Q3 2020 Production Report
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21 October 2020
Production Report for Q3 and the 9 months ended 30 September 2020
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild is recovering well from a challenging first half in which all of our operations were impacted by the global pandemic. Output has steadily increased and we have generated substantial free cashflow despite the Company not being in full production throughout the entire period. With prices continuing to be strong, we are aiming for a robust fourth quarter which will also include the bulk of our 2020 brownfield drilling programme."
Operational highlights
§ Robust recovery in attributable production1
o 39,195 ounces of gold
o 2.5 million ounces of silver
o 68,423 gold equivalent ounces
o 5.9 million silver equivalent ounces
§ Solid year-to-date operational performance in challenging circumstances
o 118,268 ounces of gold
o 6.6 million ounces of silver
o 195,258 gold equivalent ounces
o 16.8 million silver equivalent ounces
§ On track to deliver previously announced revised 2020 overall production target of 280,000-290,000 gold equivalent ounces (24.0-25.0 million silver equivalent ounces)
§ 2020 all-in sustaining costs on track to meet $1,250-$1,290 per gold equivalent ounce revised guidance ($14.5-15.0 per silver equivalent ounce)
Exploration highlights
§ H2 2020 exploration programme started with main results expected in Q4 2020
§ Drilling campaigns ongoing at all three current operations as well as at Arcata and Crespo
Strong financial position
§ Total cash of approximately $196 million as at 30 September 2020 ($162 million as at 30 June 2020)
§ Net debt of approximately $21 million as at 30 September 2020 ($58 million as at 30 June 2020)
§ Net Debt/LTM EBITDA of less than 0.1x as at 30 September 2020
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A conference call will be held at 2.30pm (London time) on Wednesday 21 October 2020 for analysts and investors.
Dial in details as follows:
UK Toll-Free Number: 0800 358 6377
International Dial in: +44 (0)330 336 9127
US/Canada Toll-Free Number: 888-254-3590
Pin: 2072941#
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 Q3 2020, Hochschild Mining PLC (HOC.LN) (OTCMKTS: $HCHDF) ("Hochschild" or "the Company") delivered attributable production of 68,423 gold equivalent ounces or 5.9 million silver equivalent ounces, representing a strong recovery versus the second quarter although the Inmaculada mine, in particular, was still impacted by effects of the Covid-19 crisis during the period. Overall year-to-date attributable production is 195,258 gold equivalent ounces or 16.8 million silver equivalent ounces. The Company remains on track to meet its revised production target for 2020 of 280,000-290,000 gold equivalent ounces or 24.0-25.0 million silver equivalent ounces.
The Company reiterates that its all-in sustaining cost for 2020 is on track to be in line with the revised guidance of $1,250-$1,290 per gold equivalent ounce ($14.5-15.0 per silver equivalent ounce).
TOTAL GROUP PRODUCTION2
| Q3 2020 | Q2 2020 | Q3 2019 | YTD 2020 | YTD 2019 |
Silver production (koz) | 3,085 | 1,482 | 5,284 | 8,103 | 15,521 |
Gold production (koz) | 47.83 | 25.17 | 81.37 | 141.42 | 243.53 |
Total silver equivalent (koz) | 7,198 | 3,647 | 12,282 | 20,264 | 36,464 |
Total gold equivalent (koz) | 83.69 | 42.40 | 142.82 | 235.63 | 424.01 |
Silver sold (koz) | 3,146 | 1,794 | 5,179 | 8,043 | 15,400 |
Gold sold (koz) | 47.62 | 35.90 | 79.79 | 141.20 | 240.04 |
Total production includes 100% of all production, including production attributable to Hochschild's joint venture partner at San Jose.
