TIDMHOC
RNS Number : 9518O
Hochschild Mining PLC
18 October 2012
18 October 2012
Interim Management Statement and
Production Report for the 3 months ended 30 September 2012
Highlights
-- Q3 2012 attributable production of 5.1 million silver
equivalent ounces
-- 2012 attributable production target of 20.0 million silver
equivalent ounces on track
-- Strong brownfield exploration results:
o Discovery of Emilia vein at San Jose
o Discovery of new vein and a significant vein extension at
Arcata in addition to further strong
intercepts from Tunel 4 area
o Pallancata's Huararani and Luisa veins continue to yield good
results
-- Significant progress at Inmaculada Advanced Project:
o Environmental Impact Study approved by Peruvian Government
o EPC contract for plant construction awarded ($142 million) in
line with budget
o Discovery of Susana vein
o Strong intercepts reported at Lourdes and Martha veins
-- Positive intercepts reported at Azuca Advanced Project
-- Baborigame prospect in Mexico added to project pipeline -
potential 'Company Maker' project
-- Excess concentrate inventory at San Jose sold during the
quarter
-- Solid financial position with total cash of approximately
$477m and minority investments valued at $351m as at 30 September
2012
Ignacio Bustamante, Chief Executive Officer, commented:
"Hochschild remains firmly on track to achieve its annual
production target of 20.0 million attributable silver equivalent
ounces after another solid operational performance in the third
quarter. I am also particularly pleased with some of the exciting
results we have seen in the period from our brownfield exploration
programme which clearly demonstrate the strong potential at our
current mines as well as the ever growing resource base at our
Advanced Projects, particularly Inmaculada."
__________________________________________________________________________________
A conference call will be held at 2pm (London time) on Thursday
18 October 2012 for analysts and investors.
Dial in details as follows:
UK: +44 (0) 20 3003 2666
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
UK: +44 (0) 20 8196 1998
Access code: 3690396
__________________________________________________________________________________
Production
In Q3 2012, Hochschild produced 5.1 million attributable silver
equivalent ounces which comprised 3.4 million ounces of silver and
28.5 thousand ounces of gold.
Main operations
At Arcata, silver equivalent production was 1.6 million ounces
(Q3 2011: 1.7 million ounces). A rise in treated tonnage resulted
from a planned increase in volumes from the Macarena Waste Dam
deposit, with grades falling as a result, in line with the same
period of 2011. The tonnage increase was facilitated by a 500 tonne
per day capacity expansion achieved at the Arcata plant in the
period.
The Arcata dore project remains on schedule for completion in Q4
2012, with dore production already having increased by more than
30% compared to Q3 2011, resulting in significant commercial
savings which more than offset the decrease in ounces recovered
from the process. Excluding the effect of the dore project,
production at Arcata in Q3 2012 would have been broadly flat versus
Q3 2011.
Table Showing Contribution From Macarena Waste Dam Deposit
Q3 2012 YTD 2012
------------------------- -------- ---------
Total
Tonnage 194,484 539,144
Average head grade
gold (g/t) 0.78 0.86
Average head grade
silver (g/t) 260 291
------------------------- -------- ---------
Macarena
Tonnage 40,838 62,392
Average head grade
gold (g/t) 0.30 0.30
Average head grade
silver (g/t) 110 107
Stopes and Developments
Tonnage 153,646 476,752
Average head grade
gold (g/t) 0.90 0.93
Average head grade
silver (g/t) 299 315
------------------------- -------- ---------
San Jose delivered silver equivalent production of 2.8 million
ounces in Q3 2012, broadly in line with the same period of 2011.
The rise in overall tonnage resulted from a greater availability of
lower grade economic development material as well as operational
efficiencies that allowed for an increase in mill throughput. The
decrease in grades reflected this higher proportion of development
material as well as the Company's policy of mining close to the
average reserve grade at each of its core operations.
At Pallancata, silver equivalent production of 2.3 million
ounces in Q3 2012 was lower than that of Q3 2011 (2.9 million
ounces), mainly a result of lower grades, reflecting the Company's
policy of mining close to the average reserve grade at its core
assets, as well as the processing of a higher proportion of mineral
from narrower structures with higher mine dilution and lower
metallurgic recovery during the quarter. There was however a small
increase in production compared to the second quarter of 2012 as
the temporary delays in the mine execution plan were resolved and
mining resumed in higher grade areas of the mine.
