TIDMHOC
RNS Number : 1015E
Hochschild Mining PLC
26 October 2022
_____________________________________________________________________________________
26 October 2022
Production Report for Q3 and the 9 months ended 30 September
2022
Ignacio Bustamante, Chief Executive Officer said:
"Operationally, the third quarter was our strongest yet in 2022
and we expect to meet both our full year production and our cost
targets. We have also recently completed our submission in response
to the Peruvian government's follow-up comments on Inmaculada's
Modified Environmental Impact Assessment and currently expect a
final decision before the year-end.
I am also delighted to announce a major discovery at our
Pallancata deposit which, although just outside the existing
permitted area, is expected to ensure the medium to long-term
future of the mine. We are aiming to announce a preliminary
Inferred resource in the next few weeks and will make a decision on
the operation's short-term future in 2023.
Finally, we have made further solid progress at our Mara Rosa
project in Brazil where we have reached 16% completion and remain
on schedule and on budget with all key infrastructure, procurement
and construction targets."
Operational highlights
-- Strongest quarter year-to-date ([1])
o 52,713 ounces of gold
o 3.0 million ounces of silver
o 94,466 gold equivalent ounces
o 6.8 million silver equivalent ounces
-- Robust 9-month operational performance
o 149,073 ounces of gold
o 8.1 million ounces of silver
o 261,173 gold equivalent ounces
o 18.8 million silver equivalent ounces
-- On track to deliver full year attributable 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)
Exploration & Project Development highlights
-- Major medium-term brownfield discovery at Pallancata
o High-grade structures with good widths drilled close to
existing permitted area and existing operations
o Estimated Inferred resource to be reported in next few
weeks
-- Mara Rosa project in Brazil advancing on schedule and on
budget - total project progress is 16%
-- Drilling completed at Snip - study results expected by
year-end
Strong financial position
-- Total cash of approximately $169 million as at 30 September
2022 ($204 million as at 30 June 2022)
-- Net debt of approximately $151 million as at 30 September
2022 ($109 million as at 30 June 2022)
-- Current Net Debt/LTM EBITDA of approximately 0.55x as at 30
September 2022
ESG highlights
-- Lost Time Injury Frequency Rate of 1.11 (FY 2021: 1.26)
([2])
-- Accident Severity Index of 86 (FY 2021: 676) ([3])
-- Water consumption of 170lt/person/day (FY 2021:
193lt/person/day)
-- Domestic waste generation of 1.03 kg/person/day (FY 2021:
1.00kg/person/day)
-- ECO score of 5.38 out of 6 (FY 2021: 5.29) ([4])
________________________________________________________________________________________
A conference call will be held at 1.30pm (London time) on
Wednesday 26 October 2022 for analysts and investors.
Dial in details as follows:
UK Toll-Free Number: 0808 109 0700
International Dial in: +44 (0)330 551 0200
US/Canada Toll-Free Number: 866-966-5335
Pin: 7758425
Please dial into the call approximately ten minutes before the
1.30pm start time.
A recording of the conference call will be available on demand
on the Company's website: www.hochschildmining.com
________________________________________________________________________________________
Overview
In Q3 2022, Hochschild Mining PLC (HOC.LN) (OTCMKTS: $HCHDF)
("Hochschild" or "the Company") delivered attributable production
of 94,466 gold equivalent ounces or 6.8 million silver equivalent
ounces, representing a 9% increase versus the second quarter of
2022 and featuring a strong period at the Inmaculada mine. Overall
year-to-date attributable production is 261,173 gold equivalent
ounces or 18.8 million silver equivalent ounces. 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
Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
-------- -------- -------- ---------
Silver production
(koz) 3,858 3,346 3,833 9,964 10,854
Gold production
(koz) 62.57 60.27 69.09 176.51 194.17
Total silver equivalent
(koz) 8,364 7,685 8,807 22,673 24,834
Total gold equivalent
(koz) 116.16 106.74 122.32 314.90 344.92
Silver sold (koz) 3,895 3,445 3,830 9,940 10,835
Gold sold (koz) 62.79 63.06 68.60 175.49 192.91
------------------------- -------- -------- -------- --------- ---------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
-------- -------- -------- ---------
Silver production
(koz) 3,006 2,641 3,043 8,071 8,964
Gold production
(koz) 52.71 49.13 58.25 149.07 164.51
Silver equivalent
(koz) 6,802 6,179 7,237 18,804 20,809
Gold equivalent
(koz) 94.47 85.82 100.51 261.17 289.02
------------------- -------- -------- -------- --------- ---------
Attributable production includes 100% of all production from
Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
-------- -------- -------- ----------
Ore production
(tonnes treated) 348,105 327,837 336,178 1,005,307 1,008,315
Average grade silver
(g/t) 151 137 184 147 168
Average grade gold
(g/t) 3.75 3.47 4.34 3.66 4.06
Silver produced
(koz) 1,519 1,322 1,608 4,334 4,385
Gold produced (koz) 39.82 34.86 44.34 112.48 123.74
Silver equivalent
(koz) 4,386 3,831 4,801 12,433 13,295
Gold equivalent
(koz) 60.91 53.21 66.67 172.68 184.65
Silver sold (koz) 1,514 1,422 1,604 4,319 4,373
Gold sold (koz) 40.06 37.56 44.42 112.78 123.91
---------------------- -------- -------- -------- ---------- ----------
Third quarter production at Inmaculada was 39,819 ounces of gold
and 1.5 million ounces of silver which amounts to a gold equivalent
output of 60,911 ounces with higher-than-expected grades and
recoveries contributing to a strong operational period.
