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News & Analysis UK

Hochschild Mining: Q4 Production Figures

January 25, 2013, Friday, 14:16 GMT | 09:16 EST | 18:46 IST | 21:16 SGT
Contributed by Fox-Davies Capital

Hochschild announced its December quarter 2012 production figures. In the quarter, Hochschild produced 7.25M oz of silver equivalent, comprising 4.77M oz of silver and 41.34k oz of gold. This took annual attributable production to 20.26M oz of silver equivalent, comprising 13.55M oz of silver and 111.82k oz of gold. Sales of silver (5.069M oz) and gold, (45.93k oz) during the quarter were higher than production, reversing the build-up of inventory during the September quarter.

Production wise, this was not an exciting quarter, but inventories were drawn down and guidance was met for 2012. The San Jose mine is scheduled to increase mill throughput by 10%, but with guidance flat, this suggests a drop in grade.

The exploration budget has been cut from the $90M in 2012 to $77M in 2013. Cash on hand as at 31st December was approximately $359M so no problems are foreseen in completing the mines under construction. However, the permits for the construction of the processing plants are not expected to the middle of 2013. In our opinion, it is highly likely that these operations will not be in production in 2014, and guidance will be flat between 2013 and 2014. The drop in the cash balance is due to the cost of acquiring Andina Minerals, which is expected to be complete within the next month.

The limited exploration results released today are very promising and we expect that all ore depleted in 2012 will be replaced when the updated ore resources are released.