TIDMHOC
RNS Number : 8616Y
Hochschild Mining PLC
10 May 2023
____________________________________________________________________________________
10 May 2023
Production Report for the 3 months ended 31 March 2023
Ignacio Bustamante, Chief Executive Officer said:
"We remain on track to deliver our annual targets with an
improved social situation in Peru and current mine plans delivering
increased production going forward at San Jose and also at
Inmaculada, subject to approval of the mine's Modified
Environmental Impact Assessment which we expect in the second
quarter. Finally, we continue to make encouraging progress at our
Mara Rosa project in Brazil which has now reached 77% completion
and is on schedule and on budget for first production in H1
2024."
Operational highlights
-- Q1 2023 attributable production ([1])
o 39,735 ounces of gold
o 2.1 million ounces of silver
o 64,514 gold equivalent ounces
o 5.4 million silver equivalent ounces
-- 2023 guidance reiterated:
o Production of 301,000-314,000 gold equivalent ounces
(25.0-26.0 million silver equivalent ounces)
o All-in sustaining costs of $1,370-1,450 per gold equivalent
ounce ($16.5-17.5 per silver equivalent ounce)
-- Peruvian government decision on Inmaculada Modified
Environmental Impact Assessment ("MEIA") expected during Q2
2023
Project & Exploration highlights
-- Mara Rosa project in Brazil advancing on schedule and on
budget - total project progress at 77% with first production
anticipated in H1 2024
o 27,600oz of gold hedged from March to December 2024 at a price
of $2,100 per ounce
-- 2023 brownfield drilling campaign at San Jose expected in Q2;
Peru exploration timing subject to Inmaculada MEIA approval
ESG highlights
-- Lost Time Injury Frequency Rate of 0.96 (FY 2022: 1.37)
([2])
-- Accident Severity Index of 35 (FY 2022: 93) ([3])
-- Water Consumption of 165lt/person/day (FY 2022:
171lt/person/day)
-- Domestic waste generation of 0.98 kg/person/day (FY 2022:
1.05kg/person/day)
-- ECO score of 5.88 out of 6 (FY 2022: 5.27) ([4])
Strong financial position
Total cash of approximately $103 million as at 31 March 2023
($144 million as at 31 December 2022)
-- Net debt of approximately $218 million as at 31 March 2023
($175 million as at 31 December 2022)
-- Current Net Cash/LTM EBITDA of approximately 0.95x as at 31
March 2023
-- 29,250 ounces of gold hedged for the remainder of 2023 at a
price of $2,047 per ounce
________________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 10 May 2023 for analysts and investors.
Dial in details as follows:
International Dial in: +44 330 551 0200;
UK Toll-Free Number: 0808 109 0700;
US Toll Free: 866 580 3963
Canada Toll Free: 866 378 3566
Password: Hochschild Q1 Production
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 2023, Hochschild delivered attributable production of
64,514 gold equivalent ounces or 5.4 million silver equivalent
ounces with Inmaculada temporarily impacted by the delay in the
approval of the MEIA affecting mine development, as expected, as
well as further disruption from the Peruvian national protests. In
addition, there have also been lower grades at San Jose in
Argentina and Pallancata in Peru. The Company remains on track to
meet its overall attributable production target for 2023 of
301,000-314,000 gold equivalent ounces or 25.0-26.0 million silver
equivalent ounces.
The Company reiterates that its all-in sustaining cost for 2023
is on track to be in line with the guidance of between $1,370 and
$1,450 per gold equivalent ounce (or $16.5 and $17.5 per silver
equivalent ounce).
TOTAL GROUP PRODUCTION
Q1 2023 Q4 2022 Q1 2022 12 mths
2022
-------------- -------- --------
Silver production
(koz) 2,438 3,632 2,759 13,596
Gold production
(koz) 46.44 68.11 53.68 244.63
Total silver equivalent
(koz) 6,292 9,285 7,214 33,900
Total gold equivalent
(koz) 75.81 111.87 86.92 408.43
Silver sold (koz) 2,414 3,596 2,600 13,536
Gold sold (koz) 44.50 67.40 49.64 242.89
------------------------- -------------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q1 2023 Q4 2022 Q1 2022 12 mths
2022
-------- -------- --------
Silver production
(koz) 2,057 2,931 2,424 11,003
Gold production
(koz) 39.73 56.94 47.23 206.01
Silver equivalent
(koz) 5,355 7,657 6,344 28,102
Gold equivalent
(koz) 64.51 92.26 76.43 338.57
------------------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q1 2023 Q4 2022 Q1 2022 12 mths
2022
--------------- --------------- ---------------
Ore production (tonnes
treated) 278,138 323,870 329,364 1,329,177
Average grade silver
(g/t) 176 182 153 156
Average grade gold
(g/t) 3.78 4.29 3.75 3.81
Silver produced
(koz) 1,274 1,602 1,493 5,936
Gold produced (koz) 31.21 42.36 37.81 154.85
Silver equivalent
(koz) 3,864 5,118 4,632 18,788
Gold equivalent
(koz) 46.56 61.66 55.80 226.36
Silver sold (koz) 1,204 1,599 1,383 5,918
Gold sold (koz) 29.29 42.15 35.16 154.93
------------------------ --------------- --------------- --------------- ----------
Inmaculada's first quarter production was 31,213 ounces of gold
and 1.3 million ounces of silver which amounts to gold equivalent
output of 46,559 ounces. Tonnage was lower than the previous
quarter, as expected, due to the anticipated delays in the approval
of the MEIA impacting mine development, and to disruption from the
local and national protests in late 2022 and early 2023. This was
partially offset by better-than-expected grades. The operation is
back to capacity and production guidance for 2023 is not affected,
subject to approval of the MEIA in the second quarter.
