Q2 2019 Production Report

 

 

 

 

 

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18 July 2019

 

Production Report for the 6 months ended 30 June 2019

 

Ignacio Bustamante, Chief Executive Officer said:

"Hochschild has continued its strong operational performance in the second quarter of 2019, with year-on-year increases at all three of our mines, resulting in our second strongest half of production on record. Consequently we remain firmly on track to meet our annual production and cost targets.

 

Our 2019 brownfield exploration season has continued this quarter with campaigns ongoing at our existing mines as well as a new programme starting at the Palca zone to the south of Pallancata where early results have already found mineralisation. At Inmaculada, we have discovered several new veins from a new zone to the west of the Angela vein and infill drilling is also ongoing with the aim of complementing the results from 2018. In Q3, we can look forward to drilling at the nearby Cochaloma and Pablo Sur zones along with a new campaign at the recently permitted Corina area to the north of Selene."

Operational highlights

§ Another solid quarter of attributable production^[1]

o  70,659 ounces of gold

o  4.3 million ounces of silver

o  123,959 gold equivalent ounces

o  10.0 million silver equivalent ounces

§ 2^nd highest half of attributable production in Hochschild's history

o  138,078 ounces of gold

o  8.7 million ounces of silver

o  245,325 gold equivalent ounces

o  19.9 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

§ Infill drilling ongoing at Inmaculada

§ Drilling started at Palca zone

§ New programmes set to begin in H2 at Cochaloma, Pablo Sur and Corina

Strong financial position

§ Total cash of approximately $95 million as at 30 June 2019 ($80 million as at 31 December 2018)

§ Net debt of approximately $61 million as at 30 June 2019 ($77 million as at 31 December 2018)

§ Net Debt/LTM EBITDA of approximately 0.23x as at 30 June 2019

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A conference call will be held at 2.30pm (London time) on Thursday 18 July 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: 11841575#

 

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: 301291996#

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Overview

Hochschild's strong start to 2019 continued with second quarter attributable production of 123,959 gold equivalent ounces or 10.0 million silver equivalent ounces. This was due to solid delivery from all of the Company's mines especially Inmaculada. For the half as a whole, Hochschild produced 245,325 gold equivalent ounces or 19.9 million silver equivalent ounces, the second highest in the Company's history.

 

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

	Q2 2019	Q1 2019	Q2 2018	H1 2019	H1 2018
Silver production (koz)	5,166	5,071	5,781	10,237	11,135
Gold production (koz)	84.18	77.98	80.62	162.16	160.47
Total silver equivalent (koz)	11,984	11,387	12,311	23,371	24,133
Total gold equivalent (koz)	147.95	140.58	151.98	288.53	297.94
Silver sold (koz)	5,189	5,032	5,785	10,221	11,067
Gold sold (koz)	84.05	76.19	81.10	160.25	158.01

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

                                                        

ATTRIBUTABLE GROUP PRODUCTION

	Q2 2019	Q1 2019	Q2 2018	H1 2019	H1 2018
Silver production (koz)	4,317	4,370	5,012	8,687	9,674
Gold production (koz)	70.66	67.42	68.48	138.08	137.51
Silver equivalent (koz)	10,041	9,831	10,558	19,871	20,812
Gold equivalent (koz)	123.96	121.37	130.35	245.33	256.94

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

 

Production

Inmaculada

Product	Q2 2019	Q1 2019	Q2 2018	H1 2019	H1 2018
Ore production (tonnes treated)	339,098	331,390	333,207	670,487	670,713
Average grade silver (g/t)	170	144	148	157	153
Average grade gold (g/t)	4.85	4.38	4.57	4.62	4.58
Silver produced (koz)	1,503	1,447	1,445	2,950	3,115
Gold produced (koz)	49.75	48.86	46.55	98.61	96.33
Silver equivalent (koz)	5,533	5,405	5,215	10,938	10,918
Gold equivalent (koz)	74.77	66.72	70.48	135.03	134.79
Silver sold (koz)	1,500	1,441	1,517	2,942	3,108
Gold sold (koz)	49.41	48.08	48.41	97.48	95.35

