TIDMHOC
RNS Number : 4753R
Hochschild Mining PLC
09 March 2016
________________________________________________________________________________
9 March 2016
Hochschild Mining plc
Preliminary Results for the twelve months ended 31 December
2015
Financial Results highlights(1)
-- Net revenue of $469.1 million (2014: $493.0 million)
-- Adjusted EBITDA of $138.8 million (2014: $135.6
million)(2)
-- Earnings per share of $(0.14) (2014: $(0.13))
-- Cash balance of $84.0 million as at 31 December 2015 (31
December 2014: $116.0 million)
-- Net debt of $350.5 million as at 31 December 2015 (30 June
2015: $455.6 million)
-- Net debt/EBITDA of 2.5x as at 31 December 2015 (30 June 2015:
5.8x)
-- Non-cash post tax impairment charges of $170.6 million
Strong 2015 operational delivery
-- 2015 All per silver equivalent ounce from operations reduced
by 26% to $12.9 exceeding guidance(3)
-- Inmaculada AISC per silver equivalent ounce significantly
below guidance at $7.3
-- Full year production of 27.0 million attributable silver
equivalent ounces exceeding guidance(4)
-- Inmaculada mine produced 8.3 million silver equivalent ounces
exceeding guidance
Improved financial position
-- $100 million equity rights issue completed
-- $105 million of debt repaid in Q4
-- Argentina macroeconomic and tax reforms already significantly
improving San Jose cash flows
o Removal of export tax on dore and concentrate confirmed
o Ongoing devaluation of Argentine peso reducing operating
costs
-- Cashflow further protected by additional 2016 precious metal
hedges:
o 15,000 ounces of gold at $1,244 per ounce
o Zero cost collar for 3.0 million ounces of silver with a floor
of $14.0 per ounce and a cap of $17.6 per ounce
o 55% of total 2016 attributable production target now
hedged
2016 Outlook
-- Record attributable production target of 32.0 million silver
equivalent ounces
-- AISC now expected to be $12.0-12.5 per silver equivalent
ounce (previous guidance of $12-13 per ounce)
-- Inmaculada AISC expected to be $9-10 per silver equivalent
ounce
-- Total sustaining and development capital expenditure expected
to be approximately $100 million including $10 million to develop
Pablo vein
$000, pre-exceptional unless stated Year ended Year ended % change
31 Dec 2015 31 Dec 2014
---------------------------------------------------- -------------- ------------- ---------
Attributable silver production (koz) 14,752 16,187 (9)
Attributable gold production (koz) 166 101 64
Net revenue(5) 469,146 492,951 (5)
Adjusted EBITDA 138,837 135,586 2
Loss from continuing operations (66,399) (56,689) (17)
Loss from continuing operations (post-exceptional) (239,657) (70,831) (238)
Earnings per share ($ pre-exceptional) (0.14) (0.13) (8)
Earnings per share ($ post-exceptional) (0.52) (0.16) (225)
---------------------------------------------------- -------------- ------------- ---------
Commenting on the results, Ignacio Bustamante, CEO, said:
"Now that the Company's key investment in the low cost
Inmaculada project is complete and with strong operational
performance at the mine, the outlook for the Company is much
brighter. Together with the encouraging geological results achieved
at our existing mines, further substantial cost and debt reductions
and a much more positive environment in Argentina, the improvement
to profitability is now a reality."
________________________________________________________________________________
A presentation will be held for analysts & investors at
9.30am (UK time) on Wednesday 9 March 2016 at the offices of Hudson
Sandler, 29 Cloth Fair, London, EC1A 7NN
For a live webcast of the presentation please visit our
website:
www.hochschildmining.com
To join the event via conference call, please see dial in
details below:
+44(0)20 3427 1915 (Please quote confirmation code 5064692)
________________________________________________________________________________
Enquiries:
Hochschild Mining plc
Charles Gordon +44 (0)20 3714 9044
Head of Investor Relations
Hudson Sandler
Charlie Jack +44 (0)207 796 4133
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 over 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.
CHAIRMAN'S STATEMENT
Hochschild Mining has ended 2015 in a significantly enhanced
operational and financial position compared to twelve months ago.
The Company's key investment in the low cost Inmaculada project is
now complete and I am delighted by the first six months of strong
operational performance. Together with the encouraging geological
results achieved at our existing mines and further cost reductions,
the expected improved profitability is now a reality. In addition,
the Company has taken decisive steps to reduce the debt position
via the equity capital raise in the autumn and has taken a
conservative approach to protect cashflows through a series of
precious metal hedges. With these measures, the leverage ratios
have materially improved and are reflecting the enhanced financial
health of the business.
We were able to achieve first dore production at Inmaculada in
early June 2015, marking the final stage for a project that has
taken approximately six years from discovery to commissioning, a
notable accomplishment in these turbulent times for the industry.
The subsequent ramp-up process was smoothly executed with key
operational metrics running according to or above design capacity.
During the last quarter, our long-held confidence in the world
class characteristics of this deposit was supported by production,
costs and ultimately cashflows that surpassed our expectations. The
Board believes that the entire process has been to the great credit
of our management and operational and project teams who have
efficiently dealt with the geological, operational and financial
challenges of a new mining operation while ensuring the safety of
our workforce and with due respect to the surrounding
environment.
Precious metals once again experienced a volatile period with
both silver and gold reaching new five year lows whilst other
commodities such as oil, copper and iron ore also experienced sharp
declines. Despite this difficult environment, our existing
operations generated positive cashflows under revised operational
plans and I was particularly encouraged by the success of our
brownfield exploration programme which not only yielded the
discovery of the Pablo vein thus reinvigorating Pallancata but also
allowed Arcata to continue to prove its resilience. Later on in the
year, there were positive macroeconomic and political developments
in Argentina which have led us to believe that we are entering a
new era of stronger cashflow generation at our high grade San Jose
mine. In short, lower prices have once again been compensated by
lower costs, rising production and new higher grade resources at
key operations.
The careful management of our financial position was of
paramount importance during the year so the success of several
Company initiatives has been crucial. Firstly, the Company ensured
the full financing of the Inmaculada project via a combination of
short and long term debt. Secondly, a target of positive cashflow
generation was set at all of our operations (before the effect of
hedging) resulting in a high level of cost discipline at each
operating asset. Finally, with the new mine having commenced
production smoothly, we were able to raise $100 million via a
rights issue with the proceeds used to pre-pay and renegotiate
debt. We now have a comfortable debt amortisation profile and a
solid cash position. However, despite these positive results, the
Board remains alert to price volatility and is maintaining its
focus on continuing to repay debt and consequently is not
recommending reinstating a dividend payment. We remain committed to
delivering shareholder returns and the Board intends to review the
position again once the Company can sustainably achieve strong
margins and the debt position is further reduced.
Operating Responsibly
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
I am delighted to report that 2015 was unprecedented in that it
represented the second consecutive year in which we achieved our
long-term aim of zero fatalities. In addition, the Group succeeded
in reducing the year-on-year frequency of accidents as well as
their severity by approximately 40% and 25% respectively. This is
to the great credit of the many teams who, despite the limitation
of resources, have worked relentlessly to ensure that we provide a
safe workplace for all and to convey the non-negotiable message
that safety comes first. As to our efforts to minimise our impact
on the environment, I am pleased to report that we maintained our
ISO 14001 certification, adopted a new and more robust Corporate
Environmental Policy and KPI dashboard to strengthen the Group's
environmental culture and made significant strides in water
management. In relation to our interaction with local communities,
we have continued to run the many programmes designed around our
core themes of education, health and socio-economic development.
Further details on the individual projects we have supported during
the year can be found in our Sustainability Report and online.
Board
I wish to thank my fellow Board members for their valuable
insight during the year. As reported last year, we suspended our
Non-Executive succession plan to provide continuity at Board level
given the difficult trading climate. The status of the plan was
kept under review during 2015 and, in recognition of the benefits
of a refreshed Board, resulted in the appointment of Michael
Rawlinson as a Non-Executive Director with effect from 1 January
2016. I am very pleased that we have been able to secure someone
with Michael's experience and knowledge of the mining sector which
will undoubtedly prove invaluable during our Board deliberations.
In line with our succession plan, Sir Malcolm Field will be
retiring from the Board at the conclusion of the forthcoming AGM.
Sir Malcolm has served on the Board since the Company's IPO in 2006
with tireless dedication and on behalf of my fellow Directors, I
wish to express my profound gratitude for his support and wise
counsel.
Outlook
We enter 2016 with renewed optimism. Inmaculada is a flagship
producing asset operating at highly competitive costs and is
expected to provide the financial stability necessary for targeting
future growth plans. The operating environment in Argentina is
rapidly improving and we believe that our high grade resource at
San Jose will soon generate stronger cashflows. And finally, the
optionality that the Arcata and Pallancata assets offer us in terms
of geological potential as well as leverage to prices is a key
feature that we expect to develop in this coming year.
Eduardo Hochschild, Chairman
8 March 2016
CHIEF EXECUTIVE OFFICER'S STATEMENT
At the start of last year, I noted that the Company's key
objectives for 2015 were the commissioning of our new flagship
mine, success from our brownfield exploration programme and
achieving a stronger overall financial position by the year end. We
are pleased to report that we have largely succeeded in our
priorities and that we enter 2016 with confidence that, whilst the
outlook for natural resources remains volatile, the prospects for
the Company have substantially improved.
Inmaculada
Construction at the Inmaculada site continued into its final
stages in the first half of the year with the result that
commercial production was declared in August following a near
faultless ramp-up period. All key metrics including tonnage, grades
and recoveries proved to be in line with or above expectations and
although there was a disagreement with our plant contractor over
construction delays and a number of submitted change orders, the
dispute was resolved amicably and in the final few months of the
year, the mine delivered on its world class promise. Production for
the year beat the higher end of our forecast range and Inmaculada's
all-in sustaining cost per silver equivalent ounce for 2015 was at
a very competitive $7.3 per ounce. We can now look forward to a
full year of production at costs of between $9 to $10 per silver
equivalent ounce which we believe will place the operation in the
first quartile of the global cost curve and will ensure strong
cashflow for the Company for the foreseeable future. We remain
positive about the mine's expansion potential in the medium term
and will begin a drill programme in the surrounding district in
2016.
Cost reduction
With commodity prices experiencing a third year of declines,
Hochschild continued its cashflow optimisation programme in order
to ensure that all our operations were mining profitable ounces and
are cashflow positive. The mine plans at Arcata and Pallancata were
revised with the focus placed on accessible ore areas requiring
reduced capital expenditure and assuming stringent cut off grades.
The effect of these measures was somewhat mitigated during the year
as both operations delivered successful brownfield exploration
programmes allowing additional higher grade tonnage to be processed
at Arcata in particular. At Pallancata, the discovery of the Pablo
vein in August delivered the prospect of a transition to
significantly lower cost feed for the Selene plant with our team
expecting to have initial production from the vein towards the end
of 2016. Overall, we were able to reduce all-in sustaining costs by
26% versus 2014, which is strong evidence of the Company's ability
to operate flexibly in a difficult industry environment.
Furthermore, the positive developments in Argentina towards the end
of the year indicate the potential to continue to move our
operations down the cost curve.
Financial position
In a year when careful management of the balance sheet was
crucial, in particular with respect to the completion of our
Inmaculada project, we believe we have taken substantial steps in
our aim of de-risking the Company. Forming the first part of our
three pronged financial strategy, the smooth progress of the new
mine's ramp-up to full production started to bear fruit in the
final two quarters with the generation of strong cashflow from this
low cost operation. Secondly, in October, we announced a $100
million rights issue, the success of which allowed us to begin the
process of strengthening our balance sheet and by the end of the
year we had already paid down just over $100 million of mid to long
term debt. And thirdly, we supplemented this initiative throughout
the year by taking advantage of short periods of price strength to
hedge around 40% of our production to ensure a degree of cashflow
stability. This prudent policy has continued with approximately
half of our 2016 production also protected at around the current
spot prices. With net debt significantly reduced versus our peak
position at the half year and with the maturities of the remaining
debt adequately profiled, the Company is in a substantially
healthier financial position than at the end of 2014.
2015 overview
One of the most pleasing aspects of the Company's ongoing
response to the industry downturn has been the strength of our
operations. Once again we exceeded the production target for the
year, delivering 27.0 million silver equivalent ounces with both
San Jose and Arcata especially, recording better than expected
production. Pallancata's performance reflects an operation in a
transitional period until new low cost material from the Pablo vein
is introduced towards the end of the year. However, when also
considering Inmaculada's maiden contribution, we believe the
flexibility of the Hochschild portfolio has been amply
demonstrated.
The average price achieved once again fell in 2015, by 12% for
silver and by almost 10% for gold and consequently our revenue was
lower despite total production increasing by almost 12%. However,
pleasingly pre-exceptional EBITDA rose by 2% to $139m reflecting
the higher margin contribution from Inmaculada and solid cost
control across our operations. The cashflow from the new mine is
beginning to offset the finance costs arising from our bond issue
in January 2014 to fund its construction but this still affected
the underlying earnings. Pre-exceptional EPS was $(0.14) per share.
The cash balance at the end of the year was $84 million with the
fourth quarter debt repayment programme resulting in net debt of
approximately $351 million.
Outlook
We expect that 2016 will mark the fourth year of increasing
production and reducing costs. Attributable production for the
Company is expected to rise to 32.0 million silver equivalent
ounces (assuming the average silver to gold ratio for 2015 of
74:1), boosted by the first full year of output from Inmaculada.
The all-in sustaining cost per silver equivalent ounce is expected
to once again be reduced to between $12.0 to $12.5 which includes
almost 14 million ounces of production from Inmaculada at between
$9 to $10 per silver equivalent ounce. The focus of our capital
expenditure budget of approximately $100 million will be on
sustaining and development expenditure for our current mines but
included is also an allocation of approximately $10 million for the
development of the Pablo vein - a project which initial Company
economics estimate has a net asset value of approximately $40
million.
The recent regulatory and economic policy changes in Argentina
also offer a promising future for our high grade San Jose mine.
Changes including the significant devaluation of the Argentine peso
and the new government's cancellation of the export taxes along
with management's solid operational track record now place the mine
in a good position to improve its cashflow contribution.
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
2015 has been a year of transformation for the Company. Whilst
the industry downturn has necessitated a continued strong focus on
cost efficiency, we are extremely encouraged by the positive
attitude displayed by all our employees. We have entered 2016 with
a renewed sense of confidence: a fourth consecutive year of
production increases and reduced costs; a new mine; renewed
resources at Arcata and Pallancata; a stronger balance sheet; and
several brownfield exploration targets with the potential to
continue improving the quality and quantity of our existing
resources.
Ignacio Bustamante, Chief Executive Officer
8 March 2016
OPERATING REVIEW
OPERATIONS
Note: silver/gold equivalent production figures assume the
average gold/silver ratio for 2015 of 74:1.
Production
In 2015, Hochschild once again exceeded its full year production
target, delivering attributable production of 27.0 million silver
equivalent ounces (24.7 million ounces using the Company's previous
gold/silver ratio of 60:1), including 14.8 million ounces of silver
and 166 thousand ounces of gold. The overall production target for
2016 is 32.0 million silver equivalent ounces, assuming the average
silver-to-gold ratio for 2015, which consists of just over 14
million ounces from Inmaculada, approximately 7 million
attributable ounces from the 51% owned San Jose and the balance
from the remaining two Peruvian operations. 2016 production is
expected to be equally weighted between gold and silver.
Costs
The Company's all-in sustaining cost was reduced by 26% in 2015
to $12.9 per silver equivalent ounce driven by Inmaculada with a
very competitive $7.3 per silver equivalent ounce(6) . Operational
initiatives (cashflow optimisation programme), devaluation of local
currencies and grade improvements at all operating units also
contributed to the reduction. Please see page 12 of the Financial
Review for further details on costs.
The all-in sustaining cost per silver equivalent ounce in 2016
is now expected to be between $12.0 and $12.5 with Inmaculada costs
forecast to be between $9 and $10 per ounce, the remaining Peruvian
mines at approximately $14.5 per ounce and San Jose at
approximately $13 per ounce although ongoing Argentinean peso
devaluation and a series of tax cancellations may reduce the target
further.
Inmaculada (Peru)
The 100% owned Inmaculada underground operation is located in
the Department of Ayacucho in southern Peru. It commenced
production in June 2015.
Inmaculada summary Year ended
31 Dec
2015
----------------------------------------- ------------------
Ore production (tonnes) 659,737
Average silver grade (g/t) 115
Average gold grade (g/t) 4.36
Silver produced (koz) 2,055
Gold produced (koz) 84.64
Silver equivalent produced (koz) 8,318
Silver sold (koz) 1,638
Gold sold (koz) 67.51
Unit cost ($/t) 63.3
Total cash cost ($/oz Ag co-product)(7) 4.6
All-in sustaining cost ($/oz) 7.3
----------------------------------------- ------------------
Production
Commercial production was declared at the new flagship mine in
August 2015 and the Company subsequently announced on 22 September
that it had received the final mill operating permit from the
Peruvian government with sales of dore commencing soon afterwards.
Overall production in 2015 improved on the targeted range, coming
in at 8.3 million silver equivalent ounces consisting of 84.6
thousand ounces of gold and 2.1 million ounces of silver. This was
primarily driven by solid gold and silver grades and increased
tonnage as the processing plant operated at closer to 3,850 tonnes
per day during the last quarter of the year compared to its design
capacity of 3,500 tonnes per day.
Costs
The all-in sustaining costs were low at $7.3 per silver
equivalent ounce. This was driven by better than expected
extraction costs, operational efficiencies versus the plan and by
the processing of the significant ore stockpile which incurred a
low cost in the plant's ramp-up phase and increased tonnage overall
when mining operations commenced. The original cost of mining this
stockpile was capitalised over the previous few periods. Overall
all-in sustaining costs are expected to increase to the normalised
forecast level of between $9 to $10 in 2016.
Brownfield exploration
In 2016, a geological mapping programme is planned for the
Inmacualda and Hualhua areas along with a 7,000 metre drilling
programme in the Palca zone.
Arcata (Peru)
The 100% owned Arcata underground operation is located in the
Department of Arequipa in southern Peru. It commenced production in
1964.
Arcata summary Year ended Year ended % change
31 Dec 2015 31 Dec 2014
------------------------- ------------- ------------------ ---------
Ore production (tonnes) 648,051 701,947 (8)
Average silver grade
(g/t) 323 286 13
Average gold grade
(g/t) 0.99 0.85 16
Silver produced (koz) 5,613 5,827 (4)
Gold produced (koz) 15.67 16.89 (7)
Silver equivalent
produced (koz) 6,772 7,077 (4)
Silver sold (koz) 5,653 5,621 1
Gold sold (koz) 15.29 15.66 (2)
Unit cost ($/t) 109.1 89.1 22
Total cash cost ($/oz
Ag co-product) 11.7 12.6 (7)
All-in sustaining
cost ($/oz) 14.3 17.7 (19)
------------------------- ------------- ------------------ ---------
Production
At Arcata, total silver equivalent production for 2015 was 6.8
million ounces (2014: 7.1 million ounces). Despite introducing an
adjusted mine plan at the start of 2015 to ensure the extraction of
profitable ounces, Arcata has delivered a much stronger year than
expected. A successful brownfield exploration programme has ensured
considerable tonnage at higher silver grades than expected.
Costs
In 2015, all-in sustaining costs fell by 19% to $14.3 per silver
equivalent ounce (2014: $17.7 per ounce) due to a substantial
decline in capital expenditure resulting from the announced
adjusted mine plan as well as improved grades.
