3rd Quarter Production Results
October 22 2008 - 2:00AM
UK Regulatory
RNS Number : 4016G
Hochschild Mining PLC
22 October 2008
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Hochschild Mining
Production Report and Interim Management Statement
for the three months to 30 September 2008 ("Q308")
Highlights:
* On track to achieve target production of 26 million attributable silver equivalent ounces in 2008 (16.9 moz Ag and 153 koz Au)
* Year to date production in line with expectations at 18.1 million attributable silver equivalent ounces, up 4.0% on the first nine
months of 2007
* Continued focus on effective cost controls
* All three mine expansions completed on time; increase in plant capacity of 29% year on year
* Further development of cluster consolidation strategy with the acquisition of 50% of Liam Regional Joint Venture
Eduardo Hochschild, Executive Chairman, commented;
"We remain on track to achieve our full year production target of 26 million attributable silver equivalent ounces in 2008. Our mine
expansions are now completed and we will have the full benefit of a 29% increase in plant capacity in 2009. We continue to take a rigorous
approach to cost control and despite difficult market conditions, we are on a firm footing to face the challenges ahead and to maintain
profitable growth".
Overview:
Total attributable silver equivalent production increased 2% quarter-on-quarter to 6.2 million ounces, comprised of 4.0 million ounces
of silver and 36.7 thousand ounces of gold. This was primarily driven by strong performance at Arcata, where silver and gold production are
up 25% and 43% respectively, and at Pallancata, where production of silver and gold have increased 8% and 4% respectively. As previously
disclosed, attributable gold production decreased in the third quarter due to lower grades at Ares and Selene but this has been offset by
the increase in production at our other operations.
With production of 18.1 million attributable silver equivalent ounces in the first nine months of the year up 4.0% on the equivalent
period in 2007, we remain firmly on track to meet our full year attributable production target of 26 million silver equivalent ounces.
Realisable precious metals prices for the first nine months of the year were $884/oz for gold and $14.9/oz for silver. However, the
precious metals market has been extremely volatile and silver prices have experienced a material decrease over the last few weeks.
Capacity expansions:
This year we completed expansions at Arcata, San Josand Selene which will materially increase the Group's plant capacity by 29%, with
full benefits accruing in 2009. All expansions have been completed on time with Arcata and Selene currently awaiting final permits which we
expect to secure by the end of the year. This year's expansions demonstrate once again our ability to deliver projects on schedule as they
follow successful plant expansions in 2007.
Cost update:
Despite the challenging conditions facing the mining industry as a whole during the first half of 2008, we remain confident that we will
control costs by continuing to execute Group-wide containment and reduction measures, ensuring that the business operates at optimum
efficiency.
As previously announced, we are in the process of converting concentrate to dor at San Jos which will reduce working capital
requirements and selling discounts. We expect this project to be completed in 2009. Market conditions for silver concentrate at Arcata have
improved and we are now expecting lower commercial discounts on concentrate in the near term. As a result, we are reviewing the feasibility
of converting production at Arcata from concentrate into dor.
Exploration:
Over the period we have encountered very positive exploration results at the following properties:
Azuca
We have had outstanding results in our second phase of drilling in the first two holes with a 2.40 metre drill intercept at 1.0 g/t Au &
1,313 g/t Ag and a 0.95 metre drill intercept at 1.4 g/t Au & 556 g/t Ag.
Arcata
A new vein, Luz, was discovered while advancing the Mariana northeast ramp. We have encountered a 0.95 metre intercept at 3.0 g/t Au and 712
g/t Ag. The structure has been recognised at surface for two kilometres along strike.
San Jose
Three new splits of the Frea vein have been identified. The best result was a 0.85 metre drill intercept at 16.2 g/t Au & 2,188 g/t Ag.
These new discoveries are in addition to the previously announced Odin and Ayelen veins that have been identified within 200 metres of the
Frea vein.
Moris
The Nopalera structure was defined after follow up work drill results by previous operators. Drilling has been completed and we are waiting
for assay results.
Acquisitions:
Current market conditions are creating some new and interesting opportunities in the sector. We will maintain our disciplined approach
to acquisitions, focusing on mid-sized, underground precious metals projects in the Americas, particularly in our existing clusters, which
we believe will create long term shareholder value.
