TIDMHOC
RNS Number : 5167C
Hochschild Mining PLC
17 April 2013
17 April 2013
Production Report and Interim Management Statement for the 3
months ended 31 March 2013
Highlights
-- Q1 2013 attributable production of 4.7 million silver
equivalent ounces
-- 2013 attributable production target of 20.0 million silver
equivalent ounces on track
-- Advanced Project permitting process on schedule
-- US$140 million loan facility agreed to partially finance
Inmaculada initial capital expenditure
-- Solid financial position with total cash of approximately
$329m and minority investments valued at $218m as at 31 March
2013
Ignacio Bustamante, Chief Executive Officer commented:
"In what is a seasonally short quarter, we have delivered a
solid start to the year and remain on track to meet our 2013
production target of 20.0 million silver equivalent ounces.
At our Advanced Projects, we continued to make good
developmental progress, achieving further key stages in both
projects' permitting processes, and remain excited by these
projects which are set to commence production in the second half of
next year. Furthermore, I am pleased that we were able to secure
very competitive financing for the Inmaculada project during the
quarter.
As part of our continuous review of market conditions to ensure
the Company's ongoing profitability we analyse a variety of
precious metal price scenarios. Given the 2013 year-to-date price
declines we are experiencing, we are in the process of implementing
an action plan to conserve capital, cut operating costs, and review
discretionary expenditure. I am confident that we will be able to
report results of this effort as the year progresses."
__________________________________________________________________________________
A conference call will be held at 3pm (London time) on Wednesday
17 April 2013 for analysts and investors.
Dial in details as follows:
UK: +44 (0) 20 3003 2666
Password: Hochschild
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 8196 1998
Access code: 6259790
__________________________________________________________________________________
Overview
In Q1 2013 the Company delivered attributable production of 4.7
million silver equivalent ounces, comprised of 3.0 million ounces
of silver and 28.7 thousand ounces of gold, and is on track to meet
its full year production target of 20.0 million attributable silver
equivalent ounces in 2013.
Production
Main operations
At Arcata, total silver equivalent production in Q1 2013 was 1.4
million silver equivalent ounces (Q1 2012: 1.8 million ounces). The
rise in tonnage compared to Q1 2012 reflects the continuing planned
increase in volumes processed from the low grade Macarena Waste Dam
Deposit facilitated by the 500 tonne per day capacity expansion at
the Arcata plant (completed in H2 2012). Grades were lower in Q1
2013 versus Q1 2012 as a result of the increased volume of low
grade material from Macarena, as well as the Company's policy of
mining close to the average reserve grade at its core assets. The
decrease in tonnage compared to Q4 2012 is due to fewer production
days in Q1 2013.
The Company plans for grades at Arcata to increase in the second
half of 2013, when Macarena tonnage will be gradually replaced by
tonnage from stopes and mine development.
In addition, production at Arcata in Q1 2013 included the
decrease in ounces recovered as a result of the completion of the
dore project at the end of 2012, with 100% of Arcata's concentrate
now being converted into dore.
Table Showing Contribution From Macarena Waste Dam Deposit
Q1 2013 Q1 2012
------------------------- -------- --------
Total
Tonnage 203,888 164,160
Average head grade
gold (g/t) 0.73 0.94
Average head grade
silver (g/t) 202 317
------------------------- -------- --------
Macarena
Tonnage 63,743 4,540
Average head grade
gold (g/t) 0.28 0.30
Average head grade
silver (g/t) 98 95
Stopes and Developments
Tonnage 140,145 159,620
Average head grade
gold (g/t) 0.93 0.95
Average head grade
silver (g/t) 249 323
------------------------- -------- --------
Total silver equivalent production at Pallancata in Q1 2013 was
2.0 million ounces (Q1 2012: 2.1 million ounces). Production in Q1
2013 was lower than that in Q4 2012 mainly due to there being fewer
production days in the first quarter.
In Q1 2013, San Jose delivered total silver equivalent
production of 2.6 million ounces, in line with Q1 2012 (2.6 million
ounces). Production decreased versus Q4 2012 (2.9 million ounces)
mainly reflecting a fall in treated tonnage due to a ten day
production stoppage following a severe viral infection at the
operation. The silver equivalent production lost as a result of the
stoppage was approximately 200 thousand ounces, which the Company
expects to recover during the year.
