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Company Hochschild Mining PLC
TIDM HOC
Headline Q3 2019 Production Report
Released 07:00 23-Oct-2019
Number 7789Q07

RNS Number : 7789Q
Hochschild Mining PLC
23 October 2019
 

 

_____________________________________________________________________________________

 

23 October 2019

Production Report for the 9 months ended 30 September 2019

 

Ignacio Bustamante, Chief Executive Officer said:

"Hochschild has delivered another strong quarter of output including robust contributions at all three of our mines and we remain on track to meet our annual production and cost targets. Commodity prices have been favourable in Q3 and combined with the consistent operational delivery we have been able to reduce leverage further and ended the quarter with net debt of $30m. We have also seen encouraging brownfield results particularly at Inmaculada where drilling has continued to upgrade the quality and quantity of recent discoveries. We remain confident for the future and are excited by the acquisition of the low-risk Biolantanidos rare earth deposit in Chile which adds diversified optionality to our portfolio although we will retain our core focus on precious metals."

Operational highlights

§ Another strong quarter of attributable production[1]

67,797 ounces of gold

4.3 million ounces of silver

121,395 gold equivalent ounces

9.8 million silver equivalent ounces

§ Solid year-to-date operational performance

205,875 ounces of gold

13.0 million ounces of silver

366,721 gold equivalent ounces

29.7 million silver equivalent ounces

§ On track to deliver overall 2019 production target of 457,000 gold equivalent ounces (37.0 million silver equivalent ounces)

§ 2019 all-in sustaining costs on track to meet $960-$1,000 per gold equivalent ounce guidance ($11.8-12.3 per silver equivalent ounce)

Exploration highlights

§ Several new veins discovered to the west of Angela at Inmaculada adding further resources

§ Inmaculada infill drilling increasing Millet vein resource grade by 27%

§ Drilling ongoing at Palca zone

Strong financial position

§ Total cash of approximately $123 million as at 30 September 2019 ($95 million as at 30 June 2019)[2]

§ Net debt of approximately $30 million as at 30 September 2019 ($61 million as at 30 June 2019)

§ Net Debt/LTM EBITDA of approximately 0.10x as at 30 September 2019

________________________________________________________________________________________

A conference call will be held at 2.30pm (London time) on Wednesday 23 October 2019 for analysts and investors. 

Dial in details as follows:

International Dial in: +44 333 300 0804

UK Toll-Free Number: 0800 358 9473

Pin: 69534171#

 

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

International: +44 333 300 0819

UK Toll Free: 0800 358 2049

Pin: 301300042#

________________________________________________________________________________________

 

 

Overview

Hochschild's strong 2019 continued with third quarter attributable production of 121,395 gold equivalent ounces or 9.8 million silver equivalent ounces. This was driven by solid delivery from all of the Company's operating mines especially San Jose. Overall year-to-date production is 366,721 gold equivalent ounces or 29.7 million silver equivalent ounces, the second highest nine month total in the Company's history. The Company is firmly on track to meet its full year production forecast of 457,000 gold equivalent ounces or 37.0 million silver equivalent ounces with the 2019 mine plan scheduling a relative reduction in production in the fourth quarter.

 

The Company reiterates that its all-in sustaining cost for 2019 is on track to be in line with the guidance of $960-$1,000 per gold equivalent ounce ($11.8-12.3 per silver equivalent ounce).

 

TOTAL GROUP PRODUCTION

 

Q3 2019

Q2 2019

Q3 2018

YTD 2019

YTD 2018

Silver production (koz)

5,284

5,166

5,794

15,521

16,929

Gold production (koz)

81.37

84.18

74.20

243.53

234.67

Total silver equivalent (koz)

11,876

11,984

11,804

35,247

35,937

Total gold equivalent (koz)

146.61

147.95

145.73

435.15

443.67

Silver sold (koz)

5,179

5,189

5,845

15,400

16,912

Gold sold (koz)

79.79

84.05

74.27

240.04

232.29

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

                                                        

ATTRIBUTABLE GROUP PRODUCTION

 

Q3 2019

Q2 2019

Q3 2018

YTD 2019

YTD 2018

Silver production (koz)

4,341

4,317

5,051

13,028

14,725

Gold production (koz)

67.80

70.66

62.43

205.87

199.94

Silver equivalent (koz)

9,833

10,041

10,108

29,704

30,920

Gold equivalent (koz)

121.40

123.96

124.79

366.72

381.73

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

 

Production

Inmaculada

Product

Q3 2019

Q2 2019

Q3 2018

YTD 2019

YTD 2018

Ore production (tonnes treated)

