TIDMHOC
RNS Number : 2814J
Hochschild Mining PLC
26 April 2022
_____________________________________________________________________________________
26 April 2022
Production Report for the 3 months ended 31 March 2022
Ignacio Bustamante, Chief Executive Officer said:
"Our flagship Inmaculada operation has delivered a better than
expected first quarter of the year and despite our Argentinian
operations having faced Covid-related workforce absences and
seasonal vacations early in the period, we are on track to meet
2022 production and cost targets.
We completed our purchase of Amarillo Gold on 1 April and are
looking forward to commencing construction at the exciting Mara
Rosa project in Brazil in the near future. In addition, we have
recently initiated a new drilling campaign at the Snip project in
Canada following our announcement in March of a significant
increase in resources. Finally, I am pleased to report that our
2022 brownfield exploration programme has commenced at all our
operations."
Operational highlights
-- Q1 2022 attributable production ([1])
o 47,226 ounces of gold
o 2.4 million ounces of silver
o 80,889 gold equivalent ounces
o 5.8 million silver equivalent ounces
-- Solid first quarter operational delivery at Inmaculada; San
Jose impacted by Covid-related absenteeism and seasonal vacations
earlier in Q1
-- On track to deliver overall 2022 production target of
360,000-375,000 gold equivalent ounces (26.0-27.0 million silver
equivalent ounces)
-- 2022 all-in sustaining costs on track to meet guidance of
$1,330-1,370 per gold equivalent ounce ($18.5-19.0 per silver
equivalent ounce)
Project & Exploration highlights
-- Amarillo Gold acquisition completed on 1 April 2022,
enhancing the company's portfolio by adding a long-life asset
located in a mining friendly jurisdiction
-- New drilling campaign started at Snip development project in
Canada following announcement of a significant increase in
resources on 1 March 2022
-- 2022 brownfield drilling campaigns underway at all
operations
ESG highlights
-- Lost Time Injury Frequency Rate of 1.89 (FY 2021: 1.26)
([2])
-- Accident Severity Index of 61 (FY 2021: 676) ([3])
-- Water Consumption of 174lt/person/day (FY 2021:
193lt/person/day)
-- Domestic waste generation of 1.01 kg/person/day (FY 2021:
1.00kg/person/day)
-- ECO score of 5.79 out of 6 (FY 2021: 5.29) ([4])
Strong financial position
-- Total cash of approximately $367 million as at 31 March 2022
($387 million as at 31 December 2021)
-- Net cash of approximately $54 million as at 31 March 2022
($86 million as at 31 December 2021)
-- Current Net Cash/LTM EBITDA of approximately 0.153x as at 31
March 2022
________________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Tuesday 26 April 2022 for analysts and investors. Dial in details
as follows:
International Dial in: +44 330 165 4012; UK Toll-Free Number:
0800 279 6877; US/Canada Toll Free: 800-289-0720
Pin: 8158412
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 2022, Hochschild delivered attributable production of
80,889 gold equivalent ounces or 5.8 million silver equivalent
ounces with a better than expected result from Inmaculada offset by
further disruption from Covid-19 impacting San Jose in Argentina
and lower than expected grades at Pallancata. The Company remains
on track to meet its overall attributable production target for
2022 of 360,000-375,000 gold equivalent ounces or 26.0-27.0 million
silver equivalent ounces.
The Company reiterates that its all-in sustaining cost for 2022
is on track to be in line with the guidance of between $1,330 and
$1,370 per gold equivalent ounce (or $18.5 and $19.0 per silver
equivalent ounce).
TOTAL GROUP PRODUCTION
Q1 2022 Q4 2021 Q1 2021 12 mths
2021
-------- -------- --------
Silver production
(koz) 2,759 3,892 3,321 14,746
Gold production
(koz) 53.68 68.22 62.31 262.39
Total silver equivalent
(koz) 6,624 8,804 7,808 33,638
Total gold equivalent
(koz) 92.00 122.28 108.44 467.19
Silver sold (koz) 2,600 3,877 3,182 14,712
Gold sold (koz) 49.64 67.80 61.14 260.71
------------------------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q1 2022 Q4 2021 Q1 2021 12 mths
2021
-------- -------- --------
Silver production
(koz) 2,424 3,209 2,829 12,174
Gold production
(koz) 47.23 56.91 52.84 221.42
Silver equivalent
(koz) 5,824 7,306 6,634 28,116
Gold equivalent
(koz) 80.89 101.48 92.13 390.50
------------------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q1 2022 Q4 2021 Q1 2021 12 mths
2021
--------------- ------------ --------
Ore production (tonnes
treated) 329,364 341,577 337,480 1,349,892
Average grade silver
(g/t) 153 191 158 174
Average grade gold
(g/t) 3.75 4.03 3.92 4.05
Silver produced
(koz) 1,493 1,850 1,419 6,236
Gold produced (koz) 37.81 41.99 39.80 165.73
Silver equivalent
(koz) 4,216 4,873 4,285 18,168
Gold equivalent
(koz) 58.55 67.69 59.52 252.34
Silver sold (koz) 1,382.9 1,843 1,414 6,216
Gold sold (koz) 35.16 41.95 39.65 165.86
------------------------ --------------- ------------ -------- ----------
Inmaculada's first quarter production was 37,811 ounces of gold
and 1.5 million ounces of silver which amounts to gold equivalent
output of 58,552 ounces which was ahead of budgeted expectations
and was due to higher than planned silver and gold recoveries and
higher gold grades.
