TIDMHOC
RNS Number : 0254H
Hochschild Mining PLC
25 July 2023
_____________________________________________________________________________________
25 July 2023
Production Report for the 6 months ended 30 June 2023
Hochschild Mining PLC ("Hochschild" or "the Company") (LSE: HOC)
(OTCQX: HCHDF) is pleased to announce its production report for H1
2023.
Ignacio Bustamante, Chief Executive Officer said:
"After a stronger second quarter, we are looking forward to
production increasing throughout the remainder of 2023. With
regards to Inmaculada's Modified Environmental Impact Assessment,
we are continuing to work with SENACE on its final review, and
therefore will update our production and cost guidance for 2023
following completion of the process. Finally, we are pleased that
further promising progress has been made at our Mara Rosa
development project in Brazil and that we remain on track for first
production early in 2024."
Operational highlights
-- Q2 2023 attributable production: ([1])
o 43,622 ounces of gold
o 2.4 million ounces of silver
o 72,364 gold equivalent ounces
o 6.0 million silver equivalent ounces
-- H1 2023 attributable production
o 83,357 ounces of gold
o 4.4 million ounces of silver
o 136,878 gold equivalent ounces
o 11.4 million silver equivalent ounces
Project highlights
-- Mara Rosa project in Brazil advancing on schedule and on
budget - total project progress at 88% with first production on
track for H1 2024
-- H2 2023 Brownfield programme expected to commence subject to
receipt of Inmaculada's MEIA
ESG highlights
-- Lost Time Injury Frequency Rate of 0.84 (FY 2022: 1.37)
([2])
-- Accident Severity Index of 32 (FY 2022: 93) ([3])
-- Water Consumption of 168lt/person/day (FY 2022:
171lt/person/day)
-- Domestic waste generation of 0.95 kg/person/day (FY 2022:
1.05kg/person/day)
-- ECO score of 5.89 out of 6 (FY 2022: 5.27) ([4])
Financial position
-- Total cash of approximately $94 million as at 30 June 2023
($103 million as at 31 March 2023)
-- Net debt of approximately $227 million as at 30 June 2023
($218 million as at 31 March 2023)
-- Current Net Debt/LTM EBITDA of approximately 1.04x as at 30
June 2023
-- Additional gold hedges executed in Q2 in Brazil:
o 50,000oz of gold hedged for 2025 at $2,117 per ounce
o 50,000oz of gold hedged for 2026 at $2,167 per ounce
o 50,000oz of gold hedged for 2027 at $2,206 per ounce
________________________________________________________________________________________
A conference call will be held at 2.30pm (London time) on
Tuesday 25 July 2023 for analysts and investors.
Dial in details as follows:
International Dial in: +44 330 551 0200
UK Toll-Free Number: 0808 109 0700
US/Canada Toll Free: 866-580-3963
Password: Hochschild - Q2 2023
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:
________________________________________________________________________________________
Overview
In Q2 2023, Hochschild delivered attributable production of
72,364 gold equivalent ounces or 6.0 million silver equivalent
ounces with Inmaculada temporarily impacted by the ongoing delay in
the decision on the MEIA affecting mine development, as expected.
However, this was partially offset by increases versus the first
quarter at San Jose and Pallancata. In the first half of 2023 as a
whole, Hochschild produced 136,878 gold equivalent ounces or 12.4
million silver equivalent ounces (on an attributable basis).
TOTAL GROUP PRODUCTION
Q2 2023 Q1 2023 Q2 2022 H1 2023 H1 2022
-------- -------- -------- --------
Silver production
(koz) 2,955 2,438 3,346 5,393 6,105
Gold production
(koz) 54.12 46.44 60.27 100.55 113.94
Total silver equivalent
(koz) 7,447 6,292 8,348 13,739 15,562
Total gold equivalent
(koz) 89.72 75.81 100.58 165.53 187.50
Silver sold (koz) 3,011 2,414 3,445 5,425 6,045
Gold sold (koz) 55.29 44.50 63.06 99.79 112.70
------------------------- -------- -------- -------- -------- --------
Total production includes 100% of all production, including
production attributable to Hochschild's joint venture partner at
San Jose.
