Hochschild addresses current

RNS Number : 5480I

Hochschild Mining PLC

20 November 2008

 



Hochschild takes steps to address current market conditions 

• Reduction of workforce by 150 corporate jobs 

• Optimisation of capex allocation to preserve strong cash position 

• Delay of San Felipe project 

• On track to meet 2008 production target of 26 million silver equivalent ounces 

In response to current adverse market conditions and lower prices of base and precious metals, Hochschild Mining plc (“Hochschild”) has initiated a plan to reduce costs and conserve cash holdings. The company is initially cutting 150 jobs and reducing administrative expenses and capital expenditure. As a result of this, and the continued decline in zinc prices, Hochschild has also decided to delay the development of its San Felipe zinc project in northern Mexico until market conditions improve.

Hochschild is implementing an initial Group-wide reduction in workforce of 150 positions, predominantly in corporate and administrative functions. The Company has also implemented a number of initiatives to reduce administrative costs further, including a freeze on recruitment. Additionally, Hochschild has deferred almost all of its 2009 capital expenditure, which will be largely limited to sustaining capex at existing operations and already committed investments.

In light of the decision to reduce capex and given the current price environment for zinc, the Company has concluded that it is prudent to delay development of the San Felipe project. Over the previous 6 months, zinc prices have fallen by 46% from a high of $2,267/mt to the current price of $1,218/mt. However, Hochschild remains confident about the long term value of San Felipe and will continue to review the timing of the project.  

Hochschild's focus for 2009 is to deliver profitable production and the Company is undertaking a review of its cut-off prices to ensure economic grades are mined throughout all of its operations. 2009 production targets will be reported in the Company's Production Statement in January.

Hochschild continues to maintain a solid cash position with a balance of US$130 million.  This, together with the reductions in capex, administrative expenses and operating costs in 2009, positions the Company to successfully meet the market challenges ahead. The Company remains on track to achieve its 2008 production target of 26 million silver equivalent ounces.

Miguel Aramburú, Chief Executive Officer, commented: 

'We are taking a proactive response to challenging market conditions. By controlling costs we are ensuring that the Company is well placed to face this volatile price environment. 

Hochschild is in solid financial health, with over US$130 million of cash on the balance sheet. We have a strong management team and over 40 years' experience in underground mining and a high quality portfolio of assets in the Americas. We are well positioned to deal with the challenges ahead.   

At the same time, we remain positive about the future of silver and gold prices as historically, these have remained solid through periods of financial instability.' 

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A conference call will be held at 8.30am (London time) on 20 November 2008 for analysts and investors.  

Dial in details as follows:

UK                                                     [phone]

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

Dial                                                    [phone]     

Access Code                                     817989

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Enquiries:

Hochschild Mining plc

Isabel Lütgendorf                             [phone]

Head of Investor Relations

Ignacio Rosado                               [phone]

Chief Financial Officer

Finsbury

Robin Walker                                  [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 for Reuters / HOC LN for Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild currently operates five underground epithermal vein mines, four located in southern Peru and one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has over sixteen long-term prospects throughout the Americas. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits. For further information please visit www.hochschildmining.com

 

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