Q1 2019 Production Report

RNS Number : 4692X

Hochschild Mining PLC

30 April 2019

 

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30 April 2019

Production Report for the 3 months ended 31 March 2019

Ignacio Bustamante, Chief Executive Officer said:

"Hochschild has delivered a solid start to the year with a strong contribution from Inmaculada and increased first quarter output from Pallancata leaving us firmly on track to meet our stated production and cost targets for 2019.

We have also begun our ambitious 2019 brownfield exploration plan with campaigns already commenced at Inmaculada, San Jose and Pallancata. In addition, we have also secured the drilling permit for the exciting programme scheduled at Palca as well as achieving environmental approvals for campaigns at nearby Cochaloma and Pablo Sur."

Operational highlights

§ Strong 1st quarter attributable production^[1]

o  67,419 ounces of gold

o  4.4 million ounces of silver

o  121,367 gold equivalent ounces

o  9.8 million silver equivalent ounces

§ On track to deliver overall 2019 production target of 457,000 gold equivalent ounces (37.0 million silver equivalent ounces)

§ 2019 all-in sustaining costs on track to meet $960-$1,000 per gold equivalent ounce guidance ($11.8-12.3 per silver equivalent ounce)

Exploration highlights

§ Brownfield exploration programmes underway at all operations

§ Drilling permit recently obtained for exploration programme at Palca - now set to commence in Q2

§ Environmental permits obtained for programmes at Cochaloma and Pablo Sur with drilling set to commence in Q3

§ Greenfield programme: initial exploration work set to begin at three projects in Chile and the US

Strong financial position

§ Total cash of approximately $88 million as at 31 March 2019 ($80 million as at 31 December 2018)

§ Net debt of approximately $68 million as at 31 March 2019 ($77 million as at 31 December 2018)

§ Current Net Debt/LTM EBITDA of approximately 0.26x as at 31 March 2019

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A conference call will be held at 2.00pm (London time) on Tuesday 30 April 2019 for analysts and investors. 

Dial in details as follows:

International Dial in: [phone]

UK Toll-Free Number: 0800 358 9473

Pin: 16524791#

A recording of the conference call will be available for one week following its conclusion, accessible from the following telephone number:

International: [phone]

UK Toll Free: 0800 358 2049

Pin: 301283164#

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Overview

Hochschild delivered a strong start to 2019 with attributable production of 121,367 gold equivalent ounces or 9.8 million silver equivalent ounces. This was mostly due to another solid quarter from Inmaculada and a consistent period at San Jose and was achieved despite the absence of a meaningful contribution from the Arcata mine following the announcement in February 2019 that it was being placed on care and maintenance.

The Company reiterates that its all-in sustaining cost for 2019 is on track to be in line with the guidance of $960-$1,000 per gold equivalent ounce ($11.8-12.3 per silver equivalent ounce).

TOTAL GROUP PRODUCTION

	Q1 2019	Q4 2018	Q1 2018	12 mths  2018
Silver production (koz)	5,071	5,791	5,355	22,720
Gold production (koz)	77.98	73.10	79.85	307.77
Total silver equivalent (koz)	11,387	11,712	11,822	47,650
Total gold equivalent (koz)	140.58	144.60	145.96	588.27
Silver sold (koz)	5,032	5,775	5,282	22,687
Gold sold (koz)	76.19	72.22	76.91	304.51

Total production includes 100% of all production, including production attributable to Hochschild's joint venture partner at San Jose.

ATTRIBUTABLE GROUP PRODUCTION

	Q1 2019	Q4 2018	Q1 2018	12 mths  2018
Silver production (koz)	4,370	4,975	4,662	19,700
Gold production (koz)	67.42	60.50	69.03	260.44
Silver equivalent (koz)	9,831	9,875	10,254	40,795
Gold equivalent (koz)	121.37	121.92	126.59	503.64

Attributable production includes 100% of all production from Arcata, Inmaculada, Pallancata and 51% from San Jose.

