TIDMHOC
RNS Number : 8409B
Hochschild Mining PLC
25 February 2011
25 February 2011
Significant Increase in Grades & Resources at the Inmaculada
Project
Highlights
-- 59% increase in Measured & Indicated Resources to 76.0
million silver equivalent ounces
-- 29% increase in silver equivalent grades to 498 g/t
-- 12% increase in total resources to 128.3 million silver
equivalent ounces
Hochschild Mining plc ("Hochschild" or "the Company") is pleased
to announce an increase in both the total Mineral Resource estimate
and Measured and Indicated Resources for the Inmaculada gold-silver
project located in Hochschild's existing southern Peru cluster,
following the announcement of a positive scoping study published by
International Minerals Inc ("IMZ") in September 2010. The project,
in which Hochschild now owns a controlling 60% stake (IMZ holds the
remaining 40%), is currently at feasibility stage with completion
expected in 2011. The Company is committed to commencing production
in December 2013 at a processing capacity of 3,000 tonnes per
day.
The previous resource estimate was based on drilling results
prior to 15 May 2010. Subsequently, 67 drill holes from higher
grade areas of the Angela vein have been completed and incorporated
into the database. As a consequence, Measured & Indicated
resources have increased by 59% to 76.0 million silver equivalent
ounces with a corresponding grade increase of 29%. Summary results
(on a 100% basis, applying a 180 g/t silver equivalent cut-off
grade and a silver to gold ratio of 60:1) are as follows:
-- Measured & Indicated resources: 4.7mt at an average grade
of 5.2 g/t gold and 186 g/t silver containing approximately 795,000
ounces of gold and 28.3 million ounces of silver.
-- Inferred resources of 2.7mt at an average grade of 6.1 g/t
gold and 247 g/t silver containing approximately 521,000 ounces of
gold and 21.0 million ounces of silver.
Hochschild expects the results to significantly improve the
economics of the project detailed in the 2010 scoping study.
Furthermore, after applying the Company's marginal silver
equivalent cut-off grade of 98 g/t, the grade and resource figures
increase further, see table 1 below for full details. The Company
will publish updated valuations and sensitivity analysis relating
to Inmaculada in its full year results announcement on 29 March
2011(1) .
Ignacio Bustamante, CEO of Hochschild Mining comments:
"The significant increase in resources and grades at Inmaculada
highlights the tremendous value of this joint venture in which we
have a controlling stake and the excellent geological potential
which will provide us with additional profitable ounces. The
feasibility study at Inmaculada is also well underway and on track
for completion this year with production coming on line in December
2013".
(1) The Company will apply a cut-off grade of 98 g/t in the
annual resource statement
Table 1: For comparison purposes, updated resources based on
silver equivalent cut-off grades of 98 g/t, 180 g/t and 250 g/t are
summarised below:
% change
Moz in
Ag Au Ag Eq koz Moz Ag contained % Grade
kt (g/t) (g/t) (g/t) Au Ag Eq oz change
------------------ ------ ------ ------ ------ ------ ----- ------ ---------- --------
98 g/t Ag cutoff
(2)
Measured 1,094 125 4.7 405 164 4.4 14.2 -1% -2%
Indicated 4,518 177 4.7 456 676 25.7 66.3 99% 21%
Measured +
Indicated 5,612 167 4.7 446 840 30.1 80.5 68% 15%
Inferred 3,553 199 5.0 498 568 22.8 56.8 -15% 5%
Total 9,165 179 4.8 466 1,407 52.9 137.3 20% 7%
------------------ ------ ------ ------
180 g/t cutoff
Measured 941 136 5.1 443 155 4.1 13.4 -7% 7%
Indicated 3,806 198 5.2 512 640 24.2 62.6 88% 36%
Measured +
Indicated 4,747 186 5.2 498 795 28.3 76.0 59% 29%
Inferred 2,648 247 6.1 614 521 21.0 52.3 -22% 29%
Total 7,395 208 5.5 540 1,316 49.4 128.3 12% 24%
------------------ ------ ------ ------
250 g/t cutoff
Measured 698 153 6.0 514 135 3.4 11.5 -20% 24%
Indicated 2,951 226 6.1 591 578 21.5 56.1 68% 57%
Measured +
Indicated 3,649 212 6.1 577 713 24.9 67.6 42% 49%
Inferred 1,998 295 7.4 737 473 18.9 47.3 -29% 55%
Total 5,647 241 6.5 633 1,186 43.8 115.0 0% 46%
------------------ ------ ------ ------
Previously
reported (180 g/t
cutoff)
Measured 1,080 107 5.1 413 178 3.7 14
Indicated 2,747 137 4.0 377 354 12.1 33
Measured +
Indicated 3,827 129 4.3 387 532 15.8 48
Inferred 4,388 200 4.6 476 645 28.3 67
Total 8,215 167 4.5 435 1,177 44.1 115
------------------ ------ ------ ------ ------ ------ ----- ------ ---------- --------
(2) The Company will apply a cut-off grade of 98 g/t in the
annual resource statement due to be published on 29 March 2011
Table 2 - Inmaculada scoping study results published on 10
September 2010 (on a 100% basis) (revised information to be
provided with the full year results announcement on 29 March
2011):
Item Units
---------------------------------------- --------------------- -----------
Base Case Gold price $ per ounce $1000
---------------------------------------- --------------------- -----------
Base Case Silver Price $ per ounce $17
