TIDMHOC
RNS Number : 0184Z
Hochschild Mining PLC
20 January 2022
_____________________________________________________________________________________
20 January 2022
Production Report for the 12 months ended 31 December 2021
Ignacio Bustamante, Chief Executive Officer said:
"Our operations have delivered another strong quarter of
production and we have once again successfully finished the year in
line with guidance. Our brownfield exploration team has continued
to add high grade ounces at Inmaculada and San Jose whilst we have
hedged further production at Pallancata to ensure profitable
production through 2023.
The fourth quarter was a very busy one in terms of business
development and expanding our growth pipeline with the announcement
of our exciting acquisition of Amarillo Gold and the exercise of
our option to start earning-in a 60% interest in the promising Snip
gold project in Canada. We look forward to advancing the
development of both projects throughout 2022. Finally we were also
pleased to complete the successful demerger and IPO of Aclara
Resources Inc. towards the end of the year."
Operational highlights
-- Full year attributable production in line with forecasts
([1])
o 221,419 ounces of gold
o 12.2 million ounces of silver
o 362,972 gold equivalent ounces
o 31.2 million silver equivalent ounces
-- Strong operational performance despite impact from Covid
protocols in 2021
-- 2021 all-in sustaining costs expected to meet $1,210-$1,250
per gold equivalent ounce guidance ($14.1-14.5 per silver
equivalent ounce)
Exploration & Business Development highlights
-- Resources expected to increase by approximately 83 million
silver equivalent ounces in 2021
-- Announcement of definitive agreement to acquire Amarillo Gold
in Brazil; completion expected in Q1 2022
-- Option exercised to start earning-in 60% interest in Skeena
Resources' Snip gold project
-- Completion of demerger & listing of Aclara Resources Inc.
on the TSX
-- Volcan Gold project CEO appointed; 2022 work programme being
developed
Strong financial position
-- Total cash of approximately $387 million as at 31 December
2021 ($232 million as at 31 December 2020) [2]
-- Increased medium-term debt by $100 million in December 2021
at competitive market rates
-- Net cash of approximately $87 million as at 31 December 2021
($22 million as at 31 December 2020)
-- Current Net Cash/LTM EBITDA of approximately 0.227x as at 31
December 2021
2021 ESG highlights
-- Lost Time Injury Frequency Rate of 1.26 (2020: 1.38)
([3])
-- Accident Severity Index of 676 (2020: 474) ([4])
-- Water consumption of 193lt/person/day (2020:
231lt/person/day)
-- Domestic waste generation of 1.00 kg/person/day (2020:
1.18kg/person/day)
-- ECO score of 5.29 out of 6 (2020: 5.74) ([5])
2022 guidance
-- Production target:
o 335,000-345,000 gold equivalent ounces (28.8-29.7 million
silver equivalent ounces) using 86x gold silver ratio
o 360,000-375,000 gold equivalent ounces (26.0-27.0 million
silver equivalent ounces) using 72x gold silver ratio
-- All-in sustaining costs target:
o $1,440-$1,480 per gold equivalent ounce ($16.8-17.2 per silver
equivalent ounce) using 86x gold silver ratio
o $1,330-$1,370 per gold equivalent ounce ($18.5-19.0 per silver
equivalent ounce) using 72x gold silver ratio
-- Total sustaining and development capital expenditure expected
to be approximately $150-160 million
-- Brownfield exploration budget expected to be approximately
$34 million
-- Amarillo/Posse gold project capital expenditure in Brazil
planned for $120 million
-- Greenfield budget of approximately $11 million; Snip
investment expected to be approximately $9 million
________________________________________________________________________________________
A conference call will be held at 1.30pm (London time) on
Thursday 20 January 2022 for analysts and investors.
Dial in details as follows:
UK Toll-Free Number: 0800 279 6877
International Dial in: +44 (0)330 336 9601
US/Canada Toll-Free Number: 800-289-0720
Pin: 9235113#
A recording of the conference call will be available on demand
on the Company's website: www.hochschildmining.com
________________________________________________________________________________________
Overview
In Q4 2021, Hochschild Mining PLC (HOC.LN) (OTCMKTS: $HCHDF)
("Hochschild" or "the Company") delivered attributable production
of 94,222 gold equivalent ounces or 8.1 million silver equivalent
ounces, virtually the same as the third quarter result. Overall
2021 attributable production was 362,972 gold equivalent ounces or
31.2 million silver equivalent ounces, in line with the Company's
guidance and a strong increase of 25% versus the Covid-impacted
2020.
