Production Report and IMS
April 29 2009 - 2:00AM
UK Regulatory
TIDMHOC
RNS Number : 3407R
Hochschild Mining PLC
29 April 2009
________________________________________________________________________
29 April 2009
Production Report and Interim Management Statement for the three months to 31
March 2009 ("Q109")
* Production up 16% year-on-year to 6.7 million attributable silver equivalent
ounces, comprised of 4.4 million ounces of silver and 37.4 thousand ounces of
gold
* On track to achieve full year production target of 28 million silver equivalent
ounces, representing a 7% increase over 2008 production
* Continue to deliver on M&A strategy: increased stake in Gold Resource
Corporation from 5% to 15% and signed agreement to acquire* 100% of Southwestern
Resources Corp for C$22.5 million (US$17.5 million)
* Continued focus on profitable ounces and cost reduction
*Subject to the approval of Southwestern's shareholders
Miguel Aramburú, Chief Executive Officer commented;
"We remain on track to achieve our full year production target of 28 million
attributable silver equivalent ounces. We are committed to producing profitable
ounces and continue to take a diligent approach to cost control. As a result of
the measures we implemented at the end of 2008, the Company is well placed to
benefit from new acquisition opportunities which may arise from current market
conditions."
Overview
Attributable production in the first quarter increased 16% year-on-year to 6.7
million attributable silver equivalent ounces. This is comprised of 4.4 million
ounces of silver, up 21% year-on-year and 37.4 thousand ounces of gold, up 6%
year-on-year. Production was particularly strong at Arcata with silver and gold
production up 28% and 50% year-on-year and at Pallancata where both silver and
gold production more than doubled compared to the equivalent period last year.
Production at Arcata, Pallancata and San José benefited from the capacity
expansions which were successfully completed in the second half of 2008.
As anticipated and previously disclosed, average reserve grades at Ares and
Selene are declining due to the ageing and geological nature of the
deposits. The focus for 2009 is to deliver profitable production and the Group
will therefore reduce production, close, or put into care and maintenance any
mines that are considered uneconomic. As a consequence, Selene is under
consideration for closure and a decision is likely to be made by June. Selene's
plant, which was upgraded during the year, will continue to process ore from
Pallancata. The 2009 production target of 28 million silver equivalent ounces
only forecasts Selene's production through to June with a significant decline in
tonnage over this 6 month period.
Quarter-on-quarter production of 6.7 million ounces was 17% below that of the
fourth quarter of 2008 as a result of the seasonal effect of fewer production
days in Q1 relative to Q4 and also due to the industrial action in Peru which
the Company announced on 23 March 2009. The dispute was resolved and will not
impact the Group's full year production target. The final cost of the settlement
is expected to be approximately $8 million and will be recorded as an
exceptional item.
As announced in March 2009, Hochschild has increased cut-off grades at its
underground mines by an average of 18% to ensure that profitable ounces are
mined and, as a result, average reserve grades have increased (with the
exception of the Group's ageing mine, Ares). The Group's policy is to mine
average reserve grades, however, given the long term nature of underground mine
planning, extracted grades in 2009 will not reflect all of the increase in
average reserve grades. This will not impact the Group's 2009 production target
of 28 million attributable silver equivalent ounces.
On 26 March 2009, Lake Shore Gold Corp ("Lake Shore Gold"), in which Hochschild
has a 40% interest, announced that it had commenced processing development ore
from the Timmins Mine advanced exploration programme at its 100% owned Bell
Creek Mill with a target of producing 30,000 ounces of gold in 2009, increasing
to 100,000 ounces in 2010. The mill, with a current capacity of 800 tonnes per
day, will initially run in campaigns processing stockpiles of development
ore. The mill will run on a more continuous basis as the year progresses and
deliveries from the Timmins Mine increase. In February 2009, the
Group participated in Lake Shore Gold's equity financing and maintained its
ownership at 40% by investing a further $18.5 million.
During the first quarter of 2009 Hochschild exercised its option to increase its
ownership interest in Gold Resource Corporation ("GRC") from 5% to 15%. GRC is a
precious metals mining company with a number of high grade development and
exploration projects in southern Mexico, including El Aguila, which is scheduled
to begin production in 2009. The Group has recorded an exceptional gain of $5.5
million, referring to the appreciation of GRC's shares over the last quarter.
The Company also entered into a binding agreement to acquire 100% of
Southwestern Resources Corp ("Southwestern"), for a total cash consideration of
C$22.5 million (US$17.5 million). The acquisition consolidates Hochschild's
position in Liam, a 282,000 hectare land package in very close proximity to the
Group's four existing Peruvian mines and enables it to leverage existing
infrastructure and knowledge of the regional geology. The transaction is subject
to the approval of Southwestern's shareholders which is expected on 8 May 2009.
Average realisable prices and sales
As a result of the extreme market volatility in the second half of 2008, the
Group decided to lock in a portion of its expected 2009 revenue to ensure a more
stable cash flow to fund operating capex and future M&A initiatives. The Group
has sold forward 10.7 million ounces or 38% of its 2009 attributable silver
equivalent production, comprised of 8.9 million ounces of silver at an average
price of $12.09/oz and 30 thousand ounces of gold at an average price of
$972/oz. None of 2010's production has been sold forward.