Other operations
Production at the Company's ageing Ares mine in Peru continued
in Q3 2012, with 559 thousand silver equivalent ounces produced
during the quarter (Q3 2011: 585 thousand silver equivalent
ounces). The Company continues to monitor production closely at
Ares to ensure the extraction of profitable ounces during the last
stage of its life cycle. Production at Ares is expected to continue
throughout the rest of the year and into 2013, broadly at the
current levels. Exploration continues at the property.
At Moris, the Company's open pit operation in Mexico, despite
mine production having ceased in September 2011, continued leaching
of the pads produced a further 155 thousand silver equivalent
ounces in Q3 2012. Moris remains in the final stages of the pads'
cyanidation process and the Company expects to continue recovering
mineral from the pads into 2013, although this is not expected to
be material. Exploration continues at the property.
Average realisable prices and sales
Average realisable precious metal prices (which are reported
before the deduction of commercial discounts) in Q3 2012 were
US$1,728.55/ounce for gold and US$34.13/ounce for silver. Average
realisable precious metal prices for the first nine months of 2012
were US$1,694.08/ounce for gold and US$32.30/ounce for silver.
Following the temporary accumulation of concentrate inventory at
the San Jose mine during Q2 2012 due to the impact of industry-wide
regulatory changes in Argentina, exports resumed at the end of Q2
2012 and sales of this inventory were completed in Q3 2012.
Brownfield exploration(1)
San Jose
In Q3 2012, a total of 26.0 thousand metres of exploration
drilling was carried out at San Jose to incorporate further
resources and new economic areas. A new vein was also discovered
during the quarter, within the known San Jose area - the Emilia
vein. Significant intercepts included(1) :
Vein Results
------- -------------------------------------------
Emilia SJD- 496: 1.00m @ 46.37g/t Au & 6,951g/t
Ag
SJD-1246: 1.00m @ 71.31g/t Au & 3,579g/t
Ag
SJD-1264: 0.90m @ 147.04g/t Au & 1,276g/t
Ag
SJD-1269: 1.00m @ 30.38g/t Au & 212g/t
Ag
------- -------------------------------------------
Arcata
In Q3 2012, a total of 16.9 thousand metres of drilling was
carried out at Arcata. Exploration work focused on the definition
of new high grade structures and the incorporation of high quality
resources from known vein systems, as well as to provide further
geological interpretation of the area. Continued positive results
were received from the Tunel 4 area and from the Socorro +800 vein.
In addition, a new vein, Katty was discovered, and the Alexia vein
was considerably extended. Positive intercepts included(1) :
Vein Results
------------- -------------------------------------------
Alexia DDH367-S-12: 1.71m @ 3.19g/t Au & 577g/t
Ag
DDH380-S-12: 2.00m @ 4.56g/t Au & 814g/t
Ag
DDH400-S-12: 9.34m @ 3.34g/t Au & 984g/t
Ag
------------- -------------------------------------------
Katty DDH354-S-12: 1.45m @ 13.69g/t Au &
1,965g/t Ag
DDH397-S-12: 1.50m @ 47.01g/t Au &
3,642g/t Ag
------------- -------------------------------------------
Socorro +800 DDH349-S-12: 0.71m @ 2.31g/t Au & 391g/t
Ag
------------- -------------------------------------------
Tunel 4 DDH355-S-12: 2.24m @ 4.68g/t Au & 1,162g/t
Ag
DDH373-S-12: 2.01m @ 3.44g/t Au & 640g/t
Ag
------------- -------------------------------------------
Pallancata
In Q3 2012, exploration work at Pallancata focused on
identifying wider structures and the incorporation of new
resources. A total of 17.2 thousand metres of drilling was
completed, with focus on the Luisa, Pilar and Huararani veins.
Promising intercepts included(1) :
Vein Results
------------- ------------------------------------------
Huararani 02 DLHU-A13: 1.46m @ 1.36g/t Au & 287g/t
Ag
DLHU-A14: 3.01m @ 3.61g/t Au & 1,236g/t
Ag
------------- ------------------------------------------
Luisa DLLU-A95: 0.74m @ 1.48g/t Au & 242g/t
Ag
DLLU-A99: 1.20m @ 12.17g/t Au & 1,670g/t
Ag
DLLU-A100: 0.91m @ 1.44g/t Au & 346g/t
Ag
------------- ------------------------------------------
Ares
In Q3 2012, a full geophysical survey was conducted at Ares.
