TIDMHOC
RNS Number : 4146K
Hochschild Mining PLC
22 April 2020
_____________________________________________________________________________________
22 April 2020
Production Report for the 3 months ended 31 March 2020
Ignacio Bustamante, Chief Executive Officer said:
"The current global situation is extremely challenging for
everyone and, at Hochschild, our priority remains the health and
safety of our employees and stakeholders who have been vital in
helping us manage this situation. Although our operations in Peru
remain suspended, we continue to work with the government on our
potential strategies for remobilisation and ramp-up, whilst in
Argentina, we are steadily beginning to restart the San Jose
operation.
Our mines delivered a solid start to the year producing 94,000
gold equivalent ounces or 8.1 million silver equivalent ounces
although output was of course impacted from the middle of March. In
addition, our exploration programmes have been curtailed across the
Americas and in particular in Peru just prior to the end of the
rainy season. Hochschild is in a strong financial position with low
net debt, significant liquidity and we expect to be firmly back on
track once this temporary period of disruption is resolved."
Operational highlights
-- Q1 2020 attributable production: ([1])
o 59,425 ounces of gold
o 3.0 million ounces of silver
o 94,123 gold equivalent ounces
o 8.1 million silver equivalent ounces
-- Inmaculada and Pallancata activities continue to be limited
to critical environmental and safety priorities
-- San Jose in phased ramp-up process following receipt of
permission to restart production
-- 2020 guidance withdrawn
Strong financial position
-- Total cash of approximately $178 million as at 31 March 2020
($166 million as at 31 December 2019)
-- Net debt of approximately $36 million as at 31 March 2020
($33 million as at 31 December 2019)
-- Proposal to pay 2019 final dividend withdrawn
________________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 22 April 2020 for analysts and investors.
Dial in details as follows:
International Dial in: +44 330 336 9411
UK Toll-Free Number: 0800 78 779
Pin: 9767980#
Please dial into the call approximately ten minutes before the
2.30pm start time.
A recording of the conference call will be available on demand
on the Company's website: www.hochschildmining.com
________________________________________________________________________________________
Overview
In Q1 2020, Hochschild delivered attributable production of
94,123 gold equivalent ounces or 8.1 million silver equivalent
ounces. The period included a solid start to the year from
Inmaculada but was impacted towards the end of the period by the
management's decision to halt operations at all three mines
following the state of emergency declarations in both Peru and
Argentina.
Guidance
Due to the temporary suspension of Hochschild's mines in Peru
and Argentina and ongoing uncertainty regarding COVID-19,
Hochschild has decided to withdraw its 2020 guidance. The Company
will reissue full-year guidance once the full impact of the
suspensions and the restart pathway is clearer.
TOTAL GROUP PRODUCTION [2]
Q1 2020 Q4 2019 Q1 2019 12 mths
2019
-------- ----------------- -----------------
Silver production
(koz) 3,536 4,641 5,071 20,163
Gold production
(koz) 68.42 78.05 77.98 321.58
Total silver equivalent
(koz) 9,420 11,354 11,777 47,818
Total gold equivalent
(koz) 109.53 132.02 136.94 556.03
Silver sold (koz) 3,103 4,662 5,032 20,062
Gold sold (koz) 57.69 77.48 76.19 317.52
------------------------- -------- ----------------- ----------------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q1 2020 Q4 2019 Q1 2019 12 mths
2019
-------- -------- --------
Silver production
(koz) 2,984 3,780 4,370 16,808
Gold production
(koz) 59.43 64.02 67.42 269.89
Silver equivalent
(koz) 8,095 9,285 10,168 40,019
Gold equivalent
(koz) 94.12 107.97 118.23 465.34
------------------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q1 2020 Q4 2019 Q1 2019 12 mths
2019
-------- -------- --------
Ore production (tonnes
treated) 308,896 327,906 331,390 1,338,569
Average grade silver
(g/t) 151 179 144 163
Average grade gold
(g/t) 4.37 5.09 4.38 4.71
Silver produced
(koz) 1,391 1,359 1,447 5,747
Gold produced (koz) 46.45 43.82 48.86 189.18
Silver equivalent
(koz) 5,385 5,127 5,649 22,016
Gold equivalent
(koz) 62.62 59.62 65.69 256.00
Silver sold (koz) 1,179 1,356 1,441 5,732
Gold sold (koz) 39.72 44.16 48.08 188.59
------------------------ -------- -------- -------- ------------------------
Inmaculada's first quarter production was 46,450 ounces of gold
and 1.4 million ounces of silver which amounts to a gold equivalent
output of 62,621 ounces which was broadly in line with
expectations. Although grades were marginally lower than expected,
they are expected to rise in the second half of the year, assuming
a resumption in production. There was also once again a
contribution from products in process from the previous period.
