Hochschild boosts H1 production, raises guidance

Peruvian precious metals miner Hochschild Mining increased its 2016 production guidance after its US$420mn Inmaculada gold-silver mine performed better than expected.

Hochschild, which also has operations in Argentina, Mexico and Chile, said it now estimates this year's production at 34Moz silver equivalent with all-in sustaining costs of US$11-11.50/oz, compared with earlier guidance of 32Moz and US$12-12.50/oz.

Hochschild produced 17Moz attributable silver equivalent in the first half, up from 9.27Moz a year earlier. Production totaled 8.21Moz silver and 118,120oz gold as higher output at the Inmaculada, Arcata and San José mines offset declines at Pallancata, the Lima-based company said in a statement. Inmaculada, which started up in June 2015, produced 2.37Moz silver and 79,200oz gold.

"Our Inmaculada operation has performed above expectations and is on track to exceed its production and cost targets for the year," CEO Ignacio Bustamante said in the statement.

Hochschild, which sold US$350mn in bonds in 2014, said it had US$103mn in cash and US$280mn in debt as of June 30. The company paid off the remaining US$50mn of a US$100mn loan to Scotiabank and US$20mn to BBVA.

The miner said it sold silver at US$17.10/oz and gold at US$1,236/oz gold in the first half, compared with US$16.90/oz and US$1,227/oz a year earlier.

In exploration work, Hochschild drilled 2,135m at Arcata, with highlights including 7.8m of 1.1g/t gold and 205g/t silver. Additional drilling included 698m near Pallancata's Pablo target and 1,240m at San José's Aguas Vivas target, it said.

Hochschild posted a US$67.4mn loss last year due to slumping metals prices and impairment charges as sales fell 5% to US$469mn. The company produced 27Moz silver equivalent in 2015.