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HOCHSCHILD MINING PLC — Earnings Release 2019
Jul 18, 2019
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Earnings Release
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RNS Number : 9022F
Hochschild Mining PLC
18 July 2019
_____________________________________________________________________________________
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
§ 2nd 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
________________________________________________________________________________________
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#
________________________________________________________________________________________
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.
____________________________________________________________________________________
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.
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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