REG - Hochschild MiningPLC - Q3 2022 Production Report
26/10/2022 07:17
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RNS Number : 1015E Hochschild Mining PLC 26 October 2022
_____________________________________________________________________________________
26 October 2022
Production Report for Q3 and the 9 months ended 30 September 2022
Ignacio Bustamante, Chief Executive Officer said:
"Operationally, the third quarter was our strongest yet in 2022 and we expect
to meet both our full year production and our cost targets. We have also
recently completed our submission in response to the Peruvian government's
follow-up comments on Inmaculada's Modified Environmental Impact Assessment
and currently expect a final decision before the year-end.
I am also delighted to announce a major discovery at our Pallancata deposit
which, although just outside the existing permitted area, is expected to
ensure the medium to long-term future of the mine. We are aiming to announce a
preliminary Inferred resource in the next few weeks and will make a decision
on the operation's short-term future in 2023.
Finally, we have made further solid progress at our Mara Rosa project in
Brazil where we have reached 16% completion and remain on schedule and on
budget with all key infrastructure, procurement and construction targets."
Operational highlights
§ Strongest quarter year-to-date(( 1 (#_ftn1) ))
o 52,713 ounces of gold
o 3.0 million ounces of silver
o 94,466 gold equivalent ounces
o 6.8 million silver equivalent ounces
§ Robust 9-month operational performance
o 149,073 ounces of gold
o 8.1 million ounces of silver
o 261,173 gold equivalent ounces
o 18.8 million silver equivalent ounces
§ On track to deliver full year attributable 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)
Exploration & Project Development highlights
§ Major medium-term brownfield discovery at Pallancata
o High-grade structures with good widths drilled close to existing permitted
area and existing operations
o Estimated Inferred resource to be reported in next few weeks
§ Mara Rosa project in Brazil advancing on schedule and on budget - total
project progress is 16%
§ Drilling completed at Snip - study results expected by year-end
Strong financial position
§ Total cash of approximately $169 million as at 30 September 2022 ($204
million as at 30 June 2022)
§ Net debt of approximately $151 million as at 30 September 2022 ($109
million as at 30 June 2022)
§ Current Net Debt/LTM EBITDA of approximately 0.55x as at 30 September 2022
ESG highlights
§ Lost Time Injury Frequency Rate of 1.11 (FY 2021: 1.26)(( 2 (#_ftn2) ))
§ Accident Severity Index of 86 (FY 2021: 676)(( 3 (#_ftn3) ))
§ Water consumption of 170lt/person/day (FY 2021: 193lt/person/day)
§ Domestic waste generation of 1.03 kg/person/day (FY 2021:
1.00kg/person/day)
§ ECO score of 5.38 out of 6 (FY 2021: 5.29)(( 4 (#_ftn4) ))
________________________________________________________________________________________
A conference call will be held at 1.30pm (London time) on Wednesday 26 October
2022 for analysts and investors.
Dial in details as follows:
UK Toll-Free Number: 0808 109 0700
International Dial in: +44 (0)330 551 0200
US/Canada Toll-Free Number: 866-966-5335
Pin: 7758425
Please dial into the call approximately ten minutes before the 1.30pm 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 Q3 2022, Hochschild Mining PLC (HOC.LN) (OTCMKTS: $HCHDF) ("Hochschild" or
"the Company") delivered attributable production of 94,466 gold equivalent
ounces or 6.8 million silver equivalent ounces, representing a 9% increase
versus the second quarter of 2022 and featuring a strong period at the
Inmaculada mine. Overall year-to-date attributable production is 261,173 gold
equivalent ounces or 18.8 million silver equivalent ounces. 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
Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
Silver production (koz) 3,858 3,346 3,833 9,964 10,854
Gold production (koz) 62.57 60.27 69.09 176.51 194.17
Total silver equivalent (koz) 8,364 7,685 8,807 22,673 24,834
Total gold equivalent (koz) 116.16 106.74 122.32 314.90 344.92
Silver sold (koz) 3,895 3,445 3,830 9,940 10,835
Gold sold (koz) 62.79 63.06 68.60 175.49 192.91
Total production includes 100% of all production, including production
attributable to Hochschild's joint venture partner at San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
Silver production (koz) 3,006 2,641 3,043 8,071 8,964
Gold production (koz) 52.71 49.13 58.25 149.07 164.51
Silver equivalent (koz) 6,802 6,179 7,237 18,804 20,809
Gold equivalent (koz) 94.47 85.82 100.51 261.17 289.02
Attributable production includes 100% of all production from Inmaculada,
Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
Ore production (tonnes treated) 348,105 327,837 336,178 1,005,307 1,008,315
Average grade silver (g/t) 151 137 184 147 168
Average grade gold (g/t) 3.75 3.47 4.34 3.66 4.06
Silver produced (koz) 1,519 1,322 1,608 4,334 4,385
Gold produced (koz) 39.82 34.86 44.34 112.48 123.74
Silver equivalent (koz) 4,386 3,831 4,801 12,433 13,295
Gold equivalent (koz) 60.91 53.21 66.67 172.68 184.65
Silver sold (koz) 1,514 1,422 1,604 4,319 4,373
Gold sold (koz) 40.06 37.56 44.42 112.78 123.91
Third quarter production at Inmaculada was 39,819 ounces of gold and 1.5
million ounces of silver which amounts to a gold equivalent output of 60,911
ounces with higher-than-expected grades and recoveries contributing to a
strong operational period. Year-to-date, Inmaculada's output is 172,677 gold
equivalent ounces (Q3 YTD 2021: 184,650 gold equivalent ounces), placing
Inmaculada in a strong position to meet its annual forecast of 233,000-239,000
ounces.
