TIDMHOC
RNS Number : 6872C
Hochschild Mining PLC
21 January 2015
__________________________________________________________________________________
21 January 2015
Production Report for the 12 months ended 31 December 2014
2014 Highlights
-- Full year production of 22.2 million attrib. silver
equivalent ounces substantially exceeding 21.0 million target
-- Main operation all-in sustaining costs per silver equivalent
ounce expected to fall by up to 5% in 2014, within guidance
(2013:$18.6/oz)
-- Total cash of approximately $115 million as at 31 December
2014
2015 Outlook
-- Further progress achieved at Inmaculada Advanced Project:
o 2015 production target of 6-7 million silver equivalent ounces
remains in place despite some construction delays
o Overall project 86% complete
o Plant construction 85% complete vs 57% in Q3; contractor
expected to commission plant in Q2 2015
o Key underground development plan ahead of schedule - 157,449
tonnes of development mineral already stockpiled
o Remaining construction capital expenditure of $72 million in
2015
-- Core operation mine plans revised to deliver profitable
ounces in lower precious metal price environment
-- 2015 attributable production target of 24.0 million silver
equivalent ounces
-- 2015 all-in sustaining costs expected to be $15-16 per silver
equivalent ounce
-- 6.0 million silver ounces sold forward for 2015 at $17.75 per
ounce
-- 38,000 gold ounces already sold forward for 2015 at $1,300
per ounce
Ignacio Bustamante, Chief Executive Officer commented:
"Despite the complex precious metal environment, our core assets
have once again surpassed their annual target, this time by almost
6%. Several cost cutting initiatives were also successfully
implemented during the year materially improving our operations'
competitiveness for the year ahead. The Company will grow its
production to 24 million silver equivalent ounces in 2015 while
maintaining the management's focus on reducing costs and improving
efficiencies.
Our flagship Inmaculada project is close to completion, with the
mine itself already ramping up and the plant construction moving
towards its final stages. We are excited about Inmaculada as it
will not only be the cornerstone of our production base in Peru but
also will contribute significantly to reinforcing our strong cash
cost position."
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 21 January 2015 for analysts and investors.
Dial in details as follows:
UK: +44 (0) 20 3139 4830
Pin: 16963109#
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 3426 2807
Pin: 653659#
__________________________________________________________________________________
Overview
In Q4 2014, the Company delivered attributable production of 5.6
million silver equivalent ounces, comprised of 4.1 million ounces
of silver and 24.4 thousand ounces of gold. This has brought the
total for 2014 to 22.2 million silver equivalent ounces, a 6%
increase on the 2014 production target of 21.0 million ounces and
comprised of 16.2 million ounces of silver and 101 thousand ounces
of gold.
The Company reiterates that it expects its 2014 main operation
all-in sustaining costs per silver equivalent ounce to have fallen
by up to 5% (2013: $18.6/ounce).
Production
Arcata
At Arcata, total silver equivalent production in Q4 was 1.8
million ounces (Q4 2013: 1.6 million ounces), a 17% improvement on
the previous quarter. Full year silver equivalent production at
Arcata was 6.8 million ounces, a very creditable 13% improvement on
the 2013 result (6.0 million ounces) and was principally driven by
a planned move to higher grade areas of the mine.
Pallancata
At Pallancata, as a result of the Company's adjustment of mine
plans to ensure the extraction of profitable ounces, as detailed in
the November 2014 Operational Update, tonnage in the fourth quarter
was moved downwards with grades increasing and resulting in
production of 1.9 million silver equivalent ounces (Q4 2013: 2.6
million ounces). For the full year, Pallancata produced 8.0 million
silver equivalent ounces (2013: 9.3 million ounces) with the fall
in the second half reflecting the scheduled move to thinner veins
in the mix.