The Company expects that its all-in sustaining cost for 2021
will be in line with guidance of $1,210-$1,250 per gold equivalent
ounce ($14.1-14.5 per silver equivalent ounce).
TOTAL GROUP PRODUCTION
Q4 2021 Q3 2021 Q4 2020 12 mths 12 mths
2021 2020
-------- -------- -------- --------
Silver production
(koz) 3,892 3,833 3,719 14,746 11,821
Gold production
(koz) 68.22 69.09 65.67 262.39 207.08
Total silver equivalent
(koz) 9,759 9,775 9,366 37,311 29,631
Total gold equivalent
(koz) 113.48 113.66 108.91 433.85 344.54
Silver sold (koz) 3,877 3,830 3,803 14,712 11,846
Gold sold (koz) 67.80 68.60 66.57 260.71 207.77
------------------------- -------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q4 2021 Q3 2021 Q4 2020 12 mths 12 mths
2021 2020
-------- -------- -------- --------
Silver production
(koz) 3,209 3,043 3,187 12,174 9,808
Gold production
(koz) 56.91 58.25 56.97 221.42 175.24
Silver equivalent
(koz) 8,103 8,052 8,087 31,216 24,879
Gold equivalent
(koz) 94.22 93.63 94.03 362.97 289.29
------------------- -------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q4 2021 Q3 2021 Q4 2020 12 mths 12 mths
2021 2020
------------ ------------ ------------ ----------
Ore production
(tonnes treated) 341,577 336,178 340,854 1,349,892 948,937
Average grade silver
(g/t) 191 184 152 174 154
Average grade gold
(g/t) 4.03 4.34 4.23 4.05 4.33
Silver produced
(koz) 1,850 1,608 1,393 6,236 4,034
Gold produced (koz) 41.99 44.34 43.55 165.73 129.17
Silver equivalent
(koz) 5,461 5,421 5,138 20,488 15,143
Gold equivalent
(koz) 63.50 63.04 59.75 238.24 176.09
Silver sold (koz) 1,843 1,604 1,404 6,216 4,020
Gold sold (koz) 41.95 44.42 44.05 165.86 129.70
---------------------- ------------ ------------ ------------ ---------- --------
Fourth quarter production at Inmaculada was 41,990 ounces of
gold and 1.9 million ounces of silver, which amounts to a gold
equivalent output of 63,504 ounces, with higher-than-expected
recoveries contributing to another strong operational period.
Overall in 2021, Inmaculada has delivered gold equivalent
production of 238,238 ounces (2020: 176,086 ounces), with the
increase versus 2020 due to the impact of two Covid-19 related
stoppages during 2020. Grades and gold recoveries have proved to be
higher than originally budgeted.
Pallancata
Product Q4 2021 Q3 2021 Q4 2020 12 mths 12 mths
2021 2020
------------- ------------- ------------- --------
Ore production
(tonnes treated) 128,228 113,451 186,454 530,681 519,611
Average grade silver
(g/t) 177 188 231 212 247
Average grade gold
(g/t) 0.85 0.79 0.81 0.84 0.87
Silver produced
(koz) 648 612 1,241 3,261 3,679
Gold produced (koz) 3.14 2.63 4.37 13.05 12.93
Silver equivalent
(koz) 918 838 1,617 4,382 4,790
Gold equivalent
(koz) 10.68 9.75 18.80 50.96 55.70
Silver sold (koz) 642 622 1,287 3,263 3,654
Gold sold (koz) 3.12 2.62 4.56 13.03 12.80
---------------------- ------------- ------------- ------------- -------- --------
In Q4, Pallancata produced 0.6 million ounces of silver and
3,137 ounces of gold bringing the silver equivalent total to 0.9
million, with treated tonnage slightly higher-than-expected but
offset by lower grades. Overall in 2021, Pallancata produced 4.4
million silver equivalent ounces (2020: 4.8 million ounces) with
the reduction versus the original forecast (5.4 -5.6 million
ounces) due to the effects of lower-than-budgeted grades in line
with the current declining production profile.