Pallancata
Product Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
Ore production (tonnes treated) 145,212 134,276 113,451 404,269 402,453
Average grade silver (g/t) 149 154 188 155 223
Average grade gold (g/t) 0.64 0.69 0.79 0.69 0.84
Silver produced (koz) 601 586 612 1,768 2,612
Gold produced (koz) 2.63 2.69 2.63 8.03 9.91
Silver equivalent (koz) 790 780 801 2,346 3,326
Gold equivalent (koz) 10.97 10.83 11.13 32.58 46.19
Silver sold (koz) 593 584 622 1,754 2,621
Gold sold (koz) 2.60 2.66 2.62 7.96 9.91
In Q3, Pallancata produced 0.6 million ounces of silver and 2,633 ounces of
gold bringing the silver equivalent total to 0.8 million, with grades lower
than budgeted but in line with the two previous quarters. Overall, in the
first nine months of the year, Pallancata has produced 2.3 million silver
equivalent ounces (Q3 2021 YTD: 3.3 million ounces).
The brownfield exploration team expects to continue drilling a number of
targets within the existing permitted area during the remainder of 2022.
Depending on those results and the level of precious metal prices, Hochschild
will make a decision on whether to place the mine on care and maintenance in
2023, while the Company secures the necessary permits to bring the new
discovery into production.
San Jose (the Company has a 51% interest in San Jose)
Product Q3 2022 Q2 2022 Q3 2021 YTD 2022 YTD 2021
Ore production (tonnes treated) 149,138 131,467 149,637 354,497 395,831
Average grade silver (g/t) 413 383 381 385 343
Average grade gold (g/t) 4.86 6.09 5.24 5.63 5.37
Silver produced (koz) 1,739 1,438 1,613 3,862 3,856
Gold produced (koz) 20.12 22.72 22.12 56.00 60.52
Silver equivalent (koz) 3,188 3,074 3,206 7,894 8,214
Gold equivalent (koz) 44.28 42.69 44.52 109.64 114.08
Silver sold (koz) 1,788 1,440 1,605 3,868 3,841
Gold sold (koz) 20.13 22.83 21.56 54.75 59.10
The San Jose mine enjoyed a solid quarter with silver grades higher than
expected although this was partially offset by moderately lower than expected
gold grades. Production in the period was 1.7 million ounces of silver and
20,120 ounces of gold which represents 3.2 million silver equivalent ounces.
This therefore amounts to a nine-month total of 7.9 million silver equivalent
ounces (Q3 2021 YTD: 8.2 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q3 2022 (which are reported before
the deduction of commercial discounts) were $1,667/ounce for gold and
$20.4/ounce for silver (Q3 2021: $1,768/ounce for gold and $22.0/ounce for
silver). For the first nine months of 2022, average realisable precious metal
prices were $1,801/ounce for gold and $22.4/ounce for silver (Q3 YTD 2021:
$1,771/ounce for gold and $24.8/ounce for silver).
Advanced Project: Mara Rosa
The Mara Rosa project in Brazil is progressing according to schedule and
budget with total project progress at 16% and detailed engineering 90%
complete.
