TIDMHOC
RNS Number : 0878T
Hochschild Mining PLC
15 July 2015
__________________________________________________________________________________
15 July 2015
Production Report for the 6 months ended 30 June 2015
Highlights
-- Q2 2015 production of 4.8 million attributable silver
equivalent ounces consisting of:
o 3.4 million ounces of silver
o 23,400 ounces of gold
-- Includes first contribution of just over 5,000 gold
equivalent ounces from flagship low cost Inmaculada mine
-- H1 2015 production of 8.7 million attributable silver
equivalent ounces consisting of:
o 6.3 million ounces of silver
o 40,600 ounces of gold
-- On track to achieve 2015 production target of 24.0 million
attributable silver equivalent ounces
-- 2015 all-in sustaining costs on track to be $15-16 per silver
equivalent ounce ($13-14 assuming current silver-to-gold ratio)
-- Cash optimisation programme expected to deliver further
efficiencies
-- Flagship Inmaculada project already producing:
o First production achieved on 3 June
o Plant ramp-up continues to progress
o Stope mining commenced; 270,000 tonnes stockpile of
development mineral being processed
o Discussions ongoing with plant contractor over completion of
EPC contract
-- Total cash of approximately $84 million as at 30 June
2015
Ignacio Bustamante, Chief Executive Officer commented:
"We are excited to report that our Inmaculada mine delivered its
first production in early June and the other operations also
contributed to what was a solid operating quarter with costs for
the half year expected to be in line with expectations. The ramp-up
process at Inmaculada is progressing and we expect to hit our six
to seven million ounce production target for 2015. The Company is
on the point of converting its significant long term investment
into low cost value accretive growth."
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 15 July 2015 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: 28103422#
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: 658744#
__________________________________________________________________________________
Overview
In Q2 2015, the Company delivered attributable production of 4.8
million silver equivalent ounces, comprised of 3.4 million ounces
of silver and 23.4 thousand ounces of gold. Overall, in the first
half of 2015, the Company delivered attributable production of 8.7
million silver equivalent ounces, including 6.3 million ounces of
silver and 40.6 thousand ounces of gold. With production from the
newly commissioned Inmaculada mine ramping up, the Company is on
track to meet its full year production target of 24.0 million
attributable silver equivalent ounces.
The Company can report that its all-in sustaining costs per
silver equivalent ounce are on track to fall to between $15 to $16
in 2015, assuming a silver-to-gold ratio of 60:1 or $13 to $14 per
ounce assuming the current silver-to-gold ratio.
Production
Arcata
At Arcata, total silver equivalent production in Q2 was 1.7
million ounces (Q2 2014: 1.6 million ounces) which brought the
first half total to 3.2 million ounces (H1 2014: 3.4 million
ounces). Despite the imposition of the Company's adjusted mine
plans for 2015 to ensure the extraction of profitable ounces,
Arcata delivered a stronger than expected first half with higher
than expected tonnage and silver grades in particular.
Pallancata
At Pallancata, tonnage in the second quarter was lower than the
equivalent period in 2014 due to the above-mentioned adjusted mine
plans resulting in production of 1.3 million silver equivalent
ounces (Q2 2014: 2.1 million ounces), an improvement on the first
quarter with grades rising to their expected level. The total for
the first half was 2.5 million silver equivalent ounces. (H1 2014:
4.4 million ounces).
San Jose
The San Jose operation improved, as expected, from its
seasonally shorter first quarter to deliver 3.0 million silver
equivalent ounces (Q2 2014: 2.8 million ounces) driven by higher
silver grades and recoveries. The operation as a whole produced 5.5
million ounces (H1 2014: 5.6 million ounces) with the second half
expected to be stronger.
Average realisable prices and sales
Average realisable precious metal prices in Q2 2015 (which are
reported before the deduction of commercial discounts and include
the effects of the existing hedging agreements) were $1,212/ounce
for gold and $16.3/ounce for silver (Q2 2014: $1,310/ounce for gold
and $20.3/ounce for silver). For H1 2015, average realisable
precious metal prices were $1,227/ounce for gold and $16.9/ounce
for silver (H1 2014: $1,328/ounce for gold and $20.5/ounce for
silver).
