Q2 2022 Production Report

Source: RNS
RNS Number : 0448T
Hochschild Mining PLC
20 July 2022
 

             

 

 

 

 

_____________________________________________________________________________________

20 July 2022

 

Production and Project Development Report for the 6 months ended 30 June 2022

 

 

Hochschild Mining PLC ("Hochschild" or "the Company") (LSE: HOC) (OTCQX: HCHDF) is pleased to announce its production report for H1 2022 and an update on its project portfolio.

 

Ignacio Bustamante, Chief Executive Officer said:

"Following a strong second quarter, we remain on track to meet our full year production and cost forecasts. Furthermore, this has been achieved despite operational issues at Pallancata and San Jose and in an environment of considerable economic challenges. We have also made good progress at our two development projects in Brazil and Canada as well as our 2022 brownfield drilling programme."

 

Operational highlights

§ Q2 2022 attributable production:[1]

49,133 ounces of gold

2.6 million ounces of silver

85,819 gold equivalent ounces

6.2 million silver equivalent ounces

§ H1 2022 attributable production      

96,360 ounces of gold

5.1 million ounces of silver

166,708 gold equivalent ounces

12.0 million silver equivalent ounces

§ 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

§ Mara Rosa project in Brazil advancing on schedule - total project progress at the end of June was 7% with key final permit expected in Q3

§ Drilling commenced at Snip with encouraging results - pre-feasibility study to be completed by end of 2022

§ Pallancata medium-term drill programme delivering positive results - continuing to test short-term targets

ESG highlights

§ Lost Time Injury Frequency Rate of 1.28 (FY 2021: 1.26)[2]

§ Accident Severity Index of 72 (FY 2021: 676)[3]

§ Water Consumption of 175lt/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 5.35 out of 6 (FY 2021: 5.29)[4]

Strong financial position

§ Total cash of approximately $205 million as at 30 June 2022 following completion of the Amarillo acquisition ($387 million as at 31 December 2021)

§ Net debt of approximately $106 million as at 30 June 2022 (net cash of $86 million as at 31 December 2021)

§ Current Net Debt/LTM EBITDA of approximately 0.34x as at 30 June 2022

________________________________________________________________________________________

 

A conference call will be held at 2.30pm (London time) on Wednesday 20 July 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: 1215129

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

________________________________________________________________________________________

 

Overview

In Q2 2022, Hochschild delivered attributable production of 85,819 gold equivalent ounces or 6.2 million silver equivalent ounces with a solid performance from Inmaculada and an increase at San Jose versus the first quarter. In the first half of 2022 as a whole, Hochschild produced 166,708 gold equivalent ounces or 12.0 million silver equivalent ounces (on an attributable basis) with production increasing quarter-on-quarter. 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

 

Q2 2022

Q1 2022

Q2 2021

H1 2022

H1 2021

Silver production (koz)

3,346

2,759

3,700

6,105

7,021

Gold production (koz)

60.27

53.68

62.76

113.94

125.07

Total silver equivalent (koz)

7,685

6,624

8,219

14,309

16,027

Total gold equivalent (koz)

106.74

92.00

114.15

198.74

222.59

Silver sold (koz)

3,445

2,600

3,823

6,045

7,005

Gold sold (koz)

63.06

49.64

63.18

112.70

124.32

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

                                     

ATTRIBUTABLE GROUP PRODUCTION

 

Q2 2022

Q1 2022

Q2 2021

H1 2022

H1 2021

Silver production (koz)

2,641

2,424

3,093

5,065

5,922

Gold production (koz)

49.13

47.23

53.42

96.36

106.26

Silver equivalent (koz)

6,179

5,824

6,939

12,003

13,573

Gold equivalent (koz)

85.82

80.89

96.37

166.71

188.51

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

 

Production

Inmaculada

Product

Q2 2022

Q1 2022

Q2 2021

H1 2022

H1 2021

Ore production (tonnes treated)

327,837

329,364

334,657

657,202

672,137

Average grade silver (g/t)

137

153

163

145

160

Average grade gold (g/t)

3.47

3.75

3.92

3.61

3.92

Silver produced (koz)

          1,322

1,493

1,358

2,815

2,777

Gold produced (koz)

        34.86

          37.81

39.60

72.67

79.40

Silver equivalent (koz)

3,831

4,216

4,209

8,047

8,494

Gold equivalent (koz)

53.21

58.55

58.46

111.77

117.98

Silver sold (koz)

1,422

1,383

1,355

2,805

2,769

Gold sold (koz)

37.56

35.16

39.85

72.72

79.49

 

Inmaculada's second quarter production was 34,855 ounces of gold and 1.3 million ounces of silver which amounts to a gold equivalent output of 53,214 ounces. Grades were lower than expected due to a temporary mine plan schedule partially offset by higher than budgeted recoveries. Overall, in the first half of 2022, Inmaculada produced 111,766 gold equivalent ounces (H1 2021: 117,975 ounces), driven by better-than-expected recoveries.

