TIDMHOC
RNS Number : 7786K
Hochschild Mining PLC
12 July 2017
__________________________________________________________________________________
12 July 2017
Production Report for the 6 months ended 30 June 2017
Ignacio Bustamante, Chief Executive Officer said:
Hochschild has continued to deliver a strong and steady
production performance in the first half of the year and we are
therefore pleased to reiterate both our 2017 output and cost
forecasts. During the second half, we can look forward to
increasing contributions from our new Pablo vein at Pallancata as
well as starting the key portion of our 2017 brownfield exploration
programme."
Operational highlights
-- Robust Q2 2017 attributable production(1)
o 4.8 million ounces of silver
o 60,815 ounces of gold
o 9.3 million silver equivalent ounces
o 126,007 gold equivalent ounces
-- H1 2017 attributable production in line with expectations
o 8.9 million ounces of silver
o 121,430 ounces of gold
o 17.9 million silver equivalent ounces (H1 2016: 17.0 million
silver equivalent ounces)
o 242,208 gold equivalent ounces (H1 2016: 229,063 gold
equivalent ounces)
-- On track to deliver overall 2017 production target of 37
million silver equivalent ounces
-- 2017 all-in sustaining costs per silver equivalent ounce
expected to meet $12.2-12.7 guidance
-- 22,000 metres of drilling scheduled for H2 2017
Strengthening financial position
-- Total cash of approximately $144 million as at 30 June 2017
($140 million as at 31 December 2016)
-- $18.5 million of debt repaid in H1 2017
-- Net debt of approximately $160 million as at 30 June 2017
($187 million as at 31 December 2016)
-- Current Net Debt/LTM EBITDA of approximately 0.5x as of 30
June 2017
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 12 July 2017 for analysts and investors.
Dial in details as follows:
International Dial in: +44 333 300 0804
UK Toll-Free Number: 0800 358 9473
Pin: 27820958#
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
International: +44 333 300 0804
UK Toll Free: 0800 358 9473
Pin: 07800091#
_________________________________________________________________________________
(1) All equivalent figures assume a gold/silver ratio of 74x
Overview
In H1 2017, the Company delivered attributable production of
242,208 gold equivalent ounces or 17.9 million silver equivalent
ounces. Pallancata is delivering grades above expectations and was
significantly ahead of the H1 2016 result despite a
community-related stoppage in the first quarter. At Inmaculada,
mining operations were boosted by a contribution from existing high
grade stockpiles whilst there was also another solid performance
from the 51% owned San Jose operation.
The Company reiterates that its all-in sustaining cost per
silver equivalent ounce for 2017 is on track to be between $12.2
and $12.7.
TOTAL GROUP PRODUCTION
Q2 2017 Q1 2017 Q2 2016 H1 2017 H1 2016
----------------------- -------- -------- -------- -------- --------
Silver production
(koz) 5,599 4,830 5,415 10,429 9,744
Gold production
(koz) 73.29 70.98 79.39 144.27 139.43
Total silver
equivalent (koz) 11,022 10,083 11,290 21,105 20,062
Total gold equivalent
(koz) 148.95 136.26 152.57 285.21 271.11
Silver sold
(koz) 5,908 4,600 5,614 10,508 10,085
Gold sold (koz) 75.70 67.72 83.55 143.42 146.10
----------------------- -------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q2 2017 Q1 2017 Q2 2016 H1 2017 H1 2016
------------------- -------- -------- -------- -------- --------
Silver production
(koz) 4,824 4,113 4,548 8,938 8,210
Gold production
(koz) 60.81 60.62 67.04 121.43 118.12
Silver equivalent
(koz) 9,324 8,599 9,509 17,923 16,951
Gold equivalent
(koz) 126.01 116.20 128.50 242.21 229.06