Health and Safety
Hochschild's health and safety corporate standards are currently being
implemented at the project, including the introduction of the Company's
Seguscore safety indicator. The project has recently surpassed 500,000
injury-free working hours and year-to-date Frequency and Severity Indexes are
currently at zero. Finally, Covid-19 prevention protocols are in place with no
positive cases recorded to date.
Earthworks
Site clearance for the processing plant and earthworks are at an advanced
stage (72% and 67% respectively) whilst those for crushing and stockpiles are
complete. In addition, sites for grinding, leaching, thickening and the main
substation are expected to be finished by the end of October which will allow
civil works to start before the rainy season. Site clearance and excavation
work on the reservoir site has been completed with waterproofing scheduled to
finish by the end of this month. Pre stripping activity is expected to start
in November.
Procurement
Currently purchase orders have been issued for 89% of the project equipment.
Deliveries are on schedule with key equipment such as the crusher, conveyor
belts, HDPE pipes, aluminium cabling for the transmission lines and the
wastewater treatment station equipment already received.
Processing plant
The civil works contractor arrived on site in September and is currently 50%
mobilised with full deployment (materials, personnel, concrete station and
other equipment) expected towards the end of November. Work on the foundations
for the crushing and stockpile areas commenced on 3 October with expansion to
other areas such as grinding, leaching, thickening and the substation expected
following completion of the earthworks. The steel structure contract was
awarded in September to a local construction company with materials set to
arrive starting in December. Contracts for the leaching tanks and
electromechanical assembly are expected to be awarded by the end of this
month.
Infrastructure
Infrastructure for the main access route is ongoing to allow delivery of
materials and heavy equipment. A preliminary drainage system that will
guarantee access to critical path areas will be finished by the end of the
month while the main project drainage system will start construction shortly.
In addition, a temporary warehouse has been completed to store equipment,
steel and materials during construction.
Power supply will be provided by the building of a 67km, 138kv transmission
line from the Porangatu substation with work currently 20% advanced and
expected to be completed by June 2023.
Sustainability
Environmental controls to monitor construction work are being executed and
reporting to local authorities. In September, the "Knowledge Trail" was
inaugurated with the presence of local authorities and the Hochschild COO. The
trail consists of an open ecological area with 13 stations highlighting local
culture, environmental, education and project history. The trail will be used
as a learning tool by local schools among other local stakeholders. Local
supplier and labour training programmes are continuing.
Development Project: Snip
The 10,300m drill programme was concluded during the quarter, with completion
of the final "infill" and "potential" holes from both underground and surface.
All core was logged and sent out for assay testing. Results received during
the period had the following highlights:
Vein Results (Twin hole)
208 UG22-279: 4.3m @ 125.7g/t Au & 13g/t Ag
212 UG22-290: 2.1m @ 8.4g/t Au & 2g/t Ag
213 UG22-278: 2.3m @ 11.5g/t Au & 19g/t Ag
214 UG22-284: 4.5m @ 48.4g/t Au & 18g/t Ag
219 UG22-290: 3.8m @ 9.5g/t Au & 2g/t Ag
228 UG22-290: 2.5m @ 6.5g/t Au & 4g/t Ag
230 UG22-284: 4.1m @ 11.0g/t Au & 3g/t Ag
Vein Results (Infill hole)
215 UG22-317: 3.9m @ 33.4g/t Au & 3g/t Ag
219 UG22-330: 4.8m @ 45.1g/t Au & 14g/t Ag
219 UG22-332: 4.0m @ 12.8g/t Au & 2g/t Ag
231 UG22-300: 3.7m @ 9.2g/t Au & 8g/t Ag
240 UG22-334: 4.3m @ 31.7g/t Au & 9g/t Ag
Processing plant designs, an updated resource model and the Tailings and Waste
Rock Storage Facility designs were completed in Q3 with the full study
remaining on track for completion by the end of the year.
Data collection for the Environmental Baseline programme continued, focusing
on air, geochemistry, surface water quality and quantity (hydrology), noise
and wildlife. In addition, the development of the Terrestrial Ecosystem Map
began with studies on soils, terrain and vegetation. A groundwater drilling
programme is planned for Q4 in preparation of a numerical hydrogeological
model.
The Company hosted a leadership delegation from the Tahltan Central Government
at the project site in August.
