REG - Hochschild MiningPLC - Interim Results
06/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230906:nRSF4808La&default-theme=true
RNS Number : 4808L Hochschild Mining PLC 06 September 2023
6 September 2023
Hochschild Mining PLC
Interim Results
Six months ended 30 June 2023
Hochschild Mining PLC ("Hochschild" or the "Company") (LSE: HOC) (OTCQX:
HCHDF) is pleased to announce Interim Results for the six months ended 30 June
2023.
Financial Highlights
§ Revenue of $314.0 million (H1 2022: $347.8 million)(( 1 (#_ftn1) ))
§ Adjusted EBITDA of $99.5 million (H1 2022: $130.5 million)(( 2 (#_ftn2) ))
§ Profit before income tax (pre-exceptional) of $0.8 million (H1 2022: $15.3
million)
§ Loss before income tax (post-exceptional) of $66.1 million (H1 2022: profit
of $5.4 million)
§ Basic loss per share (pre-exceptional) of $0.004 (H1 2022: earning per
share of $0.01)
§ Basic loss per share (post-exceptional) of $0.09 (H1 2022: $0.01)
§ Cash and cash equivalent balance of $93.6 million as at 30 June 2023 (31
December 2022: $143.8 million)
§ Net debt of $227.1 million as at 30 June 2023 (31 December 2022: $175.1
million)
Operational Highlights 3 (#_ftn3)
§ Inmaculada's Modified Environmental Impact Assessment approved on 1 August
2023 for an additional 20 years
§ All-in sustaining costs (AISC) from operations of $1,572 per gold
equivalent ounce (H1 2022: $1,466) or $18.9 per silver equivalent ounce (H1
2022: $17.7) 4 (#_ftn4)
§ H1 2023 attributable production of 136,878 gold equivalent ounces or 11.4
million silver equivalent ounces (H1 2022: 157,380 gold equivalent ounces or
13.1 million silver equivalent ounces)
Project & Exploration Highlights
§ Mara Rosa project in Brazil advancing on schedule and on budget - total
project progress at 92% with first production on track for H1 2024
§ Brownfield programme commenced in the surrounding areas of all three mines
ESG highlights
§ Continued improvement across all key metrics
§ Lost Time Injury Frequency Rate of 0.84 (FY 2022: 1.37)(( 5 (#_ftn5) ))
§ Accident Severity Index of 32 (FY 2022: 93)(( 6 (#_ftn6) ))
§ Water Consumption of 168lt/person/day (FY 2022: 171lt/person/day)
§ Domestic waste generation of 0.95 kg/person/day (FY 2022:
1.05kg/person/day)
§ ECO score of 5.89 out of 6 (FY 2022: 5.27)(( 7 (#_ftn7) ))
2023 Full year outlook
§ Revised guidance mainly reflects the impact of MEIA delays on Inmaculada
and accelerated mine development costs at San Jose
§ Revised production target:
o 289,000-303,0000 gold equivalent ounces (24.0-25.0 million silver
equivalent ounces)
§ Revised All-in sustaining costs target:
o $1,490-$1,580 per gold equivalent ounce ($18.0-$19.0 per silver equivalent
ounce)
§ Total sustaining and development capital expenditure expected to be
approximately $130-140 million
§ Additional $60 million drawn down in early August 2023 from $200 million
debt facility signed in December 2022
Capital Markets Event
§ Capital Markets Event to be held on 22 November 2023 in London where the
Company will set out its long-term strategy
$000 unless stated Six months to Six months to % change
30 June 2023 30 June 2022
Attributable silver production (koz) 4,442 5,065 (12)
Attributable gold production (koz) 83 96 (14)
Revenue 314,023 347,781 (10)
Adjusted EBITDA 99,497 130,525 (24)
Profit/(loss) from continuing operations (pre-exceptional) (4,357) 9,503 (146)
Profit/(loss) from continuing operations (post-exceptional) (52,685) (420) 12,444
Basic earnings/(loss) per share (pre-exceptional) $ (0.004) 0.01 (140)
Basic earnings/(loss) per share (post-exceptional) $ (0.09) (0.01) 800
_______________________________________________________________________________________
A live conference call and audio webcast will be held at 9.30am (London time)
on Wednesday 6 September 2023 for analysts and investors.
For a live webcast of the presentation please click on the link below:
https://brrmedia.news/HOC_IR23 (https://brrmedia.news/HOC_IR23)
Conference call dial in details:
UK: +44 (0)330 551 0200
UK Toll Free: 0808 109 0700
US/Canada Toll Free: 866 580 3963
Pin: Hochschild - Interim Results
_______________________________________________________________________________________
Enquiries:
Hochschild Mining PLC
Charles Gordon
+44 (0)20
3709 3264
Head of Investor Relations
Hudson Sandler
Charlie Jack
+44
(0)207 796 4133
Public Relations
_______________________________________________________________________________________
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures in this news release. The
Company believes that these measures, in addition to conventional measures
prepared in accordance with IFRS, provide investors an improved ability to
evaluate the underlying performance of the Company. The non-IFRS measures are
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with IFRS. These measures do not have any standardised meaning
prescribed under IFRS, and therefore may not be comparable to other issuers.
About Hochschild Mining PLC:
Hochschild Mining PLC is a leading precious metals company listed on the
London Stock Exchange (HOCM.L / HOC LN) and crosstrades on the OTCQX Best
Market in the U.S. (HCHDF), 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 three underground epithermal vein mines, two located in
southern Peru and one in southern Argentina. Hochschild also owns the Mara
Rosa Advanced Project in Brazil as well as numerous long-term projects
throughout the Americas
EDUARDO LANDIN, CHIEF EXECUTIVE OFFICER SAID:
I am honoured to lead Hochschild Mining PLC and believe in a relationship with
shareholders based on trust and a thorough appreciation of our key strengths.
We are dedicated to transparency and responsible business practices. Our core
competencies drive success, with a proven track record of finding new
resources, looking for new value accretive opportunities, delivering projects
on time and on budget and operating efficiently. These are underpinned by a
focus on consistent ESG performance and the capacity to continually learn from
experience.
I look forward to working with colleagues across the business to ensure that
we continue improving our strong safety, environmental, operational and
financial record, while progressing our growth strategy. Together with the
executive team, we are fully committed to unleashing Hochschild's full
potential. We believe that safe, efficient operations, a clear strategic
direction, great people and capital discipline will enable our Company to
generate superior returns for shareholders and make a broader positive
contribution to society.
The first half of the year was challenging for the Company as we reached the
final stages of the process in securing Inmaculada's Modified Environmental
Impact Assessment ("MEIA") which, regrettably, impacted in the short-term our
operational and exploration strategy. However, following the recent welcome
approval of the MEIA by the Peruvian government, the Company is now in an
excellent position to optimise the Inmaculada mine and unlock its impressive
geological potential, complete construction of our new Mara Rosa operation in
Brazil and advance the new Royropata discovery at Pallancata.
I would like to thank the teams involved in four years of hard work on the
permitting project and am delighted that Inmaculada will remain a key part of
Hochschild's portfolio for many years to come. The extension reaffirms our
commitment to our stakeholders in the Ayacucho region and its communities as
well as to Peru overall.
ESG
We continued with our focus on safety and are proud that, in H1 2023, our key
performance indicators highlighted our strongest performance to date in this
area with both the accident frequency rate and accident severity indices at
unprecedented low levels of 0.84 and 32, respectively. We are particularly
pleased to report that during the construction phase at Mara Rosa, we
performed over three million hours without any lost time accidents and that at
both our Pallancata and San Jose operations we have surpassed two million
hours without lost time accidents.
Our safety performance is matched by our environmental management during this
first half with our ECO Score ending the period at 5.89 (out of 6), its most
robust level since the implementation of this internally-designed KPI. This
demonstrates not only proactivity and sound operational credentials but also a
positive outcome of internal audits and regulatory inspections.
We are always looking for ways to improve our engagement with our local
communities and so, to achieve this, during the first half we have reviewed,
and are in the process of implementing, a reorganised social relations team
with a continued focus on support and collaboration. In addition, in the first
half, we held training sessions as part of our focus on promoting economic
development through the Impulso Productivo ('Boosting Productivity') and
"Orgullo Pecuario ('Pride in our Livestock') programmes for local farmers and
livestock keepers. Additionally, we have been supporting local farmers in
their sales by partnering with Sodexo.
Finally, in the area of education, we launched courses in our five Digital
Centres in Peru in conjunction with local educational institutions under the
Conexion Futuro programme ('Future Connection'). Workshops and motivational
talks were also conducted for secondary school students in our communities,
thanks to the Aprender para Triunfar programme ('Learn to Succeed').
Operations
Hochschild's production in the first half was, as expected, impacted by the
delay in securing the approval of the MEIA, which had a knock-on effect on
development at the mine. Overall attributable production was 136,878 gold
equivalent ounces (11.4 million silver equivalent ounces), which was lower
than the first half of 2022 due to the permit delay, as well as the expected
lower production at Pallancata. Production in the period was at an all-in
sustaining cost ("AISC") of $1,572 per gold equivalent ounce ($18.9 per silver
equivalent ounce). Inmaculada otherwise had a solid half with production of
92,856 gold equivalent ounces (H1 2022: 106,584 ounces) and AISC at $1,272 per
gold equivalent ounce (H1 2022: $1,074 per ounce).
