Hochschild Mining

Published : February 28th, 2011

Strong Growth in Grades & Resources at Inmaculada

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Strong Growth in Grades & Resources at Inmaculada

 

 

 

 

 

 

Highlights

 

·      59% increase in Measured & Indicated Resources to 76.0 million silver equivalent ounces

·      29% increase in silver equivalent grades to 498 g/t

·      12% increase in total resources to 128.3 million silver equivalent ounces

 

 

Hochschild Mining plc ("Hochschild" or "the Company") is pleased to announce an increase in both the total Mineral Resource estimate and Measured and Indicated Resources for the Inmaculada gold-silver project located in Hochschild's existing southern Peru cluster, following the announcement of a positive scoping study published by International Minerals Inc ("IMZ") in September 2010. The project, in which Hochschild now owns a controlling 60% stake (IMZ holds the remaining 40%), is currently at feasibility stage with completion expected in 2011. The Company is committed to commencing production in December 2013 at a processing capacity of 3,000 tonnes per day.

 

The previous resource estimate was based on drilling results prior to 15 May 2010. Subsequently, 67 drill holes from higher grade areas of the Angela vein have been completed and incorporated into the database. As a consequence, Measured & Indicated resources have increased by 59% to 76.0 million silver equivalent ounces with a corresponding grade increase of 29%. Summary results (on a 100% basis, applying a 180 g/t silver equivalent cut-off grade and a silver to gold ratio of 60:1) are as follows:

 

·      Measured & Indicated resources: 4.7mt at an average grade of 5.2 g/t gold and 186 g/t silver containing approximately 795,000 ounces of gold and 28.3 million ounces of silver. 

·      Inferred resources of 2.7mt at an average grade of 6.1 g/t gold and 247 g/t silver containing approximately 521,000 ounces of gold and 21.0 million ounces of silver. 

 

Hochschild expects the results to significantly improve the economics of the project detailed in the 2010 scoping study. Furthermore, after applying the Company's marginal silver equivalent cut-off grade of 98 g/t, the grade and resource figures increase further, see table 1 below for full details. The Company will publish updated valuations and sensitivity analysis relating to Inmaculada in its full year results announcement on 29 March 20111.

 

Ignacio Bustamante, CEO of Hochschild Mining comments:

 

"The significant increase in resources and grades at Inmaculada highlights the tremendous value of this joint venture in which we have a controlling stake and the excellent geological potential which will provide us with additional profitable ounces. The feasibility study at Inmaculada is also well underway and on track for completion this year with production coming on line in December 2013".

 

 

1 The Company will apply a cut-off grade of 98 g/t in the annual resource statement

 

Table 1:For comparison purposes, updated resources based on silver equivalent cut-off grades of 98 g/t, 180 g/t and 250 g/t are summarised below:

kt

Ag (g/t)

Au (g/t)

Ag Eq (g/t)

koz Au

Moz Ag

Moz Ag Eq

% change in contained oz

% Grade change

98 g/t Ag cutoff2

Measured

1,094

125

4.7

405

164

4.4

14.2

-1%

-2%

Indicated

4,518

177

4.7

456

676

25.7

66.3

99%

21%

Measured + Indicated

5,612

167

4.7

446

840

30.1

80.5

68%

15%

Inferred

3,553

199

5.0

498

568

22.8

56.8

-15%

5%

Total

9,165

179

4.8

466

1,407

52.9

137.3

20%

7%

180 g/t cutoff

Measured

941

136

5.1

443

155

4.1

13.4

-7%

7%

Indicated

3,806

198

5.2

512

640

24.2

62.6

88%

36%

Measured + Indicated

4,747

186

5.2

498

795

28.3

76.0

59%

29%

Inferred

2,648

247

6.1

614

521

21.0

52.3

-22%

29%

Total

7,395

208

5.5

540

1,316

49.4

128.3

12%

24%

250 g/t cutoff

Measured

698

153

6.0

514

135

3.4

11.5

-20%

24%

Indicated

2,951

226

6.1

591

578

21.5

56.1

68%

57%

Measured + Indicated

3,649

212

6.1

577

713

24.9

67.6

42%

49%

Inferred

1,998

295

7.4

737

473

18.9

47.3

-29%

55%

Total

5,647

241

6.5

633

1,186

43.8

115.0

0%

46%

Previously reported (180 g/t cutoff)

Measured

1,080

107

5.1

413

178

3.7

14

Indicated

2,747

137

4.0

377

354

12.1

33

Measured + Indicated

3,827

129

4.3

387

532

15.8

48

Inferred

4,388

200

4.6

476

645

28.3

67

Total

8,215

167

4.5

435

1,177

44.1

115

 

2 The Company will apply a cut-off grade of 98 g/t in the annual resource statement due to be published on 29 March 2011

 