 

The Company is currently in the final stages of the permitting process of Inmaculada's modified Environmental Impact Assessment with completion expected during H2.

 

Pallancata

Product

Q2 2022

Q1 2022

Q2 2021

H1 2022

H1 2021

Ore production (tonnes treated)

134,276

124,782

162,052

259,058

289,002

Average grade silver (g/t)

             154

             165

234

159

237

Average grade gold (g/t)

0.69

0.74

0.86

0.72

0.86

Silver produced (koz)

586

581

1,103

1,167

2,000

Gold produced (koz)

2.69

2.70

4.09

5.39

7.28

Silver equivalent (koz)

            780

             776

         1,398

1,555

2,524

Gold equivalent (koz)

         10.83

          10.77

         19.42

21.60

35.06

Silver sold (koz)

584

577

1,229

1,161

2,000

Gold sold (koz)

2.66

2.69

4.56

5.36

7.29

 

In the second quarter, Pallancata produced 0.6 million ounces of silver and 2,692 ounces of gold bringing the silver equivalent total to 0.8 million ounces. Overall, in H1 2022, Pallancata's output was 1.6 million silver equivalent ounces (H1 2021: 2.5 million ounces). Grades have been lower than expected throughout the first half and consequently, with the rapid fall in the silver price in the period, the Company has updated the mine plan for 2022 and is considering all options with regards to future ore production from the Pallancata mining area.

 

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

Product

Q2 2022

Q1 2022

Q2 2021

H1 2022

H1 2021

Ore production (tonnes treated)

131,467

73,892

144,849

205,359

246,194

Average grade silver (g/t)

383

331

304

365

321

Average grade gold (g/t)

6.09

6.36

4.69

6.19

5.45

Silver produced (koz)

1,438

685

1,239

2,123

2,244

Gold produced (koz)

22.72

13.16

19.07

35.88

38.40

Silver equivalent (koz)

        3,074

         1,632

          2,612

4,706

5,008

Gold equivalent (koz)

        42.69

         22.67

36.27

65.37

69.56

Silver sold (koz)

1,440

640

1,239

2,080

2,236

Gold sold (koz)

22.83

11.79

18.77

34.62

37.54

 

Q2 production at San Jose was 1.4 million ounces of silver and 22,718 ounces of gold which is 3.0 million silver equivalent ounces and brings the total for the first half of the year to 4.7 million silver equivalent ounces (H1 2021: 5.0 million ounces). Gold grades were better than expected in the quarter although this was offset by lower-than-expected tonnage.

 

As previously reported, in the first quarter the operation experienced further Covid-related restrictions on labour availability in the country. In addition, a fire in the crushing area temporarily affected operations but without any impact on full year production forecasts or costs (which are expected to be covered by insurance).

 

Average realisable prices and sales

Average realisable precious metal prices in Q2 2022 (which are reported before the deduction of commercial discounts) were $1,843/ounce for gold and $22.0/ounce for silver (Q2 2021: $1,838/ounce for gold and $27.9/ounce for silver). For H1 2022, average realisable precious metal prices were $1,875/ounce for gold and $23.7/ounce for silver (H1 2021: $1,772/ounce for gold and $26.3/ounce for silver).

 

Advanced Project: Mara Rosa

The Mara Rosa project in Brazil is progressing according to schedule with the following key highlights:  

§ Total project progress at the end of June 2022 was 7%

§ Detailed engineering 71% complete

§ Long lead-time equipment (e.g. ball mills and filters) have been purchased

§ Metso 3-stage crusher being delivered to site

§ EPCM, earthworks, diesel, and mining pre-stripping contracts being progressed

§ Acquisition of site substation, transformers and water and sewage treatment facilities completed

§ Construction powerline completed with project powerline construction ongoing

§ Topsoil removal commenced in areas with no vegetation - approximately 30% of project area

 

Development Project: Snip

Approximately 7,300m were drilled from underground in Q2, with all "twin" holes completed by the end of the quarter. Work in the third quarter will be focused on finishing the "infill" and" potential" holes in the programme and logging the resultant core. Assay results are expected through to the end of the year.