Brownfield exploration
During 2015, the Arcata exploration programme has focused on the
incorporation of resources from the Stephani, Cristina, Soledad,
Macarena and Nicole veins as well as further exploration of the
Tunels 3 and 4 vein systems. Just over 10,000 metres of drilling
were executed. Significant intercepts included:
Vein Results
------------ -----------------------------
North-South DDH027-LM11: 2.12m @ 0.43
g/t Au & 719 g/t Ag
DDH768-LM14: 1.27m @ 2.46
g/t Au & 549 g/t Ag
DDH802-GE15: 1.58m @ 0.56
g/t Au & 659 g/t Ag
DDH990-GE11: 0.82m @ 0.15
g/t Au & 1,667 g/t Ag
------------ -----------------------------
Lucero DDH777-LM15: 1.35m @ 1.35
g/t Au & 593 g/t Ag
DDH792-GE15: 1.01m @ 1.85
g/t Au & 395 g/t Ag
DDH800-LM15: 0.97m @ 1.49
g/t Au & 533 g/t Ag
------------ -----------------------------
Soledad DDH800-LM15: 1.00m @ 4.05
g/t Au & 1,015 g/t Ag
------------ -----------------------------
Tunel 3 DDH871-GE15: 1.2m @1.04 g/t
Au & 1,135 g/t Ag
DDH872-GE15: 1.3m @2.09 g/t
Au & 1,196 g/t Ag
------------ -----------------------------
Tunel 4 DDH878-GE15: 1.0m @ 2.4 g/t
Au & 3,479 g/t Ag
DDH883-GE15: 1.7m @ 1.6 g/t
Au & 1,729 g/t Ag
------------ -----------------------------
The focus of 2016 will be a 7,000 metre drilling programme to
incorporate additional resources from the Tunel 4, Marion and
Alexia veins.
Pallancata (Peru)
The 100% owned Pallancata silver/gold property is located in the
Department of Ayacucho in southern Peru, approximately 160
kilometres from the Arcata operation. Pallancata commenced
production in 2007. Ore from Pallancata is transported 22
kilometres to the Selene plant for processing.
Pallancata summary Year ended Year ended % change
31 Dec 2015 31 Dec 2014
------------------------- ------------- ------------------ ---------
Ore production (tonnes) 522,431 1,051,068 (50)
Average silver grade
(g/t) 259 238 9
Average gold grade
(g/t) 1.28 1.03 24
Silver produced (koz) 3,664 6,527 (44)
Gold produced (koz) 16.42 24.34 (33)
Silver equivalent
produced (koz) 4,879 8,329 (41)
Silver sold (koz) 3,632 6,502 (44)
Gold sold (koz) 15.80 24.03 (34)
Unit cost ($/t) 98.9 69.3 43
Total cash cost ($/oz
Ag co-product) 12.5 11.0 14
All-in sustaining
cost ($/oz) 15.7 16.7 (6)
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
------------------------- ------------- ------------------ ---------
Production
At Pallancata, total production for the year was 4.9 million
silver equivalent ounces (2014: 8.3 million ounces). Tonnage
throughout the year was significantly lower than 2014 due to the
adjusted mine plan's approximate halving of capacity although
silver and gold grades rose gradually throughout the year to
partially compensate. The operation remains in a transitional phase
with the Selene plant expected to transition to the new Pablo vein
later in 2016. See further details of the Pablo vein below.
Costs
All-in sustaining costs fell by 6% to $15.7 per silver
equivalent ounce (2014: $16.7 per ounce) due to the scheduled
decline in capex as well as better grades. These improvements were
partially offset by incremental capex approved to develop the newly
discovered Pablo vein. See details below of the Pablo vein's
preliminary economics.
Brownfield exploration
The exploration team at Pallancata began a 19,100 metre
exploration and drilling programme in May 2015 with the aim of
focusing on inferred resource exploration at surface. In mid
August, whilst pursuing the west extension of the Yurika vein to
the north west of the main Pallancata vein, a new blind structure
at a depth of 200 metres below surface was discovered. The Pablo
vein has been recognised along an east-west strike for 700 metres
and dips 50-75deg south. The structure's significant thickness
(greater than 10m wide) is associated with dilation zones in
flexures and fault jogs. The Pablo vein is a fine-to-medium grain
white quartz vein and shows a banded texture and multiple
brecciation events filled with adularia and quartz crystals. It is
part of a major regional structure, currently extending to about 2
km, which will be explored over the medium term.
Following the initial discovery of the Pablo vein, drilling
continued and an initial inferred resource was achieved. The
Company's preliminary economics for a two year mine life for the
Pablo vein are detailed below. Resources (unaudited) are estimates
based on a cut-off grade of 103g/t silver equivalent.
Pablo
------------------------- ------
Inferred resources (kt)
(unaudited) 1,251
Ag grade (g/t) 344
Au grade (g/t) 1.3
LOM production (M oz Ag
Eq) 12.6
LOM AISC ($/oz Ag Eq) 10.6
------------------------- ------
LOM Cashflows ($m)
------------------------------------------- --------
Revenue 161.4
Costs (108.5)
Selling expenses (3.0)
Capital expenditure (19.7)
Taxes (SMT & Royalties) (2.4)
Pre-tax total 27.9
------------------------------------------- --------
NAV @5% (spot metal prices)(illustrative) 40.5
------------------------------------------- --------
Spot metal prices: $15.5/oz Ag; $1,230/oz Au
Work has started on mine development to access the vein and the
Company currently expects to have initial production from Pablo
towards the end of 2016.
Drilling has continued at the deposit and 7,242 metres were
drilled at Pablo and Yurika veins during the last quarter of the
year. Preliminary results are below:
Vein Results
--------------- -----------------------
Pablo DLEP-A21: 9.0m @0.68
g/t Au & 225 g/t Ag
DLEP-A23: 7.1m @1.09
g/t Au & 389 g/t Ag
DLEP-A24: 2.9m @1.34
g/t Au & 334 g/t Ag
DLEP-A25: 9.0m @1.20
g/t Au & 324 g/t Ag
DLEP-A26: 4.7m @0.73
g/t Au & 290 g/t Ag
--------------- -----------------------
Yurika DLYU-A97: 2.8m @1.66
g/t Au & 438 g/t Ag
--------------- -----------------------
Yurika ceiling DLYU-A97: 1.5m @ 3.94
g/t Au & 748 g/t Ag
DLYU-A99: 1.0m @ 0.89
g/t Au & 231 g/t Ag
--------------- -----------------------
The focus of the brownfield exploration programme for 2016 will
be a 5,500 metre drilling programme to add resources in from the
Pablo and Yurica veins. Geological mapping of the Pallancata-Selene
area will also be carried out.
San Jose: Argentina
The San Jose silver/gold mine is located in Argentina, in the
province of Santa Cruz, 1,750 kilometres south-southwest of Buenos
Aires. San Jose commenced production in 2007 and is a joint venture
with McEwen Mining Inc. Hochschild holds a controlling interest of
51% in the mine and is the mine operator.
San Jose summary(*) Year ended Year ended % change
31 Dec 2015 31 Dec 2014
------------------------- ------------- ----------------- ---------
Ore production (tonnes) 532,488 571,017 (7)
Average silver grade
(g/t) 448 404 11
Average gold grade
(g/t) 6.36 5.77 10
Silver produced (koz) 6,706 6,469 4
Gold produced (koz) 96.64 94.16 3
Silver equivalent
produced (koz) 13,857 13,437 3
Silver sold (koz) 6,340 6,316 -
Gold sold (koz) 88.79 91.28 (3)
Unit cost ($/t) 210.4 197.8 6
Total cash cost ($/oz
Ag co-product) 10.8 12.1 (11)
All-in sustaining
cost ($/oz) 14.1 17.8 (21)
------------------------- ------------- ----------------- ---------
(*) The Company has a 51% interest in San Jose
Production
The San Jose operation once again delivered another consistent
year with operation producing a record 13.9 million silver
equivalent ounces (2014: 13.4 million ounces) driven by better than
projected silver and gold grades.
On 17 December 2015, the Argentinean peso fell by approximately
40% against the dollar following the decision by the government to
lift capital controls. With approximately 70% of operating costs at
San Jose incurred in pesos, the effect of this significant
devaluation is already having a material impact on the mine's cost
position.
The Argentinean government published a decree on 2 November 2015
restoring the right to receive a rebate from goods exported through
Patagonian ports (previously cancelled in 2009). This benefit is
applicable to Hochschild at a rate of approximately 9% of the FOB
value of its exports which amounts to approximately $15 million per
annum. The current estimate for collection is approximately two
years.
In late December 2015, following an announcement by the new
government that they would remove export taxes on agricultural and
industrial products, it was subsequently confirmed that the decree
included removal of the 5% export tax on finished mining products
such as dore (approximately 50% of the mine's output). Subsequently
in 2016 it was confirmed that the additional 10% export tax on
concentrate would also be removed from February 2016.
Finally it was also confirmed recently that the 1% tax on the
market value of reserves that was imposed by the Province of Santa
Cruz in 2013 has been removed with the resulting positive effect
amounting to approximately $3 million per annum.
The effect of all the above-mentioned changes in Argentina is
that the Company expects overall economic and operating environment
in Argentina to improve significantly.
Costs
At San Jose, unit cost per tonne increased by 6% versus 2014 to
$210.4. However, all-in sustaining costs were reduced by 21% to
$14.1 per silver equivalent ounce (2014: $17.8 per ounce) driven by
cost reduction initiatives, lower capex and better grades.
Brownfield exploration
Whilst no drilling was carried out in 2015, a 3,500 metre
programme is planned for 2016 in the Los Pinos and Colorado Grande
areas as well as a comprehensive mapping programme of other areas
such as Agua Vivas to the South of the mine.
PROJECT REVIEW
Hochschild's portfolio currently includes three Growth Projects,
Crespo, Azuca and Volcan. The continuing weakness of the precious
metal markets during 2015, following the initial price declines in
2013, led to the focus on completing construction of Hochschild's
flagship Inmaculada project.
The strategy with regards to Crespo, Azuca and Volcan was
revised in late 2013 with work on these deposits remaining on hold
throughout 2014 and 2015. Despite the above-mentioned
prioritisation of Inmaculada, all three projects remain an
important component of the company's portfolio of development
assets. It is management's intention that in the event that
precious metals markets show sustained improvement, this would
allow the Company to assess capital re-allocation to these assets
and potentially re-initiate development.
Inmaculada
During the first half of 2015, construction of the plant
continued with first dore production achieved on 3 June 2015. The
ramp-up phase was ongoing throughout the third quarter with tonnes
per day reaching the forecast capacity of 3,500 in mid August and
operating at just above that level for the remainder of the year.
Gold and silver recoveries trended to close to their target of
93.7% in gold and 87.9% in silver.
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
The Hochschild team also continued underground mine development
throughout the first half and a stockpile of approximately 270,000
tonnes began to be processed following commissioning of the plant
whilst stope mining activities (utilising long hole and breasting
methods) were being initiated. Following the declaration of
commercial production at the mine in August, the Company
subsequently announced on 22 September that it had received the
final mill operating permit from the Peruvian government and
consequently sales of dore were able to commence.
Construction of the paste backfill plant also continued
throughout the year with the mine's laboratories, warehouses and
workshops also completed.
During the year, the contractor Graña y Montero (GyM), made a
number of requests for additional costs from the Company under the
Engineering, Procurement and Construction Contract ("EPC"). In
addition, Hochschild made certain claims against GyM as a result of
delays in the construction of the plant and related components of
the project. In September, following discussions, the Company and
GyM settled their mutual claims and agreed that the total amount
payable by the Company to GyM for all works under the EPC Contract
(including pending work) would be fixed at approximately $159.1
million, of which $20 million represented additional amounts
payable in settlement of all claims made by GyM for additional
costs under the EPC Contract. In addition, it was agreed that GyM
would bear all risks and costs resulting from the completion of all
pending work under the EPC Contract and, therefore, subject to
certain limited exceptions, GyM would not be entitled to request
further adjustments to the amounts agreed to be paid.
To date Hochschild has paid to GyM approximately $136 million
under the EPC Contract. It was agreed that the above mentioned
amount of $20 million would be paid in four instalments every six
months starting in September 2017, with interest accruing at an
annual rate of 5% of the outstanding balance. The remaining
approximately $4 million will be paid following completion of the
outstanding work.
Total construction capital expenditure for the Inmaculada mine
was $455 million, of which $449 million has already been incurred
by the end of the year with the remaining construction capital
expenditure of $6 million expected to be spent during 2016 (to be
funded from existing cash resources).
FINANCIAL REVIEW
The reporting currency of Hochschild Mining plc is U.S. dollars.
In discussions of financial performance the Group 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 Group and to facilitate comparison with prior
years.
Revenue
Gross revenue
Gross revenue from continuing operations decreased by 5% to
$469.2 million in 2015 (2014: $493.0 million) primarily driven by
another substantial fall in precious metal prices.
Silver
Gross revenue from silver decreased 23% in 2015 to $275.3
million (2014: $358.2 million) as a result of lower prices as well
as a 9% decrease in the total amount of silver ounces sold to
17,263 koz (2014:18,981 koz) driven by the fall in ounces produced
from Pallancata due to the imposition of the adjusted mine
plan.
Gold
Gross revenue from gold increased 19% in 2015 to $217.2 million
(2014: $182.7 million) as a result of a 31% rise in the total
amount of gold ounces sold in 2015 (187.4 koz) offsetting the 9%
fall in the average price received. The increase in gold sales came
from the first output from the new Inmaculada operation.
Gross average realised sales prices
The following table provides figures for average realised prices
(which are reported before the deduction of commercial discounts
and include the effects of the existing hedging agreements) and
ounces sold for 2015 and 2014:
Average realised prices Year ended Year ended
31 Dec 2015 31 Dec 2014
---------------------------- ------------- -------------
Silver ounces sold (koz) 17,263 18,981
Avg. realised silver price
($/oz) 16.0 18.9
Gold ounces sold (koz) 187.39 142.77
Avg. realised gold price
($/oz) 1,159 1,279
---------------------------- ------------- -------------
Commercial discounts
Commercial discounts refer to refinery treatment charges,
refining fees and payable deductions for processing concentrates,
and are deducted 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 2015, the Group recorded
commercial discounts of $23.6 million (2014: $48.1 million). This
decrease is explained by the decision to switch the majority of
production from Arcata back to dore in 2015 as opposed to the
previous year when most was sold as concentrate due to favourable
commercial terms. The ratio of commercial discounts to gross
revenue in 2015 decreased to 5% (2014: 9%).
Net revenue
Net revenue decreased by 5% to $469.1 million (2014: $493.0
million), comprising silver revenue of $258.4 million and gold
revenue of $210.5 million. In 2015 silver accounted for 55% and
gold 45% of the Company's consolidated net revenue with a 10
percentage point change from 2014 due to commencement of
contributions from the Inmaculada mine.
Revenue by mine
$000 unless otherwise indicated Year ended Year ended % change
31 Dec 2015 31 Dec 2014
--------------------------------- ------------- ------------- ---------
Silver revenue
Arcata 93,445 103,963 (10)
Ares - 10,896 -
Inmaculada 25,223 - -
Pallancata 59,803 129,042 (54)
San Jose 96,837 114,276 (15)
Moris - 30 -
Commercial discounts (16,929) (37,369) (55)
Net silver revenue 258,379 320,838 (19)
Gold revenue
Arcata 19,124 20,040 (5)
Ares - 14,993 -
Inmaculada 77,080 - -
Pallancata 19,929 31,984 (38)
San Jose 101,046 115,211 (12)
Moris - 441 -
Commercial discounts (6,688) (10,713) (38)
Net gold revenue 210,491 171,956 22
--------------------------------- ------------- ------------- ---------
Other revenue(8) 276 157 76
--------------------------------- ------------- ------------- ---------
Net revenue 469,146 492,951 (5)
--------------------------------- ------------- ------------- ---------
Costs
Total pre-exceptional cost of sales was steady at $403.7 million
in 2015 (2014: $404.6 million). The direct production cost was flat
at $265.1 million (2014: $265.6 million) with the positive effects
of Inmaculada's lower costs offsetting the additional production
delivered. Depreciation in 2015 was $139.5 million (2014: $126.0
million) with the increase mainly due to Inmaculada capex
depreciation. Other items, which principally include the costs
associated with stoppages in Argentina, was $9.3 million in 2015
(2014: $4.4 million). Change in inventories was $10.3 million in
2015 (2014: $8.6 million).
$000 Year ended Year ended % Change
31 Dec 31 Dec
2015 2014
---------------------------- ----------- ----------- ---------
Direct production cost
excluding depreciation 265,107 265,637 -
Depreciation in production
cost 139,533 125,955 11
Other items 9,272 4,406 110
Change in inventories (10,255) 8,641 (219)
---------------------------- ----------- ----------- ---------
Pre-exceptional cost of
sales 403,657 404,639 -
---------------------------- ----------- ----------- ---------
Unit cost per tonne
The Company reported unit cost per tonne at its main operations
of $118.4 in 2015, slightly up on 2014 (2014: $106.6). For further
explanation on the increase in unit cost per tonne please refer to
page 6 of the Operating Review.
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
Unit cost per tonne by operation (including royalties)(9) :
Operating unit ($/tonne) Year ended Year ended % change
31 Dec 31 Dec
2015 2014
-------------------------- ----------- ------------ ---------
Peru 90.7 77.3 17
Arcata 109.1 89.1 22
Inmaculada 63.3 - -
Pallancata 98.9 69.3 43
-------------------------- ----------- ------------ ---------
Argentina
San Jose 210.4 197.8 6
-------------------------- ----------- ------------ ---------
Others
Ares - 119.3 -
-------------------------- ----------- ------------ ---------
Total 118.4 107.4 10
-------------------------- ----------- ------------ ---------
Cash costs
Cash costs include cost of sales, commercial deductions and
selling expenses before exceptional items, less depreciation
included in cost of sales.
Cash cost reconciliation(10) :
$000 unless otherwise indicated Year ended Year ended % change
31 Dec 31 Dec
2015 2014
----------------------------------- ----------- ----------- ---------------------------
Group cash cost 313,939 353,736 (11)
----------------------------------- ----------- ----------- ---------------------------
(+) Cost of sales 403,657 404,639 -
(-) Depreciation and amortisation
in cost of sales (135,645) (128,480) (5)
(+) Selling expenses 21,729 28,697 (24)
(+) Commercial deductions 24,198 48,880 (50)
Gold 6,714 10,752 (38)
Silver 17,484 38,128 (54)
----------------------------------- ----------- ----------- ---------------------------
Revenue 469,146 492,951 (5)
----------------------------------- ----------- ----------- ---------------------------
Gold 210,491 171,956 22
Silver 258,379 320,838 (19)
Others 276 157 76
----------------------------------- ----------- ----------- ---------------------------
Ounces Sold
----------------------------------- ----------- ----------- ---------------------------
Gold 187.4 142.8 31
Silver 17,263 18,981 (9)
----------------------------------- ----------- ----------- ---------------------------
Group Cash Cost ($/oz)
----------------------------------- ----------- ----------- ---------------------------
Co product Au 752 865 (13)
Co product Ag 10.0 12.1 (17)
By product Au 203 (37) 648
By product Ag 5.6 9.0 (38)
----------------------------------- ----------- ----------- ---------------------------
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.