San Jose
The San Jose operation delivered a strong quarter with 3.6
million silver equivalent ounces produced, a 21% improvement on the
Q3 2014 result (2.9 million ounces) and was the result of higher
tonnage and higher silver and gold grades. In 2014 as a whole, San
Jose again proved to be a very consistent performer with increased
tonnage offsetting lower grades and resulting in almost flat
year-on-year production of 12.1 million silver equivalent ounces
(2013: 12.3 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q4 2014 (which are
reported before the deduction of commercial discounts and include
the effects of the announced hedging agreements) were $1,222/ounce
for gold and $16.95/ounce for silver (Q4 2013: $1,209/ounce for
gold and $19.74/ounce for silver). For the full year 2014, average
realisable precious metal prices were $1,279/ounce for gold and
$18.87/ounce for silver (2013: $1,338/ounce for gold and
$22.12/ounce for silver).
Brownfield exploration(1)
Arcata
In Q4 2014, 7,203 metres have been drilled at Arcata.
Significant intercepts included:
Vein Results
------------ -----------------------------------------
DDH739-LM14: 1.42m at 12.42 g/t Au &
Pamela Sur 2,245 g/t Ag
------------ -----------------------------------------
DDH743-LM14: 0.86m at 0.95 g/t Au &
Pamela 303 g/t Ag
------------ -----------------------------------------
DDH741-LM14: 1.05m at 1.14 g/t Au &
Socorro+400 479 g/t Ag
------------ -----------------------------------------
DDH742-LM14: 0.97m at 11.12 g/t Au &
Lucero 1,437 g/t Ag
------------ -----------------------------------------
DDH742-LM14: 2.55m at 8.47 g/t Au &
Sorpresa 4 1,930 g/t Ag
------------ -----------------------------------------
DDH737-GE14: 0.81m at 3.11g/t Au & 1,824
Tunel 3 g/t Ag
------------ -----------------------------------------
Pallancata
In Q4, 2,924 metres of drilling was carried out at Pallancata
focusing on potential areas such as East Larissa, Isis, East
Pallancata, Pucanta and Emilia NW. Mapping campaigns were carried
out over 686ha including areas such as Ranichico, Yanacochita,
Roiropata and Yurika.
San Jose
In Q4 2014,2,111 metres were drilled at San Jose with mapping of
the south side of the San Jose area covering an area of 211ha.
Significant results include:
Vein Results
------- ------------------------------------
DDH-SJD1483: 0.94m at 9.51 g/t Au &
Karina 1,318 g/t Ag
------- ------------------------------------
Advanced Project
Inmaculada
During the fourth quarter at the Inmaculada project,
construction of the plant was continued by the EPC contractor,
Graña y Montero, and has currently reached 85% completion. Delays
remain at the plant site itself and, in particular, the concrete
foundations for the plant's SAG mill were found to not meet
contractual technical specifications and are consequently having to
be rebuilt. The effect of this and other previously mentioned minor
delays is that the plant is now expected to be commissioned in the
second quarter of 2015.
However, continuing good progress in the originally envisaged
bottleneck area of mine development has been made by the Hochschild
team and is expected to ensure that a stockpile of approximately
263,000 tonnes will be available for processing on completion of
the plant. Consequently, the Company reiterates that the overall
production forecast of 6-7 million silver equivalent ounces for
2015 remains in place.
A total of 15,406 metres of tunnelling and 2,445 metres of raise
boring have been carried out to date at the project. In addition,
construction continued in the fourth quarter on the tailings dam,
warehouses, laboratories and workshops as well as work on the paste
backfill plant.
Construction capital expenditure at the project to date is $348
million with the remaining construction capital expenditure for
2015 expected to be $72 million bringing the total to $420
million.
Exploration pipeline
Highlights of the exploration programme during the period are
provided below.
Mexico
During Q4 2014, the Company decided to close its exploration
office in Chihuahua and focus on financing and supporting the
Riverside Resources Joint Venture in the Sonora gold belt from the
head office. The venture continues to explore new opportunities in
this prolific, low-cost mineral district.