340,176

339,098

332,411

1,010,663

1,003,124

Average grade silver (g/t)

157

170

138

157

148

Average grade gold (g/t)

4.53

4.85

3.96

4.59

4.38

Silver produced (koz)

1,437

       1,503

1,320

4,388

4,435

Gold produced (koz)

       46.76

49.75

       40.13

           145.36

           136.46

Silver equivalent (koz)

5,224

5,533

4,570

16,162

15,488

Gold equivalent (koz)

64.50

74.77

56.42

199.53

191.21

Silver sold (koz)

1,435

1,500

1,317

4,376

4,425

Gold sold (koz)

46.94

49.41

39.77

144.43

135.12

 

Inmaculada's third quarter production was 46,756 ounces of gold and 1.4 million ounces of silver which amounts to a gold equivalent output of 64,499 ounces. Grades moderated in Q3 in line with the mine plan after a better than expected Q2 although tonnage remained consistent. Year-to-date, Inmaculada's output is a record 199,532 gold equivalent ounces, a 4% improvement on the first 9 months of 2018 (Q3 YTD 2018: 191,206 gold equivalent ounces), driven by better than expected grades in the first half of the year and a contribution from products in process from Q4 2018. 

 

 

 

Pallancata

Product

Q3 2019

Q2 2019

Q3 2018

YTD 2019

YTD 2018

Ore production (tonnes treated)

237,474

240,705

201,009

709,768

486,577

Average grade silver (g/t)

          283

          282

          362

284

384

Average grade gold (g/t)

1.04

1.01

1.29

1.02

1.39

Silver produced (koz)

1,923

1,931

2,086

5,735

5,364

Gold produced (koz)

6.91

6.84

7.34

20.36

19.20

Silver equivalent (koz)

       2,483

       2,485

       2,680

7,384

6,919

Gold equivalent (koz)

       30.65

30.68

       33.09

91.16

85.42

Silver sold (koz)

1,891

1,891

2,090

5,659

5,346

Gold sold (koz)

6.78

6.62

7.30

19.98

18.88

 

Pallancata produced 1.9 million ounces of silver and 6,912 ounces of gold bringing the silver equivalent total to 2.5 million ounces in Q3 with tonnage and grades in line with the previous quarter. Overall in the first nine months of the year, Pallancata has delivered 7.4 million silver equivalent ounces (Q3 2018 YTD: 6.9 million ounces) with the improvement on the corresponding period of 2018 reflecting production from the wider but lower grade Pablo vein.

 

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

Product

Q3 2019

Q2 2019

Q3 2018

YTD 2019

YTD 2018

Ore production (tonnes treated)

146,921

141,621

144,852

398,675

409,193

Average grade silver (g/t)

456

436

376

450

396

Average grade gold (g/t)

6.58

6.89

5.93

6.78

6.20

Silver produced (koz)

1,925

1,731

1,517

5,087

4,499

Gold produced (koz)

27.70

27.59

24.02

76.84

70.88

Silver equivalent (koz)

       4,169

       3,966

       3,462

11,311

10.307

Gold equivalent (koz)

       51.46

48.96

       42.74

139.64

127.25

Silver sold (koz)

1,852

1,785

1,573

5,041

4,527

Gold sold (koz)

26.08

28.18

24.66

74.97

70.66

 

The San Jose mine again delivered a good quarter with tonnage in line with expectations and slightly better than forecast gold and silver recoveries resulting in production of 1.9 million ounces of silver and 27,704 ounces of gold which makes 4.2 million silver equivalent ounces. This therefore amounts to a nine month total of 11.3 million silver equivalent ounces, ahead of the same period of 2018 (Q3 2018 YTD: 10.3 million ounces) due to better than expected grades.

 

Arcata

Product

Q3 2019

Q2 2019

Q3 2018

YTD 2019

YTD 2018

Ore production (tonnes treated)

-

-

93,381

37,049

281,903

Average grade silver (g/t)

-

-

327

298

326

Average grade gold (g/t)

-

-

1.01

0.94

1.01

Silver produced (koz)

-

-

          872

311

2,632

Gold produced (koz)

-

-

2.72

0.97

8.14

Silver equivalent (koz)

-

-

1,092

390

3,291

Gold equivalent (koz)

-

-

13.48

4.81

40.63

Silver sold (koz)

-

-

866

323

2,614

Gold sold (koz)

-

-

2.55

0.66

7.63

 

The Arcata operation is currently on temporary care and maintenance. Production in the first nine months of 2019 was the same as Q1 at 0.5 million silver equivalent ounces.

