Q1 2021 Production Report

RNS Number : 0927W

Hochschild Mining PLC

21 April 2021

 

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21 April 2021

Production Report for the 3 months ended 31 March 2021

Ignacio Bustamante, Chief Executive Officer said:

"We have delivered another solid start to the year with all our operations in line with expectations and remain on track to meet our 2021 production and cost targets. Our 2021 brownfield exploration programme has commenced and includes drilling at all three of our mines with early results from the Angela North vein at Inmaculada indicating significant high grade additions to the already substantial resource base."

Operational highlights

· Q1 2021 attributable production: ^[1]

o  52,843 ounces of gold

o  2.8 million ounces of silver

o  85,738 gold equivalent ounces

o  7.4 million silver equivalent ounces

· Strong operational recovery from 2020 Covid-19 disruption

· On track to deliver overall 2021 production target of 360,000-372,000 gold equivalent ounces or 31.0-32.0 million silver equivalent ounces

· 2021 all-in sustaining costs on track to meet $1,210 and $1,250 per gold equivalent ounce guidance ($14.1 and $14.5 per silver equivalent ounce)

Exploration highlights

· Inmaculada drilling already adding significant high grade resources from Angela North vein

· Further promising results at San Jose

· 2021 drilling campaigns already started at Pallancata, Corina, Cochaloma and Palca targets

ESG highlights

· Lost Time Injury Frequency Rate of 1.85 (2020: 1.38) ^[2]

· Accident Severity Index of 1,429 (2020: 474) ^[3]

· Water Consumption of 229lt/person/day (2020: 231lt/person/day)

· Domestic waste generation of 0.97 kg/person/day (2020: 1.18kg/person/day)

· ECO score of 5.63 out of 6 (2019: 5.74) ^[4]  

· All mines operating in compliance with strict Covid-19 protocols

Strong financial position

· Total cash of approximately $245 million as at 31 March 2021 ($232 million as at 31 December 2020)

· Net cash of approximately $38 million as at 31 March 2021 ($22 million as at 31 December 2020)

· Current Net Cash/LTM EBITDA of approximately 0.125x as at 31 March 2021

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A conference call will be held at 2.00pm (London time) on Wednesday 21 April 2021 for analysts and investors. 

Dial in details as follows:

International Dial in: [phone]

UK Toll-Free Number: 0800 279 7209

US/Canada Toll Free: 888-394-8218

Pin: 9777931

Please dial into the call approximately ten minutes before the 2.00pm start time.

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

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Overview

In Q1 2021, Hochschild delivered attributable production of 85,738 gold equivalent ounces or 7.4 million silver equivalent ounces and achieved a solid start to the year at its key flagship Inmaculada operation which benefited from better than expected grades.

The Company reiterates that its all-in sustaining cost for 2021 is on track to be in line with the guidance of between $1,210 and $1,250 per gold equivalent ounce (or $14.1 and $14.5 per silver equivalent ounce).

TOTAL GROUP PRODUCTION

	Q1 2021	Q4 2020	Q1 2020	12 mths  2020
Silver production (koz)	3,321	3,719	3,536	11,821
Gold production (koz)	62.31	65.67	68.42	207.08
Total silver equivalent (koz)	8,680	9,366	9,420	29,631
Total gold equivalent (koz)	100.93	108.91	109.53	344.54
Silver sold (koz)	3,182	3,803	3,103	11,846
Gold sold (koz)	61.14	66.57	57.69	207.77

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

ATTRIBUTABLE GROUP PRODUCTION

	Q1 2021	Q4 2020	Q1 2020	12 mths  2020
Silver production (koz)	2,829	3,187	2,984	9,808
Gold production (koz)	52.84	56.97	59.43	175.24
Silver equivalent (koz)	7,373	8,087	8,095	24,879
Gold equivalent (koz)	85.74	94.03	94.12	289.29

