TIDMHOC
RNS Number : 3166C
Hochschild Mining PLC
15 October 2015
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA,
JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, RUSSIA OR ANY
OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR
RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE.
PLEASE SEE THE IMPORTANT NOTICE IN THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND
SHOULD NOT BE RELIED UPON IN CONNECTION WITH ANY OFFER OR
COMMITMENT WHATSOEVER IN ANY JURISDICTION. ANY OFFER TO SUBSCRIBE
FOR OR PURCHASE ANY SECURITIES PURSUANT TO THE PROPOSED RIGHTS
ISSUE REFERRED TO IN THIS ANNOUNCEMENT WILL BE MADE, AND ANY
INVESTOR SHOULD MAKE THEIR INVESTMENT DECISION SOLELY ON THE BASIS
OF THE INFORMATION CONTAINED IN THE PROSPECTUS TO BE PUBLISHED BY
HOCHSCHILD MINING PLC IN CONNECTION WITH THE RIGHTS ISSUE. COPIES
OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM
THE REGISTERED OFFICE OF HOCHSCHILD MINING PLC AND ON ITS WEBSITE
AT WWW.HOCHSCHILDMINING.COM.
For immediate release
15 October 2015
Hochschild Mining plc
Proposed GBP64.8 million rights issue
The Board of Hochschild Mining plc ("Hochschild Mining") today
announces the launch of a rights issue to raise approximately
GBP64.8 million in proceeds (GBP61.1 million net of expenses).
Hochschild Mining is one of the world's leading precious metal
groups, focusing on the exploration, mining, processing and sale of
silver and gold with more than 50 years of experience operating in
the Americas.
Highlights
-- Whilst to date the Group has managed to execute its strategy
within the constraints of its existing resources, the proceeds from
the Rights Issue will substantially increase the Group's financial
flexibility going forward.
-- In accordance with the ongoing focused management of the
Group's financial position, the net proceeds of the Rights Issue
will strengthen the balance sheet and provide the flexibility
necessary to enable the Company to continue to implement its
strategy to increase long-term value for shareholders.
Eduardo Hochschild, Chairman of Hochschild Mining plc, said:
"This fundraising comes at an important time for Hochschild,
following the successful ramp-up of production at the Inmaculada
mine and the commencement of commercial production in August 2015.
We remain proud of our initiatives over the past couple of years,
including our cash flow optimisation programme, through which,
despite the challenging market environment, we successfully
preserved capital, achieved operational efficiencies and focused on
delivering substantial value through the ongoing construction of
Inmaculada. We are looking ahead to the continued success of our
strategy which we believe will generate sustainable long-term value
for Hochschild shareholders."
Ignacio Bustamante, Chief Executive Officer of Hochschild
Mining, said:
"The rights issue will provide Hochschild with financial
flexibility to begin the process of strengthening our balance
sheet. With the additional comfort of our new flagship Inmaculada
mine performing in line with expectations and the other operations
continuing to be on track in 2015, we believe we will be in a good
position to withstand any further price volatility and capitalise
on our ongoing growth strategy at Inmaculada and our other
operations."
Reasons for the Rights Issue and Use of Proceeds
-- Whilst to date the Group has managed to execute its strategy
within the constraints of its existing resources, the proceeds from
the Rights Issue will substantially increase the Group's financial
flexibility going forward.
-- In accordance with the ongoing focused management of the
Group's financial position, the net proceeds of the Rights Issue
will strengthen the balance sheet and provide the flexibility
necessary to enable the Company to continue to implement its
strategy to increase long-term value for shareholders.
-- Not less than 50% of the net proceeds of the Rights Issue
will be applied to repay outstanding bank indebtedness. The balance
will be held as cash on deposit to ensure certainty of access to
the funds and liquidity in light of the prevailing price volatility
in precious metal prices.
Details of the Rights Issue
-- Hochschild Mining is proposing to raise GBP64.8 million
(GBP61.1 million net of expenses) by way of a 3 for 8 Rights Issue
of 137,883,138 New Ordinary Shares at a price of 47.00 pence per
New Ordinary Share.
