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HOCHSCHILD MINING PLC — Earnings Release 2019
Apr 30, 2019
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Earnings Release
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RNS Number : 4692X
Hochschild Mining PLC
30 April 2019
_____________________________________________________________________________________
30 April 2019
Production Report for the 3 months ended 31 March 2019
Ignacio Bustamante, Chief Executive Officer said:
"Hochschild has delivered a solid start to the year with a strong contribution from Inmaculada and increased first quarter output from Pallancata leaving us firmly on track to meet our stated production and cost targets for 2019.
We have also begun our ambitious 2019 brownfield exploration plan with campaigns already commenced at Inmaculada, San Jose and Pallancata. In addition, we have also secured the drilling permit for the exciting programme scheduled at Palca as well as achieving environmental approvals for campaigns at nearby Cochaloma and Pablo Sur."
Operational highlights
§ Strong 1st quarter attributable production[1]
o 67,419 ounces of gold
o 4.4 million ounces of silver
o 121,367 gold equivalent ounces
o 9.8 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
§ Brownfield exploration programmes underway at all operations
§ Drilling permit recently obtained for exploration programme at Palca - now set to commence in Q2
§ Environmental permits obtained for programmes at Cochaloma and Pablo Sur with drilling set to commence in Q3
§ Greenfield programme: initial exploration work set to begin at three projects in Chile and the US
Strong financial position
§ Total cash of approximately $88 million as at 31 March 2019 ($80 million as at 31 December 2018)
§ Net debt of approximately $68 million as at 31 March 2019 ($77 million as at 31 December 2018)
§ Current Net Debt/LTM EBITDA of approximately 0.26x as at 31 March 2019
________________________________________________________________________________________
A conference call will be held at 2.00pm (London time) on Tuesday 30 April 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: 16524791#
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: 301283164#
________________________________________________________________________________________
Overview
Hochschild delivered a strong start to 2019 with attributable production of 121,367 gold equivalent ounces or 9.8 million silver equivalent ounces. This was mostly due to another solid quarter from Inmaculada and a consistent period at San Jose and was achieved despite the absence of a meaningful contribution from the Arcata mine following the announcement in February 2019 that it was being placed on care and maintenance.
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
| Q1 2019 | Q4 2018 | Q1 2018 | 12 mths 2018 |
|
| Silver production (koz) | 5,071 | 5,791 | 5,355 | 22,720 |
| Gold production (koz) | 77.98 | 73.10 | 79.85 | 307.77 |
| Total silver equivalent (koz) | 11,387 | 11,712 | 11,822 | 47,650 |
| Total gold equivalent (koz) | 140.58 | 144.60 | 145.96 | 588.27 |
| Silver sold (koz) | 5,032 | 5,775 | 5,282 | 22,687 |
| Gold sold (koz) | 76.19 | 72.22 | 76.91 | 304.51 |
Total production includes 100% of all production, including production attributable to Hochschild's joint venture partner at San Jose.
ATTRIBUTABLE GROUP PRODUCTION
| Q1 2019 | Q4 2018 | Q1 2018 | 12 mths 2018 |
|
| Silver production (koz) | 4,370 | 4,975 | 4,662 | 19,700 |
| Gold production (koz) | 67.42 | 60.50 | 69.03 | 260.44 |
| Silver equivalent (koz) | 9,831 | 9,875 | 10,254 | 40,795 |
| Gold equivalent (koz) | 121.37 | 121.92 | 126.59 | 503.64 |
Attributable production includes 100% of all production from Arcata, Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
| Product | Q1 2019 | Q4 2018 | Q1 2018 | 12 mths 2018 |
| Ore production (tonnes treated) | 331,390 | 320,400 | 337,507 | 1,323,525 |
| Average grade silver (g/t) | 144 | 157 | 158 | 150 |
| Average grade gold (g/t) | 4.38 | 4.32 | 4.60 | 4.36 |
| Silver produced (koz) | 1,447 | 1,255 | 1,670 | 5,690 |
| Gold produced (koz) | 48.86 | 37.74 | 49.78 | 174.20 |
| Silver equivalent (koz) | 5,405 | 4,312 | 5,702 | 19,800 |
| Gold equivalent (koz) | 66.72 | 53.24 | 70.40 | 244.45 |
| Silver sold (koz) | 1,441 | 1,251 | 1,591 | 5,676 |
| Gold sold (koz) | 48.08 | 37.27 | 46.95 | 172.40 |
Inmaculada's first quarter production was 48,858 ounces of gold and 1.4 million ounces of silver which amounts to a gold equivalent output of 66,720 ounces and was principally driven by higher than expected gold grades and a contribution from products in process from the previous period.
