HOC Hochschild Mining Plc

| Stated on an attributable  |            As at |            As at |    % change | 
| basis                      | 31 December 2008 | 31 December 2007 |             | 
+----------------------------+------------------+------------------+-------------+ 
| Resources                  |  2.10 mt @ 5 g/t |  2.44 mt @ 5 g/t |             | 
|                            | Ag & 1.26 g/t Au | Ag & 1.33 g/t Au |             | 
+----------------------------+------------------+------------------+-------------+ 
| Resource (moz Ag eq.)      |              5.4 |              6.6 |       (18%) | 
+----------------------------+------------------+------------------+-------------+ 
| Reserves                   |  1.24 mt @ 5 g/t |  1.77 mt @ 5 g/t |             | 
|                            | Ag & 1.44 g/t Au | Ag & 1.50 g/t Au |             | 
+----------------------------+------------------+------------------+-------------+ 
| Reserve (moz Ag eq.)       |              3.6 |              5.4 |       (33%) | 
+----------------------------+------------------+------------------+-------------+ 
 
 
Acquisitions and investments 
 
 
Expansion through investment and acquisition is a key element of our strategy. 
We have maintained our disciplined approach in 2008, focusing on mid-sized, 
underground precious metals projects in the Americas, particularly in our 
existing clusters, which we believe will create long term shareholder value. 
During 2008 and in early 2009, we secured a number of strategic investments in 
key mining districts with a total spend of $284.5 million, of which $254 million 
was invested during 2008. 
 
 
In the first half of 2008 we acquired 40% of Lake Shore Gold for a total of $164 
million, providing us with exposure to reasonably priced, high-grade gold 
deposits in the Timmins mining district of Northern Ontario, Canada. The company 
has a strong pipeline of projects, from grass roots through to advanced 
exploration as well as a proprietary database of exploration targets and is 
expected to produce up to 30,000 ounces of gold in 2009 (which would equate to 
0.72 million attributable silver equivalent ounces). We view this as an 
important strategic investment and have three positions on the board. 
 
 
In 2009 we participated in Lake Shore Gold's equity financing and maintained our 
ownership at 40% by investing a further $18.5 million. Proceeds from the 
financing will be used for underground rehabilitation and development work at 
the company's 100% owned Bell Creek mine and Vogel properties in support of an 
advanced underground exploration program, exploration expenditures at the 
Timmins, Thunder Creek, Casa Berardi and other exploration properties, and for 
general corporate purposes. 
 
 
In June 2008 we acquired 100% of the San Felipe project, our advanced 
development project in northern Mexico. As a result of declining zinc prices in 
the second half of the year and our commitment to reduce capex, in November we 
decided to delay the development of this project. However, we remain confident 
about the long term potential of San Felipe and will continue to review the 
timing of the project. 
 
 
In line with our cluster strategy, we further consolidated our position in 
southern Peru via the acquisition of a 50% interest in the Liam JV with 
Southwestern for a total consideration of US$33.3 million. The 282,000 hectare 
property has significant strategic importance for Hochschild as it is in close 
proximity to our four existing operations; Arcata, Ares, Selene and 
Pallancata. The acquisition was completed in August 2008. 
 
 
In 2009, we entered into a binding agreement, subject to the approval of 
Southwestern's shareholders, to acquire the remaining 50% of the Liam JV through 
the purchase of 100% of Southwestern, for a total cash consideration of $17.5 
million. Southwestern is a Canadian listed mineral exploration company with a 
number of gold, silver and base metals projects in southern Peru. The 
acquisition consolidates our position in one of our key operational clusters and 
enables us to leverage our existing infrastructure and knowledge of the regional 
geology. 
 
 
In November 2008, we made a $5 million investment in Gold Resource Corp, an 
underground precious metals mining company with a number of high grade 
development and exploration projects in southern Mexico. We have subsequently 
exercised our option to invest a further $13 million in GRC and as a result we 
now hold 15% of the company and are extremely confident about the potential of 
the business. 
 
 
Exploration 
 
 
We remain committed to our long term goal of achieving a resource and reserve 
life of 4.0 years at each of our operations and in 2008 spent $23.8 million on 
exploration. 
 
 
We remain extremely positive about our project pipeline which currently has 
numerous opportunities in Peru, Argentina, Mexico, Chile and Canada at various 
stages of development. We are constantly evaluating opportunities, with a clear 
focus on mid-sized, high grade, underground precious metals deposits in key 
mining districts: 
 
 
Peru 
 
 
Azuca 
 
 
Azuca is a 100% owned project located in southern Peru, in close proximity to 
our existing operations. Successful exploration at Azuca during 2008 has 
identified two laterally extensive mineralised vein systems; Azuca and Canela. 
Additional mineralised vein systems have been identified at the property and 
their continuity and metal content will be confirmed in 2009. 
 
