Hochschild Regulatory News (HOC)

16 Apr 2008 07:01

Hochschild Mining PLC16 April 2008 Hochschild Mining plc Quarterly Production Report and Interim Management Statement for the three months to 31 March 2008 ("Q108") Highlights: * On track to achieving our 2008 production target of 26 million attributable silver equivalent ounces comprised of 16.9 million ounces of silver and 153 thousand ounces of gold * Q108 in line with internal production forecast * 42% increase in attributable silver production year-on-year * 17% decrease in attributable gold production year-on-year, principally due to lower grades at Ares as previously announced in January 2008 * Capacity expansions at San Jose, Arcata and Selene on schedule to be completed later this year * Preliminary results of the San Felipe scoping study received and the feasibility study progressing as planned * Higher realisable prices for gold and silver, $933/oz and $17.28/oz respectively, due to a combination of strong prices and a fully un-hedged position * Remain confident on containing our weighted average unit cost per tonne for our mines in 2008 * Revised agreement with Lake Shore Gold Corp. to increase stake by 15% at C$2.40 per share and reduce standstill to 2010 Eduardo Hochschild, Executive Chairman of Hochschild Mining plc, commented; "This year we intend to consolidate our operations following a period ofsignificant growth having brought three new mines into production last year. Weare pleased with our first quarter results which are in line with our internalforecast. With the achievements of 2007, our San Felipe project moving towardsfeasibility and our strong project pipeline, we are on track to create theoperational platform that will enable us to deliver our 2011 production targetof 50 million silver equivalent ounces." Production in the first quarter was significantly higher than the equivalentperiod last year at 5.8 million attributable silver equivalent ounces, up 12%.However, as expected, production was below that of the fourth quarter of 2007principally due to lower grades at Ares and Selene and also due to fewer days ofproduction in Q1 relative to Q4. The capacity expansions at San Jose, Arcata and Pallancata are on schedule and,as a result, production will increase in the second half of the year once theseexpansions are completed. We are confident that we will reach our target ofproducing 26 million attributable silver equivalent ounces in 2008. The feasibility study currently being undertaken at San Felipe is progressingwell and we remain confident about the potential of the project, which isscheduled to commence production in 2010. We expect to have results from thestudy by the end of 2008. In the meantime, we are taking steps to ensure that wehave the necessary infrastructure in place to fast track this project intoproduction. During the first quarter of this year we began basic mine and milldesign and seeking permits to start construction of the exploration ramp.Verification drilling has indicated total resources (measured and indicated) of2.3 million tonnes, primarily at La Ventana, with 7.32% zinc, 3.19% lead, 0.41%copper and 71 g/t silver. The goal is to realize at least four million tonnes oftotal indicated resources by the third quarter of 2008 which will underpin apositive feasibility study. As a result of our fully un-hedged position and strong metals prices in thefirst quarter of 2008, the average realisable prices for both gold and silverwere significantly higher at $933/oz and $17.28/oz, respectively. We anticipate that we will be able to contain our weighted average unit cost pertonne for our mines during 2008 despite continued inflationary pressures in theindustry. This is mainly due to increased throughput resulting from theexpansions, further mechanization, including the use of long drill holes and afocus on reducing dilution and further cost reduction measures. On 19 January 2008, the Group announced a 19.99% strategic investment in LakeShore Gold Corp. ("LSG") for C$64.6 million. Under the terms of the transactionand subject to shareholder approval, Hochschild was granted an option to acquirea further 15%, at market price, by way of a private placement with the right toincrease its ownership to 40%, on a fully-diluted basis, through market andprivate transactions. As part of this agreement, Hochschild was subject to afive-year standstill. The Hochschild Board has now agreed to pay C$2.40 per share, representing a 38%premium to LSG's average share price over the previous 20 days, in return for asignificant reduction in the duration of the standstill. Hochschild and LSG haveagreed that the standstill will now expire on 22 November 2010 (previouslyscheduled to expire in February 2013) at which time Hochschild shall be free toincrease its ownership interest above 40%. These revised terms remain subject toapproval by LSG's shareholders. During the quarter, with the exception of the aforementioned strategicinvestment in Lake Shore Gold Corp., there have been no material events ortransactions affecting Hochschild Mining plc. There has been no significantchange in the financial position or performance of the Group since 31 December2007, other than as described in this production report. ______________________________________________________________________ A conference call will be held at 2:00 pm (London time) on Wednesday 16 Aprilfor the investment market. Dial in details as follows: UK +44 (0)20 7162 0125 A recording of the conference call will be available following its conclusion,accessible from the following telephone numbers: UK +44 (0)20 7031 4064Access code 792791______________________________________________________________________ Enquiries: Hochschild Mining plcWray Barber +44 (0)20 7152 6014Head of Investor Relations Ignacio Rosado +511 437 6007Chief Financial Officer Jose-Augusto Palma +511 317 2026Senior Adviser, Executive