Brownfield exploration(1)
Arcata
In Q2 2015, the Arcata exploration programme has focused on the
incorporation of resources from the Stephani, Cristina, Soledad,
Macarena and Nicolle veins with permitting for further exploration
of the Tunel 4 vein system still outstanding.
Pallancata
The exploration team at Pallancata received permits in May to
begin a 19,100 metre exploration and drilling programme with the
aim of focusing on inferred resource exploration at surface and
also geological mapping of the west and south side of the district
for new target definition. Results are expected in the second half
of the year on drilling in the Yurika area in particular.
Inmaculada
During the second quarter, plant construction continued with
first dore production achieved on 3 June 2015. By the end of June,
as part of the ramp-up phase to achieve full commercial design
capacity, 52,325 tonnes of low grade development material have been
treated at the plant producing approximately 3,420 ounces of gold
and 95,450 ounces of silver (approximately 5,000 gold equivalent
ounces).
Ramp-up in mill throughput has continued throughout June with
tonnes per day reaching an average of 2,500 and expected to hit the
forecast capacity of 3,500 tonnes per day at the beginning of
August whilst gold and silver recoveries have trended, as expected,
to around 80% in June with the target of reaching 95% in gold and
90% in silver by the end of the year.
The Hochschild team has continued underground mine development
and currently a stockpile of approximately 270,000 tonnes is
available for processing whilst stope mining activities have
commenced utlising long hole and breasting methods. The Company
reiterates that the overall production forecast of 6-7 million
silver equivalent ounces for 2015 remains in place and that it is
on course to receive its plant operating permit which will allow
the Company to begin commercial sales.
Construction of the paste backfill plant has reached 65% with
work on the laboratories, warehouses and workshops now
complete.
The Company and the contractor are currently in discussions over
a number of contract change orders presented by the contractor
relating to the completion of the EPC contract for Inmaculada.
Based on Hochschild's own evaluation work and advice received from
external advisers, the Company believes that the majority of the
change orders are without any merit or will be subject to
significant downward adjustment. In addition, the Company believes
that it is entitled to compensation from the contractor for certain
breaches of contract. A further update will be provided at the
Interim Results announcement in August.
The exploration focus near the Inmaculada mine remains on the
Palca area to the North East and following a mapping programme in
2014 at the Palca 1 zone, six promising vein structures have been
selected amongst others in a corridor of almost five kilometres
with work at Palca 2 zone starting later on in the year.
Financial position
Total cash was approximately $84 million as at 30 June 2015,
which reflects approximately $63 million of further investment in
Inmaculada during the half.
In January and February 2015, the Company drew down $75 million
of its short-term credit lines in Peru. Subsequently in June 2015,
the Company refinanced and extended the maturity profile of the
debt with $25 million now set to mature in December 2015, $15
million in June 2016 and $35 million in July 2016. The average
annual interest rate for those short term facilities is now
0.9%.
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
In the third quarter, Hochschild expects to receive final
permits, complete the ram-up process and achieve commercial
production at its Inmaculada project. The mine is set to deliver
6-7 million ounces of silver equivalent production in 2015 with
all-in sustaining cost per silver equivalent ounce expected to be
an average of $11.8 over the life-of-mine at the 60:1 gold:silver
ratio and $10.3 at the current gold:silver ratio.
The Company is on track to achieve its full year production
target of 24.0 million attributable silver equivalent ounces in
2015 with all-in sustaining cost per silver equivalent ounces
expected to be between $15 to $16 in line with guidance ($13 to $14
per ounce assuming current silver-to-gold ratio)
Having already achieved over $300 million of savings to date,
Hochschild remains focused and confident on delivering further
efficiencies throughout the Company.
