TIDMHOC
RNS Number : 2656E
Hochschild Mining PLC
17 October 2018
__________________________________________________________________________________
17 October 2018
Production Report for the 9 months ended 30 September 2018
Full year guidance on production increased and costs
decreased
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild has once again completed a robust quarter with
production at all our mines in line with expectations, therefore
completing a record nine months for the Company. We are pleased to
now raise our production target for the year to 520,000 gold
equivalent ounces (38.5 million silver equivalent ounces) and to
lower our all-in sustaining cost guidance to between $940 and $970
per gold equivalent ounce ($12.7 to $13.1 per silver equivalent
ounce).
We are continuing to see strong results from our ambitious
brownfield exploration plan and in particular drilling at
Inmaculada is expected to increase the estimated inferred resource
figure we disclosed in August. We look forward to our Capital
Markets Day on 7(th) November when we will give a detailed overview
of our exploration programme and the progress made to date."
Another strong quarter
-- Q3 attributable production(1)
o 5.1 million ounces of silver
o 62,432 ounces of gold
o 9.7 million silver equivalent ounces
o 130,685 gold equivalent ounces
-- Q3 YTD 2018 attributable production record
o 14.7 million ounces of silver
o 199,939 ounces of gold
o 29.5 million silver equivalent ounces
o 398,922 gold equivalent ounces
-- Revised overall 2018 production target of 520,000 gold
equivalent ounces (38.5 million silver equivalent ounces)
-- 2018 all-in sustaining costs guidance revised to $940-$970
per gold equivalent ounce ($12.7-13.1 per silver equivalent ounce)
from $960-$990 per gold equivalent ounce ($13.0-13.4 per silver
equivalent ounce)
Exploration programme delivering
-- Brownfield programme continuing to add resources
o Q3 drilling at Inmaculada expected to increase inferred
resource additions from the 800,000 gold equivalent ounces figure
disclosed at Interim Results
o Updated estimate expected at Capital Markets Day on 7(th)
November
o Ongoing encouraging results at Arcata currently being assessed
against medium-term operational viability
o San Jose drilling programme also delivering positive results
with activity weighted towards the end of the year
o Good progress on permitting for 2019 drilling programme at
Pallancata
Robust financial position
-- Total cash of approximately $143 million as at 30 September
2018 ($142 million as at 30 June 2018)
-- Net debt of approximately $63 million as at 30 September 2018
($67 million as at 30 June 2018)
-- Current Net Debt/LTM EBITDA of approximately 0.21x as at 30
September 2018
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 17 October 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: 74366882#
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: 301247688#
__________________________________________________________________________________
Overview
Hochschild delivered another strong quarter of attributable
production with 130,685 gold equivalent ounces or 9.7 million
silver equivalent ounces primarily driven by the ramp-up of
production from the Pablo vein at Pallancata and a consistent
performance at San Jose partially offsetting a scheduled period of
lower output at Inmaculada. Overall year-to-date production is a
record 29.5 million silver equivalent ounces (398,922 gold
equivalent ounces) resulting in an upgrade to the full year
guidance from 38 to 38.5 million silver equivalent ounces (520,000
gold equivalent ounces)
The Company has revised its all-in sustaining cost forecast for
2018 from $960-$990 per gold equivalent ounce ($13.0-13.4 per
silver equivalent ounce) to $940-$970 per gold equivalent ounce
($12.7-13.1 per silver equivalent ounce).