-- The Issue Price represents:
o a 47.6% discount to the Closing Price of 89.75 pence per
Existing Share on 14 October 2015 (being the last trading day prior
to the announcement of the Rights Issue); and
o a 39.8% discount to the TERP of 78.09 pence per Existing Share
calculated by reference to the Closing Price on 14 October
2015.
-- Hochschild Mining has received an irrevocable undertaking
from Inversiones ASPI S.A. (the company through which Mr. Eduardo
Hochschild will exercise his rights to subscribe for the New
Ordinary Shares) to subscribe for 68,887,508 New Ordinary Shares
(the "Irrevocable Undertaking"). Mr. Eduardo Hochschild intends to
retain a controlling shareholding in the Company for the
foreseeable future and has agreed to a lock-up undertaking with
respect to his shares that will be in force for 180 days after the
completion of the proposed rights issue.
-- Other than the New Ordinary Shares which Mr. Eduardo
Hochschild has agreed to subscribe for under the Rights Issue
pursuant to the Irrevocable Undertaking, the Rights Issue is fully
underwritten by J.P. Morgan Cazenove, BofA Merrill Lynch and RBC
Capital Markets.
This summary should be read in conjunction with the full text of
this announcement and its appendices (which include a summary of
the expected timetable of events). Defined terms used herein have
the meanings given to them in Appendix 2.
A conference call will be held at 9.00pm (London time) on
Thursday 15 October 2015 for analysts and investors.
Dial in details as follows:
International Dial in: +44 (0)20 3139 4830
UK Toll-Free Number: +44(0)808 237 0030
Pin: 34439782#
A recording of the conference call will be available for one
week following its conclusion, accessible from the following
telephone number:
International: +44 (0)20 3426 2807
UK Toll Free: +44(0)808 237 0026
Pin: 663230#
Enquiries:
Hochschild Mining plc
Charles Gordon
Head of Investor Relations +44 (0)20 3714 9040
Sponsor and Joint Bookrunner
J.P. Morgan Cazenove
Ben Davies/Virginia Khoo/Laurene
Danon +44(0)20 7742 4000
Joint Bookrunner
BofA Merrill Lynch
Omar Davis/Edward Peel/Matthew
Blawat +44(0)20 7628 1000
Joint Bookrunner
RBC Capital Markets
Tristan Lovegrove/Duncan
Smith/Ema Jakasovic +44 (0)20 7653 4000
Notes to Editors:
About Hochschild Mining plc
Hochschild Mining 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 Mining has over fifty years' experience in the mining of
precious metal epithermal vein deposits and currently operates
three underground epithermal vein mines, two located in southern
Peru and one in southern Argentina. Hochschild Mining also has
numerous long-term projects throughout the Americas.
IMPORTANT NOTICE
This announcement has been issued by and is the sole
responsibility of Hochschild Mining plc (the "Company"). A copy of
the prospectus containing details of the rights issue (the
"Prospectus") when published will be available from the registered
office of the Company and on the Company's website at
www.hochschildmining.com provided that the Prospectus will not,
subject to certain exceptions, be available (whether through the
website or otherwise) to Shareholders in the United States or any
Excluded Territories.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
The Prospectus will give further details of the New Ordinary
Shares, the Nil Paid Rights and the Fully Paid Rights being offered
pursuant to the Rights Issue. This announcement is not a prospectus
but an advertisement and investors should not acquire any Nil Paid
Rights, Fully Paid Rights or New Ordinary Shares referred to in
this announcement except on the basis of the information contained
in the Prospectus. The information contained in this announcement
is for background purposes only and does not purport to be full or
complete. No reliance may be placed for any purpose on the
information contained in this announcement or its accuracy or
completeness. The information in this announcement is subject to
change. Any purchase of Nil Paid Rights, Fully Paid Rights or New
Ordinary Shares in the proposed Rights Issue should be made solely
on the basis of the information contained in the Rights Issue
Prospectus.
J.P. Morgan Securities plc (which conducts its UK investment
banking activities as J.P. Morgan Cazenove) ("J.P. Morgan
Cazenove"), Merrill Lynch International and RBC Europe Limited,
each of which are authorised by the Prudential Regulation Authority
and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority, are acting for the Company and no one else in
connection with the Rights Issue, and will not regard any other
person as their respective clients in relation to the Rights Issue
and will not be responsible to anyone other than the Company for
providing the protections afforded to their respective clients or
for providing advice in relation to the Rights Issue or any matters
referred to in this announcement or any transaction, arrangement or
other matter referred to herein.
