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Good day, and welcome to the quarter 2 production results Hochschild Mining conference call. At this time, I would like to turn the conference over to Ignacio Bustamante, CEO. Please go ahead, sir.
Thank you very much. Hello, and welcome to our second quarter production conference call. Here in Lima, we have myself, Ignacio Bustamante, CEO; and also on the line is Ramón Barúa, our CFO; and in London, we have Charlie Gordon, our Head of Investor Relations. The current COVID crisis has made it a very tough period for everyone. At Hochschild, we have focused on protecting our workforce and our communities, and we have put extensive protecting measures in place for some time. As you know, all 3 mines were suspended for some of March and most of April. Our 2 Peruvian mines were initially halted for 11 weeks and restarted in late May, while San Jose in Argentina restarted on April 27. However, at the beginning of last week, we announced a number of cases of the virus at Inmaculada and decided to halt the operation again. Our team is currently scheduled to return to the operation at the start of next week with the ramp-up to full production expected by the end of the month of July. The company's second quarter production was obviously truncated, but we were able to produce almost 33,000 gold equivalent ounces or 2.8 million silver equivalent ounces, which therefore means that for the whole of the first half, output was almost 127,000 gold equivalent ounces or 10.9 million silver equivalent ounces. In its 25 days of production, Inmaculada rates improved versus the first quarter, and output came in at just over 12,500 ounces of gold and 377,000 ounces of silver, which is gold equivalent production of nearly 17,000 ounces. In the first half of the operation -- in the first half, the operation produced almost 80,000 gold equivalent ounces. At Pallancata, which is back in production, the operation had 24 days of operation in the quarter. As expected, grades rose and demand produced 485,000 silver equivalent ounces, which therefore makes 1.8 million ounces for the half year. In Argentina, I mentioned that San Jose restarted operations on the 27th of April, but this process has been somewhat slow and steady as the movement of people is still restricted in the country, and we currently expect the mine to reach full production towards the end of this quarter. In the second quarter, San Jose produced 732,000 ounces of silver and just over 11,000 ounces of gold, which makes 1.7 million silver equivalent ounces. Overall, in the first half, the operation produced 4.4 million silver equivalent ounces. Following on from the situation after the first quarter, given that our key operation is stopped at the moment, we are not in a position to give you a revised guidance for the year. We will, of course, aim to issue an updated set of forecasts once everything is fully up and running consistently again and we have a clear idea of the impact so far from the crisis and resulting stoppages. We were granted permission to restart our brownfield program in the middle of June. So the results you see are very early drill holes. We have revised our whole drill schedule and have hugely ambitious plans for the remaining 6 months of the year to add resources and find new potential across our portfolio. We are aiming to fully update you in the next 2 quarterly statements. On the financial side, despite the impact of the stoppages and the COVID-related expenditure, we still have a strong cash balance of approximately $162 million at the end of June and net debt at only $58 million. I should point out that our debt includes a slight increase in Argentinian debt to approximately $20 million, which is for temporary working capital increases. So to sum up, you will all understand this difficult period for everyone, but we remain hopeful that we will be able to safely restart Inmaculada in the next week or so. We have a comprehensive set of crisis-related protocols and safety measures in place across the organization so that we can ensure protection for all our employees and stakeholders. And with that, I would like to open up to any questions that you may have.
[Operator Instructions] We'll now move to our first question over the phone, which comes from Daniel Major from UBS.
Main questions around the exploration program. You obviously say you've got ambitious targets that imply a similar amount of drilling that you planned at the start of the year to be achieved in 6 months. I mean how realistic is that in particular with relation to ongoing restrictions to an extent in Peru, I suspect, or not entirely normal functioning because of coronavirus? And on that sort of basis, I mean, what is the probability, do you think, of delivering growth in group reserves and resources this year?
