Hochschild Mining plc (HOC) Earnings Call Transcript & Summary

[indiscernible] equivalent total for almost 54,000 ounces of gold. As you know, in [indiscernible], we received approval from [ Brazil ] government for Inmaculada's Modified Environmental Assessment, showing the reduction [indiscernible] starting to catch up process in mine development. Tonnage did increase in this quarter and gold grades were also strong. Production for the first 9 months of the year was just over 146,000 equivalent gold ounces. In [indiscernible], the San Jose operation delivered increased tonnage in the third quarter, which also increased steadily to 3.0 million silver equivalent ounces which brings the 9 months totaled to 7.9 million ounces. You can expect the fourth quarter to be the strongest of the year. [indiscernible] silver equivalent ounces, which is slightly better than the first 2 quarters of the year reflecting higher-than-expected rate. The [indiscernible] mining area is close to completion. And as we have explained before, we expect to place the mine on [indiscernible]. Turning to our Mara Rosa construction project, we have a strong quarter of construction with the total project progress now at 98%. The production plant at Mara Rosa is almost complete and the operational authorities is expected on the authorities this quarter, while we have already been given permission to commission the dry circuit. We began prestripping the [indiscernible] months ago, and we now have a stockpile of 1.5 million tons of ore for the ramp-up period. We will make [indiscernible] and I look forward to giving you a full update on our Capital Market Day next month. Our brownfield exploration plans have started, but we expect [indiscernible] Inmaculada and San Jose in the last quarter of this year and in 2024. On the financial side, we have approximately $114 million of cash, which translates to a net debt of $260 million and a net debt the last 12 months EBITDA of 1.12x. The cash balance reflects the capital expenditures at Mara Rosa [indiscernible] cash generation in the quarter. We will also grow $60 million of our $400 million medium-term debt facility that we took out in December 2022 with Scotia Bank and BBVA. So to sum up, a [indiscernible] quarter of production, the [indiscernible] 20 years and continued strong progress at Mara Rosa. [indiscernible] the team and I see you [indiscernible] the next month at the Capital Markets Day in November, it would be on the 22nd of November. And with that, I would like to open for questions you may have for me or for the team. Thank you very much.

[Operator Instructions] The first question comes from Richard Hatch from Berenberg.

Just a few questions. The first one is just on Mara Rosa. On permitting and obviously something which we've been watching quite closely within 2 other -- mean that the operational permit is due to expected to be received in Q4. Are you happy with that expectation having sort of seen expectations of Inmaculada having permits being promised and being missed. Are you comfortable with Q4 is deliverable? And what's the risk if you don't get it in Q4 in terms of ramp-up? That's the first one, please.

Thank you very much for the question. We don't see any [ problem ] coming from the permit. We have a very close relationship with the authorities. We have already received some earnings for [indiscernible] and the authorities are waiting just to completion of the plants -- construction of the plant, which is closed. We don't expect any problem whatsoever to get this [ going ].

Okay. Right. But if you don't get it, what is the -- what is the risk in terms of the time frame time line? Any kind of critical items there -- the biggest risk in terms of that not being received in terms of Mara Rosa reaching first production? Or are you comfortable with the time frame that you've got to deliver in H1?

Since we have very good progress at Mara Rosa, as you know, 98%, and we have to tell the market that we will start production [indiscernible] 2024, even if we wouldn't get the permit which is very [indiscernible]. I think we will get the permit early in the year, and it will not affect our guidance to the market in terms of the first production of Mara Rosa.

Okay. And the second one is on San Jose. On your -- I mean, guidance of 6 million to 6.3 million ounces silver equivalent, 73 million to 76 million gold equivalent attributable, I mean on my numbers, it looks like you're going to have to have a pretty big quarter to get anywhere near that, particularly in terms of grades. What -- how comfortable are you that you are going to be able to reach guidance at San Jose?

Thanks again. I mean we expect to do great in the fourth quarter. And we will -- I mean, we expect to have a strong quarter on the last quarter of the year. So we know that we have -- I mean we have not that good the grades on the third quarter, but I have seen the production plan and looks like that we are in 2 areas with [indiscernible] grades and we will try to continue the -- and in the guidance.

Okay. Happy with the guidance range as it stands?

For the moment, yes, we are very happy with the guidance.

Okay. And then the last one is just a bit on timing. So I think particularly Inmaculada, sales volumes, particularly for gold were a bit [ light ] versus production and the same goes for San Jose. So should we expect to see a catch-up in some of those volumes in Q4? Or is there something else going on that we need to be thinking about?

Yes. Just to [ conclude ] we are doing a lot of development at for the moment [indiscernible] the delay [indiscernible] -- and that will give [indiscernible] on the cost for sure. But we will try to reduce costs [indiscernible] effect in order to -- I mean, to complete with the guidance to [ continue the ] year, accomplishing the guidance [indiscernible] to the market.

Richard, it's Charlie here. Just to sort of follow up on that. As well as that, I think generally every year, our sales have always been pretty much in line with production, even if there can be still over sometimes from 1 quarter to the next. So they don't always match from quarter to quarter. But by the end of the year, I think if you look historically, you'll always see sales pretty much in line with production.

[Operator Instructions] And we have a question from Kamila Jenkins.

Good afternoon, Eduardo, is [ Kamila Jenkins ]. I'm a private investor with Hochschild Mining. I just wanted for the capital market event, is that something open to target investors like me? Or is it just for the business guys?

Charles [indiscernible] we got a question, please?

Hi Kamila, it's Charlie.

Hi Charlie, [indiscernible] open to?

So I think generally, it is so that we targeted, and that's just really institutional investors and -- but obviously, look at why don't we talk offline and we'll see what we can do.

All right. That's one. And a bit of a sort of GT1 really. I know we're hopefully getting a bit better where we are, but any sign of a dividend possibly for next year back on the cards?

Yes, I think you give terms on the dividend, I'm sure [indiscernible] obviously, this year, we had the permit situation. We were also building, of course, Mara Rosa. And another is that I think you took a very prudent step, especially prior to it's a full year this year, full year 2022. We realized that is profitable [indiscernible] not in a position to recommend the dividend. I'm sure that they will obviously have another look at it in February when they need to discuss the final dividend. But obviously, we need to complete our capital allocation [indiscernible] as versus Mara Rosa principally?

Yes. absolutely. And I'm just wondering if that was something to be considered for later on down the line when things improve. So that would be great.

[Operator Instructions] As there are no further questions in the queue, this concludes today's question-and-answer session. And at this time, I'd like to hand the call back over to the team for any additional or closing remarks.

Okay. Thank you very much for the call, and thank you for being here at this conference call. Let me think that we are looking forward to meet you all in the [indiscernible] on November at the Capital Market Day. I look forward to the [indiscernible] strategy of the company at that event. Thank you very much.

Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.