ATTRIBUTABLE GROUP PRODUCTION
| Q3 2020 | Q2 2020 | Q3 2019 | YTD 2020 | YTD 2019 |
Silver production (koz) | 2,514 | 1,124 | 4,341 | 6,621 | 13,028 |
Gold production (koz) | 39.20 | 19.65 | 67.80 | 118.3 | 205.87 |
Silver equivalent (koz) | 5,884 | 2,813 | 10,172 | 16,792 | 30,734 |
Gold equivalent (koz) | 68.42 | 32.71 | 118.28 | 195.26 | 357.37 |
Attributable production includes 100% of all production from Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product | Q3 2020 | Q2 2020 | Q3 2019 | YTD 2020 | YTD 2019 |
Ore production (tonnes treated) | 205,712 | 93,475 | 340,176 | 608,083 | 1,010,663 |
Average grade silver (g/t) | 156 | 166 | 157 | 155 | 157 |
Average grade gold (g/t) | 4.29 | 4.62 | 4.53 | 4.38 | 4.59 |
Silver produced (koz) | 873 | 377 | 1,437 | 2,641 | 4,388 |
Gold produced (koz) | 26.58 | 12.60 | 46.76 | 85.62 | 145.36 |
Silver equivalent (koz) | 3,159 | 1,461 | 5,458 | 10,005 | 16,889 |
Gold equivalent (koz) | 36.73 | 16.98 | 63.47 | 116.34 | 196.38 |
Silver sold (koz) | 858 | 579 | 1,435 | 2,616 | 4,376 |
Gold sold (koz) | 26.17 | 19.76 | 46.94 | 85.65 | 144.43 |
As previously announced, Inmaculada was temporarily halted for a second time in early July 2020 due to a number of cases of Covid-19 with a reduced workforce performing care and maintenance activities. The operation restarted on 28 July and reached full production during the first week of September. Mine development work was also affected by the two stoppages with the impact currently being assessed.
Third quarter production was 26,577 ounces of gold and 0.9 million ounces of silver which amounts to a gold equivalent output of 36,732 ounces. Grades were lower due to the impact of the stoppage but have moved towards more normal levels in the last month. Year-to-date, Inmaculada's output is 116,336 gold equivalent ounces (Q3 YTD 2019: 196,383 gold equivalent ounces).
Pallancata
Product | Q3 2020 | Q2 2020 | Q3 2019 | YTD 2020 | YTD 2019 |
Ore production (tonnes treated) | 144,417 | 46,234 | 237,474 | 333,157 | 709,768 |
Average grade silver (g/t) | 254 | 276 | 283 | 255 | 284 |
Average grade gold (g/t) | 0.88 | 0.98 | 1.04 | 0.91 | 1.02 |
Silver produced (koz) | 1,046 | 373 | 1,923 | 2,438 | 5,735 |
Gold produced (koz) | 3.63 | 1.30 | 6.91 | 8.55 | 20.36 |
Silver equivalent (koz) | 1,358 | 485 | 2,517 | 3,173 | 7,486 |
Gold equivalent (koz) | 15.80 | 5.64 | 29.27 | 36.90 | 87.04 |
Silver sold (koz) | 1,096 | 310 | 1,891 | 2,367 | 5,659 |
Gold sold (koz) | 3.83 | 1.08 | 6.78 | 8.24 | 19.98 |
In Q3, Pallancata produced 1.0 million ounces of silver and 3,633 ounces of gold bringing the silver equivalent total to 1.4 million. Following the production stoppage in the second quarter, tonnage was higher and grades decreased in line with the revised mine plan. Overall in the first nine months of the year, Pallancata has produced 3.2 million silver equivalent ounces (Q3 2019 YTD: 7.5 million ounces).
San Jose (the Company has a 51% interest in San Jose)
Product | Q3 2020 | Q2 2020 | Q3 2019 | YTD 2020 | YTD 2019 |
Ore production (tonnes treated) | 128,789 | 77,491 | 146,921 | 291,183 | 398,675 |
Average grade silver (g/t) | 313 | 329 | 456 | 362 | 450 |
Average grade gold (g/t) | 4.72 | 5.04 | 6.58 | 5.64 | 6.78 |
Silver produced (koz) | 1,165 | 732 | 1,925 | 3,024 | 5,087 |
Gold produced (koz) | 17.62 | 11.27 | 27.70 | 47.24 | 76.84 |
Silver equivalent (koz) | 2,680 | 1,701 | 4,307 | 7,086 | 11,695 |
Gold equivalent (koz) | 31.17 | 19.78 | 50.08 | 82.40 | 135.99 |
Silver sold (koz) | 1,192 | 904 | 1,852 | 3,060 | 5,041 |
Gold sold (koz) | 17.62 | 15.05 | 26.08 | 47.31 | 74.97 |
The San Jose mine was again in a ramp-up phase in the third quarter as the ongoing countrywide restrictions on the movement of people resulted in the ramp-up being phased over a significant period of time with full production expected towards the end of the year. The restrictions have also resulted in a revised mine plan and resulting lower grades with production in the period of 1.2 million ounces of silver and 17,618 ounces of gold which makes 2.7 million silver equivalent ounces. This therefore amounts to a nine month total of 7.1 million silver equivalent ounces (Q3 2019 YTD: 11.7 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q3 2020 (which are reported before the deduction of commercial discounts) were $1,958/ounce for gold and $27.2/ounce for silver (Q3 2019: $1,510/ounce for gold and $18.4/ounce for silver). For the first nine months of 2020, average realisable precious metal prices were $1,788/ounce for gold and $20.5/ounce for silver (Q3 YTD 2019: $1,389/ounce for gold and $16.2/ounce for silver).
