TIDMHOC
RNS Number : 9522U
Hochschild Mining PLC
18 July 2018
__________________________________________________________________________________
18 July 2018
Production Report for the 6 months ended 30 June 2018
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild has delivered another very strong operational
quarter with output at all our mines in line with expectations and
therefore completes a record half for the Company. We are firmly on
track to meet our production target for the year of 514,000 gold
equivalent ounces (38 million silver equivalent ounces) within our
guided cost levels.
We have also continued to see exciting results from our
ambitious brownfield exploration plan. In particular, drilling at
Inmaculada is expected to add substantial resources close to the
current mining infrastructure whilst the programme at Arcata has
also made good progress."
Another very strong quarter
-- Attributable production([1])
o 5.0 million ounces of silver
o 68,477 ounces of gold
o 10.1 million silver equivalent ounces
o 136,201 gold equivalent ounces
-- Record half attributable production
o 9.7 million ounces of silver
o 137,507 ounces of gold
o 19.9 million silver equivalent ounces
o 268,237 gold equivalent ounces
-- On track to deliver overall 2018 production target of 514,000
gold equivalent ounces (38 million silver equivalent ounces)
-- 2018 all-in sustaining costs on track to meet $960-$990 per
gold equivalent ounce guidance ($13.0-13.4 per silver equivalent
ounce)
Exploration programme delivering exciting results
-- Brownfield programme continuing to add resources
o Further encouraging results from Inmaculada at Millet, Divina
and Lola veins
o Estimated resource update for Inmaculada expected at interim
results in August
o Encouraging results also being delivered at Arcata -
developments being prioritised over inferred resource additions
o San Jose drilling set to restart after poor seasonal weather
conditions
o Good progress on permitting for exciting 2019 drilling
programme
Robust financial position
-- Total cash of approximately $142 million as at 30 June 2018
($109 million as at 31 March 2018)
-- Net debt of approximately $66 million as at 30 June 2018
($100 million as at 31 March 2018)
-- Current Net Debt/LTM EBITDA of approximately 0.20x as at 30
June 2018
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 18 July 2018 for analysts and investors.
Dial in details as follows:
International Dial in: +44 333 300 0804
UK Toll-Free Number: 0800 358 9473
Pin: 74314873#
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
International: +44 333 300 0819
Pin: 301233618#
__________________________________________________________________________________
Overview
Hochschild delivered a new record half of attributable
production with 268,237 gold equivalent ounces or 19.9 million
silver equivalent ounces primarily driven by significant increases
at Inmaculada and Pallancata, as well as another robust result from
the 51% owned San Jose mine.
The Company reiterates that its all-in sustaining cost for 2018
is on track to be $960-$990 per gold equivalent ounce ($13.0-13.4
per silver equivalent ounce).
TOTAL GROUP PRODUCTION
Q2 2018 Q1 2018 Q2 2017 H1 2018 H1 2017
-------- -------- -------- --------
Silver production
(koz) 5,781 5,355 5,599 11,135 10,429
Gold production
(koz) 80.62 79.85 73.29 160.47 144.27
Total silver equivalent
(koz) 11,746 11,264 11,022 23,010 21,105
Total gold equivalent
(koz) 158.73 152.21 148.95 310.94 285.21
Silver sold (koz) 5,785 5,282 5,908 11,067 10,508
Gold sold (koz) 81.10 76.91 75.70 158.01 143.42
------------------------- -------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q2 2018 Q1 2018 Q2 2017 H1 2018 H1 2017
-------- -------- -------- --------
Silver production
(koz) 5,012 4,662 4,824 9,674 8,938
Gold production
(koz) 68.48 69.03 60.81 137.51 121.43
Silver equivalent
(koz) 10,079 9,771 9,324 19,850 17,923
Gold equivalent
(koz) 136.20 132.04 126.01 268.24 242.21
------------------- -------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q2 2018 Q1 2018 Q2 2017 H1 2018 H1 2017
------------ -------- -------- ------------------
Ore production (tonnes
treated) 333,207 337,507 330,393 670,713 614,352
Average grade silver
(g/t) 148 158 148 153 142
Average grade gold
(g/t) 4.57 4.60 3.80 4.58 4.04
Silver produced
(koz) 1,445 1,670 1,405 3,115 2,644
Gold produced (koz) 46.55 49.78 38.03 96.33 79.82
Silver equivalent
(koz) 4,890 5,354 4,219 10,244 8,550
Gold equivalent
(koz) 66.08 72.35 57.01 138.43 115.55
Silver sold (koz) 1,517 1,591 1,448 3,108 2,642
Gold sold (koz) 48.41 46.95 38.35 95.35 78.32
------------------------ ------------ -------- -------- ------------------ --------
Inmaculada's strong second quarter production of 66,076 gold
equivalent ounces was due to better than expected gold grades.
