TIDMHOC
RNS Number : 8783T
Hochschild Mining PLC
18 October 2017
__________________________________________________________________________________
18 October 2017
Production Report for the 9 months ended 30 September 2017
Please click on the link below to open a PDF version of this
announcement:
http://www.rns-pdf.londonstockexchange.com/rns/8783T_1-2017-10-17.pdf
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild achieved record production levels in Q3 2017 driven
by a strong performance from Inmaculada and we are firmly on track
to hit our 37 million silver equivalent ounce target for the year.
Costs remain under control and we can look forward to our financial
position improving in the near future with good cashflow generation
and a planned debt re-financing in the first quarter of next
year.
The Pablo permitting process continues as expected with no major
issues encountered so far. We are currently in the final stages and
we expect to receive the environmental permit by the end of the
month.
We are now in the middle of our brownfield exploration campaign
and have seen some encouraging results from Arcata, San Jose and
also at Inmaculada where underground drilling has already revealed
a number of new veins close to the original Angela vein.
Furthermore, with the permit recently received from the Peruvian
government, we can now begin the surface drilling campaign at the
deposit."
Operational highlights
-- Record quarterly attributable production([1])
o 5.3 million ounces of silver
o 67,234 ounces of gold
o 10.3 million silver equivalent ounces
o 139,388 gold equivalent ounces
-- Q3 YTD 2017 attributable production in line with
expectations
o 14.3 million ounces of silver
o 188,664 ounces of gold
o 28.2 million silver equivalent ounces (Q3 YTD 2016: 26.9
million silver equivalent ounces)
o 381,596 gold equivalent ounces (Q3 YTD 2016: 363,001 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
Exploration highlights
-- Inmaculada surface drilling permit received for all planned
exploration campaigns in 2017/2018
-- All drilling permits secured for Arcata's 2017/2018
brownfield exploration programme
-- Encouraging results year-to-date from brownfield exploration
programme at all operations
Strengthening financial position
-- Total cash of approximately $156 million as at 30 September
2017 ($140 million as at 31 December 2016)
-- Net debt of approximately $147 million as at 30 September
2017 ($187 million as at 31 December 2016)
-- Current Net Debt/LTM EBITDA of approximately 0.54x as of 30
September 2017
__________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Wednesday 18 October 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: 57446849#
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 0819
UK Toll Free: 0800 358 2049
Pin: 301205236#
__________________________________________________________________________________
Overview
In Q3 2017, the Company delivered record attributable production
of 10.3 million silver equivalent ounces (139,388 gold equivalent
ounces) with Pallancata continuing to deliver tonnage and grades
above expectations whilst Inmaculada recorded its second strongest
quarter to date. Overall year-to-date production is a record 28.2
million silver equivalent ounces (381,596 gold equivalent ounces),
placing the Company firmly on course to reach its 37 million ounce
target for the year.
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
Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016
----------------------- -------- -------- -------- --------- ---------
Silver production
(koz) 6,087 5,599 5,908 16,516 15,652
Gold production
(koz) 79.10 73.29 78.91 223.37 218.34
Total silver
equivalent (koz) 11,940 11,022 11,747 33,046 31,810
Total gold equivalent
(koz) 161.36 148.95 158.75 446.56 429.86
Silver sold
(koz) 5,726 5,908 6,011 16,234 16,095
Gold sold (koz) 73.99 75.70 77.85 217.41 223.95
----------------------- -------- -------- -------- --------- ---------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016
------------------- -------- -------- -------- --------- ---------
Silver production
(koz) 5,339 4,824 4,999 14,277 13,209
Gold production
(koz) 67.23 60.81 66.38 188.66 184.50
Silver equivalent
(koz) 10,315 9,324 9,911 28,238 26,862
Gold equivalent
(koz) 139.39 126.01 133.94 381.60 363.00
------------------- -------- -------- -------- --------- ---------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016
------------------- ------------ -------- ------------ --------- -----------------
Ore production
(tonnes treated) 343,990 330,393 343,247 958,343 962,407
Average grade
silver (g/t) 149 148 132 145 132
Average grade
gold (g/t) 4.19 3.80 4.09 4.10 4.19
Silver produced
(koz) 1,499 1,405 1,318 4,143 3,688
Gold produced
(koz) 43.72 38.03 42.48 123.54 121.68
Silver equivalent
(koz) 4,735 4,219 4,461 13,285 12,692
Gold equivalent
(koz) 63.98 57.01 60.29 179.53 171.52
Silver sold
(koz) 1,410 1,448 1,270 4,052 3,738
Gold sold (koz) 40.52 38.35 40.66 118.84 122.83
------------------- ------------ -------- ------------ --------- -----------------
Inmaculada's third quarter production was 43,722 ounces of gold
and 1.5 million ounces of silver which amounts to gold equivalent
production of 63,981 ounces and was principally driven by higher
than expected extracted grades. Year-to-date, Inmaculada has
delivered gold equivalent production of 179,528 ounces, which
represents a 5% improvement on the same period of 2016 (Q3 YTD
2016: 171,520 ounces). Inmaculada is on track to meet its full year
forecast of approximately 230,000 gold equivalent ounces (17
million silver equivalent ounces).