Operations were stopped on 16 March 2020 with the shortfall from
the remaining 10 days of the quarter at approximately 5,200 gold
equivalent ounces.
Pallancata
Product Q1 2020 Q4 2019 Q1 2019 12 mths
2019
----------------- ----------------- -----------------
Ore production (tonnes
treated) 142,506 206,109 231,589 915,877
Average grade silver
(g/t) 250 258 285 278
Average grade gold
(g/t) 0.90 0.98 1.01 1.01
Silver produced
(koz) 1,019 1,524 1,881 7,259
Gold produced (koz) 3.61 5.60 6.61 25.95
Silver equivalent
(koz) 1,330 2,005 2,449 9,491
Gold equivalent
(koz) 15.46 23.31 28.48 110.36
Silver sold (koz) 961 1,502 1,877 7,161
Gold sold (koz) 3.33 5.47 6.58 25.45
------------------------ ----------------- ----------------- ----------------- --------
In the first quarter, Pallancata produced 1.0 million ounces of
silver and 3,615 ounces of gold bringing the silver equivalent
total to 1.3 million ounces in Q1. Tonnage was in line with
expectations, with grades lower than budgeted although they are
forecast to recover during the next few quarters once the mine
resumes production. Operations were stopped on 16 March 2020 with
the shortfall from the remaining 10 days of the quarter at
approximately 180,000 silver equivalent ounces.
San Jose (the Company has a 51% interest in San Jose)
Product Q1 2020 Q4 2019 Q1 2019 12 mths
2019
----------------- --------------- -----------------
Ore production (tonnes
treated) 84,903 145,490 110,132 544,165
Average grade silver
(g/t) 466 426 460 443
Average grade gold
(g/t) 7.57 6.89 6.90 6.81
Silver produced
(koz) 1,126 1,759 1,431 6,846
Gold produced (koz) 18.35 28.64 21.55 105.48
Silver equivalent
(koz) 2,705 4,222 3,285 15,917
Gold equivalent
(koz) 31.45 49.09 38.19 185.08
Silver sold (koz) 963 1,804 1,405 6,846
Gold sold (koz) 14.64 27.85 20.71 102.82
------------------------ ----------------- --------------- ----------------- --------
San Jose again delivered a steady start to the year despite the
traditionally shorter operational period due to the scheduled
hourly workers holiday in February. The run-rate on treated tonnage
was slightly higher than the corresponding period of 2019 along
with stronger gold grades resulting in production of 1.1 million
ounces of silver and 18,353 ounces of gold which makes 2.7 million
silver equivalent ounces. Operations were stopped on 19 March 2020
with the shortfall from the remaining seven days at approximately
300,000 silver equivalent ounces.
Average realisable prices and sales
Average realisable precious metal prices in Q1 2020 (which are
reported before the deduction of commercial discounts) were
$1,623/ounce for gold and $14.2/ounce for silver (Q1 2019:
$1,310/ounce for gold and $15.3/ounce for silver).
Brownfield exploration
Inmaculada
In Q1 2020, 4,690m of potential drilling was carried out in the
Bety, Lady, Pilar East, Shakira and South veins before the
programme was halted in mid-March. Also, 1,204m of resource
drilling was executed at the Angela and Ramal 4 veins.
