Hey, and welcome to the Hochschild Mining Production Report conference call. At this time, I would like to turn the conference over to Eduardo Landin, CEO. Please go ahead.
Good afternoon, and welcome to our conference call to discuss our full year production results. I am here in Lima, and we also have in the line Eduardo Noriega, our CFO, and Charlie Gordon, our Head of Investor Relations. I'll come first to the operational performance and then cover progress at Mara Rosa, and an overview of our financial position. Group production in the quarter was just over 82,000 gold equivalent ounces or 6.8 million silver equivalent ounces, which is slightly stronger than Q3. Therefore, for the year as a whole, Hochschild produced just over 300,000 gold equivalent ounces, which is in the upper end of our revised guidance, due to the better than expected performance at Inmaculada.
I am also pleased to report that this strong operational performance has been underpinned by an impressive environmental and safety record, backed up by historically low full-year results with respect to the injury frequency rate and the accident severity index. Inmaculada delivered its strongest quarter of the year, with better than expected tonnage and grades from new mining areas, offsetting lower recoveries. Production was just over 39,000 ounces of gold and 1.5 million ounces of silver, which is a gold equivalent total of 57,420 ounces. Overall, Inmaculada output in 2023 has been just short of 2,000, no, 204,000 ounces of gold, which is slightly above the revised guidance given to the market in August. In Argentina, San Jose finished the year strongly.
Output was a little under 3.3 million silver equivalent ounces in Q4, which therefore give us 11.1 million ounces for the year as a whole. For Pallancata, production was as expected, much lower than previous quarter, as we stopped operations and put the mine on care and maintenance. In Q4, Pallancata produced 300,000 ounces of silver and 1,200 ounces of gold, bringing the silver equivalent production to 390,000 ounces overall. Overall, in 2023, Pallancata produced 2.4 million ounces of silver equivalent ounces, which is slightly above the revised forecast.
In terms of cost, I am pleased to say that we remain on track to keep our revised guidance, which, if you remember, is between $1,490 and $1,580 per gold equivalent ounce. Getting to our Mara Rosa construction project, we are in the final stages, and I am happy to report that the project remains on budget and on track to achieve first production in this half. And equally impressive, we are able to achieve 5 million hours at the project without any lost time accident. The crushing and the screening areas of the processing plant were commissioned during the quarter, and we are on track for full project commissioning this quarter.
With regards to infrastructure, the Pequi Water Reservoir is fully operational and is now sufficient to meet the needs of our 2024 production, while the administration building and the dry stack have also been completed during Q4. In relation to permitting, the commissioning of the wet circuit was authorized during Q4, and in December, we organized a site visit with the local authorities to support our operational license process, which is expected to come through in February. On brownfield exploration, we performed around 900 meters of drilling at both Inmaculada and San Jose, and we have shared with you selective drilling results, including some very promising grades at Nicolas vein at Inmaculada and the Suspiro vein at San Jose.
On the final, on the financial side, we have approximately $89 million of cash, which translate to a net debt of $252 million. Our net debt to EBITDA ratio was reduced from 1.12 x in September 2023, to 0.97 x in December 2023. In addition to stabilize cash flows from Inmaculada, the company secured a zero cost collar with J.P. Morgan for 100,000 ounces of our 2024 gold production, with an average floor of $2,000 per ounce and an average cap of $2,252 per ounce. So to sum up, a robust end of the year with continued good progress at Mara Rosa, where the first gold pour is expected in the coming weeks, a very exciting prospect.
With that, I would like to open for questions you may have for me and the team. Thank you very much.
Thank you, Eduardo. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question. First question comes from the line of Marina Calero from RBC Capital Markets. Please go ahead.
Good morning. Thanks for the call. I have a question about your strategy around hedging on production. Are you happy with the level of protection that you have now after the hedge is announced, or could we expect further production to be hedged in the future? Thank you.
Yeah, I pass this question to Eduardo Noriega, our CFO.
Thank you, Eduardo. Thank you, Marina. We're happy with the transaction that we did, that Eduardo mentioned. We're basically hedging only half of our production for Inmaculada in 2024 at very good levels. We're protecting, we're ensuring a stable cash flow with a floor of $2,000 per ounce, and we think we can gain from the upside of the gold price with a ceiling at $2,252 per ounce.
Okay. That's what I had. So would you expect to hedge more production this year, or are you comfortable with those levels?
We don't expect to hedge more at this point, Marina. I think we are well protected and still have upside.
Okay. That's what I have. Thank you.
Thank you.
The next question comes from the line of Richard Hatch from Berenberg. Please go ahead.
Thanks. Yeah, good morning, and, thanks for the call and congratulations on a, on a really nice set of numbers. Just a couple of questions from me. The first one is just on Mara Rosa. Can you perhaps just help us a little bit with, the ramp-up schedule? Should we expect to see any gold finding its way into Q2, or is it more of an H2, story? I see you've said that you expect commercial production in the second quarter, first pour in February, but is that recordable or, or does it all drip into the second half? That's the first one.