Pallancata's current mining area is almost depleted, and grades and tonnage,
as expected, continued to decline in the first half of the year. Output was
1.2 million silver equivalent ounces (H1 2022: 1.6 million ounces) with the
mine's AISC unsurprisingly high at $31.7 per silver equivalent ounce (H1 2022:
$32.3 per ounce). The Company's plan is to place Pallancata on care and
maintenance in Q4 2023.
In Argentina, mine sequencing and the annual holidays impacted the first
quarter but the second quarter was much stronger, leading to production of 4.9
million silver equivalent ounces in the first half (H1 2022: 5.1 million
ounces). AISC was $21.5 per silver equivalent ounce (H1 2022: $21.2 per
ounce).
Overall, I am proud of our team's fantastic work, which has delivered
operational efficiencies and cost savings to mitigate the impact of the MEIA
delay.
Projects
At the Mara Rosa project in the state of Goias in Brazil, we have made
excellent progress in the first half of the year and are now at 92% total
completion with all key equipment in place and all civil works complete and
mechanical assembly advanced to 70% completion. We have also made good
progress with pre-stripping and preparations for the operational permit. I am
pleased to say that we remain on track for first production in the first half
of next year and will provide regular progress updates over the final few
months of construction.
Exploration
Our brownfield exploration programme for 2023 was also affected by the MEIA
delay and has only recently re-started in Peru. Plans are underway to drill
10,000 metres at Inmaculada to identify additional high-grade resources in the
Eduardo and San Salvador belts. With respect to our exciting Royropata
discovery in Pallancata, where over 50 million ounces of high-grade silver
were discovered in 2022 in veins with average widths of 5 metres, we have
applied for the requisite permit to drill for additional resources. In
Argentina, the team is targeting further potential resource drilling in the
area surrounding our operations.
Financial results
Financial results reflect the difficult operating environment experienced in
H1 2023, which we expect to improve in H2. Both silver and gold production
were lower, as guided, versus H1 2022 and therefore, despite a 4% rise in the
average gold price achieved, revenue decreased by 10% to $314.0 million (H1
2022: $347.8 million). AISC was $1,572 per gold equivalent ounce (H2 2022:
$1,466 per ounce) with the rise reflecting the impact of the MEIA delay at
Inmaculada, expected lower production at Pallancata and lower grades at San
Jose. Adjusted EBITDA of $99.5 million (H1 2022: $130.5 million) mostly
reflects the decreased production levels and increased costs whilst
pre-exceptional loss per share was $0.004 (H1 2022: $0.01 earnings per share).
Post-exceptional loss per share was $0.09 (H1 2022: $0.01).
Financial position
Following receipt of the MEIA, the Company is in a good position to fund the
remaining capital expenditure at Mara Rosa which we expect to amount to $54
million in H2. Cash and cash equivalents was $93.6 million at the end of June
(31 December 2022: $143.8 million) and net debt was $227.1 million (31
December 2022: $175.1 million). In December 2022, Hochschild closed a $200
million committed medium-term loan facility, which will provide funding to
complete the construction of Mara Rosa and amortise our existing debt
facilities, as well as for other corporate uses. We have also taken additional
steps to ensure future cashflow certainty from the low-cost Mara Rosa project
and have hedged additional ounces in Brazil for the next few years at highly
competitive gold prices. This gives us financial flexibility to repay debt and
continue to invest in our growth strategy.
Outlook
The MEIA delay has, as expected, impacted several of our 2023 operational and
investment plans. We have therefore modified our production and cost guidance
for the year at Inmaculada and at San Jose, where we have taken the decision
to accelerate some 2024 mine development plans. The second half will also
feature the final stages of investment in Mara Rosa as well as the restarting
of our brownfield exploration programme in Peru, which will continue into
2024.
As we enter this new exciting phase for the Company, we look forward to
presenting our long-term strategic plans and showcasing our future exploration
opportunities at a Capital Markets Event on 22 November 2023.
I would like to express my gratitude to all stakeholders for their ongoing
support in what has been a prolonged period of uncertainty for the Company. We
are, however, entering a new phase with renewed impetus, and we are looking
forward to a busy second half of construction and exploration while
maintaining the very highest levels of safety, ethics and community support as
we work to deliver on our commitments to all stakeholders.
OPERATING REVIEW
OPERATIONS
Note: All 2023 and 2022 silver/gold equivalent production figures assume a
gold/silver ratio of 83:1.
Production
In H1 2023, Hochschild delivered attributable production of 136,878 gold
equivalent ounces or 11.4 million silver equivalent ounces (on an attributable
basis), with the decrease versus the same period of 2022 resulting from mine
development of Inmaculada being temporarily impacted by the delay in the
approval of the MEIA, as well as expected planned lower production at
Inmaculada and Pallancata.
Total group production
Six months to Six months to
30
30 June 2023 June 2022
Silver production (koz) 5,393 6,105
Gold production (koz) 100.55 113.94
Total silver equivalent (koz) 13,739 15,562
Total gold equivalent (koz) 165.53 187.50
Silver sold (koz) 5,425 6,045
Gold sold (koz) 99.79 112.70
Total production includes 100% of all production, including production
attributable to Hochschild's minority shareholder at San Jose.
Attributable group production
Six months to Six months to
30
30 June 2023 June 2022
Silver production (koz) 4,442 5,065
Gold production (koz) 83.36 96.36
Silver equivalent (koz) 11,361 13,063
Gold equivalent (koz) 136.88 157.38
Attributable production includes 100% of all production from Inmaculada and
Pallancata and 51% from San Jose.
The delay in the approval of the Inmaculada MEIA has, as expected, temporarily
impacted the mine plan for 2023 at the operation and resulted in a
modification to the production and cost forecasts for 2023. In addition, the
Company has taken the decision to accelerate some 2024 mine development plans
at San Jose into the second half of 2023 and therefore this has temporarily
increased capital expenditure at the operation. The revised guidance for 2023
is as follows:
Revised attributable 2023 Production forecast split
Operation Oz Au Eq Moz Ag Eq
Inmaculada 192,000-200,000 16.0-16.5
Pallancata 24,000-27,000 2.0-2.2
San Jose 73,000-76,000 6.0-6.3
Total 289,000-303,000 24.0-25.0
Costs
AISC from operations in H1 2023 was $1,572 per gold equivalent ounce or $18.9
per silver equivalent ounce (H1 2022: $1,466 per gold equivalent ounce or
$17.7 per silver equivalent ounce), higher than H1 2022 mainly due to lower
tonnage at Inmaculada and lower grades at San Jose, partially offset by higher
grades at Inmaculada.
The all-in sustaining cost from operations for 2023 is revised to between
$1,490 and $1,580 per gold equivalent ounce (or $18.0 and $19.0 per silver
equivalent ounce). This incorporates an additional provision of $4.1 million
for brownfield exploration at Inmaculada and San Jose.
Revised 2023 AISC forecast split
Operation $/oz Au Eq $/oz Ag Eq
Inmaculada 1,330-1,380 16.0-16.6
Pallancata 2,175-2,390 26.2-28.8
San Jose 1,610-1,690 19.4-20.4
Total from operations 1,490-1,580 18.0-19.0
Inmaculada
The 100% owned Inmaculada gold/silver underground operation is located in the
Region of Ayacucho in southern Peru. It commenced operations in 2015.
Inmaculada summary Six months to Six months to % change
30 June 2023 30 June 2022
Ore production (tonnes) 535,905 657,202 (18)
Average silver grade (g/t) 178 145 23
Average gold grade (g/t) 3.85 3.61 7
Silver produced (koz) 2,573 2,815 (9)
Gold produced (koz) 61.85 72.67 (15)
Silver equivalent produced (koz) 7,707 8,846 (13)
Gold equivalent produced (koz) 92.86 106.58 (13)
Silver sold (koz) 2,561 2,805 (9)
Gold sold (koz) 61.39 72.72 (16)
Unit cost ($/t) 140.5 111.8 26
Total cash cost ($/oz Au co-product) 808 679 19
All-in sustaining cost ($/oz Au Eq) 1,272 1,074 18
Production
Inmaculada's first half production was 61,852 ounces of gold and 2.6 million
ounces of silver, which amounts to a gold equivalent output of 92,856 ounces
(H1 2022: 106,584 ounces),with the reduction versus H1 2022, as
expected, due to the ongoing delays in the decision on the MEIA impacting mine
development although this was partially offset by higher grades.
Costs
AISC was $1,272 per gold equivalent ounce (H1 2022: $1,074 per ounce). The
increase versus the same period of 2022 is mainly due to deferred mine
development resulting from the MEIA delay, which caused decreased tonnage
although this was partially offset by higher grades. The result was better
than originally budgeted for the period due to temporary lower capex.
Pallancata
The 100% owned Pallancata silver/gold property is located in the Region of
Ayacucho in southern Peru. Pallancata commenced production in 2007. Ore from
Pallancata is transported 22km to the Selene plant for processing.
