Hochschild Mining plc (HOC.L): BCG Matrix [Dec-2025 Updated]

Hochschild's portfolio balances cash-generating Peruvian assets-Inmaculada, silver production and tight southern infrastructure that fund expansion-with high-upside Stars in Brazil and Peru (Mara Rosa, Royropata and brownfield discoveries) that justify heavy capex, while sizeable Question Marks (Volcan, Monte do Carmo, Snip) demand capital, permits or partners to prove their value and Dogs (San Jose, Pallancata and non-core parcels) sap resources; understanding this mix explains why management is recycling cash from mature mines into selected growth projects and divestments, and why the next 18-36 months of permitting, ramp improvements and drilling will decide whether Hochschild scales or retrenches-read on to see which bets matter most.

Hochschild Mining plc (HOC.L) - BCG Matrix Analysis: Stars

Stars

Mara Rosa drives Brazilian gold expansion

The Mara Rosa project in Brazil is positioned as a Star asset within Hochschild's portfolio due to high growth potential despite a revised 2025 production guidance of 35,000-45,000 gold ounces. Initial ramp-up shortfalls resulted in a circa 50% reduction from original targets, but operational optimizations-particularly tailings filter process improvements-have stabilized throughput and metallurgical recoveries. Management has invested over $200 million of capital expenditure to secure first-mover advantages, with a long-term production target of 100,000 ounces per year by 2026-2027. Group-level All-In Sustaining Cost (AISC) guidance as of late 2025 sits in the range of $1,980-$2,080 per gold equivalent ounce, while Mara Rosa's unit costs are expected to decline as scale and recovery improvements are realized.

• 2025 revised production guidance: 35,000-45,000 oz Au
• Capital invested to date: > $200 million
• Target medium-term production: 100,000 oz Au/year
• Group AISC (late 2025): $1,980-$2,080/oz Au Eq
• Key operational improvement: tailings filter optimization (stabilized processing)

Royropata project secures future Peruvian growth

Royropata, adjacent to the historical Pallancata operations, classifies as a Star given its estimated annual production potential of ~100,000 gold equivalent ounces and exceptionally high grades (approx. 7.0 g/t AuEq). The project is advanced-exploration/early-development stage with permitting as the critical path; targeted first production is late 2027-early 2028. Project-level economics indicate a projected internal rate of return (IRR) in the 45%-55% range based on an initial capital requirement of ~$65 million. Management targets a project AISC near $1,100/oz, substantially below current group AISC, which would materially improve portfolio margin and cash generation upon commissioning.

• Estimated annual production potential: ~100,000 oz AuEq
• Grade estimate: ~7.0 g/t AuEq
• Initial capex estimate: ~$65 million
• Projected IRR: 45%-55%
• Target project AISC: ~$1,100/oz
• Target start of production: late 2027-early 2028 (subject to permitting)

Brownfield exploration delivers high resource replacement

Hochschild's brownfield exploration program is a Star-supporting growth engine, with a dedicated 2025 budget of ~ $40 million focused on high-return drilling across existing Peruvian assets. At Inmaculada, >10,000 metres of 2025 drilling targeted high-grade veins in the Eduardo and San Jose belts, contributing to a reported ~15% increase in measured and indicated (M&I) resources across the core Peruvian portfolio in the calendar year. By leveraging existing processing plants, access and permitting corridors, these discoveries offer rapid conversion to production at lower incremental capital intensity versus greenfield development-thereby helping sustain market share in South America's competitive precious metals sector.

• 2025 brownfield exploration budget: ~ $40 million
• Drilling at Inmaculada (2025): >10,000 m
• M&I resource growth (core Peru, 2025): +15%
• Value driver: rapid resource-to-production pathway via existing infrastructure

Hochschild Mining plc (HOC.L) - BCG Matrix Analysis: Cash Cows

The Cash Cows of Hochschild's portfolio deliver stable, high-margin cash flows that fund growth and deleveraging. Key contributors include the Inmaculada gold asset, the primary silver production segment across Peru and Argentina, and the integrated Peruvian processing and logistics infrastructure that lowers unit costs across satellite deposits.

The Inmaculada mine in southern Peru is the single largest cash generator in the group. It accounts for approximately 65% of the company's total gold equivalent production and is forecast to produce between 199,000 and 209,000 gold equivalent ounces for full-year 2025. At current spot prices this asset is delivering an estimated EBITDA margin in excess of 35%, generating substantial free cash flow. Sustaining capital expenditure for Inmaculada is managed at around $45 million annually to preserve its high-grade reserve base. A recently granted 20-year environmental permit extension secures long-term operational visibility and underpins capital allocation confidence for portfolio reinvestment.

Hochschild's silver production segment remains a mature, high-margin cash cow. 2025 attributable silver equivalent output is approximately 10 million ounces. The segment leverages established mine footprints in Peru and Argentina to capture a notable share of the regional silver market. Operating margins for silver operations have remained robust around 30%, attributed to optimized processing and elevated industrial and investment demand. Net cash generation from silver operations is being applied to reduce the company's reported net debt position of approximately $203 million while supporting steady operating liquidity.

The Peruvian operational infrastructure (centralized processing plants, logistics corridors and high-utilization facilities) is a structural cash cow that reduces unit costs across multiple deposits. Centralized facilities such as the Selene processing plant are operating at utilization rates above 85% during 2025, allowing the company to process lower-grade ores profitably. Minimal expansion capital is required for the existing footprint; maintenance capital for Peruvian infrastructure in 2025 is kept below $15 million, preserving free cash flow for dividends and Brazilian expansion projects.