 

Inmaculada's second quarter production was 49,751 ounces of gold and 1.5 million ounces of silver which amounts to a gold equivalent output of 74,770 ounces and was principally driven by higher than expected gold and silver grades offset by lower silver recoveries. Overall in the first half of 2019, Inmaculada produced 135,033 gold equivalent ounces, in line with the same period of 2018 (134,789 gold equivalent ounces), with the solid result reflecting steady tonnage, strong grades and a contribution from products in process from Q4 2018. 

 

 

 

Pallancata

Product	Q2 2019	Q1 2019	Q2 2018	H1 2019	H1 2018
Ore production (tonnes treated)	240,705	231,589	157,434	472,294	285,568
Average grade silver (g/t)	282	285	411	284	399
Average grade gold (g/t)	1.01	1.01	1.47	1.01	1.47
Silver produced (koz)	1,931	1,881	1,866	3,812	3,278
Gold produced (koz)	6.84	6.61	6.57	13.44	11.86
Silver equivalent (koz)	2,485	2,416	2,398	4,901	4,238
Gold equivalent (koz)	30.68	29.83	29.60	60.51	52.33
Silver sold (koz)	1,891	1,877	1,855	3,768	3,256
Gold sold (koz)	6.62	6.58	6.48	13.20	11.58

 

Pallancata produced 1.9 million ounces of silver and 6,838 ounces of gold bringing the silver equivalent total to 2.5 million ounces in Q2. Tonnage was slightly higher in the period versus Q1 2019 although grades were in line. Overall in H1 2019, Pallancata's output was 4.9 million silver equivalent ounces, a 16% improvement on the corresponding period of 2018 (H1 2018: 4.2 million ounces), reflecting production from the wider but lower grade Pablo vein.

 

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

Product	Q2 2019	Q1 2019	Q2 2018	H1 2019	H1 2018
Ore production (tonnes treated)	141,621	110,132	142,452	251,753	264,341
Average grade silver (g/t)	436	460	400	446	407
Average grade gold (g/t)	6.89	6.90	6.26	6.89	6.34
Silver produced (koz)	1,731	1,431	1,570	3,162	2,982
Gold produced (koz)	27.59	21.55	24.77	49.14	46.86
Silver equivalent (koz)	3,966	3,177	3,577	7,143	6,778
Gold equivalent (koz)	48.96	39.22	44.15	88.18	83.68
Silver sold (koz)	1,785	1,405	1,521	3,189	2,955
Gold sold (koz)	28.18	20.71	23.66	48.89	46.00

 

The San Jose mine again delivered a steady quarter with tonnage as expected and slightly higher than expected gold and silver grades resulting in production of 1.7 million ounces of silver and 27,588 ounces of gold which makes 4.0 million silver equivalent ounces. This therefore amounts to a first half total of 7.1 million silver equivalent ounces, ahead of the same period of 2018 (H1 2018: 6.8 million ounces) due to better than expected grades.

 

Arcata

Product	Q2 2019	Q1 2019	Q2 2018	H1 2019	H1 2018
Ore production (tonnes treated)	-	37,049	97,347	37,049	188,522
Average grade silver (g/t)	-	298	322	298	326
Average grade gold (g/t)	-	0.94	0.98	0.94	1.01
Silver produced (koz)	-	311	900	311	1,760
Gold produced (koz)	-	0.97	2.73	0.97	5.42
Silver equivalent (koz)	-	390	1,121	390	2,199
Gold equivalent (koz)	-	4.81	13.84	4.81	27.15
Silver sold (koz)	-	309	893	309	1,748
Gold sold (koz)	-	0.82	2.56	0.82	5.08

 

On 13 February 2019, Hochschild announced its intention to suspend operations at Arcata and place it on care and maintenance. There was consequently no output in Q2, so production in the first half was the same as Q1 at 0.5 million silver equivalent ounces.