Pallancata summary Six months to Six months to % change
30 June 2023 30 June 2022
Ore production (tonnes) 239,624 259,058 (8)
Average silver grade (g/t) 137 159 (14)
Average gold grade (g/t) 0.55 0.72 (24)
Silver produced (koz) 879 1,167 (25)
Gold produced (koz) 3.61 5.39 (33)
Silver equivalent produced (koz) 1,179 1,615 (27)
Gold equivalent produced (koz) 14.20 19.46 (27)
Silver sold (koz) 923 1,161 (20)
Gold sold (koz) 3.75 5.36 (30)
Unit cost ($/t) 133.8 137.4 (3)
Total cash cost ($/oz Ag co-product) 28.9 24.0 20
All-in sustaining cost ($/oz Ag Eq) 31.7 32.3 (2)
Production
In H1 2023, Pallancata's output was 1.2 million silver equivalent ounces (H1
2022: 1.6 million ounces) with reduced tonnage and grades versus H1 2022 in
line with the current declining production profile.
Costs
AISC was $31.7 per silver equivalent ounce (H1 2022: $32.3 per ounce). Costs
were slightly lower than H1 2022 as lower tonnage and lower grades were offset
by substantially lower exploration capex versus the same period of last year.
San Jose
The San Jose silver/gold mine is located in Argentina, in the province of
Santa Cruz, 1,750km southwest of Buenos Aires. San Jose commenced production
in 2007. Hochschild holds a controlling interest of 51% in the mine and is the
mine operator. The remaining 49% interest is owned by McEwen Mining Inc.
San Jose summary Six months Six months % change
to to
30 June 2023 30 June 2022
Ore production (tonnes) 272,063 205,359 32
Average silver grade (g/t) 254 365 (30)
Average gold grade (g/t) 4.68 6.19 (24)
Silver produced (koz) 1,941 2,123 (9)
Gold produced (koz) 35.09 35.88 (2)
Silver equivalent produced (koz) 4,854 5,101 (5)
Gold equivalent produced (koz) 58.48 61.46 (5)
Silver sold (koz) 1,941 2,080 (7)
Gold sold (koz) 34.66 34.62 -
Unit cost ($/t) 270.1 309.6 (13)
Total cash cost ($/oz Ag co-product) 15.9 13.7 16
All-in sustaining cost ($/oz Au Eq) 21.5 21.2 1
Production
The first half at San Jose in Argentina is traditionally a shorter operational
period due to the scheduled hourly workers' holiday, which occurs in the first
quarter. Mine sequencing also affected production earlier on in the year but
the operation delivered a stronger second quarter with improved grades
resulting in the H1 total of 4.9 million silver equivalent ounces (H1 2022:
5.1 million ounces).
Costs
AISC was $21.5 per silver equivalent ounce (H1 2022: $21.2 per ounce), in line
with the same period of 2022. The effect of lower grades was offset by higher
tonnage, lower capex and local currency devaluation.
ADVANCED PROJECT: MARA ROSA
The Mara Rosa project is progressing according to schedule and budget with
total project progress now standing at 92% and with the Company continuing to
expect first production in H1 2024.
Procurement
Currently purchase orders have been issued for 99% of the project. Deliveries
are on schedule with key equipment received including the crusher, belt
conveyors, the secondary substation, electrocentres, filters, HDPE piping,
aluminium cables for the transmission lines, hydrocyclones, agitators,
wastewater treatment station, thickeners and the ball mills. In addition, the
drilling service contract was signed during the period and the contractor is
already mobilised.
Mine and Pre-Stripping:
The pre-stripping contractor has begun blasting work and 365kt of ore has
already moved according to schedule. The target is to guarantee a stockpile
for use during the plant ramp-up period. Construction of the waste dumps and
ore stockpiles is also underway.
Civil works
Civil works in the processing plant area is completed. Assembly work is
advancing on schedule; total advance is 70%.
Infrastructure assembly
The Electromechanical assembly contractor has been mobilised, and the work is
advancing in line with schedule at 70% progress. The commissioning of the dry
circuit, including crushing, screening and belt conveyor areas is expected
towards the end of Q3. Power supply for the mine is being provided by the
building of a 67km, 138kv transmission line from the Porangatu substation with
work currently 99% advanced and expected to be completed very shortly.
Earthworks
The water reservoir is fully operational and already at 95% of storage
capacity with water from the pit area whilst dry stacking construction started
during the quarter and is expected to finish in the fourth quarter.
Permitting
Operations licences for the 138kv powerline, main substation, and dry and wet
circuits were submmited to local authorities. The company received the
operation permit for the Powerline and expects to receive the operaitons
license of the dry circuit in the third quarter.
Sustainability
Environmental controls to monitor construction work have been implemented to
ensure compliance with applicable permits. ESG programmes are advancing as
expected with almost 900 people having visited the "knowledge trail" as of
June 2023. On 5 June, the trail received the "Goiás Sustainability Award" in
the Innovation, Science and Education category.
During May, the project hosted over 70 stakeholders including local mayors,
politicians and community members, who inspected the site progress and gave
some very positive feedback. Also in May, the team helped to promote "Traffic
Week" involving 2,600 people from schools in Mara Rosa as well as on the main
street in Mara Rosa itself. Monthly newsletters covering project progress and
sustainability initiatives are continuing to be distributed to local
communities.
Health and Safety
Hochschild's health and safety corporate standards have been implemented at
the project, including the introduction of the Company's Seguscore safety
indicator. The project has recently surpassed three million injury-free
working hours and year-to-date Frequency and Severity Indexes are currently at
zero.
DEVELOPMENT PROJECT: VOLCAN
On 10 August, Hochschild issued an update on the Volcan Gold Project
("Volcan") which detailed a number of key milestones that have been achieved
at the 100%-owned project (the "Project") located in the Maricunga Region of
Chile:
§ Created a new Canadian Company, Tiernan Gold Corp ("Tiernan"), as a
subsidiary of Hochschild Mine Holdings UK
§ Restructured the Project to be owned by Tiernan
§ Completed an updated Mineral Resource Estimate to Canadian NI 43-101
standards, which outlined:
o 463.3 Mt of Measured and Indicated Resources at 0.66 g/t gold for 9.8
million ounces of gold contained
o 75.0 Mt of Inferred Resources at 0.516 g/t gold for and additional 1.2
million ounces of gold contained
§ Completed a positive Preliminary Economic Assessment to Canadian NI 43-101
standards, which highlighted:
o 22mtpa open-pit, heap leach operation with a 14 year mine life
o Average of 332,000 ounces per year of gold production for first 10 years
of operations with 3.8 million ounces produced over the estimated mine life
o Initial capital cost of $900 million, with life of mine sustaining capital
an additional $276 million
o Cash costs of $921/oz and All-in-Sustaining-Costs of $1,002/oz, life of
mine
o NPV (5%) = $826 million and IRR = 21% at $1,800/oz gold price, after-tax
§ Executed an agreement for a $15 million financing with the sale of a new
1.5% NSR royalty on the Project to Franco-Nevada
§ Engaged Canaccord Genuity to evaluate strategic alternatives for Tiernan
Further details can be found in the separate press release on the Company's
website at hochschildmining.com
BROWNFIELD EXPLORATION
Following the approval of the Inmaculada's MEIA, the brownfield team is
planning to drill 10,000m at the deposit to target high-grade structures in
the Eduardo and San Salvador belts. Resources are expected to be added by the
end of the first quarter of 2024.
At Pallancata, geological mapping is being completed on the western side west
of the new Royropata belt with the team also close to completing a geological
model for the Bolsa target in the same area. Permitting for the next drilling
campaign is expected in the second quarter of 2024.
Finally, 5,000m of drilling is planned close to operations at San Jose with
completion again expected towards the end of the first quarter of 2024.
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 periods.
Revenue
Gross revenue 8 (#_ftn8)
Gross revenue from continuing operations decreased by 9% to $321.9 million in
H1 2023 (H1 2022: $355.0 million) due to lower silver and gold production.
Output was mainly impacted by the delay in the approval of the MEIA at
Inmaculada and scheduled lower production at Inmaculada and Pallancata. This
was partially offset by higher average realised gold prices.
On 10 November 2021, the Group hedged 3.3 million ounces of 2023 silver
production at US$25 per ounce, and on 20 April 2023 the Group hedged 29,250
ounces of 2023 gold production at US$2,047 per ounce. As of June 2023, 1.65
million silver ounces (H1 2022: 2.0 million) were priced at US$25 per ounce
(H1 2022: US$27), and 9,750 gold ounces (H1 2022: nil) were priced at US$2,047
per ounce, boosting the realised price.
On 12 April 2023, the Group hedged 27,600 ounces of 2024 gold production at
US$2,100 per ounce and on 19 June 2023, the Group hedged 150,000 ounces of
2025, 2026 and 2027 gold production at US$2,117, US$2,167 and US$2,206 per
ounce, respectively.
Gold
Gross revenue from gold in H1 2023 decreased to $195.3 million (H1 2022:
$211.3 million) due to lower gold produced across all operations. This was
partially offset by a 4% increase in the average realised gold price.
Silver
Gross revenue decreased in H1 2023 to $126.3 million (H1 2022: $143.4 million)
due to lower silver produced across all operations and a 2% decrease in the
average realised silver price.
Gross average realised sales prices
The following table provides figures for average realised prices (before the
deduction of commercial discounts) and ounces sold for H1 2023 and H1 2022:
Average realised prices Six months to Six months to
30 June 2023 30 June 2022
Gold ounces sold (koz) 99.79 112.70
Avg. realized gold price ($/oz) 1,957 1,875
Silver ounces sold (koz) 5,425 6,045
Avg. realized silver price ($/oz) 23.3 23.7
Commercial discounts
Commercial discounts refer to refinery treatment charges, refining fees and
payable deductions for processing concentrate, 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 H1 2023,
the Group recorded commercial discounts of $7.8 million (H1 2022: $7.2
million). The ratio of commercial discounts to gross revenue in H1 2023 was
2.4% (H1 2022: 2.0%).