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

Production

Inmaculada

Product	Q1 2021	Q4 2020	Q1 2020	12 mths  2020
Ore production (tonnes treated)	337,480	340,854	308,896	948,937
Average grade silver (g/t)	158	152	151	154
Average grade gold (g/t)	3.92	4.23	4.37	4.33
Silver produced (koz)	1,419	1,393	1,391	4,034
Gold produced (koz)	39.80	43.55	46.45	129.17
Silver equivalent (koz)	4,842	5,138	5,385	15,143
Gold equivalent (koz)	56.31	59.75	62.62	176.09
Silver sold (koz)	1,414	1,404	1,179	4,020
Gold sold (koz)	39.65	44.05	39.72	129.70

Inmaculada's first quarter production was 39,803 ounces of gold and 1.4 million ounces of silver which amounts to gold equivalent output of 56,301 ounces which was slightly ahead of expectations and was due to marginally higher than planned tonnage and grades.

 

Pallancata

Product	Q1 2021	Q4 2020	Q1 2020	12 mths  2020
Ore production (tonnes treated)	126,950	186,454	142,506	519,611
Average grade silver (g/t)	240	231	250	247
Average grade gold (g/t)	0.85	0.81	0.90	0.87
Silver produced (koz)	897	1,241	1,019	3,679
Gold produced (koz)	3.18	4.37	3.61	12.93
Silver equivalent (koz)	1,171	1,617	1,330	4,790
Gold equivalent (koz)	13.61	18.80	15.46	55.70
Silver sold (koz)	771	1,287	961	3,654
Gold sold (koz)	2.72	4.56	3.33	12.80

In the first quarter, Pallancata produced 897,000 ounces of silver and 3,183 ounces of gold bringing the silver equivalent total to 1.2 million ounces. Tonnage and grade were lower than expectations although this was mostly due to the temporary effect of changing shift schedules.

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

Product	Q1 2021	Q4 2020	Q1 2020	12 mths  2020
Ore production (tonnes treated)	101,345	110,019	84,903	401,202
Average grade silver (g/t)	344	345	466	357
Average grade gold (g/t)	6.53	5.62	7.57	5.63
Silver produced (koz)	1,005	1,085	1,126	4,108
Gold produced (koz)	19.33	17.75	18.35	64.99
Silver equivalent (koz)	2,667	2,611	2,705	9,697
Gold equivalent (koz)	31.01	30.36	31.45	112.76
Silver sold (koz)	997	1,112	963	4,172
Gold sold (koz)	18.77	17.97	14.64	65.28

San Jose once again delivered a steady start to the year despite the traditionally shorter operational period due to the scheduled hourly workers holiday which was taken in the first few weeks of January this year. Tonnage and grade in the quarter were in line with expectations resulting in production of 1.0 million ounces of silver and 19,329 ounces of gold which makes 2.7 million silver equivalent ounces.

It is with deep regret that the Company reports an accident at the operation towards the end of the period which claimed the life of one of our contractors during the preparation of scheduled electrical maintenance work. A detailed investigation has been carried out and an action plan comprising internal communications and changes to operating procedures will be implemented across all operations.

Average realisable prices and sales

Average realisable precious metal prices in Q1 2021 (which are reported before the deduction of commercial discounts) were $1,703/ounce for gold and $24.4/ounce for silver (Q1 2020: $1,623/ounce for gold and $14.2/ounce for silver).

Brownfield exploration

Inmaculada

In Q1 2021, the exploration team carried out 1,519m of potential drilling and 12,236m of resource drilling from 14 drill holes mostly testing the Angela North structure. Selected results are below:

