TIDMHOC
RNS Number : 7965E
Hochschild Mining PLC
21 July 2016
__________________________________________________________________________________
21 July 2016
Production Report for the 6 months ended 30 June 2016
Ignacio Bustamante, Chief Executive Officer said:
"The first half of 2016 has proved to be pivotal in Hochschild's
recent history with the delivery of strong production results,
continued cost reduction, further debt repayments and recently,
re-entry into the FTSE 250 Index. Our Inmaculada operation has
performed above expectations and is on track to exceed its
production and cost targets for the year emphasising its world
class competitive position. We are now raising our target for
overall 2016 production by 6% to 34 million silver equivalent
ounces whilst at revising our all all-in sustaining cost down to
between $11.0 and $11.5 per silver equivalent ounce. Furthermore,
despite additional debt repayment, our cash position remains very
strong at over $100 million."
Operational highlights
-- Q2 2016 attributable production exceeded expectations(1)
o 4.5 million ounces of silver
o 67.0 thousand ounces of gold
o 9.5 million silver equivalent ounces, up 86% versus Q2 2015
(5.1 million ounces)
o 128.5 thousand gold equivalent ounces
-- H1 2016 attributable production driven by strong Inmaculada
performance
o 8.2 million ounces of silver
o 118.1 thousand ounces of gold
o 17.0 million silver equivalent ounces
o 229.1 thousand gold equivalent ounces
o Inmaculada produced 111.2 thousand gold equivalent ounces
Strengthening financial position
-- $70m of debt repaid to date in 2016
-- Total cash of approximately $103 million as at 30 June 2016
($84 million as at 31 December 2015)
-- Net debt of approximately $280 million as at 30 June 2016
($366 million as at 31 December 2015)
Revised outlook
-- Full year production now forecast to be 34 million silver
equivalent ounces (460 thousand gold equivalent ounces) from 32
million ounces
-- All-in sustaining costs per silver equivalent ounce now
expected to be between $11.0-11.5 for 2016 (previously $12.0-
12.5)
Capital Markets Event
-- Capital Markets Event to be held on 6th September 2016 in
London
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Thursday 21 July 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: 38264089#
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: 674714#
________________
(1) All equivalent figures assume the average gold/silver ratio
for 2015 of 74x.
_________________________________________________________________________________
Overview
In Q2 2016, the Company delivered attributable production of
128.5 thousand gold equivalent ounces or 9.5 million silver
equivalent ounces. This comprised of 4.5 million ounces of silver
and 67.0 thousand ounces of gold. Overall, in the first half of
2016, the Company delivered attributable production of 229.1
thousand gold equivalent ounces or 17.0 million silver equivalent
ounces, including 8.2 million ounces of silver and 118.1 thousand
ounces of gold.
TOTAL GROUP PRODUCTION
Q2 2016 Q1 2016 Q2 2015 H1 2016 H1 2015
------------------- -------- -------- -------- -------- --------
Silver production
(koz) 5,415 4,329 4,178 9,744 7,701
Gold production
(koz) 79.39 60.04 34.67 139.43 61.33
Total silver
equivalent
(koz) 11,290 8,772 6,744 20,062 12,240
Total gold
equivalent
(koz) 152.57 118.54 91.13 271.11 165.40
Silver sold
(koz) 5,614 4,471 4,437 10,085 7,785
Gold sold
(koz) 83.55 62.54 32.36 146.10 58.01
------------------- -------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q2 2016 Q1 2016 Q2 2015 H1 2016 H1 2015
------------------- -------- -------- -------- -------- --------
Silver production
(koz) 4,548 3,662 3,386 8,210 6,265
Gold production
(koz) 67.04 51.08 23.40 118.12 40.60
Silver equivalent
(koz) 9,509 7,442 5,117 16,951 9,269
Gold equivalent
(koz) 128.50 100.56 69.15 229.06 125.26
------------------- -------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q2 2016 Q1 2016 Q2 2015 H1 2016 H1 2015
------------------- -------- ------------------ --------- ------------------ ------------
Ore production
(tonnes treated) 338,630 280,530 52,325 619,161 52,325
Average grade
silver (g/t) 142 121 89.16 132 89.16
Average grade
gold (g/t) 4.42 4.05 2.92 4.25 2.92
Silver produced
(koz) 1,396 974 95 2,370 95.45
Gold produced
(koz) 45.18 34.02 3.42 79.20 3.42
Silver equivalent
(koz) 4,739 3,492 348 8,231 348
Gold equivalent
(koz) 64.04 47.19 4.71 111.23 4.71
Silver sold
(koz) 1,585 882 - 2,468 -
Gold sold (koz) 50.26 31.91 - 82.17 -
------------------- -------- ------------------ --------- ------------------ ------------
Inmaculada delivered its strongest quarter since commissioning
with gold production at 45,000 ounces and silver production of1.4
million ounces (gold equivalent production of 64 thousand ounces).
