TIDMHOC
RNS Number : 0642C
Hochschild Mining PLC
17 January 2018
________________________________________________________________________________________
17 January 2018
Production Report for the 12 months ended 31 December 2017
Please click on the link below to open a PDF version of this
announcement:
http://www.rns-pdf.londonstockexchange.com/rns/0642C_1-2018-1-16.pdf
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild has once again delivered a historic year of
production with output growing for the fifth consecutive year,
driven by another record performance from our Inmaculada mine. Our
costs and capex for 2017 are expected to be in line with
expectations reflecting the ongoing focus on cost control and
efficiencies. Our financial position is very robust and we look
forward to a further improvement in the coming days with the
previously announced early repayment of our bonds.
Our brownfield exploration programme has delivered some
encouraging results across all our operations throughout the year.
We are particularly excited by the geological prospectivity in the
area surrounding the Angela vein at Inmaculada. Early results from
our first drilling campaign at the deposit in six years confirm the
strong geological potential close to the mine's infrastructure.
These drill holes also confirm the presence of the Millet vein with
some intercepts showing up to 38 metre widths and good grades. We
are optimistic that these discoveries may be able to provide
attractive resource additions once we have completed further
drilling campaigns towards the end of 2018."
Operational highlights
-- Record full year attributable production in 2017(1)
o 254,932 ounces of gold
o 19.1 million ounces of silver
o 513,598 gold equivalent ounces
o 38.0 million silver equivalent ounces (versus target of 37.0
million silver equivalent guidance)
-- Record production of 239,479 gold equivalent ounces at
Inmaculada (2016: 229,033 ounces)
-- Production at Pallancata up 118% to 7.7 million silver
equivalent ounces (2016: 3.5 million ounces)
-- Record production of 13.9 million silver equivalent ounces at
San Jose (2016: 13.7 million ounces)
-- 2017 all-in sustaining costs per silver equivalent ounce on
track to meet $12.2-12.7 guidance
Exploration highlights
-- First results from surface drilling confirming strong
geological potential at Inmaculada
-- Encouraging results from brownfield exploration programme at
Arcata and San Jose
-- 2018 brownfield budget expected to exceed 2017
expenditure
-- Budget approved for larger greenfield exploration program in
2018
Strengthening financial position
-- Total cash of approximately $256 million as at 31 December
2017 ($140 million as at 31 December 2016)
-- Net debt of approximately $97 million as at 31 December 2017
($183 million as at 31 December 2016)
-- Current Net Debt/ LTM EBITDA of approximately 0.33x as of 31
December 2017
2018 guidance
-- Production target of 514,000 gold equivalent ounces (38.0
million silver equivalent ounces)
-- All-in sustaining cost expected to be $960-$990 per gold
equivalent ounce ($13.0-13.4 per silver equivalent ounce)2
o Inmaculada costs expected to be $700-750 per gold equivalent
ounce
-- Total sustaining and development capital expenditure expected
to be approximately $125-135 million including $14 million for
hydraulic backfill project at San Jose
________________________________________________________________________________________
A conference call will be held at 2.00pm (London time) on
Wednesday 17 January 2018 for analysts and investors.
Dial in details as follows:
International Dial in: +44 333 300 0804
UK Toll-Free Number: 0800 358 9473
Pin: 28917910#
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: 301216482#
________________________________________________________________________________________
Overview
In Q4 2017, the Company delivered attributable production of
66,268 ounces of gold and 4.9 million silver ounces with
Pallancata's grades continuing to be better than expected and
Inmaculada recording a strong finish to the year in terms of grades
and recoveries. The total production for 2017 was a record 513,598
gold equivalent ounces or 38.0 million silver equivalent ounces,
comprising 254,932 ounces of gold and 19.1 million ounces of
silver.
The Company reiterates that its all-in sustaining cost per
silver equivalent ounce for 2017 is expected to be between $12.2
and $12.7.
