accessible areas at Arcata and Pallancata, which would require less capital expenditure.
Hochschild has already been affected by lower ore grades at Pallancata and a two-week strike at Arcata in the third quarter ended Sept. 30.
The company did not provide a target for cost savings in 2015 but said it expected all-in sustaining costs of $15-$16 per ounce in 2015, compared with the 2014 target of $18.30. (Reporting by Roshni Menon in Bangalore; Editing by Ted Kerr)