Pallancata
Product Q1 2022 Q4 2021 Q1 2021 12 mths
2021
---------------- ------------- --------
Ore production (tonnes
treated) 124,782 128,228 126,950 530,681
Average grade silver
(g/t) 165 177 240 212
Average grade gold
(g/t) 0.74 0.85 0.85 0.84
Silver produced
(koz) 581 648 897 3,261
Gold produced (koz) 2.70 3.14 3.18 13.05
Silver equivalent
(koz) 776 874 1,126 4,200
Gold equivalent
(koz) 10.77 12.14 15.64 58.33
Silver sold (koz) 577 642 771 3,263
Gold sold (koz) 2.69 3.12 2.72 13.03
------------------------ ---------------- ------------- -------- --------
In the first quarter, Pallancata produced 581,000 ounces of
silver and 2,702 ounces of gold bringing silver equivalent total
production to 776,000 ounces with tonnage and silver grades lower
than expected.
San Jose (the Company has a 51% interest in San Jose)
Product Q1 2022 Q4 2021 Q1 2021 12 mths
2021
-------------- -------- --------
Ore production (tonnes
treated) 73,892 143,398 101,345 539,229
Average grade silver
(g/t) 331 346 344 344
Average grade gold
(g/t) 6.36 5.77 6.53 5.47
Silver produced
(koz) 685 1,393 1,005 5,250
Gold produced (koz) 13.16 23.10 19.33 83.62
Silver equivalent
(koz) 1,632 3,056 2,396 11,270
Gold equivalent
(koz) 22.67 42.45 33.28 156.53
Silver sold (koz) 640.2 1,392 997 5,233
Gold sold (koz) 11.79 22.73 18.77 81.83
------------------------ -------------- -------- -------- --------
The first quarter at San Jose in Argentina is traditionally a
shorter operational period due to the scheduled hourly workers'
holiday which was taken during January this year. However, the
operation also continued to be impacted by Covid-related employee
absences and tonnage was consequently lower than expected resulting
in production of 0.7 million ounces of silver and 13,165 ounces of
gold which makes 1.6 million silver equivalent ounces. However, the
operation remains on track to meet 2022 full year guidance of
between 5.7 and 6.1 million silver equivalent ounces.
Average realisable prices and sales
Average realisable precious metal prices in Q1 2022 (which are
reported before the deduction of commercial discounts) were
$1,916/ounce for gold and $26.0/ounce for silver (Q1 2021:
$1,703/ounce for gold and $24.4/ounce for silver).
Advanced Project: Mara Rosa
On 22 March 2022, the Company announced that it had received
shareholder approval for the acquisition of Amarillo Gold Inc. with
completion occurring on 1 April 2022.
The Mara Rosa project in Brazil is progressing according to
schedule with detailed engineering over 60% complete and
construction at site planned to start in the second quarter. The
construction management team is now in place and mobilised at site.
Off-site camp construction was completed in March whilst the
powerline construction started in March with completion expected in
the first half of 2023. Finally, Hochschild is working closely with
the regional environmental agency in the State of Goias to obtain
the outstanding construction permits.
Development project: Snip
Exploration recommenced during the quarter, with approximately
2,500m drilled from underground. Work also began on the
Pre-Feasibility Study, which was awarded to Ausenco Engineering
Canada.
A Communications and Engagement Agreement with the Tahltan
Central Government was signed at the beginning of the year with
constructive discussions between the two parties continuing.