Other operations
The Company's Ares mine in Peru continued to operate in Q1 2013,
producing 527 thousand silver equivalent ounces (Q1 2012: 515
thousand ounces) whilst at Moris, the Company's open pit operation
in Mexico, leaching of the pads continued during the quarter,
producing a further 244 thousand silver equivalent ounces in Q1
2013 (Q1 2012: 218 thousand ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q1 2013 (which are
reported before the deduction of commercial discounts) were
$1,599.6/ounce for gold and $29.6/ounce for silver. (Q1 2012:
$1,782.1/ounce for gold and $36.9/ounce for silver).
Project pipeline & exploration
The Company has an exploration budget of $77 million for 2013.
Of this budget, 26% has been allocated to brownfield exploration at
the Company's current operations, 14% to exploration at its
Advanced Projects, and 44% to greenfield exploration.
Please note that in line with industry-wide standards, all
mineralised intersections in this release are now quoted as true
widths.
Brownfield exploration[1]
Arcata
In Q1 2013, 238 metres of drilling were carried out at Arcata.
The focus of exploration work remained on the definition of new
high grade structures and the incorporation of high quality
resources from known vein systems as well as the provision of new
geological interpretation of the district. Exploration work
continued to delineate resources at the Socorro, Amparo, Blanca,
Katty and Ramal Marion veins through diamond drilling, and testing
was carried out in potential areas including Alexia, Pamela and
Ramal Leslie. Significant intercepts included(1) :
Vein Results
--------- ----------------------------------------
Pamela DDH399-GE13: 1.76m at 6.19 g/t Au &
1,479 Ag
DDH389-GE13: 1.00m at 2.84 g/t Au &
1,208 Ag
--------- ----------------------------------------
DDH373-EX13: 1.17m at 0.33 g/t Au &
Blanca 2 1,295 Ag
--------- ----------------------------------------
DDH427-S13: 1.60m at 2.8 g/t Au & 1,901
Baja 2 Ag
--------- ----------------------------------------
DDH401-GE13: 0.78m 1.82 g/t Au & 1,213
Tunel 3 Ag
--------- ----------------------------------------
Pallancata
During Q1 2013, exploration work at Pallancata focused on
locating new structures as well as continuing the incorporation of
new resources. The Yurika West vein mapping programme continued,
and identified major structural lineaments trending NE-EW,
associated with silicified hydrothermal breccias. Drilling
continued at the Luisa, Yurika and Ramal San Javier veins, with
2,169 metres of diamond drilling completed. Positive intercepts
included(1) :
Vein Results
----------------- ---------------------------------------
Luisa DLLU-A134: 1.96m at 1.11 g/t Au & 727
g/t Ag
DLLU-A135: 1.11m at 1.32 g/t Au & 389
g/t Ag
DLLU-A136: 1.17m at 1.09 g/t Au & 420
g/t Ag
DLLU-A137: 1.12m at 1.29 g/t Au & 335
g/t Ag
----------------- ---------------------------------------
DLLU-A137: 1.10m at 2.02 g/t Au & 338
Ramal San Javier g/t Ag
----------------- ---------------------------------------
San Jose
In Q1 2013 exploration at San Jose focused on the geological
sampling and interpretation of the La Juanita and Zone 2 areas, and
in addition, the digitalised geological models of the Saavedra West
and Kospi Sudeste vein systems were completed. These models
provided further interpretation and identified extensions of these
vein systems that can now be accessed and tested through
underground drilling, with new drill targets also identified.
During the quarter, a total of 967 metres of drift development
drilling were completed, with the exploration drilling campaign set
to start in April in order to continue to incorporate further
resources.
Ares
In Q1 2013, the exploration programme at Ares focused on the
exploration of potential in the extensions of known veins and the
definition of new high grade structures, as well as the completion
of exploration at the Isabel and Victoria East veins where new
intersections were discovered in the second half of 2012. The
exploration drilling campaign is scheduled to start at Ares later
this month.
Moris
In Q1 2013, exploration work at Moris focused on identifying new
economic structures and the completion of the potential geological
model of the property to identify new drill targets.
Advanced Projects
In November 2012 the Company announced that it expects to
receive the final mill construction permits for both the Inmaculada
and Crespo projects in the second half of 2013 with commissioning
for both projects' mills scheduled for the second half of 2014.