Net revenue
Net revenue was $314.0 million (H1 2022: $347.8 million), comprising net gold
revenue of $192.1 million (H1 2022: $208.7 million) and net silver revenue of
$121.6 million (H1 2022: $138.8 million). In H1 2023, gold accounted for 61%
and silver for 39% of the Company's consolidated net revenue (H1 2022: gold
60% and silver 40%).
Reconciliation of gross revenue by mine to Group net revenue
$000 Six months to Six months to % change
30 June 2023 30 June 2022
Gold revenue
Inmaculada 118,764 135,893 (13)
Pallancata 7,488 10,084 (26)
San Jose 69,031 65,343 6
Commercial discounts from concentrates (3,159) (2,655) 19
Net gold revenue 192,124 208,665 (8)
Silver revenue
Inmaculada 60,047 68,303 (12)
Pallancata 21,650 28,920 (25)
San Jose 44,621 46,154 (3)
Commercial discounts from concentrates (4,684) (4,561) 3
Net silver revenue 121,634 138,816 (12)
Other revenue 265 300 12
Net revenue 314,023 347,781 (10)
Costs
Total cost of sales before exceptional items was $250.9 million in H1 2023 (H1
2022: $240.5 million). The direct production cost excluding depreciation was
lower at $170.1 million (H1 2022: $174.0 million) mainly due to lower
production in Inmaculada and Pallancata, partially offset by a scheduled
higher proportion of conventional mining methods across all mining units, and
inflation. Depreciation in production cost increased to $71.9 million (H1
2022: $68.8 million) mainly due to the impact of the reversal in impairment
loss at Pallancata of $15.5 million as at 31 December 2022, partially offset
by lower depreciation in Inmaculada due to lower production. Fixed costs
incurred during total or partial production stoppages were $3.0 million in H1
2023 (H1 2022: $3.9 million). Decrease in inventories was $4.7 million in H1
2023 (H1 2022: increase in inventories of $8.2 million) due to higher
consumption of products in process across all operations.
$000 Six months to Six months to % change
30 June 2023 30 June 2022
Direct production cost excluding depreciation 170,072 174,001 (2)
Depreciation in production cost 71,904 68,801 5
Other items and workers profit sharing 1,173 2,046 (43)
Fixed costs during operational stoppages and reduced capacity 3,005 3,870 (22)
Change in inventories 4,716 (8,202) (157)
Cost of sales 250,870 240,516 4
Fixed costs during operational stoppages and reduced capacity:
$000 Six months to Six months to % change
30 June 2023 30 June 2022
Personnel 2,410 2,292 5
Third party services 1,030 1,495 (31)
Supplies 34 5 580
Depreciation and amortisation - 2 -
Others (469) 76 (717)
Cost of sales 3,005 3,870 (22)
Unit cost per tonne
The Company reported unit cost per tonne at its operations of $170.6 per tonne
in H1 2023, a 9% increase versus H1 2022 ($156.6 per tonne). This was due to
the effect of: higher costs resulting from lower treated tonnage in Inmaculada
and Pallancata, a scheduled higher proportion of conventional mining methods
across all mining units, and inflation.
Unit cost per tonne by operation (including royalties) 9 (#_ftn9) :
Operating unit ($/tonne) Six months to Six months to % change
30 June 2023 30 June 2022
Peru 138.3 119.4 16
Inmaculada 140.5 111.8 26
Pallancata 133.8 137.4 (3)
Argentina
San Jose 270.1 309.6 (13)
Total 170.6 156.6 9
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 (#_ftn10)
Six months to 30 June 2023
$000 unless otherwise indicated Inmaculada Pallancata San Jose Total
Group cash cost 74,717 36,160 79,893 190,770
(+) Cost of sales 11 (#_ftn11) 110,688 45,374 91,047 247,109
(-) Depreciation and amortisation in cost of sales (37,677) (11,588) (23,440) (72,705)
(+) Selling expenses 230 249 6,415 6,894
(+) Commercial deductions 12 (#_ftn12) 1,476 2,125 5,871 9,472
Gold 994 406 2,846 4,246
Silver 482 1,719 3,025 5,226
Revenue 178,811 27,013 107,934 313,758
Gold 118,764 7,082 66,278 192,124
Silver 60,047 19,931 41,656 121,634
Ounces sold
Gold 61.4 3.7 34.7 99.8
Silver 2,561.1 923.2 1,940.7 5,425.0
Group cash cost ($/oz)
Co product Au 808 2,531 1,416 1,171
Co product Ag 9.8 28.9 15.89 13.63
By product Au 231 3,874 1,016 640
By product Ag (17.59) 31.06 5.55 (1.03)
Six months to 30 June 2022
$000 unless otherwise indicated Inmaculada Pallancata San Jose Total
Group cash cost 74,152 37,802 70,021 181,975
(+) Cost of sales 13 (#_ftn13) 112,680 43,848 77,710 234,238
(-) Depreciation and amortisation in cost of sales (40,193) (8,754) (18,786) (67,733)
(+) Selling expenses 322 242 6,163 6,727
(+) Commercial deductions 14 (#_ftn14) 1,343 2,466 4,934 8,743
Gold 1,007 490 2,272 3,769
Silver 336 1,976 2,662 4,974
Revenue 204,196 36,538 106,747 347,781
Gold 135,893 9,594 63,178 208,665
Silver 68,303 26,944 43,569 138,816
Others - - - 300
Ounces sold
Gold 72.7 5.4 34.6 112.7
Silver 2,805 1,160 2,080 6,045
Group cash cost ($/oz)
Co product Au 679 1,853 1,197 970
Co product Ag 8.8 24.0 13.7 12.0
By product Au 76 1,658 687 395
By product Ag (22.4) 23.9 2.2 (5)
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 15 (#_ftn15)
All-in sustaining cash costs per silver equivalent ounce
Six months to 30 June 2023
$000 unless otherwise indicated Inmaculada Pallancata San Jose Main operations Corporate & others Total
(+) Direct production cost excluding depreciation 73,869 31,163 65,040 170,072 - 170,072
(+) Other items and workers profit sharing in cost of sales 732 441 - 1,173 - 1,173
(+) Operating and exploration capex for units 37,642 2,384 20,197 60,223 61 60,284
(+) Brownfield exploration expenses 368 591 4,213 5,172 1,446 6,618
(+) Administrative expenses (excl. depreciation) 1,950 291 2,744 4,985 14,981 19,966
(+) Royalties and special mining tax 16 (#_ftn16) 1,850 280 - 2,130 618 2,748
Sub-total 116,411 35,150 92,194 243,755 17,106 260,861
Au ounces produced 61,852 3,607 35,095 100,554 - 100,554
Ag ounces produced (000s) 2,573 879 1,941 5,393 - 5,393
Ounces produced (Ag Eq 000s oz) 7,707 1,179 4,854 13,740 - 13,740
Sub-total ($/oz Ag Eq) 15.1 29.8 19.0 17.7 1.2 18.9
(+) Commercial deductions 1,476 2,125 5,871 9,472 - 9,472
(+) Selling expenses 230 249 6,415 6,894 - 6,894
Sub-total 1,706 2,374 12,286 16,366 - 16,366
Au ounces sold 61,389 3,746 34,656 99,791 - 99,791
Ag ounces sold (000s) 2,561 923 1,941 5,425 - 5,425
Ounces sold (Ag Eq 000s oz) 7,656 1,234 4,817 13,707 - 13,707
Sub-total ($/oz Ag Eq) 0.2 1.9 2.5 1.2 - 1.2
All-in sustaining costs ($/oz Ag Eq) 15.3 31.7 21.5 18.9 1.2 20.1
All-in sustaining costs ($/oz Au Eq) 17 (#_ftn17) 1,272 2,635 1,788 1,572 103 1,675
Six months to 30 June 2022
$000 unless otherwise indicated Inmaculada Pallancata San Jose Main operations Corporate & others Total
(+) Direct production cost excluding depreciation 18 (#_ftn18) 71,851 35,846 66,304 174,001 - 174,001
(+) Other items and workers profit sharing in cost of sales 1,095 951 - 2,046 - 2,046
(+) Operating and exploration capex for units 34,013 8,236 23,324 65,573 356 65,929
(+) Brownfield exploration expenses 1,618 3,714 4,324 9,656 1,794 11,450
(+) Administrative expenses (excl. depreciation) 2,151 385 3,012 5,548 18,501 24,049
(+) Royalties and special mining tax 19 (#_ftn19) 2,099 376 - 2,475 1,532 4,007
Sub-total 112,827 49,508 96,964 259,299 22,183 281,482
Au ounces produced 72,666 5,394 35,883 113,943 - 113,943
Ag ounces produced (000s) 2,815 1,167 2,123 6,105 - 6,105
Ounces produced (Ag Eq 000s oz) 8,846 1,615 5,101 15,562 - 15,562
Sub-total ($/oz Ag Eq) 12.8 30.7 19.0 16.7 1.4 18.1
(+) Commercial deductions 1,343 2,466 4,934 8,743 - 8,743
(+) Selling expenses 322 242 6,163 6,727 - 6,727
Sub-total 1,665 2,708 11,097 15,470 - 15,470
Au ounces sold 72,718 5,357 34,622 112,696 - 112,696
Ag ounces sold (000s) 2,805 1,161 2,080 6,046 - 6,046
Ounces sold (Ag Eq 000s oz) 8,840 1,605 4,953 15,398 - 15,398
Sub-total ($/oz Ag Eq) 0.1 1.6 2.2 1.0 - 1.0
All-in sustaining costs ($/oz Ag Eq) 12.9 32.3 21.2 17.7 1.4 19.1
All-in sustaining costs ($/oz Au Eq) 20 (#_ftn20) 1,074 2,685 1,764 1,466 119 1,585
Administrative expenses
Administrative expenses were down by 16% to $20.9 million (H1 2022: $24.9
million) mainly due to lower bonus provision and professional fees.