Production

Inmaculada

Product	Q1 2019	Q4 2018	Q1 2018	12 mths  2018
Ore production (tonnes treated)	331,390	320,400	337,507	1,323,525
Average grade silver (g/t)	144	157	158	150
Average grade gold (g/t)	4.38	4.32	4.60	4.36
Silver produced (koz)	1,447	1,255	1,670	5,690
Gold produced (koz)	48.86	37.74	49.78	174.20
Silver equivalent (koz)	5,405	4,312	5,702	19,800
Gold equivalent (koz)	66.72	53.24	70.40	244.45
Silver sold (koz)	1,441	1,251	1,591	5,676
Gold sold (koz)	48.08	37.27	46.95	172.40

Inmaculada's first quarter production was 48,858 ounces of gold and 1.4 million ounces of silver which amounts to a gold equivalent output of 66,720 ounces and was principally driven by higher than expected gold grades and a contribution from products in process from the previous period.

 

Pallancata

Product	Q1 2019	Q4 2018	Q1 2018	12 mths  2018
Ore production (tonnes treated)	231,589	231,075	128,134	717,652
Average grade silver (g/t)	285	317	384	362
Average grade gold (g/t)	1.01	1.10	1.47	1.30
Silver produced (koz)	1,881	2,086	1,412	7,449
Gold produced (koz)	6.61	7.20	5.29	26.40
Silver equivalent (koz)	2,416	2,669	1,840	9,588
Gold equivalent (koz)	29.83	32.95	22.72	118.37
Silver sold (koz)	1,877	2.093	1,401	7,439
Gold sold (koz)	6.58	7.35	5.11	26.23

Pallancata produced 1.9 million ounces of silver and 6,606 ounces of gold bringing the silver equivalent total to 2.4 million ounces in Q1. Tonnage rose in the period versus Q1 2018 following the achievement of full production at the Pablo vein in Q4 2018 with grades adjusted down as expected.

San Jose (the Company has a 51% interest in San Jose)

Product	Q1 2019	Q4 2018	Q1 2018	12 mths  2018
Ore production (tonnes treated)	110,132	146,992	121,889	556,185
Average grade silver (g/t)	460	401	415	397
Average grade gold (g/t)	6.90	6.19	6.44	6.20
Silver produced (koz)	1,431	1,666	1,412	6,165
Gold produced (koz)	21.55	25.72	22.08	96.59
Silver equivalent (koz)	3,177	3,749	3,201	13,989
Gold equivalent (koz)	39.22	46.29	39.52	172.70
Silver sold (koz)	1,405	1,647	1,434	6,175
Gold sold (koz)	20.71	25.29	22.34	95.95

San Jose delivered a steady start to 2019 despite the traditionally shorter operational period due to the scheduled hourly workers holiday in February. Tonnage was slightly lower than the corresponding period of 2018 but this was offset by higher gold and silver grades resulting in production of 1.4 million ounces of silver and 21,549 ounces of gold which makes 3.2 million silver equivalent ounces.

Arcata

Product	Q1 2019	Q4 2018	Q1 2018	12 mths  2018
Ore production (tonnes treated)	37,049	91,203	91,175	373,106
Average grade silver (g/t)	298	304	330	321
Average grade gold (g/t)	0.94	0.95	1.04	0.99
Silver produced (koz)	311	784	860	3,416
Gold produced (koz)	0.97	2.44	2.69	10.57
Silver equivalent (koz)	390	982	1,078	4,273
Gold equivalent (koz)	4.81	12.12	13.31	52.75
Silver sold (koz)	309	783	855	3,397
Gold sold (koz)	0.82	2.30	2.52	9.93

On 13 February 2019, Hochschild announced its intention to suspend operations at Arcata and place it on care and maintenance. Mining operations continued in the period until that date with output of 0.4 million silver equivalent ounces.

Average realisable prices and sales

Average realisable precious metal prices in Q1 2019 (which are reported before the deduction of commercial discounts) were $1,310/ounce for gold and $15.3/ounce for silver (Q1 2018: $1,350/ounce for gold and $16.1/ounce for silver).

