TIDMHOC
RNS Number : 1424M
Hochschild Mining PLC
21 August 2013
21 August 2013
Hochschild Mining plc
Interim Results for the six months ended 30 June 2013
H1 2013 Financial highlights(1)
-- Revenue of $308.6 million (H1 2012: $354.5 million)
-- Adjusted EBITDA of $90.4 million (H1 2012: $168.4 million)
-- Pre-exceptional EPS of $(0.10) (H1 2012: $0.08) which
includes $15.4 million ($0.05 per share) foreign exchange loss on
cash deposits in Peru - more than offset by positive effects on
unit costs and capital expenditure
-- Exceptional items of $(13.2) million include:
o $45.9 million net gain resulting from reclassification of Gold
Resource Corp holding from investment in associate to
available-for-sale financial asset
o $59.1 million of impairment charges and severance payments net
of taxes(2)
-- Interim dividend suspended
-- Strong balance sheet with total cash of approximately $275 million as at 31 July 2013
-- Minority investments valued at $103.8 million as at 31 July 2013
-- Undrawn $140 million loan facility to finance Inmaculada project
Cashflow optimisation programme
-- Implemented in H1 2013 - approximately $200 million of initiatives identified
o Unit cost increases in Peru revised down to 0-5% for 2013
o Unit cost increase in Argentina revised down to 5-10% for
2013
o 2013 sustaining capex further lowered to $150 million from
original 2013 guidance of $180 million
o 2013 exploration budget further reduced to $50 million from
original $77 million
o 2013 administration expenses reduced by $20 million
o Reduction in Board size, Directors' fees and senior management
remuneration
o Full impact expected in H2 2013 and H1 2014
o Inmaculada and Crespo project schedules maintained
Crespo Environmental Impact Study approved by Peruvian
government - key milestone in project's progress
-- Inmaculada and Crespo permitting process on schedule for H2 2013
H1 2013 Operational highlights
-- H1 2013 attributable production of 9.7 million silver equivalent ounces
-- 2013 production target of 20.0 million attributable silver equivalent ounces on track
-- H1 2013 unit cost performance in Peru materially lower as a
result of cashflow optimisation programme and local currency
depreciation in line with revised guidance
$000, pre-exceptional unless stated Six months Six months % change
to 30 June to 30 June
2013 2012
------------------------------------------------ ------------ ------------ ---------
Attributable silver production (koz) 6,251 6,887 (9)
Attributable gold production (koz) 57.88 55.94 3
Attributable silver equivalent production
(koz) 9,724 10,243 (5)
Net Revenue* 308,577 354,504 (13)
Adjusted EBITDA(**) 90,410 168,353 (46)
(Loss) / profit from continuing operations (25,215) 54,555 (146)
(Loss) / profit from continuing operations
(post-exceptionals) (38,427) 52,755 (173)
Basic Earnings per share ($) (0.10) 0.08 (225)
Basic Earnings per share ($ post-exceptionals) (0.10) 0.08 (225)
------------------------------------------------ ------------ ------------ ---------
* Revenue presented in the financial statements is disclosed as
net revenue (in the Financial Review it is calculated as gross
revenue less commercial discounts).
** Adjusted EBITDA is calculated as profit from continuing
operations before exceptional items, net finance costs and income
tax plus depreciation and exploration expenses other than personnel
and other exploration related fixed expenses.
Commenting on the results, Eduardo Hochschild, Executive
Chairman, said:
"Hochschild Mining has operated in cyclical markets for over a
century and the first half of 2013 has provided ample evidence of
that characteristic. However, I am optimistic that the entire
organisation has moved swiftly in initiating a cost cutting
programme that is already delivering tangible results. In the
second half and into 2014, the Board is confident we will see the
full effects of the measures taken as well as a further slowdown in
operating cost inflation. Regrettably it has also necessitated a
considerable number of job losses but I firmly believe the
initiatives taken combined with our ongoing investment in our
Advanced Projects will result in the Company being in a
significantly stronger position to capitalise on a long term
precious metal price recovery and deliver value accretive
growth.
In light of the very difficult financial results caused by the
precious metals price falls, the Board has decided not to pay an
interim dividend. The Company remains committed to the long term
principle of shareholder returns and the Board intends to reassess
the position subject to the overall full year financial
results."
_________________________________________________________________________________________
A live conference call & audio webcast will be held at 2pm
(London time) on Wednesday 21 August 2013 for analysts and
investors. Details as follows:
For a live webcast of the presentation please click on the link
below:
http://www.media-server.com/m/p/9exkasok
Conference call dial in details:
UK: +44 (0)20 3427 1901 (Please use the following confirmation
code: 5056126).
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
UK: +44 (0)20 3427 0598 (Access code: 5056126)
The On Demand version of the webcast will be available within
two hours after the end of the presentation and is accessible using
the same webcast link.
_________________________________________________________________________________________
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
_________________________________________________________________________________________
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.
CHIEF EXECUTIVE OFFICER'S STATEMENT
The first half of 2013 was undoubtedly a challenging period. The
steep fall in precious metal prices has impacted the entire
industry and it is to the credit of the entire team at Hochschild
that we have confronted the ongoing volatility by reacting quickly
to the deteriorating market conditions. The average selling price
that we have received for our sales has fallen by approximately 40%
versus the same period two years ago, with a significant portion of
the fall occurring over a period of weeks in the first half of this
year. This has contributed to a difficult environment for both our
operating assets and exploration strategy and consequently, our
underlying cashflow generation. The combination of strong falls in
the silver price and cost increases in the first quarter of the
year has led the Company to report an EBITDA of $90 million for H1
2013. An overall pre-exceptional loss of $25.2 million reflects a
$15.4 million foreign exchange loss on cash deposits held in Peru
resulting from the 11% depreciation in the Peruvian Sol that will
be more than offset by positive effects on unit costs and capital
expenditure. Despite the half year results, our balance sheet is
very robust, allowing us to sustain our long term goals of
profitably growing the Company. However, Hochschild remains in a
strong position with $275 million of cash(3) , significant unused
credit lines and a cash optimisation programme that is already
delivering benefits early in the second half.
Following the initial major decline in precious metal prices in
April, we commenced the first stage of a pre-planned programme in
order to conserve capital and optimise the cashflow of the Company
in a volatile price environment. We have since then expanded the
scope of this initiative to systematically cover all areas of the
business encapsulating operating costs, sustaining capital
expenditure and administrative costs as well as re-focusing our
exploration programme going forward. We are already starting to see
the impact of this programme throughout the Company and anticipate
that the full effects will be realised in the second half of 2013
and into 2014 with expected overall savings of approximately $200
million. This total consists of a combination of cost reductions,
operating efficiencies and cuts to discretionary expenditure and
includes, regrettably, a significant number of redundancies from a
wide range of the Company's operating, financial, exploration and
support teams.
Hochschild's current operations delivered a solid first half of
production at 9.7 million silver equivalent ounces and we remain on
track to deliver our stated 2013 target of 20 million attributable
silver equivalent ounces. Several Company cost savings initiatives
and the depreciation of the Peruvian Sol have significantly reduced
cost inflation in Peru and this has allowed Arcata and Pallancata
to achieve lower than expected single-digit cost increases. As the
effect of the cashflow optimisation programme takes hold,
Hochschild is forecasting unit cost increases for the full year in
Peru of 0-5%. In Argentina, whilst production remained strong, the
local operating and political environment has continued to
deteriorate with a number of brief stoppages and high local
inflation contributing to double-digit unit cost increases as
expected. However, we have seen some offset from the continuing
devaluation in the Argentinean Peso and combined with Company cost
savings initiatives, we have been able to revise our forecast for
unit cost increases down to 5-10% for 2013.
In the first half we saw continued excellent progress made at
our two Advanced Projects, Inmaculada and Crespo both of which are
set to receive their final mill construction permits during the
second half of this year. At Inmaculada, significant milestones
were achieved in tunnelling, construction, engineering and
procurement, whilst the team continued to cooperate closely with
the relevant ministry authorities to ensure a smooth passage for
the construction permit application. Inmaculada, which remains
Hochschild's flagship growth project, is on track for first
production in the second half of 2014 and is set to benefit in
terms of capex and operating costs from any continuing weakness in
the Peruvian Sol as well as a less inflationary industry cost
environmen. At Crespo, good progress has also been made in terms of
project construction and we are also pleased in recent weeks, to
have received approval for its Environmental Impact Study, a key
milestone in the project's development.
Although Hochschild has reduced the exploration budget from $77
million to $50 million as part of our cashflow optimisation
programme, we have still made good progress at a number of our
projects in the first half. Brownfield exploration continued at the
operations and projects with the target shifting to exploration
drilling to delineate high grade resources as opposed to the
previous emphasis on life-of-mine increases. New high grade
structures were defined at all our main assets demonstrating their
continuing significant potential. The Greenfield programme also
continued with good progress made, particularly at the Valeriano
project in Chile and the Cuello Cuello project close to the Selene
plant in our Southern Peru cluster. A total of just over 23,000
metres was drilled in the half year across Chile, Mexico and Peru.
Whilst the quantum of exploration spend has been reduced with a
more focused budget, exploration remains a cornerstone of the
Hochschild strategy in the long term.
Despite current uncertainty of the short term outlook for
precious metals, Hochschild continues to believe that the long term
fundamentals for its markets remain healthy and underpin the value
potential of its current assets, Advanced Projects and exploration
pipeline. The Company remains in a strong financial position to
finance future growth and expects to be able to demonstrate further
substantial savings from its cashflow optimisation programme at the
Full Year results.
Ignacio Bustamante
Chief Executive Officer
20 August 2013
OPERATING REVIEW
CURRENT OPERATIONS
Production
In H1 2013 the Company delivered attributable production of 9.7
million silver equivalent ounces, which comprised 6.3 million
ounces of silver and 57.9 thousand ounces of gold. The Company
remains on track to meet its full year production target of 20.0
million attributable silver equivalent ounces.
Costs
In H1 2013, the Company reported an increase in unit cost per
tonne excluding royalties at its main operations in Peru (Arcata
and Pallancata) of 4.7% to $75.0 (H1 2012: $71.6). The Company
anticipates a 0-5% increase in costs in Peru for the full year. At
San Jose in Argentina, unit costs excluding royalties increased by
16.7% in H1 2013, to $216.3 (H1 2012: $185.3). The Company has
revised its guidance to a cost increase of around 5-10% in
Argentina for the full year. Further details on costs are provided
in the Financial Review on page 16.
Main operations
Arcata: Peru
Arcata summary Six months Six months % change
to 30 June to 30 June
2013 2012
---------------------------- ------------ ------------ ---------
Ore production (tonnes) 427,274 344,660 24
Average silver grade (g/t) 195 308 (37)
Average gold grade (g/t) 0.69 0.91 (24)
Silver produced (koz) 2,292 3,012 (24)
Gold produced (koz) 7.88 9.04 (13)
Silver equivalent produced
(koz) 2,764 3,555 (22)
Silver sold (koz) 2,332 2,659 (12)
Gold sold (koz) 7.83 7.81 0.3
Unit cost ($/t) 83.4 84.0 (1)
Unit cost excl. royalties
($/t) 82.2 80.5 2
Total cash cost ($/oz Ag
co-product)(4) 13.8 13.6 1
---------------------------- ------------ ------------ ---------
Production and sales
At Arcata, total silver equivalent production in H1 2013 was 2.8
million ounces (H1 2012: 3.6 million ounces). Tonnages were higher
than those in 2012 due to the planned increase in volumes processed
from the low-grade Macarena waste dam deposit, facilitated by the
500 tonne per day capacity expansion at the Arcata plant (completed
in H2 2012). The increased volumes of low-grade Macarena material,
as well as the Company's policy of mining close to the average
reserve grade at its core assets led to lower grades and production
in the first half of 2013 compared to 2012.
