TIDMHOC
RNS Number : 3164C
Hochschild Mining PLC
15 October 2015
__________________________________________________________________________________
15 October 2015
Production Report for the 3 months ended 30 September 2015
Strong operational delivery
-- Q3 2015 production of 7.6 million attributable silver
equivalent ounces consisting of:
o 4.1 million ounces of silver
o 57.0 thousand ounces of gold
-- Q3 YTD 2015 production of 16.3 million attributable silver
equivalent ounces consisting of:
o 10.4 million ounces of silver
o 97.6 thousand ounces of gold
-- First full quarter of production from Inmaculada mine
o 36.1 thousand ounces of gold
o 0.9 million ounces of silver
o On track to produce 6-7 million silver equivalent ounces
o All-in sustaining costs in September expected to be below $10
per silver equivalent ounce
-- On track to achieve 2015 production target of 24.0 million
attributable silver equivalent ounces
-- 2015 all-in sustaining costs on track to be $13-14 per silver
equivalent ounce
Financial position
-- Further precious metal hedges carried out in Q3:
o 24 August: 38,000 gold ounces at $1,158 per ounce for
remainder of 2015; 71,000 ounces of gold at 1,154 per ounce for
2016
o 6 October 2015: 6.0 million ounces of silver at $15.93 per
ounce for 2016;.29,000 ounces of gold at $1,145 per ounce for
2016
-- Total cash of approximately $75 million as at 30 Sept
2015[1]
Ignacio Bustamante, Chief Executive Officer commented:
"The third quarter has been a robust one in terms of production
as we have delivered a strong first full quarter at our new
Inmaculada mine and we are firmly on track to meet our full year
production target. The ramp-up at the operation has been
accomplished in a short space of time and I am pleased to note that
all-in sustaining costs at the mine were at below $10 per silver
equivalent ounce during the month of September, providing
confidence on overall cost target for the Company."
________________________________________________________________________________
A conference call will be held at 9.00am (London time) on
Thursday 15 October 2015 for analysts and investors.
Dial in details as follows:
International Dial in: +44 (0) 20 3139 4830
UK Toll-Free Number: +44(0) 808 237 0030
Pin: 34439782#
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
International: +44 (0) 20 3426 2807
UK Toll Free: +44(0) 808 237 0026
Pin: 663230#
__________________________________________________________________________________
Overview
In Q3 2015, the Company delivered attributable production of 7.6
million silver equivalent ounces, comprised of 4.1 million ounces
of silver and 57.0 thousand ounces of gold. The Company remains on
track to meet its full year production target of 24.0 million
attributable silver equivalent ounces (assuming the original 60:1
gold/silver ratio).
The Company can report that its all-in sustaining costs per
silver equivalent ounce are on track to fall to between $13 to $14
in 2015, assuming the current silver-to-gold ratio. All-in
sustaining costs in September at Inmaculada are expected to be
below $10 per silver equivalent ounce.
Production
Inmaculada
At Inmaculada, total silver equivalent production in Q3 was 3.0
million silver equivalent ounces consisting of 36.1 ounces of gold
and 0.9 million ounces of silver. Production to date in 2015 at the
operation has been 39.5 thousand ounces of gold and 1.0 million
ounces of silver bringing the total silver equivalent production to
3.3 million ounces.
Arcata
At Arcata, total silver equivalent production in Q3 was 1.7
million ounces (Q3 2014: 1.6 million ounces) which brought the
year-to-date total to 4.8 million ounces (Q3 2014 YTD: 5.0 million
ounces). Despite the imposition of the Company's adjusted mine
plans for 2015 to ensure the extraction of profitable ounces,
Arcata has delivered a stronger than expected first three quarters
with higher than expected tonnage and silver grades in
particular.
