Hochschild Regulatory News (HOC)

3 Nov 2006 07:03

Hochschild Mining PLC03 November 2006 The information contained herein is restricted and is not for release ordistribution, directly or indirectly, in or into the United States, Australia,Canada or Japan or to residents or citizens of Australia, Canada or Japan. This announcement is an advertisement and not a prospectus and investors shouldnot subscribe for or purchase any shares referred to in this announcement excepton the basis of information in the prospectus to be published by HochschildMining plc (the "Company") in due course in connection with the admission of theordinary shares in the capital of the Company ("Ordinary Shares") to theOfficial List of the Financial Services Authority and to trading on London StockExchange plc's main market for listed securities (the "Prospectus"). Copies ofthe Prospectus will, following publication, be available from Hochschild Miningplc's registered office at One Silk Street, London EC2Y 8HQ. ------------------------------------------------------------------------------- 3 November 2006 Hochschild Mining plc ("Hochschild Mining" or the "Company") Announcement of Offer Price of 350 pence per Ordinary Share Hochschild Mining plc, a leading precious metals producer, today announces thesuccessful pricing of its initial public offering to institutional investors inthe UK and elsewhere of Ordinary Shares on the Main Market of the London StockExchange (the "Global Offer"). The offer price has been set at 350 pence per Ordinary Share (the "OfferPrice"). • Based on the Offer Price, the market capitalisation of Hochschild Mining immediately following the Global Offer will be approximately £1,076 million. Assuming FTSE index inclusion, and based on current market valuations, Hochschild Mining would rank number 99 in the FTSE 250. • The Global Offer comprises approximately 77.3 million new Ordinary Shares, representing approximately 25% of the 307.4 million Ordinary Shares in issue following completion of the Global Offer. • The total gross proceeds of the Global Offer are expected to be approximately £270 million. The principal use of the proceeds to be received by Hochschild Mining is to maximise the potential of its existing operations, to achieve growth through delivery of its project pipeline, to repay existing debt and to exploit market and geographic niches to seek additional growth opportunities, whether by way of further exploration, joint ventures or strategic acquisitions. • The Ordinary Shares in the Global Offer have been placed with a broad base of institutional investors following a roadshow across the UK, Continental Europe, the United States and Canada. • An over-allotment option of up to 15 per cent. of the Global Offer has been granted, exercisable for a period of up to 30 days, consisting entirely of existing Ordinary Shares, which may result in certain existing shareholders selling up to 11.6 million existing Ordinary Shares at the Offer Price. • In addition to the Global Offer, the Company is issuing approximately 100 thousand Ordinary Shares at the Offer Price in a separate private placement to certain of its directors and to certain employees of Hochschild Mining and Hochschild Group companies. • Conditional dealings will commence on the London Stock Exchange at 8:00am (London time) today under the ticker "HOC". • It is expected that Admission of the Ordinary Shares to the Official List of the Financial Services Authority and to trading on the London Stock Exchange's market for listed securities will become effective, and unconditional dealings will commence, at 8:00 am (London time) on Wednesday, 8 November 2006. • Directors, employees and their related interests will continue to hold approximately 75% of the Ordinary Shares following the Global Offer (prior to the exercise of the over-allotment option). The Company, each of the Directors and the Senior Management have agreed to enter into lock-up arrangements for a period of 12 months after Admission. Commenting on today's announcement, Eduardo Hochschild, Executive Chairman ofHochschild Mining said: "We are delighted with the strong support for the IPO ofHochschild Mining. The IPO proceeds will help us to finance our Latin Americangrowth strategy. We have a strong project pipeline and also plan to maximize thepotential of our existing operations. We are especially pleased with the qualityof the investors joining us and welcome them as new shareholders. Their supportwill allow us to consolidate our position as a leading precious metals producer.We look forward to embarking on the next phase of our development as a publiclylisted company." The following individuals have been appointed to the Board of Directors: Eduardo Hochschild Executive ChairmanRoberto Danino Deputy Chairman and Executive DirectorAlberto Beeck Executive Director, Strategy and Corporate DevelopmentSir Malcolm Field Senior Non-Executive DirectorJorge Born Jr. Non-Executive DirectorNigel Moore Non-Executive DirectorDionisio Romero Non-Executive Director Any allocations under the Global Offer will be conditional on Admission tolisting. All dealings on the London Stock Exchange between commencement ofconditional dealings and the commencement of unconditional dealings will be on a"when issued" basis. If the Global Offer does not become unconditional, all suchdealings will be of no effect and any such dealings will be at the sole risk ofthe parties concerned. JPMorgan Cazenove Limited and Goldman Sachs International are Joint Sponsors,Joint Global Co-ordinators and Joint Bookrunners for the IPO. JPMorgan Cazenoveis also acting as Financial Adviser to Hochschild Mining and StabilisingManager. Canaccord Adams Limited is Co-Lead Manager and