------------------- -------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q2 2017 Q1 2017 Q2 2016 H1 2017 H1 2016
------------------- -------- -------- -------- -------- ------------------
Ore production
(tonnes treated) 330,393 283,959 338,630 614,352 619,161
Average grade
silver (g/t) 148 135 142 142 132
Average grade
gold (g/t) 3.80 4.33 4.42 4.04 4.25
Silver produced
(koz) 1,405 1,239 1,396 2,644 2,370
Gold produced
(koz) 38.03 41.79 45.18 79.82 79.20
Silver equivalent
(koz) 4,219 4,331 4,739 8,550 8,231
Gold equivalent
(koz) 57.01 58.53 64.04 115.55 111.23
Silver sold
(koz) 1,448 1,195 1,585 2,642 2,468
Gold sold (koz) 38.35 39.98 50.26 78.32 82.17
------------------- -------- -------- -------- -------- ------------------
Inmaculada's second quarter production was 38,029 ounces of gold
and 1.4 million ounces of silver which amounts to gold equivalent
production of 57,014 ounces. Following the stoppage at the
operation in Q1 2017, mining operations were steadily ramped up
back to full production in the second quarter with throughput and
grades reverting to the budgeted level. Overall in the first half,
the operation was ahead of the same period of 2016, with gold
equivalent production of 115,547 ounces (H1 2016: 111,233 ounces),
consisting of 79,820 ounces of gold and 2.6 million ounces of
silver. Inmaculada remains on track to meet its full year forecast
of approximately 230,000 gold equivalent ounces (17 million silver
equivalent ounces).
Arcata
Product Q2 2017 Q1 2017 Q2 2016 H1 2017 H1 2016
------------------- -------- -------- ------------ -------- --------
Ore production
(tonnes treated) 129,215 132,428 172,305 261,643 333,397
Average grade
silver (g/t) 308 310 345 309 327
Average grade
gold (g/t) 1.06 1.12 1.31 1.09 1.22
Silver produced
(koz) 1,138 1,165 1,592 2,303 2,970
Gold produced
(koz) 3.90 4.14 5.68 8.04 10.36
Silver equivalent
(koz) 1,427 1,471 2,013 2,898 3,736
Gold equivalent
(koz) 19.28 19.88 27.20 39.16 50.49
Silver sold
(koz) 1,139 1,121 1,572 2,261 2,922
Gold sold (koz) 3.71 4.23 5.70 7.94 10.14
------------------- -------- -------- ------------ -------- --------
At Arcata, silver production in the second quarter was 1.1
million ounces with gold production of 3,901 ounces which resulted
in silver equivalent production of 1.4 million ounces. Overall in
the first half, production was 2.9 million silver equivalent ounces
(H1 2016: 3.7 million ounces) as tonnage and silver grades were
reduced following a revision of the mine plan to accommodate a
reduced number of stopes and narrower veins. The focus at Arcata is
to improve its cost position by increasing the quality of resources
through the brownfield exploration programme as well as other
efficiency and productivity measures.
Pallancata
Product Q2 2017 Q1 2017 Q2 2016 H1 2017 H1 2016
------------------- -------- -------- ------------- -------- --------
Ore production
(tonnes treated) 121,282 71,662 66,313 192,744 135,736
Average grade
silver (g/t) 424 468 358 440 341
Average grade
gold (g/t) 1.75 1.94 1.85 1.82 1.77
Silver produced
(koz) 1,475 964 658 2,439 1,273
Gold produced
(koz) 5.90 3.89 3.32 9.79 6.37
Silver equivalent
(koz) 1,912 1,252 903 3,163 1,745
Gold equivalent
(koz) 25.83 16.92 12.21 42.75 23.58
Silver sold
(koz) 1,558 878 757 2,437 1,315
Gold sold (koz) 6.23 3.49 3.76 9.72 6.50
------------------- -------- -------- ------------- -------- --------
Production in Q2 2017 at Pallancata was 1.5 million ounces of
silver and 5,899 ounces of gold bringing the silver equivalent
total to 1.9 million ounces. The first half of the year's
performance was thus a better-than-expected 3.2 million silver
equivalent ounces (H1 2016: 1.7 million ounces) with a significant
improvement versus the same period of 2016.