All-in sustaining cost reconciliation
All-in sustaining cash costs per silver equivalent ounce(11)
Year ended 31 Dec 2015
$000 unless otherwise Arcata Inmac Pallancata San Main Other Corporate Total
indicated José operations operations & others
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
(+) Production cost excluding
depreciation 71,128 32,765 51,599 108,101 263,593 - - 263,593
(+) Other items in cost of
sales 2,133 1,544 1,610 5,499 10,786 - - 10,786
(+) Operating and exploration
capex for units 14,600 13,704 10,683 38,451 77,438 - 1,193 78,631
(+) Brownfield exploration
expenses 62 6 2,457 1,463 3,988 - 1,990 5,978
(+) Administrative expenses
(excl depreciation and before
exceptional items) 2,641 2,515 1,796 7,095 14,046 - 22,569 36,614
(+) Royalties - 1,037 741 - 1,778 - - 1,778
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Sub-Total 90,564 51,571 68,885 160,609 371,629 - 25,751 397,380
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Au Ounces produced 15,670 72,226 16,419 96,638 200,953 - - 200,953
Ag Ounces produced (000s) 5,613 1,746 3,664 6,706 17,728 - - 17,728
Ounces produced (Ag Eq oz) 6,772 7,090 4,879 13,857 32,599 - - 32,599
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Sub-total ($/oz) 13.4 7.3 14.1 11.6 11.4 - - 12.2
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
(+) Commercial deductions 5,144 4 6,687 12,363 24,198 - - 24,198
(+) Selling expenses 962 12 1,048 19,707 21,729 - - 21,729
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Sub-total 6,106 16 7,735 32,070 45,927 - - 45,927
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Au Ounces sold 15,289 67,513 15,795 88,793 187,390 - - 187,390
Ag Ounces sold (000s) 5,653 1,638 3,632 6,340 17,263 - - 17,263
Ounces sold (Ag Eq oz) 6,784 6,634 4,801 12,910 31,130 - - 31,130
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Sub-total ($/oz) 0.9 - 1.6 2.5 1.5 - - 1.5
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
All-in sustaining costs ($/oz
Ag Eq) 14.3 7.3 15.7 14.1 12.9 - - 13.7
-------------------------------- ------ ------ ---------- ---------- ----------- ----------- --------- -------
Year ended 31 Dec 2014
$000 unless otherwise Arcata Inmac Pallancata San Main Other Corporate Total
indicated José operations operations & others
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
(+) Production cost
excluding
depreciation 62,644 - 71,742 110,089 244,475 17,853 - 262,328
(+) Other items in
cost of
sales 1,301 - 834 1,724 3,859 546 - 4,406
(+) Operating and
exploration
capex for units 28,867 - 34,657 51,350 114,874 1,613 116,487
(+) Brownfield
exploration
expenses 2,038 - 1,728 1,003 4,769 42 3,232 8,043
(+) Administrative
expenses
(excl depreciation
and before
exceptional items) 5,266 - 7,317 8,270 20,853 362 20,049 41,263
(+) Royalties - - 1,370 - 1,370 241 - 1,611
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
Sub-Total 100,116 - 117,648 172,436 390,200 19,044 24,894 434,138
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
Au Ounces produced 16,892 - 24,345 94,161 135,398 11,633 - 147,031
Ag Ounces produced
(000s) 5,827 - 6,527 6,469 26,947 534 - 19,357
Ounces produced (Ag Eq
oz) 6,841 - 7,988 12,119 26,947 1,232 - 28,179
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
Sub-total ($/oz) 14.6 - 14.7 14.2 14.5 15.5 - 15.4
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
(+) Commercial
deductions 18,016 - 13,666 17,198 48,880 - - 48,880
(+) Selling expenses 1,987 - 1,995 24,648 28,630 67 - 28,697
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
Sub-total 20,003 - 15,661 41,846 77,510 67 - 77,577
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
Au Ounces sold 15,663 - 24,025 91,277 130,965 11,449 - 142,770
Ag Ounces sold (000s) 5,621 - 6,502 6.316 18,439 540 - 18,981
Ounces sold (Ag Eq oz) 6,560 - 7,944 11,793 26,297 1,250 - 27,547
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
Sub-total ($/oz) 3.0 - 2.0 3.5 2.9 0.1 - 2.8
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
All-in sustaining
costs ($/oz
Ag Eq) 17.7 - 16.7 17.8 17.4 15.5 - 18.2
------------------------ ---------- ----- ------------ ---------- ------------- ------------ --------- -------
Administrative expenses
Administrative expenses before exceptional items decreased by
12% to $38.1 million (2014: $43.3 million) primarily due to the
continuing impact of the cashflow optimisation programme.
Exploration expenses
In 2015, pre-exceptional exploration expenses, decreased by 46%
to $9.3 million (2014: $17.3 million). In addition, the Group
capitalises part of its brownfield exploration, which mostly
relates to costs incurred converting potential resource to the
Inferred or Measured and Indicated category. In 2015, the Company
capitalised $2.6 million relating to brownfield exploration
compared to $1.5 million in 2014, bringing the total investment in
exploration for 2015 to $11.8 million (2014: $18.8 million).
Selling expenses
Selling expenses decreased by 24% versus 2014 at $21.7 million
(2014: $28.7 million) mainly due to lower prices impacting the
export taxes in Argentina and the decision to switch the majority
of production from Arcata back to dore. Selling expenses in 2015
consisted of export duties at San Jose (export duties in Argentina
were previously levied at 10% of revenue for concentrate and 5% of
revenue for dore) and logistic costs for the sale of
concentrate.
Other income/expenses
Other income before exceptional items was $8.0 million (2014:
$4.1 million) mainly due to incremental revenue from logistic
services provided to third parties and an export credit from dore
bars in Argentina. Other expenses before exceptional items reached
$15.3 million (2014: $17.5 million) mainly due to an increase in
mine closure provisions of $7.6 million ($2014: $9.1 million).
Adjusted EBITDA
Adjusted EBITDA increased by 2% over the period to $138.8
million (2014: $135.6 million) driven primarily by the positive
effects of the new low cost Inmaculada contribution but largely
offset by significantly lower precious metal prices.
Adjusted EBITDA is calculated as profit from continuing
operations before exceptional items, net finance costs and income
tax plus non-cash items (depreciation and changes in mine closure
provisions) and exploration expenses other than personnel and other
exploration related fixed expenses.
$000 unless otherwise indicated Year ended Year ended % change
31 Dec 2015 31 Dec 2014
----------------------------------------------------------------------------- ------------- ------------- ---------
Profit from continuing operations before exceptional items, net finance
cost, foreign exchange
loss and income tax (10,886) (14,374) 24
Depreciation and amortisation in cost of sales 135,645 128,480 6
Depreciation and amortisation in administrative expenses 1,534 2,072 (26)
Exploration expenses 9,255 17,254 (46)
Personnel and other exploration related fixed expenses (4,301) (6,934) 38
Other non cash expenses(12) 7,590 9,088 (16)
----------------------------------------------------------------------------- ------------- ------------- ---------
Adjusted EBITDA 138,837 135,586 2
----------------------------------------------------------------------------- ------------- ------------- ---------
Adjusted EBITDA margin 30% 28%
----------------------------------------------------------------------------- ------------- ------------- ---------
Finance income
Finance income before exceptional items of $1.9 million reduced
slightly from 2014 ($2.2 million) mainly due to lower interest
received on deposits, partially offset by income generated from the
repurchase of bonds below par value.
Finance costs
Finance costs before exceptional items decreased from $33.1
million in 2014 to $31.4 million in 2015, principally due to the
repurchase of $55.2 million of Senior Notes with a coupon rate of
7.75% and the $50.0 million prepayment of the medium term loan,
both in the fourth quarter.
Foreign exchange losses
The Group recognised a foreign exchange loss of $5.6 million
(2014: $5.0 million loss) as a result of exposures in currencies
other than the functional currency specifically the Peruvian Nuevo
Sol and Argentinean Peso, both of which depreciated in the year
against the US Dollar.
Income tax
The Company's pre-exceptional income tax charge was $20.4
million (2014: $6.5 million). The increase is mainly explained by
the impact of local currency devaluation in Peru and Argentina
which significantly reduced the tax basis of PP&E and therefore
generating a deferred tax liability.
Exceptional items
Exceptional items in 2015 totalled $(173.3) million losses after
tax (2014: $(14.1) million). The tables below detail the
exceptional items excluding the exceptional tax effect that
amounted to $36.9 million (2014: $3.8 million).
2015 negative exceptional items:
Main items $000 Description of main items
---------------------------------------------------- ---------- ----------------------------------------------------
Cost of sales (1,514) Termination benefits
Impairment and write-off of non-financial assets (207,146) Impairment of: Arcata unit ($72.4 million); Volcan
(net) unit ($57.1 million); Pallancata unit ($39.0
million); Crespo project ($14.4 million); Azuca
project ($12.8 million); San Felipe project
($10.9 million); PP&E write-off ($0.6 million)
Finance cost (1,486) Interest on disputed tax charge
---------------------------------------------------- ---------- ----------------------------------------------------
Cash flow & balance sheet review
Cash flow:
$000 unless otherwise Year ended Year ended Change
indicated 31 Dec 2015 31 Dec 2014
---------------------------- ------------- ------------- ----------
Net cash generated from
operating activities 133,256 93,779 39,477
Net cash used in investing
activities (223,319) (263,007) 39,668
Cash flows generated
in financing activities 61,027 5,039 55,988
---------------------------- ------------- ------------- ----------
Net decrease in cash
and cash equivalents
during the period (29,036) (164,189) (135,153)
---------------------------- ------------- ------------- ----------
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
Operating cash flow increased from $93.8 million in 2014 to
$133.3 million in 2015, mainly due to the maiden cash contribution
from the new Inmaculada mine, partially offset by lower prices. Net
cash used in investing activities decreased to $(223.3) million in
2015 from $(263.0) million in 2014 mainly due to moderately lower
pre-operating capex incurred at the Inmaculada project in 2015 as
well as reduced sustaining capex at the other operations. Finally,
cash generated from financing activities increased to $61.0 million
from $5.0 million in 2014, primarily as a result of the proceeds
from the equity rights issue and short term debt raised in Peru
($75 million) offset by the significant repayment of $105 million
of debt in the second half of the year. As a result, total cash
outflow decreased from $(164.2) million in 2014 to $(29.0) million
in 2015 ($135.2 million difference).
Working capital
$000 unless otherwise indicated Year ended Year ended
31 Dec 2015 31 Dec 2014
----------------------------------------- ------------- -------------
Trade and other receivables 135,014 173,526
Inventories 70,286 58,417
Net other financial assets 20,126 2,809
Net income tax receivable 17,628 20,467
Trade and other payables and provisions (249,788) (226,603)
----------------------------------------- ------------- -------------
Working capital (6,734) 28,616
----------------------------------------- ------------- -------------
The Group's working capital position improved by $35.4 million
to $(6.7) million in 2015 from $28.6 million in 2014. This was
primarily explained by: lower trade and other receivables ($(38.5)
million) due to higher proportion of dore sales (lower collection
period) at Arcata and lower prices; and higher trade and other
payables and provisions ($(23.2) million), in line with improved
payment terms obtained from vendors. These effects were partially
offset by higher net financial assets ($17.4 million) and by higher
inventories ($11.9 million), mainly resulting from accumulation of
concentrate in Argentina in December 2015.
Net debt
$000 unless otherwise indicated Year ended Year ended
31 Dec 2015 31 Dec 2014
--------------------------------- ------------- -------------
Cash and cash equivalents 84,017 115,999
Long term borrowings (339,778) (440,834)
Short term borrowings(13) (94,760) (27,882)
--------------------------------- ------------- -------------
Net debt (350,521) (352,717)
--------------------------------- ------------- -------------
The Group reported net debt position was $350.5 million as at 31
December 2015 (2014: ($352.7) million). The reduction includes the
net effect of the equity rights issue ($95 million), the prepayment
of the Scotiabank medium term loan (($50) million), the repurchase
of senior notes (($55) million), the withdrawal of short term
pre-shipment loans in Peru ($75 million) and the cash outflow
required to complete the construction of Inmaculada.
Capital expenditure(14)
$000 unless otherwise indicated Year ended Year ended
31 Dec 2015 31 Dec 2014
--------------------------------- ------------- -------------
Arcata 14,600 28,867
Ares 25 -
Selene 139 497
Pallancata 10,683 34,160
San Jose 38,451 51,350
Moris - -
Operations 63,898 114,874
--------------------------------- ------------- -------------
Inmaculada 166,336 198,112
Crespo 2,842 4,206
Volcan 958 1,463
Azuca 211 853
Other 3,914 1,613
--------------------------------- ------------- -------------
Total 238,159 321,121
--------------------------------- ------------- -------------
2015 capital expenditure of $238.2 million (2014: $321.1
million) mainly comprised of operational capex of $63.9 million
(2014: $114.9 million) and Inmaculada capital expenditure of $166.3
million (2014: $198.1 million).
Forward looking Statements
This announcement contains certain forward looking statements,
including such statements within the meaning of Section 27A of the
US Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In particular, such
forward looking statements may relate to matters such as the
business, strategy, investments, production, major projects and
their contribution to expected production and other plans of
Hochschild Mining plc and its current goals, assumptions and
expectations relating to its future financial condition,
performance and results.
Forward-looking statements include, without limitation,
statements typically containing words such as "intends", "expects",
"anticipates", "targets", "plans", "estimates" and words of similar
import. By their nature, forward looking statements involve risks
and uncertainties because they relate to events and depend on
circumstances that will or may occur in the future. Actual results,
performance or achievements of Hochschild Mining plc may be
materially different from any future results, performance or
achievements expressed or implied by such forward looking
statements. Factors that could cause or contribute to differences
between the actual results, performance or achievements of
Hochschild Mining plc and current expectations include, but are not
limited to, legislative, fiscal and regulatory developments,
competitive conditions, technological developments, exchange rate
fluctuations and general economic conditions. Past performance is
no guide to future performance and persons needing advice should
consult an independent financial adviser.
The forward looking statements reflect knowledge and information
available at the date of preparation of this announcement. Except
as required by the Listing Rules and applicable law, Hochschild
Mining plc does not undertake any obligation to update or change
any forward looking statements to reflect events occurring after
the date of this announcement. Nothing in this announcement should
be construed as a profit forecast.
Statement of Directors' responsibilities
The Directors confirm that to the best of their knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
- the Management report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2015
Year ended 31 Year ended 31
December 2015 December 2014
------------------------------------ ------------------------------------
Notes Before Exceptional Total Before Exceptional Total
exceptional items US$000 exceptional items US$000
items (note items (note
US$000 11) US$000 11)
US$000 US$000
-------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Continuing
operations
-------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Revenue 3,5 469,146 - 469,146 492,951 - 492,951
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Cost of sales 6 (403,657) (1,514) (405,171) (404,639) (6,065) (410,704)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Gross profit 65,489 (1,514) 63,975 88,312 (6,065) 82,247
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Administrative
expenses 7 (38,148) - (38,148) (43,335) (2,752) (46,087)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Exploration expenses 8 (9,255) - (9,255) (17,254) (886) (18,140)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Selling expenses 9 (21,729) - (21,729) (28,697) - (28,697)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
Other income 12 8,021 - 8,021 4,112 - 4,112
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Other expenses 12 (15,264) - (15,264) (17,512) (2,963) (20,475)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Impairment and
write-off
of assets, net 11 - (207,146) (207,146) - 109 109
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Loss from continuing
operations before
net finance
income/(cost),
foreign exchange
loss and income
tax (10,886) (208,660) (219,546) (14,374) (12,557) (26,931)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Finance income 13 1,898 - 1,898 2,215 4,061 6,276
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Finance costs 13 (31,414) (1,486) (32,900) (33,074) (9,491) (42,565)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Foreign exchange
loss (5,627) - (5,627) (4,990) - (4,990)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Loss from continuing
operations before
income tax (46,029) (210,146) (256,175) (50,223) (17,987) (68,210)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Income tax
(expense)/benefit 14 (20,370) 36,888 16,518 (6,466) 3,845 (2,621)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Loss for the year
from continuing
operations (66,399) (173,258) (239,657) (56,689) (14,142) (70,831)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Attributable to:
-------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Equity shareholders
of the Company (61,852) (172,758) (234,610) (54,963) (13,914) (68,877)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
Non-controlling
interests (4,547) (500) (5,047) (1,726) (228) (1,954)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
(66,399) (173,258) (239,657) (56,689) (14,142) (70,831)
----- ------------ ----------- --------- ------------ ----------- ---------
Basic and diluted
loss per ordinary
share from
continuing
operations for the
year (expressed
in US dollars per
share) 15 (0.14) (0.38) (0.52) (0.13) (0.03) (0.16)
--------------------- ----- ------------ ----------- --------- ------------ ----------- ---------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2015
Year ended
31 December
-------------------
Notes 2015 2014
US$000 US$000
-------------------------------------------- ----- --------- --------
Loss for the year (239,657) (70,831)
--------------------------------------------- ----- --------- --------
Other comprehensive income to be
reclassified to profit or loss in
subsequent periods:
-------------------------------------------- ----- --------- --------
Exchange differences on translating
foreign operations (597) (1,716)
--------------------------------------------- ----- --------- --------
Change in fair value of available-for-sale
financial assets 19 (86) (3,106)
--------------------------------------------- ----- --------- --------
Recycling of the loss on available-for-sale
financial assets 104 2,096
--------------------------------------------- ----- --------- --------
Change in fair value of cash flow
hedges 35,887 18,945
--------------------------------------------- ----- --------- --------
Recycling of the gain on cash flow
hedges (18,962) (14,603)
--------------------------------------------- ----- --------- --------
Deferred income tax relating to components
of other comprehensive income 14 (4,739) (1,216)
--------------------------------------------- ----- --------- --------
Other comprehensive gain for the
period, net of tax 11,607 400
--------------------------------------------- ----- --------- --------
Total comprehensive expense for the
year (228,050) (70,431)
--------------------------------------------- ----- --------- --------
Total comprehensive expense attributable
to:
-------------------------------------------- ----- --------- --------
Equity shareholders of the Company (223,003) (68,477)
--------------------------------------------- ----- --------- --------
Non-controlling interests (5,047) (1,954)
--------------------------------------------- ----- --------- --------
(228,050) (70,431)
----- --------- --------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2015
As at As at
31 31
December December
2015 2014
Notes US$000 US$000
------------------------------------ ----- --------- ---------
ASSETS
------------------------------------ ----- --------- ---------
Non-current assets
------------------------------------ ----- --------- ---------
Property, plant and equipment 16 1,045,516 1,076,310
------------------------------------- ----- --------- ---------
Evaluation and exploration assets 17 138,171 207,290
------------------------------------- ----- --------- ---------
Intangible assets 18 27,981 42,815
------------------------------------- ----- --------- ---------
Available-for-sale financial assets 19 366 455
------------------------------------- ----- --------- ---------
Trade and other receivables 20 10,187 6,488
------------------------------------- ----- --------- ---------
Income tax receivable 47 -
------------------------------------- ----- --------- ---------
Deferred income tax assets 27 - 1,574
------------------------------------- ----- --------- ---------
1,222,268 1,334,932
----- --------- ---------
Current assets
------------------------------------ ----- --------- ---------
Inventories 21 70,286 58,417
------------------------------------- ----- --------- ---------
Trade and other receivables 20 124,827 167,038
------------------------------------- ----- --------- ---------
Income tax receivable 20,384 25,584
------------------------------------- ----- --------- ---------
Other financial assets 21,267 4,342
------------------------------------- ----- --------- ---------
Cash and cash equivalents 22 84,017 115,999
------------------------------------- ----- --------- ---------
320,781 371,380
----- --------- ---------
Total assets 1,543,049 1,706,312
------------------------------------- ----- --------- ---------
EQUITY AND LIABILITIES
------------------------------------ ----- --------- ---------
Capital and reserves attributable
to shareholders of the Parent
------------------------------------ ----- --------- ---------
Equity share capital 223,805 170,389
------------------------------------- ----- --------- ---------
Share premium 438,041 396,021
------------------------------------- ----- --------- ---------
Treasury shares (898) (898)
------------------------------------- ----- --------- ---------
Other reserves (203,649) (217,335)
------------------------------------- ----- --------- ---------
Retained earnings 218,093 451,047
------------------------------------- ----- --------- ---------
675,392 799,224
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
----- --------- ---------
Non-controlling interests 90,113 95,160
------------------------------------- ----- --------- ---------
Total equity 765,505 894,384
------------------------------------- ----- --------- ---------
Non-current liabilities
------------------------------------ ----- --------- ---------
Trade and other payables 24 20,379 92
------------------------------------- ----- --------- ---------
Borrowings 25 339,778 440,834
------------------------------------- ----- --------- ---------
Provisions 26 121,402 111,751
------------------------------------- ----- --------- ---------
Deferred income 23 25,000 25,000
------------------------------------- ----- --------- ---------
Deferred income tax liabilities 27 64,274 84,959
------------------------------------- ----- --------- ---------
570,833 662,636
----- --------- ---------
Current liabilities
------------------------------------ ----- --------- ---------
Trade and other payables 24 101,892 111,890
------------------------------------- ----- --------- ---------
Other financial liabilities 1,141 1,533
------------------------------------- ----- --------- ---------
Borrowings 25 94,760 27,882
------------------------------------- ----- --------- ---------
Provisions 26 6,115 2,870
------------------------------------- ----- --------- ---------
Income tax payable 2,803 5,117
------------------------------------- ----- --------- ---------
206,711 149,292
----- --------- ---------
Total liabilities 777,544 811,928
------------------------------------- ----- --------- ---------
Total equity and liabilities 1,543,049 1,706,312
------------------------------------- ----- --------- ---------
These financial statements were approved by the Board of
Directors on 8 March 2016 and signed on its behalf by:
Ignacio Bustamante
Chief Executive Officer
8 March 2016
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2015
Year ended
31 December
--------------------
2015 2014
Notes US$000 US$000
------------------------------------------ ----- --------- ---------
Cash flows from operating activities
------------------------------------------ ----- --------- ---------
Cash generated from operations 166,234 129,993
------------------------------------------- ----- --------- ---------
Interest received 726 1,931
------------------------------------------- ----- --------- ---------
Interest paid (36,445) (25,585)
------------------------------------------- ----- --------- ---------
Payment of mine closure costs 26 (2,538) (5,524)
------------------------------------------- ----- --------- ---------
Income tax received/(paid) 5,279 (7,036)
------------------------------------------- ----- --------- ---------
Net cash generated from operating
activities 133,256 93,779
------------------------------------------- ----- --------- ---------
Cash flows from investing activities
------------------------------------------ ----- --------- ---------
Purchase of property, plant and equipment (216,188) (309,033)
------------------------------------------- ----- --------- ---------
Purchase of evaluation and exploration
assets (6,861) (6,071)
------------------------------------------- ----- --------- ---------
Purchase of intangibles (612) (281)
------------------------------------------- ----- --------- ---------
Dividends received - 494
------------------------------------------- ----- --------- ---------
Proceeds from deferred income 23 - 3,223
------------------------------------------- ----- --------- ---------
Proceeds from sale of available-for-sale
financial assets 3 48,097
------------------------------------------- ----- --------- ---------
Proceeds from sale of property, plant
and equipment 339 564
------------------------------------------- ----- --------- ---------
Net cash used in investing activities (223,319) (263,007)
------------------------------------------- ----- --------- ---------
Cash flows from financing activities
------------------------------------------ ----- --------- ---------
Proceeds of borrowings 175,948 482,393
------------------------------------------- ----- --------- ---------
Repayment of borrowings (209,173) (458,132)
------------------------------------------- ----- --------- ---------
Transaction costs of borrowings - (9,166)
------------------------------------------- ----- --------- ---------
Dividends paid 28 (964) (10,056)
------------------------------------------- ----- --------- ---------
Proceeds from issue of ordinary shares 95,216 -
------------------------------------------- ----- --------- ---------
Cash flows generated in financing
activities 61,027 5,039
------------------------------------------- ----- --------- ---------
Net decrease in cash and cash equivalents
during the year (29,036) (164,189)
------------------------------------------- ----- --------- ---------
Exchange difference (2,946) (6,247)
------------------------------------------- ----- --------- ---------
Cash and cash equivalents at beginning
of year 115,999 286,435
------------------------------------------- ----- --------- ---------
Cash and cash equivalents at end
of year 22 84,017 115,999
------------------------------------------- ----- --------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year 31 December 2015
Other reserves
------------------ -----------------------------------------------------------------
Capital
and
Unrealised reserves
gain/ attributable
(loss) Unrealised Bond to
on gain/ equity Share- shareholders
Equity available-for-sale (loss) component Cumulative based Total of
share Share Treasury financial on (note translation Merger payment Other Retained the Non-controlling Total
capital premium shares assets hedges 25(b)) adjustment reserve reserve reserves earnings Parent interests equity
Notes US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
---------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Balance
at
1 January
2014 170,389 396,021 (898) 1,024 - 8,432 (11,289) (210,046) 736 (211,143) 511,492 865,861 104,375 970,236
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Other
comprehensive
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
(loss)/income - - - (1,010) 3,126 - (1,716) - - 400 - 400 - 400
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Loss
for the
year - - - - - - - - - - (68,877) (68,877) (1,954) (70,831)
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Total
comprehensive
income/(loss)
for
the year - - - (1,010) 3,126 - (1,716) - - 400 (68,877) (68,477) (1,954) (70,431)
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Transfer
to retained
earnings - - - - - (8,432) - - - (8,432) 8,432 - - -
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
CEO LTIP - - - - - - - - 610 610 - 610 - 610
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Deferred
bonus
plan - - - - - - - - 1,230 1,230 - 1,230 - 1,230
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Dividends
declared
to
non-controlling
interests 28 - - - - - - - - - - - - (7,261) (7,261)
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Balance
at
31 December
2014 170,389 396,021 (898) 14 3,126 - (13,005) (210,046) 2,576 (217,335) 451,047 799,224 95,160 894,384
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Other
comprehensive
(loss)/income - - - 18 12,186 - (597) - - 11,607 - 11,607 - 11,607
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Loss
for the
year - - - - - - - - - - (234,610) (234,610) (5,047) (239,657)
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Total
comprehensive
income/(loss)
for
the year - - - 18 12,186 - (597) - - 11,607 (234,610) (223,003) (5,047) (228,050)
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Issuance
of shares
of deferred
bonus
plan 220 - - - - - - - (1,560) (1,560) 1,340 - - -
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Issuance
of shares 53,196 46,812 - - - - - - - - - 100,008 - 100,008
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Transaction
costs
related
to issuance
of shares - (4,792) - - - - - - - - - (4,792) - (4,792)
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Restricted
share
plan - - - - - - - - 2,843 2,843 - 2,843 - 2,843
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Deferred
bonus
plan - - - - - - - - 469 469 - 469 - 469
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
CEO LTIP - - - - - - - - 327 327 316 643 - 643
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
Balance
at
31 December
2015 223,805 438,041 (898) 32 15,312 - (13,602) (210,046) 4,655 (203,649) 218,093 675,392 90,113 765,505
----------------- ----- ------- ------- -------- ------------------ ----------- --------- ----------- --------- ------- --------- --------- ------------ --------------- ---------
1 Notes to the consolidated financial statements
For the year ended 31 December 2015
The financial information for the year ended 31 December 2015
and 2014 contained in this document does not constitute statutory
accounts as defined in section 435 of the Companies Act 2006. The
financial information for the years ended 31 December 2015 and 2014
have been extracted from the consolidated financial statements of
Hochschild Mining plc for the year ended 31 December 2015 which
have been approved by the directors on 8 March 2016 and will be
delivered to the Registrar of Companies in due course. The
auditor's report on those financial statements was unqualified and
did not contain a statement under section 498 of the Companies Act
2006.