Brownfield exploration

Inmaculada

In Q1 2019, 1,796m of potential drilling was carried out at the Anomalia 1 and Anomalia 3 structures. Also, 1,204m of resource drilling was executed at the Angela and Ramal 4 veins.

Vein	Results (resource drilling)
Ramal 4	ANE-18-003: 2.3m @ 4.7g/t Au & 96g/t Ag ANE-18-005: 1.0m @ 5.4g/t Au & 340g/t Ag
Lady	MIL-18-046: 0.9m @ 5.3g/t Au & 699g/t Ag
EW	ANE-18-003: 2.2m @ 1.6g/t Au & 98g/t Ag

In Q2, resource drilling will continue to be focused at the Angela and Ramal 4 veins with 15,000m of drilling planned.

Pallancata

The focus at Pallancata is on the drilling programme at Pablo Sur, Palca and Cochaloma. Good progress has been made on permitting for all three zones with the drilling permit achieved for the Palca zone and environmental permits secured for Pablo Sur and Cochaloma. The campaign is expected to start at Palca towards the end of the second quarter and at the other two areas in the third quarter. In addition, underground drilling will be executed towards the south zone of the Pallancata West vein with the aim of intercepting structures parallel to the main Pallancata vein.

San Jose

At San Jose, 7,973m of potential drilling was executed in the first quarter at the Aguas Vivas system as well as the Pluma 19 structure. The intercepted structures at Aguas Vivas correspond to an intermediate sulphidation system with associated grades of zinc and lead.

Vein

Results

Aguas Vivas

SJD-1627: 3.0m @ 0.1g/t Au, 443/t Ag, 0.2% Cu, 8.2% Pb & 5.5% Zn SJD-1686: 1.1m @ 3.6g/t Au, 85g/t Ag, 0.1% Cu, 19.0% Pb & 10.3% Zn SJD-1703: 1.4m @ 0.2g/t Au, 55g/t Ag, 0.6% Pb & 1.9% Zn SJD-1720: 0.8m @ 2.4g/t Au, 9g/t Ag SJD-1851: 3.4m @ 0.3g/t Au, 44g/t Ag, 1.2% Cu, 4.6% Pb & 6.4% Zn SJD-1853: 1.1m @ 0.4g/t Au, 98g/t Ag, 1.6% Cu, 5.3% Pb & 4.2% Zn SJD-1855: 2.8m @ 0.9g/t Au, 9g/t Ag, 0.2% Cu, 0.7% Pb & 1.4% Zn SJD-1857: 0.9m @ 1.6g/t Au, 18g/t Ag, 0.1% Cu, 2.7% Pb & 2.2% Zn SJD-1865: 1.3m @ 0.4g/t Au, 12g/t Ag, 0.2% Cu, 2.1% Pb & 3.9% Zn SJD-1870: 1.1m @ 5.0g/t Au, 64g/t Ag, 0.4% Cu, 2.3% Pb & 3.9% Zn

In Q2, drilling will be focused towards the south of the San Jose mine.

Arcata

In Q1, 1,232m of potential drilling was executed in the 4th quadrant targeting the Pamela New vein. During Q2, drilling will continue to be focused at the 4th quadrant targeting structures resulting from a new geophysics programme.

Financial position

Total cash was approximately $88 million as at 31 March 2019 resulting in net debt of approximately $68 million. This cash balance reflects: the majority of redundancy payments at Arcata; expenditure on the ongoing brownfield exploration programme; and a temporary increase in working capital of approximately $7 million.

In March 2019, the Company refinanced its $50 million medium-term loan with Scotiabank and Citi and replaced it with a $50 million loan from Scotiabank with a duration of one year and a fixed interest rate of 2.95%.

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Enquiries:

Hochschild Mining plc

Charles Gordon                                                                                                                                                                                                                               [phone]

Head of Investor Relations

Hudson Sandler

Charlie Jack                                                                                                                                                                                                                                      [phone]

Public Relations

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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 three underground epithermal vein mines, two located in southern Peru and one in southern Argentina. Hochschild also has numerous long-term projects throughout the Americas.

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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

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[1] All equivalent figures assume a gold/silver ratio of 81x

 

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