Inmaculada
Further progress was made at Inmaculada in Q1 2013. The detailed
engineering for the plant continued and is anticipated to be
completed by the end of the first half and the underground detailed
engineering for the mine neared completion during the quarter.
Procurement has also been advanced and the plant design
requirements were submitted to the EPC contractor. The construction
of the three exploration tunnels at the project continued, with 850
metres executed during the quarter. Finally, the paste backfill
plant engineering contract and the camp construction contract were
both granted.
Further key milestones in the project's permit application
process were achieved during the quarter including the Company
obtaining positive feedback from the Peruvian Government on the
application itself, therefore enabling advancement to the next
stage of the process. In addition, the underground water studies
are expected to be approved in Q2 2013.
In March 2013, the Company announced that its 60% owned joint
venture Minera Suyamarca S.A.C had negotiated a $140 million
secured loan facility with BBVA Continental and Banco Credito del
Peru to partially finance the initial capital expenditure for the
Inmaculada project. The loan facility has a term of seven years
with no principal payable for the first two years. The interest
rate is based on the 3-month LIBOR rate plus 3.0%, with customary
closing fees and charges. The loan will be non-recoursable to
Hochschild as well as to International Minerals Corporation who
owns the remaining 40% of Suyamarca.
In Q1 2013, the exploration drilling programme in and around the
Inmaculada project continued, and focused on the definition of new
high grade structures and the definition and incorporation of
potential systems outside of the current resource area. Underground
exploration drilling continued, with one drill rig in operation,
and a total of 554 metres of diamond drilling were completed to
test the Mirella, Susana and Angela veins.
Crespo
At the Company's 100% owned Crespo project, the basic integrated
engineering for the project was completed in February and the
detailed engineering is anticipated to be completed in the second
quarter. Also in February, orders were placed for the Merrill Crowe
plant and mobile crushers. In addition, the mine plan design is
progressing according to the Company's schedule. Finally,
construction of the access road to the mine site also commenced
during the quarter and is just over halfway complete.
In Q1 2013, the Company continued the process of responding to
the relevant observations from the authorities with regards to the
Environmental Impact Study permit for Crespo, and community
relations support programmes also continued. Furthermore, following
the approval of the surface water study for the project in December
2012, the surface land agreement for the project was approved by
the local community on 11 January 2013 and the Company anticipates
approval of the underground water studies in the second quarter of
this year. Following the achievement of these key steps, the
Company was able to submit the project's construction permit
application at the end of February with positive feedback already
received from the Peruvian government, to move to the next stage in
the process.
In Q1 2013, geological mapping and geochemistry were carried out
at Crespo, in order to complete the geological interpretation of
the district.
Azuca
In Q1 2013, the near-mine and potential exploration drilling
programme at Azuca continued and assay tests have yielded positive
results. During the quarter, four drill rigs were in operation at
Azuca, and a total of 8,665 metres of diamond drilling were
completed, focused on the Ramal Colombiana, Azuca NE and Yanamayo
NE veins. Positive results were reported from these veins, with
intercepts including[2]:
Vein Results
----------------- ----------------------------------------
Ramal Colombiana DACO-A1301: 3.40m at 0.47 g/t Au & 278
g/t Ag
DAYA-A1301: 0.45m at 0.71 g/t Au & 247
g/t Ag
-----------------
Yanamayo NE DAYA-A1301: 1.60m at 1.01 g/t Au & 197
g/t Ag
----------------- ----------------------------------------
Volcan
On 8 November 2012, the Company announced that it had made a
recommended cash offer of C$0.80 per share for all of the issued
and outstanding common shares of Andina Minerals Inc. ("Andina").
Andina owns the Volcan gold project located in the prolific
Maricunga gold belt in Chile. Full details can be found in the
announcement.
On 20 February 2013, the acquisition of all of the outstanding
Andina Minerals Inc shares was announced and shortly thereafter,
the delisting of Andina Minerals Inc from the TSX Venture Exchange
was confirmed on 22 February 2013.
In Q1 2013 the exploration team commenced the process of
building a complete geological and geometallurgical model of the
property and the re-logging of historical drilling data to define
mineralised domains and improve mine planning.
Greenfield pipeline
In Q1 2013, a total of 12,625 metres were drilled as part of the
greenfield exploration programme. Drilling was carried out at six
projects, at five 'Company Maker' projects, and at one 'Medium
Scale' project. Highlights of the Greenfield exploration programme
during the quarter are provided below.