2 Significant accounting policies
Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the
consolidated financial statements are consistent with those applied
in the preparation of the consolidated financial statement for the
year ended 31 December 2014.
Standards, interpretations and amendments to existing standards
that are not yet effective and have not been previously adopted by
the Group
Certain new standards, amendments and interpretations to
existing standards have been published and are mandatory for the
Group's accounting periods beginning on or after 1 January 2016 or
later periods but which the Group has not previously adopted. Those
that are applicable to the Group are as follows:
-- IAS 1 Disclosure Initiative - Amendments to IAS 1, applicable
for annual periods beginning on or after 1 January 2016.
-- IAS 16 and IAS 38 - Clarification of Acceptable Methods of
Depreciation and Amortisation - Amendments to IAS 16 and IAS 38,
applicable for annual periods beginning on or after 1 January
2016.
-- AIP IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations - Changes in methods of disposal, applicable for annual
periods beginning on or after 1 January 2016.
-- AIP IFRS 7 Financial Instruments: Disclosures - Servicing
contracts, applicable for annual periods beginning on or after 1
January 2016.
-- AIP IAS 19 Employee Benefits - Discount rate: regional market
issue, applicable for annual periods beginning on or after 1
January 2016.
-- IFRS 15 Revenue from Contracts with Customers, applicable for
annual periods beginning on or after 1 January 2018.
-- IFRS 9 Financial Instruments, applicable for annual periods
beginning on or after 1 January 2018.
(MORE TO FOLLOW) Dow Jones Newswires
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-- IFRS 12 Disclosure of Interests in Other Entities, applicable
for annual periods beginning on or after 1 January 2016.
-- IFRS 16 Leases, applicable for annual periods beginning on or after 1 Jan 2019.
-- IAS 7 Statement of cash flows, applicable for annual periods
beginning on or after 1 January 2017.
-- IAS 12 Income Taxes, applicable for annual periods beginning on or after 1 January 2017.
The Group is analysing the effect of the standards and plans to
adopt the new standard on the required effective date.
3 Segment reporting
The Group's activities are principally related to mining
operations which involve the exploration, production and sale of
gold and silver. Products are subject to the same risks and returns
and are sold through the same distribution channels. The Group
undertakes a number of activities solely to support mining
operations including power generation and services. Transfer prices
between segments are set on an arm's length basis in a manner
similar to that used for third parties. Segment revenue, segment
expense and segment results include transfers between segments at
market prices. Those transfers are eliminated on consolidation.
For internal reporting purposes, management takes decisions and
assesses the performance of the Group through consideration of the
following reporting segments:
-- Operating units - Arcata and San Jose, which generate revenue
from the sale of gold, silver, dore and concentrate.
-- Operating unit - Pallancata, which generates revenue from the sale of concentrate.
-- Operating unit - Inmaculada, which will generate revenue from
the sale of gold, silver and dore.
-- Operating unit - Ares, in suspension, which generated revenue
from the sale of gold and silver, disclosed as a segment until 31
December 2014. This operation did not meet the quantitative
thresholds to be a separate reportable segment in 2015 and
accordingly has been included in 'Other'. The comparative segment
information has been restated to reflect these changes.
-- Exploration, which explores and evaluates areas of interest
in brownfield and greenfield sites with the aim of extending the
life--of--mine of existing operations and to assess the feasibility
of new mines. The exploration segment includes costs charged to the
profit and loss and capitalised as assets.
-- Other - includes the profit or loss generated by Empresa de
Transmisión Callalli S.A.C. (a power transmission company), HMX,
S.A. de C.V. (a service company in Mexico), Empresa de Transmisión
Aymaraes S.A.C. (a power transmission company), Ares unit, Moris
unit and the Selene plant (used to process some of the Group's
production).
The Group's administration, financing, other activities
(including other income and expense), and income taxes are managed
at a corporate level and are not allocated to operating
segments.
Segment information is consistent with the accounting policies
adopted by the Group. Management evaluates the financial
information based on International Financial Reporting Standards
(IFRS) as adopted for use in the European Union.
The Group measures the performance of its operating units by the
segment profit or loss that comprises gross profit, selling
expenses and exploration expenses.
Segment assets include items that could be allocated directly to
the segment.
(a) Reportable segment information
Other1
Adjustment
San and
Arcata Pallancata Jose Inmaculada Exploration eliminations Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Year ended
31 December
2015
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Revenue from
external
customers 107,425 73,045 186,097 102,303 - 276 - 469,146
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Inter segment
revenue - - - - - 2,437 (2,437) -
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Total revenue 107,425 73,045 186,097 102,303 - 2,713 (2,437) 469,146
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Segment
profit/(loss) (1,340) (17,002) 13,297 49,759 (10,710) 384 (1,397) 32,991
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Others2 (289,166)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Loss from
continuing
operations
before
income tax (256,175)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Other segment
information
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Depreciation3 (33,506) (35,415) (45,286) (32,093) (1,496) (2,816) - (150,612)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Amortisation - - (1,013) - (457) (34) - (1,504)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Impairment
and write-off
of assets,
net (72,718) (39,245) (57) - (95,113) (13) - (207,146)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Assets
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Capital
expenditure 14,600 10,683 38,451 166,336 4,011 4,078 - 238,159
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Current assets 17,456 13,818 63,941 31,958 30 5,435 - 132,638
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Other
non-current
assets 53,458 50,591 220,307 633,169 181,662 72,481 - 1,211,668
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Total segment
assets 70,914 64,409 284,248 665,127 181,692 77,916 - 1,344,306
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Not reportable
assets4 - - - - - 198,743 - 198,743
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Total assets 70,914 64,409 284,248 665,127 181,692 276,659 - 1,543,049
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
1 'Other' revenue relates to revenues earned by Empresa de
Transmisión Callalli S.A.C.and Empresa de Transmisión Aymaraes
S.A.C.
2 Comprised of administrative expenses of US$38,148,000, other
income of US$8,021,000, other expenses of US$15,264,000, impairment
and write-off of assets of US$207,146,000, finance income of
US$1,898,000, finance expense of US$32,900,000, and foreign
exchange loss of US$5,627,000.
3 Includes US$1,793,000 and US$6,077,000 of depreciation
capitalised in the Crespo and the Inmaculada projects
respectively.
4 Not reportable assets are comprised of available-for-sale
financial assets of US$366,000, other receivables of US$72,662,000,
income tax receivable of US$20,431,000, other financial assets of
US$21,267,000 and cash and cash equivalents of US$84,017,000.
Other1 Adjustment
San and
Arcata Pallancata Jose Inmaculada Exploration eliminations Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Year ended
31 December
2014
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Revenue from
external
customers 106,061 147,360 213,013 - - 26,517 - 492,951
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Inter segment
revenue - - - - - 2,857 (2,857) -
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Total revenue 106,061 147,360 213,013 - - 29,374 (2,857) 492,951
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Segment
profit/(loss) 5,054 20,894 28,429 - (18,662) 447 (752) 35,410
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Others2 (103,620)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Loss from
continuing
operations
before
income tax (68,210)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Other segment
information
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Depreciation3 (31,348) (48,008) (46,820) (7,558) (930) (3,014) - (137,678)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Amortisation - - (1,181) - (458) - - (1,639)
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Impairment
and write-off
of assets,
net (499) (31) (717) (85) 1,580 (139) - 109
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Assets
-------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Capital
expenditure 28,867 34,160 51,350 193,445 6,522 6,777 - 321,121
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Current assets 27,993 21,174 66,995 5,877 35 9,161 - 131,235
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Other
non-current
assets 143,524 112,365 223,295 497,771 277,829 71,631 - 1,326,415
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Total segment
assets 171,517 133,539 290,290 503,648 277,864 80,792 - 1,457,650
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Not reportable
assets4 - - - - - 248,662 - 248,662
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
Total assets 171,517 133,539 290,290 503,648 277,864 329,454 - 1,706,312
--------------- -------- ---------- -------- ---------- ----------- ------- ------------ ---------
1 'Other' revenue relates to revenue for the sale of gold and
silver generated by the Ares and Moris mine, revenues earned by
Empresa de Transmisión Callalli S.A.C., and revenues earned by HMX
S.A. de C.V. for services provided to the Moris mine and the
Mexican exploration activities.
2 Comprised of administrative expenses of US$46,087,000, other
income of US$4,112,000, other expenses of US$20,475,000, gain on
the reversal of impairment net of write-off of assets of
US$109,000, finance income of US$6,276,000, finance expense of
US$42,565,000, and foreign exchange loss of US$4,990,000.
3 Includes US$967,000 and US$7,558,000 of depreciation
capitalised in the Crespo and the Inmaculada projects
respectively.
4 Not reportable assets are comprised of available-for-sale
financial assets of US$455,000, other receivables of
US$100,708,000, income tax receivable of US$25,584,000, deferred
income tax assets of US$1,574,000, other financial assets of
US$4,342,000 and cash and cash equivalents of US$115,999,000.
(b) Geographical information
The revenue for the period based on the country in which the
customer is located is as follows:
Year ended
31 December
----------------
2015 2014
US$000 US$000
------------------ ------- -------
External customer
------------------ ------- -------
USA 229,229 96,427
------------------- ------- -------
Peru 63,328 178,217
------------------- ------- -------
Canada 58,154 36,421
------------------- ------- -------
Germany 7,428 10,987
------------------- ------- -------
Switzerland 12,174 45,020
------------------- ------- -------
United Kingdom 17,273 2,450
------------------- ------- -------
Korea 81,580 121,868
------------------- ------- -------
Japan (20) 1,561
------------------- ------- -------
Total 469,146 492,951
------------------- ------- -------
Inter-segment
------------------ ------- -------
Peru 2,437 1,804
------------------- ------- -------
Mexico - 1,053
------------------- ------- -------
Total 471,583 495,808
------------------- ------- -------
In the periods set out below, certain customers accounted for
greater than 10% of the Group's total revenues as detailed
in the following table:
Year ended 31 December Year ended 31 December
2015 2014
------------------------------- -------------------------------
US$000 % Revenue Segment US$000 % Revenue Segment
------------------- ------- --------- ----------- ------- --------- -----------
Arcata,
Inmaculada
Republic Metals and San
Corporation 106,339 23% Jose 44,725 9% San Jose
-------------------- ------- --------- ----------- ------- --------- -----------
Arcata,
Pallancata Pallancata
and San and San
LS Nikko 81,580 17% Jose 121,868 25% Jose
-------------------- ------- --------- ----------- ------- --------- -----------
Glencore Perú Arcata and Arcata and
S.A.C. 38,502 8% Pallancata 114,192 23% Pallancata
-------------------- ------- --------- ----------- ------- --------- -----------
Non-current assets, excluding financial instruments and deferred
income tax assets, were allocated to the geographical areas in
which the assets are located as follows:
As at 31
December
--------------------
2015 2014
US$000 US$000
------------------------------------ --------- ---------
Peru 897,824 942,411
------------------------------------- --------- ---------
Argentina 220,307 223,295
------------------------------------- --------- ---------
Mexico 31,005 41,944
------------------------------------- --------- ---------
Chile 62,532 118,765
------------------------------------- --------- ---------
Total non-current segment assets 1,211,668 1,326,415
------------------------------------- --------- ---------
Available-for-sale financial assets 366 455
------------------------------------- --------- ---------
Trade and other receivables 10,187 6,488
------------------------------------- --------- ---------
Income tax receivable 47 -
------------------------------------- --------- ---------
Deferred income tax assets - 1,574
------------------------------------- --------- ---------
Total non-current assets 1,222,268 1,334,932
------------------------------------- --------- ---------
4 Acquisitions and disposals
(a) Sale of subsidiary
In 2015 there were no acquisitions or disposals undertaken by
the Group.
Minas Santa MarÃa de Moris, S.A. de C.V.
On 28 February 2014 the Group sold its interest in Minas Santa
MarÃa de Moris, S.A. de C.V. ("Moris") to Exploraciones y
Desarrollos Regiomontanos, S.A. de C.V. ("EDR") and Arturo Préstamo
Elizondo ("APE") for consideration with a fair value of nil. The
terms of the transaction stipulate that:
-- the Group was entitled to a 1% net smelter return over the
Moris concessions once production reaches 50,000 ounces of gold
equivalent following the sale; and
-- EDR and APE would assume all costs associated with the mine
and plant rehabilitation obligations.
The carrying value of the net assets disposed was US$2,963,000
and the transaction resulted in a loss of US$2,963,000.
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
5 Revenue
Year ended
31 December
----------------
2015 2014
US$000 US$000
-------------------------- ------- -------
Gold (from dore bars) 142,077 62,911
--------------------------- ------- -------
Silver (from dore bars) 142,397 67,418
--------------------------- ------- -------
Gold (from concentrate) 68,414 109,045
--------------------------- ------- -------
Silver (from concentrate) 115,982 253,420
--------------------------- ------- -------
Services 276 157
--------------------------- ------- -------
Total 469,146 492,951
--------------------------- ------- -------
Included within revenue is a loss of US$7,275,000 relating to
provisional pricing adjustments representing the change in the fair
value of embedded derivatives (2014: loss of US$16,518,000) arising
on sales of concentrates and dore (refer to note 2(p).
The realised gain on gold and silver swaps contracts in the
period recognised within revenue was US$18,962,000 (gold:
US$7,012,000, silver: US$11,950,000) (2014: US$14,603,000, gold:
US$2,451,000, silver: US$12,152,000).
6 Cost of sales
Included in cost of sales are:
Year ended
31 December
-----------------
2015 2014
US$000 US$000
------------------------------------------- -------- -------
Depreciation and amortisation 142,712 128,720
-------------------------------------------- -------- -------
Personnel expenses (notes 10 and 11) 107,823 114,322
-------------------------------------------- -------- -------
Mining royalty (note 30) 5,968 6,581
-------------------------------------------- -------- -------
Change in products in process and finished
goods (10,255) 8,641
-------------------------------------------- -------- -------
7 Administrative expenses
Year ended
31 December
----------------
2015 2014
US$000 US$000
--------------------------------------- ------- -------
Personnel expenses (notes 10 and 11) 22,427 24,206
---------------------------------------- ------- -------
Professional fees 3,095 3,846
---------------------------------------- ------- -------
Social and community welfare expenses1 597 1,943
---------------------------------------- ------- -------
Lease rentals 1,415 1,442
---------------------------------------- ------- -------
Travel expenses 576 865
---------------------------------------- ------- -------
Communications 560 579
---------------------------------------- ------- -------
Indirect taxes 2,147 2,678
---------------------------------------- ------- -------
Depreciation and amortisation 1,534 2,072
---------------------------------------- ------- -------
Technology and systems 745 718
---------------------------------------- ------- -------
Security 790 951
---------------------------------------- ------- -------
Supplies 134 188
---------------------------------------- ------- -------
Other 4,128 6,599
---------------------------------------- ------- -------
Total 38,148 46,087
---------------------------------------- ------- -------
1 Represents amounts expended by the Group on social and
community welfare activities surrounding its mining units.
