22nd Apr 2015 06:54
LONDON (Alliance News) - Hochschild Mining PLC Wednesday said it is on track to achieve its full-year guidance after production in the first quarter was in line with expectations, despite being down from the previous quarter and compared to a year ago.
Total silver equivalent and total gold equivalent production both fell quarter on quarter and compared to the a year earlier, whilst sales of both also significantly fell. However, Hochschild said it was a "budgeted reduced quarter of production", adding that volumes are scheduled to increase across all of its operations from the second quarter onwards to meet its full-year guidance.
Total silver equivalent production in the first quarter fell to 5.1 million ounces compared to 7.3 million ounces in the previous quarter and 7.3 million ounces a year earlier, whilst total gold equivalent production fell to 85,380 ounces in the first quarter compared to 122,310 ounces in the previous quarter and 121,500 ounces a year earlier.
"The reduction versus the previous quarter is in line with the anticipated mine tonnage reduction at Arcata and Pallancata, as part of the company's cash optimisation plan, in addition to the sequencing of the annual mine plans and scheduled hourly workers' vacation in Argentina at the beginning of the year," said Chief Executive Igancio Bustamante.
As a result, silver sales fell quarter on quarter to 3.3 million ounces from 5.2 million ounces in the fourth quarter and 5.1 million ounces a year earlier, with gold sales falling to 25,640 ounces in the first quarter from 40,000 ounces in the fourth quarter and 38,110 ounces a year earlier.
Sales also were hit by lower commodity prices in the first quarter, with the average silver price falling to USD17.6 per ounce from USD20.7 per ounce a year earlier and gold prices dropping to USD1,236 per ounce from USD1,347.
However, Hochschild signed an agreement in January that will result in the company selling 6.0 million ounces of silver at USD17.75 per ounce in 2015, which is in addition to a previous agreement to sell 38,000 ounces of gold at USD1,300 per ounce in 2015.
"We have made a solid start to the year in what was a budgeted reduced quarter of production. Volumes are scheduled to increase at all our operations from the second quarter onwards and we are firmly on track to deliver our 24 million ounce target for the year," Bustamante said.
Hochschild added that its all in sustaining cash cost for 2015 is on track to be between USD15 to USD16 per silver equivalent ounce.
The company's "key" Inmaculada project in Peru is "almost complete" with the plant construction at the site 93% completed. The plant pre-commissioning process is underway and first production is scheduled for the end of the second quarter of 2015. The underground development plan at the project is ahead of schedule, with 225,000 tonnes of development mineral already stockpiled, it said.
The Inmaculada project is set to produce between 6.0 million to 7.0 million ounces of silver equivalent in 2015 with an all-in sustaining cost of around USD11.8 per ounce over its entire life of mine.
At the end of March, Hochschild reported a cash balance of USD131 million.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Hochschild