RE: Update - Hochschild update attachedThanks, very good news indeed.
UPDATE 2-Hochschild starts Argentina mine production
Tue Jun 26, 2007 7:44 PM BST
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LONDON, June 26 (Reuters) - Peruvian silver and gold miner Hochschild Mining Plc (HOC.L: Quote, Profile , Research) said on Tuesday it had started production at its San Jose mine in southern Argentina and that it planned to double plant capacity in the third quarter of 2008.
Deputy Chairman Robert Danino told Reuters the firm expected the mine to produce 60,000 ounces of gold and 3.5 million ounces of silver over the next 12 months.
The San Jose mine, which is 51 percent owned and operated by Hochschild, is the first of three projects the firm hopes to bring on line this year and is its first in Argentina.
"In the context of the global industry, delivering its first project on time and budget is impressive and will lend credibility to the company's ambitious organic growth plans," Cazenove analysts wrote in a research note.
Hochschild and U.S.-based Minera Andes SA, which has 49 percent interest in the project, have invested 360 million pesos ($115.8 million) since construction started in 2006, the Argentine Planning Ministry said in a statement on Tuesday.
The project will generate some 550 jobs, the ministry added.
Danino said Hochschild remained on track to start production from the other two projects, Pallancata in Peru and Mina Morisin Mexico, in the third quarter of this year.
"I can even say early in the quarter," he said in a telephone interview.
Danino said the cost of production at the San Jose mine should come down as it switches from diesel generators to an electrical connection via the southern Argentina national grid, starting in the fourth quarter of 2008.
Hochschild, which floated shares in November at 350 pence apiece, said it was on track to reach its production target of 26 million silver equivalent attributable ounces in 2007. It aims to produce 50 million silver equivalent ounces by 2011.
At 1020 GMT, Hochschild shares were down 0.2 percent at 325 pence, off an early high of 333.75 pence and valuing the business at about 1 billion pounds.
(Additional reporting by Eduardo Garcia in Buenos Aires)