Inmaculada and Crespo Feasibility Studies

RNS Number : 3593V

Hochschild Mining PLC

11 January 2012

 



11 January 2012

Hochschild Successfully Completes Inmaculada and Crespo Feasibility Studies

Highlights

·    Inmaculada and Crespo Feasibility Studies successfully completed by independent consultant

·    Profitable projects at conservative prices with significant price and geological upside

·    Combined average attributable production of approximately 10 million silver eq. oz per annum providing strong growth profile

·    Inmaculada and Crespo on track to start production in Q4 2013

·    Azuca Feasibility Study postponed to allow resource optimisation through further exploration of new higher grade areas

·    Significant exploration programme continuing during 2012 at all three Advanced Projects

Summary

Hochschild Mining plc ("Hochschild" or "the Company") is pleased to report the completion of Feasibility Studies by an independent company, Ausenco, for the Inmaculada and Crespo projects.

Both studies confirm a positive return for the Company at conservative price and resource assumptions.  The exciting 60% owned Inmaculada project is now set to start construction with total initial capital expenditure of $315 million for a 3,500 tonne per day underground operation with average annual production of 12 million silver equivalent ounces and a commissioning date in the fourth quarter of 2013. Unit cost per tonne is projected to be in line with the similar highly profitable joint venture operation at Pallancata and, most importantly, total resources have now increased to almost 150 million silver equivalent ounces from the previous figure of 137m ounces. Hochschild remains confident that these resources will grow significantly from this excellent starting point in the same manner as its other mines at Arcata, Pallancata in Peru and San Jose in Argentina and see Inmaculada develop into a main contributor for the Company.

In addition, Hochschild is pleased to see a positive result from its 100% owned Crespo project which is set to add another 2.7 million silver equivalent ounces from 2014 at an initial capital cost of $111 million for a 6,850 tonne per day operation. This relatively simple open pit project is expected to have a unit cost per tonne of $13.5, high gold recovery rates and, with its proximity to Hochschild's other operations in Southern Peru, will benefit from operational synergies. Current inferred resources at Crespo are set to deliver more mineable material for the project and the exploration team remains positive about the geological potential of the surrounding areas. 

Finally, the Company remains excited by the potential of the Azuca deposit especially in the ongoing exploration of the newly discovered higher grade Colombiana and Cimoide Vivian veins.  However, the Company believes it is prudent to delay the Feasibility Study and continue exploration work at the project throughout 2012 in order to consolidate resources and provide a more comprehensive picture of the dispersed vein structures present in the area. To this end, the Board has approved an additional $10m exploration programme for 2012.

Ignacio Bustamante, CEO, commented:

"I am delighted that Hochschild has taken the next key steps in the development of our project pipeline and is now set to increase production from 2014 by almost 50%. Following on from scoping studies released in late 2010 and early 2011, the Company has been able to deliver both the Inmaculada and Crespo projects to feasibility on time and we are now able to present two independently audited studies which demonstrate solid profitability at conservative price assumptions and with strong price and geological upside potential.

With the Feasibility Study work behind us we look forward to the year ahead, where we will focus our efforts on the engineering, permitting and construction activities at both projects. Execution risk is expected to be considerably reduced as a result of both projects' proximity to our current operations and our longstanding knowledge and experience of working closely with the surrounding communities. In addition, exploration work will continue at both sites to add more resources not included in the Feasibility Studies but which we are confident will positively impact the projects going forward."

To see the full version of the release, please click or copy and paste the link below;

http://www.rns-pdf.londonstockexchange.com/rns/3593V_1-2012-1-11.pdf 

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A conference call will be held at 12pm (London time) on Wednesday 11th January 2012 for analysts and investors. 

Dial in details as follows:

UK   [phone]

A recording of the conference call will be available for one week following its conclusion, accessible from the following telephone number:

UK   [phone]

Access code: 5485169#

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Enquiries:

Hochschild Mining plc

Charles Gordon                                                  [phone]

Head of Investor Relations

RLM Finsbury

Charles Chichester                                             [phone]

Public Relations 

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