Pallancata
At Pallancata, tonnage in the third quarter was lower than the
equivalent period in 2014 due to the above-mentioned adjusted mine
plans resulting in production of 1.2 million silver equivalent
ounces (Q3 2014: 1.7 million ounces), with lower tonnage partially
offset by consistent grades. The year-to-date total was 3.6 million
silver equivalent ounces. (Q3 YTD 2014: 6.1 million ounces).
San Jose
The San Jose operation improved, as expected, with rising
tonnage and strong grades, delivering 3.3 million silver equivalent
ounces (Q3 2014: 2.9 million ounces). The operation as a whole
produced 8.7 million ounces year-to-date (Q3 YTD 2014: 8.5 million
ounces) with the fourth quarter also expected to be robust.
Average realisable prices and sales
Average realisable precious metal prices in Q3 2015 (which are
reported before the deduction of commercial discounts and include
the effects of the existing hedging agreements) were $1,165/ounce
for gold and $15.5/ounce for silver (Q3 2014: $1,226/ounce for gold
and $17.1/ounce for silver). For the first nine months of 2014,
average realisable precious metal prices were $1,205/ounce for gold
and $16.4/ounce for silver (Q3 2013 YTD: $1,384/ounce for gold and
$23.11/ounce for silver).
Brownfield exploration[2]
Pallancata
The exploration team at Pallancata began a 19,100 metre
exploration and drilling programme in May 2015 with the aim of
focusing on inferred resource exploration at surface. In mid
August, whilst pursuing the west extension of the Yurika vein to
the north west of the main Pallancata vein, a new blind structure
at a depth of 200 metres below surface was discovered. The Pablo
vein has been recognised along an east-west strike for 700 metres
and dips 50-75deg south. The structure's significant thickness
(greater than 10m wide) is associated with dilation zones in
flexures and fault jogs. The Pablo vein is a fine-to-medium grain
white quartz vein and shows a banded texture and multiple
brecciation events filled with adularia and quartz crystals. It is
part of a major regional structure, currently extending to about 2
km, which will be explored over the medium term.
The following table displays assay results from the
programme:
Drill Hole From To Width Estimated Au Ag Ag Eq
(m) (m) (m) True (g/t) (g/t) (g/t)
Width
(m)
------------- ------- ------- ------ --------- ------ ------ ------
DLEP-A01 267.85 299.40 31.55 25.46 1.67 510 610
Including 267.85 277.35 9.50 7.67 2.23 651 785
Including 281.10 287.40 6.30 5.08 1.59 499 594
Including 293.65 299.40 5.75 4.64 3.56 1127 1,340
------------- ------- ------- ------ --------- ------ ------ ------
DLEP-A02 335.00 340.40 5.40 4.92 0.62 175 212
Including 338.45 340.40 1.95 1.78 1.15 324 394
------------- ------- ------- ------ --------- ------ ------ ------
DLEP-A03 284.50 314.15 29.65 15.91 2.32 690 830
Including 284.50 303.40 18.90 10.14 3.59 1,064 1,279
------------- ------- ------- ------ --------- ------ ------ ------
DLEP-A04 261.60 272.15 10.55 8.26 2.56 805 959
Including 262.65 269.10 6.45 5.05 4.06 1,285 1,528
------------- ------- ------- ------ --------- ------ ------ ------
DLEP-A05 301.55 309.55 8.00 6.23 0.66 209 248
Including 301.55 302.60 1.05 0.82 3.42 1,074 1,279
Split Pablo 326.65 329.60 2.95 2.30 0.86 291 342
------------- ------- ------- ------ --------- ------ ------ ------
DLNS-A01 521.70 529.70 8.00 3.63 1.35 140 221
------------- ------- ------- ------ --------- ------ ------ ------
DLNS-A03 351.80 355.40 3.60 1.18 0.17 58 68
------------- ------- ------- ------ --------- ------ ------ ------
DLRI-A164 267.00 295.65 28.65 24.79 0.84 246 296
Including 267.00 269.10 2.10 1.82 3.53 821 1,033
Including 281.55 285.40 3.85 3.33 1.60 485 581
Including 294.55 295.35 0.80 0.69 3.03 3,227 3,769
------------- ------- ------- ------ --------- ------ ------ ------
DLRI-A165 355.10 379.00 23.90 19.56 0.79 218 266
Including 366.55 374.70 8.15 6.67 2.13 585 713
------------- ------- ------- ------ --------- ------ ------ ------
DLYU-A87 244.80 246.42 1.62 1.58 0.93 140 196
268.65 269.38 0.73 0.71 0.43 108 134
------------- ------- ------- ------ --------- ------ ------ ------
DLYU-A88 234.60 235.70 1.10 1.05 0.33 124 144
------------- ------- ------- ------ --------- ------ ------ ------
DLYU-A90 Unmineralised fault zone
------------- -----------------------------------------------------------
DLYU-A92A Unmineralised fault zone
------------- -----------------------------------------------------------
The intention is to conduct a comprehensive exploration and
infill drilling programme until the end of the year to better
understand the potential of the new discovery and to achieve an
initial inferred resource.