Nomura International plcis Co-Manager. ENQUIRIES JPMorgan Cazenove Limited Tel: +44 207 588 2828Ian HannamArjun Khullar Goldman Sachs International Tel: +44 207 774 1000Alasdair WarrenChris Bischoff Finsbury Tel: +44 207 251 3801Roland RuddRobin Walker In connection with the Global Offer, JPMorgan Cazenove Limited, as stabilisingmanager, may (but will be under no obligation to) over-allot Ordinary Shares upto a maximum of 15 per cent. of the total number of Ordinary Shares comprised inthe Global Offer or effect other stabilisation transactions with a view tosupporting the market price of the Ordinary Shares at a higher level than thatwhich might otherwise prevail in the open market. Such stabilisation activitiesmay be effected on any securities market, over-the-counter market, stockexchange or otherwise and may be undertaken at any time during the periodcommencing on the date of the commencement of conditional trading and ending nolater than 30 calendar days thereafter. However, there is no obligation onJPMorgan Cazenove Limited or any of its agents to effect stabilisingtransactions and no assurance that stabilising transactions will be undertaken.Such stabilisation, if commenced, may be discontinued at any time without priornotice. In no event will measures be taken to stabilise the market price of theOrdinary Shares above the Offer Price. Except as required by law or regulation above, JPMorgan Cazenove Limited doesnot intend to disclose the extent of any over-allotments made and/orstabilisation transactions conducted in relation to the Global Offer. Certainshareholders in the Company (the "Over allotment Shareholders") will grantJPMorgan Cazenove Limited, as stabilising manager, the Over-allotment Optionpursuant to which JPMorgan Cazenove Limited may require the Over allotmentShareholders to procure the sale of Ordinary Shares at the Offer Price to coverover-allotments, if any, made in connection with the Global Offer and to coverany short positions resulting from stabilisation transactions. The number ofOrdinary Shares to be subject to the Over-allotment Option is, in aggregate,expected to be equal to approximately 15 per cent. of the total number ofOrdinary Shares to be issued in the Global Offer (before any exercise of theOver-allotment Option). The Over-allotment Option may be exercised from the dateof the commencement of conditional trading for a period of 30 calendar daysthereafter, provided that it may only be exercised to the extent that OrdinaryShares have been over-allotted. This announcement has been prepared and issued by Hochschild Mining plc and isthe sole responsibility of Hochschild Mining plc and has been approved solelyfor the purposes of Section 21 of the Financial Services and Markets Act 2000 byJPMorgan Cazenove Limited of 20 Moorgate, London EC2R 6DA and Goldman SachsInternational of Peterborough Court, 133 Fleet Street, London EC4A 2BB. The information contained herein is restricted and is not for publication,distribution or release in or into the United States, Canada, Japan orAustralia. This announcement is not an offer of securities for sale orsolicitation of an offer to purchase securities in the United States or anyother jurisdiction. The Ordinary Shares referred to herein have not been andwill not be registered under the U.S. Securities Act of 1933, as amended and maynot be offered or sold in the United States absent registration under theSecurities Act or an applicable exemption from such registration. There will beno public offering of the Ordinary Shares in the United States. JPMorgan Cazenove and Goldman Sachs International are acting exclusively forHochschild Mining plc and no one else in relation to the Global Offer and willnot be responsible to any other person for providing the protections afforded totheir respective clients or for providing advice in relation to the GlobalOffer. No offer or invitation to acquire shares in Hochschild Mining plc is being madeby or in connection with this announcement. Any such offer will be made solelyby means of the Prospectus to be published in due course and any acquisition ofshares should be made solely on the basis of the information contained in suchdocument and any supplements thereto. The Prospectus will contain certaindetailed information about Hochschild Mining plc and its management, as well asfinancial statements and other financial data. The value of shares can go down as well as up. Past performance is not a guideto future performance. Persons needing advice should consult a professionaladviser. Certain statements contained in this announcement are or may constitute "forwardlooking statements". Such forward looking statements involve risks,uncertainties and other factors which may cause the actual results, performanceor achievement of the Company to be materially different from any futureresults, performance or achievements expressed or implied by such forwardlooking statements. Such risks, uncertainties and other factors include, amongothers, dependency on key customers, difficulties in forecasting demand,dependency on key suppliers, delays in the introduction of new products,decreases in demand for the Group's products, the Company's failure to introducenew products and to implement new techniques and general economic and businessconditions, particularly in Europe and the United States. These forward lookingstatements speak only as at the date of this announcement and the Company doesnot undertake any obligation to update or revise publicly any forward lookingstatement, whether as a result of new information, future events or otherwise. - Ends - NOTES TO EDITORS Company overview Hochschild Mining is a leading Peruvian precious metals company with a primaryfocus on the