Valeriano
At the Valeriano Company Maker project in Chile, a total of
4,248 metres were drilled during Q1 2013 to further test at depth,
the porphyry copper and gold mineralisation encountered in the 2012
drilling campaign. Drill results during the quarter continued to be
encouraging.
La Falda
At the La Falda Company Maker project in Chile, a total of four
holes have been completed in the current drilling campaign,
totaling 1,303 metres. Surface exploration to identify new drill
targets also continued at the property during the quarter.
Potrero
At the Potrero Company Maker project in Chile, drilling
commenced in January 2013. Drilling centred around known
mineralised structures as well as to the North East along the
projected strike of the mineralisation. During the quarter, a total
of 2,763 metres of diamond drilling were completed and significant
gold anomalies were reported.
Mercurio
At the Mercurio Company Maker project in Mexico, exploration
drilling in Q1 2013 concentrated on the Barite zone with a total of
2,898 metres of diamond drilling completed.
Baborigame
At the Baborigame Company Maker project in Mexico, exploration
drilling commenced in March 2013. Drilling was carried out on the
Cebolla target to test for mineralisation following the indication
of gold mineralisation by surface geochemistry. A total of 156
metres of diamond drilling were completed in the quarter.
Farallon
At the Farallon Medium Scale project in Peru, the first stage of
exploration drilling was completed in Q1 2013 with three drill
holes and a total of 1,257 metres of drilling carried out. Results
have identified multiple intercepts of quartz veins and veinlets
with sphalerite, galena and chalcoprite up to one metre in width,
associated with tensional structures. In Q2 2013, a fourth drill
hole will follow these intercepts at deeper levels.
Cuello Cuello
At the Cuello Cuello Medium Scale project in Peru, a total of
310 metres were drilled during the quarter. Metallurgical tests to
define silver and gold recoveries in high sulphidation areas also
continued at the property, and the results of these tests will
define further potential drilling targets.
Senior Appointments
During the quarter, Hochschild appointed Eduardo Landin as Chief
Operating Officer in succession to Ernesto Balarezo who has left
the Company to become Executive Vice President of South America at
Gold Fields Ltd. Mr Landin joined the Company in 2008 as General
Manager of the Company's operations in Argentina and in 2011 was
appointed General Manager of Projects with direct responsibility
over the development of the Inmaculada and Crespo Advanced
Projects. In addition, Jose Augusto Palma, current Vice President
of Legal, has been appointed Vice President of Legal and Corporate
Affairs, with additional responsibility for environmental, social,
health and hygiene and institutional affairs.
Financial position
The Company's financial position remains strong, with total cash
of $328.9 million and minority investments valued at $218.0 million
as at 31 March 2013.
Outlook
The Company is on track to achieve its full year production
target of 20.0 million attributable silver equivalent ounces in
2013. The focus of the Company's brownfield exploration programme
will remain on further improving and optimising the Company's
resource base to ensure the continued addition of high quality
resources in the future.
__________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 7907 2934
Head of Investor Relations
RLM Finsbury
Charles Chichester +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 almost fifty years' experience in
the mining of precious metal epithermal vein deposits and currently
operates four underground epithermal vein mines, three located in
southern Peru and one in southern Argentina. Hochschild also has
numerous long-term projects throughout the Americas.
PRODUCTION & SALES INFORMATION*
TOTAL GROUP PRODUCTION
Q1 Q4 Q1 12 mths 2012
2013 2012 2012
------------------------- ------- ------- ------- -------------
Silver production
(koz) 4,328 4,773 4,762 19,443
Gold production (koz) 41.64 41.34 40.51 164.34
Total silver equivalent
(koz) 6,827 7,254 7,193 29,304
Total gold equivalent
(koz) 113.78 120.89 119.88 488.40
Silver sold (koz) 3,502 5,069 4,068 18,928
Gold sold (koz) 29.53 45.93 27.71 159.79
------------------------- ------- ------- ------- -------------
Total production includes 100% of all production, including
production attributable to joint venture partners at San Jose and
Pallancata.
