Golden run ends for FTSE 250 high-flyer

Gold’s record price failed to mean the return of dividends for Hochschild Mining (LSE:HOC) shareholders today as the top-performing FTSE 250 stock suffered a big results-day reverse.

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The other mid-cap company with figures out today, the biotherapeutics firm PureTech Health (LSE:PRTC), hit the top of the risers board after reporting a healthy cash balance of $500 million.

The overall performance of the FTSE 250 reflected the lacklustre nature of the wider London market. Fallers included Harbour Energy (LSE:HBR), which gave back some of the 8% advance seen yesterday after bringing forward the timeline for the completion of a major acquisition.

The $11.2 billion deal to buy the upstream assets of Wintershall Dea in Norway and Argentina is now set to be sealed next month rather than the fourth quarter. This is Harbour’s fourth major acquisition, having bought a package of UK North Sea assets from Shell for $3 billion in 2017 and ConocoPhillips UK North Sea for $2.7 billion two years later.

Prior to today’s results, Hochschild shares were up 85% this year after benefiting from the surge in gold price and May’s start of commercial production at its Mara Rosa mine in Brazil.

The support of these two factors led to a 25% rise in half-year revenues to $391.7 million (£296.5 million) and 78% increase in adjusted earnings to $177.1 million (£134 million).

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Hochschild also reiterated full-year guidance, driven by strong output at its Inmaculada mine in southern Peru as third-quarter production at Mara Rosa is currently behind schedule due to recent mechanical availability issues.

The company remains confident it will generate substantial cash flow in the second half as it looks to finance further expenditure on its brownfield exploration programme, potentially repay some of its debt and advance growth projects in Brazil and Peru.

However, it dashed any hopes that dividend payments might resume after an absence of two years. The company last paid 1.675p a share in September 2022 before putting dividends on hold due to political, social and regulatory challenges as well as the impact of Mara Rosa.

Hochschild told shareholders today that it expects to reevaluate the scope for capital returns at the full year results in early 2025.

Chief executive Eduardo Landin, who joined Hochschild in 2008 and became chief executive last summer, said: “While we are still in the early days of executing our strategic plan, we are pleased with the progress achieved to date.”

Broker Peel Hunt expects the current gold price to accelerate a further reduction in net debt, which stood at $271.2 million (£205.3 million) at the half-year stage. The City firm, which has a price target of 210p, added: “As Mara Rosa beds in and net debt reduces further, distributions should return.”

In contrast to Hochschild, the FTSE 250-listed shares of PureTech were down 13% on the eve of its interim results. That’s despite realising a further $293 million (£221.8 million) from its remaining stake in Karuna, the schizophrenia treatment business it founded and which Bristol Myers Squibb bought for $14 billion (£11 billion) in March.

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PureTech stands to receive up to $400 million (£303 million) in future milestone payments as well as royalties based on regulatory and commercial successes, the first of which could be announced by the US Food and Drug Administration in September.

The company recently returned $150 million to shareholders via a tender offer and buyback, while other highlights in the half year have included the spin out of Seaport Therapeutics.

Chief executive Bharatt Chowrira said: “PureTech made significant progress in the first half of 2024, advancing our mission to develop innovative therapies for the patients most in need. 

“We have also implemented strategies to drive efficient operations and capital allocation.”

Shares rose 3.2p to 168.2p but Peel Hunt has a price target of 624p. It noted a cash position significantly ahead of previous expectations and said a current market valuation of £400 million meant little is discounted for any of PureTech’s assets or royalty streams.