TIDMHOC
RNS Number : 4045M
Hochschild Mining PLC
13 October 2016
__________________________________________________________________________________
13 October 2016
Production Report for the 3 months ended 30 September 2016
Ignacio Bustamante, Chief Executive Officer said:
"The third quarter of 2016 has delivered a record performance
from our operations and continued the strong trend from the first
half with Inmaculada and Arcata in particular performing better
than expected. We are therefore pleased to announce that we have
raised our target for the year to 35 million silver equivalent
ounces. We have also continued to strengthen our balance sheet with
almost $123 million of debt repaid year-to-date and our cash
balance remaining close to $100 million.
Regarding exploration, we have reported some important progress
in Pallancata, with confirmation of several structures as well as a
high grade area within Pablo."
Operational highlights
-- Record attributable production in Q3 2016(1)
o 5.0 million ounces of silver
o 66.4 thousand ounces of gold
o 9.9 million silver equivalent ounces, up 19% versus Q3 2015
(8.4 million ounces)
o 133.9 thousand gold equivalent ounces
-- Q3 YTD 2016 attributable production driven by strong
Inmaculada performance
o 13.2 million ounces of silver
o 184.5 thousand ounces of gold
o 26.9 million silver equivalent ounces
o 363.0 thousand gold equivalent ounces
Exploration strategy
-- Significant brownfield exploration plan in place which is
expected to extend life of mine ("LOM") and deliver additional low
cost growth
-- Exploration progress at Pallancata delivering positive
results
o Presence of Pablo Pisos confirmed
o High grade area confirmed within Pablo Piso
Strengthening financial position
-- Further $58 million of debt repaid in Q3
-- $123 million of debt repaid to date in 2016
-- Total cash of approximately $96 million as at 30 September
2016 ($84 million as at 31 December 2015)
-- Net debt of approximately $230 million as at 30 September
2016 ($366 million as at 31 December 2015)
-- Current Net debt/LTM EBITDA of approximately 0.65x as of 30
September 2016
Outlook
-- Full year production forecast upgraded to 35 million silver
equivalent ounces (470 thousand gold equivalent ounces)
-- All-in sustaining costs per silver equivalent ounce on track
to be between $11.0-11.5 for 2016
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Thursday 13 October 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: 56197308#
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: 677672#
_________________________________________________________________________________
Overview
In Q3 2016, the Company delivered a record attributable
production of 133.9 thousand gold equivalent ounces or 9.9 million
silver equivalent ounces. This comprised of 5.0 million ounces of
silver and 66.4 thousand ounces of gold. Overall, in the first nine
months of 2016, the Company delivered attributable production of
363.0 thousand gold equivalent ounces or 26.9 million silver
equivalent ounces, including 13.2 million ounces of silver and
184.5 thousand ounces of gold.
