TIDMHOC
RNS Number : 6998Z
Hochschild Mining PLC
19 January 2011
19 January 2011
Positive scoping study at 100% owned Crespo project in Peru
Hochschild Mining plc ("Hochschild" or the "Company") is pleased
to announce positive results from a scoping study completed by an
independent company, Ausenco, at its 100% owned Crespo project,
located in the Company's existing operating cluster in southern
Peru.
Highlights
-- Open pit, heap leach operation within Hochschild's Southern
Peruvian cluster
-- Total resources of 49.41 million silver equivalent ounces
-- Estimated average initial silver equivalent production of 2.3
million ounces per year with a resource life of 7.5 years
-- Potential to generate pre-tax non-discounted cashflow2 of
$173.7 million and IRR of over 48% at current prices
-- Estimated total cash operating cost of $8.8 per silver
equivalent ounce
-- Project now at pre-feasibility stage, with targeted
completion in Q4 2011
The scoping study is based on measured and indicated resources
of 31.3 million silver equivalent ounces and estimates annual
silver equivalent production of 2.3 million ounces starting from
2014. Crespo, which is expected to be an open pit deposit, is one
of a number of properties acquired by the Company in 2008 as part
of the Liam JV/Southwestern Resources land package and is the first
of these to progress to pre-feasibility.
Ignacio Bustamante, CEO of Hochschild Mining plc commented:
"We are delighted to announce positive scoping results at our
100% owned Crespo project, demonstrating our ongoing focus on value
creation through organic growth. The results confirm that Crespo
has the potential to become a profitable operation and enables us
to leverage the existing skill base and infrastructure that we have
established in southern Peru. We have extensive experience in
bringing early stage projects into development and we will now
progress Crespo through pre-feasibility which we will aim to
complete in Q4 2011.
In addition to the resources incorporated in the scoping study,
the Company believes that there is a high probability of
significantly increasing resources at Crespo. This is demonstrated
by the recent addition of 5.6 million silver equivalent ounces in
the measured and indicated category (not considered in the scoping
study), the possibility to convert more than 15 million silver
equivalent ounces from the inferred category and the additional
potential to further explore adjacent areas."
Summary of scoping study3
(base case using $1,000/oz gold and $17/oz silver with a 60:1
silver-to-gold equivalent ratio):
-- For pit optimisation purposes, the scoping assumed long-term
gold and silver prices of $900/oz and $15/oz respectively
-- Mine production of 14.3 million tonnes at an average grade of
36.1 g/t silver and 0.5 g/t gold
-- Recovered ounces: 178,570 ounces of gold and 6.5 million
ounces silver or approximately 17.2 million ounces of silver
equivalent (based on metallurgical recoveries of 80% for gold and
39% for silver)
-- Total cash operating cost: $8.8 per silver equivalent
ounce
-- Initial capital expenditure of $65.3 million plus life of
mine capex estimate of $7.5 million
-- 5,500 ore tonnes per day ("tpd") open-pit mine
1 Includes measured, indicated and inferred resources
2 Using prices of $1,400/oz for gold and $25/oz for silver
3 Results of a scoping study can vary by +/- 40%. The Ag
equivalent resource calculation does not consider metallurgical
recovery
Table 1: Crespo resources4:
Au ( Ag ( Ag Eq
Tonnage g / g / ( g /
Category ( Mt ) Mt ) Au oz Mt ) Ag oz Mt ) Ag Eq oz
----------- ----------- ------ -------- ------ ----------- ------ -----------
Measured 2,109,738 0.53 36,087 42.55 2,886,379 74.47 5,051,274
----------- ----------- ------ -------- ------ ----------- ------ -----------
Indicated 13,575,711 0.47 203,297 32.09 14,006,530 60.05 26,209,977
----------- ----------- ------ -------- ------ ----------- ------ -----------
Inferred 10,788,690 0.50 173,313 22.37 7,758,162 52.37 18,165,291
----------- ----------- ------ -------- ------ ----------- ------ -----------
Total 26,474,138 0.49 412,697 28.96 24,651,071 58.07 49,426,542
----------- ----------- ------ -------- ------ ----------- ------ -----------
Table 2: Crespo project scoping study4 - initial results:
Item Units
---------------------------------------- -------------------- ------
Mine life yrs 7.5
---------------------------------------- -------------------- ------
Average annual silver production Oz/yr (million) 0.9
---------------------------------------- -------------------- ------
Average annual gold production Oz/year (k) 23.8
---------------------------------------- -------------------- ------
Average annual silver equivalent Au eq oz/yr
production (million) 2.3
---------------------------------------- -------------------- ------
Life-of-mine silver equivalent
production Ag eq oz (million) 17.2
---------------------------------------- -------------------- ------
Heap leaching processing rate tonnes/day 5,500
---------------------------------------- -------------------- ------
Stripping ratio 1.44
-------------------------------------------------------------- ------
Metallurgical recovery - gold % 80
---------------------------------------- -------------------- ------
Metallurgical recovery - silver % 39
---------------------------------------- -------------------- ------
per tonne
Total cash operating cost processed 10
---------------------------------------- -------------------- ------
per oz Ag
Total cash operating cost eq. 8.8
---------------------------------------- -------------------- ------
Total cash operating cost, inc per oz Ag
capital eq. 13
---------------------------------------- -------------------- ------
per oz Ag
Total cash operating cost (by-product) (Au credit) -4.2
---------------------------------------- -------------------- ------
Total cash operating cost inc capital per oz Ag
(by-product) (Au credit) 7.0
---------------------------------------- -------------------- ------
Table 3: Crespo project sensitivity analysis (base case in bold
and highlighted):
$1,000/ $1,200/ $1,400/
Category $17.0 $22.0 $25.0
---------------------------------------- -------- -------- --------
IRR (%) 19.0 36.1 48.0
---------------------------------------- -------- -------- --------
Pre-tax non-discounted cash flow
($USmillion) 53.5 119.9 173.7
---------------------------------------- -------- -------- --------
Pre-tax discounted NPV 5% (US$million) 31.6 81.8 122.3
---------------------------------------- -------- -------- --------
4 Scoping study assumes only measured and indicated
resources
4 Results of scoping study can vary by +/- 40%
5 Calculation considers inferred resources as waste
Please click on the link below to view the location of the
Crespo project within Hochschild's southern Peru cluster:
http://www.rns-pdf.londonstockexchange.com/rns/6998Z_-2011-1-18.pdf
______________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 7907 2934
Head of Investor Relations
Finsbury
Faeth Birch +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 / HOC LN) 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 four underground epithermal vein mines, three 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.
Forward looking statements:
This announcement may contain forward looking statements. By
their nature, forward looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that will or may occur in the future. Actual results,
performance or achievements of Hochschild Mining plc may, for
various reasons, be materially different from any future results,
performance or achievements expressed or implied by such forward
looking statements.
The forward looking statements reflect knowledge and information
available at the date of preparation of this announcement. Except
as required by the Listing Rules and applicable law, the Board of
Hochschild Mining plc does not undertake any obligation to update
or change any forward looking statements to reflect events
occurring after the date of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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