Hochschild Mining plc (HOC) Earnings Call Transcript & Summary

Good day, and welcome to the Hochschild Mining conference call. At this time, I would like to turn the conference over to Ignacio Bustamante. Please go ahead, sir.

Thank you, Ciara. Hello, and welcome to the conference call to discuss our announcement this morning. As usual, Ramón Barúa and Charlie Gordon are on the line with me as well. Today, we announced 2 pieces of news. Firstly, at yesterday's scheduled meeting, our Board decided to pay an interim dividend of $0.04 per share, which amounts to a total of $20.6 million payout. As you know, the Board withdrew the 2019 final dividend in April to conserve cash when our operations were halted because of COVID. The Board further discussed the subject in August, just before our half year results, but felt that it was too early given that Inmaculada had not yet ramped up back to full production and decided to revisit the plan at this month's meeting. We're in a strong balance sheet position, as you saw from last month's Q3 production report with over $196 million of cash. And our mines have now had a few months of normal operation, especially in Peru. The paying of dividends is one of our capital allocation priorities. So it was important for us to reward shareholders in the light of the higher prices and the strong cash flow we are seeing. It's worth noting that the Board will discuss the paying of our 2020 final dividend at our next Board meeting in February. We are also today publishing our guidance for 2021. Like last year, we decided to do so following the recent completion of our mine planning and budgeting process. The aim is to give everyone a little bit more time to update forecast before we reach year-end and not have a long wait until our Q4 production statement in mid-January. In addition, let me add that we are on track to meet our revised 2020 production forecast of between 24 million and 25 million silver equivalent ounces but at a slightly lower all-in sustaining cost of between $14 to $14.50 per ounce versus that $14.50 to $15 we disclosed in September. In 2021, we're expecting to produce between 31 million and 32 million silver equivalent ounces or 360,000 to 372,000 gold equivalent ounces. This output will come at an all-in sustaining cost of between $14.10 to $14.50 per silver equivalent ounce, which is between $1,210 and $1,250 per gold equivalent ounce. Our operations are still on the recovery path from the effects of the stoppages earlier this year. As we mentioned last month, development work was impacted, and this has had a knock-on effect on production, particularly at Inmaculada, where 4 months of being unable to develop the mine has reduced availability of higher-grade areas. We still expect to produce between 223,000 to 228,000 gold equivalent ounces at Inmaculada, which is very much in line with the levels of 2006 and 2017 -- 2016 and 2017. All-in sustaining costs are expected to be between $1,040 and $1,080 per gold equivalent ounce with the levels reflecting those development delays and the knock-on effect on mine rates. In Argentina, we are forecasting 12.5 million and 13.3 million silver equivalent ounces produced. The COVID-19 situation remains delicate in the country and the region as well. And although we are trying to reach full production by Q1 next year, the lack of availability of people may continue to force us to use more mechanization in the mine and, hence, increased dilution. The forecast reflects that assumption. Costs at between $15.50 to $16.30 per ounce, also include more development work, increased reserves at the mine, which is a very positive news as well. At Pallancata, we are guiding to production of between 5.4 million and 5.6 million silver equivalent ounces. We have an ongoing comprehensive brownfield program close to operations. But rather like in 2015, when we discovered the Pablo vein, this mine has only a couple of years left of reserves, and the forecasted production level reflects that. All-in sustaining costs are expected at between $16.80 and $17.20 per sliver equivalent ounce. CapEx for 2021 is expected to be at a normal increasing level of between $120 million and $130 million. And the budget for brownfield is a healthy $34 million, with greenfield set at $11 million. We will also spend approximately $14 million on BioLantanidos, our rare earth project, but that includes some $5 million of increased exploration works. So that's a quick summary. And with that, I will open up to any questions that you may have. Thank you.

[Operator Instructions] All right. And then it appears there are no questions at this time.

Okay, Ciara, thank you very much. Thank you very much, everyone, for participating in today's call for this announcement. And should you have any questions, please feel free to contact Charlie Gordon directly at our London office. Thank you very much. Have a great day. Goodbye.