Vein Results (resource drilling)
Bety IMS-20-001: 1.0m @ 1.3g/t Au & 94g/t Ag
-----------------------------------------
Lady LAD-19-001: 1.3m @ 1.5g/t Au & 120g/t Ag
-----------------------------------------
Lady Sur LAD-19-002: 0.9m @ 5.7g/t Au & 17g/t Ag
LAD-19-003: 1.4m @ 27.0g/t Au & 113g/t
Ag
-----------------------------------------
Shakira HUA-19-001: 3.1m @ 5.1g/t Au & 252g/t Ag
-----------------------------------------
South vein IMM-20-002: 0.8m @ 15.0g/t Au & 1,753g/t
Ag
-----------------------------------------
Subject to the resumption of the Company's brownfield campaign
in Peru, the second quarter plan consists of completing infill
drilling in the Pilar, Susana Beatriz, Dora and Tensional Lourdes
structures. Additional drilling will be carried out to incorporate
new resources from the Juliana, Shakira and Lady Sur veins.
Pallancata
At Pallancata, 5,145m of potential drilling was executed before
the programme was also halted. This included just over 3,000m of
long hole drilling from underground towards the Anomalia NE,
Royropata, Veta 1, Mercedes, Luisa and Erika veins and 1,880m of
drilling tracing the continuity of the Pallancata Vein.
Vein Results (resource drilling)
Paola DLLU-A206: 0.9m @ 1.3g/t Au & 479g/t Ag
----------------------------------------
Karina DLLU-A206: 1.1m @ 6.8g/t Au & 539g/t Ag
----------------------------------------
Gracia N DLPE-A171: 0.7m @ 0.7g/t Au & 88g/t Ag
----------------------------------------
4,213m of infill drilling was carried out in the Huararani and
Marco areas with results likely to lead to a redefinition of the
geology of these structures.
Subject to the resumption of the Company's brownfield campaign
in Peru, the Q2 programme includes 2,500m of underground long hole
drilling aimed towards the Royropata, Mercedes and Luisa veins as
well as 6,600m of potential drilling targeting the Pallancata,
Erika, Soraida and Marco veins. The team is also aiming to complete
the infill drilling campaigns in the Huararani, Luciano and Puka
veins.
San Jose
At San Jose, 2,889m of potential drilling was executed in the
Micaela Oeste, Emily, Karina and Carlos structures.
Vein Results (potential)
Micaela Oeste SJD-2070: 0.9m @ 9.6g/t Au & 207g/t Ag
SJD-2074: 0.3m @ 0.4g/t Au & 32g/t Ag
-----------------------------------------
Emily SJD-2081: 0.6m @ 0.8g/t Au & 34g/t Ag
SJD-2085: 0.6m @ 1.6g/t Au & 100g/t Ag
SJD-2090: 0.5m @ 0.1g/t Au & 35g/t Ag
-----------------------------------------
Elisa SJD-2085: 0.9m @ 9.6g/t Au & 207g/t Ag
-----------------------------------------
Karina SJD-2058: 0.5m @ 0.5g/t Au & 118g/t Ag
-----------------------------------------
Carlos SJD-2084: 1.9m @ 3.5g/t Au & 1,024g/t Ag
-----------------------------------------
During Q1, 8,675m of infill drilling has been carried out and a
further 6,000m is currently scheduled for the second quarter.
Financial position
Total cash was approximately $178 million as at 31 March 2020
resulting in net debt of approximately $36 million. This includes
$14 million of debt in Argentina which will mitigate the impact
from COVID 19.
_____________________________________________________________________________________
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 three underground epithermal vein mines, two 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.
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 the average gold/silver ratio
for 2019 of 86x.
[2] Group production figures for 2019 include 394,000 silver
equivalent ounces from the Arcata operation which was placed on
care and maintenance in February 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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