On 20 August 2008, we further consolidated our position in southern Peru through the acquisition of 50% of the Liam Regional Joint
Venture ("Liam JV") for a total cash consideration of $33.3 million funded entirely from existing cash. The Liam JV consists of over 282,000
hectares in the Tertiary Volcanic Belt of southern Peru, a region with significant mineral potential located approximately 170 kilometres
northwest of Arequipa, and one of the largest single claim blocks in Peru. The acquisition has significant strategic importance for us as it
is in close proximity to five of our existing properties; Arcata, Ares, Selene, Pallancata and Azuca, enabling us to leverage our existing
infrastructure and knowledge of the regional geology.
------------------------------------------------------------------------- -------------------------------------------------
Other than as described in this announcement, there have been no material events or transactions in the period from 1 July 2008 to 21
October 2008 which have affected Hochschild's financial position.
------------------------------------------------------------------------- ------------------------------------------------
A conference call will be held at 2:30pm (London time) on Wednesday 22 October for analysts and investors.
Dial in details as follows:
UK +44 (0)20 7162 0077
A recording of the conference call will be available for one week following its conclusion, accessible from the following telephone
numbers:
UK +44 (0)20 7031 4064
Access code 814229�
_____________________________________________________________________
Enquiries:
Hochschild Mining plc
Isabel Lndorf 44 (0)20 7907 2934
Head of Investor Relations
Ignacio Rosado +511 437 6007
Chief Financial Officer
Finsbury
Robin Walker +44 (0)20 7251 3801
Public Relations
__________________________________________________________________
About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L for Reuters / HOC LN for
Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild currently operates five
underground epithermal vein mines, four located in southern Peru and one in southern Argentina and one open pit mine in northern Mexico.
Hochschild also has one early development project in Mexico and over sixteen long-term prospects throughout the Americas. Hochschild has
over forty years experience in the mining of precious metal epithermal vein deposits. For further information please visit
www.hochschildmining.com
TOTAL GROUP PRODUCTION1
Q3 Q2 Q3 9 mths 2008 9 mths
2008 2008 2007 2007
Silver production (koz) 4,890 4,684 3,555 13,885 9,188
Gold production (koz) 45.98 47.96 50.59 138 141
Total silver equivalent (koz) 7,649 7,562 6,591 22,165 17,666
Total gold equivalent (koz) 127.48 126.03 109.85 369 294
Silver sold (koz) 4,661 6,438 2,544 13,504 8,245
Gold sold (koz) 47.36 62.61 46.87 140 142
1 Total production includes 100% of all production, including production attributable to joint venture partners at Moris, San Josand
Pallancata.
ATTRIBUTABLE GROUP PRODUCTION1
Q3 Q2 Q3 9 mths 2008 9 mths
2008 2008 2007 2007
Silver production (koz) 4,041 3,812 3,424 11,484 9,057
Gold production (koz) 36.73 38.32 48.68 110 139
Attrib. silver equivalent (koz) 6,245 6,111 6,345 18,110 17,420
Attrib. gold equivalent (koz) 104.08 101.84 105.74 302 290
1 Attributable production includes 100% of all production from Arcata, Ares and Selene, 60% from Pallancata, 51% from San Jos and 70%
from Moris.
QUARTERLY PRODUCTION BY MINE
ARCATA
Product Q3 Q2 Q3
2008 2008 2007
Ore production (tonnes) 158,893 116,847 106,656
Average head grade silver (g/t) 533.66 537.64 578.97
Average head grade gold (g/t) 1.48 1.36 1.48
Concentrate produced (tonnes) 5,502 4,120 4,457
Silver grade in concentrate (kg/t) 13.86 13.55 11.94
Gold grade in concentrate (kg/t) 0.04 0.03 0.03
Silver produced (koz) 2,2361 1,794 1,711
Gold produced (koz) 6.391 4.46 4.23
Silver sold (koz) 1,683 2,518 896
Gold sold (koz) 4.27 5.70 2.24
1 Arcata's silver equivalent production for Q3 was adjusted downwards by 236k ounces (216k Ag/ 0.34k Au) as a result of a measuring
difference between reported and actual produced ounces during the year.