_________________________________________________________________________________
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
Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
----------------------- ------- ------- ------- ------- -------
Silver production
(koz) 4,178 3,523 4,992 7,701 9,983
Gold production
(koz) 34.67 26.66 38.67 61.33 76.97
Total silver
equivalent (koz) 6,258 5,123 7,312 11,381 14,602
Total gold equivalent
(koz) 104.31 85.38 121.87 189.69 243.36
Silver sold
(koz) 4,437 3,348 4,974 7,785 10,086
Gold sold (koz) 32.36 25.64 38.18 58.01 76.29
----------------------- ------- ------- ------- ------- -------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
------------------- ------- ------- ------- ------- -------
Silver production
(koz) 3,386 2,879 4,255 6,265 8,526
Gold production
(koz) 23.40 17.20 27.92 40.6 55.45
Silver equivalent
(koz) 4,790 3,911 5,930 8,701 11,853
Gold equivalent
(koz) 79.83 65.19 98.83 145.02 197.55
------------------- ------- ------- ------- ------- -------
Attributable production includes 100% of all production from
Arcata, Pallancata and Ares and 51% from San Jose.
QUARTERLY PRODUCTION BY MINE
ARCATA
Product Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
------------------- ------------ -------- -------- -------- --------
Ore production
(tonnes treated) 155,373 145,551 171,334 300,924 365,573
Average grade
silver (g/t) 350 330 277 340 262
Average grade
gold (g/t) 0.97 0.97 0.85 0.97 0.81
Silver produced
(koz) 1,439 1,287 1,321 2,726 2,895
Gold produced
(koz) 3.69 3.47 3.96 7.17 8.76
Silver equivalent
produced (koz) 1,661 1,495 1,559 3,156 3,420
Silver sold
(koz) 1,626 1,057 1,293 2,683 2,947
Gold sold (koz) 4.07 2.85 3.66 6.92 8.58
------------------- ------------ -------- -------- -------- --------
ARES
Product Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
------------------- -------- -------- ------- ------- --------
Ore production
(tonnes treated) - - 89,853 - 167,331
Average grade
silver (g/t) - - 114 - 110
Average grade
gold (g/t) - - 2.26 - 2.34
Silver produced
(koz) - - 282 - 525
Gold produced
(koz) - - 5.73 - 11.46
Silver equivalent
produced (koz) - - 626 - 1,213
Silver sold
(koz) - - 325 - 518
Gold sold (koz) - - 6.68 - 11.00
------------------- -------- -------- ------- ------- --------
INMACULADA
Product Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
------------------- ------------- ------- ------- ------------- -------
Ore production
(tonnes treated) 52,325 - - 52,325 -
Average grade
silver (g/t) 89 - - 89 -
Average grade
gold (g/t) 2.92 - - 2.92 -
Silver produced
(koz) 95.45 - - 95.45 -
Gold produced
(koz) 3.42 - - 3.42 -
Silver equivalent
produced (koz) 301 - - 301 -
Silver sold - - - - -
(koz)
Gold sold (koz) - - - - -
------------------- ------------- ------- ------- ------------- -------
PALLANCATA
Product Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
------------------- ------------- -------- -------- -------- --------
Ore production
(tonnes treated) 140,829 148,722 269,213 289,551 523,695
Average grade
silver (g/t) 268 229 269 248 264
Average grade
gold (g/t) 1.32 1.08 1.19 1.19 1.12
Silver produced
(koz) 1,026 922 1,885 1,948 3,588
Gold produced
(koz) 4.55 3.89 7.05 8.44 12.84
Silver equivalent
produced (koz) 1,299 1,155 2,307 2,455 4,358
Silver sold
(koz) 1,135 851 1,844 1,986 3,615
Gold sold (koz) 4.85 3.48 6.88 8.33 13.11
------------------- ------------- -------- -------- -------- --------
.
SAN JOSE
Product Q2 Q1 Q2 H1 H1
2015 2015 2014 2015 2014
------------------- ------------ -------- -------- -------- --------
Ore production
(tonnes treated) 124,224 108,771 142,074 232,995 276,663
Average grade
silver (g/t) 466 428 378 448 385
Average grade
gold (g/t) 6.47 6.20 5.45 6.34 5.60
Silver produced
(koz) 1,617 1,315 1,504 2,932 2,975
Gold produced
(koz) 23.01 19.29 21.94 42.30 43.91
Silver equivalent
produced (koz) 2,998 2,472 2,820 5,470 5,610
Silver sold
(koz) 1,676 1,439 1,511 3,115 3,004
Gold sold (koz) 23.45 19.31 20.95 42.75 43.25
------------------- ------------ -------- -------- -------- --------
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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