TOTAL GROUP PRODUCTION
Q4 2017 Q3 2017 Q4 2016 12 mths 12 mths
2017 2016
----------------------- -------- -------- -------- -------- --------
Silver production
(koz) 5,784 6,087 4,910 22,301 20,562
Gold production
(koz) 80.80 79.10 74.29 304.16 292.63
Total silver
equivalent (koz) 11,763 11,940 10,407 44,809 42,217
Total gold equivalent
(koz) 158.96 161.36 140.63 605.52 570.50
Silver sold
(koz) 6,061 5,726 4,996 22,295 21,091
Gold sold (koz) 82.79 73.99 75.02 300.21 298.96
----------------------- -------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q4 2017 Q3 2017 Q4 2016 12 mths 12 mths
2017 2016
------------------- -------- -------- -------- -------- --------
Silver production
(koz) 4,864 5,339 4,075 19,141 17,284
Gold production
(koz) 66.27 67.23 61.57 254.93 246.08
Silver equivalent
(koz) 9,768 10,315 8,631 38,006 35,493
Gold equivalent
(koz) 132.00 139.39 116.64 513.60 479.64
------------------- -------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q4 2017 Q3 2017 Q4 2016 12 mths 12 mths
2017 2016
------------------- -------- -------- -------- ---------- ----------
Ore production
(tonnes treated) 337,358 343,990 344,199 1,295,701 1,306,606
Average grade
silver (g/t) 146 149 134 145 133
Average grade
gold (g/t) 4.29 4.19 4.26 4.15 4.21
Silver produced
(koz) 1,363 1,499 1,220 5,506 4,908
Gold produced
(koz) 41.53 43.72 41.03 165.07 162.71
Silver equivalent
(koz) 4,436 4,735 4,256 17,721 16,948
Gold equivalent
(koz) 59.95 63.98 57.51 239.48 229.03
Silver sold
(koz) 1,445 1,410 1,266 5,498 5,004
Gold sold (koz) 43.48 40.52 41.93 162.32 164.75
------------------- -------- -------- -------- ---------- ----------
Inmaculada's fourth quarter production was 41,532 ounces of gold
and 1.4 million ounces of silver which amounts to gold equivalent
production of 59,951 ounces and was once again driven by higher
than expected extracted grades. Overall in 2017, Inmaculada has
delivered record gold equivalent production of 239,479 ounces, a 5%
improvement on 2016 (2016: 229,033 ounces) and represents a very
successful result following the unexpected stoppage at the
operation in the first quarter of the year.
Arcata
Product Q4 2017 Q3 2017 Q4 2016 12 mths 12 mths
2017 2016
------------------- -------- -------- -------- -------- --------
Ore production
(tonnes treated) 120,384 117,358 170,128 499,385 677,309
Average grade
silver (g/t) 311.74 300 344 308 337
Average grade
gold (g/t) 1.04 1.05 1.21 1.07 1.24
Silver produced
(koz) 1,085 1,003 1,669 4,391 6,343
Gold produced
(koz) 3.59 3.52 5.85 15.15 22.03
Silver equivalent
(koz) 1,350 1,264 2,101 5,512 8,011
Gold equivalent
(koz) 18.25 17.08 28.40 74.49 108.26
Silver sold
(koz) 1,106 990 1,670 4,357 6,343
Gold sold (koz) 3.61 3.41 5.63 14.96 22.03
------------------- -------- -------- -------- -------- --------
At Arcata, silver production in the fourth quarter was 1.1
million ounces with gold production of 3,588 ounces which resulted
in silver equivalent production of 1.4 million ounces. Production
for the year was 5.5 million silver equivalent ounces (2016: 8.0
million ounces) a result which reflected significantly reduced
tonnage and lower grades following a revision of the mine plan to
accommodate a lower number of available stopes and narrower
veins.
Pallancata
Product Q4 2017 Q3 2017 Q4 2016 12 mths 12 mths
2017 2016
------------------- -------- -------- -------- -------- --------
Ore production
(tonnes treated) 125,872 152,087 26,881 470,903 244,765
Average grade
silver (g/t) 408 471 414 442 381
Average grade
gold (g/t) 1.70 1.80 1.98 1.78 1.86
Silver produced
(koz) 1,459 2,058 317 5,956 2,620
Gold produced
(koz) 6.03 7.65 1.47 23.47 12.37
Silver equivalent
(koz) 1,905 2,624 426 7,693 3,536
Gold equivalent
(koz) 25.74 35.46 5.75 103.95 47.78
Silver sold
(koz) 1,665 1,838 322 5,940 2,660
Gold sold (koz) 6.72 6.85 1.45 23.29 12.41
------------------- -------- -------- -------- -------- --------
Pallancata produced 1.5 million ounces of silver and 6,027
ounces of gold bringing the silver equivalent total to 1.9 million
ounces in Q4. The permitting process for the Pablo vein was also
completed in the period. The full year result was 7.7 million
silver equivalent ounces, a 118% improvement on 2016 (2016: 3.5
million ounces) driven by better than forecast tonnage and silver
grades.