Also during the quarter, 5.6 thousand metres of drilling was
carried out and new intersections at the Isabel vein were
discovered. Positive intercepts included(1) :
Vein Results
-------- ---------------------------------------
Isabel AM-1493: 1.35m @ 9.83g/t Au & 68g/t Ag
-------- ---------------------------------------
Rosario AM-1492: 1.05m @ 1.01g/t Au & 240g/t
Ag
-------- ---------------------------------------
Moris
Exploration work at Moris during Q3 2012 focused on identifying
new economic structures. During the quarter, 5.9 thousand metres of
drilling was carried out on the La Nopalera, Creston and Eureka
areas.
Advanced Projects
On 11 January 2012, Hochschild announced the successful
completion of the Inmaculada and Crespo feasibility studies which
are forecast to contribute 10 million silver equivalent ounces of
attributable production on average per annum at an initial combined
capital cost of $335 million (attributable). Full details of the
feasibility studies can be found in the announcement.
Inmaculada
In Q3 2012, the Company continued to make good progress at
Inmaculada. The Environmental Impact Study ('EIS') for the project
was awarded, representing a key step in the project's permitting
process. Following the awarding of the contract for plant
construction in August for $142 million, further progress was seen
in Q3 2012. The purchasing of the main plant equipment was
completed and the construction of the three exploration tunnels
continued, with over two thousand metres executed year to date. The
construction of the main access road also progressed and is
scheduled for completion by the end of the year. The basic and
detailed engineering for the workshops, warehouses and offices is
on track to be completed in Q4 2012 as is the final layout and
basic and detailed engineering for the camps and facilities. Work
also continued on the construction of the electricity transmission
line during the quarter.
In Q3 2012, the exploration drilling programme in and around the
Inmaculada project continued to yield encouraging results.
Exploration was focused on the definition and incorporation of
potential systems outside of the current resource area. During the
quarter, four drill rigs were in operation and a total of 13.5
thousand metres of drilling was carried out, focused on the
Lourdes, Angela NE, Marina and Martha veins, as well as the newly
discovered Susana vein. Positive results included(2) :
Vein Results
-------- ------------------------------------------
Lourdes LOU12-001: 3.50m @ 7.12g/t Au & 369g/t
Ag
LOU12-003: 1.32m @ 3.10g/t Au & 121g/t
Ag
LOU12-004: 1.50m @ 6.34g/t Au & 180g/t
Ag
LOU12-005: 1.02m @ 8.21g/t Au & 194g/t
Ag
LOU12-007: 0.80m @ 3.49g/t Au & 398g/t
Ag
LOU12-009: 3.12m @ 31.55g/t Au & 199g/t
Ag
LOU12-010: 0.90m @ 5.26g/t Au & 72g/t
Ag
-------- ------------------------------------------
Martha MAR12-001: 0.60m @ 6.57g/t Au & 30g/t
Ag
MAR12-004: 0.90m @ 1.08g/t Au & 75g/t
Ag
-------- ------------------------------------------
Susana MAR12-004: 1.03m @ 17.15g/t Au & 1,851g/t
Ag
MAR12-005: 2.25m @ 6.05g/t Au & 157g/t
Ag
-------- ------------------------------------------
During the remainder of the year, exploration will continue to
focus on the definition and incorporation of potential systems
outside of the current resource area.
Crespo
At the Company's 100% owned Crespo project, the detailed
planning is progressing according to schedule. The detailed
engineering for the access road and the final engineering for the
camp layout and construction were completed in September. The
detailed engineering for the mine and plant is expected to be
completed in Q4 2012.
In April 2012, the Company held a successful public hearing in
relation to the project's EIS permit. During the quarter, the
Company continued the process of responding to the relevant
observations and the permit is expected to be granted at the end of
Q4 2012. Community relations support programmes also continued
during the quarter.
The exploration programme at Crespo saw good progress during the
quarter. Surface sampling was finalised and exploration and infill
drilling in the Crespo and Queshca areas commenced in September,
with two drill rigs in operation. A total of 1.1 thousand metres
was drilled.
Azuca
The drilling programme continued at Azuca during Q3 2012; four
drill rigs were in operation and a total of 12.4 thousand metres of
drilling was completed during the quarter. Positive results were
reported at the Azuca West and Yanamayo NE veins, with intercepts
including(3) :
Vein Results
------------ -----------------------------------------
Azuca West DAAW-A1202:1.20m @ 1.39g/t Au & 9g/t
Ag
2.20m @ 12.13g/t Au & 114g/t Ag
1.00m @ 3.03g/t Au & 72g/t Ag
DAAW-A1203: 1.00m @ 1.33g/t Au & 153g/t
Ag
------------ -----------------------------------------
Yanamayo NE DAYA-A1204: 1.20m @ 3.65g/t Au & 764g/t
Ag
DAYA-A1205: 0.9m @ 4.11g/t Au & 513g/t
Ag
------------ -----------------------------------------
Greenfield pipeline
In Q3 2012, a total of 11.1 thousand metres was drilled as part
of the greenfield exploration programme with the Company remaining
broadly on track to meet its full year drilling targets. In Q3
2012, drilling was carried out at seven projects, of which, four
were 'Company Makers' and three were 'Medium Scale' projects.