8 Exploration expenses
Year ended
31 December
----------------
2015 2014
US$000 US$000
------------------------------- ------- -------
Mine site exploration1
------------------------------- ------- -------
Arcata 62 2,038
-------------------------------- ------- -------
Ares 50 42
-------------------------------- ------- -------
Selene - 58
-------------------------------- ------- -------
Inmaculada 6 -
-------------------------------- ------- -------
Pallancata 2,457 1,728
-------------------------------- ------- -------
San Jose 1,463 1,003
-------------------------------- ------- -------
4,038 4,869
------- -------
Prospects2
------------------------------- ------- -------
Peru 303 788
-------------------------------- ------- -------
Argentina 43 73
-------------------------------- ------- -------
Mexico - 195
-------------------------------- ------- -------
Chile 71 237
-------------------------------- ------- -------
417 1,293
------- -------
Generative3
------------------------------- ------- -------
Peru 499 1,180
-------------------------------- ------- -------
Argentina - 11
-------------------------------- ------- -------
Mexico - 2,588
-------------------------------- ------- -------
Chile - 379
-------------------------------- ------- -------
499 4,158
------- -------
Personnel (notes 10 and 11(1)) 2,967 7,412
-------------------------------- ------- -------
Others 1,334 408
-------------------------------- ------- -------
Total 9,255 18,140
-------------------------------- ------- -------
1 Mine-site exploration is performed with the purpose of
identifying potential minerals within an existing mine-site, with
the goal of maintaining or extending
the mine's life.
2 Prospects expenditure relates to detailed geological
evaluations in order to determine zones which have mineralisation
potential that is economically viable
for exploration. Exploration expenses are generally incurred in
the following areas: mapping, sampling, geophysics, identification
of local targets and
reconnaissance drilling.
3 Generative expenditure is very early stage exploration
expenditure related to the basic evaluation of the region to
identify prospects areas that have the geological conditions
necessary to contain mineral deposits. Related activities include
regional and field reconnaissance, satellite images, compilation of
public information and identification of exploration targets.
The Group determines the cash flows which relate to the
exploration activities of the companies engaged only in
exploration. Exploration activities incurred by Group operating
companies are not included since it is not practivable to separate
the liabilities related to the exploration activities of these
companies from their operating liabilities.
Cash outflows on exploration activities were US$1,190,000 in
2015 (2014: US$3,362,000).
9 Selling expenses
Year ended
31 December
----------------
2015 2014
US$000 US$000
---------------------------------------- ------- -------
Transportation of dore, concentrate and
maritime freight 3,548 6,020
----------------------------------------- ------- -------
Sales commissions 200 429
----------------------------------------- ------- -------
Personnel expenses (note 10) 254 249
----------------------------------------- ------- -------
Warehouse services 1,610 2,930
----------------------------------------- ------- -------
Taxes 12,994 15,609
----------------------------------------- ------- -------
Other 3,123 3,460
----------------------------------------- ------- -------
Total 21,729 28,697
----------------------------------------- ------- -------
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
10 Personnel expenses1
Year ended
31 December
----------------
2015 2014
US$000 US$000
--------------------------- ------- -------
Salaries and wages 103,433 115,770
---------------------------- ------- -------
Workers' profit sharing - (34)
---------------------------- ------- -------
Other legal contributions 20,735 22,168
---------------------------- ------- -------
Statutory holiday payments 6,534 7,074
---------------------------- ------- -------
Long Term Incentive Plan 1,013 (657)
---------------------------- ------- -------
Restricted share plan 2,843 -
---------------------------- ------- -------
Termination benefits 3,623 11,570
---------------------------- ------- -------
Other 1,584 1,805
---------------------------- ------- -------
Total 139,765 157,696
---------------------------- ------- -------
1 Personnel expenses are distributed in cost of sales,
administrative expenses, exploration expenses, selling expenses,
other expenses and capitalised as property plant and equipment
amounting to US$107,823,000 (2014: US$114,322,000), US$22,427,000
(2014: US$24,206,000), US$2,967,000 (2014: US$7,412,000),
US$254,000 (2014: US$249,000), US$1,218,000 (2014: US$1,642,000)
and US$5,076,000 (2014: US$9,865,000) respectively.
Average number of employees for 2015 and 2014 were as
follows:
Year ended
31 December
--------------
2015 2014
--------------- ------ ------
Peru 2,575 2,852
---------------- ------ ------
Argentina 1,129 1,179
---------------- ------ ------
Mexico - 19
---------------- ------ ------
Chile 3 11
---------------- ------ ------
United Kingdom 10 9
---------------- ------ ------
Total 3,717 4,070
---------------- ------ ------
11 Pre-tax exceptional items
Exceptional items are those significant 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 Group and facilitate comparison with prior
years.
Year ended
31 December
--------------------------------------------- ------------------
2015 2014
US$000 US$000
--------------------------------------------- --------- -------
Cost of sales
--------------------------------------------- --------- -------
Termination benefits1 (1,514) (1,327)
---------------------------------------------- --------- -------
Termination benefits Ares mine unit2 - (3,511)
---------------------------------------------- --------- -------
Work stoppage at Arcata mine unit - (1,227)
---------------------------------------------- --------- -------
Total (1,514) (6,065)
---------------------------------------------- --------- -------
Administrative expenses
--------------------------------------------- --------- -------
Termination benefits1 - (2,752)
---------------------------------------------- --------- -------
Total - (2,752)
---------------------------------------------- --------- -------
Exploration expenses
--------------------------------------------- --------- -------
Termination benefits1 - (886)
---------------------------------------------- --------- -------
Total - (886)
---------------------------------------------- --------- -------
Other expenses
--------------------------------------------- --------- -------
Loss on sale of subsidiary3 - (2,963)
---------------------------------------------- --------- -------
Total - (2,963)
---------------------------------------------- --------- -------
Impairment and write-off of assets (net)
--------------------------------------------- --------- -------
Impairment and write-off of assets4 (207,146) (1,534)
---------------------------------------------- --------- -------
Reversal of impairment of assets5 - 1,643
---------------------------------------------- --------- -------
Total (207,146) 109
---------------------------------------------- --------- -------
Finance income
--------------------------------------------- --------- -------
Gain on sale of available-for-sale financial
assets6 - 4,061
---------------------------------------------- --------- -------
Total - 4,061
---------------------------------------------- --------- -------
Finance costs
--------------------------------------------- --------- -------
Amortisation of transaction costs on
secure bank loans7 - (3,336)
---------------------------------------------- --------- -------
Loss from changes in the fair value of
financial instruments8 - (6,155)
---------------------------------------------- --------- -------
Interest on disputed tax charges9 (1,486) -
---------------------------------------------- --------- -------
Total (1,486) (9,491)
---------------------------------------------- --------- -------
Income tax benefit 36,888 3,845
---------------------------------------------- --------- -------
Total 36,888 3,845
---------------------------------------------- --------- -------
1 Termination benefits paid to workers following the cashflow
optimisation programme approved by management, amounting to
US$1,514,000 (2014:US$4,965,000).
2 Termination benefits generated in connection with the
suspension of the Ares mine unit.
3 Loss generated by the sale of the Group's interest in Moris
(refer to note 4(a)).
4 As at 31 December 2015 corresponds to the impairment of the
Pallancata mine unit of US$39,026,000, the Arcata mine unit of
US$72,424,000, the Crespo project of US$14,350,000, the Azuca
project of US$12,766,000, the Volcan project of US$57,070,000 and
the San Felipe project of US$10,927,000, and to the write-off of
assets of US$583,000. As at 31 December 2014 corresponds to the
write-off of assets of US$1,534,000.
5 Corresponds to a reversal of previously recorded impairment at
the San Felipe property of US$1,643,000 (note 17).
6 Corresponds to the gain on sale of the Group's holding in Gold
Resource Corp ('GRC') of US$2,642,000, Chaparral Gold of
US$842,000, Mirasol Resources Ltd of US$556,000 and Northern
Superior Resources Inc of US$21,000.
7 Corresponds to the attributable issue cost of the syndicated
US$270,000,000 loan, granted in 2013 and repaid in January 2014, to
CompañÃa Minera Ares S.A.C., disclosed as an exceptional item as a
significant one-off expense.
8 As at 31 December 2014 corresponds to the impairment of the
investments in Pembrook Mining Corp of US$6,000,000, Brionor
Resources of US$54,000, Revelo Resources Corp (formerly Iron Creek
Capital Corp) of US$53,000, Northern Superior Resources Inc of
US$45,000 and Empire Petroleum Corp of US$3,000.
9 Interest on overdue tax charges owed by the Group following a
change in circumstances surrounding a tax dispute with the Peruvian
tax authority, resulting in the exposure now being assessed as
'probable', rather than 'possible'.
12 Other income and other expenses before exceptional items
Year Year
ended ended
31 31
December December
2015 2014
------------ ------------
Before Before
exceptional exceptional
items items
US$000 US$000
--------------------------------------- ------------ ------------
Other Income
--------------------------------------- ------------ ------------
Export credit 2,743 1,386
---------------------------------------- ------------ ------------
Lease rentals 443 586
---------------------------------------- ------------ ------------
Logistic services 3,699 -
---------------------------------------- ------------ ------------
Other 1,136 2,140
---------------------------------------- ------------ ------------
8,021 4,112
------------ ------------
Other expenses
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
--------------------------------------- ------------ ------------
Increase in provision for mine closure
(note 26(4)) (7,590) (9,088)
---------------------------------------- ------------ ------------
Tax on mining reserves in Argentina
(note 30) (441) (3,453)
---------------------------------------- ------------ ------------
Provision of obsolescence of supplies (1,046) 945
---------------------------------------- ------------ ------------
Contingencies (108) (1,680)
---------------------------------------- ------------ ------------
Write off of value added tax (795) (37)
---------------------------------------- ------------ ------------
Other (5,284) (4,199)
---------------------------------------- ------------ ------------
Total (15,264) (17,512)
---------------------------------------- ------------ ------------
13 Finance income and finance costs before exceptional items
Year Year
ended ended
31 31
December December
2015 2014
------------ ------------
Before Before
exceptional exceptional
items items
US$000 US$000
----------------------------------------- ------------ ------------
Finance income
----------------------------------------- ------------ ------------
Interest on deposits and liquidity funds 648 1,567
------------------------------------------ ------------ ------------
Interest income 648 1,567
------------------------------------------ ------------ ------------
Dividends - 525
------------------------------------------ ------------ ------------
Gain on repurchase of bonds 856 -
------------------------------------------ ------------ ------------
Other 394 123
------------------------------------------ ------------ ------------
Total 1,898 2,215
------------------------------------------ ------------ ------------
Finance costs
----------------------------------------- ------------ ------------
Interest on secured bank loans (note
25) (5,842) (5,027)
------------------------------------------ ------------ ------------
Interest on convertible bond1 - (5,364)
------------------------------------------ ------------ ------------
Other interest (1,657) -
------------------------------------------ ------------ ------------
Interest on bond (note 25) (22,096) (20,302)
------------------------------------------ ------------ ------------
Interest expense (29,595) (30,693)
------------------------------------------ ------------ ------------
Unwind of discount (505) (1,865)
------------------------------------------ ------------ ------------
Loss from changes in the fair value
of financial instruments (116) (90)
------------------------------------------ ------------ ------------
Other (1,198) (426)
------------------------------------------ ------------ ------------
Total (31,414) (33,074)
------------------------------------------ ------------ ------------
1 Relates to US$115,000,000 of senior unsecured convertible
bonds, due in 2014, which were convertible into ordinary shares of
Hochschild Mining plc. The Group settled the convertible bonds in
cash upon their maturity in October 2014. The bonds had a coupon of
5.75% per annum payable semi-annually on 28 January and 28 July of
each year.
14 Income tax expense
Year ended 31 Year ended 31
December 2015 December 2014
----------------------------------- ----------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
US$000 US$000 US$000 US$000 US$000 US$000
------------------------------- ------------ ----------- -------- ------------ ----------- -------
Current corporate
income tax from
continuing operations
------------------------------- ------------ ----------- -------- ------------ ----------- -------
Current corporate
income tax charge 5,200 (259) 4,941 10,082 (251) 9,831
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
Current mining royalty
charge (note 30) 1,778 - 1,778 1,611 - 1,611
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
Current special mining
tax charge (note 30) 755 - 755 375 - 375
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
Withholding taxes (142) - (142) (343) - (343)
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
7,591 (259) 7,332 11,725 (251) 11,474
------------ ----------- -------- ------------ ----------- -------
Deferred taxation
------------------------------- ------------ ----------- -------- ------------ ----------- -------
Origination and reversal
of temporary differences
from continuing operations
(note 27) 12,637 (36,629) (23,992) (457) (3,851) (4,308)
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
Effect of change in
tax rate 142 - 142 (4,802) 257 (4,545)
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
12,779 (36,629) (23,850) (5,259) (3,594) (8,853)
------------ ----------- -------- ------------ ----------- -------
Total taxation charge/(credit)
in the income statement 20,370 (36,888) (16,518) 6,466 (3,845) 2,621
-------------------------------- ------------ ----------- -------- ------------ ----------- -------
The weighted average statutory income tax rate was 25.4% for
2015 and 28.7% for 2014. This is calculated as the average of the
statutory tax rates applicable in the countries in which the Group
operates, weighted by the profit/(loss) before tax of the Group
companies in their respective countries as included in the
consolidated financial statements.
The change in the weighted average statutory income tax rate is
due to a change in the weighting of profit/(loss) before tax in the
various jurisdictions in which the Group operates.
In December 2014, the Peruvian government approved a schedule
for the gradual reduction of the statutory income tax rate, from
its current level of 30% to 26% by 2019.
The tax related to items charged or credited to equity is as
follows:
As at 31
December
----------------
2015 2014
US$000 US$000
------------------------------------- ------- -------
Deferred taxation:
------------------------------------- ------- -------
Deferred income tax relating to fair
value gains on cash flow hedges 4,739 1,216
-------------------------------------- ------- -------
Total tax charge in the statement of
other comprehensive income 4,739 1,216
-------------------------------------- ------- -------
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
The total taxation charge on the Group's profit before tax
differs from the theoretical amount that would arise using the
weighted average tax rate applicable to the consolidated profits of
the Group companies as follows:
As at 31
December
-------------------
2015 2014
US$000 US$000
---------------------------------------------- --------- --------
Loss from continuing operations before
income tax (256,175) (68,210)
----------------------------------------------- --------- --------
At average statutory income tax rate
of 25.4% (2014: 28.7%) (65,017) (19,547)
----------------------------------------------- --------- --------
Expenses not deductible for tax purposes 1,040 3,058
----------------------------------------------- --------- --------
Non-taxable income1 - (851)
----------------------------------------------- --------- --------
Deferred tax recognised on special investment
regime (691) (780)
----------------------------------------------- --------- --------
Movement in unrecognised deferred tax(2) 16,565 6,700
----------------------------------------------- --------- --------
Change in statutory income tax rate 142 (4,545)
----------------------------------------------- --------- --------
Withholding tax (142) (343)
----------------------------------------------- --------- --------
Special mining tax and mining royalty3 2,533 1,986
----------------------------------------------- --------- --------
Derecognition of deferred tax asset 1,251 -
----------------------------------------------- --------- --------
Foreign exchange rate effect4 24,964 14,473
----------------------------------------------- --------- --------
Other 2,837 2,470
----------------------------------------------- --------- --------
At average effective income tax rate
of 6.4% (2014: -3.8%) (16,518) 2,621
----------------------------------------------- --------- --------
Taxation charge attributable to continuing
operations (16,518) 2,621
----------------------------------------------- --------- --------
Total taxation charge in the income statement (16,518) 2,621
----------------------------------------------- --------- --------
1 2014: Mainly corresponds to the gain on sale of Gold Resource
Corp shares.
2 Includes the effect of the impairment of Volcan and San Felipe
projects of US$11,414,000 and US$3,278,000 respectively.
3 Corresponds to the impact of a mining royalty and special
mining tax in Peru (note 30).
4 Mainly corresponds to the foreign exchange effect of
converting tax bases and monetary items from local currency to the
functional currency.
15 Basic and diluted earnings per share
Earnings per share ('EPS') is calculated by dividing
profit/(loss) for the year attributable to equity shareholders of
the Company by the weighted average number of ordinary shares
issued during the year.
The Company has dilutive potential ordinary shares.
As a result of the rights issue being at a discounted price, the
number of ordinary shares outstanding has increased due to the
bonus element resulting in the calculation of basic and diluted
earnings per share for all periods presented having been adjusted
retrospectively.
As at 31 December 2015 and 2014, EPS has been calculated as
follows:
As at 31
December
--------------
2015 2014
--------------------------------------- ------ ------
Basic loss per share from continuing
operations
--------------------------------------- ------ ------
Before exceptional items (US$) (0.14) (0.13)
---------------------------------------- ------ ------
Exceptional items (US$) (0.38) (0.03)
---------------------------------------- ------ ------
Total for the year and from continuing
operations (US$) (0.52) (0.16)
---------------------------------------- ------ ------
Diluted loss per share from continuing
operations
--------------------------------------- ------ ------
Before exceptional items (US$) (0.14) (0.13)
---------------------------------------- ------ ------
Exceptional items (US$) (0.38) (0.03)
---------------------------------------- ------ ------
Total for the year and from continuing
operations (US$) (0.52) (0.16)
---------------------------------------- ------ ------
Net loss from continuing operations before exceptional items and
attributable to equity holders of the parent is derived
as follows:
As at 31
December
-------------------
2015 2014
--------------------------------------------- --------- --------
Loss attributable to equity holders of
the parent - continuing operations (US$000) (234,610) (68,877)
---------------------------------------------- --------- --------
Exceptional items after tax - attributable
to equity holders of the parent (US$000) 172,758 13,914
---------------------------------------------- --------- --------
Loss from continuing operations before
exceptional items attributable to equity
holders
of the parent (US$000) (61,852) (54,963)
---------------------------------------------- --------- --------
Diluted loss from continuing operations
before exceptional items attributable
to equity
holders of the parent (US$000) (61,852) (54,963)
---------------------------------------------- --------- --------
The following reflects the share data used in the basic and
diluted loss per share computations:
As at 31
December
----------------
2015 2014
---------------------------------------------- ------- -------
Basic weighted average number of ordinary
shares in issue (thousands) 449,511 421,783
----------------------------------------------- ------- -------
Dilutive potential ordinary shares related
to contingently issuable shares (thousands)1 - -
---------------------------------------------- ------- -------
Diluted weighted average number of ordinary
shares in issue and dilutive potential
ordinary shares (thousands) 449,511 421,783
----------------------------------------------- ------- -------
1 The potential ordinary shares related to the contingently
issuable shares under the Enhanced Long Term Incentive Plan and
Restricted Share Plan" have not been included in the calculation of
diluted EPS for 2015 and 2014 as they have an antidilutive
effect.
16 Property, plant and equipment
Mining
properties Construction
and in progress
development Land Plant Mine and
costs1 and and closure capital
buildings equipment Vehicles asset advances Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Year ended 31
December 2015
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Cost
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 1 January 2015 999,777 257,171 389,042 6,030 96,213 237,308 1,985,541
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Additions 91,862 632 31,455 - - 106,737 230,686
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Change in discount
rate - - - - (755) - (755)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Change in mine
closure estimate - - - - 7,928 - 7,928
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Disposals - (195) (952) (196) - - (1,343)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Write-offs (2,382) (118) (5) (2,505)
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Transfer from
intangibles 582 - - - - - 582
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Transfers and
other movements2 4,886 214,485 63,584 435 - (281,648) 1,742
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 31 December
2015 1,097,107 472,093 480,747 6,151 103,386 62,392 2,221,876
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Accumulated
depreciation
and impairment
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 1 January 2015 526,824 134,638 193,210 3,663 49,486 1,410 909,231
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Depreciation for
the year 91,129 23,333 32,053 913 3,184 - 150,612
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Disposals - (179) (223) (124) - - (526)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Impairment 60,259 20,752 30,451 71 7,120 - 118,653
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Write-offs - - (1,839) (83) - - (1,922)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Transfers and
other movements2 335 492 (264) 7 - (258) 312
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 31 December
2015 678,547 179,036 253,388 4,447 59,790 1,152 1,176,360
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Net book amount
at 31 December
2015 418,560 293,057 227,359 1,704 43,596 61,240 1,045,516
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
There were borrowing costs capitalised in property, plant and
equipment amounting to US$8,252,000 (2014: US$9,904,000). The
capitalisation rate used was 6.79% (2014: 8.83%).
