REG - Hochschild MiningPLC - Q1 2022 Production Report

Hochschild MiningAnnouncement

26/04/2022 07:16

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RNS Number : 2814J  Hochschild Mining PLC  26 April 2022

 

 

 

 

 

_____________________________________________________________________________________

26 April 2022

 

 

Production Report for the 3 months ended 31 March 2022

 

 

Ignacio Bustamante, Chief Executive Officer said:

"Our flagship Inmaculada operation has delivered a better than expected first
quarter of the year and despite our Argentinian operations having faced
Covid-related workforce absences and seasonal vacations early in the period,
we are on track to meet 2022 production and cost targets.

 

We completed our purchase of Amarillo Gold on 1 April and are looking forward
to commencing construction at the exciting Mara Rosa project in Brazil in the
near future. In addition, we have recently initiated a new drilling campaign
at the Snip project in Canada following our announcement in March of a
significant increase in resources. Finally, I am pleased to report that our
2022 brownfield exploration programme has commenced at all our operations."

 

Operational highlights

§  Q1 2022 attributable production(( 1 ))

o  47,226 ounces of gold

o  2.4 million ounces of silver

o  80,889 gold equivalent ounces

o  5.8 million silver equivalent ounces

§  Solid first quarter operational delivery at Inmaculada; San Jose impacted
by Covid-related absenteeism and seasonal vacations earlier in Q1

§  On track to deliver overall 2022 production target of 360,000-375,000
gold equivalent ounces (26.0-27.0 million silver equivalent ounces)

§  2022 all-in sustaining costs on track to meet guidance of $1,330-1,370
per gold equivalent ounce ($18.5-19.0 per silver equivalent ounce)

Project & Exploration highlights

§  Amarillo Gold acquisition completed on 1 April 2022, enhancing the
company's portfolio by adding a long-life asset located in a mining friendly
jurisdiction

§  New drilling campaign started at Snip development project in Canada
following announcement of a significant increase in resources on 1 March 2022

§  2022 brownfield drilling campaigns underway at all operations

ESG highlights

§  Lost Time Injury Frequency Rate of 1.89 (FY 2021: 1.26)(( 2 ))

§  Accident Severity Index of 61 (FY 2021: 676)(( 3 ))

§  Water Consumption of 174lt/person/day (FY 2021: 193lt/person/day)

§  Domestic waste generation of 1.01 kg/person/day (FY 2021:
1.00kg/person/day)

§  ECO score of 5.79 out of 6 (FY 2021: 5.29)(( 4 ))( )

Strong financial position

§  Total cash of approximately $367 million as at 31 March 2022 ($387
million as at 31 December 2021)

§  Net cash of approximately $54 million as at 31 March 2022 ($86 million as
at 31 December 2021)

§  Current Net Cash/LTM EBITDA of approximately 0.153x as at 31 March 2022

 

________________________________________________________________________________________

A conference call will be held at 2.30pm (London time) on Tuesday 26 April
2022 for analysts and investors. Dial in details as follows:

International Dial in: +44 330 165 4012; UK Toll-Free Number: 0800 279 6877;
US/Canada Toll Free: 800-289-0720

Pin: 8158412

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 (http://www.hochschildmining.com)

________________________________________________________________________________________

 

Overview

In Q1 2022, Hochschild delivered attributable production of 80,889 gold
equivalent ounces or 5.8 million silver equivalent ounces with a better than
expected result from Inmaculada offset by further disruption from Covid-19
impacting San Jose in Argentina and lower than expected grades at Pallancata.
The Company remains on track to meet its overall attributable production
target for 2022 of 360,000-375,000 gold equivalent ounces or 26.0-27.0 million
silver equivalent ounces.

 

The Company reiterates that its all-in sustaining cost for 2022 is on track to
be in line with the guidance of between $1,330 and $1,370 per gold equivalent
ounce (or $18.5 and $19.0 per silver equivalent ounce).

 

TOTAL GROUP PRODUCTION

                                Q1 2022  Q4 2021  Q1 2021  12 mths

2021
 Silver production (koz)( )     2,759    3,892    3,321    14,746
 Gold production (koz)( )       53.68    68.22    62.31    262.39
 Total silver equivalent (koz)  6,624    8,804    7,808    33,638
 Total gold equivalent (koz)    92.00    122.28   108.44   467.19
 Silver sold (koz)              2,600    3,877    3,182    14,712
 Gold sold (koz)                49.64    67.80    61.14    260.71

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

 

ATTRIBUTABLE GROUP PRODUCTION

                             Q1 2022  Q4 2021  Q1 2021  12 mths

2021
 Silver production (koz)( )  2,424    3,209    2,829    12,174
 Gold production (koz)( )    47.23    56.91    52.84    221.42
 Silver equivalent (koz)     5,824    7,306    6,634    28,116
 Gold equivalent (koz)       80.89    101.48   92.13    390.50