TOTAL GROUP PRODUCTION
Q3 2018 Q2 2018 Q3 2017 YTD 2018 YTD 2017
-------- -------- -------- ---------
Silver production
(koz) 5,794 5,781 6,087 16,929 16,516
Gold production
(koz) 74.20 80.62 79.10 234.67 223.37
Total silver equivalent
(koz) 11,285 11,746 11,940 34,295 33,046
Total gold equivalent
(koz) 152.49 158.73 161.36 463.44 446.56
Silver sold (koz) 5,845 5,785 5,726 16,912 16,234
Gold sold (koz) 74.27 81.10 73.99 232.29 217.41
------------------------- -------- -------- -------- --------- ---------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q3 2018 Q2 2018 Q3 2017 YTD 2018 YTD 2017
-------- -------- -------- ---------
Silver production
(koz) 5,051 5,012 5,339 14,725 14,277
Gold production
(koz) 62.43 68.48 67.23 199.94 188.66
Silver equivalent
(koz) 9,671 10,079 10,315 29,520 28,238
Gold equivalent
(koz) 130.68 136.20 139.39 398.92 381.60
------------------- -------- -------- -------- --------- ---------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q3 2018 Q2 2018 Q3 2017 YTD 2018 YTD 2017
-------- -------- -------- ----------
Ore production (tonnes
treated) 332,411 333,207 343,990 1,003,124 958,343
Average grade silver
(g/t) 138 148 149 148 145
Average grade gold
(g/t) 3.96 4.57 4.19 4.38 4.10
Silver produced
(koz) 1,320 1,445 1,499 4,435 4,143
Gold produced (koz) 40.13 46.55 43.72 136.46 123.54
Silver equivalent
(koz) 4,289 4,890 4,735 14,532 13,285
Gold equivalent
(koz) 57.96 66.08 63.98 196.38 179.53
Silver sold (koz) 1,317 1,517 1,410 4,425 4,052
Gold sold (koz) 39.77 48.41 40.52 135.12 118.84
------------------------ -------- -------- -------- ---------- ---------
Inmaculada's continued its robust 2018, producing 57,958 gold
equivalent ounces in the third quarter with grades, as expected,
slightly lower than in the first half of the year. Year-to-date,
Inmaculada's output remains a record 196,385 gold equivalent
ounces, a 9% improvement on the first 9 months of 2017 (Q3 YTD
2017: 179,528 gold equivalent ounces), driven by better than
expected grades, lower dilution and a contribution from products in
process from Q4 2017.
Pallancata
Product Q3 2018 Q2 2018 Q3 2017 YTD 2018 YTD 2017
-------- -------- -------- ---------
Ore production (tonnes
treated) 201,009 157,434 152,087 486,577 345,031
Average grade silver
(g/t) 362 411 471 384 454
Average grade gold
(g/t) 1.29 1.47 1.80 1.39 1.81
Silver produced
(koz) 2,086 1,866 2,058 5,364 4,497
Gold produced (koz) 7.34 6.57 7.65 19.20 17.44
Silver equivalent
(koz) 2,629 2,352 2,624 6,784 5,788
Gold equivalent
(koz) 35.53 31.78 35.46 91.68 78.21
Silver sold (koz) 2,090 1,855 1,838 5,346 4,275
Gold sold (koz) 7.30 6.48 6.85 18.88 16.57
------------------------ -------- -------- -------- --------- ---------
At Pallancata, tonnage extracted from the Pablo vein continued
to increase in the third quarter with grades reducing in line with
expectations resulting in production of 2.6 million silver
equivalent ounces. Overall in the first nine months of the year,
Pallancata has delivered 6.8 million silver equivalent ounces (Q3
2017 YTD: 5.8 million ounces) and is on track to meet the forecast
of 9.5 million ounces. The Company expects to achieve a throughput
of 2,800 tonnes per day during the fourth quarter.
San Jose (the Company has a 51% interest in San Jose)
Product Q3 2018 Q2 2018 Q3 2017 YTD 2018 YTD 2017
-------- -------- -------- ---------
Ore production (tonnes
treated) 144,852 142,452 137,548 409,193 387,943
Average grade silver
(g/t) 376 400 406 396 425
Average grade gold
(g/t) 5.93 6.26 6.35 6.20 6.51
Silver produced
(koz) 1,517 1,570 1,526 4,499 4,570
Gold produced (koz) 24.02 24.77 24.21 70.88 70.83
Silver equivalent
(koz) 3,294 3,403 3,318 9,743 9,811
Gold equivalent
(koz) 44.51 45.99 44.84 131.67 132.59
Silver sold (koz) 1,573 1,521 1,489 4,527 4,657
Gold sold (koz) 24.66 23.66 23.22 70.66 70.65
------------------------ -------- -------- -------- --------- ---------
San Jose has delivered another robust period with tonnage
steadily rising since the first quarter and versus the
corresponding period of 2017 with a partial offset from lower
grades resulting in production of 3.3 million silver equivalent
ounces. This amounts to a year-to-date total of 9.7 million silver
equivalent ounces, in line with the same period of 2017 (Q3 YTD
2017: 9.8 million ounces).
On 4 September 2018, the Argentinian Government issued an
Executive Order establishing a temporary export tax over all goods
exported from Argentina, applicable from 4 September 2018 to 31
December 2020. The rate that applies for San Jose's production is
AR$3 per U.S. dollar exported. The Company expects the negative
effects will be fully offset by unit cost savings related to the
very significant year-to-date currency devaluation.
