Q2 2022 Production Report

RNS Number : 0448T

Hochschild Mining PLC

20 July 2022

 

   

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20 July 2022

Production and Project Development Report for the 6 months ended 30 June 2022

Hochschild Mining PLC ("Hochschild" or "the Company") (LSE: HOC) (OTCQX: HCHDF) is pleased to announce its production report for H1 2022 and an update on its project portfolio.

Ignacio Bustamante, Chief Executive Officer said:

"Following a strong second quarter, we remain on track to meet our full year production and cost forecasts. Furthermore, this has been achieved despite operational issues at Pallancata and San Jose and in an environment of considerable economic challenges. We have also made good progress at our two development projects in Brazil and Canada as well as our 2022 brownfield drilling programme."

Operational highlights

§ Q2 2022 attributable production:^[1]

o  49,133 ounces of gold

o  2.6 million ounces of silver

o  85,819 gold equivalent ounces

o  6.2 million silver equivalent ounces

§ H1 2022 attributable production 

o  96,360 ounces of gold

o  5.1 million ounces of silver

o  166,708 gold equivalent ounces

o  12.0 million silver equivalent ounces

§ On track to deliver overall 2022 production target of 360,000-375,000 gold equivalent ounces (26.0-27.0 million silver equivalent ounces)

§ 2022 all-in sustaining costs on track to meet guidance of $1,330-1,370 per gold equivalent ounce ($18.5-19.0 per silver equivalent ounce)

Project & Exploration highlights

§ Mara Rosa project in Brazil advancing on schedule - total project progress at the end of June was 7% with key final permit expected in Q3

§ Drilling commenced at Snip with encouraging results - pre-feasibility study to be completed by end of 2022

§ Pallancata medium-term drill programme delivering positive results - continuing to test short-term targets

ESG highlights

§ Lost Time Injury Frequency Rate of 1.28 (FY 2021: 1.26) ^[2]

§ Accident Severity Index of 72 (FY 2021: 676) ^[3]

§ Water Consumption of 175lt/person/day (FY 2021: 193lt/person/day)

§ Domestic waste generation of 1.01 kg/person/day (FY 2021: 1.00kg/person/day)

§ ECO score of 5.35 out of 6 (FY 2021: 5.29) ^[4]

Strong financial position

§ Total cash of approximately $205 million as at 30 June 2022 following completion of the Amarillo acquisition ($387 million as at 31 December 2021)

§ Net debt of approximately $106 million as at 30 June 2022 (net cash of $86 million as at 31 December 2021)

§ Current Net Debt/LTM EBITDA of approximately 0.34x as at 30 June 2022

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A conference call will be held at 2.30pm (London time) on Wednesday 20 July 2022 for analysts and investors. 

Dial in details as follows:

International Dial in: [phone]

UK Toll-Free Number: 0800 279 6877

US/Canada Toll Free: 800-289-0720

Pin: 1215129

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

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Overview

In Q2 2022, Hochschild delivered attributable production of 85,819 gold equivalent ounces or 6.2 million silver equivalent ounces with a solid performance from Inmaculada and an increase at San Jose versus the first quarter. In the first half of 2022 as a whole, Hochschild produced 166,708 gold equivalent ounces or 12.0 million silver equivalent ounces (on an attributable basis) with production increasing quarter-on-quarter. The Company remains on track to meet its overall attributable production target for 2022 of 360,000-375,000 gold equivalent ounces or 26.0-27.0 million silver equivalent ounces.

The Company reiterates that its all-in sustaining cost for 2022 is on track to be in line with the guidance of between $1,330 and $1,370 per gold equivalent ounce (or $18.5 and $19.0 per silver equivalent ounce).

TOTAL GROUP PRODUCTION

	Q2 2022	Q1 2022	Q2 2021	H1 2022	H1 2021
Silver production (koz)	3,346	2,759	3,700	6,105	7,021
Gold production (koz)	60.27	53.68	62.76	113.94	125.07
Total silver equivalent (koz)	7,685	6,624	8,219	14,309	16,027
Total gold equivalent (koz)	106.74	92.00	114.15	198.74	222.59
Silver sold (koz)	3,445	2,600	3,823	6,045	7,005
Gold sold (koz)	63.06	49.64	63.18	112.70	124.32

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

ATTRIBUTABLE GROUP PRODUCTION

	Q2 2022	Q1 2022	Q2 2021	H1 2022	H1 2021
Silver production (koz)	2,641	2,424	3,093	5,065	5,922
Gold production (koz)	49.13	47.23	53.42	96.36	106.26
Silver equivalent (koz)	6,179	5,824	6,939	12,003	13,573
Gold equivalent (koz)	85.82	80.89	96.37	166.71	188.51