(MORE TO FOLLOW) Dow Jones Newswires
October 15, 2015 02:00 ET (06:00 GMT)
Apart from the responsibilities and liabilities, if any, which
may be imposed on J.P. Morgan Cazenove, Merrill Lynch International
and RBC Europe Limited by FSMA or the regulatory regime established
thereunder or otherwise under law, J.P. Morgan Cazenove, Merrill
Lynch International and RBC Europe Limited do not accept any
responsibility or liability whatsoever for the contents of this
announcement, and no representation or warranty, express or
implied, is made by J.P. Morgan Cazenove, Merrill Lynch
International or RBC Europe Limited in relation to the contents of
this announcement (or whether any information has been omitted from
this announcement), including its accuracy, completeness or
verification or regarding the legality of any investment in the Nil
Paid Rights, the Fully Paid Rights or the New Ordinary Shares or
any other information relating to the Company, whether written,
oral or in a visual or electronic form, and howsoever transmitted
or made available or for any loss howsoever arising from any use of
this announcement or its contents or otherwise arising in
connection herewith, by any person under the laws applicable to
such person or for any other statement made or purported to be made
by it, or on its behalf, in connection with the Company, the Nil
Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the
Rights Issue, and nothing in this announcement is, or shall be
relied upon as, a promise or representation in this respect,
whether as to the past or the future. To the fullest extent
permissible J.P. Morgan Cazenove, Merrill Lynch International and
RBC Europe Limited accordingly disclaim all and any responsibility
or liability whether arising in tort, contract or otherwise (save
as referred to above) which they might otherwise have in respect of
this announcement.
In connection with the Rights Issue, J.P. Morgan Cazenove,
Merrill Lynch International and RBC Europe Limited and any of their
affiliates, may take up a portion of the Nil Paid Rights, Fully
Paid Rights or New Ordinary Shares in the Rights Issue as a
principal position and in that capacity may retain, purchase, sell,
offer to sell for their own accounts such Nil Paid Rights, Fully
Paid Rights or New Ordinary Shares and other securities of the
Company or related investments in connection with the Offering or
otherwise. Accordingly, references in the Prospectus, once
published, to the Nil Paid Rights, Fully Paid Rights or New
Ordinary Shares being issued, offered, subscribed, acquired, placed
or otherwise dealt in should be read as including any issue or
offer to, or subscription, acquisition, placing or dealing by, J.P.
Morgan Cazenove, Merrill Lynch International and RBC Europe Limited
and any of their affiliates acting as investors for their own
accounts. J.P. Morgan Cazenove, Merrill Lynch International and RBC
Europe Limited do not intend to disclose the extent of any such
investment or transactions otherwise than in accordance with any
legal or regulatory obligations to do so.
This announcement is for information purposes only and is not
intended to and does not constitute or form part of any offer or
invitation to purchase or subscribe for, or any solicitation to
purchase or subscribe for, Nil Paid Rights, Fully Paid Rights or
New Ordinary Shares or to take up any entitlements to Nil Paid
Rights in any jurisdiction. This announcement cannot be relied upon
for any investment contract or decision. The information contained
in this announcement is not for release, publication or
distribution to persons in the United States, Australia, Japan, New
Zealand, the Republic of South Africa or Russia and should not be
distributed, forwarded to or transmitted in or into any
jurisdiction where to do so might constitute a violation of the
securities laws or regulations of such jurisdiction. There will be
no public offer of Nil Paid Rights, Fully Paid Rights or New
Ordinary Shares in the United States, Australia, Japan, New
Zealand, the Republic of South Africa or Russia or any other
Excluded Territory. The distribution of this announcement and/or
the Prospectus and/or the Provisional Allotment Letter and/or the
transfer of Nil Paid Rights, Fully Paid Rights and/or New Ordinary
Shares into jurisdictions other than the United Kingdom may be
restricted by law, and, therefore, persons into whose possession
this announcement and/or the Prospectus and/or the Provisional
Allotment Letter comes should inform themselves about and observe
any such restrictions. Any failure to comply with any such
restrictions may constitute a violation of the securities laws of
such jurisdiction. In particular, subject to certain exceptions,
the information contained herein, the Prospectus and the
Provisional Allotment Letter should not be distributed, forwarded
or transmitted in or into the United States, Australia, Japan, New
Zealand, the Republic of South Africa or Russia or any other
Excluded Territory.