Overall in the first half, Inmaculada produced 138,427 gold
equivalent ounces, a 20% improvement on H1 2017 (115,547 gold
equivalent ounces), driven by better than expected grades, lower
dilution and a contribution from products in process from Q4
2017.
Pallancata
Product Q2 2018 Q1 2018 Q2 2017 H1 2018 H1 2017
------------- ------------- -------- --------
Ore production (tonnes
treated) 157,434 128,134 121,282 285,568 192,744
Average grade silver
(g/t) 411 384 424 399 440
Average grade gold
(g/t) 1.47 1.47 1.75 1.47 1.82
Silver produced
(koz) 1,866 1,412 1,475 3,278 2,439
Gold produced (koz) 6.57 5.29 5.90 11.86 9.79
Silver equivalent
(koz) 2,352 1,803 1,912 4,155 3,163
Gold equivalent
(koz) 31.78 24.37 25.83 56.15 42.75
Silver sold (koz) 1,855 1,401 1,558 3,256 2,437
Gold sold (koz) 6.48 5.11 6.23 11.58 9.72
------------------------ ------------- ------------- -------- -------- --------
Current mining operations at Pallancata saw average grades from
the mix of material from the Pablo vein, developments and ancillary
veins continuing to be better than planned in the second quarter
although this is expected to be only a temporary effect and will
not continue once Pablo is fully ramped up. The operation produced
1.9 million ounces of silver and 6,569 ounces of gold, a
significant improvement on the corresponding period of 2017. This
brought the total for the half to a robust 4.2 million silver
equivalent ounces (H1 2017: 3.2 million ounces).
The ramp up of tonnage from Pablo continued in the second
quarter although a small delay in the installation of the
ventilation systems resulted in tonnage reaching approximately
1,900 tonnes per day by the end of June, slightly lower than the
forecast 2,200 tonnes per day. The Company expects to achieve a
run-rate of around 2,800 tonnes per day in the fourth quarter.
San Jose (the Company has a 51% interest in San Jose)
Product Q2 2018 Q1 2018 Q2 2017 H1 2018 H1 2017
------------ ------------ -------- --------
Ore production (tonnes
treated) 142,452 121,889 135,439 264,341 250,396
Average grade silver
(g/t) 400 415 418 407 436
Average grade gold
(g/t) 6.26 6.44 6.68 6.34 6.60
Silver produced
(koz) 1,570 1,412 1,581 2,982 3,044
Gold produced (koz) 24.77 22.08 25.46 46.86 46.62
Silver equivalent
(koz) 3,403 3,047 3,465 6,450 6,494
Gold equivalent
(koz) 45.99 41.17 46.82 87.16 87.75
Silver sold (koz) 1,521 1,434 1,763 2,955 3,168
Gold sold (koz) 23.66 22.34 27.41 46.00 47.43
------------------------ ------------ ------------ -------- -------- --------
San Jose has once again experienced a steady period with tonnage
slightly higher than the corresponding period of 2017 as well as
the first quarter of this year but this was partially offset by
lower grades resulting in production of 3.4 million silver
equivalent ounces. This therefore amounts to a first half total of
6.5 million silver equivalent ounces, in line with the same period
of 2017 (H1 2017: 6.5 million ounces).
Work on the $14 million hydraulic backfill project has
progressed steadily in the second quarter although poor seasonal
weather conditions have affected deliveries of materials and
equipment. Testing of the completed pumping process is scheduled
for August with full operation due in October.
