Hello, and welcome to the Hochschild Mining Q3 2026 Results Presentation. If you would like to ask a question during today's call, please press star one on your telephone keypad. I would now like to hand the call over to Eduardo Landín. Please go ahead, sir.
Hello, everyone, and thank you for joining us to discuss our third quarter production results. I am joined today by Eduardo Noriega, our CFO, and Charlie Gordon, our Head of Investor Relations. Overall, we delivered a strong operational performance during the quarter, with attributable production of just over 74,000 gold equivalent ounces. That takes production at the first nine months to almost 226,000 gold equivalent ounces. Inmaculada continued to perform in line with our expectations, and we made particularly encouraging progress at Mara Rosa, where the operational turnaround is now nearing completion. We remain on track to meet our full year production guidance of between 300,000 and 328,000 gold equivalent ounces. Starting with Inmaculada, the mine produced just over 25,000 gold equivalent ounces in the quarter, roughly in line with the previous quarter.
Tonnage was slightly ahead of expectation, although this was offset by lower gold grades. The operations continue to perform well and remains on track to achieve its full-year production guidance of between 174,000 and 185,000 equivalent ounces. In Argentina, San Jose produced approximately 23,000 gold equivalent ounces on 100% basis during the quarter. Production was lower than Q2, with both tonnage and silver grades lower as mining was concentrated in the border areas of the veins. We expect grades to recover during the fourth quarter. Turning to Mara Rosa, I am pleased to report further progress in our operational turnaround. Production increased to just over 17,000 gold equivalent ounces in Q3, compared with approximately 14,600 oz in Q2, and September was particularly encouraging with production of just over 8,000 oz, making the strongest month of the year so far.
During the quarter, our new mining contractor completed their ramp-up to planned capacity, with material movement reaching nameplate levels towards the end of the period. Better haulage roads, improved access routes, and more productive pushback activities have also helped us to gain access to higher-grade areas of the mine. We expect this to lead to continued improvement in the fourth quarter. In the plant, the new thickener was stabilized and is performing above expectations. This has reduced filtration cycle times, restored continuity in the tailings disposal, and resolved all the water management constraints that we experienced in the first half of the year. Taking together these developments leave us well-positioned for a stronger last quarter, and we maintain Mara Rosa's full-year guidance of between 67,000 to 80,000 gold equivalent ounces.
Turning briefly to cost, we remain on track to meet our revised all-in sustaining cost guidance of between $2,380 and $2,500 per gold equivalent ounce. This is despite the continued inflationary cost pressures in Argentina. Looking to our growth projects, Monte do Carmo in Brazil continued to advance with engineering and studies progressing on schedule, including updates to the mine plan, whilst we accelerate procurement of critical long-lead items. Tailings infrastructure works and permitting activities are also moving forward, and we remain on track for a final investment decision in December. At Royropata in Peru, as you know, we achieved an important milestone in August with the submission of the modified environmental impact assessment to the Peruvian government.
Once again, it's worth me highlighting the state commitment to investment and growth in the mining sector, and we look forward to progressing this high-quality project as we move into 2027. Our brownfield exploration program also continued in the quarter with further encouraging drilling results at Inmaculada, San Jose, Mara Rosa, as well as exploration work at Monte do Carmo. This activity continued to support our long-term resources pipeline. Finally, our balance sheet remains strong. At the end of September, we had almost $350 million in cash, leading to the net cash position of around $91 million, reflecting strong operational cash generation.
Overall, we are encouraged by the progress made during this third quarter, particularly at Mara Rosa, and we remain focused on delivering our full-year targets with advancing our two growth projects and adding more ounces to the resource base.
With that, I would be happy to take your questions. Thank you so much.
Thank you. Ladies and gentlemen, as a reminder, to ask a question over the phone, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. Again, it is star one to ask a question. I'll take our first question from Felicity Robson from Bank of America. Please go ahead.
Hi. Thank you for taking my question. At San Jose, how much of the Q3 weakness do you view as purely weather-related, versus reflecting the position within the veins? What gives you the confidence in the expected grade recovery during Q4?