ATTRIBUTABLE GROUP PRODUCTION
Q2 2023 Q1 2023 Q2 2022 H1 2023 H1 2022
-------- -------- -------- --------
Silver production
(koz) 2,386 2,057 2,641 4,442 5,065
Gold production
(koz) 43.62 39.73 49.13 83.36 96.36
Silver equivalent
(koz) 6,006 5,355 6,719 11,361 13,063
Gold equivalent
(koz) 72.36 64.51 80.96 136.88 157.38
------------------- -------- -------- -------- -------- --------
Attributable production includes 100% of all production from
Inmaculada, Pallancata and 51% from San Jose.
Production
Inmaculada
Product Q2 2023 Q1 2023 Q2 2022 H1 2023 H1 2022
------------- --------------- --------------- --------
Ore production
(tonnes treated) 257,768 278,138 327,837 535,905 657,202
Average grade silver
(g/t) 181 176 137 178 145
Average grade gold
(g/t) 3.92 3.78 3.47 3.85 3.61
Silver produced
(koz) 1,300 1,274 1,322 2,573 2,815
Gold produced (koz) 30.64 31.21 34.86 61.85 72.67
Silver equivalent
(koz) 3,843 3,864 4,215 7,707 8,846
Gold equivalent
(koz) 46.30 46.56 50.78 92.86 106.58
Silver sold (koz) 1,357 1,204 1,422 2,561 2,805
Gold sold (koz) 32.10 29.29 37.56 61.39 72.72
---------------------- ------------- --------------- --------------- -------- --------
Inmaculada's second quarter production was 30,639 ounces of gold
and 1.3 million ounces of silver which amounts to a gold equivalent
output of 46,297 ounces. Tonnage was lower than the previous
quarter, as expected, due to the ongoing delays in the decision on
the MEIA impacting mine development although this was offset by
higher grades. Overall, in the first half of 2023, Inmaculada
produced 92,856 gold equivalent ounces (H1 2022: 106,584
ounces).
Hochschild continues to work with SENACE, Peru's National
Service of Environmental Certification for Sustainable Investments,
to complete the final review of Inmaculada's Modified Environment
Impact Assessment.
Pallancata
Product Q2 2023 Q1 2023 Q2 2022 H1 2023 H1 2022
---------------- ---------------- ---------------- --------
Ore production
(tonnes treated) 123,782 115,842 134,276 239,624 259,058
Average grade silver
(g/t) 147 126 154 137 159
Average grade gold
(g/t) 0.60 0.49 0.69 0.55 0.72
Silver produced
(koz) 493 386 586 879 1,167
Gold produced (koz) 2.06 1.55 2.69 3.61 5.39
Silver equivalent
(koz) 664 514 809 1,179 1,615
Gold equivalent
(koz) 8.00 6.20 9.75 14.20 19.46
Silver sold (koz) 497 427 584 923 1,161
Gold sold (koz) 2.06 1.69 2.66 3.75 5.36
---------------------- ---------------- ---------------- ---------------- -------- --------
In the second quarter, Pallancata produced 0.5 million ounces of
silver and 2,062 ounces of gold bringing the silver equivalent
total to 0.7 million ounces, an increase versus the first quarter.
Overall, in H1 2023, Pallancata's output was 1.2 million silver
equivalent ounces (H1 2022: 1.6 million ounces). Reduced tonnage
and grades versus H1 2022 are in line with the current declining
production profile.
San Jose (the Company has a 51% interest in San Jose)
Product Q2 2023 Q1 2023 Q2 2022 H1 2023 H1 2022
-------------- --------------- ------------- --------
Ore production
(tonnes treated) 143,563 128,499 131,467 272,063 205,359
Average grade silver
(g/t) 288 215 383 254 365
Average grade gold
(g/t) 5.40 3.88 6.09 4.68 6.19
Silver produced
(koz) 1,163 778 1,438 1,941 2,123
Gold produced (koz) 21.42 13.68 22.72 35.09 35.88
Silver equivalent
(koz) 2,940 1,913 3,324 4,854 5,101
Gold equivalent
(koz) 35.42 23.05 40.05 58.48 61.46
Silver sold (koz) 1,157 784 1,440 1,941 2,080
Gold sold (koz) 21.14 13.52 22.83 34.66 34.62
---------------------- -------------- --------------- ------------- -------- --------
Q2 production at San Jose was 1.2 million ounces of silver and
21,416 ounces of gold which is 2.9 million silver equivalent ounces
with grades improving from the first quarter when mine sequencing
and annual holidays impacted production. This brings the total for
the first half of the year to 4.9 million silver equivalent ounces
(H1 2022: 5.1 million ounces).
