20th Apr 2016 06:50
LONDON (Alliance News) - Hochschild Mining PLC Wednesday said it remains on track to deliver its full year production guidance after it outpaced its budgeted mine plans in the first quarter.
The silver and gold mining firm operating in north, south and central America said it produced 7.4 million silver equivalent ounces in the first quarter of 2016, which is 79% higher than the 4.2 million ounces produced a year earlier.
Those silver equivalent ounces were comprised of 3.7 million ounces of silver and 51,100 ounces of gold, and although production was up from a year ago, it was almost 21% lower than the 9.4 million ounces produced in the final quarter of 2015.
"As per company guidance, the first quarter of the year is always the lowest due to the sequencing of the annual mine plans and scheduled hourly workers' vacation in Argentina. However, production was slightly ahead of budget due to a better than expected performance in March across all operations and is also up 79% versus the first quarter of 2015," said the miner.
Its flagship Inmaculada mine in Peru produced 3.5 million silver equivalent ounces in the quarter, which was also down from the previous quarter when the mine delivered 4.4 million silver equivalent ounces. The mine was not in production this time last year.
"Our flagship mine, Inmaculada continues to operate efficiently at a very competitive cost and we remain excited by the potential in the surrounding district where we will commence a drilling programme later in the year as part of our company-wide 2016 brownfield exploration plan," said Chief Executive Ignacio Bustamante
Hochschild said it remains on track to produce 32.0 million silver equivalent ounces for the full year at an all-in sustaining cash cost of USD12.0 to USD12.5 per ounce, which would be a lift from the 27.0 million ounces produced in 2015.
The miner said prices in the first quarter of 2015 averaged USD1,266 per ounce of gold and USD16.2 per ounce of silver, which can be compared to the first quarter of 2015 when gold prices averaged USD1,247 per ounce and silver was priced at an average of USD17.6 per ounce.
However, helping to counter the fall in commodity prices, the miner said it signed a zero cost collar contract back in February covering 3.0 million ounce of silver at a call/put price of USD17.60 and USD14.0 per ounce until the end of the year.
Hochschild also signed a commodity swap deal covering a further 15,000 ounces of gold at a price of USD1,244 per ounce until the end of 2016.
Hochscild said both those deals are in addition to the previous 2016 hedging agreements, which already covers 29,000 ounces of gold at USD1,145 per ounce, 6.0 million ounces of silver at USD15.93 per ounce and another 71,000 ounces of gold priced at USD1,154 per ounce.
Hochschild said it had a total cash balance of USD105.0 million as of April 15, with net debt standing at USD345.0 million.
By Joshua Warner; [email protected]; @JoshAlliance
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