This announcement does not constitute or form part of an offer
or solicitation to purchase or subscribe for securities of the
Company in the United States, Australia, Japan, New Zealand, the
Republic of South Africa or Russia or any other Excluded Territory.
The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares
and the Provisional Allotment Letters have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"), or under any securities laws of any state
or other jurisdiction of the United States and may not be offered,
sold, pledged, taken up, exercised, resold, renounced, transferred
or delivered, directly or indirectly, within the United States
except pursuant to an applicable exemption from, or in a
transaction not subject to, the registration requirements of the
U.S. Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United
States. The Nil Paid Rights, the Fully Paid Rights, the New
Ordinary Shares and the Provisional Allotment Letters have not been
approved or disapproved by the SEC, any state securities commission
in the United States or any other U.S. regulatory authority, nor
have any of the foregoing authorities passed upon or endorsed the
merits of the offering of the Nil Paid Rights, the Fully Paid
Rights, the New Ordinary Shares and the Provisional Allotment
Letters or the accuracy or adequacy of the Prospectus. Any
representation to the contrary is a criminal offence in the United
States.
Accordingly, subject to certain exceptions, the Rights Issue is
not being made in the United States and neither this announcement,
the Prospectus nor the Provisional Allotment Letters constitute or
will constitute an offer, or an invitation to apply for, or an
offer or an invitation to subscribe for or acquire any Nil Paid
Rights, Fully Paid Rights or New Ordinary Shares in the United
States. Subject to certain limited exceptions, Provisional
Allotment Letters have not been, and will not be, sent to, and Nil
Paid Rights have not been, and will not be, credited to the CREST
account of, any Qualifying Shareholder with a registered address in
or that is located in the United States.
This announcement does not constitute a recommendation
concerning the Rights Issue. The price and value of securities can
go down as well as up. Past performance is not a guide to future
performance. The contents of this announcement are not to be
construed as legal, business, financial or tax advice. Each
Shareholder or prospective investor should consult his, her or its
own legal adviser, business adviser, financial adviser or tax
adviser for legal, financial, business or tax advice.
This announcement contains "forward-looking statements" with
respect to the Company's plans and its current goals and
expectations relating to its future financial condition,
performance, results of operations, strategic initiatives and
objectives, including in relation to the Rights Issue. Generally,
words such as "may", "could", "will," "expect," "intend,"
"estimate," "anticipate," "aim," "outlook," "pro forma," "believe,"
"plan," "seek," "continue" or similar expressions identify
forward-looking statements. These forward-looking statements are
not guarantees or predictions of future performance, and involve
known and unknown risks, uncertainties and other factors, many of
which are beyond the Company's control, and which may cause actual
results to differ materially from those expressed in the statements
contained in this announcement. These risks include, but are not
limited to, those related to: the price of and changes in demand
for silver and gold; the amount of ore that the Company can extract
from its projects and related production costs, as well as the
Company's ability to replenish ore reserves and resources; the
Company's ability to achieve expected cost savings; the outcome of
litigation and disputes; the Company's relations and agreements
with local communities; risks related to health, safety,
environmental and other applicable laws and relevant permitting
requirements; risks relating to labour relations; risks relating to
economic, social and political instability in Peru and the
Company's other markets; and other risk factors identified in the
Prospectus. The Company will update this announcement as required
by applicable law, including the Prospectus Rules, the Listing
Rules, the Disclosure and Transparency Rules, and any other
applicable law or regulations, but otherwise expressly disclaims
any obligation or undertaking to update or revise any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
Each of J.P. Morgan Cazenove, Merrill Lynch International and
RBC Europe Limited and their respective affiliates expressly
disclaim any obligation or undertaking to update, review or revise
any forward looking statement contained in this announcement
whether as a result of new information, future developments or
otherwise.