Peru
Exploration efforts during Q4 2014 were focused on the Corina
project, optioned from Lara Exploration earlier in 2014. Company
community relations teams are currently negotiating access
agreements that would allow the Company to drill in late 2015,
subject to government permit approvals.
Financial position
Total cash was approximately $115 million as at 31 December
2014. On 21 October, Hochschild announced that following maturity
of its 5.75 per cent senior unsecured convertible bonds on 20
October 2014, all outstanding convertible bonds have been redeemed.
As a result, the principal amount of $114.9 million has been repaid
in full, financed from existing cash resources.
In early October, Hochschild successfully secured a $100 million
medium term loan facility with Scotiabank which was subsequently
drawn down on 29 October. In addition, the Company reinforced its
liquidity position further this month by utilising its lines of
credit in Peru to secure short term funding of $50 million at
advantageous rates, bringing the current cash level to
approximately $170 million.
On 19 January 2015, the Company signed agreements to hedge the
sale of 6,000,000 ounces of silver at $17.75 per ounce for 2015.
This is in addition to the previous agreement to hedge 38,000
ounces of gold for 2015 at $1,300 per ounce.
Outlook
As previously disclosed, the mine plans of the Arcata and
Pallancata operations have been optimised with the operational
focus expected to be on accessible ore areas requiring reduced
capital expenditure with cut-off grades reflecting the current
weaker metal price environment. Plant throughput is expected to be
reduced to 1,500 tonnes per day at Arcata and 1,800 tonnes per day
at Pallancata, with the San Jose operation in Argentina continuing
at its current level. The resulting production target for 2015 from
the three current operations plus the Inmaculada project (expected
to deliver 6-7 million silver equivalent ounces) is 24 million
silver equivalent ounces.
The disciplined focus on profitable ounces at all operations
with reduced levels of sustainable capital expenditure for 2015 is
expected to have a positive effect on the Company's overall costs
with the all-in sustaining cost for the Company now expected to be
reduced to between $15 to $16 per ounce in 2015 with the full
effect expected to be felt in the second half of the year.
Sustaining capital expenditure for current operations is budgeted
at approximately $45 million, in part reflecting a significant
temporary cut in mine development capital expenditure. Additional
mine development capital expenditure at Inmaculada is expected to
be approximately $33 million in 2015.
__________________________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 3714 9040
Head of Investor Relations
Finsbury
Charles O'Brien +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 three underground epithermal vein mines, two 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
Q4 Q3 Q4 12 mths 12 mths
2014
2014 2014 2013 2013
------------------------- ------- ------- ------------ -------- --------
Silver production
(koz) 5,075 4,298 5,475 19,357 19,754
Gold production (koz) 37.72 32.34 43.80 147.03 175.22
Total silver equivalent
(koz) 7,338 6,239 8,103 28,179 30,267
Total gold equivalent
(koz) 122.31 103.98 135.05 469.65 504.45
Silver sold (koz) 5,236 3,659 5,742 18,981 19,555
Gold sold (koz) 40.00 26.47 43.56 142.77 168.56
------------------------- ------- ------- ------------ -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose as well as production in 2013 from the recently-sold Moris
operation.
ATTRIBUTABLE GROUP PRODUCTION
Q4 Q3 Q4 12 mths 12 mths
2014
2014 2014 2013 2013
----------------------- ------- ------- ------- -------- --------
Silver production
(koz) 4,115 3,546 4,622 16,187 16,639
Gold production (koz) 24.38 21.06 30.80 100.89 126.80
Silver equivalent
(koz) 5,578 4,810 6,470 22,241 24,247
Gold equivalent (koz) 92.96 80.17 107.83 370.68 404.11
----------------------- ------- ------- ------- -------- --------
Attributable production for Q4 2014 and Full Year 2014 includes
100% of all production from Arcata, Pallancata and Ares and 51%
from San Jose. Comparatives for 2013 have been restated to include
100% of production from Pallancata and also include production from
the now-sold Moris operation.