The Company continues to plan for grades at Arcata to increase
in the second half of 2013 when Macarena tonnage will be gradually
replaced by tonnage from stopes and mine development.
Table Showing Contribution From Macarena Waste Dam Deposit
H1 2013 H1 2012
------------------------- -------- --------
Total
Tonnage 427,274 344,660
Average head grade
gold (g/t) 0.69 0.91
Average head grade
silver (g/t) 194.67 308.06
------------------------- -------- --------
Macarena
Tonnage 144,350 21,554
Average head grade
gold (g/t) 0.29 0.30
Average head grade
silver (g/t) 93.25 101.57
Stopes and Developments
Tonnage 282,924 323,106
Average head grade
gold (g/t) 0.90 0.95
Average head grade
silver (g/t) 246.42 321.83
------------------------- -------- --------
Costs
In H1 2013, the unit cost per tonne excluding royalties at
Arcata was materially better than expectations, increasing by 2.1%
versus the same period last year, to $82.2 per tonne. This was
mainly due to the processing of higher volumes of low cost Macarena
material, operational efficiencies resulting in a lower consumption
of reagents and materials as well as a significant local currency
weakening versus expectations, in addition to the initial effects
of recently implemented cost savings initiatives.
Exploration
In H1 2013, a total of 5,265 metres of drilling were carried out
at Arcata. The exploration programme focused on the definition of
new high-grade structures from known vein systems (potential
drilling), and a new geological interpretation of the Amparo-Blanca
corridor that identified high-grade structures. In addition,
diamond drilling was conducted at the Alexia, Katty, Ramal Marion,
Pamela, Ramal Leslie, Baja and Blanca Techo veins. Significant
intercepts include(5) :
Vein Results
------------- ----------------------------------------
Pamela DDH425-LM13: 1.41m at 7.83 g/t Au &
2,028 Ag
DDH399-GE13: 1.76m at 6.19 g/t Au &
1,479 Ag
------------- ----------------------------------------
DDH438-GE13: 0.83m at 1.69 g/t Au &
Ramal Leslie 810 Ag
------------- ----------------------------------------
DDH434-S13: 1.90m at 3.10 g/t Au &
Baja 612 Ag
------------- ----------------------------------------
DDH427-S13: 1.60m at 2.8 g/t Au & 1,901
Baja 2 Ag
------------- ----------------------------------------
DDH459-GE13: 1.30m at 1.39 g/t Au &
Blanca Techo 508 Ag
------------- ----------------------------------------
In the second half the near-mine exploration programme will
continue, with potential drilling focused on the definition of new
high-grade structures.
Pallancata*: Peru
Six months to Six months to % change
30 June 2013 30 June 2012
---------------------------- -------------- -------------- ---------
Ore production (tonnes) 523,824 528,300 (1)
Average silver grade (g/t) 253 256 (1)
Average gold grade (g/t) 1.13 1.04 9
Silver produced (koz) 3,534 3,606 (2)
Gold produced (koz) 14.11 12.01 17
Silver equivalent produced
(koz) 4,380 4,326 1
Silver sold (koz) 3,590 3,556 1
Gold sold (koz) 13.67 11.43 20
Unit cost ($/t) 69.0 65.7 5
Unit cost excl. royalties
($/t) 69.0 65.7 5
Total cash cost ($/oz Ag
co-product) 10.6 11.0 (4)
---------------------------- -------------- -------------- ---------
* The Company holds a 60% interest in Pallancata.
Production and sales
Pallancata, the Company's other main Peruvian operation,
delivered a solid half of production with total silver equivalent
production of 4.4 million silver equivalent ounces which is broadly
flat on H1 2012 production (4.3 million ounces).
Costs
Unit cost per tonne excluding royalties at Pallancata increased
also by a lower than expected 5% in H1 2013, to $69.0 reflecting
lower personnel and supply costs as a higher proportion of mineral
was extracted using mechanised methods. As at Arcata, costs were
also positively impacted by the higher than expected depreciation
of the local currency and the cashflow optimisation programme.
Exploration
Both resource and potential drilling were carried out at
Pallancata during the period, to further delineate inferred
resources and to test new possible vein extensions. A total of
9,969 metres of diamond drilling were carried out. The Yurika West
vein mapping programme continued, and identified major structural
lineaments trending NE-EW associated with silicified hydrothermal
breccias, and new gold-rich high-grade structures were identified
in the northern part of the district. In addition, drilling
continued at the Luisa, Yurika, Yanely and Ramal San Javier veins.
Significant intercepts include(6) :
Vein Results
------- ----------------------------------------
Yurika DLYU-A08: 1.02m at 17.86 g/t Au & 1,702
g/t Ag
DLYU-A16: 2.17m at 11.17 g/t Au & 949
g/t Ag
DLYU-A20: 2.75m at 6.35 g/t Au & 931
g/t Ag
DLYU-A12: 0.91m at 6.72 g/t Au & 539
g/t Ag
------- ----------------------------------------
Luisa DLLU-A134: 1.96m at 1.11 g/t Au & 727
g/t Ag
------- ----------------------------------------
DLYU-A02: 0.82m at 33.91 g/t Au & 326
Yanely g/t Ag
------- ----------------------------------------
In H2 2013 the exploration programme at Pallancata will continue
to focus on completing the delineation of new potential structures,
incorporating new resources, and mapping the geological extension
of the Pallancata NW vein.
San Jose*: Argentina
Six months Six months % change
to 30 June to 30 June
2013 2012
---------------------------- ------------ ------------ ---------
Ore production (tonnes) 249,195 244,334 2
Average silver grade (g/t) 430 423 2
Average gold grade (g/t) 6.57 5.98 10
Silver produced (koz) 2,926 2,855 2
Gold produced (koz) 46.69 42.30 10
Silver equivalent produced
(koz) 5,728 5,393 6
Silver sold (koz) 2,880 2,178 32
Gold sold (koz) 44.79 32.00 40
Unit cost ($/t) 229.9 198.6 16
Unit cost excl. royalties
($/t) 216.2 185.3 17
Total cash cost ($/oz Ag
co-product) 14.9 14.1 6
---------------------------- ------------ ------------ ---------
* The Company holds a 51% interest in San Jose.
Production and sales
San Jose delivered a strong production performance in the first
half of 2013. Silver equivalent production rose 6% versus the first
half of 2012, to 5.7 million ounces, reflecting increased tonnages
and grades.
Costs
At San Jose, unit cost per tonne excluding royalties rose by 17%
versus H1 2012 to $216.2 due to the continuing high local inflation
in Argentina. The increase was slightly above the 2013 guidance of
10-15% due to a number of brief stoppages at the mine during the
period as well as a slightly lower than expected devaluation of the
local currency during the period.
Exploration
In H1 2013 the exploration programme at San Jose focused on the
geological mapping of the district area and identifying new
structures, with new high-grade structures identified in the
northern part of the district. A total of 5,743 metres of diamond
drilling were completed during H1 2013. In addition, new structures
were identified in the Juanita vein system located at the south of
the property. Drilling was conducted on the Huevos Verdes, Emilia
and Juanita veins, with significant intercepts including(7) :
Vein Results
-------- ----------------------------------------
Emilia SJD-1393: 5.00m at 40.08 g/t Au & 882
g/t Ag
SJD-1398: 1.50m at 4.28 g/t Au & 152
g/t Ag
-------- ----------------------------------------
Juanita SJD-1372: 0.40m at 4.02 g/t Au & 57 g/t
Ag
SJD-1373: 0.64m at 2.22 g/t Au & 4 g/t
Ag
-------- ----------------------------------------
In H2 2013, exploration will focus on the delineation of the
Juanita vein system to study its vein and disseminated
potential.
Other operations
Ares: Peru
Six months to Six months to % change
30 June 2013 30 June 2012
---------------------------- --------------- ---------------- ---------
Ore production (tonnes) 149,828 160,632 (7)
Average silver grade
(g/t) 71 51 41
Average gold grade
(g/t) 2.52 2.56 (2)
Silver produced (koz) 328 227 44
Gold produced (koz) 11.84 12.63 (6)
Silver equivalent produced
(koz) 1,038 985 5
Silver sold (koz) 334 178 88
Gold sold (koz) 11.97 9.94 20
---------------------------- --------------- ---------------- ---------
Production and sales
The Company's ageing Ares mine in Peru continued to operate
during H1 2013 and produced 1.04 million silver equivalent ounces
compared to 0.99 million ounces in H1 2012. The Company anticipates
that production at Ares will continue until the end of 2013.
Exploration
The exploration programme at Ares in H1 2013 focused on the
exploration of potential mineralisation in the extensions of known
veins and the definition of new high-grade structures. In addition,
exploration continued at the Isabel vein, where new intersections
were discovered in the second half of 2012, and additional
resources were incorporated. A total of 847 metres of drilling were
carried out during H1 2013. In H2 2013 the exploration and drilling
programme at Ares will focus on continuing to expand resources and
extending the resource life-of-mine.
Moris: Mexico
Six months to Six months to % change
30 June 2013 30 June 2012
---------------------------- --------------- ---------------- ---------
Ore production (tonnes) - - -
Average silver grade - - -
(g/t)
Average gold grade - - -
(g/t)
Silver produced (koz) 19 28 (32)
Gold produced (koz) 5.89 5.48 7
Silver equivalent produced
(koz) 372 357 4
Silver sold (koz) 17 24 (29)
Gold sold (koz) 5.31 4.73 12
---------------------------- --------------- ---------------- ---------
Production
At Moris, the Company's open pit operation in Mexico, leaching
of the pads continued during H1 2013, producing a further 372
thousand silver equivalent ounces, a slight increase compared to H1
2012. Moris remains in the final stages of the pads' cyanidation
process with exploration continuing at the property.
Exploration
Exploration work at Moris during the period continued to focus
on identifying new economic structures and the completion of the
potential geological model of the property to identify new drill
targets. Two new structures were discovered to the north of the
original mine location, and preliminary data suggests significant
mineralisation in the surrounding extensions of the veins. In H2
2013, the exploration of the new structures will be extended to
identify possible extensions of mineralised structures.
ADVANCED PROJECTS
In November 2012 the Company announced that it expects to
receive the final mill construction permits for both the Inmaculada
and Crespo projects in the second half of 2013 with commissioning
of both projects' mills scheduled for the second half of 2014.
In March 2013, the Company announced that its 60% owned joint
venture Minera Suyamarca S.A.C had negotiated a $140 million
secured loan facility with BBVA Continental and Banco Credito del
Peru to partially finance the initial capital expenditure for the
Inmaculada project.
Inmaculada
In H1 2013, the Company made further progress in the project
development, construction and permitting processes at Inmaculada.
The detailed civil and underground engineering continued and are on
schedule for completion this quarter. Procurement of the main
equipment also progressed according to schedule and the plant
design requirements were submitted to the EPC contractor. In
addition, construction of the three exploration tunnels continued,
with 1,926 metres carried out in the first half. Finally, the
detailed engineering for the paste backfill commenced, as well as
construction of the camp which is expected to be completed during
the second half.
The detailed engineering for the energy transmission line was
also completed during the first half, and procurement commenced and
is expected to be completed in Q3 2013. Tests were also
successfully carried out on the main equipment and electrical
substations.
In the project's permit application process, the underground
water study was approved during the first half, and a specialist
task team submitted the Company's technical response to the
relevant ministry authorities following their review of the
construction permit application. The Company continues to expect
that the construction permit will be approved in H2 2013.