Hochschild Mining plc
Proposed 3 for 8 Rights Issue of 137,883,138 New Ordinary Shares
at 47.00 pence per New Ordinary Share
1. Introduction
(MORE TO FOLLOW) Dow Jones Newswires
October 15, 2015 02:00 ET (06:00 GMT)
The Board of Hochschild Mining plc today announces that
Hochschild Mining is proposing to raise GBP64.8 million (GBP61.1
million net of expenses) by way of a 3 for 8 Rights Issue of
137,883,138 New Ordinary Shares at a price of 47.00 pence per New
Ordinary Share. The Issue Price represents a 47.6% discount to the
Closing Price of 89.75 pence per Existing Share on 14 October 2015
(being the last trading day prior to the announcement of the Rights
Issue) and a 39.8% discount to the TERP of 78.09 pence per Existing
Share calculated by reference to the Closing Price on 14 October
2015.
Hochschild Mining has received an irrevocable undertaking from
its largest shareholder, Mr. Eduardo Hochschild, to subscribe for
68,887,508 New Ordinary Shares (the "Irrevocable Undertaking"). Mr.
Eduardo Hochschild intends to retain a controlling shareholding in
the Company for the foreseeable future and has agreed to a lock-up
undertaking with respect to his shares that will be in force for
180 days after the completion of the proposed rights issue.
Other than the New Ordinary Shares which Mr. Eduardo Hochschild
has agreed to subscribe for under the Rights Issue pursuant to the
Irrevocable Undertaking, the Rights Issue is fully underwritten by
J.P. Morgan Cazenove, BofA Merrill Lynch and RBC Capital
Markets.
2. Background to and Reasons for the Rights Issue
2.1 Background
Whilst to date the Group has managed to execute its strategy
within the constraints of its existing resources, the proceeds from
the Rights Issue will substantially increase the Group's financial
flexibility going forward.
The Group's business is directly affected by volatility in
silver and gold prices. In recent years the mining industry has had
to adjust to a broader decline in precious metals prices by
significantly reducing costs, capital expenditure and expenses and
focusing on higher quality assets. In April 2013, the Company
responded to these conditions by commencing a cash flow
optimisation programme aimed at conserving cash to mitigate the
impact of lower prices, which has delivered targeted cost savings
to date of approximately US$300 million.
The Group continues to make substantial progress in improving
its cost position. Initiatives being pursued encompass all business
areas, including operations, administration and exploration. At the
operational level, the Company has achieved material improvements
though labour optimisation, efficiencies in supply chain management
and renegotiation of commercial terms as well as significant
working capital improvements. In order to reduce capital
expenditure and ensure that the Group's mines can continue to
deliver profitable ounces in 2015, the mine plans of the Arcata and
Pallancata operations in Peru have been optimised, allowing the
operations to maximise cash generation by focusing on accessible
ore areas requiring less capital deployment, lowering throughput
and increasing cut-off grades which reflect the weaker metal price
environment. Whilst exploration-led growth remains an important
part of the Group's long term strategy, the cash flow optimisation
programme has led to a significant reduction of the level of
greenfield exploration and appraisal of acquisition and joint
venture opportunities until a sustained improvement in gold and
silver prices.
Throughout 2013 and 2014, the Company has actively managed its
financial position, including raising proceeds from an offering of
senior notes to fund the acquisition of International Minerals
Corporation ("IMZ"). Proceeds were also raised through medium-term
credit facilities and the refinancing of its convertible bonds to
fund the development of a new world-class mine at Inmaculada, which
commenced commercial production in August 2015. The Company's
balance sheet has been further strengthened by ongoing
implementation of management's cash flow optimisation programme.
The Company has also taken advantage of short periods of precious
metal price improvement to hedge almost 44% and 41% of 2015 and
2016 production, respectively, in order to improve cash flow
certainty during these years. As a result of these initiatives, and
despite the backdrop of the challenging market environment,
management has successfully preserved capital, optimised cash flow
and focused on delivering substantial value through the development
of, and subsequent commencement of production at, the Inmaculada
mine. However, after careful deliberation, the Board and management
feel it is a prudent time to reassess the capital structure of the
Group with a view to reducing the Group's overall net debt level so
as to strengthen the Group's balance sheet. The Board is of the
view that the Rights Issue provides the best opportunity for the
Group to both retain strategic flexibility and to preserve and grow
long-term shareholder value.
