Q2 2020 Production Report

             

 

 

 

 

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15 July 2020

 

Production Report for the 6 months ended 30 June 2020

 

Ignacio Bustamante, Chief Executive Officer said:

"At such a difficult time for everyone globally, the Company is focused on supporting our people and communities as well as protecting our finances. I am very proud of the work that our employees are doing, particularly our colleagues at the mines who are operating in the most challenging of circumstances.

 

The second quarter results inevitably reflect the impact of Covid-19 on the countries we operate in. However, we remain in a strong financial position and currently expect that the extensive protective measures we have implemented across the organisation will allow our full team to start returning to Inmaculada next week. We look forward to an ambitious second half schedule, particularly in our brownfield drilling programme, and we expect to issue our updated 2020 guidance when we have assessed the full impact of the current suspension."

 

Operational highlights

§  Q2 2020 attributable production:^[1]

o  19,647 ounces of gold

o  1.1 million ounces of silver

o  32,712 gold equivalent ounces

o  2.8 million silver equivalent ounces

§ H1 2020 attributable production

o  79,073 ounces of gold

o  4.1 million ounces of silver

o  126,835 gold equivalent ounces

o  10.9 million silver equivalent ounces

§  Inmaculada expected to ramp up back to full production by end of July

§  Pallancata operating normally

§  San Jose in phased ramp-up process

§  Full Covid-19 protocols in place at all operations

§  Full brownfield exploration programme expected to be completed by year-end

Strong financial position despite Covid-19 impact

§ Total cash of approximately $162 million as at 30 June 2020 ($166 million as at 31 December 2019)

§ Net debt of approximately $58 million as at 30 June 2020 ($33 million as at 31 December 2019)                      

§ Net Debt/LTM EBITDA of approximately 0.21x as at 30 June 2020

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A conference call will be held at 2.30pm (London time) on Wednesday 15 July 2020 for analysts and investors. 

Dial in details as follows:

UK Toll Free: 0800 279 7204

International Dial in: +44 (0)330 336 9411

US Dial in: +1 646-828-8193

Pin: 7765875#

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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Revised guidance

Due to the temporary suspension of Hochschild's Inmaculada mine in Peru, Hochschild is not providing revised 2020 guidance. The Company will reissue guidance once all operations are in production and the full impact of the current suspension of Inmaculada is clearer.

 

Overview

In Q2 2020, Hochschild delivered attributable production of 32,712 gold equivalent ounces or 2.8 million silver equivalent ounces with the period impacted by effects of the Covid-19 crisis and the consequent operational stoppage at all three of the Company's mines. The Inmaculada and Pallancata mines were stopped for 11 weeks with operations at each mine resuming on 31 May and 1 June respectively whilst the San Jose operation in Argentina stopped for six weeks and resumed on 27 April with a phased ramp-up process. In H1 2020, Hochschild produced 126,835 gold equivalent ounces or 10.9 million silver equivalent ounces (on an attributable basis).

 

TOTAL GROUP PRODUCTION[2]

	Q2 2020	Q1 2020	Q2 2019	H1 2020	H1 2019
Silver production (koz)	1,482	3,536	5,166	5,018	10,237
Gold production (koz)	25.17	68.42	84.18	93.59	162.16
Total silver equivalent (koz)	3,647	9,420	12,405	13,067	24,182
Total gold equivalent (koz)	42.40	109.53	144.24	151.94	281.19
Silver sold (koz)	1,794	3,103	5,189	4,897	10,221
Gold sold (koz)	35.90	57.69	84.05	93.58	160.25

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

                                                        

ATTRIBUTABLE GROUP PRODUCTION

	Q2 2020	Q1 2020	Q2 2019	H1 2020	H1 2019
Silver production (koz)	1,124	2,984	4,317	4,108	8,687
Gold production (koz)	19.65	59.43	70.66	79.07	138.08
Silver equivalent (koz)	2,813	8,095	10,394	10,908	20,562
Gold equivalent (koz)	32.71	94.12	120.86	126.84	239.09

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

 

Production

Inmaculada

Product	Q2 2020	Q1 2020	Q2 2019	H1 2020	H1 2019
Ore production (tonnes treated)	93,475	308,896	339,098	402,371	670,487
Average grade silver (g/t)	166	151	170	154	157
Average grade gold (g/t)	4.62	4.37	4.85	4.42	4.62
Silver produced (koz)	377	1,391	1,503	1,768	2,950
Gold produced (koz)	12.60	46.45	49.75	59.05	98.61
Silver equivalent (koz)	1,461	5,385	5,782	6,846	11,431
Gold equivalent (koz)	16.98	62.62	67.23	79.60	132.92
Silver sold (koz)	579	1,179	1,500	1,758	2,942
Gold sold (koz)	19.76	39.72	49.41	59.48	97.48

 

Inmaculada's second quarter production was 12,596 ounces of gold and 0.4 million ounces of silver which amounts to a gold equivalent output of 16,984 ounces and represents approximately 25 days of production. As expected, grades rose versus the first quarter. Overall in the first half of 2020, Inmaculada produced 79,604 gold equivalent ounces (H1 2019: 132,915 ounces). 