San Jose (the Company has a 51% interest in San Jose)
Product Q2 2017 Q1 2017 Q2 2016 H1 2017 H1 2016
------------------- -------- -------- ------------ -------- --------
Ore production
(tonnes treated) 135,439 114,956 146,829 250,396 248,766
Average grade
silver (g/t) 418 458 428 436 446
Average grade
gold (g/t) 6.68 6.50 6.09 6.60 6.16
Silver produced
(koz) 1,581 1,463 1,770 3,044 3,132
Gold produced
(koz) 25.46 21.15 25.21 46.62 43.49
Silver equivalent
(koz) 3,465 3,029 3,635 6,494 6,350
Gold equivalent
(koz) 46.82 40.93 49.12 87.75 85.81
Silver sold
(koz) 1,763 1,405 1,699 3,168 3,380
Gold sold (koz) 27.41 20.02 23.83 47.43 47.29
------------------- -------- -------- ------------ -------- --------
The Company's 51% owned San Jose mine in Argentina has continued
to be a solid performer with production of 1.6 million ounces of
silver and 25,463 ounces of gold (3.5 million silver equivalent
ounces). The first half's production was therefore 3.0 million
ounces of silver and 46,618 ounces of gold which is 6.5 million
silver equivalent ounces, a 2% improvement on the same period of
2016 principally driven by better gold grades.
Average realisable prices and sales
Average realisable precious metal prices in Q2 2017 (which are
reported before the deduction of commercial discounts) were
$1,262/ounce for gold and $16.2/ounce for silver (Q2 2016:
$1,213/ounce for gold and $17.9/ounce for silver). For H1 2017,
average realisable precious metal prices were $1,251/ounce for gold
and $17.1/ounce for silver (H1 2016: $1,236/ounce for gold and
$17.1/ounce for silver).
Brownfield exploration
At Arcata, 5,419m of resource drilling was carried out at the
Ramal Marion and Paralela veins whilst long horizontal drilling for
potential resources also started in the Pamela and Paralelas vein
systems with results still pending.
At Pallancata, during the quarter 1,000m of resource drilling
was carried out in the Marco vein, a structure identified close to
the Pablo vein with selected results below:
Vein Results
------ -------------------------------
Marco DLYU-A92A: 1.4m @ 0.7g/t Au &
235g/t Ag
DLYU-A88: 1.1m @ 2.2g/t Au &
1,108g/t Ag
DLNE-A05: 0.6m @ 1.1g/t Au &
470g/t Ag
DLYU-A92A: 2.0m @ 0.7g/t Au &
169g/t Ag
DLNE-A07: 0.6m @ 1.1g/t Au &
152g/t Ag
------ -------------------------------
During the second half of 2017, just over 22,000 metres of
drilling will be executed as part of the Company's brownfield
exploration programme. Targets include: 3,100 metres of long
horizontal drilling for potential resources at Arcata as well as a
further 10,000 metres of resource drilling; 1,000 metres of
potential drilling to test the Millet structure at Inmaculada;
2,500 metres of potential drilling to the north east of Inmaculada
at the Puquiopata area; and 5,500 metres at the Aguas Vivas zone to
the north west of San Jose. Further drilling campaigns are subject
to the receipt of the requisite permits.
Financial position
Total cash was approximately $144 million as at 30 June 2017
resulting in net debt of approximately $160 million. The Company's
cash balance has, as expected, significantly improved in the second
quarter following stoppage related delays in the first quarter at
Pallancata and Inmaculada and a commercial delay at Arcata
temporarily impacting working capital.
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 reaffirms 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 -
This information is provided by RNS
The company news service from the London Stock Exchange
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