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Peruvian silver producer Hochschild Mining has unveiled a 44 per cent increase in profits for the first half of the year and said cost inflation at its mines had peaked.

Echoing comments made by Mexican silver miner Fresnillo this week, Miguel Aramburu, chief executive, said that cost pressure was now easing. “If the oil price doesn’t increase any more we think costs will have peaked.” He said the appreciation of the US dollar had helped keep costs down.

Although companies are benefiting from the rise in metals prices in the past few years, profits in the mining industry are being squeezed by the high cost of energy, labour, equipment and chemicals. Hochschild said on Thursday that its costs had risen 5.7 per cent in the first half.

The London-listed group mines silver and gold in Peru, Argentina and Mexico, having expanded its portfolio from three to six mines last year. While its gold production for the first half dropped 19 per cent because of declining ore grades at the Ares mine, Hochschild’s silver output was strong and rose 32 per cent. On a silver equivalent basis, the group’s precious metal production rose 7 per cent to 11.9m ounces.

Higher production and higher precious metals prices pushed up revenues to $231.8m (£124m), from $121m in the first half of 2007, while pre-tax profits rose to $69.6m, from $48.2m.

As well as expanding organically, Hochschild is looking to grow through acquisition, Mr Aramburu said.

Shares in Hochschild, which said it would pay an interim dividend of 2 cents, rose 2.65 per cent to 261½p on Thursday.

Copyright The Financial Times Limited 2017. All rights reserved.

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