TOTAL GROUP PRODUCTION
Q3 2016 Q2 2016 Q3 2015 YTD 2016 YTD 2015
------------------- -------- -------- -------- --------- ---------
Silver production
(koz) 5,908 5,415 5,014 15,652 12,715
Gold production
(koz) 78.91 79.39 69.18 218.34 130.51
Total silver
equivalent
(koz) 11,747 11,290 10,133 31,810 22,373
Total gold
equivalent
(koz) 158.75 152.57 136.93 429.86 302.34
Silver sold
(koz) 6,011 5,614 3,612 16,095 11,397
Gold sold
(koz) 77.85 83.55 32.78 223.95 90.78
------------------- -------- -------- -------- --------- ---------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q3 2016 Q2 2016 Q3 2015 YTD 2016 YTD 2015
------------------- -------- -------- -------- --------- ---------
Silver production
(koz) 4,999 4,548 4,142 13,209 10,407
Gold production
(koz) 66.38 67.04 56.97 184.50 97.58
Silver equivalent
(koz) 9,911 9,509 8,358 26,862 17,627
Gold equivalent
(koz) 133.94 128.50 112.94 363.00 238.21
------------------- -------- -------- -------- --------- ---------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q3 2016 Q2 2016 Q3 2015 YTD 2016 YTD 2015
------------------- ------------ -------- ------------ ----------------- ------------------
Ore production
(tonnes treated) 343,247 338,630 277,486 962,407 329,811
Average grade
silver (g/t) 132 142 116 132 112
Average grade
gold (g/t) 4.09 4.42 4.39 4.19 4.15
Silver produced
(koz) 1,318 1,396 875 3,688 970
Gold produced
(koz) 42.48 45.18 36.12 121.68 39.53
Silver equivalent
(koz) 4,461 4,739 3,547 12,692 3,896
Gold equivalent
(koz) 60.29 64.04 47.94 171.52 52.65
Silver sold
(koz) 1,270 1,585 92 3,738 92
Gold sold (koz) 40.66 50.26 3.64 122.83 3.64
------------------- ------------ -------- ------------ ----------------- ------------------
Inmaculada delivered another strong quarter with gold production
at 42,480 ounces and silver production of 1.3 million ounces (gold
equivalent production of 60 thousand ounces) although grades were
moderately lower than the second quarter due to the higher
proportion of ore from stopes versus developments. Throughout the
first nine months, grades and silver recoveries have been better
than expected in the original mine plan and, combined with the
improved tonnage per day rates, Q3 YTD production has been able to
reach 171.5 thousand gold equivalent ounces (12.7 million silver
equivalent ounces).
Arcata
Product Q3 2016 Q2 2016 Q3 2015 YTD 2016 YTD 2015
------------------- ------------ ------------ ------------ --------- ---------
Ore production
(tonnes treated) 173,784 172,305 162,133 507,181 463,057
Average grade
silver (g/t) 348 345 331 334 337
Average grade
gold (g/t) 1.30 1.31 0.99 1.25 0.97
Silver produced
(koz) 1,705 1,592 1,434 4,675 4,160
Gold produced
(koz) 6.33 5.68 3.92 16.69 11.09
Silver equivalent
(koz) 2,174 2,013 1,725 5,910 4,981
Gold equivalent
(koz) 29.37 27.20 23.31 79.87 67.31
Silver sold
(koz) 1,751 1,572 1,172 4,672 3,855
Gold sold (koz) 6.26 5.70 3.07 16.39 9.99
------------------- ------------ ------------ ------------ --------- ---------
At Arcata, silver production in the second quarter was 1.7
million ounces with gold production of 6,330 ounces which results
in silver equivalent production of 2.2 million ounces, a 26%
improvement on the third quarter of 2015 (Q3 2015: 1.7 million
ounces). As has been the case in the first two quarters of 2016,
this has been driven by better than expected mined tonnage in
addition to higher silver recoveries. Year-to-date Arcata has
produced a very solid 5.9 million silver equivalent ounces, a 19%
improvement on the same period of 2015 (Q3 YTD 2015: 5.0 million
ounces).
Pallancata
Product Q3 2016 Q2 2016 Q3 2015 YTD 2016 YTD 2015
------------------- ------------- ------------- ------------- --------- ---------
Ore production
(tonnes treated) 82,147 66,313 125,560 217,884 415,111
Average grade
silver (g/t) 438 358 272 377 255
Average grade
gold (g/t) 1.98 1.85 1.36 1.85 1.24
Silver produced
(koz) 1,030 658 925 2,303 2,873
Gold produced
(koz) 4.54 3.32 4.23 10.91 12.68
Silver equivalent
(koz) 1,365 903 1,238 3,110 3,811
Gold equivalent
(koz) 18.45 12.21 16.73 42.03 51.50
Silver sold
(koz) 1,023 757 729 2,338 2,715
Gold sold (koz) 4.46 3.76 3.2 10.96 11.53
------------------- ------------- ------------- ------------- --------- ---------
At Pallancata, production in Q3 was 1.0 million ounces of silver
and 4,540 ounces of gold bringing the silver equivalent total to
1.4 million ounces, a slight improvement on the third quarter of
2015 (Q3 2015: 1.2 million). Pallancata itself remains in a
transitional period before the introduction of commercial
production from the Pablo vein in 2017.