Year-to-date, Inmaculada's output is 172,677 gold equivalent ounces
(Q3 YTD 2021: 184,650 gold equivalent ounces), placing Inmaculada
in a strong position to meet its annual forecast of 233,000-239,000
ounces.
Pallancata
Product Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
-------- -------- -------- ---------
Ore production
(tonnes treated) 145,212 134,276 113,451 404,269 402,453
Average grade silver
(g/t) 149 154 188 155 223
Average grade gold
(g/t) 0.64 0.69 0.79 0.69 0.84
Silver produced
(koz) 601 586 612 1,768 2,612
Gold produced (koz) 2.63 2.69 2.63 8.03 9.91
Silver equivalent
(koz) 790 780 801 2,346 3,326
Gold equivalent
(koz) 10.97 10.83 11.13 32.58 46.19
Silver sold (koz) 593 584 622 1,754 2,621
Gold sold (koz) 2.60 2.66 2.62 7.96 9.91
---------------------- -------- -------- -------- --------- ---------
In Q3, Pallancata produced 0.6 million ounces of silver and
2,633 ounces of gold bringing the silver equivalent total to 0.8
million, with grades lower than budgeted but in line with the two
previous quarters. Overall, in the first nine months of the year,
Pallancata has produced 2.3 million silver equivalent ounces (Q3
2021 YTD: 3.3 million ounces).
The brownfield exploration team expects to continue drilling a
number of targets within the existing permitted area during the
remainder of 2022. Depending on those results and the level of
precious metal prices, Hochschild will make a decision on whether
to place the mine on care and maintenance in 2023, while the
Company secures the necessary permits to bring the new discovery
into production.
San Jose (the Company has a 51% interest in San Jose)
Product Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
-------- -------- -------- ---------
Ore production
(tonnes treated) 149,138 131,467 149,637 354,497 395,831
Average grade silver
(g/t) 413 383 381 385 343
Average grade gold
(g/t) 4.86 6.09 5.24 5.63 5.37
Silver produced
(koz) 1,739 1,438 1,613 3,862 3,856
Gold produced (koz) 20.12 22.72 22.12 56.00 60.52
Silver equivalent
(koz) 3,188 3,074 3,206 7,894 8,214
Gold equivalent
(koz) 44.28 42.69 44.52 109.64 114.08
Silver sold (koz) 1,788 1,440 1,605 3,868 3,841
Gold sold (koz) 20.13 22.83 21.56 54.75 59.10
---------------------- -------- -------- -------- --------- ---------
The San Jose mine enjoyed a solid quarter with silver grades
higher than expected although this was partially offset by
moderately lower than expected gold grades. Production in the
period was 1.7 million ounces of silver and 20,120 ounces of gold
which represents 3.2 million silver equivalent ounces. This
therefore amounts to a nine-month total of 7.9 million silver
equivalent ounces (Q3 2021 YTD: 8.2 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q3 2022 (which are
reported before the deduction of commercial discounts) were
$1,667/ounce for gold and $20.4/ounce for silver (Q3 2021:
$1,768/ounce for gold and $22.0/ounce for silver). For the first
nine months of 2022, average realisable precious metal prices were
$1,801/ounce for gold and $22.4/ounce for silver (Q3 YTD 2021:
$1,771/ounce for gold and $24.8/ounce for silver).
Advanced Project: Mara Rosa
The Mara Rosa project in Brazil is progressing according to
schedule and budget with total project progress at 16% and detailed
engineering 90% complete.
