Hochschild Mining lifts production guidance, lowers costs in third quarter

Hochschild Mining issued its production report for the nine months ended 30 September on Wednesday, increasing its full-year guidance on production and decreasing its costs.

The FTSE 250 company said its third quarter attributable production included 5.1 million ounces of silver and 62,432 ounces of gold, for 9.7 million silver equivalent ounces or 130,685 gold equivalent ounces.

Year-to-date attributable production was 14.7 million ounces of silver and 199,939 ounces of gold, for 29.5 million silver equivalent ounces or 398,922 gold equivalent ounces.

It revised its overall 2018 production target to 520,000 gold equivalent ounces, or 38.5 million silver equivalent ounces.

Full-year 2018 all-in sustaining costs guidance was also revised to between $940 and $970 per gold equivalent ounce, or $12.70 to $13.10 per silver equivalent ounce, from a previous $960 to $990 per gold equivalent ounce or $13.00 to $13.40 per silver equivalent ounce.

Hochschild said its exploration programme continued to deliver in the third quarter, with its brownfield programme still adding resources.

Third quarter drilling at Inmaculada was expected to increase inferred resource additions from the 800,000 gold equivalent ounces figure disclosed at the interim results.

An updated estimate was expected at the capital markets day on 7 November.

It also reported ongoing encouraging results at Arcata, which were currently being assessed against medium-term operational viability.

The San Jose drilling programme was also said to be delivering positive results, with activity weighted towards the end of the year.

Good progress was also reported on permitting for the 2019 drilling programme at Pallancata.

On the financial front, Hochschild said it remained “robust”, with total cash of approximately $143m as at 30 September, up from $142m at 30 June.

Net debt stood at $63m on 30 September, down from $67m at the end of June.

The company’s current net debt-to-last 12 months EBITDA was approximately 0.21x as at 30 September.

“Hochschild has once again completed a robust quarter with production at all our mines in line with expectations, therefore completing a record nine months for the company,” said chief executive officer Ignacio Bustamante.

“We are pleased to now raise our production target for the year to 520,000 gold equivalent ounces - 38.5 million silver equivalent ounces - and to lower our all-in sustaining cost guidance to between $940 and $970 per gold equivalent ounce - $12.70 to $13.10 per silver equivalent ounce.”

Bustamante said the company was continuing to see strong results from its ambitious brownfield exploration plan, particularly highlighting drilling at Inmaculada as being expected to increase the estimated inferred resource figure disclosed in August.

“We look forward to our capital markets day on 7 November when we will give a detailed overview of our exploration programme and the progress made to date.”