 

Work on the Pre-Feasibility Study continued with metallurgical test work, an evaluation of ARD potential in waste samples, and a flowsheet trade-off study all completed during the quarter. Processing plant designs and an updated resources model are expected to be finalised in Q3. The full study remains on track for completion at the end of the year. In addition, a new 2-year Environmental Baseline program was approved and data collection began.

 

Assay results were received during the period, with the following highlights:

 

Vein

Results (Twin hole)

215

UG22-297: 2.3m @ 9.5g/t Au & 11g/t Ag

215

UG22-289: 8.0m @ 20.2g/t Au & 10g/t Ag

221

UG22-291: 3.8m @ 11.8g/t Au & 13g/t Ag

226

UG22-289: 8.7m @ 5.8g/t Au & 6g/t Ag

233

UG22-297: 4.6m @ 35.0g/t Au & 11g/t Ag

246

UG22-293: 2.3m @ 18.8g/t Au & 8g/t Ag

 

Development Project: Volcan

During the second quarter, the Company's 100% owned subsidiary, Tiernan Gold Corporation continued to advance the Volcan project. Work carried out during the period included updating the Mineral Resource Estimate as well as developing an optimised mine and project development plan.  During the third quarter, the Company expects to advance several trade-off studies aimed at creating additional project value. The results of the engineering work are expected to be outlined in a new technical report.

 

Brownfield exploration

Inmaculada

In Q2 2022, 4,200m of drilling was carried out with the best result below from the Josefa vein:

 

Vein

Results (potential/resource drilling)

Josefa

IMM22-139: 2.8m @ 1.9g/t Au & 43g/t Ag

 

During Q3, the plan is to carry out 6,000m of further drilling in the Josefa vein.

 

Pallancata

At Pallancata, 12,500m of resource drilling was executed in the Laura-Demian, Royropata and Miriam structures. Whilst the results are encouraging, the structures are outside the current permitted area and will require new permits before being brought into the mine plan. Quartz-sulfide veins were intercepted with grades of between 250 and 1,600 silver equivalent grams per tonne. Selected results are below:

 

Vein

Results (resource drilling)

Miriam

DHMIR-A16: 1.3m @ 1.0g/t Au & 155g/t Ag

Demian

DLDE-A03: 3.8m @ 0.8g/t Au & 184g/t Ag

DLRY-A08: 1.1m @ 4.1g/t Au & 820g/t Ag

Laura

DLDE-A04: 6.1m @ 0.8g/t Au & 251g/t Ag

DLLAU-A08: 1.3m @ 0.5g/t Au & 274g/t Ag

DLLAU-A09: 0.9m @ 4.7g/t Au & 286g/t Ag

DLLAU-A11: 1.9m @ 0.9g/t Au & 298g/t Ag

Royropata

DLDE-A06: 4.2m @ 0.6g/t Au & 224g/t Ag

DLRY-A08: 1.5m @ 1.1g/t Au & 345g/t Ag

Royropata 2

DLDE-A06: 1.3m @ 3.0g/t Au & 1,039g/t Ag

DLRY-A08: 3.0m @ 1.8g/t Au & 596g/t Ag

Royropata 4

DLDE-A06: 17.8m @ 1.2g/t Au & 384g/t Ag

DLRY-A08: 5.1m @ 2.3g/t Au & 647g/t Ag

Royropata 5

DLDE-A06: 2.3m @ 3.0g/t Au & 1,446g/t Ag

 

During Q3, there will be 2,000m of further drilling in the vein structures in the Royropata system.

 

San Jose

At San Jose, 3,600m of potential drilling was carried out close to current operations and 700m of drilling was also executed at the Ciclon project. Selected results below:

 

Vein

Results (potential/resource)

Agostina

SJD-2468: 4.1m @ 7.5g/t Au & 84g/t Ag

SJD-2469: 5.4m @ 3.3g/t Au & 29g/t Ag

SJD-2471: 1.9m @ 1.6g/t Au & 68g/t Ag

Ayelen SE

SJM-594: 1.5m @ 6.9g/t Au & 648g/t Ag

Ciclon

DCE22-02: 2.9m @ 1.0g/t Au & 615g/t Ag

 

During Q3, 2,000m of potential drilling will be carried out on the Ayelen SE vein to find new resources.

 

Financial position

Total cash was approximately $205 million as at 30 June 2022 resulting in a net debt position of approximately $106 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' 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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