Highlights of the Greenfield exploration programme in Q3 2012
included the addition to the project pipeline of the Baborigame
project in Mexico, which has the potential to become a Company
Maker project. The Baborigame project is a series of low
sulphidation veins with disseminated mineralisation. The permitting
process is underway at the project and a surface mapping and
sampling programme is scheduled to take place in 2012. Further
highlights of the Greenfield exploration programme during the
quarter are provided below.
Mercurio
At the Mercurio Company Maker project in Mexico, a total of 3.4
thousand metres was drilled during Q3 2012 on a silver-based vein
corridor in the Santa Rosa area. Positive intercepts included(3)
:
Intercept Results
------------ -----------------------------------------
DDHME 12-35 From 404.4-1.0m @ 114.0 g/t Ag, 1.8% Cu,
9.4% Pb, 13.6% Zn
------------ -----------------------------------------
DDHME 12-36 From 345.3-2.4m @ 84.4 g/t Ag, 1.8% Cu,
4.8% Pb, 4.7% Zn
------------ -----------------------------------------
Cuello Cuello
At the Cuello Cuello Medium Scale project in Peru, almost 500
metres were drilled during Q3 2012. Near surface silver structures
were intersected and work is now focused on delineating additional
new structures. Positive intercepts included3:
Intercept Results
------------- ---------------------------------------------
DDH-CC-12003 From 63.2-64.0m - 0.8m @ 0.328g/t Au &
1,159g/t Ag
From 65.55-68.8m - 3.25m @ 0.189g/t Au
& 362g/t Ag
From 70.0-71.1m - 1.1m @ 0.157g/t Au &
596g/t Ag
------------- ---------------------------------------------
DDH-CC-12001 From 117.7-113.8m - 2.1m @ 1.60g/t Au &
335g/t Ag
From 245-246.5m - 1.5m @ 7.00g/t Au & 56g/t
Ag
------------- ---------------------------------------------
Financial position
The Company's financial position remains strong, with total cash
of $476.7 million and minority investments valued at $351.4 million
as at 30 September 2012. The decrease in the cash position versus
the end of the previous quarter ($543.6 million as at 30 June 2012)
mainly reflects investment in the Advanced Projects and debt
repayments made during the quarter.
Outlook
The Company remains firmly on track to achieve its full year
production target of 20.0 million attributable silver equivalent
ounces in 2012 with production at its core operations expected to
remain broadly stable for the remainder of 2012 as it continues to
mine close to average reserve grades in order to ensure a
consistent level of long-term production. Furthermore, the
Company's brownfield exploration programme will continue to focus
not only on resource additions but also on improving the grade
quality of these resources in the long-term.
The Company maintains its full year cost guidance of a 15%
increase versus 2011 at its operations in Peru, and of around
15-20% in Argentina.
__________________________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 7907 2934
Head of Investor Relations
RLM Finsbury
Charles Chichester +44 (0)20 7251 3801
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 almost fifty years' experience in
the mining of precious metal epithermal vein deposits and currently
operates four underground epithermal vein mines, three located in
southern Peru and one in southern Argentina. Hochschild also has
numerous long-term projects throughout the Americas.
PRODUCTION & SALES INFORMATION
TOTAL GROUP PRODUCTION(1)
Q3 Q3 YTD YTD
2012 2011 2012 2011
----------------------------- ------- ------- ------- -------
Silver production (koz) 4,942 5,473 14,670 15,886
Gold production (koz) 41.53 47.48 123.00 136.39
Total silver equivalent
(koz) 7,434 8,321 22,050 24,070
Total gold equivalent (koz) 123.90 138.69 367.50 401.16
Silver sold (koz) 5,263 4,708 13,859 15,466
Gold sold (koz) 47.95 38.43 113.86 127.82
----------------------------- ------- ------- ------- -------
(1) Total production includes 100% of all production, including
production attributable to joint venture partners at San Jose and
Pallancata.
