TIDMHOC
RNS Number : 2419L
Hochschild Mining PLC
18 April 2018
__________________________________________________________________________________
18 April 2018
Production Report for the 3 months ended 31 March 2018
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild has delivered a strong start to the year with better
than expected contributions from Inmaculada and Pallancata and our
other mines performing as planned. We are therefore firmly on track
to meet our stated production and cost targets for 2018.
We have also made an encouraging start to our ambitious 2018
brownfield exploration plan with campaigns already commenced at
Inmaculada, Arcata and San Jose. Early results support our
confidence in the programme's ability to deliver resource additions
to our mineral base during 2018."
Operational highlights
-- Record 1(st) quarter attributable production([1])
o 4.7 million ounces of silver
o 69,030 ounces of gold
o 9.8 million silver equivalent ounces
o 132,036 gold equivalent ounces
-- Strong performance achieved despite scheduled annual stoppage
at San Jose
-- Value accretive $14 million hydraulic backfill project at San
Jose on track for completion at end H1 2018
-- On track to deliver overall 2018 production target of 514,000
gold equivalent ounces (38 million silver equivalent ounces)
-- 2018 all-in sustaining costs on track to meet $960-$990 per
gold equivalent ounce guidance ($13.0-13.4 per silver equivalent
ounce)
Exploration highlights
-- Brownfield programme already adding further resources
o Inmaculada - further encouraging results from the Millet vein
and surrounding structures
o Arcata and San Jose programmes identifying resources close to
existing mine infrastructure
Strengthening financial position
-- Total cash of approximately $109 million as at 31 March 2018
($257 million as at 31 December 2017)
-- Net debt of approximately $100 million as at 31 March 2018
($103 million as at 31 December 2017)
-- 7.75% Senior Notes repaid in Q1 2018 financed by cash
resources and significantly lower cost short-to-medium term
debt
-- Current Net Debt/LTM EBITDA of approximately 0.33x as at 31
March 2018
__________________________________________________________________________________
A conference call will be held at 1.30pm (London time) on
Wednesday 18 April 2018 for analysts and investors.
Dial in details as follows:
International Dial in: +44 333 300 0804
UK Toll-Free Number: 0800 358 9473
Pin: 29664780#
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
International: +44 333 300 0819
Pin: 301225293#
__________________________________________________________________________________
Overview
Hochschild delivered a record first quarter attributable
production result of 9.8 million silver equivalent ounces (132,036
gold equivalent ounces) mostly due to record output at Inmaculada
as well as a strong result from Pallancata.
The Company reiterates that its all-in sustaining cost for 2018
is on track to be $960-$990 per gold equivalent ounce ($13.0-13.4
per silver equivalent ounce).
TOTAL GROUP PRODUCTION
Q1 2018 Q4 2017 Q1 2017 12 mths 2017
-------- -------- --------
Silver production
(koz) 5,355 5,784 4,830 22,301
Gold production
(koz) 79.85 80.80 70.98 304.16
Total silver equivalent
(koz) 11,264 11,763 10,083 44,809
Total gold equivalent
(koz) 152.21 158.96 136.26 605.52
Silver sold (koz) 5,282 6,061 4,600 22,295
Gold sold (koz) 76.91 82.79 67.72 300.21
------------------------- -------- -------- -------- -------------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q1 2018 Q4 2017 Q1 2017 12 mths 2017
-------- -------- --------
Silver production
(koz) 4,662 4,864 4,113 19,141
Gold production
(koz) 69.03 66.27 60.62 254.93
Silver equivalent
(koz) 9,771 9,768 8,599 38,006
Gold equivalent
(koz) 132.04 132.00 116.20 513.60
------------------- -------- -------- -------- -------------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q1 2018 Q4 2017 Q1 2017 12 mths 2017
-------- -------- --------
Ore production (tonnes
treated) 337,507 337,358 283,959 1,295,701
Average grade silver
(g/t) 158 146 135 145
Average grade gold
(g/t) 4.60 4.29 4.33 4.15
Silver produced
(koz) 1,670 1,363 1,239 5,506
Gold produced (koz) 49.78 41.53 41.79 165.07
Silver equivalent
(koz) 5,354 4,436 4,331 17,721
Gold equivalent
(koz) 72.35 59.95 58.53 239.48
Silver sold (koz) 1,591 1,445 1,195 5,498
Gold sold (koz) 46.95 43.48 39.98 162.32
------------------------ -------- -------- -------- -------------
Inmaculada's first quarter production was 49,781 ounces of gold
and 1.7 million ounces of silver which amounts to a record gold
equivalent output of 72,351 ounces and was principally driven by
higher than expected gold grades, lower dilution and a contribution
from products in process from the previous period.