ATTRIBUTABLE GROUP PRODUCTION
Q1 Q4 Q1 12 mths 2012
2013 2012 2012
----------------------- ------- ------- ------- -------------
Silver production
(koz) 3,023 3,240 3,386 13,550
Gold production (koz) 28.70 27.35 28.29 111.82
Silver equivalent
(koz) 4,745 4,881 5,083 20,260
Gold equivalent (koz) 79.09 81.35 84.72 337.66
----------------------- ------- ------- ------- -------------
Attributable production includes 100% of all production from
Arcata, Ares and Moris, 60% from Pallancata and 51% from San
Jose.
QUARTERLY PRODUCTION BY MINE
ARCATA
Product Q1 Q4 Q1 12 mths 2012
2013 2012 2012
---------------------------- -------- -------- -------- -------------
Ore production (tonnes
treated) 203,888 234,354 164,160 773,498
Average grade silver
(g/t) 202 227 317 271
Average grade gold
(g/t) 0.73 0.75 0.94 0.83
Silver produced (koz) 1,190 1,156 1,498 5,526
Gold produced (koz) 4.16 4.08 4.48 17.27
Silver equivalent produced
(koz) 1,440 1,401 1,766 6,562
Silver sold (koz) 931 1,280 1,112 5,236
Gold sold (koz) 3.10 4.36 2.81 15.94
---------------------------- -------- -------- -------- -------------
ARES
Product Q1 Q4 Q1 12 mths 2012
2013 2012 2012
---------------------------- ------- ------------- ------- --------------
Ore production (tonnes
treated) 77,359 89,354 78,265 336,423
Average grade silver
(g/t) 65 58 47 54
Average grade gold
(g/t) 2.36 2.64 2.62 2.65
Silver produced (koz) 166 127 112 481
Gold produced (koz) 6.02 6.46 6.71 26.28
Silver equivalent produced
(koz) 527 515 515 2,058
Silver sold (koz) 132 155 85 473
Gold sold (koz) 4.71 8.07 3.21 25.75
---------------------------- ------- ------------- ------- --------------
PALLANCATA
Product Q1 Q4 Q1 12 mths 2012
2013 2012 2012
---------------------------- -------- ------------ -------- --------------
Ore production (tonnes
treated) 251,702 288,858 257,339 1,094,250
Average grade silver
(g/t) 239 255 263 256
Average grade gold
(g/t) 1.08 1.09 0.99 1.09
Silver produced (koz) 1,608 1,942 1,780 7,441
Gold produced (koz) 6.53 7.40 5.61 26.23
Silver equivalent produced
(koz) 2,000 2,386 2,117 9,014
Silver sold (koz) 1,539 2,071 1,826 7,280
Gold sold (koz) 5.93 7.76 5.48 25.07
---------------------------- -------- ------------ -------- --------------
The Company has a 60% interest in Pallancata.
SAN JOSE
Product Q1 Q4 Q1 12 mths 2012
2013 2012 2012
---------------------------- -------- ------------ -------- -------------
Ore production (tonnes
treated) 108,379 128,940 115,531 509,851
Average grade silver
(g/t) 459 422 416 417
Average grade gold
(g/t) 6.87 6.00 5.98 5.79
Silver produced (koz) 1,351 1,545 1,356 5,953
Gold produced (koz) 21.08 22.50 20.36 85.77
Silver equivalent produced
(koz) 2,616 2,895 2,577 11,099
Silver sold (koz) 889 1,553 1,032 5,897
Gold sold (koz) 12.80 23.16 14.34 84.29
---------------------------- -------- ------------ -------- -------------
The Company has a 51% interest in San Jose.
MORIS
Product Q1 Q4 Q1 12 mths 2012
2013 2012 2012
---------------------------- ------- ------------- ------- ---------------
Ore production (tonnes - - - -
treated)
Average grade silver - - - -
(g/t)
Average grade gold - - - -
(g/t)
Silver produced (koz) 13 4 17 43
Gold produced (koz) 3.86 0.90 3.35 8.79
Silver equivalent produced
(koz) 244 58 218 570
Silver sold (koz) 10 11 13 42
Gold sold (koz) 3.00 2.58 1.87 8.74
---------------------------- ------- ------------- ------- ---------------
* Ounces sold figures for all operations have been restated to
include gross revenue divided by gross ounces (previously included
net revenue divided by net ounces)
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. Nothing in this
announcement should be construed as a profit forecast.
- ends -
[1]Please note that all mineralised intersections in this
release are quoted as true widths.
[2] Please note that all mineralised intersections referred to
in this release are quoted as true widths.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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