Thank you, Daniel. I think the likelihood of achieving our full year target is there. I think it's highly probable that we will be able to achieve it. The program, as you may recall, it wasn't a program that was fully loaded throughout the entire year. It was a program that was mostly charged for the first 7 or 8 months of the year, so by August or September, we were planning on finishing pretty much everything. So this pause in our exploration work for 3, 4 months is taking the program all the way up to December. Instead of finishing in August or September, we want to be finished in December. And still, we have been able to manage to achieve several other efficiencies and find more machines that will allow us to complete the plan. I would say, if not necessarily in meters, for sure, in terms of the targets and the amount of ounces that we are planning on obtaining in terms of additional inferred resources, it remains the same. So that is very positive news. The way we're managing that is everything that's through contracting work. And our workers are completely isolated from the rest of the camp. Particularly more notoriously in the case of Inmaculada, that is the case. So that gives us additional protection that in case situation were to recur at the mine that hopefully is not the case. But if that were to happen, still the drilling workers from the contractor will remain isolated from the rest of the other workers. So we see -- I mean, there's the interest of contractors to do the work. There's people available to do it. We have all the targets in place. There are machines available. So I would say that if provided any major, I would say, country-wide COVID crisis, we should be able to achieve all the targets that we set for ourselves for this 2020 year.
Okay. That's good. And then from a perspective, obviously, we've got the sort of implied EBITDA number from the first half during a very disrupted period. Assuming you get operations back to normal end of this month, is there an impact on the cost base as a consequence of what's going on? Should we be applying the similar total cash cost, all-in sustaining cash cost numbers you previously guided for the full year to the second half on the basis that you get back to something close to normal?
Yes. We are not giving a guidance yet until the situation gets resolved by that -- for sure, once we are back into a fully operating all our assets at 100% capacity, you should be able to use for that remaining production, the guidance that we gave at the beginning of the year, so that should be a good estimation. Having said that, as I mentioned, San Jose has been running for the past 3 months or so at pretty much 60% to 70% of capacity. So that is also going to have an impact on the cost of San Jose until we reach 100%. San Jose most likely is the one that is going to take us the longest to reach full capacity, as I mentioned, by the end of Q3, most likely. And that's because the travel between regions is still being carefully controlled. And there are people that cannot travel to the mine, so we have to operate with less -- with fewer people at the site, limiting our capacity. We expect that to get solved in the upcoming months. But again, it's going to be dependent on what happens with the COVID situation in Argentina. So -- but once we are back into operating 100%, the guidance for sure is the same that we gave at the beginning of the year. In this period, however, we have extra costs that we're having to incur because of the dealing with the COVID situation.
[Operator Instructions] We'll now move to our next question over the phone which comes from [ Camilla Jenkins ], a private investor.
Ignacio, just wondering now the silver price seems to be moving a bit, and I know Arcata is still on care and maintenance, what kind of prices are you looking at to reopen Arcata?
Sure. Thanks for the question. In the case of Arcata, we put it under temporary care and maintenance, and I emphasis the word temporary because we still have ambitious plans for Arcata. Arcata still has many untested targets that we found in the later stage of the mine, particularly in the, what we call, Q4, Quadrant 4, which is in the Northwest of our property. Those targets remain there, and we are in the process of applying for the permits from the government. We expect those permits to be obtained either late 2020 or early 2021. So there are going to be a target for exploration for, I would say, 2021. And if we find something, our goal will be to try to accelerate it and put it back into operation as soon as we can. The plant is ready to start processing minerals, so that will be a very material source of upside if we complete successfully that exploration plan. So you should expect to have more information, I would say, probably H1 2021 on Arcata.
Mr. Bustamante, there are no further questions queued over the phone at this time. I would like to turn the conference back over to yourself for any additional remarks.
Thank you. Well, thank you very much, everybody, for your time today. Should you have any additional questions, please feel free to contact Charlie Gordon directly at our London office. And thanks again. I hope to talk to all of you soon and keep safe during the COVID situation. Thank you very much. Goodbye.
Ladies and gentlemen, this does conclude today's call. Thank you for your participation. You may now disconnect.