TIDMHOC
RNS Number : 4714D
Hochschild Mining PLC
27 April 2017
__________________________________________________________________________________
27 April 2017
Production Report for the 3 months ended 31 March 2017
Ignacio Bustamante, Chief Executive Officer said:
I am pleased to report that we have delivered another solid
operational period and remain on track to meet our 2017 output and
cost targets. In addition, our new Pablo vein is showing better
than expected grades, whilst the Company's 2017 brownfield
exploration programme is underway with some encouraging results
achieved so far at San Jose."
Operational highlights
-- Strong Q1 2017 attributable production
o 4.1 million ounces of silver
o 60.6 thousand ounces of gold
o 8.6 million silver equivalent ounces, up 16% versus Q1 2016
(7.4 million ounces)
o 116.2 thousand gold equivalent ounces (Q1 2016: 100.6 thousand
ounces)
-- Production performance achieved despite stoppages at
Pallancata and Inmaculada
-- On track to deliver overall 2017 production target of 37
million silver equivalent ounces
-- 2017 all-in sustaining costs per silver equivalent ounce on
track to meet $12.2-12.7 guidance
Strengthening financial position
-- Total cash of approximately $98 million as at 31 March 2017
($140 million as at 31 December 2016)
-- $25 million of debt repaid in Q1 2017
-- Stoppage related delays in Q1 at Pallancata and Inmaculada
and a commercial delay at Arcata temporarily impacted working
capital. Full recovery expected from Q2 onwards.
-- Net debt of approximately $199 million as at 31 March 2017
($187 million as at 31 December 2016)
-- Current Net Debt/LTM EBITDA of approximately 0.6x as of 31
March 2017
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Thursday 27 April 2017 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: 77185861#
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: 686128#
_________________________________________________________________________________
1 All equivalent figures assume a gold/silver ratio of 74x.
Overview
In Q1 2017, the Company delivered attributable production of
116.2 thousand gold equivalent ounces or 8.6 million silver
equivalent ounces. This was comprised of 4.1 million ounces of
silver and 60.6 thousand ounces of gold.
The Company reiterates that its all-in sustaining costs per
silver equivalent ounce for 2017 is on track to be between $12.2
and $12.7.
TOTAL GROUP PRODUCTION
Q1 2017 Q4 2016 Q1 2016 12 mths
2016
------------------- -------- -------- -------- --------
Silver production
(koz) 4,830 4,910 4,329 20,562
Gold production
(koz) 70.98 74.29 60.04 292.63
Total silver
equivalent
(koz) 10,083 10,407 8,772 42,217
Total gold
equivalent
(koz) 136.26 140.63 118.54 570.50
Silver sold
(koz) 4,600 4,996 4,471 21,091
Gold sold (koz) 67.72 75.02 62.54 298.96
------------------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q1 2017 Q4 2016 Q1 2016 12 mths
2016
------------------- -------- -------- -------- --------
Silver production
(koz) 4,113 4,075 3,662 17,284
Gold production
(koz) 60.62 61.57 51.08 246.08
Silver equivalent
(koz) 8,599 8,631 7,442 35,493
Gold equivalent
(koz) 116.20 116.64 100.56 479.64
------------------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q1 2017 Q4 2016 Q1 2016 12 mths
2016
------------------- -------- ------------ ------------------ -----------------
Ore production
(tonnes treated) 283,959 344,199 280,530 1,306,606
Average grade
silver (g/t) 135 134 121 133
Average grade
gold (g/t) 4.33 4.26 4.05 4.21
Silver produced
(koz) 1,239 1,220 974 4,908
Gold produced
(koz) 41.79 41.03 34.02 162.71
Silver equivalent
(koz) 4,331 4,256 3,492 16,948
Gold equivalent
(koz) 58.53 57.51 47.19 229.03
Silver sold
(koz) 1,195 1,266 882 5,004
Gold sold (koz) 39.98 41.93 31.91 164.75
------------------- -------- ------------ ------------------ -----------------
Inmaculada's overall first quarter production was 41,790 ounces
of gold and 1.2 million ounces of silver which amounts to gold
equivalent production of 59 thousand ounces and represents a 24%
increase on the same period in 2016. However, as has already been
reported by the Company, on 31 January an accident occurred
underground at the mine and operations were temporarily halted in
order to carry out a full investigation. Whilst this procedure, as
well as a full review of safety measures was ongoing, the plant
continued to operate and process existing high-grade stockpiled
material. A total of 79,000 tonnes of this ore was treated in the
period at average grades of 5.6 grammes of gold per tonne and 191
grammes of silver per tonne. Mining operations are currently being
steadily ramped up back to full production and Inmaculada remains
on track to meet its full year forecast of approximately 230,000
gold equivalent ounces (17 million silver equivalent ounces).