The Company issued an updated mineral resource estimate on March
1st. Indicated mineral resources more than tripled to 840,000
ounces and inferred resources almost doubled to 723,000 ounces
(compared to the previous 2020 estimate) as a result of
approximately 28,000m of drilling and the application of
Hochschild's standard approach to resource evaluation.
Assays were received from Skeena Resources for 34 drill holes
drilled in 2021, with potential resource additions from the
following intercepts:
Hole From To Length Au
(m) (m) (m) (g/t)
------
S21-125 46.7 48.8 2.1 14.5
------ ------ -------
S21-126 25.0 27.0 2.0 41.4
------ ------ -------
S21-135 155.5 158.0 2.5 15.6
------ ------ -------
S21-142 13.5 14.8 1.3 24.2
------ ------ -------
S21-142 19.7 21.8 2.1 12.2
------ ------ -------
S21-151 25.4 26.6 1.2 12.5
------ ------ -------
Possible new veins were identified with the following
results:
Hole From To Length Au
(m) (m) (m) (g/t)
------
S21-125 65.8 66.9 1.1 56.3
------ ------ -------
S21-137 446.0 447.1 1.1 13.5
------ ------ -------
S21-139 249.0 252.0 3.0 48.8
------ ------ -------
S21-139 217.4 218.0 0.6 48.9
------ ------ -------
S21-155 201.5 204.0 2.5 15.1
------ ------ -------
A further 5,000m of drilling is planned for the second
quarter.
Development project: Volcan
During the first quarter, the Company restructured its 100%
ownership of the Volcan project in Chile under a newly-established
Canadian company, Tiernan Gold Corp. The Company is currently
evaluating strategic alternatives for Tiernan.
Tiernan expects to complete an update to the Mineral Resource
Estimate for Volcan during Q2 2022. In parallel, engineering is
also being carried out to redefine the business case for Volcan,
including an optimised mine and project development plan. The
results of the Mineral Resource Estimate and optimisation work are
expected to be outlined in a new technical report.
Brownfield exploration
Inmaculada
In Q1 2021, the exploration team started its drilling campaign
with work continuing into the second quarter.
In addition, the team will continue with 2,000m of potential
drilling at the Huarmapata area, 2,800m of resource drilling in
Josefa along with 1,000m in the Union Shakira vein.
Pallancata
At Pallancata, 3,139m of potential drilling was carried out in
the Ranichico, Pallancata and Pablo zones and also 6,135m of
resource drilling in the Laura-Demian and Miriam structures with
drilling intercepting quartz sulphide veins and grades of 250-300
silver equivalent grammes per tonne.
Vein Results (resource drilling)
Miriam DHLMIR-A13: 1.8m @ 1.5g/t Au & 261g/t Ag
DHLMIR-A14: 0.8m @ 1.9g/t Au & 371g/t Ag
------------------------------------------
Rina DHLRI-A187: 0.8m @ 11.6g/t Au & 47g/t Ag
------------------------------------------
Virgen de Carmen DHLRI-A187: 2.0m @ 1.6g/t Au & 303g/t Ag
------------------------------------------
Demian DLDE-A02: 2.5m @ 0.9g/t Au & 303g/t Ag
------------------------------------------
The programme for the second quarter will consist of 5,000m of
resource drilling in the Laura-Demian structure as well as a
resumption of drilling at the Corina deposit to the north.
San Jose
In Q1 2022, 2,049m of potential drilling was executed around the
mine area and in the Saavedra area.
Vein Results (resource drilling)
Celina SJD-2451: 1.5m @ 6.0g/t Au & 236g/t Ag
SJD-2453: 1.2m @ 8.3g/t Au & 561g/t Ag
----------------------------------------
Celina Piso SJD-2453: 1.1m @ 2.8g/t Au & 546g/t Ag
----------------------------------------
Jimena SJD-2463: 5.2m @ 1.6g/t Au & 47g/t Ag
SJD-2465: 2.4m @ 2.8g/t Au & 48g/t Ag
----------------------------------------
Drilling continues in the second quarter, with 2,000m of
resource drilling in the Olivia and Celina veins as well starting
to explore the Ciclon project further away in the Santa Cruz
province.
Financial position
Total cash was approximately $367 million as at 31 March 2022
resulting in a net cash position of approximately $54 million. This
balance does not reflect the payment for the acquisition of
Amarillo Gold Inc. which was completed on 1 April 2022.
_____________________________________________________________________________________
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 owns
the Mara Rosa Advanced Project in Brazil as well as 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 2021 of 72x.
[2] Calculated as total number of accidents per million labour
hours
([3]) Calculated as total number of days lost per million labour
hours.
[4] 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.
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