Hochschild Regulatory News (HOC)

26 Jun 2007 07:01

Hochschild Mining PLC26 June 2007 26 June 2007 Hochschild Mining plc commences production at the San Jose mine in southern Argentina • Commencement of production at San Jose on time marks another important milestone in Hochschild's growth strategy and geographic diversification • In the course of 2007, Hochschild is expanding from three operations in one country to six operations in three countries • Hochschild plans to double plant capacity at San Jose in Q3 2008 • Hochschild is on track to reach its production target of 26 million silver equivalent attributable ounces in 2007 (14 million silver attributable ounces and 200 thousand gold attributable ounces) Eduardo Hochschild, Chairman of Hochschild Mining plc, said, "I am delighted to announce the commencement of production at this significantproject. San Jose marks an important milestone for us as our first producingoperation in Argentina, adding to our status as a leading Latin Americanunderground precious metals producer. As the first Latin American company toachieve a main board listing on the London Stock Exchange in over a hundredyears, we are committed to delivering value for our shareholders and for all ourstakeholders." "We intend to keep building on our proven track record of production growth andproject delivery. This year is crucial to Hochschild's development as we areexpanding from three mines in one country to six mines in three countries. Withthe expansions at Ares and Arcata behind us and the commencement of productionat San Jose, we remain on course to reach our stated target of producing 50million silver equivalent ounces by 2011." Hochschild Mining plc ("Hochschild") is pleased to announce that it hascommenced production at the San Jose mine today. San Jose, a silver and goldmine located in southern Argentina, is owned by Minera Santa Cruz, which isjointly owned by Hochschild (51%) and Minera Andes, S.A. (49%) and is operatedby Hochschild. This project represents a significant step in the delivery ofHochschild's growth strategy, which is based on high margin, cash generativeprecious metals production in the Americas. San Jose is Hochschild's firstoperation in Argentina and the first underground mine in the province of SantaCruz. Commencement of production at San Jose demonstrates Hochschild's abilityto use its regional knowledge and expertise in underground mining tosuccessfully achieve production growth and geographic diversification. This yearHochschild is expanding from three operations in one country to six operationsin three countries, Peru, Argentina and Mexico. In addition, Hochschild plans to expand the processing plant capacity at the San Jose mine from 750 ktpd to 1500 ktpd beginning in Q3 2008. This expansion will effectively double the throughput capacity of San Jose at a cost of approximately $38m. Currently the San Jose operation is being powered by diesel generators. However,Minera Santa Cruz has been evaluating alternative sources of energy in order toreduce the future cost base. As a result of this evaluation, the company is planning to change the energy source at San Jose from diesel generators to electrical connection via the southern national grid, starting in Q4 2008. The San Jose mine will use an intensive leaching reactor (ILR) in lieu of theMerry-Crowe plant to produce dore. ILR was chosen by Minera Santa Cruz (insteadof the Merry-Crowe plant contemplated in the feasibility study) because of itshigher recoveries of gold and silver, better control of cyanide and lowerinvestment and operating costs, all of which were determined by comprehensivemetallurgical tests undertaken in 2006. Hochschild presently uses ILRsuccessfully at Ares, one of its Peruvian operations. Consistent with Hochschild's CSR philosophy, Minera Santa Cruz has devotedconsiderable time and resources to engage with the local communities around SanJose. Sixty per cent of the workforce is from the surrounding Patagonian regionand have been trained by Hochschild. In addition, over the past year, MineraSanta Cruz has hosted monthly visits to the mine site for the local community tolearn about mining, the project and environmental management. Minera Santa Cruzhas established a tripartite Project Development Agency comprisingrepresentatives from the community, local authorities and Hochschild, to promoteand, where feasible, fund projects and ventures that will provide a direct andsustainable economic benefit to the community, the surrounding region and itspeople. Enquiries:Hochschild Mining plcWray Barber +44 (0)20 7152 6014Head of Investor Relations FinsburyRobin Walker +44 (0)20 7251 3801Public Relations About San Jose The San Jose silver and gold mine, located in southern Argentina, is owned byMinera Santa Cruz, which is jointly owned with Minera Andes, S.A. andHochschild, which has a 51% ownership interest and is the operator. In 2006, a21,241 metre drill program was completed which increased attributable resourcesand reserves by 37% and 54%, respectively. Thus far in 2007, 4,800 metres ofdrilling have been completed and plans to drill an additional 33,000 metres willbe completed during the remainder of the year. This year Minera Santa Cruz plansto mine the Huevos Verdes vein and the nearby Frea vein where more than 11kilometres of underground workings have been developed. About Hochschild Mining plc Hochschild Mining plc (HOC.L for Reuters / HOC LN for Bloomberg) is a publiclyheld company listed on the London Stock Exchange. Hochschild is a leadingprecious metals company with a primary focus on the exploration, mining,processing and sale of silver and gold. Hochschild currently operates fourunderground epithermal vein mines, three located in southern Peru and one insouthern Argentina. Hochschild also has two advanced stage development projects,one in each of Mexico and Peru and one early stage development project inMexico. In addition, Hochschild has over twenty long-term prospects throughoutLatin America and has over forty years experience in the mining of preciousmetal epithermal vein deposits. For further information please visitwww.hochschildmining.com. This information is provided by RNS The company news service from the London Stock Exchange