San Jose (the Company has a 51% interest in San Jose)
Product Q4 2021 Q3 2021 Q4 2020 12 mths 12 mths
2021 2020
-------- -------- -------- --------
Ore production
(tonnes treated) 143,398 149,637 110,019 539,229 401,202
Average grade silver
(g/t) 346 381 345 344 357
Average grade gold
(g/t) 5.77 5.24 5.62 5.47 5.63
Silver produced
(koz) 1,393 1,613 1,085 5,250 4,108
Gold produced (koz) 23.10 22.12 17.75 83.62 64.99
Silver equivalent
(koz) 3,380 3,515 2,611 12,440 9,697
Gold equivalent
(koz) 39.30 40.88 30.36 144.66 112.76
Silver sold (koz) 1,392 1,605 1,112 5,233 4,172
Gold sold (koz) 22.73 21.56 17.97 81.83 65.28
---------------------- -------- -------- -------- -------- --------
The San Jose mine enjoyed another solid quarter with tonnage
moderately better than expected although this was partially offset
by lower-than-budgeted grades. Production in the period was 1.4
million ounces of silver and 23,097 ounces of gold which represents
3.4 million silver equivalent ounces. This amounts to a 2021 total
of 12.4 million silver equivalent ounces (2020: 9.7 million ounces)
with the increase versus 2020 reflecting Covid-related stoppages,
which impacted the 2020 result. Grades were lower than budgeted for
the year but practically offset by better than expected
tonnage.
Average realisable prices and sales
Average realisable precious metal prices in Q4 2021 (which are
reported before the deduction of commercial discounts) were
$1,811/ounce for gold and $25.3/ounce for silver (Q4 2020:
$1,869/ounce for gold and $26.2/ounce for silver).
For 2021 as a whole, average realisable precious metal prices
were $1,781/ounce for gold and $24.9/ounce for silver (2020:
$1,814/ounce for gold and $22.3/ounce for silver).
Brownfield exploration
Inmaculada
In Q4 2021, 3,830m of drilling for potential was carried out
along with 4,686m of resource drilling. Selected results are
below:
Vein Results (potential/resource drilling)
Josefa IMS-21-155: 1.1m @ 17.6g/t Au & 1,149g/t
Ag
IMS-21-155: 1.2m @ 4.3g/t Au & 70g/t Ag
IMS-21-155: 7.8m @ 2.0g/t Au & 70g/t Ag
IMS-21-155: 1.0m @ 3.6g/t Au & 114g/t Ag
IMS-21-198: 2.3m @ 2.3g/t Au & 312g/t Ag
IMS-21-200: 4.9m @ 3.8g/t Au & 311g/t Ag
------------------------------------------
Juliana NE IMS-21-174: 4.9m @ 11.3g/t Au & 33g/t Ag
IMS-21-182: 1.2m @ 50.8g/t Au & 81g/t Ag
IMS-21-184: 3.5m @ 18.0g/t Au & 977g/t
Ag
------------------------------------------
Juliana NE Piso IMS-21-174: 1.5m @ 3.3g/t Au & 172g/t Ag
------------------------------------------
During the first quarter of 2022, the programme will focus on
2,100m of potential drilling in the west of the Angela North vein
and in the north of the Eduardo vein zone.
Pallancata
At Pallancata, 10,619m of drilling for potential was carried out
at the Mirian, San Javier and the continuation of the Pallancata
vein to the north west as well as intercepting quartz-sulphide
veins, Laura and Demian, trending to the north east. Selected
results are below:
Results (potential drilling)
Vein
Laura DLLAU-A01: 1.9m @ 1.5g/t Au & 473g/t Ag
Including : 1.2m @ 2.1g/t Au & 655g/t
Ag
DLLAU-A03: 2.5m @ 0.8g/t Au & 332g/t Ag
Including : 1.1m @ 1.1g/t Au & 537g/t
Ag
DLLAU-A01: 6.9m @ 10.7g/t Au & 208g/t Ag
Including : 1.5m @ 1.2g/t Au & 336g/t
Ag
------------------------------------------
Demian DLEP-A66 1.3m @ 2.6g/t Au & 696g/t Ag
DLLAU-A03: 2.6m @ 1.0g/t Au & 307g/t Ag
Including : 1.1m @ 1.8g/t Au & 602g/t
Ag
------------------------------------------
In Q1 2022, the schedule consists of 5,000m of potential
drilling in the Laura-Demian veins as well as the Paola, Rina 4,
Stockwork Veta Juliet, Stockwork Pallancata Central and the Gracia
veins.
San Jose
At San Jose, the brownfield team carried out 2,892m of drilling
at the Saavedra area in the Betania, Jimena, Agostina veins and, in
the San Jose mine itself, 1,471m in the Olivia and Karina veins.