Health and Safety
Hochschild's health and safety corporate standards are currently
being implemented at the project, including the introduction of the
Company's Seguscore safety indicator. The project has recently
surpassed 500,000 injury-free working hours and year-to-date
Frequency and Severity Indexes are currently at zero. Finally,
Covid-19 prevention protocols are in place with no positive cases
recorded to date.
Earthworks
Site clearance for the processing plant and earthworks are at an
advanced stage (72% and 67% respectively) whilst those for crushing
and stockpiles are complete. In addition, sites for grinding,
leaching, thickening and the main substation are expected to be
finished by the end of October which will allow civil works to
start before the rainy season. Site clearance and excavation work
on the reservoir site has been completed with waterproofing
scheduled to finish by the end of this month. Pre stripping
activity is expected to start in November.
Procurement
Currently purchase orders have been issued for 89% of the
project equipment. Deliveries are on schedule with key equipment
such as the crusher, conveyor belts, HDPE pipes, aluminium cabling
for the transmission lines and the wastewater treatment station
equipment already received.
Processing plant
The civil works contractor arrived on site in September and is
currently 50% mobilised with full deployment (materials, personnel,
concrete station and other equipment) expected towards the end of
November. Work on the foundations for the crushing and stockpile
areas commenced on 3 October with expansion to other areas such as
grinding, leaching, thickening and the substation expected
following completion of the earthworks. The steel structure
contract was awarded in September to a local construction company
with materials set to arrive starting in December. Contracts for
the leaching tanks and electromechanical assembly are expected to
be awarded by the end of this month.
Infrastructure
Infrastructure for the main access route is ongoing to allow
delivery of materials and heavy equipment. A preliminary drainage
system that will guarantee access to critical path areas will be
finished by the end of the month while the main project drainage
system will start construction shortly. In addition, a temporary
warehouse has been completed to store equipment, steel and
materials during construction.
Power supply will be provided by the building of a 67km, 138kv
transmission line from the Porangatu substation with work currently
20% advanced and expected to be completed by June 2023.
Sustainability
Environmental controls to monitor construction work are being
executed and reporting to local authorities. In September, the
"Knowledge Trail" was inaugurated with the presence of local
authorities and the Hochschild COO. The trail consists of an open
ecological area with 13 stations highlighting local culture,
environmental, education and project history. The trail will be
used as a learning tool by local schools among other local
stakeholders. Local supplier and labour training programmes are
continuing.
Development Project: Snip
The 10,300m drill programme was concluded during the quarter,
with completion of the final "infill" and "potential" holes from
both underground and surface. All core was logged and sent out for
assay testing. Results received during the period had the following
highlights:
Vein Results (Twin hole)
208 UG22-279: 4.3m @ 125.7g/t Au & 13g/t Ag
----------------------------------------
212 UG22-290: 2.1m @ 8.4g/t Au & 2g/t Ag
----------------------------------------
213 UG22-278: 2.3m @ 11.5g/t Au & 19g/t Ag
----------------------------------------
214 UG22-284: 4.5m @ 48.4g/t Au & 18g/t Ag
----------------------------------------
219 UG22-290: 3.8m @ 9.5g/t Au & 2g/t Ag
----------------------------------------
228 UG22-290: 2.5m @ 6.5g/t Au & 4g/t Ag
----------------------------------------
230 UG22-284: 4.1m @ 11.0g/t Au & 3g/t Ag
----------------------------------------
Vein Results (Infill hole)
215 UG22-317: 3.9m @ 33.4g/t Au & 3g/t Ag
---------------------------------------
219 UG22-330: 4.8m @ 45.1g/t Au & 14g/t Ag
---------------------------------------
219 UG22-332: 4.0m @ 12.8g/t Au & 2g/t Ag
---------------------------------------
231 UG22-300: 3.7m @ 9.2g/t Au & 8g/t Ag
---------------------------------------
240 UG22-334: 4.3m @ 31.7g/t Au & 9g/t Ag
---------------------------------------
Processing plant designs, an updated resource model and the
Tailings and Waste Rock Storage Facility designs were completed in
Q3 with the full study remaining on track for completion by the end
of the year.
Data collection for the Environmental Baseline programme
continued, focusing on air, geochemistry, surface water quality and
quantity (hydrology), noise and wildlife. In addition, the
development of the Terrestrial Ecosystem Map began with studies on
soils, terrain and vegetation. A groundwater drilling programme is
planned for Q4 in preparation of a numerical hydrogeological
model.
The Company hosted a leadership delegation from the Tahltan
Central Government at the project site in August.
