Hochschild Mining achieves strong first quarter production despite San Jose stoppage

Hochschild Mining reported record first quarter attributable production in an update on Wednesday, with 4.7 million ounces of silver and 69,030 ounces of gold produced in the period.

The FTSE 250 company said on an equivalency basis, that totalled 9.8 million silver equivalent ounces or 132,036 gold equivalent ounces.

It said the strong performance was achieved despite the scheduled annual stoppage at San Jose.

The value-accretive $14m hydraulic backfill project at San Jose was said to be on track for completion at the end the first half.

Hochschild claimed to be on track to deliver its overall 2018 production target of 514,000 gold equivalent ounces, or 38 million silver equivalent ounces

Its 2018 all-in sustaining cost was on track to meet between $960 and $990 per gold equivalent ounce guidance, or between $13 and $13.40 per silver equivalent ounce.

On the exploration front, Hochschild said its brownfield programme was already adding further resources.

At Inmaculada, it reported further encouraging results from the Millet vein and surrounding structures, while its Arcata and San Jose programmes were said to be identifying resources close to the existing mine infrastructure.

Looking at the books, Hochschild reported total cash of around $109m as at 31 March, down from $257m on 31 December.

Net debt stood at $100m at the end of March, narrowing slightly from $103 million at the end of December.

Hochschild said its 7.75% senior notes were repaid in the first quarter, financed by cash resources and “significantly lower” cost short-to-medium term debt.

The company’s current net debt/LTM EBITDA stood at approximately 0.33x as at 31 March.

“Hochschild has delivered a strong start to the year with better than expected contributions from Inmaculada and Pallancata and our other mines performing as planned,” said chief executive Ignacio Bustamante.

“We are therefore firmly on track to meet our stated production and cost targets for 2018.”

Bustamante said the company also made an “encouraging start” to its ambitious 2018 brownfield exploration plan, with campaigns already commenced at Inmaculada, Arcata and San Jose.

“Early results support our confidence in the programme's ability to deliver resource additions to our mineral base during 2018.”