Exploration expenses
In H1 2023, exploration expenses decreased to $11.5 million (H1 2022: $23.8
million) mainly due lower exploration expenses at the Snip project of $2.3
million (H1 2022: $6.9 million), lower exploration expenses at Pallancata of
$0.6 million (H1 2022: $3.7 million), lower personnel expenses of $2.5 million
(H1 2022: $3.7 million), and lower exploration expenses at Inmaculada of $0.4
million (H1 2022: $1.6 million).
In addition, the Group capitalises part of its brownfield exploration, which
mostly relates to costs incurred converting potential resources to the
Inferred or Measured and Indicated categories. In H1 2023, the Company
capitalized $0.4 million relating to brownfield exploration (H1 2022: $0.2
million), bringing the total investment in exploration for H1 2022 to $11.9
million (H1 2022: $24.0 million).
Selling expenses
Selling expenses slightly increased to $6.9 million (H1 2022: $6.7 million)
mainly due to higher gold prices.
Other income/expenses
Other income was $4.9 million (H1 2022: $2.6 million) with the increase mainly
due to an insurance reimbursement received in H1 2023 in connection with
damage to Inmaculada's machine belt in 2022.
Other expenses before exceptional items were $12.8 million (H1 2022: $22.9
million) with the decrease mainly due to: lower additions to the provision for
mine closure of $1.3 million (H1 2022: $10.8 million), a decrease in care and
maintenance costs of $3.2 million (H1 2022: $4.2 million), expenses from a
voluntary redundancy programme in Argentina incurred in H1 2022 of $0.9
million, and lower labour contingencies in Argentina of $1.0 million (2022:
$1.7 million). These were partially offset by a provision for obsolescence of
supplies of $1.7 million (H1 2022: $nil).
Adjusted EBITDA
Adjusted EBITDA decreased by 24% to $99.5 million (H1 2022: $130.5 million)
mainly due to the fall in revenue resulting from lower silver and gold
production.
Adjusted EBITDA is calculated as profit from continuing operations before
exceptional items, net finance costs, foreign exchange losses and income tax
plus non-cash items (depreciation and amortisation and changes in mine closure
provisions) and exploration expenses other than personnel and other
exploration related fixed expenses.
$000 unless otherwise indicated Six months to Six months to % change
30 June 2023 30 June 2022
Profit from continuing operations before exceptional items, net finance 14,222 29,413 (52)
income/(cost), foreign exchange loss and income tax
Depreciation and amortisation in cost of sales 72,705 67,735 7
Depreciation and amortisation in administrative and other expenses 978 915 7
Exploration expenses 11,515 23,826 (52)
Personnel and other exploration related fixed expenses (2,922) (4,227) (31)
Other non-cash income, net 21 (#_ftn21) 2,999 12,863 (77)
Adjusted EBITDA 99,497 130,525 (24)
Adjusted EBITDA margin 32% 38% (16)
Finance income
Finance income was $2.6 million (H1 2022: $2.2 million), mainly due to higher
interest on deposits of $2.3 million (H1 2022: $0.6 million) resulting from
the rise in interest rates, partially offset by the gain on the unwinding of
discount of the mine closure provision of $1.1 million in H1 2022.
Finance costs
Finance costs decreased from $13.1 million in H1 2022 to $11.0 million in H1
2023, principally due to foreign exchange transaction costs to acquire dollars
in Argentina in H1 2022 of $2.8 million, a loss on the sale of C3 Metals Inc.
shares of $0.3 million in H1 2023 (H1 2022: recorded a loss on the fair value
of C3 Metals Inc. shares of $2.3 million), partially offset by higher interest
expenses, which totalled $8.6 million in H1 2023 (H1 2022: $6.3 million),
mainly explained by higher interest rates,
Foreign exchange losses
The Group recognized a foreign exchange loss of $4.3 million (H1 2022: $2.6
million) as a result of exposures in currencies other than the functional
currency, mainly in Argentina of $3.8 million (H1 2022: $0.1 million), and
Peru of $0.5 million (H1 2022: $3.0 million).
Income tax
The Company's pre-exceptional income tax charge was $5.1 million (H1 2022:
$5.8 million) and includes royalties and special mining tax of $2.7 million
(H1 2022: $4.0 million), and the foreign exchange effect on deferred income
tax of $1.9 million (H1 2022: credit of $5.6 million).
Exceptional items
Exceptional items in H1 2023 totalled a $48.3 million loss after tax (H1 2022:
$9.9 million loss after tax) related to impairment losses at: the Azuca and
Crespo projects of $42.3 million; the San Jose mining unit of $17.4 million;
and the investment in Aclara Resources Inc. of $7.2 million.
The tax effect of the exceptional items was a tax gain of $18.6 million (H1
2022: $nil). The total effective tax rate was 20.3% (2022: 107.8%).
Cash flow and balance sheet review
Cash flow
$000 Six months to Six months to Change
30 June 2023 30 June 2022
Net cash generated from operating activities 86,374 18,658 363
Net cash used in investing activities (134,448) (199,172) (32)
Cash flows generated (used in)/from financing activities (178) 306 (158)
Foreign exchange adjustment (2,014) (2,257) (11)
Net increase/(decrease) in cash and cash equivalents during the period (50,266) (182,465) (72)
Net cash generated from operating activities increased from $18.7 million in
H1 2022 to $86.4 million in H1 2023 mainly due to higher cash inflows from
working capital changes and lower taxes paid; partially offset by lower
Adjusted EBITDA.
Net cash used in investing activities decreased to $134.4 million in H1 2023
from $199.2 million in H1 2022 mainly due to the consideration paid for the
acquisition of Amarillo Gold on 1 April 2022 of $123.4 million, partially
offset by higher construction capex in Mara Rosa of $64.6 million (H1 2022:
$10.1 million).
Cash generated (used in)/from financing activities changed to an outflow of
$0.2 million from an inflow of $0.3 million in H1 2022 mainly due to the net
effect of: (i) repayment of pre-shipment loans of $11.7 million (H1 2022:
$nil), (ii) pre-shipment loans raised of $12.6 million (H1 2022: $13.4
million), and (iii) payment of $12.0 million in dividends to shareholders in
H1 2022.
Working capital
$000 As at As at
30 June 2023 31 December 2022
Trade and other receivables 79,583 85,408
Inventories 51,000 61,440
Derivative financial assets/(liabilities) 5,679 2,186
Income tax payable, net 4,410 7,100
Trade and other payables (136,407) (144,102)
Provisions (20,098) (24,177)
Working capital (15,833) (12,145)
The Group's working capital position in H1 2023 decreased by $3.7 million from
$(12.1) million to $(15.8) million. The key drivers of the decrease were lower
inventories of $10.4 million partially offset by lower trade and other
payables of $7.7 million.
Net cash/ (debt)
$000 unless otherwise indicated As at As at
30 June 2023 31 December 2022
Cash and cash equivalents 93,578 143,844
Non-current borrowings (224,999) (275,000)
Current borrowings 22 (#_ftn22) (95,633) (43,989)
Net cash/(debt) (227,054) (175,145)
The Group's reported net debt position was $227.1 million as at 30 June 2023
(31 December 2022: net debt position of $175.1 million). The decrease in cash
and cash equivalents in H1 2023 is mainly explained by capital expenditure at
Mara Rosa of $64.6 million.
Capital expenditure(( 23 (#_ftn23) ))
$000 Six months to# Six months to
30 June 2023 30 June 2022
Inmaculada 37,642 34,013
Pallancata 3,108 8,236
San Jose 21,487 24,551
Operations 62,237 66,800
Mara Rosa 64,591 133,516
Aclara - -
Other 1,646 2,134
Total 128,474 202,450
H1 2023 capital expenditure decreased from $202.5 million in H1 2022 to $128.5
million in H1 2023 mainly to the consideration paid for the acquisition of
Amarillo Gold on 1 April 2022 of $123.4 million, partially offset by higher
construction capex in Mara Rosa of $64.6 million (H1 2022: $10.1 million).
Non-IFRS Financial Performance Measures
The Company has included certain non-IFRS measures in this news release. The
Company believes that these measures, in addition to conventional measures
prepared in accordance with IFRS, provide investors an improved ability to
evaluate the underlying performance of the Company. The non-IFRS measures are
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with IFRS. These measures do not have any standardised meaning
prescribed under IFRS, and therefore may not be comparable to other issuers.
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. The Company cautions against undue reliance
on any forward looking statement or guidance, particularly in light of the
current economic climate and the significant volatility, uncertainty and
disruption caused by Covid-19. 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.