Brownfield exploration
Inmaculada
In Q3 2022, 2,550m of resource drilling and 250m of potential
drilling was carried out. Selected results are below:
Vein Results (resource drilling)
Josefa IMM-22-172: 1.5m @ 6.1g/t Au & 186g/t Ag
-----------------------------------------
Josefa Piso IMM-22-171A: 1.6m @ 8.5g/t Au & 104g/t
Ag
IMM-22-172: 0.8m @ 6.9g/t Au & 13g/t Ag
-----------------------------------------
Cloty IMM-22-172: 0.8m @ 3.9g/t Au & 90g/t Ag
-----------------------------------------
During Q4, the programme will focus on 1,500m of resource
drilling in the Josefa vein.
Pallancata
At Pallancata, 5,218m of resource drilling was carried out close
to existing operations in the Virgen del Carmen Sur, Mateo Rina,
and Thalia veins and outside the permitted area in the Marco West
vein. The Company is pleased to announce a major discovery west of
current operations. The new area, named Royropata is part of the
extended Royropata system. Hochschild believes that the new zone
contains a significant amount of high-grade silver and gold
resources. Although not in the current permitted area, the Company
believes that this new discovery has the potential to secure the
medium-term future of the Pallancata mine. A preliminary Inferred
resource is expected to be completed later in the fourth quarter.
Selected results are below:
Vein Results (resource drilling)
Marco W DLRY-A07: 10.9m @ 1.0g/t Au & 265g/t Ag
DLRY-A10: 17.6m @ 8.5g/t Au & 2,520g/t
Ag
DLRY-A11: 6.5m @ 6.6g/t Au & 1,994g/t Ag
DLRY-A12: 2.4m @ 10.5g/t Au & 3,217g/t
Ag
DLRY-A13: 6.8m @ 4.1g/t Au & 1,003g/t Ag
DLRY-A14: 3.7m @ 1.7g/t Au & 497g/t Ag
------------------------------------------
Laura DLRY-A12: 0.8m @ 0.9g/t Au & 309g/t Ag
DLRY-A14: 1.0m @ 1.1g/t Au & 290g/t Ag
------------------------------------------
Royropata 2 DLRY-A07: 0.8m @ 1.7g/t Au & 529g/t Ag
DLRY-A11: 0.8m @ 4.3g/t Au & 1,229g/t Ag
DLRY-A13: 1.0m @ 2.5g/t Au & 634g/t Ag
------------------------------------------
Mateo DLMT-A06: 0.9m @ 0.9g/t Au & 382g/t Ag
------------------------------------------
Juan 2 DLMT-A06: 0.8m @ 1.8g/t Au & 525g/t Ag
------------------------------------------
Lucas DLMT-A07: 1.2m @ 0.9g/t Au & 467g/t Ag
------------------------------------------
Finally, in Q4, 1,000m of potential drilling is planned within
the operating area to define new targets.
San Jose
At San Jose, the brownfield team carried out 3,525m of potential
drilling in the San Jose mine area within the Ayelen and Maura
veins. Selected results are below:
Vein Results (potential drilling)
Ayelen SE SJD-2529: 2.4m @ 3.9g/t Au & 363g/t Ag
SJD-2531: 2.6m @ 10.0g/t Au & 1,321g/t
Ag
------------------------------------------
Maura SJD-2554: 1.1m @ 4.7g/t Au & 102g/t Ag
SJD-2556: 0.8m @ 5.5/t Au & 103g/t Ag
SJD-2563: 1.3m @ 6.3g/t Au & 109g/t Ag
SJD-2570: 1.0m @ 15.1g/t Au & 123g/t Ag
------------------------------------------
New vein SJD-2543: 1.3m @ 14.5g/t Au & 323g/t Ag
SJD-2547: 1.0m @ 0.03g/t Au & 427g/t Ag
SJD-2547: 0.3m @ 4.8g/t Au & 6,709g/t Ag
SJD-2554: 0.8m @ 3.0g/t Au & 98g/t Ag
SJD-2556: 0.8m @ 2.6g/t Au & 142g/t Ag
------------------------------------------
During Q4, the plan is to carry out 1,000m of drilling for new
resources from the Ayelen SE and Olivia veins near the operating
area.
Financial position
Total cash was approximately $169 million as at 30 September
2022 resulting in net debt of approximately $151 million.
____________________________________________________________________________________
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' of 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.
This announcement contains information which prior to its
release could be considered inside information.
LEI: 549300JK10TVQ3CCJQ89
- ends -
[1] All equivalent figures assume a gold/silver ratio 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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