Last checked at 29 Dec 2010 07:00
[29 December 2010]
Hochschild signs JV agreement for Inmaculada property
Further to the announcement on 13 October 2010, Hochschild Mining plc ("Hochschild" or the "Company") is pleased to confirm the signing of the definitive joint venture agreement (the "JV Agreement") with its partner, International Minerals Corporation ("IMZ") to develop the Inmaculada project. Based on the terms of the agreement, Hochschild now holds a 60% interest in the Inmaculada property in southern Peru and becomes the operator.
Inmaculada is a 20,000 hectare gold-silver project located 25km south of the Pallancata silver mineand is one of the Company's key advanced projects. An independent scoping study, published by IMZ in September 2010, estimated average annual total silver equivalent production of 11 million ounces from the project's Angela vein. The project currently reports total resources of 115 million silver equivalent ounces (1.9 million gold equivalent ounces) and Hochschild is now fast tracking the project with the aim of completing feasibility by the end of 2011, moving to production in 2014.
Results of the scoping study indicate that at base case gold and silver price assumptions of $1,000/oz and $17/oz respectively, the project could return a cumulative total pre-tax cash flow[1] of $660 million, with a pre-tax internal rate of return ("IRR") of 41%. Using prices of $1,400/oz and $24/oz for gold and silver respectively, the project could return a cumulative total pre-tax cash flow[2] of approximately $1,148 million, equivalent to $787 million at a 5% discount rate and $548 million at a 10% discount rate, with an IRR for the project of approximately 63%.
Ignacio Bustamante, CEO of Hochschild Mining said:
"We are delighted to announce the closing of the joint venture agreement with IMZ, who have done a fantastic job in bringing the Inmaculada project to its current stage of development. The agreement demonstrates our strategy of securing early stage, highly value accretive projects which have significant upside potential and a clear path to control. As project operators, we now look forward to leveraging on the skill base and infrastructure in our southern Peru cluster as well as on our extensive experience in bringing early stage projects into development in order to successfully develop Inmaculada."
Under the terms of the agreement, Hochschild will make a cash payment to IMZ of $15 million and will fund 100% of the first $100 million of capital expenditure towards the project's feasibility and development. Any further capital expenditure required to achieve commercial production will be contributed by each joint venture partner in proportion to their ownership interests. In addition, Hochschild now holds 3.66 million common sharesin IMZ or 3.2% of the issued and outstanding share capital of the company.
For full details relating to the Inmaculada project, please visit the press release dated 13 October 2010 at www.hochschildmining.com.
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Enquiries:
Hochschild Mining plc
Jane Flynn +44 (0)20 7907 2934
Investor Relations Manager
Finsbury
Faeth Birch +44 (0)20 7251 3801
Public Relations
[1] Non-discounted
[2] Non-discounted
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About Hochschild Mining plc
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over forty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has numerous long-term prospects throughout the Americas.
About International Minerals
International Minerals is a silver-gold producer and developer with silver and gold production from its 40%-owned Pallancata Mine in Peru, one of the top-10 primary silver mines in the world. Production of approximately 10 million ounces of silver and 33,000 ounces of gold (on a 100% project basis) is estimated by IMZ in calendar year 2010. In addition to the Pallancata Mine, IMZ also controls a 40% interest in the Inmaculada gold-silver project in Peru and majority or 100% ownership interests in development stage gold projects in Nevada (Goldfield and Converse) and Ecuador (Rio Blanco and Gaby). IMZ also owns a 3% net smelter return ("NSR") royalty from Barrick Gold's Ruby Hill gold mine in Nevada, which produced approximately 100,000 gold ounces in 2009. IMZ is listed on the Toronto Stock Exchange (since 1994) and the Swiss Stock Exchange (since 2002).