San Jose (the Company has a 51% interest in San Jose)
Product Q4 2017 Q3 2017 Q4 2016 12 mths 12 mths
2017 2016
------------------- -------- -------- -------- -------- --------
Ore production
(tonnes treated) 144,732 137,548 146,892 532,676 536,024
Average grade
silver (g/t) 465 406 418 436 444
Average grade
gold (g/t) 7.26 6.35 6.32 6.71 6.28
Silver produced
(koz) 1,877 1,526 1,704 6,448 6,691
Gold produced
(koz) 29.65 24.21 25.95 100.47 95.01
Silver equivalent
(koz) 4,071 3,318 3,624 13,883 13,721
Gold equivalent
(koz) 55.02 44.84 48.97 187.60 185.42
Silver sold
(koz) 1,845 1,489 1,734 6,501 7,081
Gold sold (koz) 28.98 23.22 26.00 99.63 99.76
------------------- -------- -------- -------- -------- --------
The San Jose operation in Argentina enjoyed its customary strong
final quarter with consistent tonnage and better than expected gold
grades resulting in production of 1.9 million ounces of silver and
29,649 ounces of gold (4.1 million silver equivalent ounces). The
overall production results for 2017 were 6.4 million ounces of
silver and 100,474 ounces of gold which is 13.9 million silver
equivalent ounces, a slight improvement on 2016.
Average realisable prices and sales
Average realisable precious metal prices in Q4 2017 (which are
reported before the deduction of commercial discounts) were
$1,283/ounce for gold and $16.7/ounce for silver (Q4 2016:
$1,139/ounce for gold and $15.0/ounce for silver).
For 2017 as a whole, average realisable precious metal prices
were $1,270/ounce for gold and $16.9/ounce for silver (2016:
$1,216/ounce for gold and $17.1/ounce for silver).
Brownfield exploration
At Inmaculada, following receipt of the requisite permits from
the government, a 56,000 metre surface drilling programme began in
early November with four drill rigs onsite. Results in the area to
the south west of the Angela vein have so far confirmed the
presence of nine new veins close to the existing mine
infrastructure. The first results from almost 5,000 metres of
drilling are detailed below and show, in particular, the potential
of the Millet vein. The current campaign will continue throughout
2018 and will include further potential drilling as well as infill
drilling and resource conversion. The Company expects to provide
further updates on drill results throughout the year.
Vein Results
----------- -------------------------------
Millet MIL-17-002: 36.5m @ 3.3g/t Au
& 73g/t Ag
MIL-17-003: 3.8m @ 3.8g/t Au
& 109g/t Ag
MIL-17-004A: 3.0m @ 1.4g/t Au
& 80g/t Ag
MIL-17-005: 38.5m @ 4.4g/t Au
& 96g/t Ag
MIL-17-006: 1.2m @ 1.8g/t Au
& 88g/t Ag
MIL-17-007: 2.5m @ 2.0g/t Au
& 19g/t Ag
MIL-17-009: 13.0m @ 6.8g/t Au
& 68g/t Ag
----------- -------------------------------
Alessandra MIL-17-002: 2.5m @ 2.2g/t Au
& 122g/t Ag
----------- -------------------------------
Barbara BAR17-017: 1.6m @ 1.4g/t Au &
82g/t Ag
BAR17-018: 4.0m @ 3.3g/t Au &
124g/t Ag
BAR17-019: 0.7m @ 1.7g/t Au &
314g/t Ag
BAR17-020: 1.2m @ 7.9g/t Au &
665g/t Ag
BAR17-021: 0.8m @ 1.1g/t Au &
92g/t Ag
BAR17-022: 1.2m @ 1.7g/t Au &
720g/t Ag
----------- -------------------------------
Xiomara BAR17-017: 1.0m @ 1.0g/t Au &
45g/t Ag
BAR17-018: 1.5m @ 2.1g/t Au &
76g/t Ag
BAR17-019: 1.8m @ 3.6g/t Au &
242g/t Ag
BAR17-020: 2.1m @ 2.5g/t Au &
123g/t Ag
BAR17-021: 0.7m @ 0.6g/t Au &
16g/t Ag
BAR17-022: 1.0m @ 5.7g/t Au &
122g/t Ag
----------- -------------------------------
Thalia BAR17-017: 1.5m @ 11.0g/t Au
& 67g/t Ag
LIA17-001: 0.7m @ 2.3g/t Au &
174g/t Ag
LIA17-002: 3.0m @ 5.1g/t Au &
60g/t Ag
----------- -------------------------------
View of Cross section showing current and historic Millet drill
holes - please see PDF at top of announcement
Map showing newly discovered structures close to the Angela vein
- please see PDF at top of announcement
At San Jose, a further 1,941m of drilling for potential
resources was carried out in the fourth quarter at the Aguas Vivas
zone with results indicating an intermediate sulphide deposit with
associated zinc and lead mineralisation. A further 3,000 metres of
drilling at Aguas Vivas is scheduled for Q1 2018.