1 Mining properties and development costs related to Azuca,
Crespo and Volcan projects are not currently being depreciated.
2 Net of transfers and other movements of US$1,430,000 were
transferred from evaluation and exploration assets.
At the end of 2015, given the continued challenging environment
for the mining sector, the Group carried out an impairment review
of all of its operating mines (Arcata, Pallancata, Inmaculada and
San Jose), and its growth projects (Crespo, Azuca, San Felipe and
Volcan). As a result of this review the Group recognised an
impairment charge in the Pallancata mine unit of US$39,026,000, the
Arcata mine unit of US$72,424,000, the Crespo project of
US$14,350,000, the Azuca project of US$12,766,000, San Felipe
project of US$10,927,000 and the Vocan project of US$57,070,000.
The impairment recognised in property plant and equipment was
US$118,653,000, in evaluation and exploration assets was
US$74,550,000 and in intangibles was US$13,360,000 (refer to note
17 and 18).
The recoverable values of these CGUs were determined using a
fair value less costs of disposal (FVLCD) methodology. FVLCD was
determined using a combination of level 2 and level 3 inputs to
construct a discounted cash flow model to estimate the amount that
would be paid by a willing third party in an arm's length
transaction. The key assumptions on which management has based its
determination of FVLCD, and the associated recoverable values
calculated are presented below.
Gold and silver prices
US$ per oz. 2016 2017 2018 2019 Long-term
------------ ----- ----- ----- ----- ---------
Gold 1,175 1,200 1,213 1,240 1,224
------------- ----- ----- ----- ----- ---------
Silver 16 17 18 19 18
------------- ----- ----- ----- ----- ---------
Other key assumptions
Arcata Pallancata San Inmaculada Crespo Azuca San Volcan
Jose Felipe
------------------ ------ ---------- ----- ---------- ------ ----- ------- ------
Discount rate
(post tax) 6.3% 6.3% 9.7% 6.3% 7.8% n/a n/a n/a
------------------- ------ ---------- ----- ---------- ------ ----- ------- ------
Value per in-situ
ounce (per tonne
in the case of
San Felipe) n/a n/a n/a n/a n/a 0.25 16.21 6.55
------------------- ------ ---------- ----- ---------- ------ ----- ------- ------
1 With respect to the Azuca, Volcan and San Felipe growth
projects, given their early stage, the Group applied a value
in-situ methodology, which applies a realisable 'enterprise value'
to unprocessed mineral resources. The methodology is used to
determine the fair value less costs of disposal of the Azuca,
Volcan which includes the water permits held by the Group, and San
Felipe CGUs. The enterprise value used in the calculation performed
at 31 December 2015 was US$6.55 per gold equivalent ounce of
resources (Volcan), $0.25 per silver equivalent ounce of resources
(Azuca) and US$16.21 per zinc equivalent tonne of resources (San
Felipe). The enterprise value figures are based on observable
external market information.
Current carrying Arcata Pallancata San Inmaculada Crespo Azuca San Volcan
value of CGU, Jose Felipe
net of deferred
tax (US$000)
----------------- ------ ---------- ------- ---------- ------ ------ ------- ------
31 December 2015 42,956 49,331 160,055 587,208 46,275 26,102 4,218 62,512
------------------ ------ ---------- ------- ---------- ------ ------ ------- ------
Crespo, Azuca and San Felipe projects correspond to the
exploration segment.
Sensitivity analysis
Other than as disclosed below, management believes that no
reasonably possible change in any of the key assumptions above
would cause the carrying value of any of its cash generating units
to exceed its recoverable amount.
The estimated recoverable amounts of the following of the
Group's CGUs are equal to, or not materially greater than, their
carrying values; consequently, any adverse change in the following
key assumptions would, in isolation, cause an impairment loss to be
recognised:
Approximate impairment
resulting from the
following San San
changes (US$000) Arcata Pallancata Jose Inmaculada Crespo Azuca Felipe Volcan
------------------------ -------- ---------- -------- ---------- -------- ------- ------- -------
Prices (10% decrease) (42,956) (14,892) (89,961) (86,439) (16,308) n/a n/a n/a
------------------------- -------- ---------- -------- ---------- -------- ------- ------- -------
Post tax discount rate
(3% increase) (5,354) (3,525) (28,570) (50,812) (12,348) n/a n/a n/a
------------------------- -------- ---------- -------- ---------- -------- ------- ------- -------
Production costs (10%
increase) (42,956) (8,082) (48,914) (20,495) (7,397) n/a n/a n/a
------------------------- -------- ---------- -------- ---------- -------- ------- ------- -------
Value per in-situ ounce
(per tonne in the case
of San Felipe) (10%
decrease) n/a n/a n/a n/a n/a (2,610) (422) (6,251)
------------------------- -------- ---------- -------- ---------- -------- ------- ------- -------
Mining Construction
properties in progress
and Land Plant Mine and
development and and closure capital
costs buildings equipment Vehicles asset advances Total
US$000 US$000 US$000 US$000 US$000 US$000 US$000
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Year ended 31
December 2014
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Cost
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 1 January
2014 869,780 220,083 371,079 6,511 74,362 136,383 1,678,198
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Additions 136,742 1,913 20,281 46 - 157,192 316,174
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Change in discount
rate - - - - 4,357 - 4,357
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Change in mine
closure estimate - - - - 18,741 - 18,741
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Disposals - (178) (2,657) (309) - (61) (3,205)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Write-offs (114) (276) (3,943) (308) - - (4,641)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Disposal of
subsidiary
(note 4(a)) (11,015) (7,851) (6,972) (355) (1,247) - (27,440)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Transfers and
other movements1 4,384 43,480 11,254 445 - (56,206) 3,357
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 31 December
2014 999,777 257,171 389,042 6,030 96,213 237,308 1,985,541
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Accumulated
depreciation
and impairment
-------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 1 January
2014 452,777 120,923 175,453 3,645 48,425 3,498 804,721
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Depreciation
for the year 84,928 19,836 29,854 752 2,308 - 137,678
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Disposals - (178) (2,385) (256) - - (2,819)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Write-offs (51) (184) (2,677) (195) - - (3,107)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Disposal of
subsidiary
(note 4(a)) (11,015) (7,851) (6,969) (345) (1,247) - (27,427)
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Transfers and
other movements1 185 2,092 (66) 62 - (2,088) 185
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
At 31 December
2014 526,824 134,638 193,210 3,663 49,486 1,410 909,231
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
Net book amount
at 31 December
2014 472,953 122,533 195,832 2,367 46,727 235,898 1,076,310
--------------------- ------------ ---------- ---------- -------- -------- ------------ ---------
1 Net of transfers and other movements of US$3,172,000 were
transferred from evaluation and exploration assets.
17 Evaluation and exploration assets
San Volcan
Azuca Crespo Felipe US$000 Others Total
US$000 US$000 US$000 US$000 US$000
----------------------- ------- ------- ------- ------- ------- -------
Cost
----------------------- ------- ------- ------- ------- ------- -------
Balance at 1 January
2014 75,540 29,176 55,950 90,575 10,684 261,925
------------------------ ------- ------- ------- ------- ------- -------
Additions 821 - - 1,463 2,382 4,666
------------------------ ------- ------- ------- ------- ------- -------
Transfers from/(
to) property, plant
and equipment 3,593 (3,620) - (3) (3,822) (3,852)
------------------------ ------- ------- ------- ------- ------- -------
Balance at 31 December
2014 79,954 25,556 55,950 92,035 9,244 262,739
------------------------ ------- ------- ------- ------- ------- -------
Additions 211 224 - 958 5,468 6,861
------------------------ ------- ------- ------- ------- ------- -------
Transfers from/(to)
property plant and
equipment - - - - (1,742) (1,742)
------------------------ ------- ------- ------- ------- ------- -------
Balance at 31 December
2015 80,165 25,780 55,950 92,993 12,970 267,858
------------------------ ------- ------- ------- ------- ------- -------
Accumulated impairment
----------------------- ------- ------- ------- ------- ------- -------
Balance at 1 January
2014 29,862 9,130 16,550 - 1,740 57,282
------------------------ ------- ------- ------- ------- ------- -------
Impairment1 - - (1,643) - - (1,643)
------------------------ ------- ------- ------- ------- ------- -------
Transfers from/(to)
property, plant
and equipment 3,430 (3,620) - - - (190)
------------------------ ------- ------- ------- ------- ------- -------
Balance at 31 December
2014 33,292 5,510 14,907 - 1,740 55,449
------------------------ ------- ------- ------- ------- ------- -------
Impairment1 12,584 4,368 10,927 44,381 2,290 74,550
------------------------ ------- ------- ------- ------- ------- -------
Transfers from/(to)
property, plant
and equipment - - - - (312) (312)
------------------------ ------- ------- ------- ------- ------- -------
Balance at 31 December
2015 45,876 9,878 25,834 44,381 3,718 129,687
------------------------ ------- ------- ------- ------- ------- -------
Net book value as
at 31 December 2014 46,662 20,046 41,043 92,035 7,504 207,290
------------------------ ------- ------- ------- ------- ------- -------
Net book value as
at 31 December 2015 34,289 15,902 30,116 48,612 9,252 138,171
------------------------ ------- ------- ------- ------- ------- -------
There were no borrowing costs capitalised in evaluation and
exploration assets.
1 In 2015 the Group recognised an impairment charge of
US$74,550,000, mainly related to the Volcan project (refer to note
16). The FVLCD calculation is detailed in note 16. In 2014, the
Group partially reversed the impairment of the San Felipe project
of US$1,643,000.
18 Intangible assets
Transmission
line1 Water
permits2 Legal
Software rights3
licences Total
US$000 US$000 US$000 US$000 US$000
------------------------- ------------ ---------- --------- -------- -------
Cost
------------------------- ------------ ---------- --------- -------- -------
Balance at 1 January
2014 22,157 26,583 1,348 6,404 56,492
-------------------------- ------------ ---------- --------- -------- -------
Additions - - 4 277 281
-------------------------- ------------ ---------- --------- -------- -------
Transfer - - 421 - 421
-------------------------- ------------ ---------- --------- -------- -------
Balance at 31 December
2014 22,157 26,583 1,773 6,681 57,194
-------------------------- ------------ ---------- --------- -------- -------
Additions - - 25 587 612
-------------------------- ------------ ---------- --------- -------- -------
Transfer - - - (582) (582)
-------------------------- ------------ ---------- --------- -------- -------
Balance at 31 December
2015 22,157 26,583 1,798 6,686 57,224
-------------------------- ------------ ---------- --------- -------- -------
Accumulated amortisation
and impairment
------------------------- ------------ ---------- --------- -------- -------
Balance at 1 January
2014 10,022 - 1,238 1,549 12,809
-------------------------- ------------ ---------- --------- -------- -------
Amortisation for the
year4 1,102 - 79 458 1,639
-------------------------- ------------ ---------- --------- -------- -------
Transfer - - (69) - (69)
-------------------------- ------------ ---------- --------- -------- -------
Balance at 31 December
2014 11,124 - 1,248 2,007 14,379
-------------------------- ------------ ---------- --------- -------- -------
Amortisation for the
year4 946 - 67 491 1,504
(MORE TO FOLLOW) Dow Jones Newswires
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-------------------------- ------------ ---------- --------- -------- -------
Impairment5 - 12,686 - 674 13,360
-------------------------- ------------ ---------- --------- -------- -------
Balance at 31 December
2015 12,070 12,686 1,315 3,172 29,243
-------------------------- ------------ ---------- --------- -------- -------
Net book value as at
31 December 2014 11,033 26,583 525 4,674 42,815
-------------------------- ------------ ---------- --------- -------- -------
Net book value as at
31 December 2015 10,087 13,897 483 3,514 27,981
-------------------------- ------------ ---------- --------- -------- -------
1 The transmission line is amortised using the units of
production method. At 31 December 2015 the remaining amortisation
period is approximately 10 years.
2 Corresponds to the acquisition of water permits of Andina
Minerals Group ("Andina"). They have an indefinite life according
to Chilean law. In the case of the water permits the Group applied
a value in situ methodology, which applies a realisable 'enterprise
value' to unprocessed mineral resources. The methodology is used to
determine the fair value less costs of disposal of the Volcan
cash-generating unit, which includes the water permits held by the
Group. The enterprise value used in the calculation performed at 31
December 2015 was US$10.29 per gold equivalent ounce of resources
(2014: US$18.00). The enterprise value figures are based on
observable external market information
3 Legal rights correspond to expenditures required to give the
Group the right to use a property for the surface exploration work,
development and production.
At 31 December 2015 the remaining amortisation period is 10
years.
4 The amortisation for the period is included in cost of sales
and administrative expenses in the income statement.
5 Correspond to the impairment of the Crespo and Volcan projects
(refer to note 16).
The carrying amount of water permits is reviewed annually to
determine whether it is in excess of its recoverable amount.
19 Available-for-sale financial assets
Year ended
31 December
-----------------
2015 2014
US$000 US$000
------------------------------------- ------- --------
Beginning balance 455 51,658
-------------------------------------- ------- --------
Fair value change recorded in equity (86) (3,106)
-------------------------------------- ------- --------
Disposals1 (3) (48,097)
-------------------------------------- ------- --------
Ending balance 366 455
-------------------------------------- ------- --------
1 As at 31 December 2014 corresponds to the sales of 9,451,874
shares of Gold Resource Corp., 3,334,000 shares of Norther Superior
Resources Inc., 3,755,746 shares of Chaparral Gold Corp., and
500,000 shares of Mirasol Resources Ltd.
The fair value of the listed shares is determined by reference
to published price quotations in an active market.
The investments in unlisted shares (Pembrook Mining Corp. and
ECI Exploration and Mining Inc.) were recognised at cost less any
recognised impairment losses given that there is not an active
market for these investments. The investments in ECI Exploration
and Mining Inc. and Pembrook Mining Corp. were fully impaired as at
31 December 2014 and 2015.
20 Trade and other receivables
As at 31 December
------------------------------------------
2015 2014
-------------------- --------------------
Non-current Current Non-current Current
US$000 US$000 US$000 US$000
---------------------------------- ----------- ------- ----------- -------
Trade receivables - 62,352 - 72,818
----------------------------------- ----------- ------- ----------- -------
Advances to suppliers - 6,567 - 5,347
----------------------------------- ----------- ------- ----------- -------
Duties recoverable from exports
of Minera Santa Cruz 4,698 - 2,016 6,000
----------------------------------- ----------- ------- ----------- -------
Receivables from related parties
(note 29(a)) - 11 - 45
----------------------------------- ----------- ------- ----------- -------
Loans to employees 991 149 1,192 748
----------------------------------- ----------- ------- ----------- -------
Interest receivable - 36 - 78
----------------------------------- ----------- ------- ----------- -------
Receivable from Kaupthing, Singer
and Friedlander Bank - 252 - 264
----------------------------------- ----------- ------- ----------- -------
Other1 1,567 13,518 2,186 15,939
----------------------------------- ----------- ------- ----------- -------
Provision for impairment2 - (5,327) - (5,136)
----------------------------------- ----------- ------- ----------- -------
Assets classified as receivables 7,256 77,558 5,394 96,103
----------------------------------- ----------- ------- ----------- -------
Prepaid expenses 60 1,157 389 11,336
----------------------------------- ----------- ------- ----------- -------
Value Added Tax (VAT)3 2,871 46,112 705 59,599
----------------------------------- ----------- ------- ----------- -------
Total 10,187 124,827 6,488 167,038
----------------------------------- ----------- ------- ----------- -------
The fair values of trade and other receivables approximate their
book value.
1 Mainly corresponds to account receivables from contractors for
the sale of supplies of US$4,791,000 (2014: US$9,763,000), a tax
claim related to the withholding tax on the GRC dividends received
of US$142,000 (2014: US$1,447,000), other tax claims of
US$2,840,000 (2014: US$2,767,000 ).
2 Includes the provision for impairment of trade receivable from
a customer in Peru of US$1,108,000 (2014: US$1,108,000), the
impairment of deposits in Kaupthing, Singer and Friedlander of
US$252,000 (2014: US$264,000) and other receivables of US$3,967,000
(2014: US$3,764,000) that mainly relates to an exploration project
that would be recovered through an ownership interest if it
succeeds.
3 Primarily relates to US$13,078,000 (2014: US$19,583,000) of
VAT receivable related to the San Jose project that will be
recovered through future sales of gold and silver by Minera Santa
Cruz S.A. It also includes the VAT of CompañÃa Minera Ares S.A.C.
of US$32,086,000 (2014: US$35,026,000). The VAT is valued at its
recoverable amount.
Movements in the provision for impairment of receivables:
Individually
impaired
US$000
----------------------------- ------------
At 1 January 2014 5,084
------------------------------ ------------
Provided for during the year 110
------------------------------ ------------
Released during the year (58)
------------------------------ ------------
At 31 December 2014 5,136
------------------------------ ------------
Provided for during the year 446
------------------------------ ------------
Released during the year (255)
------------------------------ ------------
At 31 December 2015 5,327
------------------------------ ------------
As at 31 December 2015 and 2014, none of the financial assets
classified as receivables (net of impairment) were past due.
21 Inventories
As at 31
December
----------------
2015 2014
US$000 US$000
--------------------------------------- ------- -------
Finished goods valued at cost 14,120 7,147
---------------------------------------- ------- -------
Finished goods at net realisable value 1,856 -
---------------------------------------- ------- -------
Products in process valued at cost 13,632 13,326
---------------------------------------- ------- -------
Products in process at net realizable
value 1,121 -
---------------------------------------- ------- -------
Supplies and spare parts 44,855 42,404
---------------------------------------- ------- -------
75,584 62,877
------- -------
Provision for obsolescence of supplies (5,298) (4,460)
---------------------------------------- ------- -------
Total 70,286 58,417
---------------------------------------- ------- -------
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Finished goods include ounces of gold and silver, dore and
concentrate. Products in process include dore, concentrate and
stockpile.
The Group either sells dore bars as a finished product or if it
is commercially advantageous to do so, delivers the bars for
refining into gold and silver ounces which are then sold. In the
latter scenario, the dore bars are classified as products in
process. The amount of dore on hand at 31 December 2015 included in
products in process is US$3,827,000 (2014: US$1,405,000).
Concentrate is sold to smelters, but in addition could be used
as a product in process to produce dore.
As part of the Group's short-term financing policies, it
acquires pre-shipment loans which are guaranteed by the sales
contracts.
The amount of expense recognised in profit and loss related to
the consumption of inventory of supplies, spare parts and raw
materials is US$78,525,000 (2014: US$75,066,000).
Movements in the provision for obsolescence comprise an increase
in the provision of US$1,046,000 (2014: US$192,000) and the
reversal of US$Nil relating to the sale of supplies and spare
parts, that had been provided for (2014: US$1,137,000).
22 Cash and cash equivalents
As at 31
December
----------------
2015 2014
US$000 US$000
------------------------------------- ------- -------
Cash at bank 368 293
-------------------------------------- ------- -------
Liquidity funds1 337 935
-------------------------------------- ------- -------
Current demand deposit accounts2 47,717 76,850
-------------------------------------- ------- -------
Time deposits3 35,595 37,921
-------------------------------------- ------- -------
Cash and cash equivalents considered
for the statement of cash flows4 84,017 115,999
-------------------------------------- ------- -------
The fair value of cash and cash equivalents approximates their
book value. The Group does not have undrawn borrowing facilities
available in the future for operating activities or capital
commitments.
1 The liquidity funds are mainly invested in certificates of
deposit, commercial papers and floating rate notes with a weighted
average maturity of 14 days as at 31 December 2015 (2014: average
of 10 days).
2 Relates to bank accounts which are freely available and bear
interest.
3 These deposits have an average maturity of 2 days (2014:
Average of 2 days).
4 Funds deposited in Argentinean institutions are effectively
restricted for transfer to other countries and are invested
locally. Included within cash and cash equivalents at 31 December
2015 is US$11,696,000 (2014: US$14,233,000), which is not readily
available for use in subsidiaries outside of Argentina.