 

Average realisable prices and sales

Average realisable precious metal prices in Q3 2019 (which are reported before the deduction of commercial discounts) were $1,510/ounce for gold and $18.4/ounce for silver (Q3 2018: $1,187/ounce for gold and $13.7/ounce for silver). For the first nine months of 2019, average realisable precious metal prices were $1,389/ounce for gold and $16.2/ounce for silver (Q3 YTD 2018: $1,270/ounce for gold and $15.3/ounce for silver).

 

 

Brownfield exploration

Inmaculada

In Q3 2019, 16,791m of further drilling was carried out focusing on the Susana Beatriz, Facundo, Salvador, Noelia and Pilar structures to the west of the Angela vein with the aim of incorporating additional resources. Drilling has also identified the north east extension of the Angela vein.

 

  Vein

Results (resource drilling)

Facundo

HUA-19-002: 1.1m @ 3.7g/t Au & 78g/t Ag

HUA-19-002: 5.2m @ 5.1g/t Au & 88g/t Ag

Noelia

HUA-19-005: 1.3m @ 2.7g/t Au & 109g/t Ag

ANE-19-020: 1.5m @ 16.8g/t Au & 1,843g/t Ag

ANE-19-021: 1.1m @ 3.3g/t Au & 101g/t Ag

IMM-19-017: 1.0m @ 1.1g/t Au & 73g/t Ag

IMM-19-025: 1.9m @ 13.6g/t Au & 682g/t Ag

HUA-19-005: 1.1m @ 12.2g/t Au & 300g/t Ag

Pilar

IMM-19-008: 1.5m @ 3.7g/t Au & 203g/t Ag

IMM-19-011: 3.1m @ 4.1g/t Au & 176g/t Ag

IMM-19-014: 5.8m @ 17.7g/t Au & 751g/t Ag

IMM-19-015: 1.4m @ 5.4g/t Au & 254g/t Ag

IMM-19-016: 1.0m @ 4.9g/t Au & 52g/t Ag

IMM-19-020: 1.1m @ 23.1g/t Au & 268g/t Ag

IMM-19-025: 1.6m @ 6.2g/t Au & 271g/t Ag

IMM-19-026: 1.8m @ 7.2g/t Au & 279g/t Ag

HUA-19-005: 1.3m @ 4.2g/t Au & 169g/t Ag

HUA-19-003: 1.4m @ 19.4g/t Au & 438g/t Ag

IMM-19-017: 2.1m @ 4.2g/t Au & 253g/t Ag

Rosa

ROS-19-001: 3.2m @ 3.5g/t Au & 43g/t Ag

ROS-19-002: 1.0m @ 2.5g/t Au & 122g/t Ag

Salvador

ANE-19-020: 1.6m @ 3.0g/t Au & 370g/t Ag

ANE-19-021: 1.4m @ 7.1g/t Au & 318g/t Ag

ANE-19-022: 3.0m @ 2.0g/t Au & 165g/t Ag

IMM-19-025: 1.2m @ 5.0g/t Au & 261g/t Ag

HUA-19-005: 2.2m @ 7.7g/t Au & 335g/t Ag

ANE-19-025: 1.2m @ 2.8g/t Au & 133g/t Ag

Susana Beatriz

ANE-19-020: 3.8m @ 4.3g/t Au & 340g/t Ag

ANE-19-021: 3.6m @ 3.1g/t Au & 142g/t Ag

ANE-19-022: 8.5m @ 3.6g/t Au & 188g/t Ag

ANE-19-023: 1.2m @ 3.3g/t Au & 372g/t Ag

ANE-19-025: 3.0m @ 5.6g/t Au & 386g/t Ag

HUA-19-005: 3.1m @ 8.6g/t Au & 333g/t Ag

IMM-19-011: 1.0m @ 13.0g/t Au & 553g/t Ag

IMM-19-017: 0.9m @ 4.0g/t Au & 263g/t Ag

IMM-19-024: 1.0m @ 1.3g/t Au & 31g/t Ag

Angela Sur

IMS-19-008: 1.2m @ 1.5g/t Au & 121g/t Ag

IMS-19-010: 1.5m @ 1.6g/t Au & 191g/t Ag

Angela extension

ANE-19-029: 1.3m @ 266.5g/t Au & 1,783g/t Ag

 

Results in Q3 from the ongoing programme at the Millet and Divina structures (discovered in 2018) are detailed below. Infill drilling across the entire known Millet vein has now increased the resource grade by 27% from the December 2018 figure of 338 silver equivalent grams per tonne to 429 grams per tonne. Total contained ounces have also risen from 34 to 37 million silver equivalent ounces whilst tonnage has reduced allowing for more efficient, lower cost extraction. Vein width has decreased concentrating the resource in an average of 5.4m.