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

Production

Inmaculada

Product	Q2 2022	Q1 2022	Q2 2021	H1 2022	H1 2021
Ore production (tonnes treated)	327,837	329,364	334,657	657,202	672,137
Average grade silver (g/t)	137	153	163	145	160
Average grade gold (g/t)	3.47	3.75	3.92	3.61	3.92
Silver produced (koz)	1,322	1,493	1,358	2,815	2,777
Gold produced (koz)	34.86	37.81	39.60	72.67	79.40
Silver equivalent (koz)	3,831	4,216	4,209	8,047	8,494
Gold equivalent (koz)	53.21	58.55	58.46	111.77	117.98
Silver sold (koz)	1,422	1,383	1,355	2,805	2,769
Gold sold (koz)	37.56	35.16	39.85	72.72	79.49

Inmaculada's second quarter production was 34,855 ounces of gold and 1.3 million ounces of silver which amounts to a gold equivalent output of 53,214 ounces. Grades were lower than expected due to a temporary mine plan schedule partially offset by higher than budgeted recoveries. Overall, in the first half of 2022, Inmaculada produced 111,766 gold equivalent ounces (H1 2021: 117,975 ounces), driven by better-than-expected recoveries.

The Company is currently in the final stages of the permitting process of Inmaculada's modified Environmental Impact Assessment with completion expected during H2.

Pallancata

Product	Q2 2022	Q1 2022	Q2 2021	H1 2022	H1 2021
Ore production (tonnes treated)	134,276	124,782	162,052	259,058	289,002
Average grade silver (g/t)	154	165	234	159	237
Average grade gold (g/t)	0.69	0.74	0.86	0.72	0.86
Silver produced (koz)	586	581	1,103	1,167	2,000
Gold produced (koz)	2.69	2.70	4.09	5.39	7.28
Silver equivalent (koz)	780	776	1,398	1,555	2,524
Gold equivalent (koz)	10.83	10.77	19.42	21.60	35.06
Silver sold (koz)	584	577	1,229	1,161	2,000
Gold sold (koz)	2.66	2.69	4.56	5.36	7.29

In the second quarter, Pallancata produced 0.6 million ounces of silver and 2,692 ounces of gold bringing the silver equivalent total to 0.8 million ounces. Overall, in H1 2022, Pallancata's output was 1.6 million silver equivalent ounces (H1 2021: 2.5 million ounces). Grades have been lower than expected throughout the first half and consequently, with the rapid fall in the silver price in the period, the Company has updated the mine plan for 2022 and is considering all options with regards to future ore production from the Pallancata mining area.

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

Product	Q2 2022	Q1 2022	Q2 2021	H1 2022	H1 2021
Ore production (tonnes treated)	131,467	73,892	144,849	205,359	246,194
Average grade silver (g/t)	383	331	304	365	321
Average grade gold (g/t)	6.09	6.36	4.69	6.19	5.45
Silver produced (koz)	1,438	685	1,239	2,123	2,244
Gold produced (koz)	22.72	13.16	19.07	35.88	38.40
Silver equivalent (koz)	3,074	1,632	2,612	4,706	5,008
Gold equivalent (koz)	42.69	22.67	36.27	65.37	69.56
Silver sold (koz)	1,440	640	1,239	2,080	2,236
Gold sold (koz)	22.83	11.79	18.77	34.62	37.54

Q2 production at San Jose was 1.4 million ounces of silver and 22,718 ounces of gold which is 3.0 million silver equivalent ounces and brings the total for the first half of the year to 4.7 million silver equivalent ounces (H1 2021: 5.0 million ounces). Gold grades were better than expected in the quarter although this was offset by lower-than-expected tonnage.

As previously reported, in the first quarter the operation experienced further Covid-related restrictions on labour availability in the country. In addition, a fire in the crushing area temporarily affected operations but without any impact on full year production forecasts or costs (which are expected to be covered by insurance).

Average realisable prices and sales

Average realisable precious metal prices in Q2 2022 (which are reported before the deduction of commercial discounts) were $1,843/ounce for gold and $22.0/ounce for silver (Q2 2021: $1,838/ounce for gold and $27.9/ounce for silver). For H1 2022, average realisable precious metal prices were $1,875/ounce for gold and $23.7/ounce for silver (H1 2021: $1,772/ounce for gold and $26.3/ounce for silver).

Advanced Project: Mara Rosa

The Mara Rosa project in Brazil is progressing according to schedule with the following key highlights:  

§ Total project progress at the end of June 2022 was 7%

§ Detailed engineering 71% complete

§ Long lead-time equipment (e.g. ball mills and filters) have been purchased

§ Metso 3-stage crusher being delivered to site

§ EPCM, earthworks, diesel, and mining pre-stripping contracts being progressed

§ Acquisition of site substation, transformers and water and sewage treatment facilities completed

§ Construction powerline completed with project powerline construction ongoing

§ Topsoil removal commenced in areas with no vegetation - approximately 30% of project area

Development Project: Snip

Approximately 7,300m were drilled from underground in Q2, with all "twin" holes completed by the end of the quarter. Work in the third quarter will be focused on finishing the "infill" and" potential" holes in the programme and logging the resultant core. Assay results are expected through to the end of the year.