San Jose
Product Q3 2016 Q2 2016 Q3 2015 YTD 2016 YTD 2015
------------------- ------------ ------------ ------------ --------- ---------
Ore production
(tonnes treated) 140,366 146,829 144,851 389,132 377,846
Average grade
silver (g/t) 469 428 441 454 445
Average grade
gold (g/t) 6.44 6.09 6.09 6.26 6.25
Silver produced
(koz) 1,855 1,770 1,780 4,987 4,712
Gold produced
(koz) 25.57 25.21 24.90 69.06 67.20
Silver equivalent
(koz) 3,747 3,635 3,623 10,097 9,685
Gold equivalent
(koz) 50.64 49.12 48.96 136.45 130.88
Silver sold
(koz) 1,967 1,699 1,620 5,347 4,735
Gold sold (koz) 26.47 23.83 22.87 73.77 65.62
------------------- ------------ ------------ ------------ --------- ---------
The Company has a 51% interest in San Jose.
San Jose again delivered a strong performance with production of
3.7 million silver equivalent ounces, a 3% improvement on the
corresponding period of 2015, resulting from increased grades (gold
and silver). Silver production in the first nine months totalled
5.0 million ounces and gold production was 69,060 ounces resulting
in silver equivalent production of 10.1 million ounces, a 4%
improvement on the first nine months of 2015 (9.7 million
ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q3 2016 (which are
reported before the deduction of commercial discounts and include
the effects of the existing hedging agreements) were $1,254/ounce
for gold and $18.6/ounce for silver (Q3 2015: $1,165/ounce for gold
and $15.5/ounce for silver). For the first nine months of 2016,
average realisable precious metal prices were $1,242/ounce for gold
and $17.7/ounce for silver (Q3 YTD 2015: $1,205/ounce for gold and
$16.4/ounce for silver).
Brownfield exploration (2)
On 6 September 2016, the Company announced details of a new five
year brownfield exploration plan. Significant brownfield potential
has been identified which is expected to extend LOM at all
operations and deliver additional low cost growth.
Drilling has continued in the third quarter at the Pablo vein in
Pallancata. The results indicate the presence of several
extensional vein sets adjacent to the main Pablo structure - Pablo
Pisos (See figure 1 below). The full extension of these veins will
be determined in the next few months pending further planned
exploration in the fourth quarter. In addition, the Company has
identified an area in Pablo Piso that appears to host higher grade
mineralisation (See table 2).
Updated mineral resources for Pablo and associated structures
will be included at the end of the year within the Company's annual
reserve and resource statement.
