Q1 Production Results
Hochschild Mining PLC
25 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 has
increased from 280 ktpa to 325 ktpa. Selene also was expanded from 350 ktpa to
406 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 be
completed in Q2 2007.
New Projects:
The Group's three new projects, which are scheduled to begin production during
2007, are fully on track. In Q2, San Jose (Argentina) will commence production
of dore. Pallancata (Peru) and Mina Moris (Mexico) will commence production in
Q3. All of our planned expansions and projects for 2007 have their critical
equipment secured, despite a shortage of equipment in the industry. The three
new projects will make a meaningful contribution to production and profits. 'By
doubling the number of mines we operate during 2007 we will bring our operating
capacity from 980 ktpa to 2,780 ktpa', said Miguel Aramburu, Chief Operating
Officer.
Joint Ventures:
We signed a definitive joint venture agreement with Mirasol Resources Ltd on 21
February 2007 for two properties in Argentina: Claudia and Santa Rita. Also, a
letter of intent was signed with Cardero Resources for a third property in
Argentina: Los Manantiales.
Claudia, a precious metals deposit, is adjacent to the Cerro Vanguardia mine in
Argentina and is hosted in a similar regional setting. The principal vein system
at Claudia is exposed within an erosional window exposing prospective Chon Aike
volcanic rocks. Exploration to date has identified three gold/silver mineralized
zones, where each hosts multiple quartz veins or veinlets of classic, epithermal
style. The three zones lie within a structurally complex area some 3 kilometres
in strike length and 1 kilometre wide, and appear to represent distinct
erosional levels exposed by block faulting. Exploration has identified
additional prospective areas on the property. At this point in time, the
property has not undergone any drilling activity.
Santa Rita is a silver project located southeast of our San Jose project in
southern Argentina. At Santa Rita, reconnaissance exploration has resulted in
the discovery of a mineralised structural breccia system localized by a regional
structural trend that hosts several other gold-silver showings in the area. In
keeping with similar low-sulphidation epithermal precious metals occurrences,
the quartz vein textures and stratigraphic position at Santa Rita are permissive
for gold-silver grades increasing at depth. We plan to drill both these
properties in the coming months.
The Group has continued to be active on its exploration efforts having signed a
letter of intent with Cardero Resources for an option to earn up to 70% interest
in the Los Manantiales gold property located in Argentina. Mineralization at Los
Manantiales consists of low sulphidation epithermal vein systems hosted by
Jurassic andesitic volcanics. Jorge Benavides, Chief Executive of Exploration,
stated 'Los Manantiales exemplifies the kind of partnership that Hochschild can
offer to junior resource exploration companies in the region. We are excited
about its potential with the initial drill results provided by the previous
owner of the property indicating relatively high grades and with mineralization
remaining open and at depth'. The Group is currently undertaking due diligence
on the property.
Other:
The remaining concentrate inventory at the end of fiscal year 2006 has
successfully been shipped and has had a positive impact on revenue for the first
quarter. In addition, we continue testing the feasibility of converting the
concentrate at Arcata into dore in an effort to minimize the timing difference
between production and sales and enhance working capital efficiency.
TOTAL PRODUCTION
---------------------------------------------------------------------------------
Q1 Q4 Q1
2007 2006 2006
---------------------------------------------------------------------------------
Silver production (Koz) 2,561 3,430 2,784
Gold production (Koz) 42.66 54.25 53.85
Total silver equivalent (Koz) 5,120 6,685 6,015
Total gold equivalent (Koz) 85.33 111.42 100.25
---------------------------------------------------------------------------------
ARCATA
---------------------------------------------------------------------------------
Product Q1 Q4 Q1
2007 2006 2006
---------------------------------------------------------------------------------
Ore production (tonnes) 82,092 91,190 69,643
Average head grade silver (g/t) 491.25 548.28 501.82
Average head grade gold (g/t) 1.30 1.46 1.20
Concentrate produced (tonnes) 3,349 3,857 2,636
Silver grade in concentrate (kg/t) 10.54 11.34 11.64
Silver produced (Koz) 1,134 1,406 987
Gold produced (Koz) 3.00 3.73 2.23
---------------------------------------------------------------------------------
ARES
---------------------------------------------------------------------------------
Product Q1 Q4 Q1
2007 2006 2006
---------------------------------------------------------------------------------
Ore produciton (tonnes) 72,266 75,688 70,016
Average head grade silver (g/t) 252.80 335.42 352.26
Average head grade gold (g/t) 15.03 18.24 20.19
Dore total (Koz) 564.09 799.88 781.61
Silver produced (Koz) 529 755 736
Gold produced (Koz) 33.49 42.79 43.75
---------------------------------------------------------------------------------
SELENE
---------------------------------------------------------------------------------
Product Q1 Q4 Q1
2007 2006 2006
---------------------------------------------------------------------------------
Ore production (tonnes) 90,192 93,915 88,103
Average head grade silver (g/t) 349.92 465.10 410.42
Average head grade gold (g/t) 2.55 2.98 3.16
Concentrate produced (tonnes) 861 969 1,062
Silver grade in concentrate (kg/t) 32.62 40.75 31.08
Silver produced (Koz) 897 1,269 1,061
Gold produced (Koz) 6.16 7.74 7.87
---------------------------------------------------------------------------------
The Group will announce its Q2 Production Statement in July and its Interim
Results for the first half of 2007 September. Please visit our website for more
details on upcoming events www.hochschildmining.com.
Enquiries:
Hochschild Mining plc
Wray Barber +44 (0)20 7152 6014
Head of Investor Relations
Finsbury
Robin Walker +44 (0)20 7251 3801
Public Relations
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