Average realisable prices (which include commercial discounts) in Q109 were
$899/oz for gold and $13.41/oz for silver (excluding forward contracts). A
realised loss of $1.7 million will be recorded under finance income/expense for
the first quarter of 2009, representing the difference between the average
monthly market prices and the prices contracted in the above mentioned forward
sales contracts. The mark-to-market unrealised loss amounts to $6.6 million as
at 31 March 2009.
Exploration
The Group remains committed to replenishing and expanding its resource base and
has a successful record of converting resources to reserves. In the first
quarter of 2009, significant progress has been made at San José with the
discovery of a new mineralised structure located approximately 845 metres
southwest from the Huevos Verdes vein. The structure, which does not outcrop on
the surface, was discovered with the first drill hole of a programme of five
1,000 metre long diamond drill holes to be performed horizontally from existing
underground workings. Results from core hole (SMJ-105) were 8.9 g/t gold and 517
g/t silver over 1.00 metres.
A follow-up surface drilling programme to test the continuity of this recent
discovery is under preparation. The current five long-hole underground programme
continues with a second horizontal hole being drilled in a northeast direction
from the Huevos Verdes vein.
Outlook
Hochschild is in sound financial health, with $73 million of cash on the balance
sheet as at 31 March 2009. The decrease in cash balance from 31 December 2008 is
primarily explained by the equity financing of Lake Shore Gold of $18 million,
the additional stake in GRC of $13 million and net debt repayments of $12
million. The Company is committed to cash preservation but is also in a solid
position to pursue acquisition opportunities, focusing on underground precious
metals projects in the Americas. The Group will also continue to develop its
project pipeline which currently contains numerous long term prospects with
significant growth potential.
The Company is focused on producing profitable ounces and diligently controlling
costs. Good progress has been made in this area and the Group expects unit cost
per tonne in 2009 to be at least 5% lower than in 2008. Hochschild will continue
to responsibly manage operations and will not hesitate to close or put into care
and maintenance mines that are considered uneconomic.
=------------------------------------------------------------------------------
=----------------------------------------
A conference call will be held at 1pm (London time) on Wednesday 29 April for
analysts and investors.
Dial in details as follows:
UK+44 (0)20 7806 1959
A recording of the conference call will be available for one week following its
conclusion, accessible from the following telephone number:
UK+44 (0)20 7806 1970
Access code9473043#
_____________________________________________________________________
+------------+--------+---------------+
| Enquiries: | | |
| | | |
+------------+--------+---------------+
| Hochschild | | +44 |
| Mining plc | | (0)20 |
| Isabel | | 7907 2934 |
| Lütgendorf | | |
| Head of | | |
| Investor | | |
| Relations | | |
| | | |
+------------+--------+---------------+
| Ignacio | | +511 437 6007 |
| Rosado | | |
| Chief | | |
| Financial | | |
| Officer | | |
| | | |
+------------+--------+---------------+
| Finsbury | | +44 |
| Robin | | (0)20 |
| Walker | | 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
has over forty years experience in the mining of precious metal epithermal vein
deposits and currently operates five underground epithermal vein mines, four
located in southern Peru, one in southern Argentina and one open pit mine in
northern Mexico. Hochschild also has numerous long-term prospects throughout the
Americas.
TOTAL GROUP PRODUCTION1
+--------------------------+-----------+-----------+-----------+
| | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+-----------+-----------+-----------+
| Silver production (koz) | 5,575 | 6,898 | 4,310 |
+--------------------------+-----------+-----------+-----------+
| Gold production (koz) | 50.11 | 55.97 | 44.06 |
+--------------------------+-----------+-----------+-----------+
| Total silver equivalent | 8,582 | 10,256 | 6,954 |
| (koz) | | | |
+--------------------------+-----------+-----------+-----------+
| Total gold equivalent | 143.03 | 170.93 | 115.90 |
| (koz) | | | |
+--------------------------+-----------+-----------+-----------+
| Silver sold (koz) | 4,421 | 7,089 | 2,379 |
+--------------------------+-----------+-----------+-----------+
| Gold sold (koz) | 39.31 | 58.57 | 29.25 |
+--------------------------+-----------+-----------+-----------+
1 Total production includes 100% of all production, including production
attributable to joint venture partners at Moris, San José and Pallancata.
ATTRIBUTABLE GROUP PRODUCTION1
+--------------------------+-----------+-----------+-----------+
| | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+-----------+-----------+-----------+
| Silver production (koz) | 4,411 | 5,457 | 3,632 |
+--------------------------+-----------+-----------+-----------+
| Gold production (koz) | 37.44 | 42.44 | 35.38 |
+--------------------------+-----------+-----------+-----------+
| Attrib. silver | 6,657 | 8,003 | 5,755 |
| equivalent (koz) | | | |
+--------------------------+-----------+-----------+-----------+
| Attrib. gold equivalent | 110.95 | 133.38 | 95.91 |
| (koz) | | | |
+--------------------------+-----------+-----------+-----------+
1 Attributable production includes 100% of all production from Arcata, Ares and
Selene, 60% from Pallancata, 51% from San José and 70% from Moris.