Figure 1: Plan view of Pablo Area drill holes showing associated
structures
Table 1 - Drill results in the Pablo Area
Vein Results
------------- ------------------------------
Pablo Piso 1 DLPP-A06: 0.8m @ 0.4g/t Au &
126g/t Ag
DLPP-A01: 1.1m @ 1.3g/t Au &
176g/t Ag
------------- ------------------------------
Pablo Piso 2 DLPP-A01: 0.9m @ 2.4g/t Au &
721g/t Ag
DLEP-A23: 1.4m @ 7.1g/t Au &
3,416g/t Ag
DLEP-A05: 2.3m @ 0.9g/t Au &
291g/t Ag
DLEP-A19: 1.3m @ 0.5g/t Au &
196g/t Ag
DLEP-A12: 1.4m @ 0.9g/t Au &
299g/t Ag
------------- ------------------------------
Pablo Piso 3 DLPP-A01: 1.1m @ 0.6g/t Au &
207g/t Ag
DLEP-A12: 1.3m @ 2.8g/t Au &
795g/t Ag
DLPP-A08: 1.3m @ 1.0g/t Au &
268g/t Ag
------------- ------------------------------
Pablo Piso 4 DLPP-A01: 0.2m @ 0.7g/t Au &
222g/t Ag
DLEP-A12: 0.8m @ 1.4g/t Au &
493g/t Ag
DLEP-A04: 5.2m @ 4.1g/t Au &
1,285g/t Ag
DLEP-A08: 0.9m @ 0.2g/t Au &
134g/t Ag
------------- ------------------------------
Yurika Piso DLYU-A96: 2.1m @ 1.4g/t Au &
248g/t Ag
------------- ------------------------------
Table 2: Selected Drill Hole Results from Pablo Piso
Hole Results
--------- --------------------------------
DLEP-A16 2.1m @ 11.0g/t Au & 3,395g/t
Ag including 1.5m @ 14.6g/t Au
& 4,581g/t Ag
--------- --------------------------------
DLEP-A21 4.2m @ 2.8g/t Au & 579g/t Ag
including 2.2m @ 2.6g/t Au &
842g/t Ag
--------- --------------------------------
DLEP-A24 3.2m @ 1.6g/t Au & 606g/t Ag
including 2.0m @ 2.2g/t Au &
860g/t Ag
--------- --------------------------------
DLPP-A05 6.6m @ 1.1g/t Au & 322g/t Ag
including 1.8m @ 2.7g/t Au &
782g/t Ag
--------- --------------------------------
DLPP-A06 4.6m @ 2.6g/t Au & 813g/t Ag
including 2.8m @ 3.6g/t Au &
1,140g/t Ag
--------- --------------------------------
DLPP-A07 4.1m @ 1.4g/t Au & 483g/t Ag
including 2.3m @ 1.8g/t Au &
644g/t Ag
--------- --------------------------------
DLYU-A31 1.8m @ 1.6g/t Au & 471g/t Ag
including 0.9m @ 2.1g/t Au &
590g/t Ag
--------- --------------------------------
At Arcata, 2,586 metres have been drilled in the third quarter
with results currently pending. In Q4, the Company is planning to
drill 1,400 metres in the Ramal Marion, Roxana and Tunel 4
structures.
At San Jose, no drilling was possible due to the winter season
but in Q4 5,000 metres will be drilled in the Cerro Colorado Grande
area as well as 1,500 metres to the south of the mine.
Financial position
Total cash of approximately $96 million as at 30 September 2016
resulting in net debt of approximately $230 million.
During the period $35 million of short term debt was repaid to
local banks in Peru whilst a further $3 million of short term debt
was repaid in Argentina. All payments were financed from existing
cash resources.
In addition, on 29 September 2016, Hochschild paid the remaining
$20 million to Graña y Montero (GyM), the Inmaculada EPC
contractor, representing additional amounts payable in final
settlement of all claims made by GyM for additional costs under the
EPC Contract.
Outlook
The flagship Inmaculada mine as well as the Arcata and San Jose
operations are delivering a consistently better than expected
production performance and, with Pallancata beginning to improve
its production outlook, the Company is increasing its overall 2016
production forecast from 34 million to 35 million silver equivalent
ounces.
The all-in sustaining cost per silver equivalent ounce target
for 2016 remains on track to be between $11.0 to $11.5 with the
positive impact on mining costs of the increased production
expected to be offset by one-off increases in capital expenditure
at Inmaculada, Pallancata and San Jose.
__________________________________________________________________________________
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 -
(1) All equivalent figures assume the average gold/silver ratio
for 2015 of 74x.
(2) Please note that in line with industry-wide standards, all
mineralised intersections in this release are quoted as calculated
true widths subject to error
This information is provided by RNS
The company news service from the London Stock Exchange
END
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