23 Deferred income
On 3 August 2011, Hochschild entered into an agreement with
Impulsora Minera Santa Cruz ("IMSC") whereby IMSC acquired the
right to explore the San Felipe properties and an option to
purchase the related concessions. Under the terms of this agreement
the Group has received the following non-refundable payments to
date:
As at 31
December
----------------
2015 2014
US$000 US$000
-------------------- ------- -------
San Felipe contract 25,000 25,000
--------------------- ------- -------
These payments reduce the total consideration IMSC will be
required to pay upon exercise of the option on December 2016, and
constitute an advance of the final purchase price, rather than an
option premium, as such, they were recorded as deferred income. On
7 July 2015, IMSC renegotiated terms of the agreement, postponing
the advance payment of US$5,000,000 from 1 December 2015 to 1
December 2016.
24 Trade and other payables
As at 31 December
------------------------------------------
2015 2014
-------------------- --------------------
Non-current Current Non-current Current
US$000 US$000 US$000 US$000
------------------------------ ----------- ------- ----------- -------
Trade payables1 - 58,655 - 64,458
------------------------------- ----------- ------- ----------- -------
Salaries and wages payable2 - 20,278 - 23,890
------------------------------- ----------- ------- ----------- -------
Dividends payable - 826 - 1,789
------------------------------- ----------- ------- ----------- -------
Taxes and contributions 57 9,605 - 11,441
------------------------------- ----------- ------- ----------- -------
Guarantee deposits - 7,163 - 7,327
------------------------------- ----------- ------- ----------- -------
Mining royalty (note 30) - 796 - 951
------------------------------- ----------- ------- ----------- -------
Accounts payable to related
parties (note 29) - 40 - 49
------------------------------- ----------- ------- ----------- -------
Account payable to Graña
& Montero3 20,322 - - -
------------------------------- ----------- ------- ----------- -------
Other - 4,529 92 1,985
------------------------------- ----------- ------- ----------- -------
Total 20,379 101,892 92 111,890
------------------------------- ----------- ------- ----------- -------
The fair value of trade and other payables approximate their
book values.
1 Trade payables relate mainly to the acquisition of materials,
supplies and contractors' services. These payables do not accrue
interest and no guarantees have been granted.
2 Salaries and wages payable relates to remuneration payable.
There were no board members remuneration and long term incentive
plan payable at 31 December 2015 and 2014.
3 Related to the construction of Inmaculada mine unit. Includes
the principal of US$20,000,000 plus interests of US$322,000,
calculated at a 5% interest rate. The payment of the amount owing
is to be made in four instalments every six months starting in
September 2017.
25 Borrowings
As at 31 December
----------------------------------------------------------------
2015 2014
------------------------------- -------------------------------
Effective Effective
interest Non-current Current interest Non-current Current
rate US$000 US$000 rate US$000 US$000
-------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
Bond payable (a) 8.56% 290,230 8,777 8.48% 342,043 13,457
--------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
Secured bank loans
(b)
-------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
* Pre-shipment loans in Minera Santa Cruz (note 21) 29.64% - 10,554 29.08% - 13,843
--------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
* Medium-term bank loan 3.82% 49,548 229 3.47% 98,791 582
--------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
0.7%
* Short-term bank loans to 1.35% - 75,200 - - -
--------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
Total 339,778 94,760 440,834 27,882
--------------------------------------------------------- --------- ----------- ------- --------- ----------- -------
(a) Bond payable
On 23 January 2014 the Group issued US$350,000,000 7.75% Senior
Unsecured Notes of CompañÃa Minera Ares S.A.C. guaranteed by
Hochschild Mining plc and Hochschild Mining (Argentina) Corporation
S.A.The interest is paid semiannually, until maturity in 23 January
2021.During November and Decembe 2015, the Group repurchased bonds
amounting to US$55,225,000 for $54,369,000, giving rise to a gain
on repurchase of US$856,000 (see note 12). The balance at 31
December 2015 comprises the carrying value, including accrued
interest payable, of US$299,007,000 (2014: US$355,500,000)
determined in accordance with the effective interest method.
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The following options could be taken before the maturity:
-- Optional Redemption with Proceeds of Equity Offerings: Up to
35% at 107.750% prior to 23 January 2017
-- Optional Redemption with Make-Whole Premium: At any time
prior to 23 January 2018, the issuer may redeem all or part of the
notes, at a price equal to 100% of the outstanding principal amount
of the notes plus accrued and unpaid interest and additional
amounts, if any, to the redemption date, plus a "make-whole"
premium at Treasury Rate + 50 bps.
-- Optional Redemption without Make-Whole Premium: The issuer
may redeem all or part of the notes on or after 23 January 2018 at
the redemption prices specified plus accrued and unpaid interest
and additional amounts, if any, to the redemption date. The Make
Whole Premium requires repayment of 103.875%, 101.938% or 100% of
the outstanding principal balance if exercised in 2018, 2019 or
2020 respectively.
-- Optional Redemption Upon Tax Event: 100% of the outstanding
principal amount plus accrued and unpaid interest and additional
amounts, if any.
-- Change of Control Offer: 101% of principal amount plus accrued and unpaid interest.
(b) Secured bank loans:
Medium-term bank loan:
Credit agreement of US$100,000,000 with Scotiabank Peru S.A.A.
acting as Lead Arranger and The Bank of Nova Scotia and Corpbanca
as lenders. The borrower is CompañÃa Minera Ares S.A.C. and the
loan is guaranteed by Hochschild Mining plc. The loan has an
interest rate of LIBOR + 2.6% payable quarterly. On November 2015
the Group paid US$50,000,000 of principal and modified the schedule
of repayments, starting on 30 March 2018 until maturity on 30
December 2019. The carrying value including accrued interest
payable at 31 December 2015 of US$49,777,000 (2014: US$99,373,000)
was determined in accordance with the effective interest
method.
Short-term bank loans:
Six credit agreements signed by CompañÃa Minera Ares S.A.C. with
BBVA Continental. The loans have an interest rate ranging from 0.7%
to 1.35%. The carrying value including accrued interest payable at
31 December 2015 is US$75,200,000 (2014: US$Nil)
The maturity of non-current borrowings is as follows:
As at 31
December
----------------
2015 2014
US$000 US$000
---------------------- ------- -------
Between 1 and 2 years - 16,660
----------------------- ------- -------
Between 2 and 5 years 49,548 82,131
----------------------- ------- -------
Over 5 years 290,230 342,043
----------------------- ------- -------
Total 339,778 440,834
----------------------- ------- -------
The carrying amount of current borrowings differs their fair
value only with respect to differences arising under the effective
interest rate calculations described above. The carrying amount and
fair value of the non--current borrowings are as follows:
Carrying
amount Fair value
as at 31 as at 31
December December
---------------- ----------------
2015 2014 2015 2014
US$000 US$000 US$000 US$000
------------------- ------- ------- ------- -------
Secured bank loans 49,548 98,791 48,223 99,083
-------------------- ------- ------- ------- -------
Bond payable 290,230 342,043 274,878 348,250
-------------------- ------- ------- ------- -------
Total 339,778 440,834 323,101 447,333
-------------------- ------- ------- ------- -------
The fair value of secured bank loans was determined by
discounting the remaining principal and interest payments at the
three month U.S. LIBOR rate plus 2.6 percent. The U.S. LIBOR rate
is a Level 1 input. In the case of the bond payable, the fair value
was determined with reference to the quoted price of these bonds in
an active market, another Level 1 input.
26 Provisions
Long
Provision Workers' Term
for profit Incentive
mine closure1 sharing2 Plan3
Other Total
US$000 US$000 US$000 US$000 US$000
-------------- --------- ---------- ------- -------
At 1 January 2014 82,149 374 1,879 4,820 89,222
-------------------------- -------------- --------- ---------- ------- -------
Additions - - - 1,680 1,680
-------------------------- -------------- --------- ---------- ------- -------
Accretion 242 - - - 242
-------------------------- -------------- --------- ---------- ------- -------
Change in discount rate 4,357 - - - 4,357
-------------------------- -------------- --------- ---------- ------- -------
Change in estimates 27,8294 - (1,285) - 26,544
-------------------------- -------------- --------- ---------- ------- -------
Payments (5,524) (374) - (260) (6,158)
-------------------------- -------------- --------- ---------- ------- -------
Sale of subsidiary (note
4(a)) (1,266) - - - (1,266)
-------------------------- -------------- --------- ---------- ------- -------
At 31 December 2014 107,787 - 594 6,240 114,621
-------------------------- -------------- --------- ---------- ------- -------
Less current portion - - - (2,870) (2,870)
-------------------------- -------------- --------- ---------- ------- -------
Non-current portion 107,787 - 594 3,370 111,751
-------------------------- -------------- --------- ---------- ------- -------
At 1 January 2015 107,787 - 594 6,240 114,621
-------------------------- -------------- --------- ---------- ------- -------
Additions - - 544 108 652
-------------------------- -------------- --------- ---------- ------- -------
Accretion 69 - - - 69
-------------------------- -------------- --------- ---------- ------- -------
Change in discount rate (755) - - - (755)
-------------------------- -------------- --------- ---------- ------- -------
Change in estimates 15,5174 - (175) - 15,342
-------------------------- -------------- --------- ---------- ------- -------
Foreign exchange effect - - - 126 126
-------------------------- -------------- --------- ---------- ------- -------
Payments (2,538) - - - (2,538)
-------------------------- -------------- --------- ---------- ------- -------
At 31 December 2015 120,080 - 963 6,474 127,517
-------------------------- -------------- --------- ---------- ------- -------
Less current portion 2,000 - - 4,115 6,115
-------------------------- -------------- --------- ---------- ------- -------
Non-current portion 118,080 - 963 2,359 121,402
-------------------------- -------------- --------- ---------- ------- -------
1 The provision represents the discounted values of the
estimated cost to decommission and rehabilitate the mines at the
expected date of closure of each of the mines. The present value of
the provision has been calculated using a real pre-tax annual
discount rate, based on a US Treasury bond of an appropriate tenure
adjusted for the impact of quantitative easing as at 31 December
2015 and 2014 respectively, and the cash flows have been adjusted
to reflect the risk attached to these cash flows. Uncertainties on
the timing for use of this provision include changes in the future
that could impact the time of closing the mines, as new resources
and reserves are discovered. The discount rate used was 0.07%
(2014: 0.02%).
2 On the basis that no profit was recognised by the Peruvian
companies of the Group, no legal or voluntary provision has been
recognised as at 31 December 2015 and 2014.
3 Corresponds to the provision related to awards granted under
the Long Term Incentive Plan to designated personnel of the Group.
Includes the following benefits: (i) 2015 awards, granted in March
2015, payable in March 2018 (Ii) 2014 awards, granted in March
2014, payable in March 2017. Only employees who remain in the
Group's employment on the vesting date will be entitled to a cash
payment, subject to exceptions approved by the Remuneration
Committee of the Board. The provision represents the discounted
values of the estimated cost of the long-term employee benefit. In
2015 there is change to the provision and corresponding expense of
US$369,000 (2014: US$-1,285,000) that is disclosed under
administrative expenses US$372,000 (2014: US$-1,064,000),
exploration expenses US$-3,000 (2014: US$-221,000).
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4 Based on the 2015 and 2014 internal review of mine
rehabilitation budgets, an increase of US$15,517,000 (2014:
US$27,829,000) was recognised, of which US$7,590,000 (2014:
US$9,088,000) related to project already closed and has therefore
been recognised directly in the income statement.
27 Deferred income tax
The changes in the net deferred income tax assets/(liabilities)
are as follows:
As at 31
December
------------------
2015 2014
US$000 US$000
---------------------------------------------- -------- --------
Beginning of the year (83,385) (91,089)
----------------------------------------------- -------- --------
Income statement charge (note 14) 23,850 8,853
----------------------------------------------- -------- --------
Deferred income tax arising on net unrealised
gains cash flow hedges recognised in
equity (note 14) (4,739) (1,216)
----------------------------------------------- -------- --------
Others - 67
----------------------------------------------- -------- --------
End of the year (64,274) (83,385)
----------------------------------------------- -------- --------
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
against
current tax liabilities and when the deferred income tax assets
and liabilities relate to the same fiscal authority.
The movement in deferred income tax assets and liabilities
before offset during the year is as follows:
Differences
in
cost
of Mine Financial
PP&E development instruments Others Total
US$000 US$000 US$000 US$000 US$000
--------------------------------- ----------- ------------ ------------ ------- --------
Deferred income tax liabilities
--------------------------------- ----------- ------------ ------------ ------- --------
At 1 January 2014 34,464 91,183 2,109 3,018 130,774
---------------------------------- ----------- ------------ ------------ ------- --------
Income statement (credit)/charge 7,453 (11,202) - (844) (4,593)
---------------------------------- ----------- ------------ ------------ ------- --------
Deferred income tax arising
on net unrealised gains
cash flow hedges recognised
in equity - - 1,216 - 1,216
---------------------------------- ----------- ------------ ------------ ------- --------
At 31 December 2014 41,917 79,981 3,325 2,174 127,397
---------------------------------- ----------- ------------ ------------ ------- --------
Income statement (credit)/charge 6,050 (19,874) - 2,588 (11,236)
---------------------------------- ----------- ------------ ------------ ------- --------
Deferred income tax arising
on net unrealised gains
cash flow hedges recognised
in equity - - 4,739 - 4,739
---------------------------------- ----------- ------------ ------------ ------- --------
At 31 December 2015 47,967 60,107 8,064 4,762 120,900
---------------------------------- ----------- ------------ ------------ ------- --------
The amounts after offset, as presented on the face of the
Statement of Financial Position, are as follows:
As at 31
December
------------------
2015 2014
US$000 US$000
-------------------------------- -------- --------
Deferred income tax liabilities (64,274) (84,959)
--------------------------------- -------- --------
Differences
in Provision
cost for
of mine Tax Financial
PP&E closure losses Mine instruments Others Total
US$000 US$000 US$000 developmentUS$000 US$000 US$000 US$000
------------------ ----------- --------- ------- ------------------ ------------ ------- -------
Deferred income
tax assets
------------------ ----------- --------- ------- ------------------ ------------ ------- -------
At 1 January 2014 18,426 12,832 640 - 2,394 5,393 39,685
------------------- ----------- --------- ------- ------------------ ------------ ------- -------
Income statement
credit/(charge) (8,879) 1,703 7,911 697 (132) 2,960 4,260
------------------- ----------- --------- ------- ------------------ ------------ ------- -------
Foreign exchange
effect - - - - - 67 67
------------------- ----------- --------- ------- ------------------ ------------ ------- -------
At 31 December
2014 9,547 14,535 8,551 697 2,262 8,420 44,012
------------------- ----------- --------- ------- ------------------ ------------ ------- -------
Income statement
credit/(charge) (1,685) 8,318 8,263 257 (9) (2,530) 12,614
------------------- ----------- --------- ------- ------------------ ------------ ------- -------
At 31 December
2015 7,862 22,853 16,814 954 2,253 5,890 56,626
------------------- ----------- --------- ------- ------------------ ------------ ------- -------
The amounts after offset, as presented on the face of the
Statement of Financial Position, are as follows:
As at 31
December
----------------
2015 2014
US$000 US$000
--------------------------- ------- -------
Deferred income tax assets - 1,574
---------------------------- ------- -------
Tax losses expire in the following years:
As at 31
December
----------------
2015 2014
US$000 US$000
------------------------ ------- -------
Unrecognised
------------------------ ------- -------
Expire in one year 1,075 -
------------------------- ------- -------
Expire in two years 2,733 1,256
------------------------- ------- -------
Expire in three years 3,903 3,184
------------------------- ------- -------
Expire in four years 3,978 6,017
------------------------- ------- -------
Expire after four years 109,315 108,143
------------------------- ------- -------
121,004 118,600
------- -------
Other unrecognised deferred income tax assets comprise (gross
amounts):
As at 31
December
----------------
2015 2014
US$000 US$000
---------------------------- ------- -------
Provision for mine closure1 66,577 55,637
----------------------------- ------- -------
Impairments of assets2 14,692 (493)
----------------------------- ------- -------
1 This relates to provision for mine closure expenditure which
is expected to be incurred in periods in which taxable profits are
not expected against which the expenditure can be offset.
2 Related to the impairment of San Felipe and Volcan project
(2014: Corresponds to the reversal of impairment of San Felipe
project) (note 17).
Unrecognised deferred tax liability on retained earnings
At 31 December 2015, there was no recognised deferred tax
liability (2014: nil) for taxes that would be payable on the
unremitted earnings of certain of the Group's subsidiaries as the
intention is that these amounts are permanently reinvested.
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
28 Dividends paid and proposed
2015 2014
US$000 US$000
----------------------------------------- ------- -------
Declared and paid during the year
----------------------------------------- ------- -------
Equity dividends on ordinary shares:
----------------------------------------- ------- -------
Final dividend for 2014: US$Nil (2013:
US$Nil) - -
----------------------------------------- ------- -------
Interim dividend for 2015: US$Nil (2014:
US$Nil) - -
----------------------------------------- ------- -------
Dividends declared to non-controlling
interests: US$Nil (2014: US$0.04 and
US$Nil) - 5,542
------------------------------------------ ------- -------
Dividends declared and paid - 5,542
------------------------------------------ ------- -------
Dividends declared to non-controlling
interests: US$Nil (2014: US$0.04) - 1,719
------------------------------------------ ------- -------
Dividends declared and not paid - 1,719
------------------------------------------ ------- -------
Total dividends declared - 7,261
------------------------------------------ ------- -------
Final dividend for 2015: US$Nil (2014:
US$Nil) - -
------------------------------------------ ------- -------
Dividends per share
The Directors of the Company are not recommending a dividend in
respect of the year ended 31 December 2015 and 31 December
2014.
29 Related-party balances and transactions
(a) Related-party accounts receivable and payable
The Group had the following related-party balances and
transactions during the years ended 31 December 2015 and 2014. The
related parties are companies owned or controlled by the main
shareholder of the parent company or associates.
Accounts Accounts
receivable payable
as at 31 as at 31
December December
---------------- ----------------
2015 2014 2015 2014
US$000 US$000 US$000 US$000
------------------------------- ------- ------- ------- -------
Current related party balances
------------------------------- ------- ------- ------- -------
Cementos Pacasmayo S.A.A.1 11 45 40 49
-------------------------------- ------- ------- ------- -------
Total 11 45 40 49
-------------------------------- ------- ------- ------- -------
1 The account receivable relates to reimbursement of expenses
paid by the Group on behalf of Cementos Pacasmayo S.A.A. The
account payable relates to the payment of rentals.
As at 31 December 2015 and 2014, all accounts are, or were,
non-interest bearing. No security has been granted or guarantees
given by the Group in respect of these related party balances.
Principal transactions between affiliates are as follows:
Year ended
----------------
2015 2014
US$000 US$000
--------------------------------------- ------- -------
Expenses
--------------------------------------- ------- -------
Expense recognised for the rental paid
to Cementos Pacasmayo S.A.A. (285) (185)
---------------------------------------- ------- -------
Transactions between the Group and these companies are on an
arm's length basis.
(b) Compensation of key management personnel of the Group
As at 31
December
----------------
2015 2014
US$000 US$000
------------------------------------------ ------- -------
Short-term employee benefits 5,613 5,369
------------------------------------------- ------- -------
Long Term Incentive Plan, Deferred Bonus
Plan and Restricted Share Plan 2,641 679
------------------------------------------- ------- -------
Total compensation paid to key management
personnel 8,254 6,048
------------------------------------------- ------- -------
This amount includes the remuneration paid to the Directors of
the parent company of the Group of US$4,155,759 (2014:
US$4,005,780), out of which US$Nil (2014: US$160,462) relates to
pension payments.
(c) Participation in rights issue by Pelham Investment
Corporation ("Pelham") and Inversiones ASPI SA ("ASPI")
As at the record date of the rights issue, Eduardo Hochschild
held his investment in the Company through Pelham. Following
receipt of its entitlement under the rights issue, Pelham
transferred, for nil consideration, its nil paid rights in respect
of 74,745,101 new ordinary shares to ASPI an entity that is also
under the control of Eduardo Hochschild. Under the terms of an
irrevocable undertaking signed between Pelham, ASPI and the
Company, it was agreed that:
(i) ASPI would, among other things, subscribe for at least
68,887,508 new ordinary shares at an issue price of 47 pence per
new ordinary share (the "Subscription Commitment"); and
(ii) the Company would, among other things, pay ASPI a fee of 1%
of the Subscription Commitment of approximately US$500,000.