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

 

Production

Inmaculada

 Product                          Q1 2022                   Q4 2021             Q1 2021  12 mths

2021
 Ore production (tonnes treated)  329,364                   341,577             337,480  1,349,892
 Average grade silver (g/t)       153                       191                 158      174
 Average grade gold (g/t)         3.75                      4.03                3.92     4.05
 Silver produced (koz)            1,493                     1,850               1,419    6,236
 Gold produced (koz)                        37.81                  41.99        39.80    165.73
 Silver equivalent (koz)          4,216                     4,873               4,285    18,168
 Gold equivalent (koz)            58.55                     67.69               59.52    252.34
 Silver sold (koz)                1,382.9                   1,843               1,414    6,216
 Gold sold (koz)                  35.16                     41.95               39.65    165.86

 

Inmaculada's first quarter production was 37,811 ounces of gold and 1.5
million ounces of silver which amounts to gold equivalent output of 58,552
ounces which was ahead of budgeted expectations and was due to higher than
planned silver and gold recoveries and higher gold grades.

 

 

Pallancata

 Product                          Q1 2022                       Q4 2021                 Q1 2021  12 mths

2021
 Ore production (tonnes treated)  124,782                       128,228                 126,950  530,681
 Average grade silver (g/t)                    165                        177           240      212
 Average grade gold (g/t)         0.74                          0.85                    0.85     0.84
 Silver produced (koz)            581                           648                     897      3,261
 Gold produced (koz)              2.70                          3.14                    3.18     13.05
 Silver equivalent (koz)                       776              874                     1,126    4,200
 Gold equivalent (koz)                      10.77               12.14                   15.64    58.33
 Silver sold (koz)                577                           642                     771      3,263
 Gold sold (koz)                  2.69                          3.12                    2.72     13.03

 

In the first quarter, Pallancata produced 581,000 ounces of silver and 2,702
ounces of gold bringing silver equivalent total production to 776,000 ounces
with tonnage and silver grades lower than expected.

 

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

 Product                             Q1 2022                 Q4 2021  Q1 2021  12 mths

2021
 Ore production (tonnes treated)( )  73,892                  143,398  101,345  539,229
 Average grade silver (g/t)          331                     346      344      344
 Average grade gold (g/t)            6.36                    5.77     6.53     5.47
 Silver produced (koz)( )            685                     1,393    1,005    5,250
 Gold produced (koz)                 13.16                   23.10    19.33    83.62
 Silver equivalent (koz)                      1,632          3,056    2,396    11,270
 Gold equivalent (koz)                        22.67          42.45    33.28    156.53
 Silver sold (koz)                   640.2                   1,392    997      5,233
 Gold sold (koz)                     11.79                   22.73    18.77    81.83

 

The first quarter at San Jose in Argentina is traditionally a shorter
operational period due to the scheduled hourly workers' holiday which was
taken during January this year. However, the operation also continued to be
impacted by Covid-related employee absences and tonnage was consequently lower
than expected resulting in production of 0.7 million ounces of silver and
13,165 ounces of gold which makes 1.6 million silver equivalent ounces.
However, the operation remains on track to meet 2022 full year guidance of
between 5.7 and 6.1 million silver equivalent ounces.

 

Average realisable prices and sales

Average realisable precious metal prices in Q1 2022 (which are reported before
the deduction of commercial discounts) were $1,916/ounce for gold and
$26.0/ounce for silver (Q1 2021: $1,703/ounce for gold and $24.4/ounce for
silver).

 

Advanced Project: Mara Rosa

On 22 March 2022, the Company announced that it had received shareholder
approval for the acquisition of Amarillo Gold Inc. with completion occurring
on 1 April 2022.

 

The Mara Rosa project in Brazil is progressing according to schedule with
detailed engineering over 60% complete and construction at site planned to
start in the second quarter. The construction management team is now in place
and mobilised at site. Off-site camp construction was completed in March
whilst the powerline construction started in March with completion expected in
the first half of 2023. Finally, Hochschild is working closely with the
regional environmental agency in the State of Goias to obtain the outstanding
construction permits.

 

Development project: Snip

Exploration recommenced during the quarter, with approximately 2,500m drilled
from underground. Work also began on the Pre-Feasibility Study, which was
awarded to Ausenco Engineering Canada.

 

A Communications and Engagement Agreement with the Tahltan Central Government
was signed at the beginning of the year with constructive discussions between
the two parties continuing.