In addition, closer to the San Jose operation, almost 5,000
metres of further resource and potential drilling has been carried
out in the Molle, Odin, Ramal Ayelen and Frea E-W veins. Selected
results are provided in the table below:
Vein Results
---------------- ------------------------------------
Aguas Vivas SJD-1686: 2.6m @ 3.6g/t Au, 86g/t
Ag, 19.0% Pb & 10.3% Zn
SJD-1686: 1.5m @ 1.0g/t Au, 29g/t
Ag, 1.1% Pb & 2.9% Zn
SJD-1687: 0.4m @ 0.2g/t Au, 65g/t
Ag, 3.1% Pb & 7.2% Zn
SJD-1687: 1.0m @ 6.5g/t Au, 14g/t
Ag
---------------- ------------------------------------
Molle SJD-1696: 2.9m @ 3.8g/t Au &
913g/t Ag
SJD-1697: 1.3m @ 92.3g/t Au &
2,429g/t Ag
SJM-340: 0.6m @ 5.5g/t Au & 316g/t
Ag
SJM-341: 0.6m @ 0.6g/t Au & 31g/t
Ag
SJM-342: 1.1m @ 9.9g/t Au & 496g/t
Ag
---------------- ------------------------------------
Odin SJM-338: 1.4m @ 1.0g/t Au & 472g/t
Ag
---------------- ------------------------------------
Ramal Ayelen SJM-339: 0.6m @ 0.7g/t Au & 329g/t
Ag
SJM-339: 1.0m @ 0.8g/t Au & 461g/t
Ag
---------------- ------------------------------------
Ramal Ayelen SE SJD-1689: 0.6m @ 1.2g/t Au &
49g/t Ag
SJD-1690: 0.5m @ 0.8g/t Au &
225g/t Ag
---------------- ------------------------------------
Frea (E-W) SJM-331: 0.6m @ 15.9g/t Au &
405g/t Ag
SJM-333: 1.2m @ 3.3g/t Au & 262g/t
Ag
SJD-1693: 1.6m @ 13.8g/t Au &
184g/t Ag
---------------- ------------------------------------
At Arcata, in the fourth quarter, just over 5,000 metres of
potential drilling was executed in the Tunel 4, Ruby 2 and Ruby 3
veins whilst 7,662 metres of resource drilling was carried out in
the Paralelas veins. Selected results are provided in the table
below:
Vein Results
--------------- --------------------------------
Alexia Techo 2 DDH-094-ST-17: 1.0m @ 1.4g/t
Au & 454g/t Ag
--------------- --------------------------------
Ruby 2 DDH-155-DI-17: 1.0m @ 0.4g/t
Au & 241g/t Ag
DDH-190-EX-17: 1.3m @ 1.2g/t
Au & 551g/t Ag
--------------- --------------------------------
Ruby 3 DDH-155-DI-17: 2.0m @ 0.7g/t
Au & 250g/t Ag
DDH-184-DI-17: 1.3m @ 0.3g/t
Au & 207g/t Ag
DDH-198-EX-17: 1.1m @ 0.5g/t
Au & 407g/t Ag
DDH-197-DI-17: 1.7m @ 1.3g/t
Au & 735g/t Ag
--------------- --------------------------------
Tunel 4 DDH-576-S-17: 0.6m @ 1.0g/t Au
& 268g/t Ag
DDH-579-S-17: 2.8m @ 1.1g/t Au
& 276g/t Ag
--------------- --------------------------------
Paralela 3 DDH-107-DI-17: 1.3m @ 1.9g/t
Au & 192g/t Ag
--------------- --------------------------------
Financial position
Total cash was approximately $256 million as at 31 December 2017
resulting in net debt of approximately $97 million.
