Q1 2020 Production Report

RNS Number : 4146K

Hochschild Mining PLC

22 April 2020

 

_____________________________________________________________________________________

22 April 2020

Production Report for the 3 months ended 31 March 2020

Ignacio Bustamante, Chief Executive Officer said:

"The current global situation is extremely challenging for everyone and, at Hochschild, our priority remains the health and safety of our employees and stakeholders who have been vital in helping us manage this situation. Although our operations in Peru remain suspended, we continue to work with the government on our potential strategies for remobilisation and ramp-up, whilst in Argentina, we are steadily beginning to restart the San Jose operation.

Our mines delivered a solid start to the year producing 94,000 gold equivalent ounces or 8.1 million silver equivalent ounces although output was of course impacted from the middle of March. In addition, our exploration programmes have been curtailed across the Americas and in particular in Peru just prior to the end of the rainy season. Hochschild is in a strong financial position with low net debt, significant liquidity and we expect to be firmly back on track once this temporary period of disruption is resolved."

Operational highlights

§ Q1 2020 attributable production:^[1]

o  59,425 ounces of gold

o  3.0 million ounces of silver

o  94,123 gold equivalent ounces

o  8.1 million silver equivalent ounces

§ Inmaculada and Pallancata activities continue to be limited to critical environmental and safety priorities

§ San Jose in phased ramp-up process following receipt of permission to restart production

§ 2020 guidance withdrawn

Strong financial position

§ Total cash of approximately $178 million as at 31 March 2020 ($166 million as at 31 December 2019)

§ Net debt of approximately $36 million as at 31 March 2020 ($33 million as at 31 December 2019)

§ Proposal to pay 2019 final dividend withdrawn

________________________________________________________________________________________

A conference call will be held at 2.30pm (London time) on Wednesday 22 April 2020 for analysts and investors. 

Dial in details as follows:

International Dial in: [phone]

UK Toll-Free Number: 0800 78 779

Pin: 9767980#

Please dial into the call approximately ten minutes before the 2.30pm start time.

A recording of the conference call will be available on demand on the Company's website: www.hochschildmining.com

________________________________________________________________________________________

Overview

In Q1 2020, Hochschild delivered attributable production of 94,123 gold equivalent ounces or 8.1 million silver equivalent ounces. The period included a solid start to the year from Inmaculada but was impacted towards the end of the period by the management's decision to halt operations at all three mines following the state of emergency declarations in both Peru and Argentina.

Guidance

Due to the temporary suspension of Hochschild's mines in Peru and Argentina and ongoing uncertainty regarding COVID-19, Hochschild has decided to withdraw its 2020 guidance. The Company will reissue full-year guidance once the full impact of the suspensions and the restart pathway is clearer.

TOTAL GROUP PRODUCTION[2]

	Q1 2020	Q4 2019	Q1 2019	12 mths  2019
Silver production (koz)	3,536	4,641	5,071	20,163
Gold production (koz)	68.42	78.05	77.98	321.58
Total silver equivalent (koz)	9,420	11,354	11,777	47,818
Total gold equivalent (koz)	109.53	132.02	136.94	556.03
Silver sold (koz)	3,103	4,662	5,032	20,062
Gold sold (koz)	57.69	77.48	76.19	317.52

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

ATTRIBUTABLE GROUP PRODUCTION

	Q1 2020	Q4 2019	Q1 2019	12 mths  2019
Silver production (koz)	2,984	3,780	4,370	16,808
Gold production (koz)	59.43	64.02	67.42	269.89
Silver equivalent (koz)	8,095	9,285	10,168	40,019
Gold equivalent (koz)	94.12	107.97	118.23	465.34

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

Production

Inmaculada

Product	Q1 2020	Q4 2019	Q1 2019	12 mths  2019
Ore production (tonnes treated)	308,896	327,906	331,390	1,338,569
Average grade silver (g/t)	151	179	144	163
Average grade gold (g/t)	4.37	5.09	4.38	4.71
Silver produced (koz)	1,391	1,359	1,447	5,747
Gold produced (koz)	46.45	43.82	48.86	189.18
Silver equivalent (koz)	5,385	5,127	5,649	22,016
Gold equivalent (koz)	62.62	59.62	65.69	256.00
Silver sold (koz)	1,179	1,356	1,441	5,732
Gold sold (koz)	39.72	44.16	48.08	188.59

Inmaculada's first quarter production was 46,450 ounces of gold and 1.4 million ounces of silver which amounts to a gold equivalent output of 62,621 ounces which was broadly in line with expectations.  Although grades were marginally lower than expected, they are expected to rise in the second half of the year, assuming a resumption in production. There was also once again a contribution from products in process from the previous period. Operations were stopped on 16 March 2020 with the shortfall from the remaining 10 days of the quarter at approximately 5,200 gold equivalent ounces.

Pallancata

Product	Q1 2020	Q4 2019	Q1 2019	12 mths  2019
Ore production (tonnes treated)	142,506	206,109	231,589	915,877
Average grade silver (g/t)	250	258	285	278
Average grade gold (g/t)	0.90	0.98	1.01	1.01
Silver produced (koz)	1,019	1,524	1,881	7,259
Gold produced (koz)	3.61	5.60	6.61	25.95
Silver equivalent (koz)	1,330	2,005	2,449	9,491
Gold equivalent (koz)	15.46	23.31	28.48	110.36
Silver sold (koz)	961	1,502	1,877	7,161
Gold sold (koz)	3.33	5.47	6.58	25.45

In the first quarter, Pallancata produced 1.0 million ounces of silver and 3,615 ounces of gold bringing the silver equivalent total to 1.3 million ounces in Q1. Tonnage was in line with expectations, with grades lower than budgeted although they are forecast to recover during the next few quarters once the mine resumes production.   Operations were stopped on 16 March 2020 with the shortfall from the remaining 10 days of the quarter at approximately 180,000 silver equivalent ounces.