The exploration drilling programme in and around the Inmaculada
project continued in H1 2013. Surface exploration drilling was
completed, with one drill rig in operation to test geophysical
anomalies and alteration lineaments parallel to the Mirella vein,
and to test the NE extension of the Martha vein. In addition, a new
potential high-grade vein, Mayte, was intercepted with 0.40 to 7.70
metres of true widths. During the half, a total of 1,482 metres of
diamond drilling were completed, with significant results
including(8) :
Vein Results
-------- -----------------------------------------
MIR13-001: 7.70m at 11.97 g/t Au & 153
Mayte g/t Ag
-------- -----------------------------------------
Mirella MIR13-001: 1.10m at 1.34 g/t Au & 108
g/t Ag
-------- -----------------------------------------
SHK13-003: 1.10m at 4.10 g/t Au & 10 g/t
Shakira Ag
-------- -----------------------------------------
Martha MIR13-001: 0.20m at 31.02 g/t Au & 3,269
g/t Ag
-------- -----------------------------------------
In H2 2013, exploration will focus on the completion of a new
geological interpretation of the district to target high-grade
structures to improve project economics.
Crespo
At the Company's 100% owned Crespo project, in H1 2013 the
detailed integration engineering continued and is on schedule for
completion in Q3 2013. In addition, orders were placed for the
Merrill Crowe plant and mobile crushers. The basic and detailed
engineering for the mine was also in progress during H1 2013, and
the construction of the new access road to the mine site progressed
and is also anticipated to be completed in Q3 2013.
With regards to the permit application process for the Crespo
project, the surface land agreement for the project was approved by
the local community on 11 January 2013 and the underground water
study was approved in Q2 2013. In addition, in July, the Company
received the Environmental Impact Study ('EIS') permit for Crespo.
The Company submitted the project's construction permit application
at the end of February and received positive feedback from the
Peruvian government, to move to the next stage in the process.
District surface exploration continued at Crespo in H1 2013 and
a new high sulphidation target, Jackelin, was identified.
Furthermore, surface geochemistry sampling programmes were
completed, with gold and silver anomalies reported. In H2 2013 the
Company will continue surface exploration work at Crespo, with full
geological mapping of the property to identify new drill
targets.
Azuca
In H1 2013, a total of 13,108 metres of diamond drilling were
completed at Azuca. The exploration drilling campaigns at Azuca
were subsequently put on hold in late April until market conditions
improve.
Volcan
Exploration was not scheduled at Volcan for 2013. Future plans
include the process of building a complete geological and
geometallurgical model of the El Dorado resource, the re-logging of
historical drilling data and the image scanning of a selection of
existing diamond drill holes, to define mineralised domains and
improve mine planning.
EXPLORATION REVIEW
Revised Exploration budget
As part of the Company's cashflow optimisation programme
implemented as a response to the volatility in precious metal
prices in H1 2013, the Company conducted a detailed review of
discretionary elements of its exploration budget. Consequently, the
Company has reduced its 2013 exploration budget to $50 million with
the key reductions in the brownfield and Advanced Projects
exploration programmes. Exploration at the Company's main
operations will focus on the development of potential resources as
opposed to increasing further, resource life-of-mine, reflecting
the Company's confidence in their long term sustainability. In
addition, the Company's greenfield exploration programme will
concentrate on the Company's most promising prospects.
Greenfield Exploration
In H1 2013, a total of 23,524 metres were drilled as part of the
greenfield exploration programme. Drilling was carried out at eight
projects, at five 'Company Maker' projects, and at three 'Medium
Scale' projects.
Company Makers
The Company currently has 11 potential "Company Makers" which
are projects with the potential to achieve 20-30 million silver
equivalent ounces per year. These are typically high sulphidation,
disseminated or gold/copper porphyry deposits and are generally
open pit operations. In H1 2013, the Company made an addition to
its Company Makers' portfolio with the Pachuca property in Mexico.
Also during the half, the Company stopped the exploration
programmes at the La Falda and Potrero Company Maker projects in
Chile and the Baborigame Company Maker project in Mexico. No
further exploration work is planned for these projects. Highlights
from the H1 2013 exploration programme for a number of our Company
Maker projects include the following:
Valeriano
At the Valeriano Company Maker project in Chile, in H1 2013 a
total of 2,421 metres were drilled to further test at depth the
high-grade copper gold porphyry system encountered in the 2012
drilling campaign. Further tests of the mineralised body at a depth
of 1.5 km yielded positive results. The drilling campaign at
Valeriano was concluded in Q2 2013 and the Company plans to
recommence drilling at the end of the winter season at the end of
Q3 2013 to continue testing the porphyry system at depth and to
define the extension and continuity of the mineralised system.
Mercurio
In H1 2013, a total of 2,898 metres of drilling were carried out
at the Mercurio Company Maker project in Mexico, focused on the
Barite zone. In H2 2013, the Company plans to continue surface
exploration in the North West area of the property.
Pachuca
The Pachuca project is located in Mexico and was added to the
Company's project pipeline as a Company Maker project in Q2 2013.
The Pachuca property encompasses approximately 19,000 hectares of
mineral rights in and around the Pachuca silver-gold mining
district. Historic production from the Pachuca district totals
approximately 1.4 billion ounces of silver and over 7.0 million
ounces of gold, making it one of the largest silver-gold districts
in the world. The Company's property does not include the central
Pachuca property where historical production has taken place, but
rather focuses on the northern area of the property.
Exploration work at Pachuca is currently focused on the
reinterpretation and re-logging of the San Juan Gallo and Raquel
areas of the property for further drill testing. In addition, 36
veins have been identified within the Pachuca Norte concessions to
date, of which only a small number have been explored in previous
exploration campaigns.
Julieta
At the Julieta Company Maker project in Peru, in H1 2013 a
surface mapping programme was completed and a new area with
breccias was discovered, showing robust mineralised surface
geochemistry. The Company plans to commence a drilling campaign at
the Julieta property in H2 2013.
Medium Scale projects
The Company's project pipeline also contains various Medium
Scale properties in the prospects and drill target categories.
These projects each have the potential to contribute 5-10 million
silver equivalent ounces of production per year and tend to be low
sulphidation epithermal gold/silver type deposits with varying base
metal content and are typically mined underground. Highlights from
the H1 2013 exploration programme for a number of our Medium Scale
projects include the following:
Fresia
At the Fresia Medium Scale project in Peru, geological mapping
and geochemistry campaigns were completed in H1 2013.
Cuello Cuello
At the Cuello Cuello Medium Scale project in Peru, during H1
2013, a total of 310 metres were drilled. This was the second
drilling programme carried out at the property and near surface
mineralised structures were again intersected, and two structural
trends were identified. Metallurgical tests on ore from these
structures show that some areas of the deposit are amenable to
cyanide leaching with good recoveries. The Company is currently
evaluating the economics of the project before defining the next
phase of the exploration programme.
San Martin
Drilling commenced in Q2 2013 at the San Martin Medium Scale
project in Peru. A total of 3,003 metres of exploration drilling
were carried out to explore the continuity of quartz veins outside
of the Rioacite dome. Holes intercepted structures with good
mineralisation including sphalerite, galena and red silver, and
high- grade gold and silver mineralisation is expected. In H2 2013
further drilling will be carried out along the favourable trend to
test the extension and continuity of mineralisation. In addition, a
comprehensive geological surface exploration programme will be
carried out over the entire property to target similar structures
and generate further drilling targets. Significant intercepts
included(9) :
Intercept Results
------------ ----------------------------------------
Paloma SM13-004: 0.10m at 1.96 g/t Au & 2,270
g/t Ag
SM13-001: 1.15m at 1.83 g/t Au & 1,362
g/t Ag
SM13-003: 0.20m at 5.25 g/t Au & 845
g/t Ag
------------ ----------------------------------------
Ramal Techo SM13-004: 0.41m at 5.92 g/t Au & 1,503
g/t Ag
SM13-005: 0.20m at 2.99 g/t Au & 1,480
g/t Ag
------------ ----------------------------------------
FINANCIAL REVIEW
Key performance indicators:
(before exceptional items, unless otherwise indicated)
$000 unless otherwise indicated Six months to 30 June 2013 Six months to 30 June 2012 % change
------------------------------------------------- --------------------------- --------------------------- ---------
Net Revenue(1) 308,577 354,504 (13)
Attributable silver production (koz) 6,251 6,887 (9)
Attributable gold production (koz) 57.88 55.94 3
Cash costs ($/oz Ag co-product) (2) 13.35 12.77 5
Cash costs ($/oz Au co-product) (2) 785 708 11
Adjusted EBITDA(3) 90,410 168,353 (46)
(Loss) / profit from continuing operations (pre
exceptional) (25,215) 54,555 (146)
(Loss) / profit from continuing operations (post
exceptional) (38,427) 52,755 (173)
Basic Earnings per share (pre exceptional) (0.10) 0.08 (225)
Basic Earnings per share (post exceptional) (0.10) 0.08 (225)
Cash flow from operating activities (4) 4,279 64,096 (93)
------------------------------------------------- --------------------------- --------------------------- ---------
(1) Revenue presented in the financial statements is disclosed
as net revenue (in this Financial Review it is calculated as gross
revenue
less commercial discounts).
(2) Includes Hochschild's operations: Arcata, Pallancata and San
Jose. Cash costs are calculated to include cost of sales, treatment
charges, and selling expenses before exceptional items less
depreciation included in cost of sales.
(3) Adjusted EBITDA is calculated as profit from continuing
operations before exceptional items, net finance costs and income
tax plus depreciation and exploration expenses other than personnel
and other exploration related fixed expenses.
(4) Cash flow from operations is calculated as profit for the
year from continuing operations after exceptional items, plus the
add-back of non-cash items within profit for the year (such as
depreciation and amortisation, impairments and write-off of assets,
gains/losses on sale of assets, amongst others) plus/minus changes
in liabilities/assets such as trade and other payables, trade and
other receivables, inventories, net tax assets, net deferred income
tax liabilities, amongst others.
The reporting currency of Hochschild Mining plc is U.S. dollars.
In discussions of financial performance, the Company removes the
effect of exceptional items, unless otherwise indicated, and in the
income statement results are shown both pre and post such
exceptional items. Exceptional items are those items which, due to
their nature or the expected infrequency of the events giving rise
to them, need to be disclosed separately on the face of the income
statement to enable a better understanding of the financial
performance of the Company and to facilitate comparison with prior
years.
Revenue
Gross revenue: Gross revenue from continuing operations
decreased by 14% to $325.2 million in H1 2013 (H1 2012: $378.0
million) driven by lower silver and gold prices. This effect was
partially offset by higher ounces sold, mainly due to the temporary
accumulation of inventory at San Jose in H1 2012.
Silver: Gross revenue from silver decreased by 21% in H1 2012 to
$210.9 million (H1 2012: $268.0 million) as a result of lower
prices. The total amount of silver ounces sold in H1 2013 rose to
9,153 koz (H1 2012: 8,596 koz) mainly due to the temporary
accumulation of inventory at San Jose in H1 2012.
Gold: Gross revenue from gold increased by 4% in H1 2013 to
$114.3 million (H1 2012: $110.0 million) as a result of higher
sales volumes; this effect was partially offset by lower gold
prices. The total amount of gold ounces sold in H1 2013 increased
to 83.6 koz (H1 2012: 65.9 koz) mainly due to the temporary
accumulation of inventory at San Jose in H1 2012.
Gross average realised sales prices
The following table provides figures for average realised prices
and ounces sold for H1 2013 and H1 2012:
Average realised prices Six months to Six months
30 June 2013 to 30 June
2012
----------------------------------- -------------- ------------
Silver ounces sold (koz) 9,153 8,596
Avg. realised silver price ($/oz) 23.04 31.18
Gold ounces sold (koz) 83.56 65.91
Avg. realised gold price ($/oz) 1,367 1,669
----------------------------------- -------------- ------------
Commercial discounts
Commercial discounts refer to refinery treatment charges,
refining fees and payable deductions for processing concentrates,
and are discounted from gross revenue on a per tonne basis
(treatment charge), per ounce basis (refining fees) or as a
percentage of gross revenue (payable deductions). In H1 2013, the
Company recorded commercial discounts of $16.6 million (H1 2012:
$23.7 million). Lower commercial discounts in H1 2013 resulted
mainly from the completion of the Arcata dore project in Q4 2012,
as well as the impact of lower prices.
