Hochschild Regulatory News (HOC)

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20 April 2022

2021 Annual Financial Report,

2022 Annual General Meeting ("AGM") and

Circular relating to an Extraordinary General Meeting ("EGM") (incorporating the Notice of EGM)

Following the release of Hochschild Mining PLC's 2021 full year results announcement on 23 February 2022 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for the year ended 31 December 2021 (the "2021 Annual Report").

In accordance with LR 9.6.1 R, the Company also announces that the following documents have been submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

· 2021 Annual Report

· AGM circular (incorporating the Notice of AGM)

· EGM circular (incorporating the Notice of EGM)

· Notice of Availability of the 2021 Annual Report, AGM circular and EGM circular

The above documents will be posted shortly or otherwise made available to shareholders and, in accordance with the Disclosure Guidance and Transparency Rules ("DTR"), the 2021 Annual Report, the AGM circular and EGM circular have been published on the Company's website at www.hochschildmining.com.

GENERAL MEETING ARRANGEMENTS

The EGM and AGM (the "Hochschild Meetings") will be held on Thursday, 26th May 2022 at the offices of Hudson Sandler LLP, 25 Charterhouse Square, London EC1M 6AE at 8.45 a.m. and 9.00 a.m. respectively.

- EGM

The EGM circular, which was approved today by the Financial Conduct Authority, sets out proposals to (a) rectify certain historic dividends (the "Relevant Dividends") and enter into deeds of release in favour of the Company's shareholders and directors; and (b) create distributable reserves for the Company by way of:

(i) a capitalisation of the Company's merger reserve followed by a cancellation of the shares that are issued (the "Merger Reserve Capitalisation and Cancellation");

(ii) the subsequent reduction of all or part of the Company's share premium account, including share premium created through the Merger Reserve Capitalisation and Cancellation, and the crediting of the amount by which the share premium account is reduced to the Company's retained earnings reserve (the "Share Premium Reduction"); and

(iii) the reduction in the nominal value of the ordinary shares from 25 pence per ordinary share to 1 pence per ordinary share (the "Capital Reduction" and, together with the Share Premium Reduction, the "Company Reductions").

The EGM circular includes a letter from the Chairman of the Company, which is reproduced in Appendix 4 without material adjustment or amendment.

Completion of the dividend rectification and entry into the related party transactions and the Company Reductions remain conditional on, among other things, the approval of the Company's shareholders and, in the case of the Company Reductions, approval by the Court of England and Wales.

- Attendance at the Hochschild Meetings

Shareholders who wish to attend either of the Hochschild Meetings in person are requested to register their intention to attend by emailing info@hocplc.com no later than 48 hours prior to the relevant Hochschild Meeting to allow us to ensure that the venue can remain secure against COVID-19 and allow us to make various health, safety and risk assessments.

We are pleased this year that shareholders will be able to physically attend the Hochschild Meetings. In the event circumstances change before the appointed time of the relevant Hochschild Meeting, we will notify shareholders of any change to the arrangements through announcements via the London Stock Exchange and by publishing details on the Company's website at www.hochschildmining.com as early as is possible before the Hochschild Meetings. For the safety of others, shareholders or proxies experiencing any of the symptoms connected with COVID-19 are requested not to attend either of the Hochschild Meetings. To mitigate the risk that shareholders or proxies cannot attend because of COVID-19 or for whatever other reason, we would encourage all shareholders to appoint the chairman as their proxy to exercise their votes in accordance with their instructions.

- Proxy Voting at Hochschild Meetings

Full details on how to submit proxy votes and the deadlines to do so can be found in the Notices of AGM and EGM.

Appendices 1 to 3 to this announcement contain the information required to be disclosed under DTR 6.3.5 which has been reproduced from the 2021 Annual Report and should be read in conjunction with the Preliminary Announcement. All page references and cross-references in Appendices 1 to 3 are to the 2021 Annual Report.

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Enquiries:

Hochschild Mining PLC

Raj Bhasin +44 (0)7825 533495

Company Secretary

Hudson Sandler

Charlie Jack +44 (0)20 7796 4133

Public Relations

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About Hochschild Mining PLC

Hochschild Mining PLC is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) and crosstrades on the OTCQX Best Market in the U.S. (HCHDF), with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over fifty years' experience in the mining of precious metal epithermal vein deposits and currently operates three underground epithermal vein mines, two located in southern Peru and one in southern Argentina. Hochschild also owns the Posse Advanced Project in Brazil which is currently in construction as well as numerous long-term projects throughout the Americas.

LEI: 549300JK10TVQ3CCJQ89

APPENDICES

Appendix 1

Risk Management

(reproduced from pages 68 to 75 of the 2021 Annual Report)

Management of the Group's operations and execution of its growth strategies are subject to a number of risks, the occurrence of which could adversely affect the performance of the Group. The Group's risk management framework is premised on the continued monitoring of the prevailing environment, the risks posed by it, and the evaluation of potential actions to mitigate those risks.

The Risk Committee is a management committee tasked with implementing the Group's policy on risk management and monitoring the effectiveness of controls in support of the Group's business objectives. It meets four times a year and more frequently if required. The Risk Committee comprises the CEO, the Vice Presidents, Country General Managers and the head of the Internal Audit function. A 'live' risk matrix is reviewed which maps the significant risks faced by the business as well as those considered to be emerging risks. The matrix is updated at each Risk Committee meeting, and the most significant current and emerging risks, as well as actions to mitigate them, are reported to the Group's Audit Committee, and if considered appropriate, also to the Board. In light of their strategic importance, sustainability risks and their mitigation plans are monitored by the Sustainability Committee.

Risk appetiteDefining risk appetite is crucial in ensuring that a risk management system is embedded into Hochschild's organisational culture. Our risk appetite approach is to minimise our exposure to reputational, compliance and excessive financial risk, whilst accepting a certain level of risk to achieve our strategic goals. As part of setting risk appetite, the Board will consider and monitor the level of acceptable risk it is willing to take in each of the principal risk areas.