Table 2 - Inmaculada scoping study results published on 10 September 2010 (on a 100% basis) (revised information to be provided with the full year results announcement on 29 March 2011):

 

Item

Units

Base Case Gold price

$ per ounce

$1000

Base Case Silver Price

$ per ounce

$17

Initial Mine life

years

7.5

Average annual gold production 6

ounces/year

117,000

Average annual silver production 6

ounces/year

4,000,000

Average annual gold Eq. production

Au Eq ounces/year

180,000

Life-of-mine gold production 6

ounces

858,000

Life-of-mine silver production 6

ounces

29,300,000

Life-of-mine gold Eq. production

Au Eq. ounces

1,346,000

Plant processing rate (~3,000 tpd)

tonnes/year

1,095,750

Metallurgical recovery - gold

%

88%

Metallurgical recovery - silver

%

83%

Initial capital 2

US$ millions

168

Total Cash operating cost 3

per tonne processed

$52.08

Total Cash operating cost 4

per ounce Au Eq.

$311

Total Cash operating cost, inc capital 4

per ounce Au Eq.

$517

Total Cash operating cost (by-product) 5

per ounce Au (Ag credit)

-$94

Total Cash operating cost inc capital (by-product) 5

per ounce Au (Ag credit)

$231

Pre-Tax IRR

%

41%

Cash Flow (non-discounted)

US$ millions

$660

NPV, 5% discount rate

US$ millions

$434

NPV, 10% discount rate

US$ millions

$286

 

1) This Preliminary Economic Assessment or Scoping study is preliminary in nature, in that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves, and there is no certainty that the results of the preliminary economic assessment study will be realised and actual results may vary substantially.

2) Initial Capital includes $32.9 million in contingency allowance. Costs are based on Q3 2010 estimates and no escalation factors have been applied. Value added tax has not been included in the cost estimates.

3) Total Cash Operating costs include smelting and refining and Peruvian Government royalties, but do not include employee profit sharing or depreciation, depletion or amortization.

4) Total Cash Costs per ounce of gold equivalent are calculated using a silver-to-gold ratio of 60:1.

5) By-product accounting subtracts the revenue generated by silver from the operating costs as a credit to determine the cost per ounce of gold.

6) Annual and life-of-mine production figures are after 5% mining losses, 20% mining dilution and the respective metallurgical recoveries for gold and silver.

7) Mineral resources that are not mineral reserves do not have demonstrated economic viability.

 

Table 3 - Inmaculada sensitivity analyses published on 10 September 2010 (on a 100% basis) and revised information will be provided with the full year results announcement on 29 March 2011:

Category

$1,000/

$17.00

$1,300/

$22.10

$1,400/

$23.80

$1,500/

$25.50

IRR

41%

58%

63%

68%

Cash flow (US$m)

660

1,026

1,148

1,271

NPV 5% (US$m)

434

699

787

875

NPV 10% (US$m)

287

483

548

613

Cash flow and NPVs are all shown pre-tax, but do include Peruvian government royalties and smelter and transportation charges. Value added tax (generally recoverable in Peru) was not included in the cash flows.

 

___________________________________________________________________________

 

Enquiries:

Hochschild Mining plc

Charles Gordon                                                                                    +44 (0)20 7907 2934

Head of Investor Relations

 

Finsbury

Faeth Birch                                                                                          +44 (0)20 7251 3801

Public Relations 

 

___________________________________________________________________________

 

 

About Hochschild Mining plc

Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over forty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has numerous long-term prospects throughout the Americas.

 

 

 

Data and Statistics for these countries : Argentina | Peru | All
Gold and Silver Prices for these countries : Argentina | Peru | All

Hochschild Mining

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ISIN : GB00B1FW5029
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Hochschild is a silver and gold producing company based in United kingdom.

Hochschild develops silver, gold, copper, lead and zinc in Mexico and in Peru, and holds various exploration projects in Chile.

Its main assets in production are MORIS MINE in Mexico, SELENE, PALLANCATA, ARCATA and ARES in Peru and SAN JOSE ARGENTINA in Argentina, its main assets in development are SAN FELIPE in Mexico and INMACULADA in Peru and its main exploration properties are LIAM and AZUCA in Peru, THUNDER CREEK in Canada, MORIS ARECHUYVO in Mexico, LOS AMIGOS (ARGENTINA) in Argentina and VALERIANO in Chile.

Hochschild is listed in Germany, in United Kingdom and in United States of America. Its market capitalisation is GBX 73.2 billions as of today (US$ 85.9 billions, € 72.7 billions).

Its stock quote reached its lowest recent point on October 24, 2008 at GBX 100.25, and its highest recent level on September 16, 2021 at GBX 144.40.

Hochschild has 507 232 000 shares outstanding.

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