15th Jul 2015 07:27
LONDON (Alliance News) - Hochschild Mining PLC Wednesday said production rose in the first half of the year as its Inmaculada mine contributed its first gold during the period and the company reiterated its production guidance for the full year.
The miner produced 4.8 million silver equivalent ounces in the second quarter of 2015, comprising 3.4 million ounces of silver and 23,400 ounces of gold. That is down from 5.9 million ounces of silver equivalent a year earlier but up from the 3.9 million ounces produced in the previous quarter.
In the period, the company's flagship Inmaculada mine in Peru contributed its first 5,000 gold equivalent ounces after starting production in June.
That brought production in the first half to 8.7 million silver equivalent ounces comprised of 6.3 million ounces of silver and 40,600 ounces of gold, up from 6.2 million silver equivalent ounces a year earlier.
"We are excited to report that our Inmaculada mine delivered its first production in early June and the other operations also contributed to what was a solid operating quarter with costs for the half year expected to be in line with expectations," said the company.
Hochschild reiterated its full year production guidance of 24.0 million silver equivalent ounces, and said its all-in-sustaining-cost should be in the region of USD15 to USD16 per silver equivalent ounce.
In the third quarter, Hochschild expects to receive final permits, complete the ramp-up process and achieve "commercial production" at its Inmaculada project. The mine is set to deliver 6.0 to 7.0 million ounces of silver equivalent production in 2015.
"The ramp-up process at Inmaculada is progressing and we expect to hit our six to seven million ounce production target for 2015. The company is on the point of converting its significant long term investment into low cost value accretive growth," added Chief Executive Ignacio Bustamante.
At the end of the quarter, Hochschild cash balance stood at USD84 million.
Although production was up, gold and silver prices remain lower than a year earlier. Gold prices averaged USD1,212 per ounce in the second quarter whilst silver prices averaged USD16.3 per ounce, down from USD1,310 per ounce and USD20.3 per ounce respectively.
However, in January the miner entered agreements to hedge 6.0 million ounces of silver in 2015 for USD17.75 per ounce, which is in addition to the previous agreement to hedge 38,000 ounces of gold for USD1,300 per ounce throughout the year.
Hochschild shares were up 2% to 101.00 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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