Appetite for risk will vary according to the activity undertaken, and is predicated on the fact that a risk will only be tolerated after a full understanding of the potential benefits and its implications before proceeding with a course of action, and that sensible mitigation measures are identified and implemented.

Covid-19

As reported in the 2020 Annual Report, in response to the Covid-19 pandemic, Hochschild Mining established a Crisis Committee which oversaw the implementation of the Covid-19 Crisis Plan. This plan resulted in the instigation of, among other things, enhanced health protocols designed to prioritise employee welfare. In 2021 the protocols on testing and social distancing measures at the operations remained in place to control the spread of the virus among employees.

2021 RisksDetails of the principal and emerging risks affecting the Group and the associated mitigating actions are provided on the following pages. The risks differ from those reported in the 2020 Annual Report in the following respects:

 - Acknowledging the reduced impact of Covid-19 on the Group's principal risks in 2021, Covid-19 has this year been presented as a separate risk; and

- The inclusion of Climate Change as a new risk which, as described later, discusses both the impact on the business of the physical aspects of climate change, as well as the impact on the Group in light of the transition to a low-carbon economy which may include increased costs of compliance and governance.

Reasons for the year-on-year change in the profile of a specific risk can be found in the commentary section of the relevant risk, which also provides an outlook on the risk for the current financial year.

Outlook

At the time of approval of this Annual Report, the number of new daily cases in Peru and Argentina is falling from a recent peak due to the Omicron variant which, although more transmissible, is resulting in a much lower proportion of severe illness.

The Company continues to monitor the situation and, as described later in this report, is able to scale up the implementation of the Covid-19 Crisis Plan as required.

1. FINANCIAL RISKS

a) Commodity Price

Change in risk profile vs 2020: UNCHANGED

Impact

Adverse movements in precious metal prices could materially impact the Group in various ways beyond a reduction in the financial results of operations. These include impacts on the feasibility of projects, the economics of mineral resources, heightened personnel retention and sustainability related risks.

Mitigation

- Constant focus on maintaining a low all-in sustaining cost of production and an efficient level of administrative expense.

- Policy to maintain low levels of financial leverage to ensure flexibility through price cycles.

- Flexible hedging policy that allows the Company to contract hedges to mitigate the effect of price movements taking into account the Group's asset mix and forecast production.

Commentary

The Group's principal strategy to mitigate against commodity price volatility is focused on conserving capital and optimising cash flow through:

- controlling operating and administrative costs;

- optimising sustaining capital expenditure; and

- maintaining low working capital.

As reported in the Financial Review, the Group increased borrowing by an additional $100m under its medium-term facility.

The Group has ended the year with a net cash position and is therefore in a robust financial position.

As previously reported, in early February 2021 the Group hedged 4 million ounces of silver for both 2021 and 2022 at an average price of c.$27 per ounce to protect cash flows in Peru. In addition, in November 2021, the Group hedged 3.3 million ounces of silver for 2023 at $25 per ounce. These hedges will ensure profitable production from existing resources mainly at Pallancata while brownfield exploration efforts continue to add near-term resources.

See the Market Review on pages 10 to 13 for further details on how commodity prices performed in 2021.

b) Commercial Counterparty

Change in risk profile vs 2020: UNCHANGED

Impact

Insolvency of a customer or other business counterparty (bank, insurance company, contractor, etc) could result in the Group's inability to collect accounts receivable or to access funds or to receive services which could adversely impact the Group's profitability.

Mitigation

- Active assessment of customers and business counterparties.

- Risk mitigation practices seeking to diversify the Group's customer base and/or to limit the size of shipments.

- Ongoing assessment of methods to mitigate collection risk

Commentary

During the year, the Group undertook the following:

- Annual counterparty analysis: The annual review of existing customers incorporated analysis of corporate governance, balance sheet strength and other aspects of credit quality. Although the counterparty risk analysis did not raise any material issues, we continue to require customers to make advance payments for 90% - 98% of the amount sold. We also obtained parent guarantees;

- Review of financial counterparties: The Group has implemented policies to identifying suitable financial counterparties to support the Group's treasury and insurance needs. On an ongoing basis, the Group has adopted a number of practices such as the placing of limits on cash balances invested with financial institutions, monitoring of advanced payments from customers and ensuring diversification.

2. OPERATIONAL RISKS

a) Operational Performance

Change in risk profile vs 2020: LOWER

Impact

Failure to meet production targets and manage the cost base could adversely impact the Group's profitability.

Mitigation

- Close monitoring of operational performance, costs and capital expenditure as well as the overall profitability at all stages of the mining value chain.

- Monitoring the adequacy and safety of key mining components such as tailing dams, waste rock deposits and pipelines in close liaison with relevant departments ensuring that procurement, construction and permitting are undertaken appropriately.

Commentary

In 2021 the Group benefited from a year of uninterrupted operations enabling it to meet its production target for the year of 31.2m silver equivalent ounces.

In setting budgets for the year, the Group continued to focus on maintaining controlled levels of costs, capital expenditure and expenses.

As reported in the Financial Review from page 36, the all-in sustaining cost from operations was in line with guidance for the year, at $14.4 per silver equivalent ounce (excluding exceptional items including Covid costs).

b) Business Interruption/Supply chain

Change in risk profile vs 2020: UNCHANGED

Impact

Assets used in the Group's operations may cease to function or the provision of supplies or of electricity may be disrupted (e.g. as a result of technical malfunction or earthquake damage) thereby causing production stoppages with material effects.

Mitigation

- Insurance coverage to protect against major risks.

- Management reporting systems to support appropriate levels of inventory.

- Inspections every 18 months (to coincide with renewal) by insurance brokers and insurers assist management's efforts to understand and mitigate operational risks.