Net revenue
Net revenue decreased by 13% to $308.6 million (H1 2012: $354.5
million), comprising silver revenue of $198.6 million and gold
revenue of $110.0 million. In H1 2013, silver accounted for 64% and
gold 36% of the Company's consolidated net revenue compared to 70%
and 30% respectively in H1 2012.
Net revenue by mine
$000 unless otherwise indicated Six months to 30 June 2013 Six months to 30 June 2012 % change
--------------------------------- --------------------------- --------------------------- ---------
Silver revenue
Arcata 60,334 83,294 (28)
Ares 8,604 5,551 (55)
Pallancata 79,056 110,46 (28)
San Jose 62,431 67,946 (8)
Moris 475 767 (38)
Commercial discounts (12,323) (19,867) (38)
Net silver revenue 198,577 248,153 (20)
Gold revenue
Arcata 11,686 13,026 (10)
Ares 17,825 16,421 9
Pallancata 18,166 19,188 (5)
San Jose 58,367 53,520 9
Moris 8,209 7,846 5
Commercial discounts (4,285) (3,860) 11
Net gold revenue 109,968 106,141 4
--------------------------------- --------------------------- --------------------------- ---------
Other revenue(1) 32 210 (85)
--------------------------------- --------------------------- --------------------------- ---------
Net revenue 308,577 354,504 (13)
--------------------------------- --------------------------- --------------------------- ---------
(1) Other revenue includes revenue from sale of energy in Peru
and revenue from administrative services in Mexico.
Costs
Total pre-exceptional cost of sales in the first half increased
34% to $233.4 million (H1 2012: $174.4 million) as a result of
higher sales volumes (following the accumulation of inventory in
San Jose in H1 2012) and higher costs. Direct production costs
increased by 14% to $153.0 million (H1 2012: $134.4 million) mainly
due to increased tonnages and higher costs per tonne. Further
details can be found in the Operating Review. Depreciation and
amortisation was higher than H1 2012, at $65.0 million (H1 2012:
$55.7 million). Other costs, which principally include workers'
profit sharing, fell significantly, to $3.9 million (H1 2012: $8.8
million). The cost resulting from change in inventories was $(11.6)
million in H1 2013 as opposed to a positive $24.5 million in H1
2012 reflecting the accumulation of inventory at San Jose in H1
2012. Finally, post-exceptional cost of sales in H1 2013 totaled
$233.6 million due to $0.2 million of termination benefits paid to
workers between April and May 2013 following the restructuring as
part of the Company's cashflow optimisation programme.
Unit cost per tonne
The Company reported an overall increase in unit cost per tonne
excluding royalties at its main operations of 7% in H1 2013 to
$104.4 (H1 2012: $97.6) principally driven by inflation in
Argentina. Further detail on unit costs per tonne can be found in
the Operating Review on page 6.
Unit cost per tonne by operation (including royalties)*:
Operating unit ($/tonne) Unit cost per Unit cost per % change
tonne H1 2013 tonne H1 2012
-------------------------- --------------- --------------- ---------
Main operations 107.7 102.1 6
Peru 75.5 73.0 3
Arcata 83.4 84.0 (1)
Pallancata 69.0 65.7 5
-------------------------- --------------- --------------- ---------
Argentina 229.9 198.6 16
San Jose 229.9 198.6 16
-------------------------- --------------- --------------- ---------
Others
Ares 145.9 130.4 12
Total underground 111.8 105.7 6
-------------------------- --------------- --------------- ---------
*Unit cost per tonne is calculated by dividing mine and geology
costs by extracted tonnage and plant and other costs by treated
tonnage.
Unit cost per tonne by operation (excluding royalties)*:
Operating unit ($/tonne) Unit cost per Unit cost per % change
tonne H1 2013 tonne H1 2012
-------------------------- --------------- --------------- ---------
Main operations 104.4 97.6 7
Peru 75.0 71.6 5
Arcata 82.2 80.5 2
Pallancata 69.0 65.7 5
-------------------------- --------------- --------------- ---------
Argentina 216.3 185.3 17
San Jose 216.3 185.3 17
-------------------------- --------------- --------------- ---------
Others
Ares 145.9 130.4 12
Total underground 108.9 101.9 7
-------------------------- --------------- --------------- ---------
*Unit cost per tonne is calculated by dividing mine and geology
costs by extracted tonnage and plant and other costs by treated
tonnage.
Cash costs
Cash costs include cost of sales, commercial deductions and
selling expenses before exceptional items, less depreciation
included in cost of sales.
Co-product silver/gold cash costs are total cash costs
multiplied by the percentage of revenue from silver/gold, divided
by the number of silver/gold ounces sold in the first half. Silver
cash costs increased from $13.5 to $14.0 per ounce and gold cash
costs increased from $751 to $851 per ounce. Silver and gold cash
costs at the Company's main operations (Arcata, Pallancata and San
Jose) increased from $12.8 to $13.4 per ounce and from $708 to $785
per ounce, respectively. The increase in silver cash costs resulted
from higher production costs at all mines and lower average grades
in line with the Company's policy of mining close to the average
reserve grade.
By-product silver/gold cash costs are total cash costs less
revenue from gold/silver, divided by the number of silver/gold
ounces sold in the first half. By-product cash costs for the period
were $9.3 per silver ounce (H1 2012: $6.4 per silver ounce) and
($143) per gold ounce (H1 2012: ($1,564) per gold ounce).
Cash cost reconciliation*:
$000 Six months Six months % change
to 30 June to 30 June
2013 2012
--------------------------- ------------ ------------- ---------
Group Cash Cost 199,474 165,307 21
--------------------------- ------------ ------------- ---------
(+) Cost of sales 233,371 174,352 34
(-) Depreciation in Cost
of Sales (67,462) (49,029) 38
(+) Selling expenses 16,408 15,908 3
(+) Commercial deductions 17,157 24,076 (29)
Gold 4,301 3,870 11
Silver 12,856 20,206 (36)
--------------------------- ------------ ------------- ---------
Revenue 308,577 354,504 (13)
--------------------------- ------------ ------------- ---------
Gold 109,968 106,14 4
Silver 198,577 248,152 (20)
Others 32 210 -
--------------------------- ------------ ------------- ---------
Ounces Sold
--------------------------- ------------ ------------- ---------
Gold 83.56 65.91 27
Silver 9,153 8,596 6
--------------------------- ------------ ------------- ---------
Group Cash Cost ($/oz)
--------------------------- ------------ ------------- ---------
Co product Au 851 751 13
Co product Ag 14.03 13.47 4
By product Au (143) (1,564) (91)
By product Ag 9.31 6.43 45
--------------------------- ------------ ------------- ---------
* Cash costs are calculated to include cost of sales, treatment
charges, and selling expenses before exceptional items less
depreciation
included in cost of sales.
Cash costs are calculated based on pre-exceptional figures.
Co-product cash cost per ounce is the cash cost allocated to the
primary metal (allocation based on proportion of revenue), divided
by the ounces sold of the primary metal. By-product cash cost per
ounce is the total cash cost minus revenue and commercial discounts
of the by-product divided by the ounces sold of the primary
metal.
Administrative expenses
Administrative expenses before exceptional items decreased by
17% to $29.0 million (H1 2012: $34.1 million) primarily due to the
impact of the cashflow optimisation programme. Post-exceptional
administrative expenses in H1 2013 totaled $30.0 million and
include an expense of $1.0 million due to termination benefits paid
to workers between April and May 2013 following the restructuring
as part of the above mentioned cashflow optimisation programme.
Exploration expenses
In H1 2013, pre-exceptional exploration expenses, decreased by
13% to $27.8 million (H1 2012: $30.3 million). Post-exceptional
exploration expenses in H1 2013 totaled $29.7 million and include
an expense of $1.9 million due to termination benefits paid to
workers between April and May 2013 following the restructuring as
part of the Company's cashflow optimisation programme.
In addition, in H1 2013, the Company capitalised $0.3 million
relating to brownfield exploration compared to $8.0 million in H1
2012, bringing the total investment in exploration for the six
month period to 30 June 2013 to $28.1 million (H1 2012: $38.4
million). As part of the Company's cashflow optimisation programme,
the 2013 exploration budget has been reduced to $50 million, with
the majority of the exploration spend to be expensed through the
Company's income statement.
Selling expenses
Selling expenses increased to $16.4 million (H1 2012: $15.9
million), reflecting higher sales in H1 2013 following the
accumulation of inventory at San Jose in H1 2012.
Other income/expenses
Other income before exceptional items was $3.5 million (H1 2012:
$2.6 million). There were no exceptional items related to other
income in H1 2013.
Other expenses before exceptional items reached $4.3 million (H1
2012: $4.5 million). There were no exceptional items related to
other expenses in H1 2013.
Profit from continuing operations before exceptional items, net
finance costs, foreign exchange loss and income tax
Profit from continuing operations before exceptional items, net
finance costs, foreign exchange loss and income tax decreased to
$1.2 million (H1 2012: $97.9 million) as a result of the effects
detailed above.
Adjusted EBITDA
Adjusted EBITDA before exceptional items decreased by 46% over
the period to $90.4 million (H1 2012: $168.3 million) driven
primarily by lower prices. Adjusted EBITDA is calculated as profit
from continuing operations before exceptional items, net finance
costs and income tax plus depreciation and exploration expenses
other than personnel and other exploration related fixed
expenses.
$000 unless otherwise indicated Six months to 30 June 2013 Six months to 30 June 2012 % change
------------------------------------------------- --------------------------- --------------------------- ---------
Profit from continuing operations before
exceptional items, net finance cost, foreign
exchange
loss and income tax 1,195 97,915 (99)
Operating margin 0% 28%
Depreciation and amortisation in cost of sales 67,462 49,029 38
Depreciation and amortisation in administrative
expenses 1,969 1,059 86
Exploration expenses 27,770 30,337 (8)
Personnel and other exploration related fixed
expenses (7,986) (9,987) (20)
------------------------------------------------- --------------------------- --------------------------- ---------
Adjusted EBITDA 90,410 168,353 (46)
------------------------------------------------- --------------------------- --------------------------- ---------
Adjusted EBITDA margin 29% 47%
------------------------------------------------- --------------------------- --------------------------- ---------
Impact of the Group's investments in joint ventures and
associates
The Company's pre-exceptional share of the profit/(loss) after
tax of associates totaled $5.9 million in H1 2013 (H1 2012: $3.8
million). In both H1 2013 and H1 2012, the Company's share in
associates reflects profits related to its holdings in Gold
Resource Corporation ('GRC'). After exceptional items, the share of
the profit/(loss) after tax of associates totaled $5.9 million.
The Company recognised an exceptional gain in H1 2013 of $107.9
million due to the loss of significant influence with regards to
its investment in GRC, and its resulting reclassification from an
associate to an available-for-sale asset. Equity accounting of the
investment was discontinued as a result of developments during the
period that led the Company to conclude that it no longer had the
ability to influence significantly that company's strategic,
operational and financial direction. Consequently, the asset is now
recognised as an available-for-sale asset at fair value. The
difference in the asset value that arises on reclassification is
recognised in the income statement. The subsequent decrease of 33%
in GRC's share price between the reclassification as at the end of
March and the end of H1 2013, has resulted in an impairment in the
value of the available-for-sale asset and a charge of $62.0 million
in H1 2013.
Finance income and finance costs
Finance income before exceptional items at $5.3 million was
significantly higher than that of last year (H1 2012: $0.7 million)
due to interest on deposits on the cash balance in Peruvian Soles
as well as dividend payments of US$1.3 million from Gold Resource
Corporation.