RISKS
The principal risks and uncertainties facing the Company in respect of the
year ended 31 December 2022 are set out in detail in the Risk Management
section of the 2022 Annual Report and in Note 38 to the 2022 Consolidated
Financial Statements.
The key risks disclosed in the 2022 Annual Report (available
at www.hochschildmining.com (http://www.hochschildmining.com/) )
are categorised as:
§ Financial risks comprising commodity price risk, commercial counterparty
risk and liquidity risk;
§ Operational risks including the risks associated with operational
performance, business interruption/supply chain, information security and
cybersecurity, exploration & reserve and resource replacement, personnel
and project development;
§ Macro-economic risks which include political, legal and regulatory risks;
and
§ Sustainability risks including risks associated with health and safety,
environmental, climate change and community relations.
With the exception of liquidity risk, which has been mitigated by the approval
of the Inmaculada MEIA, the risks referred to above continue to apply to the
Company in respect of the remaining six months of the financial year.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in Note 23 to the interim condensed
consolidated financial statements.
GOING CONCERN
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
duration of the Going Concern Period until 30 September 2024. Accordingly,
they continue to adopt the going concern basis in preparing the interim
condensed set of financial statements. For further detail, refer to the Going
concern disclosure in Note 2 "Significant Accounting Policies" of the interim
condensed consolidated financial statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that, to the best of their knowledge, the interim
condensed consolidated financial statements have been prepared in accordance
with UK adopted International Accounting Standard 34 "Interim Financial
Reporting" and that the interim management report includes a fair review of
the information required by Disclosure Guidance and Transparency Rules 4.2.7R
and 4.2.8R.
A list of current Directors and their functions is maintained on the Company's
website.
For and on behalf of the Board
Eduardo Landin
Chief Executive Officer
5 September 2023
INDEPENDENT REVIEW REPORT TO HOCHSCHILD MINING PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2023, which comprises the interim condensed consolidated income
statement, the interim condensed consolidated statement of comprehensive
income, the interim condensed consolidated statement of financial position,
the interim condensed consolidated statement of cash flows, the interim
condensed consolidated statement of changes in equity and the related notes 1
to 25. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
5 September 2023
Interim condensed consolidated income statement
Six months ended Six months ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited)
Notes Before exceptional items US$000 Exceptional items Total US$000 Before exceptional items US$000 Exceptional items Total US$000
(Note 10) (Note 10)
US$000 US$000
Continuing operations
Revenue 5 314,023 - 314,023 347,781 - 347,781
Cost of sales 6 (250,870) - (250,870) (240,516) - (240,516)
Gross profit 63,153 - 63,153 107,265 - 107,265
Administrative expenses (20,884) - (20,884) (24,913) - (24,913)
Exploration expenses 7 (11,515) - (11,515) (23,826) - (23,826)
Selling expenses 8 (6,894) - (6,894) (6,727) - (6,727)
Other income 9 4,863 - 4,863 2,580 - 2,580
Other expenses 9 (12,817) - (12,817) (22,902) - (22,902)
Impairment and write-off of non-financial assets 13 (1,684) (59,719) (61,403) (2,064) - (2,064)
(Loss)/profit from continuing operations before net finance cost, foreign 14,222 (59,719) (45,497) 29,413 - 29,413
exchange loss and income tax
Share of loss of an associate 15 (785) (7,183) (7,968) (551) (9,923) (10,474)
Finance income 11 2,628 - 2,628 2,163 - 2,163
Finance costs 11 (11,010) - (11,010) (13,083) - (13,083)
Foreign exchange loss (4,268) - (4,268) (2,649) - (2,649)
(Loss)/profit from continuing operations before income tax 787 (66,902) (66,115) 15,293 (9,923) 5,370
Income tax (expense)/benefit 12 (5,144) 18,574 13,430 (5,790) - (5,790)
(Loss)/profit for the period from continuing operations (4,357) (48,328) (52,685) 9,503 (9,923) (420)
Attributable to:
Equity shareholders of the parent (1,927) (42,787) (44,714 ) 7,156 (9,923) (2,767
Non-controlling interests (2,430) (5,541) (7,971) 2,347 - 2,347
(4,357) (48,328) (52,685) 9,503 (9,923) (420)
Basic (loss)/earnings per ordinary share from continuing operations for the (0.004) (0.083) (0.087) 0.01 (0.02) (0.01)
period (expressed in U.S. dollars per share)
Diluted (loss)/earnings per ordinary share from continuing operations for the (0.004) (0.081) (0.085) 0.01 (0.02) (0.01)
period (expressed in U.S. dollars per share)
Interim condensed consolidated statement of comprehensive income
Six months ended 30 June
Notes 2023 (Unaudited) US$000 2022 (Unaudited) US$000
Loss for the period (52,685) (420)
Other comprehensive income that might be reclassified to profit or loss in
subsequent periods; net of tax:
Net gain on cash flow hedges 16 4,113 6,734
Deferred tax charge on cash flow hedges (1,269) (1,987)
Exchange differences on translating foreign operations(1) 22,554 (18,883)
Share of other comprehensive gain/(loss) of an associate 15 1,058 (1,541)
26,456 (15,677)
Other comprehensive income that will not be reclassified to profit or loss in
subsequent periods; net of tax:
Net loss on equity instruments at fair value through other comprehensive (106) (159)
income ("OCI")
(106) (159)
Other comprehensive income/(loss) for the period, net of tax 26,350 (15,836)
Total comprehensive loss for the period (26,335) (16,256)
Total comprehensive loss attributable to:
Equity shareholders of the parent (18,364) (18,603)
Non-controlling interests (7,971) 2,347
(26,335) (16,256)
1 Foreign exchange effect generated in the Group´s companies when the
functional currency is the local currency, mainly generated by the decrease of
the US$ exchange rate in Brazil.
Interim condensed consolidated statement of financial position
Notes As at 30 As at 31
June
December
2023
2022
(Unaudited) US$000 US$000
ASSETS
Non-current assets
Property, plant and equipment 13 965,708 926,913
Evaluation and exploration assets 14 101,654 123,462
Intangible assets 19,540 19,328
Investment in an associate 15 26,332 33,242
Financial assets at fair value through OCI 16 403 509
Financial assets at fair value through profit and loss 16 - 1,015
Trade and other receivables 13,147 6,498
Derivative financial assets 16 1,574 -
Deferred income tax assets 17 1,029 4,213
1,129,387 1,115,180
Current assets
Inventories 51,000 61,440
Trade and other receivables 79,583 85,408
Derivative financial assets 16 5,679 2,186
Income tax receivable 5,856 9,226
Cash and cash equivalents 18 93,578 143,844
235,696 302,104
Total assets 1,365,083 1,417,284
EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Parent
Equity share capital 21 9,068 9,061
Other reserves (213,400) (238,800)
Retained earnings 844,523 886,980
640,191 657,241
Non-controlling interests 57,178 65,475
Total equity 697,369 722,716
Non-current liabilities
Trade and other payables 2,849 1,623
Derivative financial liabilities 16 954 -
Borrowings 19 224,999 275,000
Provisions 20 131,420 123,506
Deferred income tax liabilities 17 53,908 80,045
414,130 480,174
Current liabilities
Trade and other payables 136,407 144,102
Borrowings 19 95,633 43,989
Provisions 20 20,098 24,177
Income tax payable 1,446 2,126
253,584 214,394
Total liabilities 667,714 694,568
Total equity and liabilities 1,365,083 1,417,284
Interim condensed consolidated statement of cash flows
Six months ended 30 June
Notes 2023 (Unaudited) US$000 2022 (Unaudited) US$000
Cash flows from operating activities
Cash generated from operations 24 99,810 41,208
Interest received 2,333 1,069
Interest paid 19 (11,139) (3,814)
Payment of mine closure costs (3,046) (3,789)
Income tax paid (1,584) (16,016)
Net cash generated from operating activities 86,374 18,658
Cash flows from investing activities
Purchase of property, plant and equipment (133,817) (82,590)
Purchase of evaluation and exploration assets (1,828) (113,625)
Purchase of intangibles (123) (354)
Purchase of Argentinian bonds 11(2) - (6,091)
Proceeds from sale of Argentinian bonds 11(2) - 3,289
Proceeds from sale of financial assets at fair value though profit and loss 723 -
Proceeds from sale of property, plant and equipment 13 597 199
Net cash used in investing activities (134,448) (199,172)
Cash flows from financing activities
Proceeds from borrowings 19 12,560 13,411
Repayment of borrowings 19 (11,682) -
Payment of lease liabilities (730) (821)
Dividends paid to shareholders 22 - (11,998)
Dividends paid to non-controlling interests 22 (326) (286)
Cash flows (used in)/generated from financing activities (178) 306
Net decrease in cash and cash equivalents during the period (48,252) (180,208)
Impact of foreign exchange (2,014) (2,257)
Cash and cash equivalents at beginning of period 18 143,844 386,789
Cash and cash equivalents at end of period 18 93,578 204,324
Interim condensed consolidated statement of changes in equity
Other reserves
Notes Equity Share premium US$000 Dividends expired US$000 Fair value reserve of financial assets Cumulative translation adjustment US$000 Merger reserve US$000 Share-based payment reserve US$000 Total Retained earnings US$000 Capital and reserves attributable to shareholders Non-controlling interests US$000 Total equity US$000
at fair value through OCI US$000
other
of the Parent US$000
share
reserves US$000
capital US$000 Share
Unrealised gain/ of other compre- hensive
(loss) on hedges loss of an associate US$000
US$000
Balance at 1 January 2023 9061 - 99 1,541 1,274 (78) (37,902) (210,046) 6,312 (238,800) 886,980 657,241 65,475 722,716
Other comprehensive income/(loss) - - - 2,844 1,058 (106) 22,554 - - 26,350 - 26,350 - 26,350
Loss for the period - - - - - - - - - - (44,714) (44,714) (7,971) (52,685)
Total comprehensive income/(loss) for the - - - 2,844 1,058 (106) 22,554 - - 26,350 (44,714) (18,364) (7,971) (26,335)
period