- Negotiation of long-term power supply contracts and the procurement of contingent generators.

Commentary

In addition to maintaining insurance policies covering machinery breakdown, mitigating actions during the year include the following:

- A thorough review of critical supplies and inventory was performed with data uploaded onto the Maintenance Module of SAP HANA;

- Maintaining back-up equipment to ensure power supply in Peru and Argentina; and

- A Crisis Response Plan ('CRP') was developed in 2019 with the support of external consultants. Management received training on the CRP in Q1 2020 on how to mount a co-ordinated response to unforeseen disruption.

Specifically with regards to supply chain risks, the Company:

- has identified alternative suppliers;

- has increased its stocks of critical consumables and strategic spare parts; and

- maintains ongoing dialogue with vendors and shippers.

c) Information security and cybersecurity

Change in risk profile vs 2020: UNCHANGED

Impact

Failure of any of the Group's business critical information systems as a result of unauthorised access by third parties may affect the Group's ability to operate.

Mitigation

- Compliance with ISO 27001, an internationally recognised certification to evaluate information security management systems.

- Dedicated team within the IT department focused on preventing cyber-attacks.

- Audits performed by the internal audit department and third parties to test systems and issue recommendations.

- Primary information processing supported by SAP Hana which has best-in-class security features

Commentary

Security of the Group's network infrastructure is assured through the following means:

- The inclusion of industrial networks into the Group's IS Management System ('ISMS') which accordingly benefit from associated security enhancements;

- SMS received BSI certification; and

- The implementation of the principal recommendations arising from an ethical hacking assessment.

To counter the heightened risks as a result of the widespread use of remote working, the Group has adopted use of VPN software, enhanced security monitoring efforts and upgraded anti-spam software for use with corporate email services. In addition, internal communication campaigns were launched to ensure best practices in remote working.

d) Exploration & Reserve and Resource Replacement

Change in risk profile vs 2020: HIGHER

(d)(i) Impact

The Group's future operating margins and profitability depend upon its ability to find mineral resources and to replenish reserves.

Mitigation

- Implementing and maintaining an annual exploration drilling plan.

- Ongoing evaluation of acquisition and joint venture opportunities to acquire additional ounces.

- Implementation of a comprehensive permitting strategy led by a Permitting Committee.

- Comprehensive engagement activities with communities and governmental authorities (see later sections on Macroeconomic and Sustainability risks).

Commentary

GeneralThe Group has an internal Permitting Committee led by two Vice Presidents to co-ordinate efforts with a view to streamlining the permitting process for exploration and operational requirements. Senior executives actively participate in industry initiatives to simplify the permitting process.

Greenfield exploration is primarily conducted through the negotiation of earn-in/joint venture opportunities. These provide the Group with a balanced portfolio of advanced and early-stage opportunities in stable jurisdictions in the Americas.

Developments during the yearAs described elsewhere in the Annual Report, social conditions in Peru have worsened leading to higher social demands and social conflicts involving mining projects. This has led to delays in securing permits from the communities, impacting the Group's exploration programme.

Following events in southern Ayacucho in November 2021 (as described in the commentary of Political, legal and regulatory risks), the risk of delay in the granting of environmental permits for exploration in Ayacucho, where Pallancata and Inmaculada are located, has increased substantially.

Further details on brownfield exploration are provided on pages 33 and 34 and in relation to greenfield projects, on page 34.

(d)(ii) Impact

Reserves stated in this Annual Report are estimates.

Mitigation

- Engagement of independent experts to undertake annual audit of mineral reserve and resource estimates.

- Adherence to the JORC Code and guidelines therein.

Commentary

The Group has engaged P&E Consultants to undertake the annual audit of mineral reserve and resource estimates.

See page 198 for further details 

(e) Personnel: Recruitment and RetentionChange in risk profile vs 2020: UNCHANGED

Impact

Inability to attract or retain personnel through a shortage of skilled personnel.

Mitigation

- The Group's approach to recruitment and retention provides for the payment of competitive compensation packages, well defined career plans, training and development opportunities and the overall employee value proposition.

Commentary

The Group has undertaken a number of initiatives to improve the retention of employees. These include the use of non-financial benefits (e.g. flexible working arrangements for office-based staff) and tailored personal development plans. In addition to the five-year Leadership programme implemented at all operations, a new Leadership model aligned with the Company's culture is being deployed.

Training programmes for supervisors and hourly workers continued to be delivered virtually during 2021.

Enhancing the Group's employee value proposition includes the launching of initiatives related to causes that are valued by employees; providing employees with the opportunity to contribute to the relaunched purpose of the Company which includes innovation, community relations and environmental performance.

To assist retention of key personnel, the Company has a Long-Term Incentive Plan.

(f) Personnel: Labour Relations

Change in risk profile vs 2020: HIGHER

Impact

Failure to maintain good labour relations with workers and/or unions may result in work slowdown, stoppage or strike.

Mitigation

- Development of a tailored labour relations strategy focusing on profit sharing, working conditions, management style, development opportunities, motivation and communication.

- Monthly meetings with mineworkers and unions to ensure a complete understanding of expectations and to keep all parties updated on the Group's financial performance.

Commentary

PeruThe Group's Peruvian operation generated sufficient taxable income to give rise to an entitlement to statutory profit sharing for Peruvian mineworkers.

In keeping with recent practice, as part of the salary increases agreed with the Peruvian labour unions, the Company has approved an additional bonus plan incorporating safety and productivity goals.

The left-wing Castillo administration, elected in July 2021, has expressed its support for the country's labour unions and the right for employees to strike. This has resulted in an increased risk in labour relations overall relative to 2020.

ArgentinaIn Argentina the Company maintains constructive relations with the labour unions through ongoing and regular dialogue.