2.2 Strategy
The Group has been focusing on the development and construction
of the Inmaculada mine in recent years and successfully commenced
commercial production at the mine in August 2015. Approximately
39.5 thousand ounces of gold and 970 thousand ounces of silver have
been produced up to 30 September 2015, a portion of which was
produced during the ramp-up and commissioning phase in June 2015.
The mine is expected to produce between 6 and 7 million silver
equivalent ounces in 2015 and between 11 and 12 million silver
equivalent ounces in 2016.
Inmaculada is a world class gold and silver project which is
expected to be the Group's lowest cost operation with all-in
sustaining costs of US$759 per ounce of gold equivalent and
US$10.40 per ounce of silver equivalent over an initial projected
6.3 year reserve mine life. Inmaculada will contribute to an
increase in the Group's attributable production from 20.5 million
silver-equivalent ounces in 2013 to a projected 29.0 million silver
equivalent ounces in 2016. In addition, Inmaculada will also drive
a reduction in Group-wide all-in sustaining costs to between US$13
and US$14 per silver-equivalent ounce in 2015 (from US$16.90 per
silver-equivalent ounce in 2014). The Company expects its liquidity
position and financial leverage levels to progressively improve as
its Inmaculada mine delivers significant operating cash flow in the
second half of 2015.
In addition, the Group is also focused on the near to medium
term objective of developing its recent discovery of a significant
new high grade, wide vein at the Pallancata mine in south west
Peru, which was announced in September 2015. Management expects the
new east-west vein, called the Pablo vein, to lead to a significant
expansion of the mine's mineral resources and to improve the
operational outlook for the Pallancata mine. The Group is currently
conducting a comprehensive exploration and infill drilling
programme through to the end of November 2015 to better understand
the potential of the new discovery and to achieve an initial
inferred resource. As the Pablo vein is easily accessible through
the existing infrastructure at the Pallancata mine and the mineral
mined from the Pablo vein can be processed using the excess plant
capacity at Selene, it is expected that limited capital expenditure
will be required to bring the Pablo vein into production.
3. Use of Proceeds
In accordance with the ongoing focused management of the Group's
financial position, the net proceeds of the Rights Issue will
strengthen the balance sheet and provide the flexibility necessary
to enable the Company to continue to continue to implement its
strategy to increase long-term value for shareholders.
Not less than 50% of the net proceeds of the Rights Issue will
be applied to repay outstanding bank indebtedness. The balance will
be held as cash on deposit to ensure certainty of access to the
funds and liquidity in light of the prevailing price volatility in
precious metal prices.
4. Current Trading and Prospects
For the three months ended 30 September 2015, the Group produced
7.6 million attributable silver equivalent ounces (assuming the
60:1 gold/silver ratio) consisting of 4.1 million ounces of silver
and 57.0 thousand ounces of gold, which includes 36.1 thousand
ounces of gold and 875 thousand ounces of silver from the new
Inmaculada mine. For the period from 1 January 2015 to 30
September, the Group has produced 16.3 million attributable silver
equivalent ounces (assuming the average gold/silver ratio for the
period) consisting of 10.4 million ounces of silver and 97.6
thousand ounces of gold. The Group is therefore on track to achieve
its 2015 production target of 24.0 million attributable silver
equivalent ounces (assuming the 60:1 gold/silver ratio). The Group
expects its all-in sustaining cost per silver equivalent ounce to
be reduced from US$16.9 in the year ended 31 December 2014 to an
estimated US$13 to US$14 for the year ending 31 December 2015.
All-in sustaining costs in the month of September 2015 is expected
to be below $10 per silver equivalent ounce at Inmaculada.
Management estimates the total cash held by the Group to be
approximately US$75 million as at 30 September 2015.