Pallancata
Product Q1 2018 Q4 2017 Q1 2017 12 mths 2017
-------- -------- --------
Ore production (tonnes
treated) 128,134 125,872 71,662 470,903
Average grade silver
(g/t) 384 408 468 442
Average grade gold
(g/t) 1.47 1.70 1.94 1.78
Silver produced
(koz) 1,412 1,459 964 5,956
Gold produced (koz) 5.29 6.03 3.89 23.47
Silver equivalent
(koz) 1,803 1,905 1,252 7,693
Gold equivalent
(koz) 24.37 25.74 16.92 103.95
Silver sold (koz) 1,401 1,665 879 5,940
Gold sold (koz) 5.11 6.72 3.49 23.29
------------------------ -------- -------- -------- -------------
At Pallancata, the ramp up of tonnage from the Pablo vein
continued according to plan with the operation on track to mine
approximately 2,200 tonnes per day by the end of the first half.
Average grades from the mix of several veins were better than
expected in the first quarter although this is expected to be only
a seasonal effect. The operation produced 1.4 million ounces of
silver and 5,292 ounces of gold bringing the silver equivalent
production total to 1.8 million ounces, a 44% improvement on the
corresponding period of 2017.
San Jose (the Company has a 51% interest in San Jose)
Product Q1 2018 Q4 2017 Q1 2017 12 mths 2017
-------- -------- --------
Ore production (tonnes
treated) 121,889 144,732 114,956 532,676
Average grade silver
(g/t) 415 465 458 436
Average grade gold
(g/t) 6.44 7.26 6.50 6.71
Silver produced
(koz) 1,412 1,877 1,463 6,448
Gold produced (koz) 22.08 29.65 21.15 100.47
Silver equivalent
(koz) 3,047 4,071 3,029 13,883
Gold equivalent
(koz) 41.17 55.02 40.93 187.60
Silver sold (koz) 1,434 1,845 1,405 6,501
Gold sold (koz) 22.34 28.98 20.02 99.63
------------------------ -------- -------- -------- -------------
San Jose delivered a steady start to 2018 despite the
traditionally shorter operational period due to the scheduled
hourly workers holiday in February. Tonnage was slightly higher
than the corresponding period of 2017 but this was offset by lower
silver grades resulting in production of 1.4 million ounces of
silver and 22,085 ounces of gold which makes 3.0 million silver
equivalent ounces. Work on the highly value accretive $14 million
hydraulic backfill project has progressed well in the first quarter
and is on track to be completed, as scheduled, by the end of the
first half.
Arcata
Product Q1 2018 Q4 2017 Q1 2017 12 mths 2017
-------- -------- --------
Ore production (tonnes
treated) 91,175 120,384 132,428 499,385
Average grade silver
(g/t) 330 312 310 308
Average grade gold
(g/t) 1.04 1.04 1.12 1.07
Silver produced
(koz) 860 1,085 1,165 4,391
Gold produced (koz) 2.69 3.59 4.14 15.15
Silver equivalent
(koz) 1,060 1,350 1,471 5,512
Gold equivalent
(koz) 14.32 18.25 19.88 74.49
Silver sold (koz) 855 1,106 1,121 4,357
Gold sold (koz) 2.52 3.61 4.23 14.96
------------------------ -------- -------- -------- -------------
The Arcata mine operated according to plan during the period
with production of 860,000 ounces of silver and 2,693 ounces of
gold which gives a silver equivalent figure of 1.1 million ounces.
Both tonnage and grades remained consistent at the operation with
the focus still on improving the cost position and increasing the
quality of resources through the 2018 brownfield exploration
programme, as well as other efficiency and productivity
measures.