Arcata
Product Q1 2017 Q4 2016 Q1 2016 12 mths
2016
------------------- -------- ------------ -------- --------
Ore production
(tonnes treated) 132,428 170,128 161,092 677,309
Average grade
silver (g/t) 310 344 309 337
Average grade
gold (g/t) 1.12 1.21 1.13 1.24
Silver produced
(koz) 1,165 1,669 1,377 6,343
Gold produced
(koz) 4.14 5.85 4.68 22.54
Silver equivalent
(koz) 1,471 2,101 1,724 8,011
Gold equivalent
(koz) 19.88 28.40 23.29 108.26
Silver sold
(koz) 1,121 1,673 1,349 6,346
Gold sold (koz) 4.23 5.65 4.43 22.04
------------------- -------- ------------ -------- --------
At Arcata, silver production in the first quarter was 1.2
million ounces with gold production of 4,141 ounces which resulted
in silver equivalent production of 1.5 million ounces. Tonnage and
silver grades fell following a revision of the mine plan to
accommodate a reduced number of stopes and narrower veins, although
silver grades are expected to increase from the second quarter. The
focus at Arcata is to improve its cost position whilst increasing
high quality resources through the brownfield exploration
programme.
Pallancata
Product Q1 2017 Q4 2016 Q1 2016 12 mths
2016
------------------- -------- ------------- -------- --------
Ore production
(tonnes treated) 71,662 26,881 69,423 244,765
Average grade
silver (g/t) 468 414 324 381
Average grade
gold (g/t) 1.94 1.98 1.69 1.86
Silver produced
(koz) 964 317 615 2,620
Gold produced
(koz) 3.89 1.47 3.05 12.37
Silver equivalent
(koz) 1,252 426 841 3,536
Gold equivalent
(koz) 16.92 5.75 11.37 47.78
Silver sold
(koz) 878 322 559 2,660
Gold sold (koz) 3.49 1.45 2.74 12.41
------------------- -------- ------------- -------- --------
At Pallancata, production in Q1 2017 was 964,000 ounces of
silver and 3,895 ounces of gold bringing the silver equivalent
total to 1.3 million ounces. This material improvement was
partially offset by the previously reported road blockade at the
mine which resulted in output this year commencing later than
expected.
San Jose (the Company has a 51% interest in San Jose)
Product Q1 2017 Q4 2016 Q1 2016 12 mths
2016
------------------- -------- ------------ -------- --------
Ore production
(tonnes treated) 114,956 146,892 101,937 536,024
Average grade
silver (g/t) 458 418 470 444
Average grade
gold (g/t) 6.50 6.32 6.27 6.28
Silver produced
(koz) 1,463 1,704 1,362 6,691
Gold produced
(koz) 21.15 25.95 18.28 95.01
Silver equivalent
(koz) 3,029 3,624 2,715 13,721
Gold equivalent
(koz) 40.93 48.97 36.69 185.42
Silver sold
(koz) 1,405 1,734 1,681 7,081
Gold sold (koz) 20.02 26.00 23.46 99.76
------------------- -------- ------------ -------- --------
In a traditionally shorter period of operation due to scheduled
hourly workers vacation in March, San Jose has continued to be a
consistent performer with production of 1.5 million ounces of
silver and 21,155 ounces of gold (3.0 million silver equivalent
ounces) principally driven by higher than expected tonnage.
Average realisable prices and sales
Average realisable precious metal prices in Q1 2017 (which are
reported before the deduction of commercial discounts) were
$1,238/ounce for gold and $18.3/ounce for silver (Q1 2016:
$1,266/ounce for gold and $16.2/ounce for silver).
Brownfield exploration
At Arcata, 2,366m of resource drilling was carried out at the
Tunel 4, Paralela 3, Ramal Marion and Paralela Sur veins although
there were a few delays in surface drilling due to the heavy rain
in Peru. During the second quarter, 14,400m of further resource
drilling is planned.
Long horizontal drilling for potential resources has also
started recently in the Pamela vein system with 2,000m due to be
completed in the second quarter along with a similar programme of
1,700m through the Paralelas veins.
At Pallancata, the plan for the second quarter is to drill
1,000m of potential resource drilling in the Marco vein, a
structure identified close to the Pablo vein.
At San Jose, 4,837m of potential drilling has been carried out
at the Aguas Vivas zone as well as the Juanita structure with
preliminary results from Aguas Vivas below:
Vein Results
--------------- -----------------------------------
Aguas Vivas NW SJD-1627: 2.6m @ 0.1g/t Au, 43g/t
Ag, 8.2% Pb & 5.5% Zn
SJD-1616: 2.8m @ 0.3g/t Au, 40g/t
Ag, 7.0% Pb & 6.0% Zn
--------------- -----------------------------------
In the second quarter, a further 4,000m of potential drilling
will be carried out in structures in the Platifero zone to the
south of San Jose.
Financial position
Total cash was approximately $98 million as at 31 March 2017
resulting in net debt of approximately $199 million. The cash
figure reflects the repayment of short term debt in February ($25
million) but also a temporary increase in accounts receivable of
approximately $35 million arising from timing differences on sales
contracts at Arcata and San Jose as well as at Pallancata which
experienced shipment delays resulting from the stoppage.
Outlook
The Company remains on track to deliver its overall production
target for 2017 of 37.0 million silver equivalent ounces or 500
thousand gold equivalent ounces and also reiterates its all-in
sustaining cost per silver equivalent ounce forecast of between
$12.2 and $12.7.
__________________________________________________________________________________
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.
- ends -
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The company news service from the London Stock Exchange
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