Arcata
Product Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016
------------------- ------------ -------- ------------ --------- ---------
Ore production
(tonnes treated) 117,358 129,215 173,784 379,001 507,181
Average grade
silver (g/t) 300 308 348 306 334
Average grade
gold (g/t) 1.05 1.06 1.30 1.08 1.25
Silver produced
(koz) 1,003 1,138 1,705 3,306 4,675
Gold produced
(koz) 3.52 3.90 6.33 11.56 16.69
Silver equivalent
(koz) 1,264 1,427 2,174 4,162 5,910
Gold equivalent
(koz) 17.08 19.28 29.37 56.24 79.87
Silver sold
(koz) 990 1,139 1,751 3,250 4,672
Gold sold (koz) 3.41 3.71 6.26 11.35 16.39
------------------- ------------ -------- ------------ --------- ---------
At Arcata, silver production in the third quarter was 1.0
million ounces with gold production of 3,516 ounces which resulted
in silver equivalent production of 1.3 million ounces. Production
for the first nine months of 2017 was 4.2 million silver equivalent
ounces (Q3 YTD 2016: 5.9 million ounces) which reflected reduced
tonnage and silver grades following a revision of the mine plan to
accommodate a lower number of stopes and narrower veins.
Pallancata
Product Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016
------------------- ------------- -------- ------------- --------- ---------
Ore production
(tonnes treated) 152,087 121,282 82,147 345,031 217,884
Average grade
silver (g/t) 471 424 438 454 377
Average grade
gold (g/t) 1.80 1.75 1.98 1.81 1.85
Silver produced
(koz) 2,058 1,475 1,030 4,497 2,303
Gold produced
(koz) 7.65 5.90 4.54 17.44 10.91
Silver equivalent
(koz) 2,624 1,912 1,365 5,788 3,110
Gold equivalent
(koz) 35.46 25.83 18.45 78.21 42.03
Silver sold
(koz) 1,838 1,558 1,023 4,275 2,338
Gold sold (koz) 6.85 6.23 4.46 16.57 10.96
------------------- ------------- -------- ------------- --------- ---------
The Pallancata operation produced 2.1 million ounces of silver
and 7,650 ounces of gold bringing the silver equivalent total to
2.6 million ounces. For the first nine months this has led to a
better-than-expected 5.8 million silver equivalent ounces (Q3 YTD
2016: 3.1 million ounces) driven by better than forecast tonnage
and grades.
San Jose (the Company has a 51% interest in San Jose)
Product Q3 2017 Q2 2017 Q3 2016 YTD 2017 YTD 2016
------------------- ------------ -------- ------------ --------- ---------
Ore production
(tonnes treated) 137,548 135,439 140,366 387,943 389,132
Average grade
silver (g/t) 406 418 469 425 454
Average grade
gold (g/t) 6.35 6.68 6.44 6.51 6.26
Silver produced
(koz) 1,526 1,581 1,855 4,570 4,987
Gold produced
(koz) 24.21 25.46 25.57 70.83 69.06
Silver equivalent
(koz) 3,318 3,465 3,747 9,811 10,097
Gold equivalent
(koz) 44.84 46.82 50.64 132.59 136.45
Silver sold
(koz) 1,489 1,763 1,967 4,657 5,347
Gold sold (koz) 23.22 27.41 26.47 70.65 73.77
------------------- ------------ -------- ------------ --------- ---------
The San Jose mine in Argentina has continued to be a solid
performer with consistent tonnage offsetting slightly lower gold
grades and resulting in production of 1.5 million ounces of silver
and 24,208 ounces of gold (3.3 million silver equivalent ounces).