Brownfield exploration
Inmaculada
In Q3 2020, 11,379m of potential drilling were carried out. Selected results are below:
Vein | Results (resource drilling) |
Brenda | SP-20-0168: 1.4m @ 1.1g/t Au & 438g/t Ag SP-20-0300: 2.1m @ 13.5g/t Au & 760g/t Ag SP-20-0302: 3.7m @ 13.3g/t Au & 1,255g/t Ag |
Perla | SBE-20-034: 1.4m @ 5.1g/t Au & 467g/t Ag SBE-20-035: 1.4m @ 3.0g/t Au & 286g/t Ag |
Techo Lourdes | TLO-20-006: 2.4m @ 1.8g/t Au & 108g/t Ag TLO-20-011: 2.1m @ 4.2g/t Au & 117g/t Ag |
Lucrecia | SBE-20-034: 1.2m @ 7.3g/t Au & 1,903g/t Ag SBE-20-038: 1.3m @ 7.2g/t Au & 45g/t Ag |
Shakira | IMS-20-020: 2.9m @ 2.2g/t Au & 159g/t Ag IMS-20-032: 6.2m @ 2.5g/t Au & 287g/t Ag HUA-20-017: 1.1m @ 20.5g/t Au & 41g/t Ag |
Salvador piso | SBE-20-031: 2.0m @ 2.3g/t Au & 91g/t Ag SBE-20-039: 4.5m @ 1.5g/t Au & 138g/t Ag |
Nancy | HUA-20-017: 2.8m @ 14.3g/t Au & 87g/t Ag |
During Q4, the programme will focus on drilling 15,000m to incorporate new resources from the Shakira, Perla, Brenda, Tensional Lourdes and Nancy veins.
Pallancata
In Pallancata, 11,540m of potential were drilled targeting the continuation of the Pallancata main vein as well as the Farallón Royropata vein. In addition, long hole drilling has intercepted a new vein, located 350m south from the Pablo vein exploration area.
Vein | Results (potential drilling) |
New vein | DLER-A27: 2.0m @ 4.4g/t Au & 478g/t Ag |
In Q3, the plan is to execute 1,500m of potential drilling in the new vein and the continuity of the Pallancata vein. In addition, 2,683m of potential drilling is scheduled at the Palca zone.
San Jose
At San Jose, 6,125m of potential drilling were executed towards the Erika, Brecha Saavedra, Sigmoide Luli, Emilia, Salvador, Micaela Oeste and Cindy veins. Selected results below:
Vein | Results (potential drilling) |
Isabel | SJD-2145: 0.8m @ 1.7g/t Au & 449g/t Ag |
Horiz.Savedra | SJD-2154: 2.4m @ 4.9g/t Au & 19g/t Ag |
Emilia | SJM-511: 0.9m @ 1.8g/t Au & 248g/t Ag |
Cindy | SJM-518: 1.2m @ 3.8g/t Au & 407g/t Ag |
HVS | SJD-2140: 3.4m @ 10.0g/t Au & 523g/t Ag |
Kospi | SJD-2129: 1.4m @ 6.2g/t Au & 1,309g/t Ag |
Odin | SJM-505: 2.6m @ 11.0g/t Au & 968g/t Ag |
Sig. Luli | SJM-507: 1.1m @ 14.9g/t Au & 295g/t Ag SJM-508: 1.5m @ 2.4g/t Au & 248g/t Ag |
During Q4, the plan is to carry out 5,000m of drilling in the Aguas Vivas, Rosalía, Telken, and Cindy veins.
Crespo
2020 Q4 Drilling Plan
The new Crespo drilling programme has started with the plan being to carry out 6,000m of diamond drilling as well as 1,500m of drilling in the colluvial deposits.
Financial position
Total cash was approximately $196 million as at 30 September 2020 resulting in net debt of approximately $21 million.
____________________________________________________________________________________
Enquiries:
Hochschild Mining PLC
Charles Gordon +44 (0)20 3709 3264
Head of Investor Relations
Hudson Sandler
Charlie Jack +44 (0)207 796 4133
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.
LEI: 549300JK10TVQ3CCJQ89
- ends -
1All equivalent figures assume a gold/silver ratio of 86x
2Group production figures for 2019 include 394,000 silver equivalent ounces from the Arcata operation which was placed on care and maintenance in February 2019.
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