Average realisable prices and sales
Average realisable precious metal prices in Q2 2023 (which are
reported before the deduction of commercial discounts) were
$1,958/ounce for gold and $23.4/ounce for silver (Q2 2022:
$1,843/ounce for gold and $22.0/ounce for silver). For H1 2023,
average realisable precious metal prices were $1,957/ounce for gold
and $23.3/ounce for silver (H1 2022: $1,875/ounce for gold and
$23.7/ounce for silver).
Advanced Project: Mara Rosa
The Mara Rosa project is progressing according to schedule and
budget with total project progress now standing at 88% and with the
Company continuing to expect first production in H1 2024.
Procurement
Currently purchase orders have been issued for 97% of the
project equipment. Deliveries are on schedule with key equipment
received including the crusher, belt conveyors, the secondary
substation, electrocentres, filters, HDPE piping, aluminium cables
for the transmission lines, hydrocyclones, agitators, wastewater
treatment station, thickeners and the ball mills. In addition, the
drilling service contract was signed during the period and the
contractor is already mobilised.
Mine and Pre-Stripping:
The pre-stripping contractor has begun blasting work and 365kt
of ore has already moved according to schedule. The target is to
guarantee a stockpile for use during the plant ramp-up period.
Construction of the waste dumps and ore stockpiles are also
underway.
Civil works
Civil works in the processing plant area have advanced in line
with schedule and are mostly complete which allowed
electromechanical assembly to start on time. Assembly work is
advancing slightly ahead of schedule on the crushing, screening and
belt conveyor areas with commissioning on this circuit expected
towards the end of Q3. The grinding area is also advancing well
(84% completion), and mechanical completion is expected to finish
in the quarter, whilst the thickening and leaching areas are
expected to have mechanical completion in Q4.
Infrastructure assembly
The Electromechanical assembly contractor has been mobilised,
and the work is advancing in line with schedule at 42% progress.
The power supply for the mine is being provided by the building of
a 67km, 138kv transmission line from the Porangatu substation with
work currently 97% advanced and expected to be completed very
shortly.
Earthworks
The water reservoir is fully operational and already at 95% of
storage capacity with water from the pit area whilst dry stacking
construction started during the quarter and is expected to finish
in the fourth quarter.
Permitting
Preparations are underway for the operational license from local
authorities whilst the license for the crusher/screening circuit
(dry circuit) has already been submitted and it is expected to be
received in the third quarter. The remaining licenses for the
processing plant (wet circuit) are expected to be submitted in this
quarter whilst the operational permit for the transmission line was
submitted last month and is expected in September.
Sustainability
Environmental controls to monitor construction work have been
implemented to ensure compliance with applicable permits. ESG
programmes are advancing as expected with almost 900 people having
visited the "knowledge trail" as of June 2023. On 5 June, the trail
received the "Goiás Sustainability Award" in the Innovation,
Science and Education category.
During May, the project hosted over 70 stakeholders including
local mayors, politicians and community members, who inspected the
site progress and gave some very positive feedback. Also in May,
the team helped to promote "Traffic Week" involving 2,600 people
from schools in Mara Rosa as well as on the main street in Mara
Rosa itself. Monthly newsletters covering project progress and
sustainability initiatives are continuing to be distributed to
local communities.
Health and Safety
Hochschild's health and safety corporate standards have been
implemented at the project, including the introduction of the
Company's Seguscore safety indicator. The project has recently
surpassed three million injury-free working hours and year-to-date
Frequency and Severity Indexes are currently at zero.
Brownfield exploration
Although the brownfield team is planning a busy half of
drilling, the budget for the exploration programme in Peru is
subject to the Inmaculada MEIA approval.
Financial position
Total cash was approximately $94 million as at 30 June 2023
resulting in a net debt position of approximately $227 million.
During the quarter, the Company executed several precious metal
hedges for production from Brazil
o 50,000oz of gold hedged for 2025 at $2,117 per ounce
o 50,000oz of gold hedged for 2026 at $2,167 per ounce
o 50,000oz of gold hedged for 2027 at $2,206 per ounce
These were in addition to the previous announced hedges:
o 29,250 ounces of gold hedged for the remainder of 2023 at
$2,047 per ounce in Peru
o 27,600 ounces of gold hedged between March and December 2024
at $2,100 per ounce in Brazil
_____________________________________________________________________________________
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' 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 2022 of 83x.
[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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