The first nine months' overall production was 4.6 million ounces of
silver and 70,825 ounces of gold which is 9.8 million silver
equivalent ounces, broadly in line with the same of 2016.
Average realisable prices and sales
Average realisable precious metal prices in Q3 2017 (which are
reported before the deduction of commercial discounts) were
$1,293/ounce for gold and $16.9/ounce for silver (Q3 2016:
$1,254/ounce for gold and $18.6/ounce for silver). For the first
nine months of 2017, average realisable precious metal prices were
$1,265/ounce for gold and $17.1/ounce for silver (Q3 YTD 2016:
$1,205/ounce for gold and $16.4/ounce for silver).
Brownfield exploration
At Arcata, in the third quarter over 5,000m of resource drilling
has been carried out at the Ramal Marion and Paralelas veins whilst
6,200m of potential drilling has been executed in the Tunel 3,
Tunel 4, Pamela and Veta Paralelas veins. The outcome of drilling
year-to-date is promising with selected results below:
Vein Results
------------- --------------------------------
Ramal Marion DDH-018-GE-17: 1.0m @ 1.0g/t
Au & 326g/t Ag
DDH-023-GE-17: 0.8m @ 0.6g/t
Au & 154g/t Ag
DDH-049-EX-17: 0.8m @ 0.6g/t
Au & 146g/t Ag
DDH-054-EX-17: 0.8m @ 0.4g/t
Au & 201g/t Ag
DDH-023-GE-17: 0.8m @ 0.9g/t
Au & 246g/t Ag
DDH-043-EX-17: 1.2m @ 0.3g/t
Au & 159g/t Ag
DDH-058-EX-17: 1.0m @ 2.1g/t
Au & 712g/t Ag
DDH-066-EX-17: 1.3m @ 0.4g/t
Au & 167g/t Ag
DDH-018-GE-17: 1.2m @ 2.6g/t
Au & 1,229g/t Ag
DDH-023-GE-17: 0.8m @ 1.0g/t
Au & 227g/t Ag
DDH-043-EX-17: 0.8m @ 0.2g/t
Au & 477g/t Ag
DDH-058-EX-17: 0.9m @ 0.5g/t
Au & 309/t Ag
DDH-043-EX-17: 0.8m @ 0.2g/t
Au & 132g/t Ag
DDH-052-EX-17: 0.8m @ 0.4g/t
Au & 106g/t Ag
DDH-066-EX-17: 1.2m @ 1.1g/t
Au & 408g/t Ag
DDH-018-GE-17: 0.8m @ 0.9g/t
Au & 303g/t Ag
DDH-023-GE-17: 1.1m @ 3.8g/t
Au & 1,025g/t Ag
------------- --------------------------------
Paralela DDH-036-GE-17: 0.8m @ 4.9g/t
Au & 605g/t Ag
DDH-038-GE-17: 0.8m @ 1.5g/t
Au & 198g/t Ag
DDH-048-DI-17: 0.4m @ 3.9g/t
Au & 389g/t Ag
DDH-074-DI-17: 1.2m @ 1.8g/t
Au & 176g/t Ag
DDH-056-DI-17: 0.8m @ 1.5g/t
Au & 177g/t Ag
------------- --------------------------------
Paralela 1 DDH-036-GE-17: 0.8m @ 5.2g/t
Au & 692g/t Ag
DDH-038-GE-17: 0.8m @ 1.4g/t
Au & 240g/t Ag
DDH-048-DI-17: 0.8m @ 6.6g/t
Au & 765g/t Ag
------------- --------------------------------
Paralela 2 DDH-057-DI-17: 1.1m @ 3.0g/t
Au & 244g/t Ag
DDH-028-GE-17: 0.9m @ 2.6g/t
Au & 226g/t Ag
------------- --------------------------------
Paralela 3 DDH-056-DI-17: 1.1m @ 2.1g/t
Au & 331g/t Ag
DDH-074-DI-17: 1.8m @ 12.2g/t
Au & 1,339g/t Ag
DDH-041-DI-17: 1.3m @ 1.4g/t
Au & 173g/t Ag
DDH-038-GE-17: 0.8m @ 1.7g/t
Au & 117g/t Ag
------------- --------------------------------
Socorro+800 DDH-074-DI-17: 2.5m @ 12.2g/t
Au & 399g/t Ag
------------- --------------------------------
Tunel 4 DDH-087-GE-17: 0.8m @ 1.6g/t
Au & 850g/t Ag
DDH-097-DI-17: 1.8m @ 0.9g/t
Au & 397g/t Ag
DDH-103-DI-17: 0.8m @ 0.8g/t
Au & 126g/t Ag
DDH-109-DI-17: 1.3m @ 4.2g/t
Au & 636g/t Ag
DDH-555-S-17: 0.4m @ 1.6g/t Au
& 516g/t Ag
DDH-557-S-17: 1.9m @ 1.5g/t Au
& 205g/t Ag
------------- --------------------------------
In addition, long horizontal drilling for potential resources
has continued during the quarter having started in the Pamela and
Paralelas vein systems in the second quarter with results still
pending. During the fourth quarter drilling, will be carried out at
the Michele, Soledad, Baja and Ramal 4 veins.