QUARTERLY PRODUCTION BY MINE
ARCATA
Product Q4 Q3 Q4 12 mths 12 mths
2014
2014 2014 2013 2013
---------------------------- ------------ ------------ ------------- ------------------ ------------------
Ore production (tonnes
treated) 186,486 149,888 244,125 701,947 900,861
Average grade silver
(g/t) 307 319 242 286 217
Average grade gold
(g/t) 0.90 0.90 0.81 0.85 0.74
Silver produced (koz) 1,579 1,353 1,337 5,827 4,984
Gold produced (koz) 4.40 3.74 4.32 16.89 16.83
Silver equivalent produced
(koz) 1,843 1,578 1,597 6,841 5,994
Silver sold (koz) 1,550 1,124 1,404 5,621 4,924
Gold sold (koz) 4.06 3.02 4.42 15.66 15.95
---------------------------- ------------ ------------ ------------- ------------------ ------------------
ARES
Product Q4 Q3 Q4 12 mths 12 mths
2014
2014 2014 2013 2013
---------------------------- ------- ------- ------------- ------------------ ------------------
Ore production (tonnes
treated) - - 91,602 167,331 329,095
Average grade silver
(g/t) - - 86 110 82
Average grade gold
(g/t) - - 2.00 2.34 2.39
Silver produced (koz) - 8 195 534 757
Gold produced (koz) - 0.17 4.90 11.63 23.40
Silver equivalent produced
(koz) - 19 489 1,232 2,162
Silver sold (koz) 17 6 214 540 761
Gold sold (koz) - 0.45 5.27 11.45 23.25
---------------------------- ------- ------- ------------- ------------------ ------------------
PALLANCATA
Product Q4 Q3 Q4 12 mths 12 mths
2014
2014 2014 2013 2013
---------------------------- ------------- ------------ ------------- ------------------ ------------------
Ore production (tonnes
treated) 256,299 271,074 291,740 1,051,068 1,088,712
Average grade silver
(g/t) 224 199 285 238 264
Average grade gold
(g/t) 1.00 0.89 1.14 1.03 1.13
Silver produced (koz) 1,537 1,402 2,198 6,527 7,628
Gold produced (koz) 6.09 5.41 6.97 24.34 27.83
Silver equivalent produced
(koz) 1,902 1,727 2,616 7,988 9,298
Silver sold (koz) 1,506 1,381 2,378 6,502 7,567
Gold sold (koz) 5.80 5.11 7.51 24.02 26.67
---------------------------- ------------- ------------ ------------- ------------------ ------------------
Comparatives from 2013 for Pallancata have been restated to 100%
of production.
SAN JOSE
Product Q4 Q3 Q4 12 mths 12 mths
2014
2014 2014 2013 2013
---------------------------- ------------ ------------ ------------ ----------------- -----------------
Ore production (tonnes
treated) 152,689 141,666 156,150 571,017 536,937
Average grade silver
(g/t) 454 388 399 404 425
Average grade gold
(g/t) 6.19 5.66 6.03 5.77 6.42
Silver produced (koz) 1,959 1,535 1,741 6,469 6,357
Gold produced (koz) 27.23 23.02 26.53 94.16 98.83
Silver equivalent produced
(koz) 3,593 2,916 3,333 12,119 12,286
Silver sold (koz) 2,163 1,150 1,742 6,316 6,278
Gold sold (koz) 30.13 17.89 25.25 91.28 94.76
---------------------------- ------------ ------------ ------------ ----------------- -----------------
The Company has a 51% interest in San Jose.
*Silver equivalent production assumes a gold/silver ratio of
60:1
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 in line with industry-wide standards, all
mineralised intersections in this release are quoted as calculated
true widths.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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