3. MACRO-ECONOMIC RISKS

Political, Legal and Regulatory

Change in risk profile vs 2020: HIGHER

Impact

Changes in the political, legal, tax and regulatory landscape could result in significant additional expense, restrictions on or suspensions of operations and may lead to delays in the development of current operations and projects.

Changes in the political, legal, tax and regulatory landscape could result in significant additional expense, restrictions on or suspensions of operations and may lead to delays in the development of current operations and projects.

Delays in granting/securing the necessary environmental permits for exploration or operations could affect future production and financial results of the Group.

Mitigation

- Local specialist personnel continually monitor and react, as necessary, to policy changes. In addition, political, social and communications advisers have been engaged to support the Group in responding to developments.

- Participation in local industry organisations.

Commentary

Peru

- General

After suffering from the devastating impact of the Covid-19 pandemic in 2020, the first half of the year saw political uncertainty in Peru in the lead up to the Presidential elections. The second round of voting in June polarised the country along political lines and saw a contested victory by Pedro Castillo of the left-wing Free Peru party who was inaugurated in late July 2021.

On assuming office, President Castillo announced his government's intentions to increase state participation in the economy and to form a constituent assembly to oversee constitutional reform. The

government's stated focus with regards to the mining sector was to implement a policy of enhancing 'social profitability' which would see mining companies facilitating the promotion of local development, increasing State revenues and facilitating the redistribution of wealth. President Castillo has appointed four successive Prime Ministers who have been vocal proponents of the government's stated objectives.

With the arrival of the new administration, mining has become highly politicised and has prompted many social conflicts with local communities seeking to capitalise on the Government's commitments

during the presidential campaign and election (see commentary on Community relations risks for further details). In line with its election campaign pledge, the Executive sought to increase taxes on the mining industry but failed to seek the requisite authority from Congress.

- The Coracora Act

As announced by the Company, in November 2021, a meeting by the Head of Cabinet and certain vice-ministers in a town in southern Ayacucho resulted in the publication of minutes (the 'Coracora Act')

which (a) alleged undisclosed environmental complaints, and (b) established a commission (the 'Executive Commission') to negotiate the timetable and terms for the closure and withdrawal of certain mining projects in southern Ayacucho including the Company's Pallancata and Inmaculada mines. It was further announced that approvals would no longer be granted to authorise additional mining, exploration, or expansion activities in relation to these mines.

In response to protests from the industry, the business community in general and other organisations, official statements were issued expressing the Government's commitment to upholding the rule of law and acknowledging the continued rights of mining companies to request extensions and modifications of existing permits for mining and exploration activities.

In mid-December 2021, the Government announced its intention to issue, before the end of the year, a decree formalising the Executive Commission. In mid-January 2022, a temporary working group for

the development of certain provinces in southern Ayacucho was established to oversee the implementation of the Coracora Act.

- Environmental permits

With regards to environmental permits for operating activities, the Group was expecting to hold the virtual townhall in mid-December 2021 in connection with the second modification of the detailed Environmental Impact Study ('EIS') for Inmaculada. Less than 24 hours prior to the scheduled time of the event, the Company was notified by the relevant authority (SENACE) of its cancellation citing safety concerns. The Company believes that this decision was premature and unfounded and it made its position known to the relevant officials and authorities.

As a result, the virtual townhall had to be rescheduled and was held on 12 February 2022 which, in turn, will cause the EIS approval process to be delayed, potentially impacting future mine developments and production at Inmaculada. The virtual townhall was held successfully and the EIS approval process continues to advance, with approval expected during H2 2022.

Argentina

President Fernandez's administration has been very cautious in supporting and promoting the mining industry. Covid-19 and certain populist measures have negatively impacted the overall investment

climate in Argentina including in the extractive industry sector.

Mid-term congressional elections in November 2021 saw the ruling Peronist Government lose its majority in Congress as well as the key stronghold of Buenos Aires province.

2022 Outlook

- Peru

The political outlook for 2022 in Peru remains uncertain with opponents to mining accusing the Castillo Government of reneging on its commitments in the Coracora Act and calling for strikes and other

action. Accordingly, the risk of stoppage has increased substantially, as well as the granting of new permits for explorations and operations under complex social conditions. In addition, with regional and local elections scheduled for October 2022, the risk of further political turmoil and polarisation remains high.

The Government has announced that it plans to submit a legislative bill to Congress to increase taxes on the mining sector during the first quarter of 2022.

- Argentina

President Fernandez's administration is expected to continue cautiously supporting mining activity, however its approach will be influenced by the dynamics within the coalition government and the general state of the economy which is expected to be dominated by high rates of inflation and limited growth.

4. SUSTAINABILITY RISKS

(a) Health and Safety

Change in risk profile vs 2020: UNCHANGED

Impact

Group employees working in the mines may be exposed to severe health and safety risks.

Failure to manage these risks may result in occupational illness, accidents, a work slowdown, stoppage or strike and/or may damage the reputation of the Group and hence its ability to operate.

Mitigation

- Health & Safety operational policies and procedures reflect the Group's zero tolerance approach to accidents.

- Use of world-class DNV safety management systems.

- Dedicated personnel to ensure the safety of employees at the operations via stringent controls, training and prevention programmes.

- Systematic programme of training, communication campaigns and other initiatives promoting safe working practices.

- Use of reporting and management information systems to monitor the incidence of accidents and enable preventative measures to be implemented.

Commentary

The Group reported two fatalities at its operations during 2021 which occurred at the San Jose and Aclara sites. For further details on the investigation of these accidents, please refer to the Sustainability Report on pages 59 and 60.

During the year, there was a particularly tragic traffic accident involving a bus operated by one of our contractors resulting in the loss of 26 lives. The Group worked together with the contractor in question and the relevant authorities to take all necessary measures to collectively mitigate the risk of such a tragic accident from recurring.

Management continued with the implementation of 'Safety 2.0', an action plan to reinforce a safety-first culture. The plan, which combines technical and people-led approaches, comprises seven key attributes covering training, effective communication, recognition and aligning compensation with measurable safety performance.