At Inmaculada, following the recent receipt from the Peruvian
government of the exploration permit, the 3,600m surface drilling
programme at the Millet vein will commence shortly. In addition,
the permit also encompasses resource drilling that is expected to
start by the end of the first quarter of 2018 at the Millet and
Olinda structures. In addition, mine development during the third
quarter has allowed a reinterpretation of the geological model at
the deposit and has so far identified a further 9.7 million silver
equivalent ounces of resources. Exploratory underground drilling
has also already confirmed the presence of the Millet vein as well
as discovering new structures, Barbara, Thalia and Alessandra.
Supporting intercepts and diagram are provided below.
Vein Results
-------------- -------------------------------
Thalia MIL-17-001: 1.1m @ 3.0g/t Au
& 125g/t Ag
BAR17-017: 1.5m @ 11.0g/t Au
& 67g/t Ag
-------------- -------------------------------
Alessandra MIL-17-001: 1.2m @ 2.9g/t Au
& 227g/t Ag
MIL-17-001: 1.5m @ 1.5g/t Au
& 82g/t Ag
-------------- -------------------------------
Millet MIL-17-001: 3.0m @ 0.7g/t Au
& 35g/t Ag
-------------- -------------------------------
Barbara BAR17-001: 3.9m @ 1.6g/t Au &
235g/t Ag
BAR17-003: 1.3m @ 2.4g/t Au &
419g/t Ag
BAR17-004: 3.0m @ 2.6g/t Au &
175g/t Ag
BAR17-008: 4.3m @ 10.0g/t Au
& 751g/t Ag
BAR17-009: 3.6m @ 1.9g/t Au &
348g/t Ag
BAR17-010: 6.0m @ 15.2g/t Au
& 3,049g/t Ag
BAR17-011: 2.7m @ 6.6g/t Au &
780g/t Ag
BAR17-012: 3.8m @ 6.5g/t Au &
692g/t Ag
BAR17-013: 4.1m @ 11.1g/t Au
& 1,449g/t Ag
BAR17-014: 3.5m @ 16.2g/t Au
& 1,227g/t Ag
BAR17-017: 2.4m @ 1.2g/t Au &
70g/t Ag
BAR17-018: 3.6m @ 3.5g/t Au &
132g/t Ag
BAR 17-019: 1.9m @ 3.9g/t Au
& 259g/t Ag
-------------- -------------------------------
Ramal Barbara BAR 17-019: 1.0m @ 1.7g/t Au
& 314g/t Ag
-------------- -------------------------------
View of underground drill holes showing newly discovered
structures close to the Angela vein - please see PDF at top of
announcement
At San Jose, a further 1,846m of drilling for potential
resources was carried out in the third quarter at the Aguas Vivas
zone with the results pending whilst resource drilling has been
carried out close to the San Jose operation with results from the
Molle vein shown below.
Vein Results
------ ------------------------------------
Molle SJD-1651: 0.8m @ 8.4g/t Au &
141g/t Ag
SJM-320: 2.5m @ 5.2g/t Au & 427g/t
Ag
SJM-320: 1.2m @ 46.7g/t Au &
2,256g/t Ag
------ ------------------------------------
Financial position
Total cash was approximately $156 million as at 30 September
2017 following interest and equity dividend payments in the third
quarter resulting in net debt of approximately $147 million. The
Company's cash balance is expected to rise in the fourth
quarter.
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.
Note
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (Regulation (EU) No.596/2014). Upon the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
LEI: 549300JK10TVQ3CCJQ89
- ends -
[1] All equivalent figures assume a gold/silver ratio of
74x.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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