ARES
Product Q3 Q2 Q3
2008 2008 2007
Ore production (tonnes) 89,798 86,339 84,995
Average head grade silver (g/t) 139.66 180.41 255.93
Average head grade gold (g/t) 5.67 6.72 13.98
Dor total (koz) 368.74 464.95 664.57
Silver produced (koz) 352 446 633
Gold produced (koz) 15.47 17.68 36.57
934 634
Silver sold (koz)1 646
23.13 21.30
Gold sold (koz) 2 38.56
1 Total sale figures for Ares include the sale of 746 koz of silver precipitates from San Jos.
2 Total sale figures for Ares include the sale of 11.14 koz of gold precipitates from San Jos.
SELENE
Product Q3 Q2 Q3
2008 2008 2007
Ore production (tonnes) 67,659 79,851 125,451
Average head grade silver (g/t) 205.09 222.72 275.31
Average head grade gold (g/t) 1.23 1.27 1.84
Concentrate produced (tonnes) 845 973 1,090
Silver grade in concentrate (kg/t) 13.05 16.44 26.69
Gold grade in concentrate (kg/t) 0.07 0.09 0.16
Silver produced (koz) 400 504 923
Gold produced (koz) 2.20 2.63 5.66
Silver sold (koz) 364 825 1,002
Gold sold (koz) 1.93 4.15 6.07
PALLANCATA1
Product Q3 Q2 Q3
2008 2008 2007
Ore production (tonnes) 88,247 83,517 14,723
Average head grade silver (g/t) 337.22 339.36 255.45
Average head grade gold (g/t) 1.56 1.70 1.27
Concentrate produced (tonnes) 909 847 79
Silver grade in concentrate (kg/t) 30.76 30.45 41.60
Gold grade in concentrate (kg/t) 0.11 0.12 0.17
Silver produced (koz) 899 829 105
Gold produced (koz) 3.35 3.23 0.43
Silver sold (koz) 824 796 0
Gold sold (koz) 3.02 3.13 0.00
1 The Company has a 60% interest in Pallancata.
SAN JOSE1
Product Q3 Q2 Q3
2008 2008 2007
Ore production (tonnes) 70,036 60,603 27,494
Average head grade silver (g/t) 547.65 680.70 543.78
Average head grade gold (g/t) 6.76 7.56 7.21
Silver produced (koz) 990 1,093 182
Gold produced (koz) 12.34 12.41 3.30
Silver sold (koz) 846 2,2842 0
Gold sold (koz) 9.76 28.983 0.00
1 The Company has a 51% interest in San Jos
2 Total sale figures for San Jos include 835.2 koz of silver precipitates sold to
Ares.
3 Total sale figures for San Jos include 13.06 koz of gold precipitates sold to Ares.
MORIS1
Product Q3 Q2 Q3
2008 2008 2007
Ore production (tonnes) 193,009 205,393 84,538
Average head grade silver (g/t) 6.31 5.56 4.92
Average head grade gold (g/t) 1.53 1.80 1.76
Silver produced (koz) 14 18 1
Gold produced (koz) 6.24 7.55 0.40
10 22
Silver sold (koz) 0
5.25 8.90
Gold sold (koz) 0.00
1 The Company has a 70% interest in Moris.
Certain statements in this production report are or may be forward looking statements regarding Hochschild Mining plc's financial
position and results, business strategy, production, plans and objectives. By their nature, all forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances which are beyond the Group's control. As a result, the Group's actual
future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in such
forward-looking statements. Except as required by applicable law or regulation, the Group does not undertake any obligation to update or
change any forward-looking statements contained in this production report or any other forward-looking statement it may make. Nothing in
this production report should be construed as a profit or production forecast.
This production report does not constitute or form part of any offer, invitation to underwrite, subscribe for or otherwise acquire or
dispose of any Hochschild Mining plc shares.
Past performance of the Company or its shares cannot be relied upon as a guide to future performance and persons needing advice should
consult an independent financial adviser.
- ends -
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