Arcata
Product Q3 2018 Q2 2018 Q3 2017 YTD 2018 YTD 2017
-------- -------- -------- ---------
Ore production (tonnes
treated) 93,381 97,347 117,358 281,903 379,001
Average grade silver
(g/t) 327 322 300 326 306
Average grade gold
(g/t) 1.01 0.98 1.05 1.01 1.08
Silver produced
(koz) 872 900 1,003 2,632 3,306
Gold produced (koz) 2.72 2.73 3.52 8.14 11.56
Silver equivalent
(koz) 1,073 1,102 1,264 3,234 4,162
Gold equivalent
(koz) 14.50 14.89 17.08 43.70 56.24
Silver sold (koz) 866 893 990 2,614 3,250
Gold sold (koz) 2.55 2.56 3.41 7.63 11.35
------------------------ -------- -------- -------- --------- ---------
The Arcata mine operated in line with current expectations with
production of 872,666 ounces of silver and 2,719 ounces of gold
which resulted in a silver equivalent figure of 1.1 million ounces.
Tonnage and grades remained broadly consistent with first half
rates and the focus remains on improving the cost position and
increasing the quality of resources through the 2018 brownfield
exploration programme. Total production for first nine months was
3.2 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 Q3 2018 (which are
reported before the deduction of commercial discounts) were
$1,187/ounce for gold and $13.7/ounce for silver (Q3 2017:
$1,293/ounce for gold and $16.9/ounce for silver). For the first
nine months of 2018, average realisable precious metal prices were
$1,270/ounce for gold and $15.3/ounce for silver (Q3 YTD 2017:
$1,265/ounce for gold and $17.1/ounce for silver).
Brownfield exploration
Inmaculada
In Q3, the Company continued its comprehensive drilling
programme with almost 27,000m of resource drilling carried out in
the Millet, Divina, Lola, Lizina, Thalia and Barbara veins. Further
additions are expected to be made to the already announced 59.2
million silver equivalent ounces (800,000 gold equivalent ounces)
of the Inferred resource category. The Company expects to be able
to provide a further update on estimated resource additions to date
at the Capital Markets Day on 7(th) November 2018. Selected
intercepts are included below:
Vein Results
Bella BEL-18-001: 2.5m @ 14.5g/t Au & 1,453g/t
Ag
------------------------------------------
Divina LOL-18-015: 9.2m @ 1.8g/t Au & 86g/t Ag
LOL-18-017: 13.9m @ 2.4g/t Au & 101g/t
Ag
LOL-18-019: 1.7m @ 2.0g/t Au & 43g/t Ag
LOL-18-020: 11.3m @ 0.7g/t Au & 37g/t Ag
LOL-18-022: 20.6m @ 1.7g/t Au & 45g/t Ag
LOL-18-025: 3.1m @ 1.4g/t Au & 109g/t Ag
LOL-18-028: 7.3m @ 1.6g/t Au & 200g/t Ag
LOL-18-030: 1.7m @ 5.1g/t Au & 186g/t Ag
LOL-18-031: 1.0m @ 1.7g/t Au & 197g/t Ag
LAD-18-004: 3.0m @ 2.0g/t Au & 141g/t Ag
------------------------------------------
Lady LAD-18-004: 5.5m @ 25.9g/t Au & 213g/t
Ag
LAD-18-005: 6.7m @ 3.6g/t Au & 138g/t Ag
LAD-18-006: 1.2m @ 5.2g/t Au & 19g/t Ag
LAD-18-007: 1.2m @ 0.8g/t Au & 82g/t Ag
LAD-18-008: 1.1m @ 2.4g/t Au & 85g/t Ag
LAD-18-010: 0.9m @ 2.6g/t Au & 110g/t Ag
------------------------------------------
Lizina LOL-18-016: 1.1m @ 1.7g/t Au & 54g/t Ag
------------------------------------------
Lola LOL-18-011: 2.3m @ 2.3g/t Au & 50g/t Ag
LOL-18-012: 1.6m @ 2.7g/t Au & 64g/t Ag
LOL-18-017: 8.4m @ 2.1g/t Au & 40g/t Ag
LOL-18-022: 2.3m @ 3.6g/t Au & 15g/t Ag
LOL-18-024: 3.8m @ 5.6g/t Au & 8g/t Ag
------------------------------------------
Millet MIS-18-003: 4.3m @ 4.1g/t Au & 109g/t Ag
MIS-18-005: 1.9m @ 0.8g/t Au & 556g/t Ag
MIS-18-007: 1.3m @ 3.9g/t Au & 102g/t Ag
------------------------------------------
Misterio MIS-18-002: 1.2m @ 2.5g/t Au & 40g/t Ag
------------------------------------------
Thalia LIA-18-006: 1.8m @ 3.9g/t Au & 20g/t Ag
LIA-18-007: 1.1m @ 1.1g/t Au & 69g/t Ag
------------------------------------------
The programme is continuing in Q4 with 5,400m of drilling
planned in the Barbara and Thalia veins with 1,700m of potential
drilling to explore the west of the Angela vein.