5. Dividends and Dividend Policy
The Directors did not recommend a dividend in respect of the
years ended 31 December 2013 and 31 December 2014. Future decisions
regarding the dividend will be based on a number of factors,
including market conditions, distributable reserves, liquidity,
operational performance and the impact of project capital
expenditure.
Since the Company is the holding company for the Group, its
stand-alone income and its ability to pay dividends depends in part
on the receipt of dividends and distributions from other members of
the Group. The payment of dividends by these subsidiaries and
associated companies is contingent upon the sufficiency of
earnings, cash flows and distributable reserves.
Future dividend payments will also be adjusted to take account
of the indicative bonus factor of the Rights Issue.
6. Summary of the Principal Terms of the Rights Issue
(MORE TO FOLLOW) Dow Jones Newswires
October 15, 2015 02:00 ET (06:00 GMT)
The Company is proposing to raise approximately GBP61.1 million
(net of expenses) by way of the Rights Issue of 137,883,138 New
Ordinary Shares. The Issue Price of 47.00 pence per New Ordinary
Share, which is payable in full on acceptance by not later than
11.00 a.m. on 3 November 2015, represents a 47.6% discount to the
Closing Price of 89.75 pence per Existing Share on 14 October 2015
(being the last trading day prior to the announcement of the Rights
Issue) and a 39.8% discount to the TERP of 78.09 pence per Existing
Share calculated by reference to the Closing Price on 14 October
2015.
The Company proposes to offer New Ordinary Shares by way of the
Rights Issue to Qualifying Shareholders on the following basis:
3 New Ordinary Shares for every 8 Existing Shares
held by Qualifying Shareholders on the Record Date and so in
proportion to any other number of Existing Shares then held, and
otherwise on the terms and conditions as set out in this document
and, in the case of Qualifying Non-CREST Shareholders only, the
Provisional Allotment Letter.
Holdings of Existing Shares in certificated and uncertificated
form will be treated as separate holdings for the purpose of
calculating entitlements under the Rights Issue. New Ordinary
Shares representing fractional entitlements will not be allotted to
Qualifying Shareholders and, where necessary, entitlements to New
Ordinary Shares will be rounded down to the nearest whole number.
Such fractional entitlements will be aggregated and, if possible,
sold in the market for the benefit of the Company.
The New Ordinary Shares will, when issued and fully paid, rank
pari passu in all respects with the Existing Shares, including the
right to all future dividends or other distributions made, paid or
declared after the date of issue of the New Ordinary Shares.
The Rights Issue is conditional upon:
-- Admission becoming effective by not later than 8.00 a.m. on
20 October 2015 (or such later time and/or date as the Company and
the Underwriters may agree (being not later than 4 November
2015));
-- the execution by the Company's largest shareholder, Mr.
Eduardo Hochschild, of an irrevocable undertaking to subscribe for
68,887,508 New Ordinary Shares; and
-- the Underwriting Agreement having become unconditional in all
respects (save for conditions relating to Admission) and not having
been terminated in accordance with its terms prior to
Admission.
Other than the New Ordinary Shares which Mr. Eduardo Hochschild
has agreed to subscribe for under the Rights Issue pursuant to the
Irrevocable Undertaking, the Rights Issue is fully underwritten on
the basis set out in the Underwriting Agreement. The Underwriters
have agreed under the terms of the Underwriting Agreement to
procure subscribers for, or failing which to itself subscribe for,
New Ordinary Shares not taken up in the Rights Issue at the Issue
Price.
Mr Eduardo Hochschild intends to retain a controlling
shareholding in the Company for the foreseeable future and,
accordingly, both Pelham Investment Corporation and Inversiones
ASPI S.A. (the companies through which Mr Hochschild will hold his
ordinary shares in the Company upon completion of the Rights Issue)
have agreed to a lock-up undertaking with respect to the ordinary
shares in the Company that will be in force for 180 days after
completion of the Rights Issue, subject to customary exceptions and
waiver by the Joint Bookrunners.
If the Underwriting Agreement is not declared or does not become
unconditional in all respects or if it is terminated in accordance
with its terms, the Rights Issue will be revoked and will not
proceed. Revocation cannot occur after Admission, and therefore if
Admission has occurred by 8.00 a.m. on 20 October 2015 (or such
later time and/or date as the Company and the Underwriters agree),
the Rights Issue will proceed.