In addition, during the year:

- a new internal safety indicator, the Seguscore, was developed for roll-out in 2023; and

- the Health team partnered with the Community Relations team to visit local families to promote early childhood development.

For further details on the above, please refer to the safety section of the Sustainability Report on pages 59 and 60.

(b) Covid-19

Change in risk profile vs 2020: LOWER

Impact

Another wave of infections, whether in general in Peru/Argentina, or localised at the Group's operations, could result in a) operational disruption or stoppages (e.g. due to personnel shortage,

disruption in the supply chain etc), b) increased costs and c) reputational risks.

Secondary Covid-19 risks include legal risks (e.g. litigation from suppliers/contractors), permitting

delays, IT risks (in light of increased reliance on IT systems) and fraud risk due to increased use of

remote working.

Mitigation

- Covid-19 Crisis Plan

Commentary

Management designed and implemented the Covid-19 Crisis Plan following the outbreaks in 2020 (further details of which can be found in the 2020 Annual Report). The protocols in the Crisis Plan continue to be largely in place and can be scaled up at short notice on the signs of an increase in the level of infections. In summary, these protocols include:

- a comprehensive testing programme;

- the increased presence of medical personnel and availability of medical facilities;

- the redeployment of high-risk employees;

- the adaptation of working areas and transportation;

- the use of technology-based systems to monitor cases and support the logistics related to shift changes; and

- adapting the focus and style of delivery of our Community Relations programmes.

As reported in the 2020 Annual Report, a tailored Covid-19 risk matrix was compiled which, in addition to forming the basis of the operating protocols referred to above, also established mitigating actions with regards to secondary Covid-19 risks.

During 2021, the Company took a number of steps to increase its level of preparedness through:

- the commissioning of an audit of its biosecurity protocols which were certified by Bureau Veritas; and

- the procurement of stocks of medication, personal protective equipment and testing kits.

(c) Environmental

Change in risk profile vs 2020: UNCHANGED

Impact

The Group may suffer from reputational risk and may be liable for losses arising from environmental hazards associated with the Group's activities and production methods, ageing infrastructure, or may

be required to undertake corrective actions or extensive remedial clean-up action or pay for governmental remedial clean-up actions or be subject to fines and/or penalties.

Mitigation

- The Group has a dedicated team responsible for environmental management.

- The Group has adopted a number of policies and procedures to manage its environmental footprint.

- The Group has developed a tool which allows it to measure and manage environmental performance.

- The Group continues to adopt measures to minimise natural resource use, with particular emphasis on water consumption in its operations.

- A specific tailings management framework is in place for TSFs, including independent third-party review.

Commentary

In 2021, the Group performed highly in its ECO Score (with a score of 5.29 out of 6 (2020: 5.74)), reflecting the following notable achievements:

- Four operations achieving a perfect score of 6 out of 6 (Inmaculada, San Jose, Pallancata and Arcata);

- The lowest water consumption since 2015;

- The lowest amount of waste generated since 2015 (0.98 kg/person/day);

- The highest level of environmental culture compliance (using an internal scoring system).

In addition, during the year:

- the Environmental team had an unprecedented year in terms of reporting on the Group's environmental performance by participating in numerous reporting initiatives;

- there was continued progress with the implementation of the Environment Culture Transformation Plan (ECTP) which, in 2021, focused on people, innovation and technology; and

- as part of the ECTP, 85 environmental ambassadors were appointed across the operations in Peru and Argentina tasked with promoting a robust environmental culture across the organisation.

As disclosed in the Operational risks, the Group has published information on its website regarding its TSFs, including their construction method and risk profile. It also continues to commission independent third-party reviews of all such facilities and monitors on an ongoing basis their stability, with particular emphasis on older TSFs such as the Ares facility which is in the process of being closed.

The independent review conducted in 2021 did not identify any material issues.

For further details, please refer to the environmental section of the Sustainability Report on pages 56 to 58.

(d) Climate Change

Change in risk profile vs 2020: NEW

Impact

Changes in climate and weather patterns, including the occurrence of extreme weather events such as higher rainfall, droughts, and storm conditions, may cause operational disruption and, at worse, could result in a suspension of operations.

Failure to comply with climate-related laws and regulations could result in reputational risks for the

Group, increased costs and longer permitting delays.

Lack of climate change actions could result in restricted access to capital.

Mitigation

- Enhanced management oversight and operating protocols to:

· maximise the use of natural resources and minimize energy consumption.

· monitor weather projections for operations, incorporating weather assessments in operating applications.

- Promoting transparency with regards to the Group's performance through participation in investor-led reporting initiatives.

Commentary

Actions taken in 2021 include:

- The recognition of climate-change related risks on the Group Risk Register resulting in the monitoring of mitigating actions by the Risk Committee, Sustainability Committee and, as appropriate, by the Board;

- Increasing the percentage of recycled water used in processing plants at Inmaculada and San Jose;

- Assessing purchasing increased levels of energy from renewable sources.

Reporting of the Group's performance has been enhanced through:

- external assurance of the calculation of the Group's carbon footprint at operations;

- participation in CDP information request; and

- voluntary TCFD disclosure in respect of 2020.

The 2022 Action Plan includes, most notably, the launch of Hochschild's Carbon Neutral strategy.

Read our 2021 TCFD Report from page 64.

(e) Community Relations

Change in risk profile vs 2020: HIGHER

Impact

Communities living in the areas surrounding the Group's operations may oppose the activities carried out at existing mines or, with respect to development projects and prospects, may invoke their rights to be consulted under new laws.

These actions may result in loss of production, increased costs and decreased revenues, longer lead times, additional costs for exploration and have an adverse impact on the Group's ability to obtain the relevant permits.

Mitigation

- The Group has a dedicated team responsible for Community Relations.