Finance costs before exceptional items was $7.3 million (H1
2012: $7.1 million), in line with H1 2012.
Foreign exchange losses
The Company recognised a foreign exchange loss of $15.4 million
in H1 2013 (H1 2012: $1.2 million loss). This loss is principally
the result of the impact of an 11% devaluation of the Peruvian Sol
versus the US Dollar on cash deposits in Peru. This impact will be
more than offset by the positive effects of the local currency
weakening on the Company's unit costs and capital expenditure
programme.
Income tax
The Company's pre-exceptional income tax was $14.9 million in H1
2013 (H1 2012: $39.5 million). Despite having losses from
continuing operations, income tax charges are mainly explained by
foreign exchange adjustments and non-deductible expenses, mainly
exploration expenses. The Company's post-exceptional income tax was
$(10.3) million in H1 2013 (H1 2012: $39.5 million).
Exceptional items
Exceptional items in H1 2013 totaled $(13.2) million after tax
(H1 2012: $(1.8) million). The tables below detail the exceptional
items excluding the exceptional tax effect that amounted to $25.2
million, comprising $0.7 million of tax related to termination
benefits and $24.5 million related to the impairment of assets and
projects.
Positive exceptional items:
Main items $000 Description of main items
----------------------------------------------------- -------- -----------------------------------------------------
Gain on reclassification of Gold Resource Corp 107,942 Gain on the reclassification of Gold Resource
shares Corporation shares from investment accounted
under the equity method to available-for-sale
financial assets of US$107,942,000 as a result
of the Company ceasing to have the ability to
exercise significant influence over Gold Resource
Corporation. Refer to explanation on page 19.
Reversal of impairment 13,000 Reversal of the impairment of the San Felipe
property of US$13,000,000.
----------------------------------------------------- -------- -----------------------------------------------------
Negative exceptional items:
Main items $000 Description of main items
----------------------------------------------------- --------- ----------------------------------------------------
Termination benefits paid to workers (3,117) Termination benefits paid to workers between April
and May 2013 following the restructuring
plan approved by management during the first half
of 2013, amounting to US$3,117,000 (Cost
of sales: US$200,000, administrative expenses:
US$1,006,000 and exploration expenses:
US$1,911,000).
Impairment of assets of San Jose and Ares mine units (74,930) Impairment of assets of the San Jose mine unit of
and Azuca project US$40,869,000, the Azuca project of US$30,290,000
and the Ares unit of US$3,771,000. The impairment
of San Jose results from the fall in metal
prices and the current economic situation in
Argentina. With regards to Azuca, the Company
decided to put on hold the process of completing a
Feasibility Study. The Company used current
market fair values to value the existing ounces.
The impairment of Ares is mainly a result
of the drop in metal prices.
Other Impairments (81,320) The impairment of investments in Gold Resource
Corp. (US$62,018,000), International Minerals
(US$12,920,000), Pembrook Mining Corp.
(US$5,745,000), Mariana Resources Ltd.
(US$281,000),
Northern Superior Resources Inc. (US$227,000), Iron
Creek Capital Corp. (US$103,000), Empire
Petroleum Corp. (US$22,000) and Brionor Resources
(US$4,000). The impairments are mainly explained
by a significant drop in market prices for these
mining companies.
----------------------------------------------------- --------- ----------------------------------------------------
Cash flow & balance sheet review:
Cash flow:
$000 Six months to Six months to Change
30 June 2013 30 June 2012
--------------------------------- -------------- -------------- ---------
Net cash generated from
operating activities 4,279 64,096 (59,817)
Net cash used in investing
activities (130,463) (115,499) (14,964)
Cash flows generated /
(used) in financing activities 20,764 (31,943) 52,707
--------------------------------- -------------- -------------- ---------
Net (decrease) / increase
in cash and cash equivalents
during the period (105,420) (83,346) (22,074)
--------------------------------- -------------- -------------- ---------
Total cash generated decreased from $(83.3) million in H1 2012
to $(105.4) million in H1 2013 ($22.1 million difference).
Operating cashflow decreased by $59.8 million mainly due to lower
commodity prices. Net cash used in investing activities increased
by $15.0 million primarily due to capital expenditure on the
Inmaculada and Crespo Advanced Projects during H1 2013 of $51.1
million (H1 2012: $26.9 million). Finally, cash flows generated
from financing activities increased by $52.7 million primarily as a
result of pre-shipment borrowings raised in Peru and Argentina.
Working capital:
$000 unless otherwise indicated As at As at
30 June 2013 30 June 2012
-------------------------------------------- -------------- --------------
Trade and other receivables 155,682 161,300
Inventories 68,905 78,148
Net other financial assets / (liabilities) (16,123) (5,264)
Net Income tax receivable / (payable) 23,137 6,353
Trade and other payables and provisions (173,740) (229,695)
-------------------------------------------- -------------- --------------
Working Capital 57,861 10,842
-------------------------------------------- -------------- --------------
The Company's working capital position increased to $57.9
million in H1 2013 from $10.8 million in H1 2012. This was
primarily explained by cash optimisation measures taken in Q2 2013
that reduced trade and other payables (these include reductions
relating to cost and capital expenditure reductions, negotiations
with suppliers and personnel expenses).
Net cash:
$000 unless otherwise indicated As at As at
30 June 2013 31 December
2012
--------------------------------- -------------- -------------
Cash and cash equivalents 239,274 358,944
Long term borrowings (107,944) (106,850)
Short term borrowings (39,775) (6,973)
--------------------------------- -------------- -------------
Net cash 91,555 245,121
--------------------------------- -------------- -------------
The Company reported net cash of $91.6 million as at 30 June
2013 (FY 2012: $245.1 million) reflecting the impact of capital
expenditure on the Company's Advanced Projects of $51.1 million as
well as the final payment for the acquisition of Andina Minerals
Inc amounting to $14 million, and 2012 related expenses paid in H1
2013 (mainly taxes in Argentina). Finally, a foreign exchange loss
on cash deposits in Peru of $15.4 million in H1 2013 will be more
than offset by the positive effects of weakening local currency on
unit costs and capital expenditure.
The convertible bond has a current conversion price of GBP3.85
and, under its terms, the Company is entitled to force conversion
of the bonds at any time if, for a period of 20 out of 30
consecutive days, the average share price, calculated under the
terms of the bonds, exceeds 130% of the conversion price
(GBP5.01).
In March 2013, the Company announced that its 60% owned joint
venture Minera Suyamarca S.A.C had negotiated a $140 million
secured loan facility with BBVA Continental and Banco Credito del
Peru to partially finance the initial capital expenditure for the
Inmaculada project. The loan facility has a term of seven years
with no principal payable for the first two years. The interest
rate is based on the 3-month LIBOR rate plus 3.0%, with customary
closing fees and charges. The loan will be non-recoursable to
Hochschild as well as to International Minerals Corporation who
owns the remaining 40% of Suyamarca.
Capital expenditure(1)
$(000) unless otherwise indicated Six months to 30 Six months
June 2013 to 30 June
2012
----------------------------------- ----------------- ------------
Arcata 22,816 21,891
Ares 2,798 3,172
Selene 672 930
Pallancata 24,908 25,920
San Jose 27,156 32,190
Moris 917 -
Inmaculada 39,970 21,018
Crespo 11,177 5,834
Azuca 3,194 4,706
Volcan 3,253 -
Other 1,347 574
----------------------------------- ----------------- ------------
Total 138,208 116,235
----------------------------------- ----------------- ------------
(1) Includes additions in property, plant and equipment and
evaluation and exploration assets (confirmation of resources) and
excludes increases in closure of mine assets.
H1 2013 capital expenditure of $138.2 million (H1 2012: $116.2
million) includes operations capital expenditure of $79.0 million,
capitalised exploration costs of $0.3 million in respect of the
Company's operating mines, $51.1 million capitalised in respect of
the Advanced Projects (Inmaculada and Crespo), US$6.4 million in
Azuca and Volcan, and administrative capital expenditure of $1.3
million.
Interim Dividend
The Board has taken the decision not to pay an interim dividend
in light of the impact of precious metals price falls on the
Company's financial results in H1 2013. The Company remains
committed to the long term principle of shareholder returns and the
Board intends to review dividend payouts subject to the overall
full year financial position.
RISKS
The principal risks and uncertainties facing the Company in
respect of the year ended 31 December 2012 were set out in detail
in the Risk Management section of the 2012 Annual Report and in
Note 36 to the 2012 Consolidated Financial Statements.
The key risks disclosed in the 2012 Annual Report (available at
www.hochschildmining.com) are categorised as:
- Financial risks which include commodity price risk,
counterparty credit risk and liquidity risk;
- Operational risks including the risks associated with
operational performance, delivery of projects, business
interruption, exploration & reserve and resource replacement
and personnel;
- Macroeconomic risks which include political, legal and regulatory risks; and
- Sustainability risks including health and safety,
environmental and community relations risks.
These risks continue to apply to the Company in respect of the
remaining six months of the current financial year.
Given the challenging price environment during H1 2013, the
Board has considered in more detail the issues resulting from the
heightened level of commodity price risk and, in addition, those
specific to the implementation of the Company's cashflow
optimisation programme. These issues relate to personnel, community
relations, feasibility of projects and operations, and
exploration.
GOING CONCERN
After considering budgets and cash flow forecasts, the Directors
confirm that, having assessed the impact of the cashflow
optimisation programme and medium-term cashflow projections under a
number of possible scenarios, they are satisfied that the Company
has sufficient resources to continue in operation for the
foreseeable future. Accordingly, adoption of the going concern
basis in the preparation of the financial statements contained
herein is considered to be appropriate.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that, to the best of their knowledge, the
interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting" as
adopted by the European Union and that the interim management
report includes a fair review of the information required by
Disclosure and Transparency Rules 4.2.7 and 4.2.8.
A list of current Directors and their functions is maintained on
the Company's website.
For and on behalf of the Board
Ignacio Bustamante
Chief Executive Officer
20 August 2013
INDEPENDENT REVIEW REPORT TO HOCHSCHILD MINING PLC
Introduction
We have been engaged by Hochschild Mining plc (the Company) to
review the interim condensed consolidated set of financial
statements in the half-yearly financial report for the six months
ended 30 June 2013 which comprises the Interim condensed
consolidated income statement, the Interim condensed consolidated
statement of comprehensive income, the Interim condensed
consolidated statement of financial position, the Interim condensed
consolidated statement of cash flows, the Interim condensed
consolidated statement of changes in equity and the related notes 1
to 19. We have read the other information contained in the half
yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim condensed consolidated set of financial
statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The interim condensed consolidated set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European
Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the interim condensed consolidated set of financial statements in
the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the interim condensed consolidated set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2013 is not prepared, in all material
respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Ernst & Young LLP
London
20 August 2013
Interim condensed consolidated income statement
Six-months ended 30 Six-months ended 30
Notes June 2013 (Unaudited) June 2012 (Unaudited)
----- ------------------------------------- -------------------------------------
Exceptional Exceptional
Before items Before items
exceptional (Note exceptional (Note
items 6) Total items 6) Total
----------- ----------- --------- ----------- ----------- ---------
US$(000)
Continuing
operations
Revenue 4 308,577 - 308,577 354,504 - 354,504
Cost of sales 5 (233,371) (200) (233,571) (174,352) - (174,352)
----------- ----------- --------- ----------- ----------- ---------
Gross profit 75,206 (200) 75,006 180,152 - 180,152
Administrative expenses (29,039) (1,006) (30,045) (34,134) - (34,134)
Exploration expenses (27,770) (1,911) (29,681) (30,337) - (30,337)
Selling expenses (16,408) - (16,408) (15,908) - (15,908)
Other income 3,501 - 3,501 2,627 - 2,627
Other expenses (4,295) - (4,295) (4,485) - (4,485)
Impairment and
write-off
of non-financial
assets
(net) - (61,930) (61,930) - 238 238
(Loss)/profit from
continuing operations
before net finance
income/(cost), foreign
exchange gain/(loss)
and income tax 1,195 (65,047) (63,852) 97,915 238 98,153
Share of post tax
profit/(losses) of
associates and joint
ventures accounted
under the equity
method 5,921 - 5,921 3,766 (948) 2,818
Gain on transfer from
investment accounted
under the equity
method
to available-for-sale
financial assets - 107,942 107,942 - - -
Finance income 7 5,311 - 5,311 671 - 671
Finance costs 7 (7,331) (81,320) (88,651) (7,099) (1,090) (8,189)
Foreign exchange loss (15,373) - (15,373) (1,197) - (1,197)
----------- ----------- --------- ----------- ----------- ---------
(Loss)/profit from
continuing operations
before income tax (10,277) (38,425) (48,702) 94,056 (1,800) 92,256
Income tax expense 8 (14,938) 25,213 10,275 (39,501) - (39,501)
----------- ----------- --------- ----------- ----------- ---------
(Loss)/profit for
the period from
continuing
operations (25,215) (13,212) (38,427) 54,555 (1,800) 52,755
Attributable to:
Equity shareholders
of the Company (34,406) (49) (34,455) 28,430 (1,917) 26,513
Non-controlling
interests 9,191 (13,163) (3,972) 26,125 117 26,242
----------- ----------- --------- ----------- ----------- ---------
(25,215) (13,212) (38,427) 54,555 (1,800) 52,755
=========== =========== ========= =========== =========== =========
Six-months ended 30 Six-months ended 30
Notes June 2013 (Unaudited) June 2012 (Unaudited)
------ ---------------------------------- ---------------------------------
Exceptional Exceptional
Before items Before items
exceptional (Note exceptional (Note
items 6) Total items 6) Total
US$(000)
Basic earnings per
ordinary share from
continuing operations
and for the period
(expressed in U.S.