 

For Q4, the Inmaculada drilling programme will include 4,500m of resource drilling in the Facundo, Salvador, Susana Beatriz, Pilar and Noelia structures as well as on the Angela extension. In addition, a further 1,300m will be drilled as part of the infill programme in the Divina vein and 15,000m in the Millet structure with further updates expected at the end of the fourth quarter.

 

 

Vein

Results (infill drilling)

Millet

MIL-19-043: 12.5m @ 3.8g/t Au & 394g/t Ag

MIL-19-044: 2.4m @ 6.5g/t Au & 720g/t Ag

MIL-19-045: 10.5m @ 7.8g/t Au & 622g/t Ag

MIL-19-046: 14.0m @ 3.8g/t Au & 44g/t Ag

MIL-19-047: 12.5m @ 4.9g/t Au & 311g/t Ag

MIL-19-048: 3.2m @ 9.8g/t Au & 374g/t Ag

MIL-19-049: 1.4m @ 4.0g/t Au & 188g/t Ag

Divina

DIV-19-027: 6.8m @ 6.3g/t Au & 347g/t Ag

DIV-19-029: 0.8m @ 5.0g/t Au & 406g/t Ag

DIV-19-030: 8.4m @ 1.4g/t Au & 72g/t Ag

DIV-19-031: 3.4m @ 1.7g/t Au & 72g/t Ag

DIV-19-032: 4.2m @ 3.6g/t Au & 104g/t Ag

DIV-19-033: 1.0m @ 7.5g/t Au & 153g/t Ag

DIV-19-034: 7.4m @ 4.1g/t Au & 96g/t Ag

 

Pallancata

In Pallancata, 2,649m of potential resources were drilled using horizontal long drill holes from underground towards the Pablo, Marco and Alizze veins close to current operations with results below:

 

Vein

Results (potential drilling)

Ramal Mariana

DLMA-A27: 0.7m @ 1.0g/t Au & 172g/t Ag

Marco

DLMARC-A03: 0.8m @ 0.7g/t Au & 297g/t Ag

DLMARC-A05: 1.0m @ 0.7g/t Au & 245g/t Ag

DLMARC-A06: 1.2m @ 1.0g/t Au & 331g/t Ag

DLMARC-A07: 1.7m @ 1.0g/t Au & 381g/t Ag

DLMARC-A10: 1.1m @ 0.5g/t Au & 161g/t Ag

Pedro

DLEP-A43: 0.7m @ 1.4g/t Au & 283g/t Ag

DLEP-A44: 1.2m @ 1.7g/t Au & 485g/t Ag

Ramal Pablo

DLEP-A43: 3.7m @ 1.9g/t Au & 111g/t Ag

 

During Q4, the programme will focus on the extension of the Marco structure with 8,500m of drilling to look for potential and also to incorporate inferred resources. A Titan geophysical programme is also set to commence in Q4 to define targets for the 2020 programme.

 

Drilling permits for planned programmes at Pablo Sur and Cochaloma have been made subject to prior consultation with local communities and therefore the campaigns are now expected to commence in the first quarter of 2020.

 

Palca

In Q3, potential resource drilling continued at the Palca zone, with 6,874m of drilling in the Roxana, Santa Beatriz, Prometida, Alejandra, Escondida and Kimberly structures testing continuity to a depth of 300m. Key results were:

 

Vein

Results (potential drilling)

Escondida

PLC-195-025: 1.9m @ 4.7g/t Au & 33g/t Ag

PLC-195-027: 2.8m @ 7.7g/t Au & 72g/t Ag

PLC-195-033 1.7m @ 2.5g/t Au & 202g/t Ag

Prometida South

PLC-195-006 4.1m @ 3.7g/t Au & 26g/t Ag

PLC-195-031 3.7m @ 1.3g/t Au & 13g/t Ag

 

The brownfield team is continuing with efforts to interpret the geology of the Palca zone including the optimum levels of mineralisation and the orientation of the vein structures. The next drilling campaign is scheduled for the first quarter of 2020.

 

San Jose

In Q3, just over 5,000m of potential and inferred resource drilling was carried out with the majority concentrating on an area including the Kospi, Kospi South East, Ramal Huevos Verdes and the new Milagro structures. The team has also started executing an 1,800m long drill hole to the west of Huevos Verdes. The remainder of exploration work was at Aguas Vivas.