Yep. Well, we expect, as I said, on Q1 2024, we expect to reach the first pour, gold pour, and as I said, on Q2, we expect to reach commercial production. If this is the case, we will be able to record some production on Q2.
Okay, cool.
I feel quite confident on these dates.
Okay. And then, I mean, you also note that you had the Brazilian sort of government personnel just to the site for permitting and such like. Are you confident that you're gonna get your operating license in February? No sort of concerns there, and if you don't get the operating license in February, what does that mean?
No, I believe that our relationship is optimal with the local authorities, with the Goiás authorities. And I believe that we will need... I mean, we will not have any problem to get the operational permits as soon as we finish the plant. I mean, the plan reflects exactly the engineering that has been approved during the environmental permit and the construction permit. So I believe that we are not going to have any problems.
Okay. Good stuff. All right. Thank you very much for your time. Have a nice one.
Thank you. Thank you. Thank you for your question.
Before proceeding to the next question, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Tim Huff from Canaccord. Please go ahead.
Yes, thank you very much. I just had two quick questions. One is very similar to Richard's on the commissioning of Mara Rosa. You've mentioned in the processing plant section that the full project commissioning is expected in the first quarter, and as you just indicated, you're expecting, hopefully, to have some commercial production in the second quarter. Are you looking at a very short three-month ramp-up period? Because it sounds to me like you're expecting that first gold pour next month, and then the ramp-up directly from the first gold pour to full production by the end of the second quarter.
I don't know if that's about what you are thinking, but that would - yeah, that would, that would tend to match with some of the commentary in the release today, and also your guidance for the year. So I was just wondering if you could sort of help me through the, the thinking from first gold pour to the end of the second quarter.
Yeah, thank you very much. I mean, to reach commercial production, we need to ramp up the plant up to 70%.... so it doesn't mean that we have to go up to 100%. But I believe that, I mean, getting the first pour in February, and taking for, maybe between 60 and 80 days, we for sure, we can get to 70% of the capacity and start recording commercial production. We have done that before, yeah, at Inmaculada. Inmaculada, I remember that in 2015, we had 90 days of ramp up, and we did it in 30 days. So we have a lot of expertise, and I believe that we will do exactly the same.
We have all the corporate team, the technical service team that is going to be at the site, you know, for this process. And we have very good people, very good technical people that will help the Brazilian team. That also is very well prepared. I mean, we have been preparing this stage six months ago, and we have several documents, operational procedures and everything in place, you know, for this moment. So let's hope that we have some luck, you know, and no rain, and
Yeah.
We will be able to achieve those targets.
Okay, that sounds great. Yeah, no, that's, that's sort of what it sounded like. You were expecting something much shorter, and I, I was hoping to hear the 70% level for, for commercial production, so that's great. And then the second question was, it was just a quick one. Net debt at year-end obviously was a little bit lower than I was expecting, so that's great news. But I was just wondering if, if you, if you could even comment whether any of that was due to working cap influx. I know you, you typically have a first half, second half working cap influx. I didn't know if you, you could comment anything about working cap movements at year-end.
Thank you very much. I pass this question to Eduardo Noriega, our CFO.
Thank you, Eduardo. Thank you, Tim. Thanks for your question. I would say we have unusual changes in working capital. We kept some inventory by the end of the year, but nothing material, so there are no big changes in working capital. So the reduction in net debt is mainly due to the operational performance of our mines, as well as the good prices that we're seeing.
Okay, that's really helpful and good news. Excellent. That, that's it from me. Thank you very much, and, and well done.
Thank you.
Thank you very much.
We currently have no questions coming through. As a final reminder, if you would like to ask a question, please press star one. The next question comes from the line of Anthony Boone from Stapleton Capital. Please go ahead.
Good afternoon, gents. Thank you for the results. On your dividend payments, can you update investors what your thoughts are? Obviously, you've got the permits on Mara Rosa, but you talked about it on the last conference calls. What is the current policy in the next board meetings to decide possibly reinstating the dividend?
I pass this question to Eduardo Noriega, our CFO. Thank you.
Thank you, Eduardo. Thank you, Anthony, as well. As we have discussed in our previous conversations, we are right now focused on putting Mara Rosa into production, start generating the additional cash from our new mine, and continue seeing our indebtedness coming down. And I think that discussion on dividends will be held in our coming board meetings, and so we'll update you with more information after March.
Excellent. Very clear. I can understand why you might possibly not want to say more, that's fine. Thank you.
Thank you, Anthony.
There are no further questions, so I'll hand you back to Eduardo Landin to conclude today's conference.
Well, I would like to thank you all for being here at this call, and thank you very much. I hope I'll see you very soon. Thank you. Good afternoon.
Thank you for joining today's call. You may now disconnect your lines. Host, please stay on the line and await further instructions.