Throughout the first half, grades and silver recoveries have been
better than expected in the original mine plan and, combined with
the ongoing improved tonnage per day rates, H1 production was able
to reach 111 thousand gold equivalent ounces (8.2 million silver
equivalent ounces).
Arcata
Product Q2 2016 Q1 2016 Q2 2015 H1 2016 H1 2015
------------------- ------------ -------- ------------ -------- --------
Ore production
(tonnes treated) 172,305 161,092 155,373 333,397 300,924
Average grade
silver (g/t) 345 309 349.56 327 340
Average grade
gold (g/t) 1.31 1.13 0.97 1.22 0.97
Silver produced
(koz) 1,592 1,377 1,439 2,970 2,726
Gold produced
(koz) 5.68 4.68 3.69 10.36 7.17
Silver equivalent
(koz) 2,013 1,724 1,713 3,736 3,256
Gold equivalent
(koz) 27.20 23.29 23.14 50.49 44.00
Silver sold
(koz) 1,572 1,349 1,626 2,922 2,683
Gold sold (koz) 5.70 4.43 4.07 10.14 6.92
------------------- ------------ -------- ------------ -------- --------
At Arcata, silver production in the second quarter was 1.6
million ounces with gold production of 5,700 ounces which results
in silver equivalent production of 2.0 million ounces, an 18%
improvement on the first quarter of 2015 (Q2 2015: 1.7 million
ounces). As in the first quarter this has been 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. Overall in the first half Arcata has
produced a very solid 3.7 million silver equivalent ounces (H1
2015: 3.3 million ounces).
Pallancata
Product Q2 2016 Q1 2016 Q2 2015 H1 2016 H1 2015
------------------- ------------- -------- ------------- -------- --------
Ore production
(tonnes treated) 66,313 69,423 140,829 135,736 289,551
Average grade
silver (g/t) 358 324 268 341 248
Average grade
gold (g/t) 1.85 1.69 1.32 1.77 1.19
Silver produced
(koz) 658 615 1,026 1,273 1,948
Gold produced
(koz) 3.32 3.05 4.55 6.37 8.44
Silver equivalent
(koz) 903 841 1,363 1,745 2,573
Gold equivalent
(koz) 12.21 11.37 18.42 23.58 34.77
Silver sold
(koz) 757 559 1,135 1.315 1,986
Gold sold (koz) 3.76 2.74 4.85 6.50 8.33
------------------- ------------- -------- ------------- -------- --------
At Pallancata, as expected, tonnage through the plant in the
first half was lower than the average 2015 rate with operations in
a transitionary period before the introduction of feed from the new
Pablo vein towards the end of the year. Production in Q2 was
658,000 ounces of silver and 3,320 ounces of gold bringing the
silver equivalent total to 903,000 ounces (Q2 2015: 1.1
million).
The 950 metre ramp to reach the Pablo vein has now been
completed and approximately 600 metres of further mine
infrastructure has also been developed. Currently work is advancing
on the vein gallery. The Company remains on track to start
production at the end of 2016.
