Hochschild Regulatory News (HOC)

Hochschild Mining plc ("the Company")

2012 Annual Financial Report and 2013 Annual General Meeting ("AGM")

Following the release of the Company's 2012 full year results announcement on 13 March 2013 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for the year ended 31 December 2012 (the "2012 Annual Report").

In accordance with LR 9.6.1, the following documents have been submitted to the National Storage Mechanism and will be available for inspection at www.Hemscott.com/nsm.do

·; The 2012 Annual Report

·; The 2013 AGM Circular (incorporating the Notice of 2013 AGM) 

·; The 2013 AGM Proxy Card (incorporating the Notice of Availability of the 2012 Annual Report and 2013 AGM Circular)

The 2012 Annual Report and the 2013 AGM Circular are also available on the Company's website at www.hochschildmining.com

The appendices to this announcement contain the information required to be disclosed under DTR 6.3.5 which has been reproduced from the 2012 Annual Report and should be read in conjunction with the Preliminary Announcement.

All page references and cross-references in the appendices are to the 2012 Annual Report.

APPENDICES

Appendix 1

Risk Management (reproduced from pages 57 to 61 of the 2012 Annual Report)

As with all businesses, 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 and the risks posed by it, and the evaluation of potential actions to mitigate those risks.

The Risk Committee is responsible for implementing the Group's policy on risk management and monitoring the effectiveness of controls in support of the Company's business objectives. It

meets four times a year and more frequently if required. The Risk Committee comprises the CEO, the Vice Presidents and the head of the internal audit function. A 'live' risk matrix is compiled and updated at each Risk Committee meeting and the most significant risks as well as potential actions to mitigate those risks are reported to the Group's Audit Committee which has oversight of risk management on behalf of the Board.

The key business risks affecting the Group set out in this report differ from those disclosed in the 2011 Risk Management report in the following respects:

• foreign currency risks in respect of the cost impact that arises from changes in the value of local currencies (given that the Group's revenue is denominated in US dollars) has been removed as it is no longer considered to be a principal risk;

• the risk previously disclosed as 'Costs' has been re-categorised as 'Operational Performance' to incorporate the risk of failure to meet the Group's production goals; and

• the addition of 'Delivery of Projects', which has become increasingly important to the Group in light of the advancement of the Inmaculada and Crespo projects.

 1. FINANCIAL RISKS

(i) Commodity Price

Impact

Adverse movements in precious metals' prices could have a material impact on the Group's results of operations.

Mitigation

·; Constant focus on maintaining low cost base and low leverage policy

·; Prices closely monitored by management with oversight by the board

2012 Commentary

The Company maintained continued focus on cost controls, reduced debt and did not participate in any hedging activity.

(ii) Counterparty credit risk

Impact 1

Loss of revenue resulting from defaulting customers.

Mitigation

• Sales contracts for concentrate incorporate various protection measures including provision for advance payment, delaying transfer of title on non-payment

• Parent company guarantees are sought, where appropriate

• Risk profiling of key and new customers and active review of accounts receivables

2012 Commentary

The Company completed the significant investment at its Arcata mine to convert its entire production into dore thereby reducing its exposure to counterparty risk (since the sale of dore, as opposed to concentrates, is settled almost immediately).

Impact 2

The Group may lose financial resources through the failure of financial institutions

Mitigation

• Surplus cash invested with a diverse list of select highly rated financial institutions within investment limits set by the Board

• The Board receives regular reports on the management of cash

2012 Commentary

Management has continued to operate its policy with oversight by the Board without any change during the year.

(iii) Liquidity

Impact

The Group may be unable to raise funds to meet its financial commitments as they fall due

 Mitigation

• Board and senior management continually monitor the Group's requirements for short- and

medium-term liquidity

• The Company maintains a cash position, strong banking relationships, and access to credit lines, and limits indebtedness to ensure an appropriate level of financing

2012 Commentary

The Company benefits from considerable balance sheet strength with a year-end cash balance of $359 million1 and no debt except for the Convertible Bonds.