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

Product	Q1 2020	Q4 2019	Q1 2019	12 mths  2019
Ore production (tonnes treated)	84,903	145,490	110,132	544,165
Average grade silver (g/t)	466	426	460	443
Average grade gold (g/t)	7.57	6.89	6.90	6.81
Silver produced (koz)	1,126	1,759	1,431	6,846
Gold produced (koz)	18.35	28.64	21.55	105.48
Silver equivalent (koz)	2,705	4,222	3,285	15,917
Gold equivalent (koz)	31.45	49.09	38.19	185.08
Silver sold (koz)	963	1,804	1,405	6,846
Gold sold (koz)	14.64	27.85	20.71	102.82

San Jose again delivered a steady start to the year despite the traditionally shorter operational period due to the scheduled hourly workers holiday in February. The run-rate on treated tonnage was slightly higher than the corresponding period of 2019 along with stronger gold grades resulting in production of 1.1 million ounces of silver and 18,353 ounces of gold which makes 2.7 million silver equivalent ounces. Operations were stopped on 19 March 2020 with the shortfall from the remaining seven days at approximately 300,000 silver equivalent ounces.

Average realisable prices and sales

Average realisable precious metal prices in Q1 2020 (which are reported before the deduction of commercial discounts) were $1,623/ounce for gold and $14.2/ounce for silver (Q1 2019: $1,310/ounce for gold and $15.3/ounce for silver).

Brownfield exploration

Inmaculada

In Q1 2020, 4,690m of potential drilling was carried out in the Bety, Lady, Pilar East, Shakira and South veins before the programme was halted in mid-March. Also, 1,204m of resource drilling was executed at the Angela and Ramal 4 veins.

Vein	Results (resource drilling)
Bety	IMS-20-001: 1.0m @ 1.3g/t Au & 94g/t Ag
Lady	LAD-19-001: 1.3m @ 1.5g/t Au & 120g/t Ag
Lady Sur	LAD-19-002: 0.9m @ 5.7g/t Au & 17g/t Ag LAD-19-003: 1.4m @ 27.0g/t Au & 113g/t Ag
Shakira	HUA-19-001: 3.1m @ 5.1g/t Au & 252g/t Ag
South vein	IMM-20-002: 0.8m @ 15.0g/t Au & 1,753g/t Ag

Subject to the resumption of the Company's brownfield campaign in Peru, the second quarter plan consists of completing infill drilling in the Pilar, Susana Beatriz, Dora and Tensional Lourdes structures. Additional drilling will be carried out to incorporate new resources from the Juliana, Shakira and Lady Sur veins.

Pallancata

At Pallancata, 5,145m of potential drilling was executed before the programme was also halted. This included just over 3,000m of long hole drilling from underground towards the Anomalia NE, Royropata, Veta 1, Mercedes, Luisa  and Erika veins and 1,880m of drilling tracing the continuity of the Pallancata Vein.  

Vein	Results (resource drilling)
Paola	DLLU-A206: 0.9m @ 1.3g/t Au & 479g/t Ag
Karina	DLLU-A206: 1.1m @ 6.8g/t Au & 539g/t Ag
Gracia N	DLPE-A171: 0.7m @ 0.7g/t Au & 88g/t Ag

4,213m of infill drilling was carried out in the Huararani and Marco areas with results likely to lead to a redefinition of the geology of these structures.

Subject to the resumption of the Company's brownfield campaign in Peru, the Q2 programme includes 2,500m of underground long hole drilling aimed towards the Royropata, Mercedes and Luisa veins as well as 6,600m of potential drilling targeting the Pallancata, Erika, Soraida and Marco veins. The team is also aiming to complete the infill drilling campaigns in the Huararani, Luciano and Puka veins.

San Jose

At San Jose, 2,889m of potential drilling was executed in the Micaela Oeste, Emily, Karina and Carlos structures.

Vein	Results (potential)
Micaela Oeste	SJD-2070: 0.9m @ 9.6g/t Au & 207g/t Ag SJD-2074: 0.3m @ 0.4g/t Au & 32g/t Ag
Emily	SJD-2081: 0.6m @ 0.8g/t Au & 34g/t Ag SJD-2085: 0.6m @ 1.6g/t Au & 100g/t Ag SJD-2090: 0.5m @ 0.1g/t Au & 35g/t Ag
Elisa	SJD-2085: 0.9m @ 9.6g/t Au & 207g/t Ag
Karina	SJD-2058: 0.5m @ 0.5g/t Au & 118g/t Ag
Carlos	SJD-2084: 1.9m @ 3.5g/t Au & 1,024g/t Ag

During Q1, 8,675m of infill drilling has been carried out and a further 6,000m is currently scheduled for the second quarter.

Financial position

Total cash was approximately $178 million as at 31 March 2020 resulting in net debt of approximately $36 million. This includes $14 million of debt in Argentina which will mitigate the impact from COVID 19.

_____________________________________________________________________________________

Enquiries:

Hochschild Mining PLC

Charles Gordon       [phone]

Head of Investor Relations

Hudson Sandler

Charlie Jack    [phone]

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 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.

_____________________________________________________________________________________

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.

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 the average gold/silver ratio for 2019 of 86x.

[2] Group production figures for 2019 include 394,000 silver equivalent ounces from the Arcata operation which was placed on care and maintenance in February 2019.

 

END

 

 

TSTDFLFLBZLZBBV