Dividends paid to non-controlling 22 - - - - - - - - - - - - (326) (326)
interest
Cancellation of dividends expired - - (99) - - - - - - (99) 152 53 - 53
Exercise of share based payments 7 - - - - - - - (584) (584) 577 - - -
Accrual of share-based payments - - - - - - - - 1,261 1,261 - 1,261 - 1,261
Forfeiture of share options - - - - - - - - (1,528) (1,528) 1,528 - - -
Balance at 30 June 2023 (unaudited) 9,068 - - 4,385 2,332 (184) (15,348) (210,046) 5,461 (213,400) 844,523 640,191 57,178 697,369
Balance at 1 January 2022 226,506 438,041 99 13,476 (9) 74 (25,163) (210,046) 3,912 (217,657) 248,664 695,554 63,890 759,444
Other comprehensive income/(loss) - - - 4,747 (1,541) (159) (18,883) - - (15,836) - (15,836) - (15,836)
Loss for the period - - - - - - - - - - (2,767) (2,767) 2,347 (420)
Total comprehensive income/(loss) for the - - - 4,747 (1,541) (159) (18,883) - - (15,836) (2,767) (18,603) 2,347 (16,256)
period
Dividends 22 - - - - - - - - - - (11,998) (11,998) - (11,998)
Dividends paid to non-controlling 22 - - - - - - - - - - - - (286) (286)
interest
Issuance of deferred bonus shares 21 303,268 - - - - - - - - - (303,268) - - -
Cancelation of deferred bonus shares 21 (303,268) - - - - - - - - - 303,268 - - -
Cancelation of share premium account 21 - (438,041) - - - - - - - - 438,041 - - -
Nominal value reduction 21 (217,445) - - - - - - - - - 217,445 - - -
Accrual of share-based payments - - - - - - - - 1,187 1,187 - 1,187 - 1,187
Forfeiture of share options - - - - - - - - (1,886) (1,886) 1,886 - - -
Balance at 30 June 2022 (unaudited) 9,061 - 99 18,223 (1,550) (85) (44,046) (210,046) 3,213 (234,192) 891,271 666,140 65,951 732,091
Notes to the interim condensed consolidated financial statements
1 Corporate Information
Hochschild Mining PLC (hereinafter the "Company" and together with its
subsidiaries, the "Group") is a public limited company incorporated on 11
April 2006 under the Companies Act 1985 as a limited company and registered in
England and Wales with registered number 05777693. The Company's registered
office is located at 17 Cavendish Square, London W1G 0PH, United Kingdom. Its
ordinary shares are traded on the London Stock Exchange.
The Group's principal business is the mining, processing and sale of gold and
silver. The Group has two operating mines (Pallancata and Inmaculada) located
in southern Peru, and one operating mine (San Jose) located in Argentina. The
Group also has a portfolio of projects located across Peru, Argentina, Mexico,
Brazil and Chile at various stages of development.
These interim condensed consolidated financial statements were approved for
issue on behalf of the Board of Directors on 5 September 2023.
2 Significant Accounting Policies
Basis of preparation
These interim condensed consolidated financial statements set out the Group's
financial position as at 30 June 2023 and 31 December 2022 and its financial
performance and cash flows for the six months ended 30 June 2023 and 30 June
2022.
They have been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and UK adopted International
Accounting Standard 34, "Interim Financial Reporting". Accordingly, the
interim condensed consolidated financial statements do not include all the
information required for full annual financial statements and therefore,
should be read in conjunction with the Group's 2022 annual consolidated
financial statements as published in the 2022 Annual Report. The annual
financial statements of the Group will be prepared in accordance with UK
adopted IFRS.
The interim condensed consolidated financial statements do not constitute
statutory accounts as defined in the Companies Act 2006. The financial
information for the full year is based on the statutory accounts for the
financial year ended 31 December 2022. A copy of the statutory accounts for
that year, which were prepared in accordance with UK adopted International
Accounting Standards has been delivered to the Registrar of Companies. The
auditor's report under section 495 of the Companies Act 2006 in relation to
those accounts was unmodified and did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying the
report and did not contain a statement under s498(2) or s498(3) of the
Companies Act 2006.
The impact of the seasonality or cyclicality of operations is not regarded as
significant on the interim condensed consolidated financial statements.
The interim condensed consolidated financial statements are presented in US
dollars ($) and all monetary amounts are rounded to the nearest thousand
($000) except when otherwise indicated.
Critical accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of
judgement and/or estimation. These judgements and estimates are based on
management's best knowledge of the relevant facts and circumstances, having
regard to prior experience, but actual results may differ from the amounts
included in the financial statements. Information about such judgements and
estimates is contained in the accounting policies and/or the notes to the
financial statements.
The significant accounting judgements, estimates and assumptions remain
consistent with those disclosed in the consolidated financial statements for
the year ended 31 December 2022. The most significant are:
Critical judgements:
· Assessment of impairment indicators for the Group's GCUs
- note 13
· Acquiring a subsidiary or a group of assets - note 4.
In identifying a business combination or acquisition of assets the Group
considers the underlying inputs, processes and outputs acquired as a part of
the transaction. For an acquired set of activities and assets to be considered
a business there must be at least some inputs and processes that have the
capability to achieve the purposes of the Group. Where significant inputs and
processes have not been acquired, a transaction is considered to be the
purchase of assets. For the assets and assumed liabilities acquired the Group
allocates the total consideration paid (including directly attributable
transaction costs) based on the relative fair values of the underlying items.
On 1 April 2022 the Group acquired the control of Amarillo Gold Group (note
4). The transaction was accounted as a purchase of assets as no significant
systems, processes or outputs were acquired, with the main asset acquired
being the Posse gold project.
As at 30 June 2023, the valuation of certain of the Group's assets and
liabilities reflect the changes to certain assumptions used in the
determination of their value, such as future gold and silver prices, discount
rates, exchange rates, and interest rates (note 16).
Significant estimates:
· Mine closure estimates - note 20
· Recoverable values of mining assets - note 13
The values of the Group's mining assets are sensitive to a range of
characteristics unique to each mine unit. Key sources of estimation for all
assets include uncertainty around ore reserve estimates and cash flow
projections. In performing impairment reviews, the Group assesses the
recoverable amount of its operating assets principally with reference to fair
value less costs of disposal, assessed using discounted cash flow models. The
Group uses two approaches to estimate the fair value less costs of disposal,
depending on the circumstances: (i) the traditional approach, which uses a
single cash flow projection, and (ii) the expected cash flow approach, which
uses multiple, probability-weighted cash flow projections. As at 31 December
2022, the impairment reviews for the Group´s operating assets were performed
using a traditional approach, with the exception of Inmaculada where the Group
used an expected cash flow approach. To determine the fair value less costs of
disposal of exploration assets the Group uses the value-in-situ
methodology. This methodology applies a realisable 'enterprise value' to
unprocessed mineral resources per ounce of resources.
There is judgement involved in determining the assumptions that are considered
to be reasonable and consistent with those that would be applied by market
participants. Significant estimates used include future gold and silver
prices, future capital requirements, reserves and resources volumes,
production costs and the application of discount rates which reflect the
macro-economic risk in Peru and Argentina, as applicable. Judgement is also
required in determining the risk factor that will be applied by market
participants to take into account the water restrictions imposed by the
Chilean government over the Volcan cash-generating unit. Changes in these
assumptions will affect the recoverable amount of the property, plant and
equipment, evaluation and exploration assets, and intangibles.
Changes in accounting policies and disclosures
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
year ended 31 December 2022, except for the adoption of new standards
effective as of 1 January 2023. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2023, but do not have an impact
on the interim condensed consolidated financial statements of the Group.
Definition of Accounting Estimates - Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between changes in accounting
estimates, and changes in accounting policies and the correction of errors.
They also clarify how entities use measurement techniques and inputs to
develop accounting estimates. The amendments had no impact on the Group's
interim condensed consolidated financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction - Amendments to IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the initial
recognition exception, so that it no longer applies to transactions that give
rise to equal taxable and deductible temporary differences such as leases and
decommissioning liabilities. The amendments had no impact on the Group's
interim condensed consolidated financial statements.
Going concern
The Directors have reviewed Group liquidity and covenant forecasts to assess
whether the Group is able to continue in operation for the period to 30
September 2024 (the "Going Concern Period") which is at least 12 months from
the date of these financial statements. The Directors also considered the
impact of a reasonable downside scenario on the Group's future cash flows and
liquidity position as well as debt covenant compliance.
