Hochschild reports progress at Volcan Gold Project

(Sharecast News) - Precious metals explorer and miner Hochschild Mining updated the market on its Volcan Gold Project on Monday, situated in the Maricunga Region of Chile. The company gained ownership of the Volcan project in 2012 following its acquisition of Andina Minerals.

After several years of inactivity, the project was reignited in early 2022, with the aim of reevaluating its viability and economic potential within the current gold price landscape.

On Monday, Hochschild outlined a series of achievements over the last year and a half, signifying significant progress within the Volcan Gold Project:

It said a fundamental milestone had been the establishment of Tiernan Gold Corporation - a newly-formed Canadian subsidiary under the umbrella of Hochschild Mine Holdings UK.

The restructuring efforts had culminated in the transfer of ownership of the Volcan project to Tiernan.

As part of the ongoing development process, Hochschild successfully completed an updated mineral resource estimate under Canadian NI 43-101 standards.

The assessment revealed substantial reserves, including 463.3 million metric tonnes of measured and indicated resources, with a gold content of 0.66 grams per tonne, equating to an impressive 9.8 million ounces of gold.

Additionally, the project boasted an estimated 75 million metric tonnes of inferred resources containing approximately 1.2 million ounces of gold, with a grade of 0.516 grams per tonne.

The board added that the completion of a positive preliminary economic assessment, also in accordance with NI 43-101 standards, was a pivotal step forward for Volcan.

It said the assessment outlined a compelling operational framework, including plans for a 22 million metric tonnes-per-annum open-pit, heap leach operation with a projected mine life of 14 years.

Notably, the initial decade of operations was expected to yield an average annual gold production of 332,000 ounces, with a cumulative output of 3.8 million ounces over the mine's lifespan.

The development would require an initial capital investment of $900m, supplemented by a sustaining capital of $276m over the mine's life.

Operational efficiency was said to be a central focus, with estimated cash costs of $921 per ounce and all-in sustaining costs of $1,002 per ounce, both evaluated over the mine's life.

A favourable financial outlook was indicated by the after-tax 5%-discounted net present value of $826m, and an internal rate of return of 21%, at a gold price of $1,800 per ounce.

Financial partnerships were being fostered, the company added, with Hochschild securing a $15m financing agreement by selling a new 1.5% net smelter returns (NSR) royalty on the Volcan project to Franco-Nevada, enhancing the capital base for its development.

Finally, In a move aimed at maximising the project's potential, Hochschild said it had enlisted Canaccord Genuity to assess various strategic alternatives for Tiernan Gold.

"There has been a significant amount of work completed over the past 18 months on the Volcan project," said chief executive officer Ignacio Bustamante.

"The updated Mineral Resource Estimate and PEA confirm that Volcan is a large resource capable of generating significant annual gold production with substantial margins at today's gold prices.

"Furthermore, Tiernan is now fully funded independently to carry out the next phases of project de-risking and, with gold prices remaining strong, we believe there is significant value in this project."

Bustamante said that, by engaging a financial advisor, the firm was looking at a number of options to unlock value while it focused its resources on the development of high-grade reserves and resources close to Immaculada, Mara Rosa construction in Brazil and the recent Royropata discovery near Pallancata."

Reporting by Josh White for Sharecast.com.