2. OPERATIONAL RISKS

(i) Operational Performance

Impact

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

Mitigation

• Close monitoring by management of operational performance, costs and capital expenditure

• Negotiation of long-term supply contracts where appropriate

• Exploration to increase high quality resources

2012 Commentary

As stated in the Operating and Financial Reviews there has been a considerable increase in unit costs during the year primarily due to the increasingly challenging geological conditions of

ageing assets, labour inflation and the cost of raw materials.

(ii) Delivery of Projects

Impact

Delays in delivering projects such as Inmaculada and Crespo could have several negative consequences including delaying cash inflows and increasing capital costs which could ultimately reduce profitability

Mitigation

• Teams comprising specialist personnel and world class consultants are involved in all aspects of project planning and execution including the commissioning of an Independent feasibility study and the securing of permits and financing

• Project teams meet on a weekly basis to monitor on-going progress against project schedules with a

Procurement Committee ensuring timely sourcing of materials and services to meet project schedules

2012 Commentary

Notable project milestones achieved for Inmaculada include the completion of the feasibility study, approval of the Environmental Impact Study ('EIS'), awarding of the EPC contract and the start of construction of the necessary infrastructure for a dedicated electricity supply.

With respect to Crespo, the feasibility study was completed, the EIS was submitted and agreement reached for the requisite power supply.

Delivery of projects is also exposed to risks relating to Community Relations and the Political, Legal

& Regulatory environment.

(iii) Business Interruption

Impact

Assets used in operations may break down and insurance policies may not cover all forms of risk

Mitigation

• Adequate insurance coverage

• Management reporting systems to support appropriate levels of inventory

• Annual inspections by insurance brokers and insurers with recommendations addressed in order to

mitigate operational risks

• Availability of contingency power supplies at all operating units

2012 Commentary

A third-party review was completed to ensure that appropriate and adequate property damage and

business interruption insurance policies are in place for all operations.

Management reporting systems ensured that an appropriate level of inventory of critical parts is maintained. Adequate preventative maintenance programmes, supported by the SAP Maintenance

Module, are in place at the operating units.

(iv) Exploration & Reserve and Resource Replacement

Impact 1

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

Mitigation

• Retain and incentivise world-class geologists

• Implementing and maintaining an annual exploration drilling plan

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

2012 Commentary

The Group allocated $90 million in 2012 to fund its exploration and geology activities. The 2013 budget has been set at $77 million.

The 2012 drilling plan was revised on a quarterly basis with exploration targets continually evaluated and new targets incorporated.

Impact 2

Reserves stated in this Annual Report are estimates

Mitigation

• Develop internal expertise and processes in managing mineral reserves and resources

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

2012 Commentary

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

(v) Personnel

Impact 1

Inability to retain or attract personnel either through a shortage of skilled personnel or the commencement of mining operations in the vicinity of the Group's core operations or projects

Mitigation

Implementation of the Group's HR recruitment and retention strategies which incorporate the provision of competitive compensation packages, well-defined career plans and training & development opportunities

2012 Commentary

In addition to the Long Term Incentive Plan the Group continued to operate the Exploration Incentive Plan which provides additional rewards for geologists based on the mineral content discovered at a given project.

A series of specially commissioned courses for employees across the organisation were conducted in 2012 to develop leadership and effective management skills.

Impact 2

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

Mitigation

A tailored labour relations strategy focusing on profit sharing, working conditions, management style, development opportunities, motivation and communication

2012 Commentary

In addition to the annual negotiations with unions on pay and benefits, monthly meetings with workers and unions were held during 2012 to ensure a complete and accurate understanding of matters of concern and requirements.

