TIDMHOC
RNS Number : 7056V
Hochschild Mining PLC
20 April 2016
20 April 2016
Production Report for the 3 months ended 31 March 2016
Operational highlights
-- Q1 2016 attributable production exceeding budgeted mine
plans
o 3.7 million ounces of silver
o 51.1 thousand ounces of gold
o 7.4 million silver equivalent ounces, up 79% versus Q1 2015
(4.2 million ounces)
-- Inmaculada mine produced 47.2 thousand gold equivalent
ounces
o 34.0 thousand ounces of gold
o 1.0 million ounces of silver
o 3.5 million silver equivalent ounces
-- 2016 all-in sustaining costs per silver equivalent ounce on
track to meet $12.0-12.5 guidance
Improving financial position
-- Total cash of approximately $105 million as at 15 April
2016
-- Net debt of approximately $345 million as at 15 April
2016
-- Current Net debt/LTM EBITDA ratio of approximately 1.8x (31
December 2015: 2.5x)
-- Argentina macroeconomic & tax reforms significantly
improving San Jose cash flows
-- Cashflow further protected by 2016 precious metal hedges -
45% of production sold forward
Ignacio Bustamante, Chief Executive Officer commented:
"We have once again delivered a strong start to the year at all
our mines in what is budgeted as the lowest quarter of production.
Output is scheduled to increase through the rest of the year and we
are firmly on track to reach our full year production target of 32
million silver equivalent ounces. Our flagship mine, Inmaculada
continues to operate efficiently at a very competitive cost and we
remain excited by the potential in the surrounding district where
we will commence a drilling programme later in the year as part of
our Company-wide 2016 brownfield exploration plan. Our cash balance
has now grown to beyond the $100 million level and with the recent
relative strength in prices, our leverage ratio is currently
running at approximately 1.8x Net Debt to EBITDA for the year."
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 20 April 2016 for analysts and investors.
Dial in details as follows:
International Dial in: +44 (0) 20 3139 4830
UK Toll-Free Number: +44(0) 808 237 0030
Pin: 41037930#
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
International: +44 (0) 20 3426 2807
UK Toll Free: +44(0) 808 237 0026
Pin: 669622#
__________________________________________________________________________________
Overview
In Q1 2016, the Company delivered attributable production of 3.7
million ounces of silver and 51.1 thousand ounces of gold.
As per Company guidance, the first quarter of the year is always
the lowest due to the sequencing of the annual mine plans and
scheduled hourly workers' vacation in Argentina. However,
production was slightly ahead of budget due to a better than
expected performance in March across all operations and is also up
79% versus the first quarter of 2015.
The Company can report that its all-in sustaining costs per
silver equivalent ounce are on track to fall to between 12.0 to
$12.5 in 2016.
Production
Inmaculada
Inmaculada delivered a very smooth start to the year with gold
production at 34,000 ounces and silver production of 974,000 ounces
(silver equivalent production of 3.5 million ounces), driven by
better than expected gold grades and silver recoveries.
Arcata
At Arcata, silver production in the first quarter was 1.4
million ounces with gold production of 4,700 ounces which results
in silver equivalent production of 1.7 million ounces, a 12%
improvement on the first quarter of 2015 (Q1 2015: 1.5 million
ounces). This was driven by better than expected mined tonnage
resulting from the success of the Company's 2015 brownfield
exploration programme in addition to higher silver recoveries.
Pallancata
At Pallancata, as expected, tonnage through the plant in the
first quarter was lower than the average 2015 rate with the
operation entering a transitionary period before the introduction
of feed from the new Pablo vein towards the end of the year.
Production was 615,000 ounces of silver and 3,100 ounces of gold
bringing the silver equivalent total to 841,000 ounces (Q1 2015:
1.2 million).
San Jose
In what is a shorter period of operation due to scheduled hourly
workers vacation in February, the San Jose operation delivered
another solid quarter in line with the corresponding period of 2015
with lower than expected tonnage offset by higher grades. Silver
production was 1.4 million ounces and gold production was 18,280
ounces resulting in silver equivalent production of 2.7 million
ounces (Q1 2015: 2.7 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q1 2016 (which are
reported before the deduction of commercial discounts and include
the effects of the existing hedging agreements) were $1,266/ounce
for gold and $16.2/ounce for silver (Q1 2015: $1,247/ounce for gold
and $17.6/ounce for silver).
Brownfield exploration
Due to the rainy season in Peru, exploration programmes were not
scheduled to commence until the second quarter.
At Arcata, a 7,000 metre drilling programme is planned to
incorporate additional resources from the Tunel 4, Marion and
Alexia veins with the Q2 programme expected to consist of drilling
at the Paralela 1 zone and to the north of the Tunel 4 vein.
At Pallancata, the main focus has been on mine development to
access the Pablo vein with the Company currently on track to
realise initial production from Pablo towards the end of the year.
The focus of the brownfield exploration programme will be a 5,500
metre drilling programme to add resources in from the Pablo and
Yurica veins as well as a surface drilling campaign at Yanacohita
Norte in Q2. Geological mapping of the Pallancata-Selene area will
also be carried out.
At San Jose, surface drilling is scheduled for the second
quarter at the Aguas Vivas and Cerro Colorado Grande areas.