Inmaculada
During the third quarter ramp-up in mill throughput continued
with tonnes per day reaching the forecast capacity of 3,500 in mid
August and operating just above that level for the rest of the
quarter. Gold and silver recoveries have trended, as expected, to
their target of 95% in gold and 90% in silver.
(MORE TO FOLLOW) Dow Jones Newswires
October 15, 2015 02:01 ET (06:01 GMT)
Following the declaration of commercial production at the mine,
as disclosed on 8 September 2015, the Company subsequently
announced on 22 September that it had received the final mill
operating permit from the Peruvian government and consequently
sales of dore were able to commence. The overall production
forecast of 6-7 million silver equivalent ounces for 2015 remains
in place.
Total construction capital expenditure for the Inmaculada mine
is $455 million, of which $425 million has already been spent as of
August 2015 with the remaining construction capital expenditure of
$30 million expected to be spent during the rest of 2015 (to be
funded from existing cash resources).
As previously reported, the contractor GyM, has made a number of
requests for additional costs from the Company under the EPC
Contract. In addition, Hochschild has made certain claims against
GyM as a result of delays in the construction of the plant and
related components of the project. In September 2015, following
discussions, the Company and GyM settled their mutual claims and
have agreed that the total amount payable by the Company to GyM for
all works under the EPC Contract (including pending work) would be
fixed at approximately $159.1 million, of which $20 million
represented additional amounts payable in settlement of all claims
made by GyM for additional costs under the EPC Contract. In
addition, it was agreed that GyM would bear all risks and costs
resulting from the completion of all pending work under the EPC
Contract and, therefore, subject to certain limited exceptions, GyM
will not be entitled to request further adjustments to the amounts
agreed to be paid.
To date Hochschild has paid to GyM approximately $135 million
under the EPC Contract. It was agreed that the above mentioned
amount of $20 million would be paid in four instalments every six
months starting in September 2017, with interest accruing at an
annual rate of 5% of the outstanding balance. The remaining
approximately $4 million will be paid following completion of the
outstanding work.
Financial position
Total cash was approximately $75 million as at 30 September
2015.
On 24 August 2015, the Company signed agreements to hedge the
sale of 38,000 ounces of gold at a price of $1,158 per ounce for
the remainder of 2015 and 71,000 ounces of gold at a price of
$1,154 per ounce for 2016. Subsequently on 6 October 2015, the
Company signed further agreements to hedge the sale of a further
29,000 ounces of gold at $1,145 per ounce and 6.0 million ounces of
silver at $15.93 per ounce for 2016.
This is in addition to the previous agreement to hedge 38,000
ounces of gold for 2015 at $1,300 per ounce and 6,000,000 ounces of
silver at $17.75 per ounce for 2015.
Outlook
The Company is on track to achieve its full year production
target of 24.0 million attributable silver equivalent ounces in
2015 with all-in sustaining cost per silver equivalent ounces
expected to be between $13 to $14 in line with guidance (assuming
current silver-to-gold ratio).