 

The Company issued an updated mineral resource estimate on March 1st.
Indicated mineral resources more than tripled to 840,000 ounces and inferred
resources almost doubled to 723,000 ounces (compared to the previous 2020
estimate) as a result of approximately 28,000m of drilling and the application
of Hochschild's standard approach to resource evaluation.

 

Assays were received from Skeena Resources for 34 drill holes drilled in 2021,
with potential resource additions from the following intercepts:

 

 Hole     From   To     Length  Au

          (m)    (m)    (m)     (g/t)
 S21-125  46.7   48.8   2.1     14.5
 S21-126  25.0   27.0   2.0     41.4
 S21-135  155.5  158.0  2.5     15.6
 S21-142  13.5   14.8   1.3     24.2
 S21-142  19.7   21.8   2.1     12.2
 S21-151  25.4   26.6   1.2     12.5

 

Possible new veins were identified with the following results:

 

 Hole     From   To     Length  Au

          (m)    (m)    (m)     (g/t)
 S21-125  65.8   66.9   1.1     56.3
 S21-137  446.0  447.1  1.1     13.5
 S21-139  249.0  252.0  3.0     48.8
 S21-139  217.4  218.0  0.6     48.9
 S21-155  201.5  204.0  2.5     15.1

 

A further 5,000m of drilling is planned for the second quarter.

 

Development project: Volcan

During the first quarter, the Company restructured its 100% ownership of the
Volcan project in Chile under a newly-established Canadian company, Tiernan
Gold Corp. The Company is currently evaluating strategic alternatives for
Tiernan.

 

Tiernan expects to complete an update to the Mineral Resource Estimate for
Volcan during Q2 2022.  In parallel, engineering is also being carried out to
redefine the business case for Volcan, including an optimised mine and project
development plan.  The results of the Mineral Resource Estimate and
optimisation work are expected to be outlined in a new technical report.

 

Brownfield exploration

Inmaculada

In Q1 2021, the exploration team started its drilling campaign with work
continuing into the second quarter.

 

In addition, the team will continue with 2,000m of potential drilling at the
Huarmapata area, 2,800m of resource drilling in Josefa along with 1,000m in
the Union Shakira vein.

 

Pallancata

At Pallancata, 3,139m of potential drilling was carried out in the Ranichico,
Pallancata and Pablo zones and also 6,135m of resource drilling in the
Laura-Demian and Miriam structures with drilling intercepting quartz sulphide
veins and grades of 250-300 silver equivalent grammes per tonne.

 

 Vein              Results (resource drilling)
 Miriam            DHLMIR-A13: 1.8m @ 1.5g/t Au & 261g/t Ag

                   DHLMIR-A14: 0.8m @ 1.9g/t Au & 371g/t Ag
 Rina              DHLRI-A187: 0.8m @ 11.6g/t Au & 47g/t Ag
 Virgen de Carmen  DHLRI-A187: 2.0m @ 1.6g/t Au & 303g/t Ag
 Demian            DLDE-A02: 2.5m @ 0.9g/t Au & 303g/t Ag

 

The programme for the second quarter will consist of 5,000m of resource
drilling in the Laura-Demian structure as well as a resumption of drilling at
the Corina deposit to the north.

 

 

 

San Jose

In Q1 2022, 2,049m of potential drilling was executed around the mine area and
in the Saavedra area.

 

 Vein         Results (resource drilling)
 Celina       SJD-2451: 1.5m @ 6.0g/t Au & 236g/t Ag

              SJD-2453: 1.2m @ 8.3g/t Au & 561g/t Ag
 Celina Piso  SJD-2453: 1.1m @ 2.8g/t Au & 546g/t Ag
 Jimena       SJD-2463: 5.2m @ 1.6g/t Au & 47g/t Ag

              SJD-2465: 2.4m @ 2.8g/t Au & 48g/t Ag

 

Drilling continues in the second quarter, with 2,000m of resource drilling in
the Olivia and Celina veins as well starting to explore the Ciclon project
further away in the Santa Cruz province.

 

Financial position

Total cash was approximately $367 million as at 31 March 2022 resulting in a
net cash position of approximately $54 million.  This balance does not
reflect the payment for the acquisition of Amarillo Gold Inc. which was
completed on 1 April 2022.

_____________________________________________________________________________________

 

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 owns
the Mara Rosa Advanced Project in Brazil as well as 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.

 

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

 

- ends -

 

 1 All equivalent figures assume the average gold/silver ratio for 2021 of
72x.

 2 Calculated as total number of accidents per million labour hours

(( 3 ))Calculated as total number of days lost per million labour hours.

 4 The ECO Score is an internally designed Key Performance Indicator measuring
environmental performance in one number and encompassing numerous fronts
including management of waste water, outcome of regulatory inspections and
sound environmental practices relating to water consumption and the recycling
of materials.

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