Final Results -10-
March 25 2009 - 3:01AM
UK Regulatory
+----------------------------------+--------------------+--------------------+
| Working capital | 40,995 | 105,266 |
+----------------------------------+--------------------+--------------------+
The change in the working capital position resulted from a significant increase
in trade and other payables from $52.2 million as at 31 December 2007 to $82.3
million as at 31 December 2008 and from an increase in pre-shipment loans from
$23.8 million as at 31 December 2007 to $49.7 million as at 31 December 2008.
Trade payables and other payables increased mainly as a consequence of increased
production and higher salaries payable, as well as an increase in taxes and
contributions.
Receivables were lower at the end of 2008 because of a decrease in trade
receivables and the reclassification of a portion of a loan to Minera Andes from
current receivables to non current receivables. The decrease was partially
offset by higher prepaid expenses and VAT in Minera Suyamarca and Minera Santa
Cruz.
The reduction in trade receivables is mainly explained by the change in our
customers' base and selling contract terms. Trade accounts receivable comprised
of amounts receivable from Cormin, Louis Dreyfus, Sudamericana Trading and
Norddeutsche Affinerie.
Cashflow
Total cash decreased $184.4 million in 2008 (2007: $134.2 million decrease).
Cash flow from operating activities increased by 267% to $78.6 million mainly as
a result of lower working capital. The increase in cash flow from operations was
offset by the outflows resulting from investing activities, which totalled
$475.8 million in 2008 comparing to $162.3 in 2007. 2008 investments included:
40% of Lake Shore Gold ($164 million), 50% of the Liam JV ($33.3million), 100%
in San Felipe ($51.5 million) and 5% of Gold Resource Corp. ($5 million). In
2008, the Group incurred a higher amount of capital expenditure in operating
units due to plant expansions at San José, Arcata and Selene.
Total capital expenditure:
We continue to invest in our production platform to ensure we have the
infrastructure in place for future growth. In 2008, capital expenditure was $311
million (2007: $145 million) due to new investments in Peru, Argentina and
Mexico. Industry inflation has also impacted capital expenditure in 2008.
+------------------------------------+--------------------+--------------------+
| US$(000) unless otherwise | Year ended | Year ended |
| indicated | 31 December 2008 | 31 December 2007 |
+------------------------------------+--------------------+--------------------+
| Arcata | 43,977 | 22,750 |
+------------------------------------+--------------------+--------------------+
| Ares | 10,438 | 3,705 |
+------------------------------------+--------------------+--------------------+
| Selene | 47,226 | 27,497 |
+------------------------------------+--------------------+--------------------+
| Pallancata1 | 14,619 | 12,190 |
+------------------------------------+--------------------+--------------------+
| San José1 | 80,398 | 62,752 |
+------------------------------------+--------------------+--------------------+
| Moris1 | 2,234 | 12,099 |
+------------------------------------+--------------------+--------------------+
| San Felipe1 | 63,318 | 667 |
+------------------------------------+--------------------+--------------------+
| Other | 49,061 | 3,078 |
+------------------------------------+--------------------+--------------------+
| Total | 311,271 | 144,738 |
+------------------------------------+--------------------+--------------------+
1 Represents 100% of capital expenditure
The increase of $166.6 million of capital expenditure in 2008 is primarily a
result of the mine developments and expansion projects at San José, Arcata and
Selene. This increase was also driven by the acquisition of 100% of San Felipe
($51.5 million) and 50% of the Liam JV ($33.3million).
Net debt:
+---------------------------------------+------------------+------------------+
| US$(000) unless otherwise indicated | As at | As at |
| | 31 December 2008 | 31 December 2007 |
+---------------------------------------+------------------+------------------+
| Cash and cash equivalents | 116,147 | 301,426 |
+---------------------------------------+------------------+------------------+
| Long term borrowings | 231,692 | 55,209 |
+---------------------------------------+------------------+------------------+
| Short term borrowings less | 48,410 | 9,419 |
| pre-shipment loans | | |
+---------------------------------------+------------------+------------------+
| Net debt/(net cash) | 163,955 | (236,798) |
+---------------------------------------+------------------+------------------+
As a result of the syndicated loan facility of $200 million, the Group's balance
sheet changed from a net cash position of $236.8 million to a net debt position
of $164.0 million. Part of the facility was used for M&A as described under the
cash flow section.
The decrease in cash and cash equivalents from $301 million to $116 million was
mainly explained by the increase in capital expenditure in 2008 due to plant
expansions at Arcata, Selene and San José.
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=----------------------------------------
A conference call will be held at 9.30am (London time) on Wednesday 25 March
2009 for analysts and investors.
Dial in details as follows:
UK+44 (0)203 037 9098
A recording of the conference call will be available for one week following its
conclusion, accessible from the following telephone numbers:
UK+44 (0)208 196 1998
Access code: 7521788#
_____________________________________________________________________
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| Enquiries: | |
+------------+-----------------+
| | |
+------------+-----------------+
| Hochschild | |
| Mining plc | |
+------------+-----------------+
| Isabel | +44 |
| Lütgendorf | (0)20 |
| | 7907 2934 |
+------------+-----------------+
| Head | |
| of | |
| Investor | |
| Relations | |
+------------+-----------------+
| | |
+------------+-----------------+
| Ignacio | +511 437 6007 |
| Rosado | |
+------------+-----------------+
| Chief | |
| Financial | |
| Officer | |
+------------+-----------------+
| | |
+------------+-----------------+
| Finsbury | |
+------------+-----------------+
| Robin | +44 |
| Walker | (0)20 |
| | 7251 3801 |
+------------+-----------------+
| Public | |
| Relations | |
+------------+-----------------+
__________________________________________________________________
About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London
Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focus
on the exploration, mining, processing and sale of silver and gold. Hochschild
has over forty years experience in the mining of precious metal epithermal vein
deposits and currently operates five underground epithermal vein mines, four
located in southern Peru, one in southern Argentina and one open pit mine in
northern Mexico. Hochschild also has numerous long-term prospects throughout the
Americas.
Forward looking Statements
This announcement contains certain forward looking statements, including such
statements within the meaning of Section 27A of the US Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
In particular, such forward looking statements may relate to matters such as the
business, strategy, investments, production, major projects and their
contribution to expected production and other plans of Hochschild Mining plc and
its current goals, assumptions and expectations relating to its future financial
condition, performance and results.
Forward-looking statements include, without limitation, statements typically
containing words such as "intends", "expects", "anticipates", "targets",
"plans", "estimates" and words of similar import. By their nature, forward
looking statements involve risks and uncertainties because they relate to events
and depend on circumstances that will or may occur in the future. Actual
results, performance or achievements of Hochschild Mining plc may be materially
different from any future results, performance or achievements expressed or
implied by such forward looking statements. Factors that could cause or
contribute to differences between the actual results, performance or
achievements of Hochschild Mining plc and current expectations include, but are
not limited to, legislative, fiscal and regulatory developments, competitive
conditions, technological developments, exchange rate fluctuations and general
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