Arcata
Product Q2 2018 Q1 2018 Q2 2017 H1 2018 H1 2017
------------- ------------- -------- --------
Ore production (tonnes
treated) 97,347 91,175 129,215 188,522 261,643
Average grade silver
(g/t) 322 330 308 326 309
Average grade gold
(g/t) 0.98 1.04 1.06 1.01 1.09
Silver produced
(koz) 900 860 1,138 1,760 2,303
Gold produced (koz) 2.73 2.69 3.90 5.42 8.04
Silver equivalent
(koz) 1,102 1,060 1,427 2,161 2,898
Gold equivalent
(koz) 14.89 14.32 19.28 29.21 39.16
Silver sold (koz) 893 855 1,139 1,748 2,261
Gold sold (koz) 2.56 2.52 3.71 5.08 7.94
------------------------ ------------- ------------- -------- -------- --------
The Arcata mine operated as expected during the second quarter
with production of 900,035 ounces of silver and 2,725 ounces of
gold which resulted in a silver equivalent figure of 1.1 million
ounces. Tonnage and grades remained broadly consistent throughout
the first half of the year with the focus still on improving the
cost position and increasing the quality of resources through the
2018 brownfield exploration programme, as well as other efficiency
and productivity measures. Total production for the half was 2.2
million silver equivalent ounces, which places the mine on track to
meet the 2018 forecast of just over 4 million ounces.
Average realisable prices and sales
Average realisable precious metal prices in Q2 2018 (which are
reported before the deduction of commercial discounts) were
$1,270/ounce for gold and $16.3/ounce for silver (Q2 2017:
$1,262/ounce for gold and $16.2/ounce for silver). For H1 2018,
average realisable precious metal prices were $1,309/ounce for gold
and $16.2/ounce for silver (H1 2017: $1,251/ounce for gold and
$17.1/ounce for silver).
Brownfield exploration
Inmaculada
In Q2, the Company continued its comprehensive drilling
programme with encouraging results indicating substantial additions
to the deposit's resource base close to the existing mine
infrastructure. The current campaign is focused to the east of the
Angela vein with almost 20,000m of resource drilling carried out in
Q2 focused on the Millet, Divina, Lola and Lizina veins. Selected
results are presented below:
Vein Results
Millet MIL-18-024: 7.0m @ 2.4g/t Au & 135g/t Ag
MIL-18-026: 1.2m @ 2.5g/t Au & 177g/t Ag
MIL-18-028: 3.1m @ 1.8g/t Au & 64g/t Ag
MIL-18-029: 3.9m @ 1.8g/t Au & 121g/t Ag
MIL-18-030: 4.8m @ 1.7g/t Au & 80g/t Ag
MIL-18-031: 1.3m @ 3.3g/t Au & 91g/t Ag
MIL-18-032: 1.6m @ 2.6g/t Au & 80g/t Ag
------------------------------------------
Divina LOL-18-003: 12.0m @ 6.2g/t Au & 46g/t Ag
LOL-18-004: 3.0m @ 3.7g/t Au & 23g/t Ag
LOL-18-005: 2.2m @ 4.2g/t Au & 5g/t Ag
LOL-18-006: 7.0m @ 2.3g/t Au & 28g/t Ag
LOL-18-008: 3.7m @ 2.2g/t Au & 66g/t Ag
LOL-18-010: 3.8m @ 2.3g/t Au & 53g/t Ag
LOL-18-013: 1.8m @ 2.3g/t Au & 140g/t Ag
LOL-18-014: 2.9m @ 1.9g/t Au & 256g/t Ag
LOL-18-014: 8.7m @ 1.3g/t Au & 93g/t Ag
LOL-18-014: 9.3m @ 3.1g/t Au & 258g/t Ag
LAD-18-001: 1.0m @ 4.2g/t Au & 181g/t Ag
------------------------------------------
Lola LOL-18-004: 2.3m @ 2.1g/t Au & 37g/t Ag
LOL-18-005: 8.8m @ 5.1g/t Au & 356g/t Ag
LOL-18-006: 3.3m @ 1.8g/t Au & 55g/t Ag
LOL-18-008: 4.0m @ 4.1g/t Au & 82g/t Ag
LOL-18-013: 1.5m @ 2.9g/t Au & 29g/t Ag
------------------------------------------
Lizina LOL-18-003: 1.0m @ 2.1g/t Au & 8g/t Ag
LOL-18-006: 6.2m @ 2.9g/t Au & 16g/t Ag
LOL-18-007: 1.2m @ 1.5g/t Au & 49g/t Ag
LOL-18-008: 1.6m @ 2.2g/t Au & 88g/t Ag
LOL-18-010: 0.8m @ 4.9g/t Au & 183g/t Ag
LOL-18-011: 1.0m @ 8.6g/t Au & 135g/t Ag
LAD-18-013: 0.9m @ 4.0g/t Au & 11g/t Ag
------------------------------------------
Olinda LOL-18-001: 2.2m @ 2.7g/t Au & 225g/t Ag
------------------------------------------
Veronica MIL-18-028: 3.5m @ 2.0g/t Au & 91g/t Ag
------------------------------------------
The Company expects to be able to provide an update on estimated
resource additions to date at the interim results in August and
then at the end of the third and fourth quarters. The programme is
continuing in Q3 and 10,000m of drilling is planned for the Millet
West, Divina West and Misterio structures.