Vein	Results (resource drilling)
Angela North	IMS-21-056: 5.9m @ 2.5g/t Au & 99g/t Ag IMS-21-062: 9.7m @ 91.7g/t Au & 3,013g/t Ag IMS-21-063: 2.1m @ 6.5g/t Au & 217g/t Ag IMS-21-065: 7.0m @ 3.7g/t Au & 198g/t Ag IMS-21-066: 2.4m @ 4.3g/t Au & 386g/t Ag IMS-21-067: 1.0m @ 2.4g/t Au & 234g/t Ag IMS-21-070: 1.5m @ 2.1g/t Au & 156g/t Ag IMS-21-071: 1.4m @ 3.6g/t Au & 123g/t Ag IMS-21-072: 2.0m @ 1.8g/t Au & 109g/t Ag IMS-21-075: 3.1m @ 5.5g/t Au & 341g/t Ag IMS-21-077: 2.7m @ 1.4g/t Au & 103g/t Ag IMS-21-078: 9.1m @ 14.1g/t Au & 1,639g/t Ag IMS-21-087: 5.6m @ 12.6g/t Au & 494g/t Ag
Ramal Angela North 1	IMS-21-056: 1.6m @ 2.0g/t Au & 151g/t Ag
Ramal Angela North 2	IMS-21-056: 0.8m @ 5.4g/t Au & 572g/t Ag

During the second quarter, the team will continue with 10,000m of potential and resource drilling in Angela North and Juliana North.

Pallancata

At Pallancata, 1,907m of potential drilling was carried out testing the continuity of the Pallancata vein, the Falla NW and Pablo Piso vein structures. Quartz veins were intercepted but so far without economic value. At Cochaloma, 800m of potential drilling in the Esperanza vein was executed, also intercepting a quartz structure but again without economic value.

In Corina, 2,095m were drilled in the Calvario, Clara, Anomalia NE and Corina veins. Selected results are below:

Vein	Results (resource drilling)
Corina	DHCOR-21-026: 1.6m @ 6.0g/t Au & 39g/t Ag DHCOR-21-028: 1.6m @ 3.1g/t Au & 22g/t Ag

For Q2, in Pallancata, 2,000m of potential drilling is planned in the Pallancata and Pablo veins, 1,000m in Cochaloma, and 2,000m in Corina vein.

San Jose

In Q1 2021, 1,792m of resource drilling was executed targeting the Isabel and Ramal Isabel veins and the team also carried out 1,396m of potential drilling targeting the Escondida vein and the North Telken area close to Cerro Negro.

Vein	Results (resource drilling)
Isabel	SJD-2210: 1.2m @ 4.9g/t Au & 552g/t Ag SJD-2211: 1.0m @ 3.7g/t Au & 376g/t Ag SJD-2241: 1.0m @ 8.2g/t Au & 499g/t Ag SJM-179: 1.3m @ 3.7g/t Au & 586g/t Ag
Ramal Isabel 1	SJD-2210: 0.8m @ 2.2g/t Au & 772g/t Ag SJD-2241: 0.8m @ 1.6g/t Au & 337g/t Ag
Ramal Isabel 2	SJD-2241: 2.0m @ 1.1g/t Au & 309g/t Ag

Vein	Results (potential drilling)
Escondida	SJM-529: 2.0m @ 62.5g/t Au & 5,571g/t Ag

Drilling continues in the second quarter, with 1,000m of resource drilling in the Escondida vein and the continuation of drilling at the Betania structure (Saavedra) in May, once the geology and geochemistry is complete.

Financial position

Total cash was approximately $245 million as at 31 March 2021 resulting in a net cash position of approximately $38 million.

On 8 February 2021, the Group signed agreements to hedge the sale of 4,000,000 ounces of silver at $27.10 per ounce for 2021 and a further 4,000,000 ounces of silver at US$26.86 per ounce for 2022. This is to protect cashflows from the Pallancata mine in the next two years with the existing resource base.

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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.

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 the average gold/silver ratio for 2020 of 86x.

[2]Calculated as total number of accidents per million labour hours

^[3]Calculated as total number of days lost per million labour hours.

[4]The ECO Score is an internally designed Key Performance Indicator measuring environmental performance in one number and encompassing numerous fronts including management of waste water, outcome of regulatory inspections and sound environmental practices relating to water consumption and the recycling of materials.

 

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