Pallancata
Product Q1 2023 Q4 2022 Q1 2022 12 mths
2022
---------------- ---------------- ----------------
Ore production (tonnes
treated) 115,842 155,530 124,782 559,799
Average grade silver
(g/t) 126 139 165 151
Average grade gold
(g/t) 0.49 0.68 0.74 0.69
Silver produced
(koz) 386 600 581 2,368
Gold produced (koz) 1.55 2.95 2.70 10.98
Silver equivalent
(koz) 514 845 805 3,279
Gold equivalent
(koz) 6.20 10.18 9.70 39.50
Silver sold (koz) 427 561 577 2,315
Gold sold (koz) 1.69 2.80 2.69 10.76
------------------------ ---------------- ---------------- ---------------- --------
In the first quarter, Pallancata produced 386,000 ounces of
silver and 1,545 ounces of gold bringing silver equivalent total
production to 514,000 ounces with reduced tonnage and grades in
line with the current declining production profile.
San Jose (the Company has a 51% interest in San Jose)
Product Q1 2023 Q4 2022 Q1 2022 12 mths
2022
--------------- ------------- ----------------
Ore production (tonnes
treated) 128,499 152,692 73,892 507,189
Average grade silver
(g/t) 215 332 331 369
Average grade gold
(g/t) 3.88 5.38 6.36 5.55
Silver produced
(koz) 778 1,430 685 5,292
Gold produced (koz) 13.68 22.80 13.16 78.80
Silver equivalent
(koz) 1,913 3,323 1,777 11,833
Gold equivalent
(koz) 23.05 40.03 21.41 142.57
Silver sold (koz) 784 1,435 640.2 5,303
Gold sold (koz) 13.52 22.46 11.79 77.20
------------------------ --------------- ------------- ---------------- --------
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. Due to mine
sequencing, grades and recoveries were lower in Q1 and led to
production of 0.8 million ounces of silver and 13,679 ounces of
gold which makes 1.9 million silver equivalent ounces. However, the
operation remains on track to meet 2023 full year guidance of
between 6.1 and 6.3 million silver equivalent ounces.
Average realisable prices and sales
Average realisable precious metal prices in Q1 2023 (which are
reported before the deduction of commercial discounts) were
$1,956/ounce for gold and $23.0/ounce for silver (Q1 2022:
$1,916/ounce for gold and $26.0/ounce for silver).
Advanced Project: Mara Rosa
The Mara Rosa project is progressing according to schedule and
budget with total project progress now standing at 77% and detailed
engineering 99% complete. The Company continues to expect first
production in H1 2024.
Procurement
Currently purchase orders have been issued for 93% of the
project equipment. Deliveries are on schedule with key equipment
such as the crusher, thickeners, filters, conveyor belts, HDPE
pipes, aluminium cabling for transmission lines, hydrocyclones,
agitators and equipment for the wastewater treatment station
already received.
Earthworks
Site clearance for the processing plant and earthworks
activities is complete.
Civil work
Civil works in the processing plant area are advancing in line
with schedule at 86% completion. Work on the crushers and ball mill
buildings are finished whilst leaching and filtering circuits are
expected to be completed in May.
Infrastructure assembly
The Electromechanical assembly contractor has been mobilised,
and the work is advancing in line with schedule at 25% progress.
The power supply for the mine will be provided by the building of a
67km, 138kv transmission line from the Porangatu substation with
work currently 77% advanced and expected to be completed by July
2023.
Sustainability
Environmental controls to monitor construction work have been
implemented to ensure compliance with applicable permits. ESG
programmes are advancing as expected with over 500 people having
visited the "knowledge trail" as of March 2023. Procurement from
local suppliers has surpassed $9 million and over 320 people from
Mara Rosa and Amaralina towns are currently working on the project.
Monthly newsletters covering project progress and sustainability
initiatives are also being distributed to local communities.
Health and Safety
Hochschild's health and safety corporate standards have been
implemented at the project, including the introduction of the
Company's Seguscore safety indicator. The project has recently
surpassed two million injury-free working hours and year-to-date
Frequency and Severity Indexes are currently at zero.
Development project: Snip
Due to the need to focus capital elsewhere in Hochschild's
portfolio, the Company terminated, on 4 April 2023, the option with
Skeena Resources Limited ("Skeena") to earn-in a 60% interest in
the Snip project. Termination of the project became effective
immediately and, as a result, Hochschild has no liability to
complete the Aggregate Expenditure Requirement.
In addition, Hochschild provided confirmation to Skeena that it
had satisfied the Minimum Annual Expenditure Requirement in respect
of the 12-month period that commenced on 14 October 2022.
Accordingly, no cash payment is due from Hochschild to Skeena under
the terms of the option agreement.
Brownfield exploration
Although the brownfield team is planning a busy year of
drilling, the budget for the exploration programme in Peru is
subject to the Inmaculada MEIA approval.
In Argentina, the programme has commenced with drilling for
potential at the Ciclon project in the Santa Cruz province with
results currently pending.
Financial position
Total cash was approximately $103 million as at 31 March 2023
resulting in a net debt position of approximately $218 million.
During the quarter, the Company executed two precious metal
hedges. Firstly, a total of 29,250 ounces of gold was hedged for
the remainder of 2023 at a forward price of $2,047 per ounce. In
addition, the Company has hedged a further 27,600 ounces of gold
for the period between March 2024 and December 2024 at a forward
price of $2,100 per ounce.
_____________________________________________________________________________________
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 2022 of 83x.
[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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