Hochschild, Hudbay increase H1 output

Peruvian precious metals miner Hochschild Mining increased gold and silver production in the first half, while Canadian copper, gold and silver producer Hudbay Minerals also boosted output.

Hochschild, which has operations in Peru, Argentina, Mexico and Chile, produced 19.85Moz silver equivalent in H1, including 9.67Moz silver and 137,507oz gold, up from 8.94Moz silver and 121,430oz gold a year earlier, the Lima-based company said in a statement.

The US$340mn Inmaculada mine in Peru, which started up in June 2015, produced 3.16Moz silver and 96,330oz gold in the period, compared with 2.64Moz silver and 79,820oz gold a year ago, Gold production rose at Pallancata (Peru) and San José (Argentina), while output of both metals fell at the Arcata operation in Peru.

Hochschild is adding ore from Pallancata's new Pablo vein, with the mine expected to reach its installed capacity of 2,800t/d in Q4 after installing ventilation systems, the company said. Bad weather has slowed work on a US$14mn hydraulic backfill project at San José, although the mine is expected to be fully operational by October.

Hochschild, which plans to allocate US$125-135mn to capex this year and US$17mn in brownfield exploration, set 2018 production guidance at 38Moz silver equivalent, with all-in sustaining costs expected to range from US$13-13.40/oz.

"Output at all our mines [is] in line with expectations and therefore completes a record half for the company," CEO Ignacio Bustamante said in the statement. "Drilling at Inmaculada is expected to add substantial resources close to the current mining infrastructure whilst the program at Arcata has also made good progress."

In exploration work, Hochschild drilled 20,000m in Q2 at Inmaculada's Millet, Divina, Lola and Lizina veins, with highlights including 12m of 6.2g/t gold and 46g/t silver. Another 10,000m of drilling is planned at Millet West, Divina West and Misterio, it said.

At Arcata, the company drilled a total of 12,500m at the Silvia, Anomaly North, Ruby 2, Ruby 3, Cristina, Rosalia, Pablito East, Veta X and Fryda veins, with highlights including 4.6m of 3g/t gold and 2,714g/t silver. Another 7,000m of drilling is planned at Ruby 2, Ruby 3 and Pamela, the company said.

Hochschild also drilled 1,000m at Pallancata and 4,708m at San José's Maia and Guadalupe targets, with highlights of drilling at San José including 2.8m of 6g/t gold and 13g/t silver. Further drilling is planned at both mines.

Hochschild, which earlier this year bought back the outstanding amount from a 2014 US$350mn bond sale, said it had US$142mn in cash and US$66mn in net debt through June 30.

The company said it sold metals at US$16.30/oz silver and US$1,270/oz gold in the second quarter, compared with US$16.20/oz and US$1,262/oz a year earlier, respectively.

HUDBAY

Hudbay, which has operations in Canada, the US, Peru and Chile, produced 58,369t copper, 1.24Moz silver and 10,608oz gold at its Constancia mine in Peru in H1, compared with 57,009t copper, 1.09Moz silver, and 7,737oz gold a year earlier, the Toronto-based company said in a statement. The company processed more ore to counter falling ore grades at the mine.

Gold and silver output is expected to rise in 2018 due partly to the startup of extraction at Constancia's Pampacancha orebody, while copper will probably decline as miners tap into lower grade ore at the mine, Hudbay said earlier this year.

Hudbay plans to allocate US$135mn to sustaining capex and US$100mn to projects in 2018, including US$45mn for Peru, where work was completed on a tailings facility expansion at Constancia last year.