Application will be made to the UK Listing Authority for the New
Ordinary Shares to be admitted to the premium listing segment of
the Official List and to the London Stock Exchange for the New
Ordinary Shares to be admitted to trading on its main market for
listed securities. It is expected that Admission will become
effective and that dealings in the New Ordinary Shares will
commence on the London Stock Exchange, nil paid, at 8.00 a.m. on 20
October 2015.
The latest time and date for acceptance and payment in full of
the New Ordinary Shares will be 11.00 a.m. on 3 November 2015.
APPENDIX 1
Each of the times and dates in the table below is indicative
only and may be subject to change. Please read the notes to this
timetable set out below.
2015
Record Date for entitlements under close of business
the Rights Issue on 13 October
Announcement of Rights Issue 15 October
Publication of Prospectus 15 October
Provisional Allotment Letters despatched 15 October
(to Qualifying Non-CREST Shareholders
only)
Admission and dealings in New Ordinary 8.00 a.m. on 20
Shares, nil paid, commence on the October
London Stock Exchange
Shares marked "ex-rights" by the 8.00 a.m. on 20
London Stock Exchange October
Nil Paid Rights credited to stock as soon as practicable
accounts in CREST (Qualifying CREST after
Shareholders only) 8.00 a.m. on
20 October
Nil Paid Rights and Fully Paid as soon as practicable
Rights enabled in CREST after
8.00 a.m. on
20 October
Recommended latest time for requesting 4.30 p.m. on 28
withdrawal of Nil Paid Rights or October
Fully Paid Rights from CREST (i.e.
if your Nil Paid Rights or Fully
Paid Rights are in CREST and you
wish to convert them into certificated
form)
Latest time and date for depositing 3.00 p.m. on 29
renounced Provisional Allotment October
Letters, nil paid or fully paid,
into CREST or for dematerialising
Nil Paid Rights or Fully Paid Rights
into a CREST stock account (i.e.
if your Nil Paid Rights or Fully
Paid Rights are represented by
a Provisional Allotment Letter
and you wish to convert them to
uncertificated form)
Latest time and date for splitting 3.00 p.m. on 30
Provisional Allotment Letters, October
nil paid or fully paid
Latest time and date for acceptance, 11.00 a.m. on
payment in full and registration 3 November
of renounced Provisional Allotment
Letters
Results of Rights Issue to be announced by 8.00 a.m. on
4 November
Dealings in New Ordinary Shares 8.00 a.m. on 4
taken up pursuant to the Rights November
Issue, fully paid, commence on
the London Stock Exchange
New Ordinary Shares credited to as soon as possible
CREST stock accounts (uncertificated after
holders only) 8.00 a.m. on
4 November
Expected despatch of definitive by not later than
share certificates for the New 11 November
Ordinary Shares in certificated
form
Notes:
(i) Each of the times and dates set out in the above timetable
and mentioned in this announcement, the Provisional Allotment
Letter and in any other document issued in connection with the
Rights Issue is subject to change by the Company (with the
agreement of, in certain circumstances, the Sponsor), in which
event details of the new times and dates will be notified to the
FCA and, where appropriate, to Shareholders.
(ii) Any reference to a time in this announcement is to London time, unless otherwise specified.
(iii) The ability to participate in the Rights Issue is subject
to certain restrictions relating to Shareholders with registered
addresses or located or resident in countries outside the UK,
details of which are set out in the Prospectus.
APPENDIX 2
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context requires otherwise:
"Admission" the admission of the New Ordinary
Shares, nil paid and fully
paid, to the premium listing
segment of the Official List
and to trading on the London
Stock Exchange's main market
for listed securities
"Articles" the articles of association
of the Company from time to
time
"Board" the board of directors of
the Company
"BofA Merrill Lynch" Merrill Lynch International
"Closing Price" the closing, middle market
quotation of an Ordinary Share
as published in the Daily
Official List on the relevant
day
"Company" Hochschild Mining plc
"CREST" the relevant system (as defined
in the Uncertificated Securities
Regulations) for the paperless
settlement of trades and the
holding of securities in uncertificated
form operated by Euroclear
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