21st Jan 2015 09:17
(An item published at 0827 GMT misstated the location of the Inmaculada project. The correct version follows.)
LONDON (Alliance News) - Hochschild Mining PLC Wednesday said production grew in 2014 and will expand further in 2015, while it has hedged a significant amount of silver to try and protect itself from falling silver prices.
In the fourth quarter ended December 31, the company reported net production of 5.6 million silver equivalent ounces, bringing total production for 2014 to 22.2 million silver equivalent ounces, which is a 6% over the company's guidance of 21 million ounces.
During 2014, Hochschild said it achieved an average price of USD1,279 per ounce of gold and USD18.87 per ounce of silver, both significantly down from 2013.
""Despite the complex precious metal environment, our core assets have once again surpassed their annual target, this time by almost 6%," said Chief Executive Ignacio Bustamante.
In 2015, the company is expecting production to rise, setting guidance of 24 million ounces of silver equivalent. Hochschild reiterated it expects its all-in sustaining costs to fall by 5% to USD15 to USD16 per ounce in 2014, from the USD18.6 per ounce reported in 2013.
"The company will grow its production to 24 million silver equivalent ounces in 2015 while maintaining the management's focus on reducing costs and improving efficiencies," added Bustamante.
The company has hedged 6 million ounces of silver at USD17.75 per ounce for 2015, which is in addition to a previous hedging of 38,000 ounces of gold at USD1,300 per ounce, it said.
At the end of 2014, the company reported a cash balance of USD115 million.
"Our flagship Inmaculada project is close to completion, with the mine itself already ramping up and the plant construction moving towards its final stages. We are excited about Inmaculada as it will not only be the cornerstone of our production base in Peru but also will contribute significantly to reinforcing our strong cash cost position," said Bustamante.
The Inmaculada project in Peru is 86% complete and is expected to produce between 6 million to 7 million ounces of silver equivalent in 2015. The project has faced some construction delays but the plant at the project is expected to be commissioned in the second quarter.
Hochschild has already stockpiled 157,449 tonnes of development minerals to be processed once the plant is operational.
During 2015, the miner will spend USD33 million on developing the Inmaculada project, and USD75 million on construction. Other capital expenditure is expected to total around USD45 million, it said.
Hochschild shares were down 3.5% to 126.00 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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