Average realisable prices and sales
Average realisable precious metal prices in Q1 2018 (which are
reported before the deduction of commercial discounts) were
$1,350/ounce for gold and $16.1/ounce for silver (Q1 2017:
$1,238/ounce for gold and $18.3/ounce for silver).
Brownfield exploration
Inmaculada
At Inmaculada, the Company has maintained the momentum in its
current drill programme with a total of 11 drill rigs now on site
and ongoing results indicating substantial additions to the
deposit's resource base close to the existing mine infrastructure.
The campaign is focusing to the East of the Angela vein (the Millet
zone) with a further update expected to be given later in the year.
In the first quarter of 2018, 7,650m of resource drilling targeted
the Millet vein whilst 2,157m of potential drilling was also
carried out at the Thalia vein. Selected results below:
Vein Results
Millet MIL-17-008: 5.1m @ 1.8g/t Au & 72g/t Ag
MIL-17-010: 9.9m @ 2.0g/t Au & 61g/t Ag
MIL-18-012: 0.9m @ 2.8g/t Au & 18g/t Ag
MIL-18-013: 5.0m @ 6.7g/t Au & 43g/t Ag
MIL-18-014: 14.3m @ 4.0g/t Au & 205g/t
Ag
MIL-18-015: 8.0m @ 1.3g/t Au & 75g/t Ag
MIL-18-015: 3.1m @ 2.0g/t Au & 127g/t Ag
MIL-18-018: 7.8m @ 2.6g/t Au & 37g/t Ag
MIL-18-018: 4.2m @ 3.9g/t Au & 27g/t Ag
MIL-18-019: 7.7m @ 1.8g/t Au & 78g/t Ag
MIL-18-019: 3.8m @ 3.2g/t Au & 108g/t Ag
------------------------------------------
Alessandra MIL-17-002: 2.3m @ 2.2g/t Au & 122g/t Ag
MIL-17-003: 1.0m @ 2.7g/t Au & 126g/t Ag
MIL-17-004A: 1.8m @ 1.9g/t Au & 154g/t
Ag
------------------------------------------
Vero MIL-17-003: 1.3m @ 1.7g/t Au & 57g/t Ag
MIL-17-010: 9.3m @ 3.3g/t Au & 24g/t Ag
OLI-17-001: 1.0m @ 3.5g/t Au & 82g/t Ag
------------------------------------------
The programme will continue throughout the year and in the
second quarter, 25,000m of drilling will focus on the Millet,
Olinda and Lola veins. In addition, the brownfield team is also
planning to carry out a number of underground camera drill holes in
order to identify structures parallel to the Angela vein to the
West.
Finally, the successful campaign surrounding the mine
infrastructure has facilitated a reinterpretation of approximately
fifty older drill holes which will add further resources with an
update expected to be given in the third quarter.
Arcata
At Arcata, an underground drilling programme for the year is
focused on areas close to the existing mine infrastructure with
strong potential to be rapidly incorporated into the short-term
Arcata mine plan. In the first quarter of 2018, despite the rainy
season, the programme was able to begin with over 3,000m of
resource drilling in the Ruby 2 & 3 veins whilst 6,550m of
potential drilling was carried out in the Tunel 4, Barbara and Tres
Reyes veins. Selected results below:
Vein Results
Alexia T2 DDH-209-ST-17: 0.7m @ 0.6g/t Au & 264g/t
Ag
DDH-218-ST-18: 0.9m @ 0.3g/t Au & 115g/t
Ag
--------------------------------------------
Alexia T3 DDH-218-ST-18: 0.5m @ 0.9g/t Au & 298g/t
Ag
--------------------------------------------
Amparo DDH-218-ST-18: 1.5m @ 0.6g/t Au & 64g/t
Ag
--------------------------------------------
Pablito DDH-231-DI-18: 1.6m @ 0.2g/t Au & 146g/t
Ag
DDH-239-DI-18: 1.0m @ 2.4g/t Au & 819g/t
Ag
DDH-248-DI-18: 1.7m @ 0.2g/t Au & 269g/t
Ag
--------------------------------------------
Ruby 2 DDH-198-EX-17: 1.0m @ 0.2g/t Au & 5g/t
Ag
DDH-207-DI-17: 1.0m @ 0.1g/t Au & 53g/t
Ag
DDH-217-DI-18: 1.2m @ 0.7g/t Au & 236g/t
Ag
DDH-222-DI-18: 0.8m @ 0.5g/t Au & 156g/t
Ag
DDH-225-DI-18: 1.0m @ 0.4g/t Au & 133g/t
Ag
DDH-231-DI-18: 1.2m @ 0.7g/t Au & 317g/t
Ag
DDH-239-DI-18: 0.6m @ 0.3g/t Au & 152g/t
Ag
DDH-248-DI-18: 1.0m @ 2.3g/t Au & 1,003g/t
Ag
--------------------------------------------
Ruby 3 DDH-212-DI-18: 1.3m @ 0.7g/t Au & 396g/t
Ag
--------------------------------------------
In the second quarter the programme will be focused on Ruby 2
and 3 and Pablito veins with 15,000m of drilling scheduled.