dollars per share) (0.10) - (0.10) 0.08 - 0.08
=========== =========== ====== =========== =========== =====
Diluted earnings per
ordinary share from
continuing operations
and for the period
(expressed in U.S.
dollars per share) (0.10) - (0.10) 0.08 - 0.08
=========== =========== ====== =========== =========== =====
Interim condensed consolidated statement of comprehensive
income
Six-months ended
Notes 30 June
------ ---------------------------------
2013 (Unaudited) 2012 Unaudited)
---------------- ---------------
US$(000)
(Loss)/profit for the period (38,427) 52,755
Other comprehensive income to be reclassified
to profit or loss in subsequent periods:
Exchange differences on translating foreign
operations (910) (164)
Change in fair value of available-for-sale
financial assets (77,289) (6,567)
Recycling of the loss on available-for-sale
financial assets 81,191 266
Deferred income tax relating to components
of other comprehensive income - 615
---------------- ---------------
Other comprehensive gain/(loss) for the
period, net of tax 2,992 (5,850)
---------------- ---------------
Total comprehensive (expense)/income
for the period (35,435) 46,905
---------------- ---------------
Total comprehensive (expense)/income
attributable to:
Equity shareholders of the Company (31,463) 20,663
Non-controlling interests (3,972) 26,242
---------------- ---------------
(35,435) 46,905
================ ===============
Interim condensed consolidated statement of financial
position
As at 30
June As at 31
2013 December
Notes (Unaudited) 2012
----- ------------- ----------
US$(000)
ASSETS
Non-current assets
Property, plant and equipment 9 684,776 636,555
Evaluation and exploration assets 10 354,578 396,557
Intangible assets 10 44,334 43,903
Investments accounted under equity
method - 78,188
Available-for-sale financial assets 11 142,609 30,609
Trade and other receivables 9,931 8,613
Deferred income tax assets 1,349 856
1,237,577 1,195,281
------------- ----------
Current assets
Inventories 68,905 76,413
Trade and other receivables 145,751 166,173
Income tax receivable 28,219 23,023
Other financial assets 12 51 150
Cash and cash equivalents 14 239,274 358,944
------------- ----------
482,200 624,703
------------- ----------
Total assets 1,719,777 1,819,984
============= ==========
EQUITY AND LIABILITIES
Capital and reserves attributable
to shareholders of the Parent
Equity share capital 158,644 158,637
Share premium 396,021 395,928
Treasury shares (898) (898)
Other reserves (211,809) (214,946)
Retained earnings 675,417 720,011
------------- ----------
1,017,375 1,058,732
Non-controlling interests 258,889 264,518
Total equity 1,276,264 1,323,250
------------- ----------
Non-current liabilities
Borrowings 15 107,944 106,850
Provisions 71,936 76,550
Deferred income 20,000 -
Deferred income tax liabilities 80,798 95,715
------------- ----------
280,678 279,115
------------- ----------
Current liabilities
Trade and other payables 95,215 149,585
Other financial liabilities 12 16,174 6,891
Borrowings 15 39,775 6,973
Provisions 6,589 26,688
Income tax payable 5,082 27,482
------------- ----------
162,835 217,619
------------- ----------
Total liabilities 443,513 496,734
------------- ----------
Total equity and liabilities 1,719,777 1,819,984
============= ==========
Interim condensed consolidated statement of cash flows
Six-months ended
Notes 30 June
----- ----------------------------------
2013 (Unaudited) 2012 (Unaudited)
---------------- ----------------
US$ (000)
Cash flows from operating activities
Cash generated from operations 19,695 93,753
Interest received 1,614 1,335
Interest paid (3,303) (4,877)
Payments of mine closure costs (1,176) (2,476)
Income tax paid (12,551) (23,639)
---------------- ----------------
Net cash (used in)/generated from
operating activities 4,279 64,096
---------------- ----------------
Cash flows from investing activities
Purchase of property, plant and equipment (123,864) (100,902)
Purchase of evaluation and exploration
assets (11,707) (19,481)
Purchase of intangibles (678) -
Dividends received 4,098 4,827
Acquisition of subsidiary (14,615) -
Deferred income received related
to San Felipe property 16,000 -
Proceeds from sale of property, plant
and equipment 303 57
Net cash used in investing activities (130,463) (115,499)
---------------- ----------------
Cash flows from financing activities
Proceeds of borrowings 15 33,114 44,963
Repayment of borrowings 15 (412) (45,297)
Dividends paid 16 (16,318) (31,609)
Capital contribution from non-controlling
interest 4,380 -
Cash flows generated from/(used in)
financing activities 20,764 (31,943)
---------------- ----------------
Net decrease in cash and cash equivalents
during the period (105,420) (83,346)
Exchange difference (14,250) (578)
Cash and cash equivalents at beginning
of period 358,944 627,481
---------------- ----------------
Cash and cash equivalents at end
of period 14 239,274 543,557
================ ================
Interim condensed consolidated statement of changes in
equity
Other reserves
Capital
Unrealised and reserves
gain/(loss) attributable
on to
Equity available-for-sale Bond Cumulative Share-based Total shareholders
share Share Treasury financial equity translation Merger payment other Retained of the Non-controlling Total
Notes capital premium Shares assets component adjustment reserve reserve reserves earnings Parent interests Equity
Balance at 1
January
2013 158,637 395,928 (898) (3,330) 8,432 (10,447) (210,046) 445 (214,946) 720,011 1,058,732 264,518 1,323,250
------- ------- ----- ------- ----- -------- --------- --- --------- -------- --------- -------- ---------
Other
comprehensive
(loss) - - - 3,902 - (910) - - 2,992 - 2,992 - 2,992
Profit for the
period - - - - - - - - - (34,455) (34,455) (3,972) (38,427)
----- ------- ----- ---
Total
comprehensive
(loss)/income
for
the period - - - 3,902 - (910) - - 2,992 (34,455) (31,463) (3,972) (35,435)
Issuance of
shares 7 93 - - - - - - - - 100 - 100
Expiration of
dividends - - - - - - - - - - - (38) (38)
Capital
contribution
from
non-controlling
interest - - - - - - - - - - - 4,381 4,381
CEO LTIP - - - - - - - 145 145 - 145 - 145
Dividends paid
to
non-controlling
interests 16 - - - - - - - - - - - (6,000) (6,000)
Dividends 16 - - - - - - - - - (10,139) (10,139) - (10,139)
------- ------- ----- ------- ----- -------- --------- --- --------- -------- --------- -------- ---------
Balance at 30
June
2013 158,644 396,021 (898) 572 8,432 (11,357) (210,046) 590 (211,809) 675,417 1,017,375 258,889 1,276,264
======= ======= ===== ======= ===== ======== ========= === ========= ======== ========= ======== =========
Balance at 1
January
2012 158,637 395,928 (898) 5,058 8,432 (10,715) (210,046) 154 (207,117) 677,218 1,023,768 195,299 1,219,067
----- ------- ----- ---
Other
comprehensive
(loss)/income - - - (5,686) - (164) - - (5,850) - (5,850) - (5,850)
Profit for the
period - - - - - - - - - 26,513 26,513 26,242 52,755
----- ------- ----- ---
Total
comprehensive
(loss)/income
for
the period - - - (5,686) - (164) - - (5,850) 26,513 20,663 26,242 46,905
Capital
contribution
from
non-controlling
interest - - - - - - - - - - - 10,900 10,900
CEO LTIP - - - - - - - 145 145 - 145 - 145
Dividends paid
to
non-controlling
interests 16 - - - - - - - - - - - (24,877) (24,877)
Dividends 16 - - - - - - - - - (10,139) (10,139) - (10,139)
----- ------- ----- ---
Balance at 30
June
2012 158,637 395,928 (898) (628) 8,432 (10,879) (210,046) 299 (212,822) 693,592 1,034,437 207,564 1,242,001
======= ======= ===== ======= ===== ======== ========= === ========= ======== ========= ======== =========
Notes to the interim condensed consolidated financial
statements
1 Corporate Information
Hochschild Mining plc (hereinafter 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 20 August
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 June 2013 and 31
December 2012 and its financial performance and cash flows for the
periods ended 30 June 2013 and 30 June 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 International Financial Reporting Standards
('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 six months
ended 30 June 2013 and 2012 respectively:
Exploration
Six months San and Advanced Adjustments
ended 30 Ares Arcata Pallancata Jose Moris Projects Other and eliminations Total
June 2013 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
----------------- ------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Revenue
from external
customers 26,429 71,962 89,101 112,369 8,684 - 32 - 308,577
Inter segment
revenue - - - - - - 3,643 (3,643) -
Total revenue 26,429 71,962 89,101 112,369 8,684 - 3,675 (3,643) 308,577
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Segment
profit/(loss) (1,616) 18,797 24,049 13,104 3,298 (37,628) 2,702 6,211 28,917
Others(1) (77,619)
---------
Profit/(loss)
from continuing
operations
before income
tax (48,702)
---------
Assets
Capital
expenditure 2,798 22,816 25,580 27,156 917 51,281 7,660 - 138,208
Current
assets 13,749 12,380 33,265 72,477 2,524 1,514 516 - 136,425
Other non-current
assets 6,186 138,543 156,323 212,295 1,402 542,019 26,920 - 1,083,688
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Total segment
assets 19,935 150,923 189,588 284,772 3,926 543,533 27,436 - 1,220,113
Not reportable
assets(2) - - - - - - 499,664 - 499,664
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Total assets 19,935 150,923 189,588 284,772 3,926 543,533 527,100 - 1,719,777
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
(1) Comprised of administrative expenses of US$30,045,000, other
income of US$3,501,000, other expenses of US$4,295,000, impairment
of assets of US$61,930,000, 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$5,311,000, finance
costs of US$88,651,000, and foreign exchange loss of
US$15,373,000.