Pallancata
| Product | Q1 2019 | Q4 2018 | Q1 2018 | 12 mths 2018 |
| Ore production (tonnes treated) | 231,589 | 231,075 | 128,134 | 717,652 |
| Average grade silver (g/t) | 285 | 317 | 384 | 362 |
| Average grade gold (g/t) | 1.01 | 1.10 | 1.47 | 1.30 |
| Silver produced (koz) | 1,881 | 2,086 | 1,412 | 7,449 |
| Gold produced (koz) | 6.61 | 7.20 | 5.29 | 26.40 |
| Silver equivalent (koz) | 2,416 | 2,669 | 1,840 | 9,588 |
| Gold equivalent (koz) | 29.83 | 32.95 | 22.72 | 118.37 |
| Silver sold (koz) | 1,877 | 2.093 | 1,401 | 7,439 |
| Gold sold (koz) | 6.58 | 7.35 | 5.11 | 26.23 |
Pallancata produced 1.9 million ounces of silver and 6,606 ounces of gold bringing the silver equivalent total to 2.4 million ounces in Q1. Tonnage rose in the period versus Q1 2018 following the achievement of full production at the Pablo vein in Q4 2018 with grades adjusted down as expected.
San Jose (the Company has a 51% interest in San Jose)
| Product | Q1 2019 | Q4 2018 | Q1 2018 | 12 mths 2018 |
| Ore production (tonnes treated) | 110,132 | 146,992 | 121,889 | 556,185 |
| Average grade silver (g/t) | 460 | 401 | 415 | 397 |
| Average grade gold (g/t) | 6.90 | 6.19 | 6.44 | 6.20 |
| Silver produced (koz) | 1,431 | 1,666 | 1,412 | 6,165 |
| Gold produced (koz) | 21.55 | 25.72 | 22.08 | 96.59 |
| Silver equivalent (koz) | 3,177 | 3,749 | 3,201 | 13,989 |
| Gold equivalent (koz) | 39.22 | 46.29 | 39.52 | 172.70 |
| Silver sold (koz) | 1,405 | 1,647 | 1,434 | 6,175 |
| Gold sold (koz) | 20.71 | 25.29 | 22.34 | 95.95 |
San Jose delivered a steady start to 2019 despite the traditionally shorter operational period due to the scheduled hourly workers holiday in February. Tonnage was slightly lower than the corresponding period of 2018 but this was offset by higher gold and silver grades resulting in production of 1.4 million ounces of silver and 21,549 ounces of gold which makes 3.2 million silver equivalent ounces.
Arcata
| Product | Q1 2019 | Q4 2018 | Q1 2018 | 12 mths 2018 |
| Ore production (tonnes treated) | 37,049 | 91,203 | 91,175 | 373,106 |
| Average grade silver (g/t) | 298 | 304 | 330 | 321 |
| Average grade gold (g/t) | 0.94 | 0.95 | 1.04 | 0.99 |
| Silver produced (koz) | 311 | 784 | 860 | 3,416 |
| Gold produced (koz) | 0.97 | 2.44 | 2.69 | 10.57 |
| Silver equivalent (koz) | 390 | 982 | 1,078 | 4,273 |
| Gold equivalent (koz) | 4.81 | 12.12 | 13.31 | 52.75 |
| Silver sold (koz) | 309 | 783 | 855 | 3,397 |
| Gold sold (koz) | 0.82 | 2.30 | 2.52 | 9.93 |
On 13 February 2019, Hochschild announced its intention to suspend operations at Arcata and place it on care and maintenance. Mining operations continued in the period until that date with output of 0.4 million silver equivalent ounces.