Work on the Pre-Feasibility Study continued with metallurgical test work, an evaluation of ARD potential in waste samples, and a flowsheet trade-off study all completed during the quarter. Processing plant designs and an updated resources model are expected to be finalised in Q3. The full study remains on track for completion at the end of the year. In addition, a new 2-year Environmental Baseline program was approved and data collection began.

Assay results were received during the period, with the following highlights:

Vein	Results (Twin hole)
215	UG22-297: 2.3m @ 9.5g/t Au & 11g/t Ag
215	UG22-289: 8.0m @ 20.2g/t Au & 10g/t Ag
221	UG22-291: 3.8m @ 11.8g/t Au & 13g/t Ag
226	UG22-289: 8.7m @ 5.8g/t Au & 6g/t Ag
233	UG22-297: 4.6m @ 35.0g/t Au & 11g/t Ag
246	UG22-293: 2.3m @ 18.8g/t Au & 8g/t Ag

Development Project: Volcan

During the second quarter, the Company's 100% owned subsidiary, Tiernan Gold Corporation continued to advance the   Volcan project.   Work carried out during the period included updating the Mineral Resource Estimate as well as developing an optimised mine and project development plan.   During the third quarter, the Company expects to advance several trade-off studies aimed at creating additional project value.   The results of the engineering work are expected to be outlined in a new technical report.

Brownfield exploration

Inmaculada

In Q2 2022, 4,200m of drilling was carried out with the best result below from the Josefa vein:

Vein	Results (potential/resource drilling)
Josefa	IMM22-139: 2.8m @ 1.9g/t Au & 43g/t Ag

During Q3, the plan is to carry out 6,000m of further drilling in the Josefa vein.

Pallancata

At Pallancata, 12,500m of resource drilling was executed in the Laura-Demian, Royropata and Miriam structures. Whilst the results are encouraging, the structures are outside the current permitted area and will require new permits before being brought into the mine plan. Quartz-sulfide veins were intercepted with grades of between 250 and 1,600 silver equivalent grams per tonne. Selected results are below:

Vein	Results (resource drilling)
Miriam	DHMIR-A16: 1.3m @ 1.0g/t Au & 155g/t Ag
Demian	DLDE-A03: 3.8m @ 0.8g/t Au & 184g/t Ag DLRY-A08: 1.1m @ 4.1g/t Au & 820g/t Ag
Laura	DLDE-A04: 6.1m @ 0.8g/t Au & 251g/t Ag DLLAU-A08: 1.3m @ 0.5g/t Au & 274g/t Ag DLLAU-A09: 0.9m @ 4.7g/t Au & 286g/t Ag DLLAU-A11: 1.9m @ 0.9g/t Au & 298g/t Ag
Royropata	DLDE-A06: 4.2m @ 0.6g/t Au & 224g/t Ag DLRY-A08: 1.5m @ 1.1g/t Au & 345g/t Ag
Royropata 2	DLDE-A06: 1.3m @ 3.0g/t Au & 1,039g/t Ag DLRY-A08: 3.0m @ 1.8g/t Au & 596g/t Ag
Royropata 4	DLDE-A06: 17.8m @ 1.2g/t Au & 384g/t Ag DLRY-A08: 5.1m @ 2.3g/t Au & 647g/t Ag
Royropata 5	DLDE-A06: 2.3m @ 3.0g/t Au & 1,446g/t Ag

During Q3, there will be 2,000m of further drilling in the vein structures in the Royropata system.

San Jose

At San Jose, 3,600m of potential drilling was carried out close to current operations and 700m of drilling was also executed at the Ciclon project. Selected results below:

Vein	Results (potential/resource)
Agostina	SJD-2468: 4.1m @ 7.5g/t Au & 84g/t Ag SJD-2469: 5.4m @ 3.3g/t Au & 29g/t Ag SJD-2471: 1.9m @ 1.6g/t Au & 68g/t Ag
Ayelen SE	SJM-594: 1.5m @ 6.9g/t Au & 648g/t Ag
Ciclon	DCE22-02: 2.9m @ 1.0g/t Au & 615g/t Ag

During Q3, 2,000m of potential drilling will be carried out on the Ayelen SE vein to find new resources.

Financial position

Total cash was approximately $205 million as at 30 June 2022 resulting in a net debt position of approximately $106 million.

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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) and crosstrades on the OTCQX Best Market in the U.S. (HCHDF), 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 owns the Mara Rosa Advanced Project in Brazil as well as 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

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[1] All equivalent figures assume the average gold/silver ratio for 2021 of 72x.

[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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