QUARTERLY PRODUCTION BY MINE
ARCATA
+--------------------------+---------------+---------------+---------------+
| Product | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 149,507 | 170,416 | 111,714 |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 533.18 | 628.63 | 572.95 |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 1.59 | 1.79 | 1.40 |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Concentrate produced | 5,324 | 6,760 | 4,256 |
| (tonnes) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver grade in | 13.23 | 14.56 | 13.43 |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Gold grade in | 0.04 | 0.04 | 0.03 |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 2,347 | 3,164 | 1,838 |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 6.64 | 8.76 | 4.44 |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 2,093 | 3,332 | 1,032 |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 6.34 | 9.77 | 2.64 |
+--------------------------+---------------+---------------+---------------+
ARES
+--------------------------+---------------+---------------+---------------+
| Product | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 77,293 | 92,397 | 79,376 |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 94.95 | 111.06 | 204.41 |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 4.86 | 5.33 | 6.64 |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Doré total (koz) | 6.71 | 302.96 | 471.68 |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 203 | 286 | 454 |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 11.36 | 14.95 | 16.07 |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 173 | 387 | 444 |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 9.56 | 16.65 | 16.36 |
+--------------------------+---------------+---------------+---------------+
SELENE
+--------------------------+---------------+---------------+---------------+
| Product | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 65,012 | 24,623 | 97,017 |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 234.37 | 187.86 | 207.25 |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 1.19 | 1.06 | 1.20 |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Concentrate produced | 627 | 293 | 1,090 |
| (tonnes) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver grade in | 19.96 | 15.17 | 15.29 |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Gold grade in | 0.10 | 0.08 | 0.08 |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 400 | 140 | 536 |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 1.99 | 0.71 | 2.95 |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 157 | 334 | 406 |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 0.78 | 1.59 | 2.26 |
+--------------------------+---------------+---------------+---------------+
PALLANCATA1
+--------------------------+---------------+---------------+---------------+
| Product | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 155,552 | 245,468 | 50,893 |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 296.99 | 288.14 | 340.10 |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 1.30 | 1.36 | 1.61 |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Concentrate produced | 1,223 | 1,968 | 541 |
| (tonnes) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver grade in | 33.05 | 30.97 | 28.71 |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Gold grade in | 0.13 | 0.12 | 0.11 |
| concentrate (kg/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 1,299 | 1,959 | 500 |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 4.94 | 7.65 | 1.93 |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 1,137 | 1,841 | 391 |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 4.08 | 7.22 | 1.44 |
+--------------------------+---------------+---------------+---------------+
1 The Company has a 60% interest in Pallancata.
SAN JOSE1
+--------------------------+---------------+---------------+---------------+
| Product | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 118,986 | 107,875 | 59,897 |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 427.45 | 462.56 | 624.11 |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 5.29 | 5.91 | 7.10 |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 1,299 | 1,329 | 968 |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 16.56 | 17.37 | 12.14 |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 838 | 1,135 | 323 |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 11.38 | 13.91 | 5.05 |
+--------------------------+---------------+---------------+---------------+
1 The Company has a 51% interest in San José.
MORIS1
+--------------------------+---------------+---------------+---------------+
| Product | Q1 | Q4 | Q1 |
| | 2009 | 2008 | 2008 |
+--------------------------+---------------+---------------+---------------+
| Ore production (tonnes) | 291,084 | 296,077 | 181,671 |
+--------------------------+---------------+---------------+---------------+
| Average head grade | 4.82 | 6.05 | 4.69 |
| silver (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Average head grade gold | 1.37 | 1.52 | 1.43 |
| (g/t) | | | |
+--------------------------+---------------+---------------+---------------+
| Silver produced (koz) | 26 | 19 | 14 |
+--------------------------+---------------+---------------+---------------+
| Gold produced (koz) | 8.62 | 6.53 | 6.53 |
+--------------------------+---------------+---------------+---------------+
| Silver sold (koz) | 22 | 23 | 13 |
+--------------------------+---------------+---------------+---------------+
| Gold sold (koz) | 7.18 | 8.26 | 5.60 |
+--------------------------+---------------+---------------+---------------+
1 The Company has a 70% interest in Moris.
Certain statements in this announcement 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 announcement should be construed as a profit forecast.
The statement in this press release relating to the advancement and development
of Lake Shore Gold's Timmins West project is a forward looking statement within
the meaning of securities legislation. The statement is based on the public
disclosure of Lake Shore Gold, dated 26 March 2009, which is available on SEDAR
at www.sedar.com under Lake Shore Gold, and is subject to the statements by Lake
Shore Gold about such forward looking statements and the assumptions and risks
associated with it.
- ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEKLBLKZBZBBV
Hochschild Mining (LSE:HOC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hochschild Mining (LSE:HOC)
Historical Stock Chart
From Jul 2023 to Jul 2024