Well, basically, I would say that it's 50/50. The weather effect and the grades. We expect that since we are going to the fourth quarter, the weather will be quite good, so we will not have problems with weather. We expect to have the plant at nameplate capacity. Related to the grades, it's true that we are at the border mineralization. We continue doing infill drilling to make sure that we have better certain, on grades. We expect to accomplish the grades that we have planned, in order to get to our guidance production.
Okay. Thank you.
Welcome.
Thank you. We'll now move to our next question from Daniel Major from UBS. Please go ahead.
Hi. Thanks so much for the questions. Appreciate you are going to give longer term guidance, probably with the fourth quarter or next year's guidance, with the fourth quarter of the full year numbers. Maybe if we could just talk a little bit about the trajectory into next year at a high level, two elements. One, encouraging to see you got Mara Rosa back to a more normalized production run rate. Can you just give us a sense of where you expect to see that kind of normalized production and costs into 2027? Should we look at the second half of 2026 as a sort of normalized run rate? Then, I guess a similar question on the cost front. Would you expect to see costs come down in this kind of environment, or is it much more the operation running normally mitigates inflation? That is the first question.
Let me start with our projections for 2027. We have not finished the budget exercise yet. But as we said, we would like to see Mara Rosa between 80,000 and 85,000 oz per year. With these current rates, we believe that we will be able to achieve that. The operation has been prepared for the rainy season, that we have the global effect of El Niño effect, and we are getting ready for that situation with many actions and initiatives in Mara Rosa. What I expect is that level of production at Mara Rosa. In terms of cost, we have demonstrated that it is possible to have very good costs at Mara Rosa, very competitive, because September we got a very good figure, very competitive.
Cost will depend, of course, on the run rate and the production of ounces, but also on the initiatives that we are putting together during this budget process in order to lower down costs and be much more competitive. Saying that, there is a huge inflation on the sector, and we expect if the gold price continue growing during 2027, there will be some cost related to the metal prices that we will have to encourage. I do not know if that answered your question. I believe that your question was related to Mara Rosa.
Sure. Yeah, that is useful. The next question, again, is directionally, if we think about either all-in sustaining costs or group total cash costs into 2027, should we expect, directionally, given the inflationary backdrop, moderate inflation in unit costs? Or is there any mitigating factors that would mean that that was not the right kind of assumption?
Let me pass this question to Eduardo Noriega.
Thank you, Daniel. As Eduardo said, there is inflation in the industry, and we are working on initiatives to mitigate that inflation. If we look at on a mine-by-mine basis, in the case of Inmaculada, I think we have a very robust production and good initiatives to keep costs down. We also need to look into the budget and see what are the projects that we have. We're looking to expand the nameplate capacity. That may have a temporary impact, but I think Inmaculada, as I said, is pretty much well-positioned. In the case of San Jose, also, it's heavily dependent on inflation and devaluation. Being said that, the plan for San Jose is also to bring initiatives to reduce inflationary pressure, both locally and at a global level.
In the case of Mara Rosa, the all-in sustaining cost for next year could be better than what we had in 2026, where we had to implement different measures to recover full operational capacity. So that's what we can tell you about the extra cost, Daniel. We are working on the budget, and we will be able to provide guidance by the end of 2026, when we announce our Q4 production report.
Okay. So it sounds like at a group level, measures to mitigate inflation rather than deflation in unit cost is what we should be thinking about. Limiting the inflation. Is that right? High level.
High level, yes. We still need to complete our[crosstalk].
Sure. Yeah. Okay.
Yeah.
Yeah. Great. Okay. Thank you. Just last question. Encouraging you are still targeting FID of Monte do Carmo by the end of the year. Can you just give us your latest high-level thoughts on construction timeline, and any ranges or relative CapEx in comparison to the around $200 million you spent at Mara Rosa? That was magnitude of increase for what should be a comparable project.