(2) Not reportable assets are comprised of investments accounted
under the equity method of US$Nil, available-for-sale financial
assets of US$142,609,000, other receivables of US$88,162,000,
income tax receivable of US$28,219,000, deferred income tax assets
of US$1,349,000, other financial assets of US$51,000, and cash and
cash equivalents of US$239,274,000.
Exploration
Six-months San and Advanced Adjustments
ended 30 Ares Arcata Pallancata Jose Moris Projects Other and eliminations Total
June 2012 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
----------------- ------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Revenue
from external
customers 21,972 85,521 122,049 116,139 8,613 - 210 - 354,504
Inter segment
revenue - - - - - - 3,265 (3,265) -
Total revenue 21,972 85,521 122,049 116,139 8,613 - 3,475 (3,265) 354,504
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Segment
profit/(loss) 3,837 43,717 62,425 49,638 3,779 (31,119) 2,137 (507) 133,907
Others(1) (41,651)
---------
Profit/(loss)
from continuing
operations
before income
tax 92,256
---------
Year ended
31 December
2012
Assets
Capital
expenditure 7,476 52,791 56,871 71,188 846 213,380 17,833 - 420,385
Current
assets 12,569 14,374 54,078 72,605 7,459 3,239 524 - 164,848
Other non-current
assets 11,035 127,091 156,199 251,813 839 500,599 29,439 - 1,077,015
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Total segment
assets 23,604 141,465 210,277 324,418 8,298 503,838 29,963 - 1,241,863
Not reportable
assets(2) - - - - - - 578,121 - 578,121
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
Total assets 23,604 141,465 210,277 324,418 8,298 503,838 608,084 - 1,819,984
------- ------- ---------- ------- ------- ------------- ------- ---------------- ---------
(1) Comprised of administrative expenses of US$34,134,000, other
income of US$2,627,000, other expenses of US$4,485,000, reversal of
impairment of assets of US$238,000, share of profit of associates
and joint ventures of US$2,818,000, finance income of US$671,000,
finance costs of US$8,189,000, and foreign exchange loss of
US$1,197,000.
(2) Not reportable assets are comprised of investments accounted
under the equity method of US$78,188,000, available-for-sale
financial assets of US$30,609,000, other receivables of
US$86,351,000, income tax receivable of US$23,023,000, deferred
income tax assets of US$856,000, other financial assets of
US$150,000 and cash and cash equivalents of US$358,944,000.
4 Revenue
Six-months ended
30 June
----------------------------------
2013 (Unaudited) 2012 (Unaudited)
---------------- ----------------
US$(000)
Gold (from dore bars) 63,026 48,636
Silver (from dore bars) 96,517 51,636
Gold (from concentrate) 46,942 57,505
Silver (from concentrate) 102,060 196,517
Services 32 210
308,577 354,504
================ ================
5 Cost of sales before exceptional items
Included in cost of sales are:
Six-months ended
30 June
----------------------------------
2013 (Unaudited) 2012 (Unaudited)
---------------- ----------------
US$(000)
Depreciation and amortisation 66,171 56,717
Personnel expenses 63,530 58,371
Mining royalty 3,931 4,778
Change in products in process and finished
goods 11,639 (24,531)
---------------- ----------------
6 Exceptional items
Exceptional items in the six months ended 30 June 2013 relate
to:
a) The termination benefits paid to the workers between April
and May 2013 following the restructuring plan approved by
management during the first semester of 2013, amounting to
US$3,117,000 (Cost of sales: US$200,000, administrative expenses:
US$1,006,000 and exploration expenses: US$1,911,000).
b) Impairment of assets of San José mine unit of US$40,869,000,
Azuca project of US$30,290,000 and Ares unit of US$3,771,000; and
reversal of the impairment of San Felipe property of
US$13,000,000.
c) Gain on the reclassification of Gold Resource Corp ('GRC')
shares from investment accounted under the equity method to
available-for-sale financial assets of US$107,942,000, as a result
of the Company ceasing to have the ability to exercise significant
influence over GRC. (refer to note 11).
d) The impairment of investments in Gold Resource Corp. (US$62,018,000), International Minerals (US$12,920,000), Pembrook Mining Corp. (US$5,745,000), Mariana Resources Ltd. (US$281,000), Northern Superior Resources Inc. (US$227,000), Iron Creek Capital Corp. (US$103,000), Empire Petroleum Corp. (US$22,000) and Brionor Resources (US$4,000).
Exceptional items in the six months ended 30 June 2012 related
to:
a) Gain of US$238,000 generated by the reversal of the write-off
recorded in 2010 related to the 100% dore project at the San Jose
mine.
b) Loss from dilution of US$948,000 generated by the Group's investment in Gold Resource Corp.
c) The losses arising from the fair value adjustments in
relation to warrants in Iron Creek Capital Corp. of US$25,000.
d) The impairment of Brionor Resources and Iron Creek Capital Corp. of US$67,000 and US$998,000 respectively.
7 Finance income and finance cost before exceptional items
The Group recognised the following finance income and finance
cost before exceptional items:
Six-months ended
30 June
------------------------------------
2013 (Unaudited) 2012 (Unaudited)
---------------- ----------------
US$(000)
Finance income:
Interests on deposits and liquidity
funds 3,468 415
Interest on loans 56 141
Dividends 1,658 -
Others 129 115
---------------- -----------------
5,311 671
---------------- -----------------
Finance cost:
Interest on bank loans and long-term
debt (393 ) (1,090)
Interest on convertible bond (4,497 ) (4,430)
Unwind of discount rate (1,904 ) (878)
Others (537 ) (701)
(7,331 ) (7,099)
================ =================
8 Income tax expense
Six-months ended
30 June
----------------------------------
2013 (Unaudited) 2012 (Unaudited)
---------------- ----------------
US$(000)
Current income tax expense 2,713 11,868
Current mining royalty charge 1,211 1,927
Current special mining tax charge 657 2,405
Deferred income tax relating to origination
and reversal of temporary differences (15,422) 22,653
Withholding taxes 566 648
Total taxation charge in the income statement (10,275) 39,501
================ ================
The tax related to items charged or credited to equity is as
follows:
Six-months ended
30 June
----------------------------------
2013 (Unaudited) 2012 (Unaudited)
---------------- ----------------
US$(000)
Deferred income tax relating to origination
and reversal of temporary differences - (615)
Total taxation (credit)/charge in the
statement of comprehensive income - (615)
================ ================
9 Property, plant and equipment
During the six months ended 30 June 2013, the Group acquired
assets for a cost of US$125,092,000 (2012: US$96,789,000). The
additions for the period ended 30 June 2013 relate to:
Other property
Mining properties plant and
and development equipment
----------------- --------------
US$(000)
San Jose 16,774 10,160
Pallancata 13,855 8,889
Inmaculada 19,029 14,130
Arcata 13,794 6,026
Crespo 4,174 6,823
Empresa de transmision Aymaraes - 6,344
Others 2,551 2,543
----------------- --------------
70,177 54,915
================= ==============
Assets with a net book value of US$559,000 were disposed of by
the Group during the six month period ended 30 June 2013 (2012:
US$67,000) resulting in a net loss on disposal of US$256,000 (2012:
loss on disposal of US$10,000).
For the six months ended 30 June 2013, the depreciation charge
on property, plant and equipment was US$67,409,000 (2012:
US$57,016,000).
The Group recorded an impairment of US$821,000 with respect to
the Azuca project, US$34,305,000 with respect to the San José mine
unit and US$3,771,000 with respect to the Ares mine unit.
10 Evaluation, exploration and intangible assets
a) Evaluation and exploration assets: During the six months
ended 30 June 2013, the Group capitalised evaluation and
explorations costs of US$13,116,000 (2012: US$19,446,000). The
additions mainly correspond to:
US$(000)
--------
Azuca 3,189
San Jose 222
Pallancata 2,836
Inmaculada 467
Arcata 2,996
Crespo 180
El Dorado 3,254
Others (28)
--------
13,116
========
There were transfers from evaluation and exploration assets to
property plant and equipment during the period of
US$35,853,000.
The Group recorded an impairment with respect to the Azuca
project (US$29,469,000) and the San José mine unit (US$2,260,000),
and partially reversed the impairment of the San Felipe project by
US$13,000,000.
b) Intangible assets: During the six months ended 30 June 2013,
the additions of intangibles amounted to US$678,000 (2012:
US$35,000). The additions for the period ended 30 June 2013
correspond to the Crespo project.
For the six months ended 30 June 2013, the amortisation charge
on intangibles was US$737,000 (2012: US$758,000).
There were transfers from property, plant and equipment to
intangibles during the period of US$4,794,000.
The Group recorded an impairment of all of the goodwill of
$2,091,000 and other intangibles of $2,213,000 related to the San
Jose mine unit.
11 Available-for-sale financial assets
As at
30 June
2013 As at
31 December
(Unaudited) 2012
-------------- -------------
US$(000)
Opening balance 30,609 40,769
Additions - -
Impairment (129) (891)
Reclassification from investments accounted
under the equity method(1) 189,418 -
Fair value change recorded in equity (77,289) (9,269)
Disposals - -
Closing balance(2) 142,609 30,609
============== =============
1 Corresponds to the gain on the reclassification of the Group's
Gold Resource Corp. shares from an associate accounted for under
the equity method to an available-for-sale financial asset on 27
March 2013. Equity accounting of the investment was discontinued as
a result of developments during the period that led the Company to
conclude that it no longer had the ability to influence
significantly that company's strategic, operational and financial
direction. Consequently, the asset is now recognised as an
available-for-sale asset at fair value.
2 As at 30 June 2013, the amount mainly represents the fair
value of shares of Gold Resource Corp. (US$127,400,000),
International Minerals Corporation (US$7,640,000), Pembrook Mining
Corp. (US$6,000,000), Mirasol Resources Ltd. (US$580,000), Northern
Superior Resources Inc. (US$479,000), Mariana Resources Ltd.
(US$213,000), Iron Creek Capital Corp (US$202,000), Brionor
Resources (US$80,000), and Empire Petroleum Corp (US$15,000).
12 Other financial assets and liabilities
As at
30 June
2013 As at
31 December
(Unaudited) 2012
-------------- -------------
US$ (000)
Other financial assets
Bonds 51 149
Warrants in Iron Creek Capital Corp. - 1
-------------- -------------
Other financial assets 51 150
============== =============
Other financial liabilities
Embedded derivatives(1) 16,174 6,891
Other financial liabilities 16,174 6,891
============== =============
1 Sales of concentrate and certain gold and silver volumes are
provisionally priced at the time the sale is recorded. The price is
then adjusted after an agreed period of time usually linked to the
length of time it takes for the smelter to refine and sell the
concentrate or for the refiner to process the dore into gold and
silver, with the Group either paying or receiving the difference
between the provisional price and the final price. At 30 June 2013
and at 31 December 2012 the provisional price adjustment resulted
in a liability due to the decrease in forward prices of gold and
silver.
13 Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
At 30 June 2013 and 31 December 2012, the Group held the
following financial instruments measured at fair value:
As at 30
June 2013 Level 1 Level 2 Level 3
US$000 US$000 US$000 US$000
------------ -------- ----------- ---------
Assets measured
at fair value
Equity shares
(note 11) 142,609 136,609 - 6,000
Warrants - - - -
Bonds 51 - 51 -
142,660 136,609 51 6,000
Liabilities measured
at fair value
Embedded derivatives
(note 12) (16,174) - - (16,174)
------------ -------- ----------- ---------
(16,174) - - (16,174)
------------ -------- ----------- ---------
As at 31
December Level 1 Level 3
2012 US$000 US$000 Level 2 US$000 US$000
------------- -------- ----------------- --------
Assets measured
at fair value
Equity shares
(note 11) 30,609 18,600 - 12,009
Warrants 1 - 1 -
Bonds 149 - 149 -
30,759 18,600 150 12,009
Liabilities measured
at fair value
Embedded derivatives
(note 12) (6,891) - - (6,891)
-------- ----------------- --------
(6,891) - - (6,891)
------------- -------- ----------------- --------
During the periods ending 30 June 2013 and 31 December 2012,
there were no transfers between these levels.
