Mara Rosa’s $3,551/oz AISC Shadows Hochschild’s Next Brazil Mine

Hochschild Mining’s first-half profit surge came with an uncomfortable operating warning from Brazil. Revenue rose 62% to $844.4 million and adjusted EBITDA more than doubled to $491.5 million, but the Mara Rosa mine produced just 28,158 gold-equivalent ounces at an all-in sustaining cost of $3,551 an ounce - 35% above the same period last year and well above the group average.18

That gap matters because Hochschild is preparing to make another capital-allocation decision in Brazil. The company is advancing the Monte do Carmo gold project in Tocantins toward Board approval by the end of 2026, explicitly applying lessons from Mara Rosa to engineering, filtration, infrastructure and execution planning.16

The investment case is therefore no longer simply that higher gold and silver prices are expanding margins. Hochschild has already demonstrated that price can overwhelm weak operating performance in reported earnings. The harder question is whether it can turn Mara Rosa into a dependable cash generator before committing significant capital to the next Brazilian mine.

Hochschild produced 151,830 attributable gold-equivalent ounces in the first half, down from 165,180 ounces a year earlier. Inmaculada in Peru remained the portfolio anchor with 93,686 gold-equivalent ounces, while the 51%-owned San Jose mine in Argentina produced 58,800 ounces. Mara Rosa contributed 28,158 ounces, almost unchanged from the comparable period despite a 12% increase in average gold grade to 1.06 g/t.12

The cost deterioration was sharper than the production line suggests. Mara Rosa’s unit cost increased 22% to $72.80 per tonne, cash cost rose 22% to $2,278 per gold ounce and AISC climbed from $2,626 to $3,551 per gold-equivalent ounce. Hochschild cited the legacy impact of the previous mining contractor, limited access to higher-grade mining areas, haulage constraints, filtration availability and water-management problems.14

Those are operating problems rather than geological ones. The mine’s company-reported reserve base is about 917,000 gold-equivalent ounces, with measured and indicated resources of roughly 1.09 million ounces, and the plant is designed for about 7,000 tonnes per day. Construction was completed on time and on budget and first gold was poured in February 2024, making the subsequent performance shortfall particularly important for judging execution quality.4

Management says the turnaround is improving. Q2 gold-equivalent output increased to 14,614 ounces from 13,545 ounces in Q1 as plant stability improved. A new mining contractor is mobilising, waste movement is being accelerated to improve access to higher-grade ore, haul distances are being reduced and a tailings thickener entered commissioning late in the half to improve water management and filtration stability.23

Even with that progress, the second half carries a heavy burden. Mara Rosa produced only 28,158 ounces in H1 against unchanged full-year guidance of 67,000 to 80,000 ounces. Reaching the bottom of the range requires about 38,800 ounces in H2, roughly 38% more than first-half production. Reaching the top requires more than 51,800 ounces, an 84% increase.1

Hochschild has accordingly raised group cost guidance. Full-year attributable AISC is now expected at $2,380-$2,500 per gold-equivalent ounce, compared with the previous $2,157-$2,320 range. Mara Rosa itself is guided to $2,750-$2,900 an ounce for the year. Higher metal prices are also lifting royalties, worker profit-sharing and export-linked charges, while stronger local currencies and Argentine inflation add pressure.12

The irony is that those same metal prices are funding the repair. Net cash generated from operations increased to $310.1 million from $153.8 million, and the group moved from $23 million of net debt at the end of 2025 to about $51 million of net cash at June 30. That balance-sheet improvement gives Hochschild room to fix Mara Rosa without compromising its near-term growth pipeline.12

It also raises the hurdle for Monte do Carmo. Hochschild acquired that project from Cerrado Gold in 2024 for a total acquisition cost of about $60 million. The project has around 1.01 million ounces of measured and indicated resources, an installation licence, substantial infrastructure access and a feasibility-stage development plan. Engineering work has included evaluating a 100% carbon-in-leach configuration, SAG milling, potential plant expansion and a revised filtration system - areas where experience from Mara Rosa is directly relevant.6

Hochschild spent about $8.4 million on Monte do Carmo property, plant and development additions in the first half and capitalised about $4.8 million of borrowing costs linked mainly to the project. The Board decision has now shifted from the previously indicated mid-2026 timetable to the end of the year, giving management additional time to incorporate operating lessons from Mara Rosa.16

The company’s core Peru operation provides a useful contrast. Inmaculada has been operating since 2015, produced 210,000 gold-equivalent ounces in 2025 and still carries 581,000 ounces of proved and probable reserves plus a larger resource base. Hochschild says it has discovered an additional 3.4 million gold-equivalent ounces there since operations began, demonstrating the kind of reserve replacement and operational longevity that the newer Brazilian portfolio has yet to prove.5

Investors have rewarded the earnings surge. Hochschild shares jumped after the interim results as strong precious-metal prices drove revenue and EBITDA sharply higher, while analysts highlighted the potential value of the company’s growth pipeline. But the same external reporting also points to the central contradiction: group margins are expanding while operating costs remain elevated, especially at Mara Rosa.8

The next catalyst is operational rather than macroeconomic. Hochschild needs to show that H2 mine sequencing, contractor performance, tailings-thickener commissioning and access to higher-grade ore can pull Mara Rosa toward its 67,000-80,000 ounce annual target and below the $2,900 per ounce upper end of revised full-year AISC guidance. At the same time, investors will get a clearer view of Monte do Carmo economics and the Board’s construction decision by year-end.

If Mara Rosa stabilises, the first-half cash windfall gives Hochschild a credible route to fund another Brazilian growth project from a much stronger balance sheet. If it does not, Monte do Carmo stops looking like straightforward portfolio expansion and starts looking like a test of whether management is repeating an execution problem before the first one is fully solved.