San Jose
Product Q2 2016 Q1 2016 Q2 2015 H1 2016 H1 2015
------------------- ------------ -------- -------- -------- --------
Ore production
(tonnes treated) 146,829 101,937 124,224 248,766 232,995
Average grade
silver (g/t) 428 470 466 446 448
Average grade
gold (g/t) 6.09 6.27 6.47 6.16 6.34
Silver produced
(koz) 1,770 1,362 1,617 3,132 2,932
Gold produced
(koz) 25.21 18.28 23.01 43.49 42.30
Silver equivalent
(koz) 3,635 2,715 3,320 6,350 6,062
Gold equivalent
(koz) 49.12 36.39 44.86 85.81 81.92
Silver sold
(koz) 1,699 1,681 1,676 3,380 3,115
Gold sold (koz) 23.83 23.46 23.45 47.29 42.75
------------------- ------------ -------- -------- -------- --------
The Company has a 51% interest in San Jose.
The San Jose operation delivered yet another solid quarter at
3.6 million silver equivalent ounces, slightly ahead of the
corresponding period of 2015, resulting from better than planned
grades (gold and silver) and higher than expected tonnage. Silver
production in the first half totalled 3.1 million ounces and gold
production was 43,490 ounces resulting in silver equivalent
production of 6.4 million ounces, a 5% improvement on the H1 2015
(6.1 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q2 2016 (which are
reported before the deduction of commercial discounts and include
the effects of the existing hedging agreements) were $1,213/ounce
for gold and $17.9/ounce for silver (Q2 2015: $1,212/ounce for gold
and $16.3/ounce for silver). For H1 2016, average realisable
precious metal prices were $1,236/ounce for gold and $17.1/ounce
for silver (H1 2015: $1,227/ounce for gold and $16.9/ounce for
silver).
Brownfield exploration
Due to the rainy season in Peru, exploration programmes only
commenced in the second quarter.
At Arcata 2,135 metres were drilled in the first half to test
North-South structures in the central area of the mine. The plan
for the remainder of the year is to drill in the Tunel 4 zone to
extend existing structures and identify new ones. Some highlights
are presented below:
Vein Results
----------------- -------------------------
Ramal Marion Sur DDH-941-GE16:1.3m @ 1.8
g/t Au & 576 g/t Ag
DDH-943-GE16:1.3m @ 4.1
g/t Au & 2,157 g/t Ag
----------------- -------------------------
Tunel 4 DDH-912-GE16:7.8m @ 1.1
g/t Au & 205 g/t Ag
DDH-939-LM16:1.3m @ 3.6
g/t Au & 2,655 g/t Ag
----------------- -------------------------
At Pallancata, a drilling campaign has just begun to the north
and south of the Pablo structure to test anomalies and add
potential resources (potentially an extension of the Luisa vein).
So far, 698m have been drilled with results pending.
At San Jose 1,240m has been drilled mainly in the Aguas Vivas
area with the programme ongoing.
Financial position
Total cash was approximately $103 million with net debt of
approximately $280 million as at 30 June 2016.
On 8 June 2016, the remaining $50 million of the original $100
million Scotiabank medium term loan was prepaid with no penalties.
In addition, on 17 June 2016 and 4 July 2016, a further $15 million
and $5 million respectively of short term debt was repaid to BBVA
in Peru. All payments were financed from existing cash
resources.
Outlook
Following better than expected performances from the Inmaculada
and Arcata mines, Hochschild has increased its full year production
guidance from 32.0 million to 34 million of attributable silver
equivalent ounces.
The all-in sustaining cost per silver equivalent ounce target
has also been revised and is now expected to be between $11.0 to
$11.5, a significant improvement on the previous guidance of $12.0
to $12.5 per ounce.
__________________________________________________________________________________
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.
__________________________________________________________________________________
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 -
This information is provided by RNS
The company news service from the London Stock Exchange
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