Arcata
In the third quarter of 2018, the drilling programme continued
with almost 15,000m of resource drilling in the 1(st) and 4(th)
Quadrants and focused on the Pamela New, Ruby 2, Ruby 3, Cristina,
Rosalia, Pablito East & West, Vein X and Frida veins.
Selected intercepts are included below:
Vein Results
Frida DDH-279-ST-18: 1.7m @ 3.6g/t Au & 1,461g/t
Ag
DDH-269-ST-18: 0.8m @ 1.0g/t Au & 501g/t
Ag
DDH-302-DI-18: 1.1m @ 0.6g/t Au & 338g/t
Ag
--------------------------------------------
Rosalia DDH-300-EX-18: 1.0m @ 2.1g/t Au & 908g/t
Ag
DDH-290-EX-18: 1.1m @ 0.9g/t Au & 254g/t
Ag
DDH-339-DI-18: 2.4m @ 2.2g/t Au & 1,504g/t
Ag
--------------------------------------------
Pamela W DDH-301-EX-18: 1.3m @ 2.5g/t Au & 446g/t
Ag
DDH-311-EX-18: 1.2m @ 1.6g/t Au & 193g/t
Ag
DDH-286-EX-18: 2.4m @ 5.1g/t Au & 402g/t
Ag
--------------------------------------------
Pamela New DDH-305-ST-18: 2.2m @ 2.7g/t Au & 758g/t
Ag
DDH-329-VE-18: 1.0m @ 0.6g/t Au & 320g/t
Ag
DDH-332-VE-18: 1.1m @ 0.9g/t Au & 282g/t
Ag
DDH-301-EX-18: 1.8m @ 0.9g/t Au & 264g/t
Ag
DDH-342-VE-18: 1.0m @ 3.4g/t Au & 2,019g/t
Ag
--------------------------------------------
Elena DDH-269-ST-18: 1.0m @ 1.2g/t Au & 584g/t
Ag
DDH-339-DI-18: 1.0m @ 5.5g/t Au & 2,175g/t
Ag
--------------------------------------------
Alexia DDH-318-EX-18: 1.3m @ 3.3g/t Au & 563g/t
Ag
DDH-337-DE-18: 1.1m @ 5.3g/t Au & 336g/t
Ag
DDH-344-DI-18: 2.5m @ 2.0g/t Au & 238g/t
Ag
--------------------------------------------
Ruby 3 DDH-239-DI-18: 1.1m @ 0.3g/t Au & 264g/t
Ag
DDH-231-DI-18: 1.1m @ 0.5g/t Au & 327g/t
Ag
DDH-291-DE-18: 2.4m @ 0.8g/t Au & 314g/t
Ag
--------------------------------------------
Carolina DDH-299-VE-18: 0.8m @ 3.0g/t Au & 405g/t
Ag
--------------------------------------------
Vein X DDH-285-ST-18: 3.0m @ 1.9g/t Au & 2,714g/t
Ag
--------------------------------------------
Cristina DDH-308-EX-18: 2.2m @ 2.6g/t Au & 1,089g/t
Ag
--------------------------------------------
Diana DDH-350-DI-18: 2.2m @ 1.4g/t Au & 648g/t
Ag
--------------------------------------------
Paloma DDH-342-VE-18: 2.2m @ 1.7g/t Au & 468g/t
Ag
--------------------------------------------
In the fourth quarter, the programme will focus on 7,200m of
drilling at Pamela (New) and Frida structures.
Pallancata
The focus for 2018 remains on securing exploration permits for
the planned 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 Q3, following disruption from adverse winter weather, the
programme recommenced with 3,200m of reverse circulation drilling
in the Saavedra zone to the south of the mine as well as long drill
holes from the mine to look for potential east-west structures.
5,700m of resource drilling was focused on the Lita, Ayelen,
Tensional Perla, Perla and Sigmoide Luli veins with results
pending.
During Q4, 5,000m of potential resource drilling will focus on
the Antonella east-west structure and a further programme at the
Aguas Vivas area to the North West of the mine.
Financial position
Total cash was approximately $143 million and net debt was
approximately $63 million as at 30 September 2018. This cash
balance reflects substantially lower precious metal prices in the
period and the payment in the third quarter of: the interim
dividend; a number of strategic investments; the ongoing investment
in the hydraulic backfill project at San Jose; increased investment
in the Company's brownfield exploration programme; and debt
repayment in Argentina.
__________________________________________________________________________________
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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END
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