- Constructive engagement with local communities based on several years of positive relations.

- Community Relations strategy focuses on promoting education, health and nutrition, and sustainable development.

- Policy to actively recruit workers from local communities.

- Policy of hiring service providers from local communities.

- The Group has also engaged with local governments to support public investment initiatives through technical assistance and direct investment.

Commentary

- Overall

The overall social climate has become markedly hostile to mining since July 2021 as the promises made by the governing party during the presidential campaign resulted in increased and unrealistic expectations. Social conflicts have led to the temporary stoppage of major mining operations such as Las Bambas and Antamina. In addition, in October 2021, violent protests against the Apumayo mining unit in Southern Ayacucho led to the attack and burning down of Apumayo's camp and certain mining infrastructure.

The Group experienced brief stoppages at Pallancata and Inmaculada but they did not affect production during the year. However, social conflicts have led to the stoppage of certain of the Group's exploration projects in Peru, such as Corina and Huacullo.

As described earlier (in relation to political, legal and regulatory risks), given the actions of the Government in Southern Ayacucho since November 2021, the political and social risks have increased substantially as the Government has further raised expectations which, if not met, could lead to further acts of violence and attempts to disrupt mining operations in general.

Governmental authorities remain very sensitive to conflicts between communities and mining companies and typically take a cautious approach by prioritising dialogue between parties and supporting social demands regardless of their merit.

- Hochschild developments

The Group continues to implement its social engagement strategy in recognition of its responsibilities to host communities. The Group invested significant resources to understand the needs and expectations of local communities and governments.

During the year:

- the Group spent or donated $5.4m to benefit local communities and supported local community-run businesses;

- we continued to support the communities with a wide range of programmes covering our areas of focus: education, health and nutrition, and sustainable development;

- the Community Relations team continued to support the business, for example, by successfully securing surface rights and concluding prior consultation processes to facilitate exploration activities.

Further details can be found in the Sustainability Report from page 54. 

Appendix 2

Related-Party Balances and Transactions, and

Compensation of key management personnel of the Group

(reproduced from pages 174 and 175 of the 2021 Annual Report)

 (a) Related-party accounts receivable and payable

The Group had the following related-party balances and transactions during the years ended 31 December 2021 and 2020. The related parties are companies owned or controlled by the main shareholder of the Parent Company or associates.

1 The account receivable relates to reimbursement of expenses paid by the Group on behalf of Cementos Pacasmayo S.A.A., an entity controlled by Eduardo Hochschild. The account payable relates to the payment of rentals.

2 Peruvian not for profit educational institutions controlled by Eduardo Hochschild.

3 Associated companies of the Aclara Group (refer to notes 4 and 19).

As at 31 December 2021 and 2020, all other accounts are, or were, non-interest bearing.

No security has been granted or guarantees given by the Group in respect of these related party balances.

Principal transactions between affiliates are as follows:

Transactions between the Group and these companies are at an arm's length basis.

(b) Compensation of key management personnel of the Group

This amount includes the remuneration paid to the Directors of the Parent Company of the Group of US$3,967,000 (2020: US$3,821,000).

(c) Related party transaction

Participation of Pelham Investment Corporation in the IPO of Aclara

As announced by the Company on 3 December 2021, Pelham Investment Corporation ('Pelham'), a company controlled by the Chairman, Eduardo Hochschild, entered into a subscription agreement with Aclara on 2 December 2021 pursuant to which Pelham agreed to purchase, on a prospectus exempt basis in Canada, 22,791,399 Aclara shares at a price of C$1.70 per share (the 'Offering Price'). In addition, Pelham subscribed for 9,855,660 Aclara shares at the Offering Price as part of the IPO. These share acquisitions, which are in addition to the Aclara shares acquired by Pelham as part of the demerger dividend, constitute a smaller related party transaction for the purposes of the UK Listing Rules. Accordingly, as also announced, the Company obtained a written confirmation from a sponsor that the terms of the smaller related party transaction were fair and reasonable as far as the shareholders of the Company are concerned.

Appendix 3

Statements of Directors' Responsibilities

A) Reproduced from page 82 of the 2021 Annual Report

The Directors confirm that to the best of their knowledge:

- that the consolidated financial statements, prepared in accordance with UK-adopted international accounting standards give a true and fair view of the assets, liabilities, financial position and profit of the parent company and undertakings included in the consolidation taken as a whole;

- the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

- that they consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

B) Reproduced from page 124 of the 2021 Annual Report

The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Parent Company financial statements in accordance with UK-adopted international accounting standards ('IFRS'). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of their profit or loss for that period.

Under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, group financial statements are required to be prepared in accordance with UK-adopted international accounting standards.

In preparing those financial statements, the Directors are required to:

- select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

- provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group and Parent Company financial position and financial performance;

- in respect of the Group financial statements, state whether UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- in respect of the Parent Company financial statements, state whether UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

- prepare the financial statements on the going concern basis unless it is appropriate to presume that the Parent Company and/ or the Group will not continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and the Group and enable them to ensure that the Parent Company and the Group financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Parent Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Appendix 4Letter from the Chairman of Hochschild Mining PLC

 20 April 2022

Dear Shareholder,

Proposed dividend rectification, capitalisation of Merger Reserve, reduction of Share Premium Account and reduction of the nominal value of the Ordinary Shares

1 Introduction

In August 2021, the board of directors of the Company (the "Board") became aware of an issue concerning technical compliance with the Companies Act 2006 ("CA 2006") in relation to the payment of certain historic dividends paid between 2018 and 2021, being the 2017 Final Dividend, the 2018 Interim Dividend, the 2018 Final Dividend, the 2019 Interim Dividend, the 2020 Interim Dividend and the 2020 Final Dividend (the "Relevant Dividends"). In particular, the Relevant Dividends were paid to shareholders when the Company did not have adequate distributable reserves. Significant corrective transactions (namely, a capital reduction and dividend distribution by the Company's wholly owned subsidiary, Hochschild Mining Holdings Limited) were implemented by the Company in September 2021, shortly after discovery of the issue. Had these internal corporate transactions been implemented prior to the payment of the first of the Relevant Dividends, adequate distributable reserves would have been available to the Company.

