Hochschild Regulatory News (HOC)

25 Apr 2007 07:02

Hochschild Mining PLC25 April 2007 25 April 2007 Hochschild Mining plc Quarterly Production Report for the three months to 31 March 2007 ("Q1") Highlights: • The Group remains on track to deliver over 26 million ounces of silver equivalent production for 2007. This represents a year-on-year increase of 11% and will equate to approximately 14 million silver ounces and 200 thousand gold ounces. • Total Q1 production was 2.6 million ounces of silver and 43 thousand ounces of gold. As indicated in the preliminary results, Q1 was lower than the same quarter the previous year mainly due to the anticipated lower grades in Ares. • Production is expected to increase in Q2 due to the commencement of operations in the San Jose project in Argentina. As the additional two projects in Peru and Mexico (Pallancata and Mina Moris) are brought online in Q3 and ramped-up, we expect significantly higher production for the year as a whole. • Joint venture agreements for three new properties in Argentina (Claudia, Santa Rita and Manantiales) were signed in Q1, in line with our growth strategy. Expansions: The expansion of the plant at Ares was tested in Q1 and its capacity hasincreased from 280 ktpa to 325 ktpa. Selene also was expanded from 350 ktpa to406 ktpa in February 2007 and will be expanded further to 700 ktpa in Q3 2007.The expansion at Arcata from 350 ktpa to 420 ktpa is on track and will becompleted in Q2 2007. New Projects: The Group's three new projects, which are scheduled to begin production during2007, are fully on track. In Q2, San Jose (Argentina) will commence productionof dore. Pallancata (Peru) and Mina Moris (Mexico) will commence production inQ3. All of our planned expansions and projects for 2007 have their criticalequipment secured, despite a shortage of equipment in the industry. The threenew projects will make a meaningful contribution to production and profits. "Bydoubling the number of mines we operate during 2007 we will bring our operatingcapacity from 980 ktpa to 2,780 ktpa", said Miguel Aramburu, Chief OperatingOfficer. Joint Ventures: We signed a definitive joint venture agreement with Mirasol Resources Ltd on 21February 2007 for two properties in Argentina: Claudia and Santa Rita. Also, aletter of intent was signed with Cardero Resources for a third property inArgentina: Los Manantiales. Claudia, a precious metals deposit, is adjacent to the Cerro Vanguardia mine inArgentina and is hosted in a similar regional setting. The principal vein systemat Claudia is exposed within an erosional window exposing prospective Chon Aikevolcanic rocks. Exploration to date has identified three gold/silver mineralizedzones, where each hosts multiple quartz veins or veinlets of classic, epithermalstyle. The three zones lie within a structurally complex area some 3 kilometresin strike length and 1 kilometre wide, and appear to represent distincterosional levels exposed by block faulting. Exploration has identifiedadditional prospective areas on the property. At this point in time, theproperty has not undergone any drilling activity. Santa Rita is a silver project located southeast of our San Jose project insouthern Argentina. At Santa Rita, reconnaissance exploration has resulted inthe discovery of a mineralised structural breccia system localized by a regionalstructural trend that hosts several other gold-silver showings in the area. Inkeeping with similar low-sulphidation epithermal precious metals occurrences,the quartz vein textures and stratigraphic position at Santa Rita are permissivefor gold-silver grades increasing at depth. We plan to drill both theseproperties in the coming months. The Group has continued to be active on its exploration efforts having signed aletter of intent with Cardero Resources for an option to earn up to 70% interestin the Los Manantiales gold property located in Argentina. Mineralization at LosManantiales consists of low sulphidation epithermal vein systems hosted byJurassic andesitic volcanics. Jorge Benavides, Chief Executive of Exploration,stated "Los Manantiales exemplifies the kind of partnership that Hochschild canoffer to junior resource exploration companies in the region. We are excitedabout its potential with the initial drill results provided by the previousowner of the property indicating relatively high grades and with mineralizationremaining open and at depth". The Group is currently undertaking due diligenceon the property. Other: The remaining concentrate inventory at the end of fiscal year 2006 hassuccessfully been shipped and has had a positive impact on revenue for the firstquarter. In addition, we continue testing the feasibility of converting theconcentrate at Arcata into dore in an effort to minimize the timing differencebetween production and sales and enhance working capital efficiency. TOTAL PRODUCTION --------------------------------------------------------------------------------- Q1 Q4 Q1 2007 2006 2006---------------------------------------------------------------------------------Silver production (Koz) 2,561 3,430 2,784Gold production (Koz) 42.66 54.25 53.85Total silver equivalent (Koz) 5,120 6,685 6,015Total gold equivalent (Koz) 85.33 111.42 100.25--------------------------------------------------------------------------------- ARCATA ---------------------------------------------------------------------------------Product Q1 Q4 Q1 2007 2006 2006---------------------------------------------------------------------------------Ore production (tonnes) 82,092 91,190 69,643Average head grade silver (g/t) 491.25 548.28 501.82Average head grade gold (g/t) 1.30 1.46 1.20Concentrate produced (tonnes) 3,349 3,857 2,636Silver grade in concentrate (kg/t) 10.54 11.34 11.64Silver produced (Koz) 1,134 1,406 987Gold produced (Koz) 3.00 3.73 2.23--------------------------------------------------------------------------------- ARES ---------------------------------------------------------------------------------Product Q1 Q4 Q1 2007 2006 2006---------------------------------------------------------------------------------Ore produciton (tonnes) 72,266 75,688 70,016Average head grade silver (g/t) 252.80 335.42 352.26Average head grade gold (g/t) 15.03 18.24 20.19Dore total (Koz) 564.09 799.88 781.61Silver produced (Koz) 529 755 736Gold produced (Koz) 33.49 42.79 43.75--------------------------------------------------------------------------------- SELENE ---------------------------------------------------------------------------------Product Q1 Q4 Q1 2007 2006 2006---------------------------------------------------------------------------------Ore production (tonnes) 90,192 93,915 88,103Average head grade silver (g/t) 349.92 465.10 410.42Average head grade gold (g/t) 2.55 2.98 3.16Concentrate produced (tonnes) 861 969 1,062Silver grade in concentrate (kg/t) 32.62 40.75 31.08Silver produced (Koz) 897 1,269 1,061Gold produced (Koz) 6.16 7.74 7.87--------------------------------------------------------------------------------- The Group will announce its Q2 Production Statement in July and its InterimResults for the first half of 2007 September. Please visit our website for moredetails on upcoming events www.hochschildmining.com. Enquiries: Hochschild Mining plcWray Barber +44 (0)20 7152 6014Head of Investor Relations FinsburyRobin Walker +44 (0)20 7251 3801Public Relations - ends - This information is provided by RNS The company news service from the London Stock Exchange