Pallancata
At Pallancata, as part of the 2018 aim of drilling for potential
resources from the extension of Pablo and from the Marco vein to
the north, drilling was carried out at Marco with results pending.
In the second quarter, the focus will be on the Farallon area where
Pablo and Marco meet and in addition underground drilling is to be
carried out to the south of the Pablo vein with the aim of
intercepting the continuation of the Pallancata and Luisa
veins.
San Jose
At San Jose, resources are expected to be added from the ongoing
drilling campaign (1,115m in Q1) close to the mine infrastructure
particularly from the Ayelen S.E., Molle and Odin veins.
The Company is also in the middle of executing a potential
drilling campaign incorporating sixteen drill holes to the North
West at the Aguas Vivas zone.
Vein Results
Ayelen S.E. extension SJD-1708: 2.4m @ 8.7g/t Au & 652g/t Ag
SJD-1711: 4.9m @ 6.7g/t Au & 151g/t Ag
--------------------------------------------
Odin SJM-351: 1.1m @ 5.6g/t Au & 739g/t Ag
--------------------------------------------
Perla SJM-351: 0.3m @ 1.9g/t Au & 149g/t Ag
--------------------------------------------
Molle SJM-351: 2.6m @ 1.6g/t Au & 320g/t Ag
--------------------------------------------
Aguas Vivas SJD-1703: 0.4m @ 0.3g/t Au, 7g/t Ag, 1.3%
Pb & 2.8% Zn
SJD-1704: 1.4m @ 0.5g/t Au, 32g/t Ag, 2.5%
Pb & 1.6% Zn
SJD-1704: 0.6m @ 3.4g/t Au, 14g/t Ag, 1.0%
Pb & 0.6% Zn
SJD-1704: 1.2m @ 2.3g/t Au, 13g/t Ag, 0.2%
Pb & 0.3% Zn
SJD-1705: 0.4m @ 0.2g/t Au, 3g/t Ag, 1.8%
Pb & 3.5% Zn
SJD-1705: 0.3m @ 0.3g/t Au, 12g/t Ag, 1.6%
Pb & 1.7% Zn
--------------------------------------------
Financial position
Total cash was approximately $109 million as at 31 March 2018
resulting in net debt of approximately $100 million.
On 10 January 2018, Hochschild signed a short-term loan with
Nova Scotia Bank of $50 million (at an interest rate of 3 months
LIBOR plus 0.32%) and on 17 January 2018, the Company signed a
medium-term loan with Nova Scotia Bank and Citibank of $100 million
(at an interest rate of 3 months LIBOR plus 0.70%). The proceeds
were used to redeem the Senior Unsecured Notes of Compañia Minera
Ares S.A.C.
On 23 January 2018, the Company redeemed in full all of the
$294.8 million outstanding principal amount of the Senior Unsecured
Notes. The redemption price was $317.6 million which included the
principal amount of $294.8 million as well as the total unpaid
interest of $11.4 million and a premium of $11.4 million. This
repayment and refinancing has significantly reduced the company's
interest cost going forward.
__________________________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 3709 3264
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.
__________________________________________________________________________________
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.
This announcement contains information which prior to its
release could be considered inside information.
Note
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (Regulation (EU) No.596/2014). Upon the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
LEI: 549300JK10TVQ3CCJQ89
- ends -
[1] All equivalent figures assume a gold/silver ratio of
74x.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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