 

As announced on 6 July 2020, operations are currently halted due to a number of cases of Covid-19 with a reduced workforce performing care and maintenance activities. The Inmaculada team is currently expected to remobilise during the week beginning 20 July 2020 and is scheduled to reach full production by the end of the month.

 

 

Pallancata

Product	Q2 2020	Q1 2020	Q2 2019	H1 2020	H1 2019
Ore production (tonnes treated)	46,234	142,506	240,705	188,740	472,294
Average grade silver (g/t)	276	250	282	257	284
Average grade gold (g/t)	0.98	0.90	1.01	0.92	1.01
Silver produced (koz)	373	1,019	1,931	1,392	3,812
Gold produced (koz)	1.30	3.61	6.84	4.92	13.44
Silver equivalent (koz)	485	1,330	2,519	1,815	4,969
Gold equivalent (koz)	5.64	15.46	29.29	21.10	57.78
Silver sold (koz)	310	961	1,891	1,271	3,768
Gold sold (koz)	1.08	3.33	6.62	4.41	13.20

 

In the second quarter, Pallancata produced 372,807 ounces of silver and 1,305 ounces of gold bringing the silver equivalent total to 485,034 ounces. Tonnage resulted from 24 days of production in June with grades higher, as expected, versus the first quarter. Overall in H1 2020, Pallancata's output was 1.8 million silver equivalent ounces (H1 2019: 5.0 million ounces).

 

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

Product	Q2 2020	Q1 2020	Q2 2019	H1 2020	H1 2019
Ore production (tonnes treated)	77,491	84,903	141,621	162,394	251,753
Average grade silver (g/t)	329	466	436	401	446
Average grade gold (g/t)	5.04	7.57	6.89	6.36	6.89
Silver produced (koz)	732	1,126	1,731	1,858	3,162
Gold produced (koz)	11.27	18.35	27.59	29.62	49.14
Silver equivalent (koz)	1,701	2,705	4,104	4,406	7,388
Gold equivalent (koz)	19.78	31.45	47.72	51.23	85.91
Silver sold (koz)	904	963	1,785	1,868	3,189
Gold sold (koz)	15.05	14.64	28.18	29.69	48.89

 

The San Jose operation in Argentina restarted concentrate production on 27 April, although 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 third quarter. Q2 production was 732,048 ounces of silver and 11,268 ounces of gold which is 1.7 million silver equivalent ounces and brings the total for the first half of the year to 4.4 million silver equivalent ounces (H1 2019: 7.4 million ounces).

                                                               

Average realisable prices and sales

Average realisable precious metal prices in Q2 2020 (which are reported before the deduction of commercial discounts) were $1,826/ounce for gold and $19.8/ounce for silver (Q2 2019: $1,346/ounce for gold and $14.8/ounce for silver). For H1 2020, average realisable precious metal prices were $1,701/ounce for gold and $16.2/ounce for silver (H1 2019: $1,329/ounce for gold and $15.0/ounce for silver).

 

Brownfield exploration

In the second quarter, the brownfield exploration programme was subject to the same restrictions which were implemented to control the spread of Covid-19 and therefore in Peru only a limited amount of work was performed.

 

Inmaculada

In Q2 2020, 1,677m of potential drilling was carried out with selected results below:

 

Vein	Results (potential drilling)
Shakira	HUA-20-008A: 1.3m @ 2.5g/t Au & 259g/t Ag
Noe	HUA-20-008A: 1.1m @ 5.0g/t Au & 179g/t Ag

 

During Q3, the plan is to drill 25,000m to incorporate new resources from the Juliana and Shakira veins.

 

Pallancata

At Pallancata, 2,734m of potential drilling was executed targeting the Erika and Luciano veins and the continuation of the Pallancata vein.  

 

 

Vein	Results (potential drilling)
Pallancata c	DLPL-A932: 4.6m @ 3.0g/t Au & 790g/t Ag
Puka	DLHU-A49: 1.9m @ 1.1g/t Au & 351g/t Ag

 

In Q3, the plan is to carry out 6,300m of resource drilling in the Pallancata vein extension and 2,500m of potential drilling towards the Marco vein and the Pablo West zone.

 

San Jose

At San Jose, 6,020m of potential were drilled towards the Ayelen, Erika, Mara, Sigmoide Julia, Emilia, Salvador and Micaela Oeste targets. Additionally, during Q2 the Titan geophysics survey was completed.

 

Vein	Results (potential)
Odin	SJD-2103: 2.8m @ 17.1g/t Au & 591g/t Ag SJD-2109: 0.9m @ 6.9g/t Au & 126g/t Ag
Julia	SJD-2108: 1.0m @ 7.0g/t Au & 812g/t Ag SJD-2110: 1.2m @ 5.8g/t Au & 197g/t Ag
Erika	SJD-2114: 0.8m @ 1.5g/t Au & 332g/t Ag
New vein 1	SJD-2110: 0.9m @ 8.0g/t Au & 398g/t Ag
New vein 2	SJD-2118: 0.8m @ 1.2g/t Au & 226g/t Ag

 

During Q3, subject to a successful potential drilling programme, 5,000m will be drilled in the Erika vein to add resources.

 

Financial position

Total cash was approximately $162 million as at 30 June 2020 resulting in net debt of approximately $58 million. This includes $20 million of debt raised in Argentina for temporary working capital increases.

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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.

 

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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