_________________________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 3714 9040
Head of Investor Relations
Hudson Sandler
Charlie Jack +44 (0)207 796 4133
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 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
Q3 Q2 Q3 2014 YTD YTD 2014
2015 2015 2015
----------------------- ------- ------- ---------- ------- ---------
Silver production
(koz) 5,014 4,178 4,298 12,715 14,282
Gold production
(koz) 69.18 34.67 32.34 130.51 109.31
Total silver
equivalent (koz) 9,165 6,258 6,239 20,546 20,840
Total gold equivalent
(koz) 152.74 104.31 103.98 342.43 347.34
Silver sold
(koz) 3,612 4,437 3,659 11,397 13,745
Gold sold (koz) 32.78 32.36 26.47 90.78 102.77
----------------------- ------- ------- ---------- ------- ---------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q3 Q2 Q3 2014 YTD YTD 2014
2015 2015 2015
------------------- ------- ------- ---------- ------- ---------
Silver production
(koz) 4,142 3,386 3,546 10,407 12,072
Gold production
(koz) 56.97 23.40 21.06 97.58 76.52
Silver equivalent
(koz) 7,560 4,790 4,810 16,261 16,663
Gold equivalent
(koz) 126.00 79.83 80.17 271.02 277.72
------------------- ------- ------- ---------- ------- ---------
Attributable production includes 100% of all production from
Arcata, Pallancata and Ares and 51% from San Jose.
QUARTERLY PRODUCTION BY MINE
ARCATA
Product Q3 Q2 Q3 2014 YTD YTD 2014
2015 2015 2015
------------------- ------------ ------------ ------------ -------- ------------------
Ore production
(tonnes treated) 162,133 155,373 149,888 463,057 515,461
Average grade
silver (g/t) 331 350 319 337 278
Average grade
gold (g/t) 0.99 0.97 0.90 0.97 0.84
Silver produced
(koz) 1,434 1,439 1,353 4,160 4,248
Gold produced
(koz) 3.92 3.69 3.74 11.09 12.50
Silver equivalent
produced (koz) 1,670 1,661 1,578 4,826 4,998
Silver sold
(koz) 1,172 1,626 1,124 3,855 4,070
Gold sold (koz) 3.07 4.07 3.02 9.99 11.60
------------------- ------------ ------------ ------------ -------- ------------------
ARES
Product Q3 Q2 Q3 2014 YTD YTD 2014
2015 2015 2015
------------------- -------- -------- ---------- ------- ------------------
Ore production
(tonnes treated) - - - - 167,331
Average grade
silver (g/t) - - - - 110
Average grade
gold (g/t) - - - - 2.34
Silver produced
(koz) - - 8 - 534
Gold produced
(koz) - - 0.17 - 11.63
Silver equivalent
produced (koz) - - 19 - 1,232
Silver sold
(koz) - - 6 - 524
Gold sold (koz) - - 0.45 - 11.45
------------------- -------- -------- ---------- ------- ------------------
INMACULADA
Product Q3 Q2 Q3 2014 YTD YTD 2014
2015 2015 2015
------------------- ------------ ------------ ---------- ------------------ ---------
Ore production
(tonnes treated) 277,486 52,325 - 329,811 -
Average grade
silver (g/t) 116 89 - 112 -
Average grade
gold (g/t) 4.39 2.92 - 4.15 -
Silver produced
(koz) 875 95.45 - 970 -
Gold produced
(koz) 36.12 3.42 - 39.53 -
Silver equivalent
produced (koz) 3,042 301 - 3,342 -
Silver sold
(koz) 92 - - 92 -
Gold sold (koz) 3.64 - - 3.64 -
------------------- ------------ ------------ ---------- ------------------ ---------
(MORE TO FOLLOW) Dow Jones Newswires
October 15, 2015 02:01 ET (06:01 GMT)
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