Arcata
An underground drilling programme for the year is focused on
areas close to the existing mine infrastructure with strong
potential to be rapidly incorporated into the short-term Arcata
mine plan with such resources being prioritised over inferred
resource incorporation. In the second quarter of 2018, the
programme continued with over 2,300m of potential drilling in the
Silvia and Anomaly North structures whilst 10,300m of resource
drilling targeted the Ruby 2, Ruby 3, Cristina, Rosalia, Pablito
East, Veta X and Fryda veins. Results are included below:
Vein Results
Cristina DDH-267-ST-18: 1.1m @ 1.3g/t Au & 454g/t
Ag
DDH-286-EX-18: 4.4m @ 0.4g/t Au & 145g/t
Ag
--------------------------------------------
Cristina Techo DDH-286-EX-18: 2.0m @ 0.4g/t Au & 173g/t
Ag
DDH-279-ST-18: 1.0m @ 2.0g/t Au & 547g/t
Ag
--------------------------------------------
Fryda DDH-267-ST-18: 1.2m @ 0.9g/t Au & 300g/t
Ag
--------------------------------------------
Pablito DDH-267-ST-18: 1.2m @ 3.6g/t Au & 1,535g/t
Ag
DDH-279-ST-18: 1.4m @ 6.9g/t Au & 2,852g/t
Ag
--------------------------------------------
Pablito East DDH-259-DI-18: 1.0m @ 0.2g/t Au & 93g/t
Ag
--------------------------------------------
Pamela DDH-286-EX-18: 1.3m @ 0.8g/t Au & 269g/t
Ag
--------------------------------------------
Pamela New DDH-278-ST-18: 1.1m @ 0.5g/t Au & 118g/t
Ag
--------------------------------------------
Rosalita DDH-267-ST-18: 1.3m @ 0.4g/t Au & 142g/t
Ag
DDH-290-EX-18: 0.7m @ 1.2g/t Au & 372g/t
Ag
--------------------------------------------
Ruby 2 DDH-276-DI-18: 1.2m @ 1.4g/t Au & 547g/t
Ag
--------------------------------------------
Ruby 3 DDH-259-DI-18: 0.9m @ 0.2g/t Au & 57g/t
Ag
--------------------------------------------
Vein X DDH-285-ST-18: 4.6m @ 3.0g/t Au & 2,714g/t
Ag
DDH-255-DI-18: 3.2m @ 1.3g/t Au & 447g/t
Ag
--------------------------------------------
In the third quarter, the programme will focus on 7,000m of
drilling at the Ruby 2, Ruby 3 and Pamela (New) structures.
Pallancata
Approximately 1,000m of potential underground drilling was
carried out in Pablo Sur structures with the campaign in this area
continuing into the third quarter. Much of the focus for 2018 is
currently on securing exploration permits for potential 2019
campaigns for the Pallancata East area, for the Cochaloma
structures to the south east and for highly promising areas further
to the south.
San Jose
In Q2, 4,708m of potential drilling was executed before the
winter weather disrupted progress. The targets were the Maia and
Guadalupe structures in the south of the deposit with resource
drilling beginning at Maia. 300m were completed with the following
results so far:
Vein Results
S.Odin SJD-1737: 2.4m @ 6.8g/t Au & 778g/t Ag
---------------------------------------
Guadalupe SJD-1737: 1.5m @ 5.4g/t Au & 525g/t Ag
SJD-1725: 2.8m @ 6.0g/t Au & 13g/t Ag
---------------------------------------
During Q3, resource drilling will continue to focus on Guadalupe
and Maia and in September, when weather conditions improve,
drilling will be restarted at Aguas Vivas to complete the ongoing
potential programme.
Financial position
Total cash was approximately $142 million as at 30 June 2018
resulting in net debt of approximately $66 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) 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 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.
__________________________________________________________________________________
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.
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 a gold/silver ratio of
74x.
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London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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