Whilst this breach is technical in nature, the Company theoretically has claims against all shareholders past and present who received dividends as well as persons who were directors of the Company at the time of payment of the Relevant Dividends. The Company has no intention to follow up on such claims and wishes to take steps to rectify this breach.

The Resolutions, as explained further in the EGM Circular, seek to put Shareholders, the Directors and the Former Director into the position in which they were intended to be. The entry by the Company into the Shareholders' Deed of Release and the Directors' Deed of Release (further details of which are included in the EGM Circular) constitute a related party transaction as defined in the Listing Rules. Additionally, the Company proposes to take a number of actions to create additional distributable reserves.

Finally, I would like to emphasise that none of the actions proposed will impact the Company's financial position. To effect these changes we are asking our shareholders to vote on the three Resolutions.

This letter sets out the details of proposals to (a) rectify the Relevant Dividends and enter into the Shareholders' Deed of Release and the Directors' Deed of Release in connection with their issue and (b) create distributable reserves for the Company by way of:

(i) a capitalisation of the Company's merger reserve followed by a cancellation of the shares that are issued (the "Merger Reserve Capitalisation and Cancellation");

(ii) the subsequent reduction of all or part of the Company's share premium account, which will include the share premium created through the Merger Reserve Capitalisation and Cancellation (the "Share Premium Account"), and the crediting of the amount by which the Share Premium Account is reduced to the Company's retained earnings reserve (the "Share Premium Reduction"); and

(iii) the reduction in the nominal value of the Ordinary Shares from 25 pence per Ordinary Share to 1 pence per Ordinary Share (the "Capital Reduction" and, together with the Share Premium Reduction, the "Company Reductions").

Entry into the Shareholders' Deed of Release and the Directors' Deed of Release, the Merger Reserve Capitalisation and Cancellation and the Company Reductions are conditional upon, among other things:

· the Resolutions being passed at the Hochschild General Meeting;

· the confirmation of the Company Reductions by the Court at the Court Hearing; and

· a copy of the Court Order having been delivered to the Registrar of Companies and registered by them.

A full explanation of the proposed Resolutions are set out in Part II of the EGM Circular.

1.1 Dividend rectification

The Relevant Dividends were paid to shareholders when the Company did not have adequate distributable reserves. Had certain internal corporate transactions been implemented prior to the payment of the 2017 Final Dividend, adequate distributable reserves would have been available to the Company.

The CA 2006 provides that a public company may pay a dividend out of its distributable profits as shown in the last annual accounts circulated to shareholders or, if those accounts do not show sufficient distributable reserves, interim accounts must be prepared. The CA 2006 also requires that interim accounts, where used by a public company to justify the declaration of an interim dividend, must be prepared on an individual accounting basis and filed at Companies House prior to payment of the relevant dividend. Accordingly, each of the Relevant Dividends was distributed otherwise than in accordance with the CA 2006.

The Company has been advised that, as a consequence of the Relevant Dividends having been distributed otherwise than in accordance with the CA 2006, it may have claims against past and present shareholders who were recipients of the Relevant Dividends and against persons who were directors of the Company at the time of payment of the Relevant Dividends. It is therefore proposed that the Company put resolutions before Shareholders to complete the rectification of the Relevant Dividends and the Company enter into (i) a deed of release in favour of all shareholders who appeared on the register of members on the record date for each of the Relevant Dividends from any and all claims which the Company has or may have in respect of the payment of those Relevant Dividends (the "Shareholders' Deed of Release") and (ii) a deed of release by which the Company waives any rights to make claims against the Directors and the Former Director in respect of the Relevant Dividends (the "Directors' Deed of Release"). The maximum potential amount to which the Shareholders' Deed of Release will relate is $73,766,000, being the aggregate amount of the Relevant Dividends paid to Shareholders. The maximum potential amount to which the Directors' Deed of Release will relate is $73,766,000, being the aggregate amount of the Relevant Dividends which were approved by the Directors.

The entry by the Company into the Directors' Deed of Release and the Shareholders' Deed of Release constitute related party transactions (as defined in the Listing Rules). Therefore, the Resolutions will also seek the specific approval of the Company's Shareholders for the entry into the Directors' Deed of Release and the Shareholders' Deed of Release as related party transactions, in accordance with the requirements of the Listing Rules.

1.2 Merger Reserve Capitalisation and Cancellation

As a matter of company law, a merger reserve cannot be reduced directly in a reduction of capital and so an additional intermediate step will be required in order to effect the reduction of capital. The reduction of capital will therefore be executed through a capitalisation issue of the Bonus Shares paid up out of the Merger Reserve, followed by the cancellation of the Bonus Shares in a court-approved reduction of capital.

The capitalisation of the Merger Reserve will be achieved by means of an issue of new fully paid-up deferred ordinary shares in the capital of the Company (whereby the nominal value of such shares is equal to the sum that is obtained by dividing the number of such shares to be issued into US$303,268,000) (the "Bonus Shares") to each Shareholder, on the basis of one Bonus Share for each Ordinary Share held at the Company Reductions Record Time. Immediately following the issuance of the Bonus Shares, the Bonus Shares will then be cancelled. The cancellation of the Bonus Shares will result in the nominal value of such shares being credited to the Share Premium Account.

1.3 Share Premium Reduction

The Company will undertake a reduction of the Company's Share Premium Account.

Share premium forms part of the capital of the Company which arises on the issue by the Company of Ordinary Shares at a premium to their nominal value. The premium element is credited to the Share Premium Account. Under the CA 2006, the Company is generally prohibited from paying any dividends or making other distributions in the absence of positive distributable reserves, and the Share Premium Account, being a non-distributable reserve, can be applied by the Company only for limited purposes.