Selected results are below:
Vein Results (potential/resource drilling)
Betania SJD-2408: 2.6m @ 5.4g/t Au & 10g/t Ag
SJD-2414: 3.0m @ 7.5g/t Au & 40g/t Ag
----------------------------------------
Sig Betania SJD-2408: 1.0m @ 6.1g/t Au & 11g/t Ag
----------------------------------------
Jimena SJD-2399: 1.4m @ 3.1g/t Au & 157g/t Ag
SJD-2406: 0.8m @ 2.6g/t Au & 482g/t Ag
SJD-2410: 6.4m @ 7,1g/t Au & 56g/t Ag
SJD-2418: 2.6m @ 3.1g/t Au & 12g/t Ag
----------------------------------------
The drilling plan for the first quarter will focus on the
western zone of the mine in the Olivia NW and Olivia NS structures.
At Saavedra, an environmental permit is due before the programme
can resume.
Financial position
Total cash was approximately $387 million as at 31 December
2021, resulting in net cash of approximately $87 million. This
includes $20 million investment in the IPO of Aclara Resources
Inc.
In September 2021, the Company signed an amendment to its
existing $200 million loan with Scotiabank and BBVA. This
incorporated an additional $100 million borrowing capacity and
increased the maturity to five years with a two-year grace period
at an interest rate of LIBOR +1.65%. On 1 December 2021, the
Company drew down in full on the $100 million.
In November 2021, the Company hedged 3.3 million ounces of
silver for 2023 at an average price of $25.00 per ounce to protect
cashflows in Peru. This will ensure profitable production from
existing resources, mainly at Pallancata whilst the brownfield
exploration team continues to look for additional near-term
resources.
Outlook
The overall attributable production target for 2022 is
360,000-375,000 gold equivalent ounces or 26.0-27.0 million silver
equivalent ounces. [6]
2022 Attributable production split
Operation Oz Au Eq Moz Ag Eq
Inmaculada 218,000-222,000 15.7-16.0
---------------- ----------
Pallancata 64,000-68,000 4.6-4.9
---------------- ----------
San Jose 79,000-85,000 5.7-6.1
---------------- ----------
Total 360,000-375,000 26.0-27.0
---------------- ----------
The all-in sustaining cost from operations in 2022 is expected
to be between $1,330 and $1,370 per gold equivalent ounce (or $18.5
and $19.0 per silver equivalent ounce). Grades at Inmaculada are
expected to be lower due to the inclusion into the mine plan of
veins discovered between 2018 and 2020. It also includes a rise in
mine development costs at Inmaculada and San Jose to access veins
discovered in 2021 and increase reserves at San Jose. The impact of
updating the gold/silver ratio is approximately $1.8 per silver
equivalent ounce.
2022 AISC split
Operation $/oz Au Eq $/oz Ag Eq
------------
Inmaculada 1,180-1,210 16.4-16.8
------------
Pallancata 1,760-1,800 24.4-25.0
------------
San Jose 1,370-1,410 19.0-19.6
------------
Total from operations 1,330-1,370 18.5-19.0
------------
The capital expenditure budget for 2022 is approximately
$150-160 million allocated to sustaining and development
expenditure. This includes the increased mine development costs at
Inmaculada and San Jose and tailings dams capacity increases at
Inmaculada and Pallancata. Capital expenditure at Pallancata also
reflects an increase in development costs to access previously
uneconomic zones now incorporated into the remodeled mine plan.
2022 Capital expenditure split
Operation Sustaining & development capital expenditure
($m)
Inmaculada 87-92
---------------------------------------------
Pallancata 20-22
---------------------------------------------
San Jose (100%) 43-46
---------------------------------------------
Total 150-160
---------------------------------------------
The brownfield exploration budget for 2022 is approximately $34
million with the greenfield and advanced project budget set at
approximately $9 million. The Posse gold project capital
expenditure budget is set at $120 million with the expected
investment in Snip budgeted at approximately $9 million. The
Company is also developing a 2022 work programme for the Volcan
gold project in Chile and has appointed a CEO for the project.
____________________________________________________________________________________
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) and
crosstrades on the OTCQX Best Market in the U.S. (HCHDF), 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.
This announcement contains information which prior to its
release could be considered inside information.
LEI: 549300JK10TVQ3CCJQ89
- ends -
[1] Unless otherwise stated, 2021 equivalent figures calculated
using the previous Company gold/silver ratio of 86x. All 2022
forecasts assume the average gold/silver ratio for 2021 of 72x
[2] Includes $20 million investment in IPO of Aclara Resources
Inc.
[3] Calculated as total number of accidents per million labour
hours.
([4]) Calculated as total number of days lost per million labour
hours.
[5] The ECO Score is an internally designed Key Performance
Indicator measuring environmental performance in one number and
encompassing numerous fronts including management of waste water,
outcome of regulatory inspections and sound environmental practices
relating to water consumption and the recycling of materials.
[6] All forecast equivalent figures assume a gold/silver ratio
of 72x.
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