30 Mining royalties
Peru
In accordance with Peruvian legislation, owners of mining
concessions must pay a mining royalty for the exploitation of
metallic and non--metallic resources. Mining royalties have been
calculated with rates ranging from 1% to 3% of the value of mineral
concentrate or equivalent sold, based on quoted market prices.
In October 2011 changes came into effect for mining companies,
with the following features:
a) Introduction of a Special Mining Tax ('SMT'), levied on
mining companies at the stage of exploiting mineral resources. The
additional tax is calculated by applying a progressive scale of
rates ranging from 2% to 8.4%, of the quarterly operating
profit.
b) Modification of the mining royalty calculation, which
consists of applying a progressive scale of rates ranging from 1%
to 12%, of the quarterly operating profit. The former royalty was
calculated on the basis of monthly sales value of mineral
concentrates.
The SMT and modified mining royalty are accounted for as an
income tax in accordance with IAS 12 "Income Taxes".
c) For companies that have mining projects benefiting from tax
stability regimes, mining royalties are calculated and recorded as
they were previously, applying an additional new special charge on
mining that is calculated using progressive scale rates, ranging
from 4% to 13.12% of quarterly operating profit.
d) In the case of the Arcata mine unit, the company quit the tax
stability agreement, but has mantained the agreement for the mining
royalties, such that the Arcata unit, is liable for the new SMT but
the mining royalties remain payable at the same rate as they were,
before the modification in 2011.
As at 31 December 2015, the amount payable as under the former
mining royalty (for the Arcata mining unit), the new mining royalty
(for the Ares, Pallancata and Inmaculada mining units), and the SMT
amounted to US$272,000 (2014: US$395,000), US$1,080,000 (2014:
US$266,000), and US$745,000 (2014: US$Nil) respectively. The former
mining royalty is recorded as 'Trade and other payables', and the
new mining royalty and SMT as 'Income tax payable' in the Statement
of Financial Position. The amount recorded in the income statement
was US$1,205,000 (2014: US$1,279,000) representing the former
mining royalty, classified as cost of sales, US$1,778,000 (2014:
US$1,611,000) of new mining royalty and US$755,000 (2014:
US$375,000) of SMT, both classified as income tax.
Argentina
In accordance with Argentinian legislation, Provinces (being the
legal owners of the mineral resources) are entitled to request
royalties from mine operators. For San Jose, the mining royalty was
originally fixed at 1.85% of the pit-head value of the production
where the final product is dore and 2.55% where the final product
is mineral concentrate or precipitates. In October 2012 a new
provincial law was passed, which increased the mining royalty
applicable to dore and concentrate to 3% of the pit-head value.
Since November 2012 Minera Santa Cruz S.A. has been paying and
expensing the increased 3% royalty although it has filed an
administrative claim against the new law. As at 31 December 2015,
the amount payable as mining royalties amounted to US$524,000
(2014: US$556,000). The amount recorded in the income statement as
cost of sales was US$4,763,000 (2014: US$5,302,000).
(MORE TO FOLLOW) Dow Jones Newswires
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On 13 June 2013, the congress of the Province of Santa Cruz
passed Law No. 3318, which created a tax on mining reserves.
Accordingly, the owners of mining concessions located in the
Province of Santa Cruz must pay a tax on mining reserves at a rate
of 1%, calculated at the end of each year and determined according
to the international price of metals at that date. According to
these regulations, the tax applies only on "proved reserves" and
certain deductions (related to the production cost) apply. Minera
Santa Cruz S.A. (a subsidiary of Hochschild Mining plc) is affected
by this tax. On 20 December 2013, Minera Santa Cruz S.A. filed
before the Argentine Supreme Court a legal claim against the tax on
mining reserves. Such legal claim challenges the legality of the
tax on mining reserves arguing its unconstitutionality on the
grounds that it violates the Federal Mining Policy created by
national law No. 24.196. Additionally, on 2 November 2015, Minera
Santa Cruz S.A. filed a precautionary measure under which it
requested the Argentine Supreme Court to order the Province of
Santa Cruz not to claim to Minera Santa Cruz S.A. the payment of
any amount related to the tax on mining reserves until a final
decision on the constitutionality of the tax is rendered. The
precautionary measure was granted on 9 December 2015, furthermore
no tax was paid during 2015. As at 31 December 2015, the amount
payable as tax on mining reserves was US$4,054,000 (2014:
US$4,088,000) recorded as 'Trade and other payables'. The amount
recorded in the income statement was US$441,000 (2014:
US$3,453,000) as other expenses. The tax on mining reserves was
eliminated on 30 December 2015.
31 Subsequent events
a) On 11 February 2016, the Group signed a zero cost collar
contract with JP Morgan Chase Bank, National Association, London
Branch over 2,999,997 ounces of silver at a call/put price of
US$17.60 and US$14.00 per ounce, from 12 February to 30 December
2016. In addition, on 12 February 2016, the Group signed a
commodity swap contract with Citibank, NA to hedge 15,000 ounces of
gold at a price of US$1,244.25 per ounce from 12 February to 30
December 2016.
b) On 12 February 2016, the Argentinian government published
Decreto 349/2016 that eliminated the export tax on the sale of
concentrate.
Profit by operation(1)
(Segment report reconciliation) as at 31 December 2015
Consolidation
San adjustment
Company (US$000) Arcata Pallancata Inmaculada Jose and others Total/HOC
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Revenue 107,425 73,045 102,303 186,097 276 469,146
Cost of sales (Pre
consolidation) (107,803) (88,999) (52,532) (153,093) (2,744) (405,171)
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Consolidation adjustment 165 (194) (2,621) (94) 2,744 -
Cost of sales (Post
consolidation) (107,638) (89,193) (55,153) (153,187) - (405,171)
Production cost
excluding depreciation (71,128) (51,599) (32,765) (109,615) - (265,107)
Depreciation in production
cost (33,360) (35,725) (27,243) (43,205) - (139,533)
Other items (2,133) (1,610) (1,544) (5,499) - (10,786)
Change in inventories (1,017) (259) 6,399 5,132 - 10,255
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Gross profit (378) (15,954) 49,771 33,004 (2,468) 63,975
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Administrative expenses - - - - (38,148) (38,148)
Exploration expenses - - - - (9,255) (9,255)
Selling expenses (962) (1048) (12) (19,707) - (21,729)
Other income/expenses - - - - (7,243) (7,243)
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Operating profit
before impairment (1,340) (17,002) 49,759 13,297 (57,114) (12,400)
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Impairment of assets - - - - (207,146) (207,146)
Finance income - - - - 1,898 1,898
Finance costs - - - - (32,900) (32,900)
FX loss - - - - (5,627) (5,627)
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Profit/(loss) from
continuing operations
before income tax (1,340) (17,002) 49,759 13,297 (300,889) (256,175)
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Income tax - - - - 16,518 16,518
----------------------------- --------- ---------- ---------- --------- ------------- ---------
Profit/(loss) for
the year from continuing
operations (1,340) (17,002) 49,759 13,297 (284,371) (239,657)
----------------------------- --------- ---------- ---------- --------- ------------- ---------
1 On a post exceptional basis.
RESERVES AND RESOURCES
Ore reserves and mineral resources estimates
Hochschild Mining plc reports its mineral resources and reserves
estimates in accordance with the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves 2004
edition ("the JORC Code"). This establishes minimum standards,
recommendations and guidelines for the public reporting of
exploration results and mineral resources and reserves estimates.
In doing so it emphasises the importance of principles of
transparency, materiality and confidence. The information on ore
reserves and mineral resources on pages 65 to 69 were prepared by
or under the supervision of Competent Persons (as defined in the
JORC Code). Competent Persons are required to have sufficient
relevant experience and understanding of the style of
mineralisation, types of deposits and mining methods in the area of
activity for which they are qualified as a Competent Person under
the JORC Code. The Competent Person must sign off their respective
estimates of the original mineral resource and ore reserve
statements for the various operations and consent to the inclusion
of that information in this report, as well as the form and context
in which it appears.
Hochschild Mining plc employs its own Competent Person who has
audited all the estimates set out in this report. Hochschild Mining
Group companies are subject to a comprehensive programme of audits
which aim to provide assurance in respect of ore reserve and
mineral resource estimates. These audits are conducted by Competent
Persons provided by independent consultants. The frequency and
depth of an audit depends on the risks and/or uncertainties
associated with that particular ore reserve and mineral resource,
the overall value thereof and the time that has lapsed since the
previous independent third-party audit.
The JORC Code requires the use of reasonable economic
assumptions. These include long-term commodity price forecasts
(which, in the Group's case, are prepared by ex-house specialists
largely using estimates of future supply and demand and long-term
economic outlooks).
Ore reserve estimates are dynamic and are influenced by changing
economic conditions, technical issues, environmental regulations
and any other relevant new information and therefore these can vary
from year-to-year. Mineral resource estimates can also change and
tend to be influenced mostly by new information pertaining to the
understanding of the deposit and secondly the conversion to ore
reserves.
The estimates of ore reserves and mineral resources are shown as
at 31 December 2015, unless otherwise stated. Mineral resources
that are reported include those mineral resources that have been
modified to produce ore reserves. All tonnage and grade information
has been rounded to reflect the relative uncertainty in the
estimates; there may therefore be small differences. The prices
used for the reserves calculation were: Au Price: US$1,200 per
ounce and Ag Price: US$20 per ounce.
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
ATTRIBUTABLE METAL RESERVES AS AT 31 DECEMBER 20151
Proved
and probable Ag Au Ag Au Ag Eq
Reserve category (t) (g/t) (g/t) (moz) (koz) (moz)
----------------- ------------- ------- ------ ------ ------- ------
OPERATIONS(1)
----------------- ------------- ------- ------ ------ ------- ------
Arcata
----------------- ------------- ------- ------ ------ ------- ------
Proved 652,377 347 1.1 7.3 22.6 8.6
------------------ ------------- ------- ------ ------ ------- ------
Probable 881,991 311 1.1 8.8 31.0 10.7
------------------ ------------- ------- ------ ------ ------- ------
Total 1,534,369 326 1.1 16.1 53.6 19.3
------------------ ------------- ------- ------ ------ ------- ------
Inmaculada(2)
----------------- ------------- ------- ------ ------ ------- ------
Proved 2,950,174 126 4.1 12.0 391.2 35.4
------------------ ------------- ------- ------ ------ ------- ------
Probable 4,025,378 155 4.5 20.1 584.5 55.2
------------------ ------------- ------- ------ ------ ------- ------
Total 6,975,552 143 4.4 32.0 975.7 90.6
------------------ ------------- ------- ------ ------ ------- ------
Pallancata
----------------- ------------- ------- ------ ------ ------- ------
Proved 618,107 286 1.5 5.7 29.6 7.5
------------------ ------------- ------- ------ ------ ------- ------
Probable 614,625 261 1.2 5.2 24.4 6.6
------------------ ------------- ------- ------ ------ ------- ------
Total 1,232,732 274 1.4 10.9 54.0 14.1
------------------ ------------- ------- ------ ------ ------- ------
San Jose
----------------- ------------- ------- ------ ------ ------- ------
Proved 626,967 521 7.4 10.5 149.7 19.5
------------------ ------------- ------- ------ ------ ------- ------
Probable 334,696 414 6.5 4.5 70.1 8.7
------------------ ------------- ------- ------ ------ ------- ------
Total 961,663 484 7.1 15.0 149.7 28.1
------------------ ------------- ------- ------ ------ ------- ------
Total
----------------- ------------- ------- ------ ------ ------- ------
Proved 4,847,625 227 3.8 35.4 593.2 71.0
------------------ ------------- ------- ------ ------ ------- ------
Probable 5,856,689 205 3.8 38.5 710.0 81.1
------------------ ------------- ------- ------ ------ ------- ------
TOTAL 10,704,315 215 3.8 73.9 1,303.1 152.1
------------------ ------------- ------- ------ ------ ------- ------
Note: Where reserves are attributable to a joint venture
partner, reserve figures reflect the Company's ownership only.
Includes discounts for ore loss and dilution.
1 Operations were audited by P&E Consulting.
2 Inmaculada reserves and resources as published in the
Feasibility Study released on 11 January 2012. Prices used for
reserves calculation: Au: $1,100/oz and Ag: $18/oz.
ATTRIBUTABLE METAL RESOURCES AS AT 31 DECEMBER 2015
Ag Ag
Resource Tonnes Ag Au Zn Pb Cu Eq Ag Au Eq Zn Pb Cu
category (t) (g/t) (g/t) (%) (%) (%) (g/t) (moz) (koz) (moz) (kt) (kt) (kt)
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
OPERATIONS
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Arcata
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 1,758,822 457 1.41 - - - 542 25.9 79.5 30.6 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 2,086,114 370 1.27 - - - 447 24.8 85.5 30.0 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 3,844,936 410 1.33 - - - 490 50.7 165.0 60.6 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 4,348,694 335 1.22 - - - 408 46.8 170.2 57.0 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inmaculada(1)
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 2,707,568 155 5.05 - - - 458 13.5 439.4 39.8 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 3,793,491 188 5.41 - - - 513 22.9 660.4 62.6 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 6,501,060 174 5.26 - - - 490 36.4 1,099.8 102.4 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 3,733,302 124 2.98 - - - 303 14.9 357.6 36.3 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Pallancata
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 2,442,908 360 1.71 - - - 463 28.2 134.7 36.3 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 1,050,863 289 1.37 - - - 371 9.8 46.3 12.5 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 3,493,771 338 1.61 - - - 435 38.0 181.0 48.9 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 4,305,774 283 1.14 - - - 352 39.2 158.1 48.7 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
San Jose
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 1,015,679 575 8.33 - - - 1,075 18.8 272.1 35.1 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 1,251,369 395 5.69 - - - 737 15.9 229.1 29.6 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 2,267,048 476 6.88 - - - 888 34.7 501.2 64.7 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 781,685 390 6.06 - - - 754 9.8 152.4 18.9 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
GROWTH
PROJECTS
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Crespo(2)
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 5,211,058 47 0.47 - - - 75 7.9 78.6 12.6 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 17,298,228 38 0.40 - - - 62 21.0 222.5 34.3 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 22,509,286 40 0.42 - - - 65 28.8 301.0 46.9 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 775,429 46 0.57 - - - 80 1.1 14.2 2.0 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Azuca
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 190,602 244 0.77 - - - 290 1.5 4.7 1.8 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 6,858,594 187 0.77 - - - 233 41.2 168.8 51.3 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 7,049,197 188 0.77 - - - 234 42.7 173.5 53.1 - - -
(MORE TO FOLLOW) Dow Jones Newswires
March 09, 2016 02:01 ET (07:01 GMT)
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 6,946,341 170 0.89 - - - 223 37.9 199.5 49.9 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Volcan(3)
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 105,918,000 - 0.738 - - - 44 - 2,511.0 150.7 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 283,763,000 - 0.698 - - - 42 - 6,367.0 382.0 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 389,681,000 - 0.709 - - - 43 - 8,878.0 532.7 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 41,553,000 - 0.502 - - - 30 - 671.0 40.3 - - -
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
OTHER
PROJECTS(4)
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 1,393,716 69 0.02 7.12 3.10 0.39 315 3.1 0.9 14.1 99.3 43.1 5.5
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 1,354,261 82 0.06 6.14 2.73 0.31 295 3.6 2.4 12.9 83.2 37.0 4.2
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 2,747,977 76 0.04 6.64 2.92 0.35 305 6.7 3.3 27.0 182.4 80.1 9.7
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 13,445,001 8 0.30 0.58 0.21 1.22 160 3.4 128.6 69.0 77.8 28.5 163.6
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
GRAND
TOTAL
-------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Measured 120,638,353 25 0.91 0.08 0.04 0.00 83 97.5 3,520.9 321.1 99.3 43.1 5.5
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Indicated 317,455,921 14 0.76 0.03 0.01 0.00 60 143.2 7,782.0 615.2 83.2 37.0 4.2
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Total 438,094,275 17 0.80 0.04 0.02 0.00 66 240.7 11,302.9 936.3 182.4 80.1 9.7
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
Inferred 75,889,227 63 0.76 0.10 0.04 0.22 132 136.1 1,851.4 322.2 77.8 28.5 163.6
--------------- ----------- ----- ----- ---- ---- ---- ----- ----- -------- ----- ----- ---- -----
1 Inmaculada resources as published in the Feasibility Study
released on 11/01/ 2012. Prices used for resources calculation: Au:
$1,100/oz and Ag: $18/oz
2 Prices used for resources calculation: Au: $1,200/oz and Ag:
$20/oz.
3 Resources reported in the NI 43-101 Technical Report published
by Andina Minerals, January 2011. Price used for resources
calculation: Au: $950/oz.
4 Includes the Jasperoide copper project and the San Felipe
zinc/silver project. The silver equivalent grade (147 g/t Ag Eq)
has being calculated applying the following ratios, Cu/Ag=96.38 and
Au/Ag=60
CHANGE IN ATTRIBUTABLE RESERVES AND RESOURCES
Percentage
Ag equivalent attributable December December
content (million December 2014 2015 Net
ounces) Category 2014 Att.(1) Att.(1) difference % change
------------------ --------- ------------- -------- -------- ----------- --------
Arcata Resource 100% 108.7 117.6 8.9 8.2
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve 25.6 19.3 (6.3) (24.5)
---------- ------------- -------- -------- ----------- --------
Inmaculada Resource 100% 149.7 138.7 (10.9) (7.3)
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve 81.1 90.6 9.5 11.7
---------- ------------- -------- -------- ----------- --------
Pallancata Resource 100% 80.7 97.6 16.9 21.0
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve 18.7 14.1 (4.6) (24.5)
---------- ------------- -------- -------- ----------- --------
San Jose Resource 51% 87.7 83.7 (4.0) (4.6)
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve 27.5 28.1 (0.6) (2.2)
---------- ------------- -------- -------- ----------- --------
Crespo Resource 100% 48.9 48.9 - -
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve - - - -
------------------ --------- ------------- -------- -------- ----------- --------
Azuca Resource 100% 103.0 103.0 - -
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve - - - -
------------------ --------- ------------- -------- -------- ----------- --------
Volcan Resource 100% 572.9 572.9 - -
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve - - - -
------------------ --------- ------------- -------- -------- ----------- --------
Reserve - - - -
------------------ --------- ------------- -------- -------- ----------- --------
Other projects
total Resource 100% 96.0 96.0 - -
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve - - - -
------------------ --------- ------------- -------- -------- ----------- --------
Total Resource 1,247.6 1,258.5 (10.9) (0.9)
------------------- ---------- ------------- -------- -------- ----------- --------
Reserve 152.9 152.1 (0.7) (0.5)
---------- ----------------- ------------- -------- -------- ----------- --------
1 Attributable reserves and resources based on the Group's
percentage ownership of its joint venture projects.
TOTAL RESOURCES: PRICE ASSUMPTION SENSITIVITY ANALYSIS
(OPERATIONS)
The below table is based on internal calculations and has not
been audited by the external third party consultant.
1,200/Au oz & 20/Ag 1,200/Au oz &
oz 17/Ag oz
-------------- --------------------- -----------------
Resources Tonnes Ag Eq Ag Eq (moz Tonnes Ag Eq Ag Eq
(g/t (g/t (moz
-------------- ------------- ------ ----------- ---------- ----- -----------
Measured 8,900,825 614 175,640,365 8,667,406 626 174,538,787
--------------- ------------- ------ ----------- ---------- ----- -----------
Indicated 9,384,134 541 163,175,127 9,055,796 555 161,569,307
--------------- ------------- ------ ----------- ---------- ----- -----------
Inferred 13,920,487 400 179,221,889 13,039,859 418 175,372,258
--------------- ------------- ------ ----------- ---------- ----- -----------
Total 32,205,447 500 518,037,382 30,763,062 517 511,480,352
--------------- ------------- ------ ----------- ---------- ----- -----------
Variation (%) - - - (4%) 3% (1%)
--------------- ------------- ------ ----------- ---------- ----- -----------
Reserves
-------------- ------------- ------ ----------- ---------- ----- -----------
Proven 5,450,005 512 89,719,230 5,157,545 522 86,529,372
--------------- ------------- ------ ----------- ---------- ----- -----------
Probable 6,178,260 450 89,443,807 5,810,036 461 86,152,341
--------------- ------------- ------ ----------- ---------- ----- -----------
Total 11,628,265 479 179,163,037 10,967,581 490 172,681,714
--------------- ------------- ------ ----------- ---------- ----- -----------
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