 

Vein

Results (potential drilling)

Roma

SJD-1963: 1.0m @ 2.0g/t Au & 228g/t Ag

Kospi SE

SJD-1980: 0.9m @ 7.1g/t Au & 467g/t Ag

Kospi SE 02

SJD-1980: 0.5m @ 46g/t Au & 11,416g/t Ag

Kospi

SJM-432: 2.5m @ 4.8g/t Au & 502g/t Ag

RHVN K

SJM-433: 2.0m @ 3.3g/t Au & 155g/t Ag

RHVN D

SJM-433: 1.1m @ 30.4g/t Au & 1,991g/t Ag

RMLHVND

SJM-434: 1.0m @ 2.7g/t Au & 266g/t Ag

Milagro

SJD-2001: 1.0m @ 6.3g/t Au & 355g/t Ag

 

During Q4, the programme will focus on extensions to San Jose structures including the Tonio target from Goldspot technology, the extension of Cerro Negro structures (Telken) into the San Jose property to the south and further work on Aguas Vivas.

 

 

 

Corina

At Corina, drilling in Q3 has confirmed promising mineralisation within two sub-parallel structures, Corina and Micky. Drill results are included below and do not necessarily represent true widths.

 

Drillhole

From (m)

To (m)

Width (m)

g/t Au

g/t Ag

COR19001

201.55

204.75

3.20

1.13

24.00

including

203.40

204.75

1.35

1.80

31.00

COR19001

218.80

228.20

9.40

0.43

7.11

COR19002

253.15

254.45

1.30

0.43

4.40

COR19002

330.20

348.50

18.30

0.26

1.35

COR19003

142.85

146.85

4.00

0.28

1.57

219.80

221.00

1.20

0.46

67.40

COR19004

152.00

156.85

4.85

0.07

0.78

265.00

266.35

1.35

0.61

9.00

COR19005

91.10

94.60

3.50

8.97

32.00

including

92.10

93.65

1.55

15.90

47.00

COR19005

117.90

122.90

5.00

0.60

4.99

COR19005

160.80

162.80

2.00

1.18

2.90

COR19006

209.60

211.10

1.50

1.71

7.65

including

210.70

211.10

0.40

2.89

7.90

COR19006

284.85

287.10

2.25

0.27

0.87

COR19007

126.40

142.10

15.70

4.56

53.69

including

132.30

135.00

2.70

15.94

207.20

and

132.30

133.70

1.40

19.55

290.00

COR19007

184.60

189.20

4.60

1.10

27.64

COR19007

200.75

201.75

1.00

1.32

14.50

COR19008

209.40

211.00

1.60

0.52

2.05

COR19008

220.80

223.00

2.20

3.20

25.66

including

220.80

221.80

1.00

5.73

51.00

COR19009

144.80

149.00

4.20

0.82

6.71

COR19009

152.50

157.60

5.10

1.05

14.19

including

156.50

157.00

0.50

2.63

53.70

COR19009

160.40

165.40

5.00

1.08

6.98

including

164.50

165.40

0.90

1.86

2.40

COR19010

189.10

202.60

13.50

6.15

31.10

including

195.10

198.10

3.00

16.08

82.60

COR19010

206.90

210.60

3.70

7.66

17.66

including

207.90

208.90

1.00

17.35

126.00

COR19010

222.65

230.30

7.65

4.08

37.39

including

222.65

228.40

5.75

4.95

45.85

including

224.45

224.95

0.50

8.14

77.60

 

Financial position

Total cash was approximately $123 million as at 30 September 2019 resulting in net debt of approximately $30 million. 

 

On 1 July 2019, the Group signed two short term loans of $50 million each with Scotiabank Peru, with an interest rate of 2.00%. The proceeds were used to repay the two loans of $50 million each with the same institution.  In addition, also on 1 July 2019, the Company signed a short term loan of $50 million with Banco de Credito del Peru with an annual interest rate of 2.06% with the proceeds employed to repay the loan of $50 million with BBVA Bank.

 

On 2 October 2019, the Company announced that it was acquiring 93.8% of the Biolantanidos rare earth deposit in Chile that it did not already own for a consideration of $56.3 million, which was financed from existing cash resources.

____________________________________________________________________________________

 

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

_____________________________________________________________________________________

 

 

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.

 

This announcement contains information which prior to its release could be considered inside information.

 

LEI: 549300JK10TVQ3CCJQ89

 

 

- ends -

 

[1]All equivalent figures assume a gold/silver ratio of 81x

[2]The cash position is disclosed prior to payment in early October 2019 of $56.3 million for the previously announced acquisition of 93.8% of the Biolantanidos rare earth deposit in Chile


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