Key characteristics that define Hochschild's Cash Cows:

• High concentration of production (Inmaculada ~65% of gold equivalent output)
• High-margin assets (EBITDA margin >35% at Inmaculada; ~30% at primary silver operations)
• Predictable sustaining capex (Inmaculada ~$45M; Peru infrastructure <$15M)
• Strong operational utilization (central plants >85%)
• Clear cash allocation: debt reduction (net debt ~$203M), dividends, and selective growth funding

Hochschild Mining plc (HOC.L) - BCG Matrix Analysis: Question Marks

Dogs (Question Marks): assets with high market growth potential but low current market share, requiring substantial investment decisions. The following discussion covers Volcan, Monte do Carmo and Snip as Question Marks within Hochschild's portfolio, outlining projected production, capital requirements, ownership and key development risks and catalysts.

The Volcan project (Chile) has been restructured into a new entity ahead of a planned listing on the TSX Venture Exchange in late 2025. An updated August 2025 Preliminary Economic Assessment (PEA) models a 14-year mine life with average annual production of 332,000 ounces of gold, a post-tax Net Present Value (NPV, 5% discount) of $1.51 billion, and an internal rate of return (IRR) of 29% assuming a $2,400/oz gold price. Estimated initial capital expenditure (capex) to reach production is approximately $900 million. Hochschild will retain an 87% ownership stake in the spun entity, Tiernan Gold, preserving majority exposure to Chilean upside while reducing direct corporate execution risk.

Volcan: strategic considerations and financial profile.

• Economic metrics: PEA (Aug 2025) projecting 332,000 oz/year, NPV US$1.51bn, IRR 29% at US$2,400/oz.
• Capital intensity: ~US$900m initial capex to reach production; funding strategy may include equity from TSXV listing, partner funding, or project-level debt.
• Ownership and exposure: Hochschild retains 87% of Tiernan Gold, maintaining majority exposure while enabling external investor participation through the TSXV vehicle.
• Key risks: capex execution risk, commodity price sensitivity, permitting and social licence, timeline to first production.

Monte do Carmo: feasibility-stage dynamics and de-risking program.

• Acquisition: purchased late 2024 for US$60m; measured & indicated resource of 1.01 million oz.
• Projected output and cost: feasibility-stage projected 95,000 oz/year, initial capex ~US$262m.
• 2025 work program: US$19m allocated to de-risk studies focused on Serra Alta deposit installation licences and economic confirmation.
• Transition pathway: success in permitting and feasibility could move asset from Question Mark to Star; failure or prolonged delays could render it a cash-consuming Dog.

Snip: Canadian high-grade exploration asset and strategic optionality.

• Resource and grade: indicated resource ~600,000 oz at >10 g/t Au (very high grade).
• 2025 allocation: US$15m for exploration and environmental baseline studies to assess restart feasibility and permitting pathways in British Columbia.
• Strategic choices: advance independently (full project risk & reward) or pursue joint venture to share capex, permitting risk and expedite development.
• Considerations: high jurisdictional quality and grade improve upside, but low current contribution to production means it remains a Question Mark until feasibility and permitting outcomes are clear.

Cross-project investment and decision metrics to consider.

• Capital prioritisation: aggregate near-term project spend in 2025 across these Question Marks exceeds US$34m (US$19m + US$15m; listing and Tiernan-related capex not included).
• Value triggers: milestones that could reclassify assets include TSXV listing completion (Volcan/Tiernan), feasibility and licensing approvals (Monte do Carmo), and successful restart feasibility/permits or JV agreement (Snip).
• Downside exposure: continued delays or negative feasibility outcomes would convert these Question Marks into low-performing Dogs absorbing cash with limited near-term return.

Hochschild Mining plc (HOC.L) - BCG Matrix Analysis: Dogs

Dogs

The San Jose mine (Argentina) operates as a mature, low-growth asset in Hochschild's portfolio. Hochschild holds a 51% ownership stake. In Q3 2025 San Jose contributed approximately 2.6 million silver equivalent ounces to group production, but All‑In Sustaining Costs (AISC) remain among the highest in the group. Argentina's economic volatility has historically compressed operating margins at San Jose to approximately 10% or less. Remaining mine life is estimated at fewer than four years and capital allocation is restricted to brownfield drilling for reserve replacement rather than expansion, limiting any meaningful increase in market share or growth potential.

The Pallancata legacy site has transitioned to care and maintenance after permitted reserves were depleted. The site retains significant infrastructure but generates zero revenue while incurring ongoing environmental and security costs. Hochschild has suspended active mining at the original Pallancata to prioritise resources on the Royropata discovery; until Royropata permits are secured, Pallancata remains a non‑productive cost center.

• Estimated holding costs for Pallancata legacy site: ~$5 million per year.
• Revenue contribution from Pallancata original site: $0 while under care & maintenance.
• Capital expenditures at Pallancata: suspended for production; limited to care & maintenance and compliance.

Non‑core asset divestments have been used to streamline the portfolio and reduce drag from low‑share, stagnant projects. Projects such as Arcata and Azuca have been largely written down and contribute no production or significant resource growth to the company's near‑term strategy. Divestments executed in 2025 aimed to lower administrative overhead and environmental liability, removing loss‑making Dogs from the balance sheet and reallocating managerial focus and capital to higher‑growth Tier 1 prospects.

• Year of divestment actions: 2025 (targeted non‑core disposals).
• Primary strategic objective: improve portfolio quality and growth rate by removing low‑share, low‑growth assets.
• Expected short‑term benefit: reduced holding costs and liabilities; improved operating ratios at group level.