Hochschild Mining PLC CEO Comments On Cashflow Optimisation Action Plan (6064E)
May 14 2013 - 2:00AM
UK Regulatory
TIDMHOC
RNS Number : 6064E
Hochschild Mining PLC
14 May 2013
14 May 2013
Hochschild CEO Comments On Cashflow Optimisation Action Plan
At the Bank of America Merrill Lynch Global Metals, Mining &
Steel Conference in Barcelona today, Ignacio Bustamante, CEO, will
give an update on Hochschild Mining's progress in 2013 and, in
particular, detail on several of the measures taken as part of the
Company's previously announced cashflow optimisation action plan,
implemented as a prudent response to recent volatility in precious
metal prices.
Highlights
-- 2013 exploration budget revised by 29% to $55m
-- Greenfield exploration initiatives focused on most promising
prospects
-- Positive impact from cashflow optimisation initiatives:
o 2013 production target maintained at 20.0 million attributable
silver equivalent ounces
o Unit cost increases in Peru now expected at 10-15% for 2013
(previously 15-20% increase)
o Unit cost increase in Argentina maintained at 10-15% for
2013
o Sustaining capital expenditure at main operations now expected
to be approximately $160m
Exploration
Following a detailed review of discretionary elements of the
Company's exploration budget, Hochschild has reduced the expected
2013 figure by 29% to $55m with the key temporary reductions in the
greenfield programme which will now represent 53% of the overall
reduced figure and will concentrate on the Company's most promising
prospects. In addition, brownfield exploration programmes at the
Company's main operations are expected to focus on the development
of potential resources as opposed to further resource life-of-mine
increases, reflecting the Company's confidence in their long term
sustainability.
Operating cost optimisation
Hochschild has also made progress with regards to its operating
cost base and has identified key savings following ongoing
negotiations with equipment and material suppliers as well as
changes to the mine development budget which is expected to
materially impact both the unit cost per tonne at the main
operations as well as the forecast level of sustaining capital
expenditure. The 2013 production target of 20.0 million
attributable silver equivalent ounces is unchanged.
The Company now expects the increase in overall 2013 unit cost
per tonne in Peru to be approximately 10-15% (excluding royalties
and the increased refining cost due to the effects of the dore
project at Arcata) versus previous guidance of 15-20% as disclosed
in the 2012 Full Year Production Report on 23 January 2013. In
Argentina, the expected unit cost per tonne increase has been
maintained at 10-15%. In addition, sustaining capital expenditure
for the main operations has been revised down from $180m to
approximately $160m.
Administrative cost optimisation
The Company has also recently reduced its Administrative budget
with key savings identified in administrative expenses,
professional fees and other items of corporate and support capex.
In addition, a significant headcount reduction of 86 employees has
already been carried out at the corporate centre.
Ignacio Bustamante, Chief Executive Officer commented:
"We have highlighted in our first quarter interim management
statement that Hochschild has initiated an action plan to conserve
capital and optimise cashflow and I am pleased that we are today
able to give an update on our progress. The Company has moved
swiftly to implement plans that were put in place as part of our
ongoing review of market conditions and has already begun to
deliver significant savings without impacting our overall long term
exploration-led strategy. I am confident that we will be able to
report back with further important progress at our Interim Results
in August."
__________________________________________________________________________________
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.
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 -
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