The reconciliation of the financial instruments categorised as
level 3 is as follows:
Embedded
derivatives Equity
liabilities shares
US$000 US$000
------------- ----------
Balance at 1 January
2012 (12,831) 11,841
Gain from the period
recognised in revenue 5,940 -
Fair value change through
equity - 168
Balance 31 December 2012 (6,891) 12,009
Loss from the period
recognised in revenue (9,283) -
Impairment through profit
and loss (finance costs) - (5,745)
Recycling fair value
adjustment from equity - (264)
------------- ----------
Balance 30 June 2013 (16,174) 6,000
------------- ----------
Valuation techniques:
Level 2: Bonds are measured based on observable data from
financial institutions.
Level 3: Comprises embedded derivatives and equity shares of
Pembrook Mining Corp.
Embedded derivatives: Sales of concentrates and doré bars are
"provisionally priced" and revenue is initially recognised using
this provisional price and the Group's best estimate of the
contained metal. Revenue is subject to final price and metal
content adjustments subsequent to the date of delivery. This price
exposure is considered to be an embedded derivative and is
separated from the sales contract. At each reporting date the
provisionally priced metal content is revalued based on the forward
selling price for the quotational period stipulated in the relevant
sales contract. The selling price of metals can be reliably
measured as these are actively traded on international exchanges
but the estimated metal content is a non observable input to this
valuation. At 30 June 2013 the fair value of embedded derivatives
within sales contracts was US$(16,174,000) (31 December 2012:
US$(6,891,000)). The revaluation effects of embedded derivatives
arising from these sales contracts are recorded as an adjustment to
revenue.
Equity shares: The unquoted shares of Pembrook Mining Corp are
measured based on a combination of observable and unobservable
market data.
14 Cash and cash equivalents
As at
30 June
2013 As at
31 December
(Unaudited) 2012
------------- -------------
US$(000)
Cash at bank 388 322
Liquidity funds(1) 5,736 72,803
Current demand deposit accounts(2) 40,136 61,654
Time deposits(3) 193,014 224,165
------------- -------------
Cash and cash equivalents 239,274 358,944
============= =============
1 The liquidity funds are mainly invested in certificate of
deposits, commercial papers and floating rate notes with a weighted
average maturity of 25 days as at 30 June 2013 (as at 31 December
2012: 5 days). In addition, liquidity funds include US Treasury
bonds amounting to US$Nil (as at 31 December 2012:
US$49,967,000)
2 Relates to bank accounts which are readily accessible to the Group and bear interest.
3 These deposits have an average maturity of 66 days (as at 31 December 2012: 36 days).
15 Borrowings
The movement in borrowings during the period to 30 June 2013 is
as follows:
As at As at
1 January 30 June
2013 Additions Repayments Reclassifications 2013
----------- ---------- ----------- ------------------ ----------
US$ (000)
Current
Bank loans 360 33,114 (312) - 33,162(1)
Convertible
bond payable 6,613 763 (3,303) 2,540 6,613
6,973 33,877 (3,615) 2,540 39,775
Non-current
Convertible
bond payable 106,850 3,734 (100) (2,540) 107,944
106,850 3,734 (100) (2,540) 107,944
----------- ---------- ----------- ------------------ ----------
Accrued Interest: (9,636) (4,497) 3,303 - (10,830)
----------- ---------- ----------- ------------------ ----------
Net of accrued
interest 104,187 33,114 (412) - 136,889
----------- ---------- ----------- ------------------ ----------
1 Mainly relates to pre-shipment loans for a total amount of
US$10,022,000 advanced to Minera Santa Cruz S.A. (at 31 December
2012: US$Nil) and US$23,000,000 of Minera Suyamarca S.A.C. These
obligations accrue an effective annual interest rate ranging from
1.65% to 21.75% and are guaranteed by the inventories and the trade
receivables of the Company (at 31 December 2012: Nil). Pre-shipment
loans are credit lines given by banks to meet payment obligations
arising from the exports of the Group.
16 Dividends paid and declared
Six-months ended 30 June
2013 2012
------------ ------------
US$(000)
Declared and paid during the period:
Equity dividends on ordinary shares:
Final dividend for 2012: US$0.03 (2011: US$0.03) 10,139 10,139
Dividends paid to non-controlling interest: US$0.05 (2011: US$0.03) 6,000 24,877
Dividends paid 16,139 35,016
------------ ------------
Declared dividend to be paid:
2013 Interim dividend: US$Nil (2012: US$0.03) - 10,139
------------ ------------
A final dividend in respect of the year ended 31 December 2012
of US$0.03 per share, amounting to a total dividend of
US$10,139,237 was approved by shareholders at the Annual General
Meeting held on 30 May 2013. The Directors of the Company have not
declared an interim dividend in respect of the year ending 31
December 2013.
17 Related party transactions
During the period, in addition to the normal arrangements the
Group has with its related parties, the Group recognised a dividend
from its associate, Gold Resource Corporation of US$3,949,256 (30
June 2012: US$4,826,869). At 30 June 2013 the dividend receivable
from Gold Resource Corporation amounted to US$438,806 (31 December
2012: US$877,612).
18 Commitments
a) Mining rights purchase options
During the ordinary course of business, the Group enters into
agreements to carry out exploration under concessions held by third
parties. Generally, under the terms of these agreements, the Group
has the option to acquire the concession or invest in the entity
holding the concession. In order to exercise the option the Group
must satisfy certain financial and other obligations over the
agreement term. The option lapses in the event that the Group does
not meet the financial requirements. At any point in time, the
Group may cancel the agreements without penalty, except in certain
specific circumstances.
The Group continually reviews its requirements under the
agreements and determines on an annual basis whether to proceed
with the financial commitment. Based on management's current
intention regarding these projects, the commitments at the balance
sheet date are as follows:
As at As at
30 June 2013 31 December 2012
------------- -----------------
US$(000)
Less than one year 2,437 3,363
Later than one year 15,620 32,188
b) Capital commitments
The future capital commitments of the Group are as follows:
As at As at
30 June 2013 31 December 2012
------------- -----------------
US$(000)
Peru 80,252 64,603
Argentina 8,874 11,907
89,126 76,510
------------- -----------------
19 Subsequent events
a) Sale of Gold Resource Corporation shares
On 11 July 2013, the Group sold 3,375,000 shares of Gold
Resource Corporation for a total consideration of US$25,650,000
(US$7.6 per share), resulting in a loss of US$3,746,233 ('the
Sale').
After the Sale, the Group's interest in Gold Resource
Corporation was reduced to 21.1%.
b) Amendment Agreement with Impulsora Minera Santacruz SA de
C.V, ("Impulsora") in relation to San Felipe and El Gachi
Properties
On 13 August 2013, the Group signed an amendment agreement with
Impulsora, a subsidiary of Santacruz Silver Mining Ltd. ("Santacruz
Silver"), amending the timing of payments to be made by Impulsora
for the purchase of the San Felipe and El Gachi properties.
Pursuant to the terms of the amendment agreement:
(i) Consideration comprising (i) cash of US$700,000 and (ii)
1,250,000 common shares of Santacruz Silver ("Santacruz Shares")
was paid on signature;
(ii) Impulsora is required to make the following payments to Hochschild:
-- US$1 million on 15 June 2014
-- US$5 million on or before 31 October 2014
-- US$15 million on or before 31 October 2015; and
(iii) Impulsora is required to pay Hochschild US$1,000,000 on or
before 31 October 2015 which may, at Impulsora's entire discretion,
be paid either in cash or 1,500,000 Santacruz Shares (to be issued
at an issuance price calculated at the time of issuance pursuant to
the policies of the TSX Venture Exchange and subject to a minimum
issuance price of $1.07 per share).
Profit by operation(1)
(Segment report reconciliation) as at 30 June 2013
Consolidation
adjustment
Company (US$000) Ares Arcata Pallancata San Jose Moris and others Total/HOC
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Revenue 26,429 71,962 89,101 112,369 8,684 32 308,577
Cost of sales (Pre consolidation) (27,948) (53,031) (63,667) (84,456) (5,386) 917 (233,571)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Consolidation adjustment 290 565 (1,772) - - 917 -
Cost of sales (Post consolidation) (28,238) (53,596) (61,895) (84,456) (5,386) - (233,571)
Production cost excluding
depreciation (20,895) (34,824) (37,168) (55,634) (4,526) - (153,047)
Depreciation in
production
cost (2,911) (14,012) (23,814) (23,871) (353) - (64,961)
Other items 3 638 (18) (4,547) - - (3,924)
Change in inventories (4,435) (5,398) (895) (404) (507) - (11,639)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Gross profit (1,519) 18,931 25,434 27,913 3,298 949 75,006
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Administrative expenses - - - - - (30,045) (30,045)
Exploration expenses - - - - - (29,681) (29,681)
Selling expenses (97) (134) (1,385) (14,809) - 17 (16,408)
Other income/expenses - - - - - (794) (794)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Operating profit before
impairment (1,616) 18,797 24,049 13,104 3,298 (59,554) (1,922)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Impairment of assets - - - - - (61,930) (61,930)
Investments under equity
method - - - - - 5,921 5,921
Finance income - - - - - 113,253 113,253
Finance costs - - - - - (88,651) (88,651)
FX gain/(loss) - - - - - (15,373) (15,373)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Profit/(loss) from continuing
operations before income
tax (1,616) 18,797 24,049 13,104 3,298 (106,334) (48,702)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Income tax 10,275 10,275
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
Profit/(loss) for the year
from continuing operations (1,616) 18,797 24,049 13,104 3,298 (96,059) (38,427)
--------------------------------------- -------- -------- ---------- -------- ------- ------------- ---------
1 On a post-exceptional basis.
SHAREHOLDER INFORMATION
Company website
Hochschild Mining plc Interim and Annual Reports and results
announcements are available via the internet on our website at
www.hochschildmining.com. Shareholders can also access the latest
information about the Company and press announcements as they are
released, together with details of future events and how to obtain
further information.
Registrars
Enquiries concerning shareholdings, dividends and changes in
personal details should be referred to the Company's registrars,
Capita as detailed below.
By post: Capita Registrars, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU
By telephone:
-- If calling from the UK: 0871 664 0300 (Calls cost 10p per minute plus network extras, lines are open 8.30am -
5.30pm Mon-Fri)
-- If calling from overseas: +44 20 8639 3399
By fax: +44 (0) 20 8639 2342
Investor Relations
For investor enquiries please contact the London office by
writing to the registered office (given below) or by telephone on
020 7907 2930 or by email to info@hocplc.com.
Hochschild Mining plc
46 Albemarle Street
London
W1S 4JL
Registered in England and Wales with Company Number 5777693
(1) On a pre-exceptional basis.
(2) $59.1 million represents H1 2013 impairment charge, net of
taxes, excluding the effect of the Gold Resource Corp
reclassification. See page 20 of Financial Review for full details
of exceptional items.
(3) As at 31 July 2013
(4) Cash costs are calculated to include cost of sales,
treatment charges, and selling expenses before exceptional items
less depreciation included in cost of sales.
(5) Please note that in line with industry-wide standards, all
mineralised intersections referred to in this release are quoted as
true widths.
(6) Please note that in line with industry-wide standards, all
mineralised intersections referred to in this release are quoted as
true widths.
(7) Please note that in line with industry-wide standards, all
mineralised intersections referred to in this release are quoted as
true widths.
(8) Please note that in line with industry-wide standards, all
mineralised intersections referred to in this release are quoted as
true widths.
(9) Please note that in line with industry-wide standards, all
mineralised intersections referred to in this release are quoted as
true widths.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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