Hochschild Regulatory News (HOC)

26 November 2013

Hochschild Mining plc

Financial Performance Update

As previously announced on 2 October 2013, Hochschild Mining plc (the "Company") is progressing with the second stage of a balance sheet refinancing (the "Refinancing") in connection with the proposed acquisition, announced on that date, of the 40% interests held by International Minerals Corporation in the Pallancata mine and Inmaculada Advanced Project in Peru.

In preparation for the Refinancing, the Board of Directors has approved interim financial results for the nine months ended 30 September 2013, details of which are being announced today.

Q3 year-to-date 2013 financial highlights1

· Revenue of $466.4 million (H1 2013: $308.6 million)

· Q3 operating margin improvements as cashflow optimisation programme delivers material savings

· Q3 cash cost per ounce reduced by over 16% at all three main operations compared to H1 2013

· Pre-exceptional Profit Before Tax increased to $10.3 million versus H1 2013 Loss Before Tax of $(10.3) million

· Adjusted EBITDA of $164.8 million (H1 2013: $98.4 million)2

Ignacio Bustamante, Chief Executive Officer commented:

"Hochschild has enjoyed a much improved quarter with healthy increases in operating margins versus the half-year results. Significant benefits are already being seen from our cash optimisation programme, which is on track to deliver approximately $200 million of savings and I am confident that we will maintain momentum and continue to demonstrate the effectiveness of this Company-wide initiative."

"We have also made good progress with regards to the IMZ transaction with an equity raise of approximately $73 million completed and a $340 million acquisition bridge financing facility arranged."

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Enquiries:

Hochschild Mining plc

Charles Gordon +44 (0)20 7907 2934

Head of Investor Relations

RLM Finsbury

Charles Chichester +44 (0)20 7251 3801

Public Relations

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1On a pre-exceptional basis.

2Adjusted EBITDA is calculated on a pre-exceptional basis as profit for the year from continuing operations, income tax expense, foreign exchange loss, finance costs, finance income, share of profit / (losses) of associates and joint ventures accounted for under the equity method, exploration and expenses and depreciation and amortization.

About Hochschild Mining plc

Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has almost fifty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru and one in southern Argentina. Hochschild also has numerous long term projects throughout the Americas.

Interim condensed consolidated income statement

Interim condensed consolidated statement of comprehensive income

Interim condensed consolidated statement of financial position

Interim condensed consolidated statement of cash flows

Interim condensed consolidated statement of changes in equity 

Notes to the interim condensed consolidated financial statements

1 Corporate Information

Hochschild Mining plc (the "Company") is a public limited company incorporated on 11 April 2006 under the Companies Act 1985 as a limited company and registered in England and Wales with registered number 05777693. The Company's registered office is located at 46 Albemarle Street, London W1S 4JL, United Kingdom. Its ordinary shares are traded on the London Stock Exchange.

The Group's principal business is the mining, processing and sale of silver and gold. The Group has three operating mines (Ares, Arcata and Pallancata) and a plant (Selene used to treat ore from the Pallancata mine) located in Southern Peru, one operating mine (San Jose) located in Argentina and one plant (Moris) located in Mexico. The Group also has a portfolio of projects located across Peru, Argentina, Mexico and Chile at various stages of development.

These interim condensed consolidated financial statements were approved for issue on behalf of the Board of Directors on 14 November 2013.

2 Significant Accounting Policies

(a) Basis of preparation

These interim condensed consolidated financial statements set out the Group's financial position as at 30 September 2013 and 31 December 2012 and its financial performance and cash flows for the periods ended 30 September 2013 and 30 September 2012.

They have been prepared in accordance with IAS 34 Interim Financial Reporting in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. Accordingly, the interim condensed consolidated financial statements do not include all the information required for full annual financial statements and therefore, should be read in conjunction with the Group's 2012 annual consolidated financial statements as published in the 2012 Annual Report.

The interim condensed consolidated financial statements do not constitute statutory accounts as defined in the Companies Act 2006. The financial information for the full year is based on the statutory accounts for the financial year ended 31 December 2012. A copy of the statutory accounts for that year, which were prepared in accordance with IFRS as adopted by the European Union has been delivered to the Registrar of Companies. The auditors' report under section 495 of the Companies Act 2006 in relation to those accounts was unmodified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

The impact of the seasonality or cyclicality of operations is not regarded as significant on the interim condensed consolidated financial statements.

The interim condensed consolidated financial statements are presented in US dollars ($) and all monetary amounts are rounded to the nearest thousand ($000) except when otherwise indicated.

(b) Changes in accounting policies and disclosures

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statement for the year ended 31 December 2012, except for the adoption of the following standards and interpretations:

· IFRS 13 "Fair value measurement", applicable for annual periods beginning on or after 1 January 2013

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements.

IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The amendment affects disclosure but has no impact on the Group's financial position and performance. Refer to note 13 for the additional disclosures on fair value measurement.

· IAS 1 "Financial statements presentation - Presentation of items in other comprehensive income", applicable for annual periods beginning on or after 1 July 2012

The amendments to IAS 1 change the grouping of items presented in other comprehensive income. Items that could be reclassified (or recycled) to profit and loss at a future point in time would be presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the Group's financial position and performance.

· IAS 19 "Employee benefits (amendment)", applicable for annual periods beginning on or after 1 January 2013

The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording. The application of this new standard has no impact on the Group's financial position or performance.

· IFRIC 20 "Stripping costs in the production phase of a surface mine", applicable for annual periods beginning on or after 1 January 2013

This interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. There can be two benefits accruing to the entity from the stripping activity: usable ore that can be used to produce inventory and improved access to further quantities of material that will be mined in future periods. When the benefit from the stripping activity is the production of inventory, an entity is required to account for the stripping activity costs as part of the cost of inventory. When the benefit is the improved access to ore, the entity recognises these costs as a non-current asset only if certain criteria are met, which is referred to as the stripping activity asset. The amendment has no material impact on the Group's financial position and performance.

· "Improvements to IFRSs (issued in May 2012)", applicable for annual periods beginning on or after 1 January 2013

The IASB issued improvements to IFRSs, including IAS 1 Presentation of Financial Statements, IAS 16 Property Plant and Equipment, IAS 32 Financial Instruments, Presentation, and IAS 34 Interim Financial Reporting.

The Group made an assessment of the changes and determined there is no significant impact in its financial position and performance.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

3 Segment Reporting

The following tables present revenue, profit and asset information for the Group's operating segments for the nine months ended 30 September 2013 and 2012 respectively:

(1) Comprised of administrative expenses of US$46,116,000, other income of US$1,902,000, other expenses of US$4,003,000, impairment of assets of US$77,530,000, share of profit of associates and joint ventures of US$5,921,000, gain on transfer from investments accounted under the equity method to available-for-sale financial assets of US$107,942,000, finance income of US$8,162,000, finance costs of US$120,459,000, and foreign exchange loss of US$15,648,000.

(2) Not reportable assets are comprised of available-for-sale financial assets of US$92,191,000, other receivables of US$96,877,000, income tax receivable of US$28,043,000, deferred income tax assets of US$1,244,000, other financial assets of US$Nil, and cash and cash equivalents of US$273,302,000.