Committee FinsburyRobin Walker +44 (0)20 7251 3801Public Relations______________________________________________________________________ About Hochschild Mining plc: Hochschild Mining plc is a leading precious metals company listed on the LondonStock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focuson the exploration, mining, processing and sale of silver and gold. Hochschildcurrently operates five underground epithermal vein mines, four located insouthern Peru and one in southern Argentina and one open pit mine in northernMexico. Hochschild also has one early development project in Mexico and sixteenlong-term prospects throughout Latin America. Hochschild has over forty yearsexperience in the mining of precious metal epithermal vein deposits. For further information please visit www.hochschildmining.com______________________________________________________________________ TOTAL PRODUCTION (1) Q1 Q4 Q1 2008 2007 2007--------------------------------------------------------------------------------Silver production (koz) 4,310 5,155 2,561Gold production (koz) 44.06 70.09 42.66Total silver equivalent (koz) 6,954 9,360 5,120Total gold equivalent (koz) 115.90 156.00 85.33Silver sold (koz) 2,404 5,472 3,504Gold sold (koz) 29.78 60.35 52.16--------------------------------------------------------------------------------(1) Total production includes 100% of all production, including productionattributable to joint venture partners at Moris, San Jose and Pallancata. ARCATA Q1 Q4 Q1Product 2008 2007 2007--------------------------------------------------------------------------------Ore production (tonnes) 111,714 132,231 82,092Average head grade silver (g/t) 572.95 581.06 491.25Average head grade gold (g/t) 1.40 1.48 1.30Concentrate produced (tonnes) 4,256 4,761 3,349Silver grade in concentrate (kg/t) 13.43 14.04 10.54Gold grade in concentrate (kg/t) 0.03 0.03 0.03Silver produced (koz) 1,838 2,211 1,134Gold produced (koz) 4.44 5.50 3.00Silver sold (koz) 1,032 3,161 1,575Gold sold (koz) 2.64 7.07 4.01-------------------------------------------------------------------------------- ARES Q1 Q4 Q1Product 2008 2007 2007--------------------------------------------------------------------------------Ore production (tonnes) 79,376 92,401 72,266Average head grade silver (g/t) 204.41 337.29 252.80Average head grade gold (g/t) 6.64 14.67 15.03Dore total (koz) 471.68 674.19 564.09Silver produced (koz) 454 889 529Gold produced (koz) 16.07 41.81 33.49Silver sold (koz) 444 917 626Gold sold (koz) 16.36 42.20 40.15-------------------------------------------------------------------------------- SELENE Q1 Q4 Q1Product 2008 2007 2007--------------------------------------------------------------------------------Ore production (tonnes) 97,017 97,590 90,192Average head grade silver (g/t) 207.25 238.95 349.92Average head grade gold (g/t) 1.20 1.41 2.55Concentrate produced (tonnes) 1,090 1,112 861Silver grade in concentrate (kg/t) 15.29 18.96 32.62Gold grade in concentrate (kg/t) 0.08 0.10 0.21Silver produced (koz) 536 669 897Gold produced (koz) 2.95 3.61 6.16Silver sold (koz) 406 745 1,303Gold sold (koz) 2.26 4.30 8.01-------------------------------------------------------------------------------- PALLANCATA (1) Q1 Q4Product 2008 2007--------------------------------------------------------------------------------Ore production (tonnes) 50,893 63,612Average head grade silver (g/t) 340.10 322.64Average head grade gold (g/t) 1.61 1.54Concentrate produced (tonnes) 541 560Silver grade in concentrate (kg/t) 28.71 33.25Gold grade in concentrate (kg/t) 0.11 0.13Silver produced (koz) 500 599Gold produced (koz) 1.93 2.33Silver sold (koz) 391 550Gold sold (koz) 1.44 2.03--------------------------------------------------------------------------------(1) The Company has a 60% interest in Pallancata. SAN JOSE (1) Q1 Q4Product 2008 2007--------------------------------------------------------------------------------Ore produciton (tonnes) 59,897 65,480Average head grade silver (g/t) 624.11 536.12Average head grade gold (g/t) 7.10 7.03Silver produced (koz) 968 776Gold produced (koz) 12.14 11.66Silver sold (koz) 323 92Gold sold (koz) 5.05 1.49--------------------------------------------------------------------------------(1) The Company has a 51% interest in San Jose. MORIS (1) Q1 Q4Product 2008 2007--------------------------------------------------------------------------------Ore produciton (tonnes) 181,671 253,766Average head grade silver (g/t) 4.69 4.62Average head grade gold (g/t) 1.43 1.62Silver produced (koz) 14 11Gold produced (koz) 6.53 5.18Silver sold (koz) 13 6Gold sold (koz) 5.60 3.26--------------------------------------------------------------------------------(1) The Company has a 70% interest in Moris. Certain statements in this production report are or may be forward lookingstatements regarding Hochschild Mining plc's financial position and results,business strategy, plans and objectives. By their nature, all forward-lookingstatements involve risk and uncertainty because they relate to future events andcircumstances which are beyond the Group's control. As a result, the Group'sactual future financial condition, performance and results may differ materiallyfrom the plans, goals and expectations set forth in the Group's forward-lookingstatements. The Group undertakes no obligation to update the forward-lookingstatements contained in this production report or any other forward-lookingstatement it may make. This production report does not constitute or form part of any offer, invitationto underwrite, subscribe for or otherwise acquire or dispose of any HochschildMining plc shares. Past performance of the Company or its shares cannot be relied upon as a guideto future performance and persons needing advice should consult an independentfinancial adviser. - ends - This information is provided by RNS The company news service from the London Stock Exchange