exploration, mining, processing and sale of silver and gold. TheCompany is the fourth largest primary silver producer and produces a significantquantity of gold (approximately 10.5 million ounces of silver and approximately233 thousand ounces of gold in 2005). Hochschild Mining has over forty yearsexperience in the exploration, evaluation and extraction of precious metalepithermal vein deposits. Currently, it has three underground, epithermal veinmines supported by fully developed infrastructure, consisting of the Arcata,Ares and Selene operations in Southern Peru. The Company also has two advancedand two early stage development projects in Argentina, Mexico and Peru. Inaddition to its development projects, the Company has over twenty long-termprospects throughout Latin America that are at various stages of development.The Company has a high-grade reserve base and a proven track record ofconsistent reserves replacement, sustaining the reserve and resource base ateach of its current operating mines in step with production over many years. TheCompany has a track record of sustained profitability underpinned by its lowcash costs of production (in 2005 its cash costs of production on a co-productbasis were US$2.65/oz for silver and US$169/oz for gold). This places HochschildMining within the first quartile of the 2005 global cost curve for both silverand gold according to CRU Strategies Limited and GFMS Limited, respectively. TheCompany's headquarters are in Lima and it has a senior management presence inLondon. Key strengths The Directors believe that the key strengths of Hochschild Mining's business are: - Its leading position as a precious metals producer, the fourth largest primary silver producer globally and a significant producer of gold; - Its low cash costs and strong returns on invested capital; - Its proven track record of production growth and reserve replacement; - Its expertise in underground mining in Latin America; - Its attractive growth opportunities from both development projects and prospects; and - Its responsibility towards employees, the environment and local communities. Strategy The Hochschild Mining Group's strategy is to achieve growth as a high-margin,cash generative, precious metals producer in Latin America, continuing itsprimary focus on silver and gold production, and to enhance overall value forits shareholders, whilst maintaining a strong focus on operational excellenceand on its social and environmental responsibilities. The Company intends to pursue this strategy: - By continuing to maximise the potential of its existing operations through increased efficiency and increased investment in exploration and facilities; - By delivery of its project pipeline and development of its portfolio of long-term prospects into producing mines, with plans to further increase annual production to approximately 50 million silver equivalent ounces (830,000 gold equivalent ounces) from both its existing operations and its development projects by 2011; and - By leveraging its operating expertise and Latin American experience to seek additional growth opportunities through further exploration, acquisitions or joint ventures, with a focus precious metal assets of a size and scale similar to its current operations, whilst offering high margins and attractive growth potential. History Hochschild Mining, a Peruvian company, is the group of companies whichpreviously comprised the mining division of the Hochschild Group founded inChile in 1911 by Mauricio Hochschild. Following World War I, the HochschildGroup expanded into Bolivia, where it developed significant interests in tin.The Hochschild Group commenced operations in Peru in 1925 and in 1945 LuisHochschild joined the Hochschild Group's Peruvian operations. During the firstdecades of its operations, the Hochschild Group focused on the commercialisationof minerals, and it was not until the 1940s that it began operating its firstmines, although mineral commercialisation remained the Hochschild Group's mainsource of revenue. During World War II, the Hochschild Group was a key supplierof tin and other metals to the allied forces. In the 1960s the Hochschild Groupdeveloped the Arcata mine in Peru, which is still in production today. TheHochschild Group expanded further into mining in the 1960s and 1970s, opening orexpanding mines in Brazil, Peru and Chile, such as the Mantos Blancos coppermine in Chile. In November 1984, the South American mining operations of the Hochschild Groupwere sold to Anglo American Corporation of South Africa who, in the same month, sold thePeruvian operations of the Hochschild Group to a group of companies owned byLuis Hochschild. In 1995, Hochschild Mining launched an extensive exploration programme,uncovering and further developing several sites in Peru, including the Ares,Selene and Sipan sites. By 2001, the Company had assembled an experiencedprofessional management team which has taken forward the Company's strategy ofinternational expansion. As a result of this strategy, between 2001 and 2006,the Company opened exploration offices and identified a number of projects andprospects in Argentina, Mexico and Chile, and entered into various joint ventureagreements with local or overseas mining partners, notably those relating to theSan Jose, Pallancata, Mina Moris and San Felipe development projects. Eduardo Hochschild, Luis Hochschild's son, joined the Group in 1987 as SafetyAssistant at the Arcata operating unit and has been head of the Hochschild MiningGroup since 1998. Eduardo Hochschild is now the Executive Chairman of the Hochschild Mining Group, a position he has held since 2006. This information is provided by RNS The company news service from the London Stock Exchange