 
Core drilling of approximately 15,000 metres in 53 holes at this exciting new 
discovery resulted in the development of a significant resource in the inferred 
category along two ore shoots in the Azuca vein, totalling 1,776,034 metric 
tonnes at 327 g/t Ag and 1.34g/t Au (408 g/t Ag-equivalent) containing 23.3 
million ounces of silver-equivalent. 
 
 
Drilling to the east of Azuca and along the Canela vein looks very promising, 
indicating that there is potential for additional resource to be defined in 
2009. Metallurgical recoveries are slightly above 90% for both gold and silver. 
 
 
Liam JV 
 
 
To date, 38 prospects have been identified and partially evaluated. 
 
 
The most important is the Crespo project where previous exploration led to the 
drilling of approximately 6,400 metres in 41 holes. Drilling results have 
allowed the internal calculation of a mineralised potential at Crespo of 12.5 
million metric tonnes at 0.77 g/t Au and 39.4 g/t Ag, containing 0.4 moz Au and 
15.8 moz Ag. Initial core drilling focused on defining distinct zones containing 
structures with higher grade mineralization (above 300g/t Ag equivalent). A 
total of 352 metres was completed in 6 holes. Results include 14.5 metres at 328 
g/t Ag equivalent and 11 metres at 327 g/t Ag equivalent. 
 
 
Data review, core re-logging and preliminary exploration work were also carried 
out at the Huacullo, Astana-Farallón and Ibel prospects. These areas will be a 
significant part of the 2009 generative program in Peru. 
 
 
Inmaculada 
 
 
The Inmaculada project is part of a JV agreement with Ventura Gold, in which 
Hochschild has a 49% ownership interest. Ventura Gold recently reported the 
first independent inferred mineral resource estimate at the Inmaculada project 
as per National Instrument 43-101 by Micon of 3.7 million tonnes at an average 
grade of 4.0 g/t Au and 139 g/t Ag containing 483,000 ounces Au and 16.6 million 
ounces Ag (as at 5 January 2009). 
 
 
Chile 
 
 
Encrucijada 
 
 
Encrucijada is part of a JV agreement with Andina Minerals Inc, signed in 
February 2008, in which Hochschild can earn a 60% interest in the property. 
Detailed surface exploration has defined four areas of interest (Millaray, 
Central, Curicala and Norte). A first pass core drilling program was completed 
in the Millaray area totalling 1,561 million tonnes in 10 holes. The Quillay and 
Millaray veins have been recognised at above 400 metres along strike and to 130 
million tonnes depth. In 2009, detailed exploration will be performed at the 
Central, Curicala and Norte areas to define drillable targets for follow-up. 
 
 
Vaquillas project 
 
 
A joint venture letter of intent with Iron Creek Capital Corp. to explore the 
precious metal properties within their Vaquillas project was signed in September 
2008. Under the terms of the agreement Hochschild can earn-in a 60% interest in 
the Vaquillas project by contributing $6.75 million over a 5 year period. Field 
work started during the first week in October on the Inti claims followed by a 
2,100 metre reverse circulation drill program (9 holes) that was completed in 
December. Sample results from the drilling program show no significant 
mineralization, with the exception of drill hole 3 which intersected 1m of 326 
g/t Ag. The remaining targets will be explored during 2009. 
 
 
 
 
FINANCIAL REVIEW 
 
 
Key performance indicators: 
(before exceptional items, unless otherwise indicated) 
 
 
+-----------------------------------------------------+-------------------+-------------------+-----------+ 
|  US$(000) unless otherwise indicated                |     Year ended 31 |     Year ended 31 |  % change | 
|                                                     |     December 2008 |     December 2007 |           | 
+-----------------------------------------------------+-------------------+-------------------+-----------+ 
| Revenue                                             |           433,779 |           305,021 |       42% | 
+-----------------------------------------------------+-------------------+-------------------+-----------+ 
| Attributable silver production (koz)                |            16,941 |            13,588 |       25% | 
+-----------------------------------------------------+-------------------+-------------------+-----------+ 
| Attributable gold production (koz)                  |               153 |               201 |     (24%) | 
+-----------------------------------------------------+-------------------+-------------------+-----------+ 
| Cash costs ($/oz Ag co-product)1                    |              7.05 |              4.40 |       60% | 

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