---------------------------------------- --------------------- -----------
Initial Mine life years 7.5
---------------------------------------- --------------------- -----------
Average annual gold production
(6) ounces/year 117,000
---------------------------------------- --------------------- -----------
Average annual silver production
(6) ounces/year 4,000,000
---------------------------------------- --------------------- -----------
Average annual gold Eq. production Au Eq ounces/year 180,000
---------------------------------------- --------------------- -----------
Life-of-mine gold production
(6) ounces 858,000
---------------------------------------- --------------------- -----------
Life-of-mine silver production
(6) ounces 29,300,000
---------------------------------------- --------------------- -----------
Life-of-mine gold Eq. production Au Eq. ounces 1,346,000
---------------------------------------- --------------------- -----------
Plant processing rate (3,000
tpd) tonnes/year 1,095,750
---------------------------------------- --------------------- -----------
Metallurgical recovery - gold % 88%
---------------------------------------- --------------------- -----------
Metallurgical recovery - silver % 83%
---------------------------------------- --------------------- -----------
Initial capital (2) US$ millions 168
---------------------------------------- --------------------- -----------
Total Cash operating cost (3) per tonne processed $52.08
---------------------------------------- --------------------- -----------
Total Cash operating cost (4) per ounce Au Eq. $311
---------------------------------------- --------------------- -----------
Total Cash operating cost,
inc capital (4) per ounce Au Eq. $517
---------------------------------------- --------------------- -----------
Total Cash operating cost (by-product) per ounce Au (Ag
(5) credit) -$94
---------------------------------------- --------------------- -----------
Total Cash operating cost inc per ounce Au (Ag
capital (by-product) (5) credit) $231
---------------------------------------- --------------------- -----------
Pre-Tax IRR % 41%
---------------------------------------- --------------------- -----------
Cash Flow (non-discounted) US$ millions $660
---------------------------------------- --------------------- -----------
NPV, 5% discount rate US$ millions $434
---------------------------------------- --------------------- -----------
NPV, 10% discount rate US$ millions $286
---------------------------------------- --------------------- -----------
1) This Preliminary Economic Assessment or Scoping study is
preliminary in nature, in that it includes inferred mineral
resources that are considered too speculative geologically to have
the economic considerations applied to them that would enable them
to be categorised as mineral reserves, and there is no certainty
that the results of the preliminary economic assessment study will
be realised and actual results may vary substantially.
2) Initial Capital includes $32.9 million in contingency
allowance. Costs are based on Q3 2010 estimates and no escalation
factors have been applied. Value added tax has not been included in
the cost estimates.
3) Total Cash Operating costs include smelting and refining and
Peruvian Government royalties, but do not include employee profit
sharing or depreciation, depletion or amortization.
4) Total Cash Costs per ounce of gold equivalent are calculated
using a silver-to-gold ratio of 60:1.
5) By-product accounting subtracts the revenue generated by
silver from the operating costs as a credit to determine the cost
per ounce of gold.
6) Annual and life-of-mine production figures are after 5%
mining losses, 20% mining dilution and the respective metallurgical
recoveries for gold and silver.
7) Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Table 3 - Inmaculada sensitivity analyses published on 10
September 2010 (on a 100% basis) and revised information will be
provided with the full year results announcement on 29 March
2011:
$1,000/ $1,300/ $1,400/ $1,500/
Category $17.00 $22.10 $23.80 $25.50
------------------ -------- -------- -------- --------
IRR 41% 58% 63% 68%
------------------ -------- -------- -------- --------
Cash flow (US$m) 660 1,026 1,148 1,271
------------------ -------- -------- -------- --------
NPV 5% (US$m) 434 699 787 875
------------------ -------- -------- -------- --------
NPV 10% (US$m) 287 483 548 613
------------------ -------- -------- -------- --------
Cash flow and NPVs are all shown pre-tax, but do include
Peruvian government royalties and smelter and transportation
charges. Value added tax (generally recoverable in Peru) was not
included in the cash flows.
________________________________________________________________________
___
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.
This information is provided by RNS
The company news service from the London Stock Exchange
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