ATTRIBUTABLE GROUP PRODUCTION(1)
Q3 Q3 YTD YTD
2012 2011 2012 2011
--------------------------- ------- ------- ------- -------
Silver production (koz) 3,424 3,791 10,311 11,131
Gold production (koz) 28.53 33.49 84.5 96.75
Attrib. silver equivalent
(koz) 5,136 5,800 15,379 16,936
Attrib. gold equivalent
(koz) 85.60 96.67 256.31 282.27
--------------------------- ------- ------- ------- -------
(1) Attributable production includes 100% of all production from
Arcata, Ares and Moris, 60% from Pallancata and 51% from San
Jose.
QUARTERLY PRODUCTION BY MINE
ARCATA
Q3 Q3 YTD YTD
2012 2011 2012 2011
---------------------------- ---------- ---------- ---------- --------
Ore production (tonnes) 194,484 181,271 539,144 497,357
Average head grade silver
(g/t) 260 277 291 318
Average head grade gold
(g/t) 0.78 0.80 0.86 0.89
Silver produced (koz) 1,358 1,433 4,370 4,489
Gold produced (koz) 4.15 4.24 13.19 12.90
Silver equivalent produced
(koz) 1,607 1,688 5,162 5,263
Silver sold (koz) 1,297 1,228 3,956 4,247
Gold sold (koz) 3.78 3.40 11.58 11.76
---------------------------- ---------- ---------- ---------- --------
ARES
Q3 Q3 YTD YTD
2012 2011 2012 2011
---------------------------- ---------- ---------- ------------ -------------
Ore production (tonnes) 86,437 91,287 247,069 246,970
Average head grade silver
(g/t) 55 63 52 64
Average head grade gold
(g/t) 2.83 2.58 2.66 2.85
Silver produced (koz) 128 164 355 448
Gold produced (koz) 7.19 7.02 19.82 21.09
Silver equivalent produced
(koz) 559 585 1,544 1,714
Silver sold (koz) 141 121 319 409
Gold sold (koz) 7.74 5.03 17.68 19.35
---------------------------- ---------- ---------- ------------ -------------
PALLANCATA(1)
Q3 Q3 YTD YTD
2012 2011 2012 2011
---------------------------- ---------- ---------- ---------- -------------
Ore production (tonnes) 277,093 268,673 805,392 777,407
Average head grade silver
(g/t) 257 313 256 304
Average head grade gold
(g/t) 1.18 1.44 1.09 1.36
Silver produced (koz) 1,893 2,291 5,499 6,478
Gold produced (koz) 6.81 9.37 18.83 25.58
Silver equivalent produced
(koz) 2,302 2,853 6,629 8,013
Silver sold (koz) 1,652 1,935 5,208 6,428
Gold sold (koz) 5.88 8.02 17.31 24.59
---------------------------- ---------- ---------- ---------- -------------
(1) The Company holds a 60% interest in Pallancata.
SAN JOSE(1)
Q3 Q3 YTD YTD
2012 2011 2012 2011
---------------------------- ---------- ---------- ---------- -------------
Ore production (tonnes) 136,577 124,204 380,911 336,151
Average head grade silver
(g/t) 402 448 416 456
Average head grade gold
(g/t) 5.24 5.75 5.71 5.93
Silver produced (koz) 1,552 1,562 4,408 4,416
Gold produced (koz) 20.97 20.91 63.27 60.02
Silver equivalent produced
(koz) 2,810 2,816 8,204 8,017
Silver sold (koz) 2,166 1,409 4,344 4,336
Gold sold (koz) 29.13 18.14 61.13 57.47
---------------------------- ---------- ---------- ---------- -------------
(1) The Company holds a 51% interest in San Jose.
MORIS
Q3 Q3 YTD YTD
2012 2011 2012 2011
---------------------------- ---------- ---------- ---------- -------------
Ore production (tonnes) - 245,771 - 858,028
Average head grade silver
(g/t) - 5.5 - 5.0
Average head grade gold
(g/t) - 1.00 - 0.96
Silver produced (koz) 11 23 39 55
Gold produced (koz) 2.41 5.94 7.89 16.80
Silver equivalent produced
(koz) 155 380 512 1,063
Silver sold (koz) 7 15 32 46
Gold sold (koz) 1.43 3.84 6.16 14.66
---------------------------- ---------- ---------- ---------- -------------
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.
- ends -
(1) Please note that all mineralised intersections referred to
in this release are quoted as down-hole lengths, not true
widths.
(2) Please note that all mineralised intersections referred to
in this release are quoted as down-hole lengths, not true
widths.
(3) Please note that all mineralised intersections referred to
in this release are quoted as down-hole lengths, not true
widths.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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