3. MACROECONOMIC RISKS

(i) Political, Legal and Regulatory Risks

Impact

Changes in the 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. Implementation of exchange controls could impede the Group's ability to convert or remit hard currency out of its operating countries

Mitigation

• Local specialised personnel continually monitor and react, as necessary, to policy changes

• Active dialogue with Governmental authorities

• Participation in local industry organisations

2012 Commentary

Following the election of the new administration in Peru in 2011, new obligations impacting mining companies were enacted including:

• a law requiring the prior consultation of indigenous communities as part of the planning of mining activities; and

• the creation of new protected nature reserves.

Whilst the Company remains in dialogue with the relevant authorities, the procedures required to comply with these new requirements have not yet been officially established.

The authorities of Argentina and Peru levied new taxes and royalties on mining companies during the year. In addition, in Argentina, the Federal Government imposed foreign exchange controls which

have affected the Company's ability to access and remit hard currency abroad.

4. SUSTAINABILITY RISKS

(i) Health and Safety

Impact

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

manage these risks may result in 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 not only assure the safety of employees at the operations but, through the Health & Hygiene team, there is continued focus on the prevention of accidents and occupational illness

• Rolling 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

2012 Commentary

During the year, the Group maintained Level 7 of the DNV safety management information system at Arcata and Pallancata-Selene and Level 6 at San Jose. In addition, Level 3 was achieved at the Inmaculada project.

Following the occurrence of fatalities at the Group's mine, a Safety Day was held to raise awareness among employees of the importance of safety. A video recording of the Chairman addressing all employees on safety was produced and broadcast across all operating sites.

The internal competition for the Luis Hochschild Safety Innovation Award was once again held in 2012.

 (ii) Environmental

Impact

The Group may be liable for losses arising from environmental hazards associated with the Group's activities and production methods, or may be required to undertake extensive remedial clean-up actions or be subject to fines and/or penalties

Mitigation

• The Group has a dedicated and specialised team of professionals with an allocated budget for

environmental management

• Robust procedures and policies have been adopted to monitor and limit the Group's environmental impact

• Investment in leading environmental management information systems

2012 Commentary

During the year:

• the Group achieved compliance with over 90% of its internal Compliance Performance Indicators, which was validated by an external third party;

• the operations in Peru and Argentina maintained their ISO14001 certification;

• the Group obtained the approval of the Environmental Impact Study for the Inmaculada project; and

• the Group completed the first carbon footprint study of its operations.

(iii) Community Relations

Impact

Communities living in the areas surrounding Hochschild's operations may oppose the activities carried out by the Group at existing mines or, with respect to development projects and prospects, may invoke their rights to be consulted under new laws enacted during the year. These actions may result in longer lead times and additional costs in bringing assets into production and lead to an adverse impact on the Group's ability to obtain the relevant permissions for current or future projects.

Mitigation

• Constructive engagement and management of relationships with local communities

• Community Relations strategy focuses on promoting education, health & nutrition, and sustainable development

• Allocation of budget and personnel for the provision of community support activities

• Policy to actively recruit workers from local communities

2012 Commentary

The Group launched the Digital Chalhuanca initiative in Apurimac.

Other initiatives during the year include the continuation of the 'Maestro Líder' campaign, a training programme for community teachers, and 'Médico deCabecera', a programme taking healthcare to the rural populations.

A database of all agreements with communities was maintained and updated on a monthly basis to ensure that all social commitments were met.

Appendix 2

Related Party Transactions (reproduced from pages 147 and 148 of the 2012 Annual Report)

30 Related-party balances and transactions

(a) Related-party accounts receivable and payable

The Group had the following related-party balances and transactions during the years ended 31 December 2012 and 2011. The related parties are companies owned or controlled by the main shareholder of the parent company, joint ventures or associates.

As at 31 December 2012 and 2011 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 on 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$5,467,700 (2011: US$4,816,370), out of which US$199,606 (2011: US$199,660) relates to pension payments.

Appendix 3

Statement of Directors' Responsibilities (reproduced from page 68 of the 2012 Annual Report)

The Directors confirm that to the best of their knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

• the Management 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.

On behalf of the Board

Raj Bhasin

Company Secretary

12 March 2013