Financial position
Total cash was approximately $105 million with net debt of
approximately $345 million as at 15 April 2016.
On 11 February 2016, the Group signed a zero cost collar
contract with JP Morgan Chase Bank over three million ounces of
silver at a call/put price of US$17.60 and US$14.00 per ounce, from
12 February to 30 December 2016. In addition, on 12 February 2016,
the Group signed a commodity swap contract with Citibank to hedge
15,000 ounces of gold at a price of US$1,244.25 per ounce from 12
February to 30 December 2016. These agreements are in addition to
previous agreements for 2016 to hedge the sale of 29,000 ounces of
gold at $1,145 per ounce, 6.0 million ounces of silver at $15.93
per ounce and 71,000 ounces of gold at a price of $1,154 per
ounce.
Outlook
The Company is on track to achieve its full year production
target of 32.0 million attributable silver equivalent ounces with
all-in sustaining cost per silver equivalent ounce expected to be
between $12 to $12.5 in line with guidance.
__________________________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 3714 9040
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.
PRODUCTION & SALES INFORMATION*
TOTAL GROUP PRODUCTION
Q1 Q4 Q1 12 mths
2016 2015 2015 2015
----------------------- ------- ------- ------------ --------
Silver production
(koz) 4,329 5,322 3,523 18,037
Gold production
(koz) 60.04 82.87 26.66 213.37
Total silver
equivalent (koz) 8,772 11,454 5,496 33,827
Total gold equivalent
(koz) 118.54 154.78 74.27 457.12
Silver sold
(koz) 4,471 5,866 3,348 17,263
Gold sold (koz) 62.54 96.61 25.64 187.39
----------------------- ------- ------- ------------ --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q1 Q4 Q1 12 mths
2016 2015 2015 2015
------------------- ------- ------- -------- --------
Silver production
(koz) 3,662 4,345 2,879 14,752
Gold production
(koz) 51.08 68.44 17.20 166.02
Silver equivalent
(koz) 7,442 9,410 4,152 27,037
Gold equivalent
(koz) 100.56 127.16 56.11 365.37
------------------- ------- ------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
QUARTERLY PRODUCTION BY MINE
(MORE TO FOLLOW) Dow Jones Newswires
April 20, 2016 02:00 ET (06:00 GMT)
ARCATA
Product Q1 Q4 Q1 12 mths
2016 2015 2015 2015
------------------- -------- ------------ -------- --------
Ore production
(tonnes treated) 161,092 184,994 145,551 648,051
Average grade
silver (g/t) 309 288 330 323
Average grade
gold (g/t) 1.13 1.03 0.97 0.99
Silver produced
(koz) 1,377 1,453 1,287 5,613
Gold produced
(koz) 4.68 4.58 3.47 15.67
Silver equivalent
(koz) 1,724 1,792 1,544 6,772
Silver sold
(koz) 1,349 1,798 1,057 5,653
Gold sold (koz) 4.43 5.30 2.85 15.29
------------------- -------- ------------ -------- --------
INMACULADA
Product Q1 Q4 Q1 12 mths
2016 2015 2015 2015
------------------- ------------------ ------------ -------- ------------------
Ore production
(tonnes treated) 280,530 329,925 - 659,737
Average grade
silver (g/t) 121 118 - 115
Average grade
gold (g/t) 4.05 4.57 - 4.36
Silver produced
(koz) 974 1,084 - 2,055
Gold produced
(koz) 34.02 45.11 - 84.64
Silver equivalent
(koz) 3,492 4,423 - 8,318
Silver sold
(koz) 882 1,546 - 1,638
Gold sold (koz) 31.91 3.64 - 67.51
------------------- ------------------ ------------ -------- ------------------
PALLANCATA
Product Q1 Q4 Q1 12 mths
2016 2015 2015 2015
------------------- ------- ------------- -------- --------
Ore production
(tonnes treated) 69,423 107,320 148,722 522,431
Average grade
silver (g/t) 324 272 229 259
Average grade
gold (g/t) 1.69 1.40 1.08 1.28
Silver produced
(koz) 615 791 922 3,664
Gold produced
(koz) 3.05 3.74 3.89 16.42
Silver equivalent
(koz) 841 1,068 1,210 4,879
Silver sold
(koz) 559 918 851 3,632
Gold sold (koz) 2.74 4.27 3.48 15.80
------------------- ------- ------------- -------- --------
SAN JOSE
Product Q1 Q4 Q1 12 mths
2016 2015 2015 2015
------------------- -------- ------------ -------- --------
Ore production
(tonnes treated) 101,937 154,642 108,771 532,488
Average grade
silver (g/t) 470 453 428 448
Average grade
gold (g/t) 6.27 6.63 6.20 6.36
Silver produced
(koz) 1,362 1,994 1,315 6,706
Gold produced
(koz) 18.28 29.44 19.29 96.64
Silver equivalent
(koz) 2,715 4,172 2,742 13,857
Silver sold
(koz) 1,681 1,604 1,439 6,340
Gold sold (koz) 23.46 23.17 19.31 88.79
------------------- -------- ------------ -------- --------
The Company has a 51% interest in San Jose.
*Silver equivalent production assumes the average gold/silver
ratio for 2015 of 74:1 unless otherwise stated.
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 -
This information is provided by RNS
The company news service from the London Stock Exchange
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