Well, I can give you some figures on production. We are trying to produce between 80,000 and 90,000 oz of gold. We do not have the CapEx figures since we are finishing engineering in December, so it is too early to say. We are doing some engineering on the plant and also on the different components. I cannot give you today a figure, but of course, we will try to present a very competitive project, based on consensus prices, and that has to reach a good return for the company in line with our strategy.
Okay. Thanks for the questions. Appreciate it.
Okay. Thank you.
We'll now move to our next question from Jasper Mainwaring from Berenberg. Please go ahead.
Hello. Congratulations on the result, particularly at Mara Rosa. Just one for me on the Brazilian elections. I know you've spoken about this before, but with these ongoing, could you please provide some color on your expectations, in particular related to mining sector policies, and if your opinions on any business impacts have changed? Thanks.
Well, let me say that, since we work with the state government, not with the national government, we don't expect any impact depending on the results of the national elections. We have a very strong relationship with the governor of the state of Goiás, and also we are working on that on Tocantins. That is where Monte do Carmo is. Since the beginning, since we started working in Brazil, we had Bolsonaro at the beginning, then we had Lula. We didn't feel any difference between these two candidates or these two presidency periods. What we have today is that we believe that Brazil has a lot of geological potential. In the states that we are operating, Goiás and Tocantins, they're totally in favor of mining, and they recognize that the mining industry has a very important role in their economy.
Okay. Great. Thank you.
Thank you. We will now move to our next question from Alfonso Salazar. Please go ahead. From Scotiabank. Please go ahead. Your line's open.
Yes. Thank you. I have a follow-up on these presidential elections in Brazil. Just wondering if you can share with us, what is the FX rate and the energy and fuel that you have in your budget for the Brazilian operation for Mara Rosa, and what you have in the budget for the Monte do Carmo. Just trying to understand if there is an appreciation of the Brazilian real or an increase in the fuel price in Brazil. Trying to assess what it means both for your costs. If you can give any color on that, please.
Thanks, Alfonso. The macroeconomic variables set for the budget 2027 were before the elections, and they are a little bit above 5. In fact, it was like 5.2. We are monitoring the FX rate to see what is the impact that may have in terms of our costs. In terms of inflation, I think general inflation is around 3%, between 3% and 5% locally. Those are the rates that we have so far. Certainly, when we get closer to the approval of the budget and the guidance, we are going to review that and make sure that it is aligned with the latest information available to the market.
Okay. Thank you. The second question on my end, for Monte do Carmo, given the experience that you have at Mara Rosa, I do not know if you can share something regarding the planning of the project or how to do things differently that you have learned from Mara Rosa and you plan to apply when you move ahead with Monte do Carmo.
Yes. Since the beginning, when we acquired Monte do Carmo, we realized that there were a lot of improvements that could be implemented in this project, compared with Mara Rosa projects. We have made many, in terms of the plan. For example, we have substituted the crushing area by a SAG mill. Every single improvement that we realized that it could be implemented in Monte do Carmo is on the engineering already there. In terms of the way that we are going to manage this project, in terms of execution, we have also made some changes. We will have an EPCM team, as we did in Inmaculada many years ago.
I believe that it is a project that it will go smoothly during construction. A question before said that, how long do we expect that it will take us to build Monte do Carmo? I have to say that it will be around two years. Yes, the answer is yes. We have taken all the lessons learned from Mara Rosa, and it is already in place in Monte do Carmo.
Excellent. Thank you.
Welcome.
Thank you. As a reminder, if you wish to ask a question, please signal by pressing star one. We will pause just a moment to allow it to signal. There are currently no further questions. With this, I'd like to hand the call back over to Eduardo Landín for closing remarks. Over to you, sir.
Well, thank you very much for being here today. We believe that we have presented a robust result on Q3 production. I would like to highlight the results in Mara Rosa, and I believe that we are going to have a very good Q4 in all our sites. The message is that we are in the way to accomplish our guidance. Still, we believe that we are undervalued. Once we will demonstrate that Mara Rosa is totally at nameplate capacity, I believe that that will be a very good message to the market. Thank you so much.
Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.