 

Average realisable prices and sales

Average realisable precious metal prices in Q2 2019 (which are reported before the deduction of commercial discounts) were $1,346/ounce for gold and $14.8/ounce for silver (Q2 2018: $1,270/ounce for gold and $16.3/ounce for silver). For H1 2019, average realisable precious metal prices were $1,329/ounce for gold and $15.0/ounce for silver (H1 2018: $1,309/ounce for gold and $16.2/ounce for silver).

 

 

Brownfield exploration

Inmaculada

In Q2 2019, 6,684m of potential drilling and 7,968m of resource drilling was carried out focusing on the newly-discovered Susana Beatriz, Facundo and Salvador structures to the west of the Angela vein.

 

Vein	Results (potential drilling)
Salvador	ANG-19-012: 2.1m @ 41.0g/t Au & 480g/t Ag
Susana Beatriz	ANE-19-010: 4.2m @ 2.9g/t Au & 280g/t Ag IMM-19-001: 1.5m @ 8.1g/t Au & 114g/t Ag IMM-19-002: 2.5m @ 2.5g/t Au & 105g/t Ag
Lady	IMS-19-003: 1.1m @ 6.3g/t Au & 58g/t Ag
Facundo	HUA-19-001: 3.1m @ 6.0g/t Au & 136g/t Ag
M.Mamani	MM-19-001: 1.0m @ 2.2g/t Au & 155g/t Ag

 

Vein	Results (resource drilling)
Salvador	ANE-19-010: 0.8m @ 16.7g/t Au & 349g/t Ag ANE-19-011: 0.8m @ 20.7g/t Au & 667g/t Ag ANE-19-013: 0.8m @ 5.9g/t Au & 399g/t Ag IMM-19-001: 1.1m @ 31.9g/t Au & 5,053g/t Ag IMM-19-007: 0.6m @ 3.6g/t Au & 98g/t Ag

 

Results to date from the ongoing infill drilling programme at Millet are below:

 

Vein

Results (infill drilling)

Millet

MIL-19-001: 0.9m @ 1.7g/t Au & 80g/t Ag MIL-19-002: 4.5m @ 2.6g/t Au & 204g/t Ag MIL-19-003: 2.8m @ 3.6g/t Au & 153g/t Ag MIL-19-004: 1.3m @ 0.9g/t Au & 42g/t Ag MIL-19-005: 0.9m @ 3.2g/t Au & 25g/t Ag MIL-19-006: 4.2m @ 0.8g/t Au & 67g/t Ag MIL-19-007: 2.7m @ 7.0g/t Au & 129g/t Ag MIL-19-008: 1.5m @ 2.5g/t Au & 139g/t Ag MIL-19-009: 2.0m @ 4.8g/t Au & 557g/t Ag MIL-19-010: 5.0m @ 3.3g/t Au & 104g/t Ag MIL-19-011: 0.9m @ 2.0g/t Au & 37g/t Ag MIL-19-012: 6.8m @ 2.4g/t Au & 81g/t Ag MIL-19-013: 1.2m @ 1.3g/t Au & 8g/t Ag MIL-19-014: 2.0m @ 3.8g/t Au & 342g/t Ag MIL-19-015: 1.2m @ 0.9g/t Au & 97g/t Ag MIL-19-016: 5.9m @ 1.9g/t Au & 88g/t Ag MIL-19-017: 1.4m @ 2.0g/t Au & 344g/t Ag MIL-19-018: 1.2m @ 1.4g/t Au & 30g/t Ag MIL-19-019: 4.6m @ 1.3g/t Au & 67g/t Ag MIL-19-020: 1.2m @ 0.2g/t Au & 52g/t Ag MIL-19-021: 2.6m @ 9.4g/t Au & 184g/t Ag MIL-19-022: 4.0m @ 1.2g/t Au & 61g/t Ag MIL-19-023: 3.5m @ 3.1g/t Au & 208g/t Ag MIL-19-024: 1.0m @ 2.8g/t Au & 213g/t Ag MIL-19-025: 5.8m @ 2.9g/t Au & 174g/t Ag MIL-19-026: 6.2m @ 2.1g/t Au & 167g/t Ag MIL-19-027: 5.1m @ 2.7g/t Au & 264g/t Ag MIL-19-028: 3.0m @ 2.7g/t Au & 162g/t Ag MIL-19-029: 4.0m @ 2.9g/t Au & 470g/t Ag MIL-19-030: 0.7m @ 1.4g/t Au & 67g/t Ag MIL-19-031: 2.3m @ 1.6g/t Au & 113g/t Ag MIL-19-032: 2.5m @ 1.7g/t Au & 133g/t Ag MIL-19-033: 3.3m @ 3.0g/t Au & 14g/t Ag MIL-19-034: 1.4m @ 0.7g/t Au & 41g/t Ag MIL-19-035: 3.0m @ 2.7g/t Au & 77g/t Ag MIL-19-036: 2.3m @ 2.1g/t Au & 71g/t Ag MIL-19-037: 2.8m @ 4.5g/t Au & 509g/t Ag MIL-19-038: 1.0m @ 1.0g/t Au & 93g/t Ag MIL-19-039: 0.8m @ 0.9g/t Au & 68g/t Ag MIL-19-040: 3.5m @ 3.0g/t Au & 111g/t Ag MIL-19-041: 0.6m @ 0.2g/t Au & 347g/t Ag