On 6 December 2017 the Company announced that it had instructed
the trustee to give notice to the note holders in respect of the
redemption of all outstanding Notes with outstanding principal, in
aggregate, of $294.8 million. The redemption settlement is expected
to occur on 23 January 2018 with the price set at $103.875 per $100
principal amount of the Notes, equating to a total payment of
$306.2 million.
The redemption will be financed through existing cash resources
in addition to borrowings under committed facilities, in aggregate,
of $200 million on the terms outlined in the table below and is
expected to result in a significant reduction in the Company's
interest payments.
Principal Bank Term Interest Rate
---------- ------------------- ------------ -------------------------
$100 BBVA/Scotiabank 1 year 1.75% (BBVA)/Libor+0.32%
million (Scotiabank)
---------- ------------------- ------------ -------------------------
$100 Citibank, N.A./The 2 years (1 Libor+0.7%
million Bank of Nova year grace
Scotia period)
---------- ------------------- ------------ -------------------------
On 15 December 2017, $50 million was drawn down from the BBVA
loan at the interest rate of 1.75%.
Outlook
The overall attributable production target for 2018 is 514,000
gold equivalent ounces or 38.0 million silver equivalent ounces
which consists of:
2018 Production split
Operation Gold production (m Silver production (m
oz approximate) oz approximate)
------------ ------------------- ---------------------
Inmaculada 160,000 5.6
------------ ------------------- ---------------------
Arcata 10,000 3.3
------------ ------------------- ---------------------
Pallancata 27,000 7.5
------------ ------------------- ---------------------
San Jose
(100%) 100,000 6.5
------------ ------------------- ---------------------
Total 297,000 22.9
------------ ------------------- ---------------------
The all-in sustaining cost from operations in 2018 is expected
to be between $960 and $990 per gold equivalent ounce (or $13.0 and
$13.4 per silver equivalent ounce) which includes a full year of
the new detoxification process at Inmaculada, further development
costs at the Pablo vein and an investment of $14 million in a
highly value accretive hydraulic backfill project at San Jose.
Arcata's costs are expected to be higher in line with its resource
base and despite the implementation of significant cost control
measures. An intense drilling campaign is expected to add higher
quality resources during the year in order to provide continuity to
the operation
2018 AISC split
Operation AISC ($/oz)
----------- ----------------
Inmaculada 700-750 Au Eq
----------- ----------------
Arcata 18.0-18.5 Ag Eq
----------- ----------------
Pallancata 13.0-13.5 Ag Eq
----------- ----------------
San Jose 14.5-15.0 Ag Eq
----------- ----------------
The overall capital expenditure budget for 2018 is approximately
$125-135 million allocated to sustaining and development
expenditure. This includes a $14 million investment in the
above-mentioned backfill project at San Jose where the current
method utilises crushed waste rock obtained from the mining
process. This is being replaced with hydraulic backfill using
tailings and will result in a reduction in mine development,
dilution and contamination and is expected to generate annual
savings of approximately $14 million. In addition, the overall
budget also includes further expenditure on the development of the
Pablo vein.
2018 Capital expenditure split
Operation Sustaining & development capital expenditure
($m)
------------ ---------------------------------------------
Inmaculada 40-45
------------ ---------------------------------------------
Arcata 7
------------ ---------------------------------------------
Pallancata 35
------------ ---------------------------------------------
San Jose 43-48
------------ ---------------------------------------------
The brownfield exploration budget for the year is expected to be
$17 million with the greenfield and advanced project budget set at
approximately $10 million.
________________________________________________________________________________________
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.
2 All in-sustaining cost from operations
This information is provided by RNS
The company news service from the London Stock Exchange
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