Brownfield exploration
Inmaculada
In Q3 2022, 2,550m of resource drilling and 250m of potential drilling was
carried out. Selected results are below:
Vein Results (resource drilling)
Josefa IMM-22-172: 1.5m @ 6.1g/t Au & 186g/t Ag
Josefa Piso IMM-22-171A: 1.6m @ 8.5g/t Au & 104g/t Ag
IMM-22-172: 0.8m @ 6.9g/t Au & 13g/t Ag
Cloty IMM-22-172: 0.8m @ 3.9g/t Au & 90g/t Ag
During Q4, the programme will focus on 1,500m of resource drilling in the
Josefa vein.
Pallancata
At Pallancata, 5,218m of resource drilling was carried out close to existing
operations in the Virgen del Carmen Sur, Mateo Rina, and Thalia veins and
outside the permitted area in the Marco West vein. The Company is pleased to
announce a major discovery west of current operations. The new area, named
Royropata is part of the extended Royropata system. Hochschild believes that
the new zone contains a significant amount of high-grade silver and gold
resources. Although not in the current permitted area, the Company believes
that this new discovery has the potential to secure the medium-term future of
the Pallancata mine. A preliminary Inferred resource is expected to be
completed later in the fourth quarter. Selected results are below:
Vein Results (resource drilling)
Marco W DLRY-A07: 10.9m @ 1.0g/t Au & 265g/t Ag
DLRY-A10: 17.6m @ 8.5g/t Au & 2,520g/t Ag
DLRY-A11: 6.5m @ 6.6g/t Au & 1,994g/t Ag
DLRY-A12: 2.4m @ 10.5g/t Au & 3,217g/t Ag
DLRY-A13: 6.8m @ 4.1g/t Au & 1,003g/t Ag
DLRY-A14: 3.7m @ 1.7g/t Au & 497g/t Ag
Laura DLRY-A12: 0.8m @ 0.9g/t Au & 309g/t Ag
DLRY-A14: 1.0m @ 1.1g/t Au & 290g/t Ag
Royropata 2 DLRY-A07: 0.8m @ 1.7g/t Au & 529g/t Ag
DLRY-A11: 0.8m @ 4.3g/t Au & 1,229g/t Ag
DLRY-A13: 1.0m @ 2.5g/t Au & 634g/t Ag
Mateo DLMT-A06: 0.9m @ 0.9g/t Au & 382g/t Ag
Juan 2 DLMT-A06: 0.8m @ 1.8g/t Au & 525g/t Ag
Lucas DLMT-A07: 1.2m @ 0.9g/t Au & 467g/t Ag
Finally, in Q4, 1,000m of potential drilling is planned within the operating
area to define new targets.
San Jose
At San Jose, the brownfield team carried out 3,525m of potential drilling in
the San Jose mine area within the Ayelen and Maura veins. Selected results are
below:
Vein Results (potential drilling)
Ayelen SE SJD-2529: 2.4m @ 3.9g/t Au & 363g/t Ag
SJD-2531: 2.6m @ 10.0g/t Au & 1,321g/t Ag
Maura SJD-2554: 1.1m @ 4.7g/t Au & 102g/t Ag
SJD-2556: 0.8m @ 5.5/t Au & 103g/t Ag
SJD-2563: 1.3m @ 6.3g/t Au & 109g/t Ag
SJD-2570: 1.0m @ 15.1g/t Au & 123g/t Ag
New vein SJD-2543: 1.3m @ 14.5g/t Au & 323g/t Ag
SJD-2547: 1.0m @ 0.03g/t Au & 427g/t Ag
SJD-2547: 0.3m @ 4.8g/t Au & 6,709g/t Ag
SJD-2554: 0.8m @ 3.0g/t Au & 98g/t Ag
SJD-2556: 0.8m @ 2.6g/t Au & 142g/t Ag
During Q4, the plan is to carry out 1,000m of drilling for new resources from
the Ayelen SE and Olivia veins near the operating area.
Financial position
Total cash was approximately $169 million as at 30 September 2022 resulting in
net debt of approximately $151 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) and crosstrades on the OTCQX Best
Market in the U.S. (HCHDF), with a primary focus on the exploration, mining,
processing and sale of silver and gold. Hochschild has over fifty years' of
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.
This announcement contains information which prior to its release could be
considered inside information.
LEI: 549300JK10TVQ3CCJQ89
- ends -
1 (#_ftnref1) All equivalent figures assume a gold/silver ratio of 72x
2 (#_ftnref2) Calculated as total number of accidents per million labour
hours.
(( 3 (#_ftnref3) ))Calculated as total number of days lost per million labour
hours.
4 (#_ftnref4) 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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