Average realisable prices and sales
Average realisable precious metal prices in Q1 2019 (which are reported before the deduction of commercial discounts) were $1,310/ounce for gold and $15.3/ounce for silver (Q1 2018: $1,350/ounce for gold and $16.1/ounce for silver).
Brownfield exploration
Inmaculada
In Q1 2019, 1,796m of potential drilling was carried out at the Anomalia 1 and Anomalia 3 structures. Also, 1,204m of resource drilling was executed at the Angela and Ramal 4 veins.
| Vein | Results (resource drilling) |
| Ramal 4 | ANE-18-003: 2.3m @ 4.7g/t Au & 96g/t Ag ANE-18-005: 1.0m @ 5.4g/t Au & 340g/t Ag |
| Lady | MIL-18-046: 0.9m @ 5.3g/t Au & 699g/t Ag |
| EW | ANE-18-003: 2.2m @ 1.6g/t Au & 98g/t Ag |
In Q2, resource drilling will continue to be focused at the Angela and Ramal 4 veins with 15,000m of drilling planned.
Pallancata
The focus at Pallancata is on the drilling programme at Pablo Sur, Palca and Cochaloma. Good progress has been made on permitting for all three zones with the drilling permit achieved for the Palca zone and environmental permits secured for Pablo Sur and Cochaloma. The campaign is expected to start at Palca towards the end of the second quarter and at the other two areas in the third quarter. In addition, underground drilling will be executed towards the south zone of the Pallancata West vein with the aim of intercepting structures parallel to the main Pallancata vein.
San Jose
At San Jose, 7,973m of potential drilling was executed in the first quarter at the Aguas Vivas system as well as the Pluma 19 structure. The intercepted structures at Aguas Vivas correspond to an intermediate sulphidation system with associated grades of zinc and lead.
| Vein | Results |
| Aguas Vivas | SJD-1627: 3.0m @ 0.1g/t Au, 443/t Ag, 0.2% Cu, 8.2% Pb & 5.5% Zn SJD-1686: 1.1m @ 3.6g/t Au, 85g/t Ag, 0.1% Cu, 19.0% Pb & 10.3% Zn SJD-1703: 1.4m @ 0.2g/t Au, 55g/t Ag, 0.6% Pb & 1.9% Zn SJD-1720: 0.8m @ 2.4g/t Au, 9g/t Ag SJD-1851: 3.4m @ 0.3g/t Au, 44g/t Ag, 1.2% Cu, 4.6% Pb & 6.4% Zn SJD-1853: 1.1m @ 0.4g/t Au, 98g/t Ag, 1.6% Cu, 5.3% Pb & 4.2% Zn SJD-1855: 2.8m @ 0.9g/t Au, 9g/t Ag, 0.2% Cu, 0.7% Pb & 1.4% Zn SJD-1857: 0.9m @ 1.6g/t Au, 18g/t Ag, 0.1% Cu, 2.7% Pb & 2.2% Zn SJD-1865: 1.3m @ 0.4g/t Au, 12g/t Ag, 0.2% Cu, 2.1% Pb & 3.9% Zn SJD-1870: 1.1m @ 5.0g/t Au, 64g/t Ag, 0.4% Cu, 2.3% Pb & 3.9% Zn |
In Q2, drilling will be focused towards the south of the San Jose mine.
Arcata
In Q1, 1,232m of potential drilling was executed in the 4th quadrant targeting the Pamela New vein. During Q2, drilling will continue to be focused at the 4th quadrant targeting structures resulting from a new geophysics programme.
Financial position
Total cash was approximately $88 million as at 31 March 2019 resulting in net debt of approximately $68 million. This cash balance reflects: the majority of redundancy payments at Arcata; expenditure on the ongoing brownfield exploration programme; and a temporary increase in working capital of approximately $7 million.
In March 2019, the Company refinanced its $50 million medium-term loan with Scotiabank and Citi and replaced it with a $50 million loan from Scotiabank with a duration of one year and a fixed interest rate of 2.95%.
_____________________________________________________________________________________
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.
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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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[1] All equivalent figures assume a gold/silver ratio of 81x
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