 

The drilling programme in Q3 will focus mainly on 7,000m of resource drilling with the main targets of the Susana Beatriz, Salvador, Facundo, Laidy and Rosy veins. It will also include 1,200m of potential drilling in the Rosy and Lady structures. In addition, infill drilling will continue at the Millet, Divina and other veins discovered in 2018.

 

Pallancata

In Pallancata, 817m of potential resources were drilled from the Mariel and Pablo veins with results pending from the Mariel target.

 

Vein	Results (potential drilling)
Pablo	DLEP-A49: 3.4m @ 1.4g/t Au & 553g/t Ag

 

Drilling in the Pablo Sur area is scheduled for Q3 along with the programme at Cochaloma to the south.

 

Palca

The Palca drilling programme started in late Q2 with potential resource drilling in the Roxana, Santa Beatriz and Prometida structures. Early results confirm mineralisation with 200m of depth. The key result was obtained from the Prometida vein.

 

Vein	Results (potential drilling)
Roxana	PLC-195-001: 1.8m @ 1.0g/t Au & 27g/t Ag PLC-195-004: 0.8m @ 1.0g/t Au & 33g/t Ag
Santa Beatriz	PLC-195-001: 1.2m @ 0.7g/t Au & 13g/t Ag
Prometida	PLC-195-006: 2.9m @ 5.0g/t Au & 32g/t Ag

 

For Q3, 3,810m of drilling is scheduled for the Blanca, Alejandra, Rafaela, Escondida, Escandalosa and Kimberly targets.

 

San Jose

During Q2, potential drilling was carried out at Aguas Vivas, the south-east Kospi projection and East and West Antonella.

 

Vein	Results (potential drilling)
Antonella	SJM-429: 3.9m @ 8.1g/t Au & 239/t Ag

 

During Q3, the programme will focus on the Antonella structure and on the south-east Kospi projection. Also, a magnetometry study will be performed on the extension of Cerro Negro structures covering a total area of 14.3km².

 

Arcata

At Arcata, a Titan geophysical programme and geological mapping for new targets has concluded and a drilling plan is scheduled for August 2019.

 

Corina

During the quarter, final permits were obtained for the drilling programme planned for the Corina zone, approximately 15km to the north east of the Selene plant. A 3,500m drilling campaign has recently commenced with results expected later in the quarter.

 

Financial position

Total cash was approximately $95 million as at 30 June 2019 resulting in net debt of approximately $61 million. 

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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.

 

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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