20th Jan 2016 08:32
LONDON (Alliance News) - Hochschild Mining PLC Wednesday said production in 2015 exceeded its full year guidance and said production will soar during the current year, with the company contnuing to mitigate falls in gold prices through its hedging programme.
The miner said full year production totalled 24.7 million silver equivalent ounces in 2015, comfortably ahead of its 24.0 million ounce target, with the Inmaculada mine in Peru producing slightly more than expected.
"The operational performance during 2015 exceeded expectations as we once again beat our annual production target and are maintaining our guidance on full year costs. The mines delivered a very solid fourth quarter with our new low cost Inmaculada mine performing particularly strongly," said Chief Executive Ignacio Bustamante.
Production in 2016 is expected to soar to 32.0 million silver equivalent ounces, also boosted by lower production costs. In 2015, Hochschild had a stunningly low all-in-sustaining cash cost of only USD13 to USD14 per silver equivalent ounce, and it expects this to fall further to only USD12 to USD13 per ounce in 2016.
There is further good news from the company as its hedging programme is also allowing it to receive more per ounce than current spot prices. In 2016, the miner has 71,000 ounces hedged at USD1,154 an ounce, 29,000 ounces hedged at USD1,145 an ounce and 6.0 million ounces of silver hedged at USD15.93 per ounce.
To put that into perspective, gold was trading at USD1,096 per ounce on Wednesday morning.
The company also repaid USD105.0 million of debt in the final quarter of 2015, and said net debt should stand at around USD366.0 million at the end of 2015, with cash of USD83.0 million.
Total sustaining and development expenditure in 2016 is expected to be around USD100.0 million, 10% of which will be spent on developing the Pablo vein at the Pallancata mine property in south west Peru, which is expected to have an all-in sustaining cost of USD10 to USD11 per silver equivalent ounce and a net asset value of USD25.0 to USD30.0 million, it said.
"We enter 2016 with a renewed sense of excitement: a fourth consecutive year of production increases and reduced costs; a low risk organic project; a stronger balance sheet; and several brownfield exploration targets with the potential to continue improving the quality and quantity of our existing resources," said Bustamante.
Hochschild shares were up 4.4% to 41.25 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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