However, provided the Company obtains the approval of Shareholders by way of a special resolution and the subsequent confirmation by the Court, it may undertake the Share Premium Reduction.

1.4 Capital Reduction

Under the CA 2006, a company may, with the sanction of a special resolution and the confirmation of the Court, reduce or cancel its existing share capital, provided the company's articles of association do not contain any provisions restricting or prohibiting such reduction or cancellation.

The Company's articles of association do not prohibit the Company from reducing or cancelling its share capital and the Company therefore proposes the Capital Reduction.

A full explanation of the proposed Resolutions is set out in Part II of the EGM Circular.

2 Notice of Extraordinary General Meeting

The Notice of Extraordinary General Meeting convening the Hochschild General Meeting is contained at the end of the EGM Circular. The Hochschild General Meeting will be held at the offices of Hudson Sandler LLP, 25 Charterhouse Square, London EC1M 6AE, United Kingdom to consider and, if thought appropriate, pass the proposed Resolutions as special resolutions.

Definitions for capitalised terms used in this letter can be found in Part IV (Definitions and Glossary) of the EGM Circular.

3 Action to be taken

Whether or not you will be attending the Hochschild General Meeting, I would urge you to appoint a proxy in accordance with the instructions below and ensure that such proxy is lodged and received by the Company's Registrars, Link Group, as soon as possible and, in any event, by no later than 8.45 a.m. on Tuesday 24 May 2022.

A Shareholder can appoint a proxy by:

· logging on to www.signalshares.com and following the instructions;

· requesting a hard copy form of proxy from the Company's Registrars, Link Group, by:

· sending a letter addressed to Link Group at 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, United Kingdom; or

· contacting Link Group on +44 (0) 371 664 0300 (calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales (the "Shareholder Helpline"). Please note that the helpline operators cannot provide advice on the merits of the Resolutions or give any financial, legal or tax advice),

and completing, signing and returning such hard copy form of proxy in accordance with the instructions set out thereon; or

· in the case of CREST Members, utilising the CREST electronic proxy appointment service in accordance with the procedures set out in note 6 of the Notice of Extraordinary General Meeting set out on page 21 of the EGM Circular,

in each case so that such proxy is received no later than 8.45 a.m. on Tuesday 24 May 2022.

If you are an institutional investor, you may be able to appoint a proxy electronically via the Proxymity platform. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 8.45 a.m. on Tuesday 24 May 2022 in order to be considered valid.

Further details in relation to the appointment of proxies, including the CREST electronic proxy appointment service, are given in the notes to the Notice of Extraordinary General Meeting set out on pages 21 and 22 of the EGM Circular.

Additional forms of proxy may be obtained by contacting Link Group on the Shareholder Helpline.

Appointing a proxy online, completing and returning a hard copy form of proxy or appointing a proxy using the CREST electronic proxy appointment service will not preclude Shareholders from attending and voting in person at the Hochschild General Meeting, should they so wish.

The attention of corporate Shareholders wishing to appoint more than one corporate representative is drawn to note 8 of the Notice of Extraordinary General Meeting set out on page 22 of the EGM Circular.

If you are in any doubt as to the action you should take, you are recommended to seek your own financial and/or legal advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under FSMA, if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

4 Further information

Your attention is drawn to the further information contained in the remaining sections of the EGM Circular. Shareholders should read the whole of the EGM Circular and not rely solely on information summarised in this letter.

5 Recommendation

5.1 Resolution 1 (Relevant Dividend rectification and release and related party transactions)

In shareholder circulars it is customary for directors to (i) state that the proposed resolutions are in the best interests of the company and its shareholders as a whole and (ii) recommend shareholders to vote in favour of the proposed resolutions. However, as the Directors have an interest in Resolution 1 as beneficiaries of the Directors' Deed of Release, they are unable to make the customary statement and recommendation with respect to Resolution 1. The Board does, however, recommend that Shareholders vote on Resolution 1.

Given the interests of the Board in Resolution 1 (Relevant Dividend rectification and release and related party transactions), and as required by the Listing Rules:

(a) the Board has not considered whether Resolution 1 is in the best interests of the Company. Accordingly, the Board cannot recommend that Shareholders vote in favour of Resolution 1 but recommends that Shareholders vote on it. However, as required by Listing Rule 13.6.1(5), each of (i) the waiver of claims against the Directors and the Former Director pursuant to paragraph (d) of Resolution 1, (ii) the entry into of the Directors' Deed of Release, (iii) the waiver of claims against Shareholders pursuant to paragraph (b) of Resolution 1, and (iv) the entry into of the Shareholders' Deed of Release, is fair and reasonable as far as the shareholders of the Company are concerned and the Directors have been so advised by RBC, in its capacity as the Company's sponsor; and

(b) each of the Directors, the Related Party Former Director, the Substantial Shareholder and each of their respective associates are precluded from voting on Resolution 1. Therefore, each of them will not vote on, and have undertaken to take all reasonable steps to ensure that their associates abstain from voting on, Resolution 1.

The Board has taken steps to ensure that, in future, the issues referred to in the EGM Circular do not arise in relation to the payment of future dividends. We are grateful for Shareholders' understanding in respect of the issues set out in the EGM Circular.

5.2 Resolution 2 (Capitalisation of Merger Reserve and cancellation of Bonus Shares) and Resolution 3 (Reduction of Capital)

The Directors consider that, for the reasons set out in this document, Resolutions 2 and 3 are, in the Board's opinion, in the best interests of the Company and its Shareholders as a whole and unanimously recommend Shareholders to vote in favour of them, as they intend to in respect of their own beneficial holdings.

Yours faithfully,

[Signed]

Eduardo HochschildChairman