Having secured government approval of the Inmaculada MEIA in early August
2023, the material uncertainties disclosed in the 2022 Annual Report with
respect to the Group's ability to continue as a going concern no longer exist.
For purposes of the review, the base case scenario assumed forecast production
for 2023, life-of-mine plans for Inmaculada, Pallancata, San Jose and Mara
Rosa, and precious metal prices of $1,876.6/oz for gold and $24.2/oz for
silver (the "Assumed Prices"), based on analysts' consensus prices as of June
2023. The Directors also considered a reasonable downside scenario, taking
into account, a four-week suspension of all operations, community
relations-related cost increases, and precious metal prices which are 10%
lower than the Assumed Prices. In both of these scenarios, it has been
assumed that the US$200 million medium-term loan is fully drawn down.
Under both scenarios, the cash balance remained more than adequate for the
Group's forecast expenditure with sufficient headroom maintained to comply
with debt covenants.
The results of reverse stress tests were also considered.
After their thorough review, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational existence during
the Going Concern Period. Accordingly, they continue to adopt the going
concern basis in preparing the condensed set of financial statements.
3 Segment reporting
The following tables present revenue and profit/(loss) information for the
Group's operating segments for the six months ended 30 June 2023 and 30 June
2022 and asset information as at 30 June 2023 and 31 December 2022,
respectively:
Six months ended 30 June 2023 Pallancata San Jose US$000 Inmaculada US$000 Exploration US$000 Other Adjustments and eliminations US$000 Total
(Unaudited) US$000 US$000 US$000
Revenue from external customers 27,223 107,964 178,772 - 265 - 314,224
Inter segment revenue - - - - 4,669 (4,669) -
Total revenue from customers 27,223 107,964 178,772 - 4,934 (4,669) 314,224
Provisional pricing adjustments (210) (30) 39 - - - (201)
Total revenue 27,013 107,934 178,811 - 4,934 (4,669) 314,023
Segment profit/(loss) (19,501) 9,297 62,447 (11,593) 4,016 78 44,744
Others((1)) (110,859)
Profit from continuing operations before income tax (66,115)
As at 30 June 2023 (Unaudited)
Assets
Capital expenditure 3,108 21,487 37,642 66,159 78 - 128,474
Current assets 6,350 49,686 17,698 2 4,422 - 78,158
Other non-current assets 12,289 140,652 508,960 386,424 38,577 - 1,086,902
Total segment assets 18,639 190,338 526,658 386,426 42,999 - 1,165,060
Not reportable assets((2)) - - - - 200,023 - 200,023
Total assets 18,639 190,338 526,658 386,426 243,022 - 1,365,083
1 Comprised of administrative expenses of US$20,884,000, other income of
US$4,863,000, other expenses of US$12,817,000, impairment and write off of
non-financial assets of US$61,403,000, share of losses of an associate of
US$7,968,000, finance income of US$2,628,000, finance costs of US$11,010,000
and foreign exchange loss of US$4,268,000.
2 Not reportable assets are comprised of financial assets at fair value
through OCI of US$403,000, financial assets at fair value through profit and
loss of US$nil, other receivables of US$65,572,000, income tax receivable of
US$5,856,000, deferred income tax asset of US$1,029,000, investment in
associates US$26,332,000, derivative financial assets of US$7,253,000 and cash
and cash equivalents of US$93,578,000.
Six months ended 30 June 2022 (Unaudited) Pallancata US$000 San Jose US$000 Inmaculada US$000 Exploration US$000 Other Adjustments and eliminations US$000 Total
US$000 US$000
Revenue from external customers 39,084 110,804 204,262 - 300 - 354,450
Inter segment revenue - - - - 4,834 (4,834) -
Total revenue from customers 39,084 110,804 204,262 - 5,134 (4,834) 354,450
Provisional pricing adjustments (2,546) (4,057) (66) - - - (6,669)
Total revenue 36,538 106,747 204,196 - 5,134 (4,834) 347,781
Segment profit/(loss) (8,614) 18,436 86,617 (24,286) 4,098 461 76,712
Others((1)) (71,342)
Profit from continuing operations before income tax 5,370
As at 31 December 2022
Assets
Capital expenditure 13,518 50,112 78,176 196,792 1,268 - 339,866
Current assets 16,965 62,796 19,872 - 4,171 - 103,804
Other non-current assets 21,345 159,617 508,768 337,654 42,319 - 1,069,703
Total segment assets 38,310 222,413 528,640 337,654 46,490 - 1,173,507
Not reportable assets((2)) - - - - 243,777 - 243,777
Total assets 38,310 222,413 528,640 337,654 290,267 - 1,417,284
1 Comprised of administrative expenses of US$24,913,000, other income of
US$2,580,000, other expenses of US$22,902,000, impairment and write off of
non-financial assets of US$2,064,000, share of losses of an associate of
US$10,474,000, finance income of US$2,163,000, finance costs of US$13,083,000
and foreign exchange loss of US$2,649,000.
2 Not reportable assets are comprised of financial assets at fair value
through OCI of US$509,000, financial assets at fair value through profit and
loss of US$1,015,000, other receivables of US$49,542,000, income tax
receivable of US$9,226,000, deferred income tax asset of US$4,213,000,
investment in associates US$33,242,000, derivative financial assets of
US$2,186,000 and cash and cash equivalents of US$143,844,000.
4 Acquisition of assets
Amarillo Gold Group ("Amarillo")
On 1 April 2022, the Group acquired a 100% interest in Amarillo Gold
Corporation (Amarillo) flagship Mara Rosa ("Mara Rosa") project located in
Goiás State, Brazil, which included the construction stage Posse gold project
as well as certain early-stage exploration targets.
The Group applied its judgement to weigh the characteristics of Amarillo´s
acquisition and concluded whether it constituted the acquisition of a business
or a set of assets and activities. Since there were no outputs acquired, the
Group based its conclusion on the fact that the processes acquired were not
critical to the ability to develop or convert the actual inputs into outputs.
In this context, and in application of IFRS 3, the Group concluded that the
acquisition of Amarillo did not constitute the acquisition of a business but
the acquisition of a set of assets.
The consideration paid for the transaction amounted to CAD$154,429,478
(US$123,420,039), and transaction costs amounted to US$4,830,000. In
addition, a 2 per cent net smelter revenue royalty on certain exploration
properties owned by Amarillo that were separate from Posse was granted.
Amarillo consolidated its financial information with the Group from 1 April
2022, being the date on which the Group obtained control.
The fair value of assets acquired and liabilities assumed as at 1 April 2022
comprised the following:
US$000
Cash and cash equivalents 4,246
Other receivables 968
Intangibles 21
Evaluation and exploration assets 107,362
Property, plant and equipment 15,078
Deferred income tax asset 3,775
Income tax receivable 36
Total assets 131,486
Accounts payable and other liabilities (3,236)
Total liabilities (3,236)
Net assets acquired 128,250
Consideration for the acquisition of Amarillo Gold Canada shares 123,420
Transaction costs 4,830
Total consideration 128,250
Cash paid 128,250
Less cash acquired with the subsidiary (4,246)
Net cash flow on acquisition 124,004
The Group recognised individual identifiable assets (and liabilities) by
allocating the cost of acquisition on the basis of the relative fair values at
the date of purchase:
Step 1: Identify assets and liabilities acquired, adjusting them to the
Group´s accounting policies and presentation;
Step 2: Determine the purchase consideration; and
Step 3: Purchase Price Allocation: The consideration paid is allocated to the
fair value of the identifiable assets and liabilities assumed with the
remainder allocated to the mineral property acquired.
The fair value at the time of acquisition is the amount for which an asset
could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm's-length transaction.
5 Revenue
Period ended 30 June 2023 (unaudited) Period ended 30 June 2022 (unaudited)
Revenue from customers Revenue from customers
Goods/ services sold US$000 Shipping services US$000 Total US$000 Provisional pricing US$000 Total US$000 Goods/ services sold US$000 Shipping services US$000 Total US$000 Provisional pricing US$000 Total US$000
Gold (from dore bars) 142,854 321 143,175 21 143,196 164,011 458 164,469 (34) 164,435
Silver (from dore bars) 77,055 226 77,281 (3) 77,278 87,531 312 87,843 (74) 87,769
Gold (from concentrate) 46,796 1,871 48,667 261 48,928 44,215 1,277 45,492 (1,262) 44,230
Silver (from concentrate) 43,293 1,543 44,836 (480) 44,356 54,822 1,524 56,346 (5,299) 51,047
Services 265 - 265 - 265 300 - 300 - 300
Total 310,263 3,961 314,224 (201) 314,023 350,879 3,571 354,450 (6,669) 347,781
6 Cost of sales before exceptional items
Included in cost of sales are:
Six months ended 30 June
2023 (Unaudited) US$000 2022 (Unaudited) US$000
Depreciation and amortisation in cost of sales1 72,705 67,733
Personnel expenses2 58,905 58,052
Mining royalty 2,844 3,020
Change in products in process and finished goods(3) 4,716 (8,202)
Fixed costs at the operations during stoppages, reduced capacity and excess 3,005 3,870
absenteeism(4)
1 The depreciation and amortisation in production cost is US$71,903,000
(2022: US$68,801,000).
2 Includes workers' profit sharing of US$1,174,000 (2022: US$2,046,000).
3 Corresponds to the difference between the beginning and ending balance
of the finished products and products in process included in the production
cost during the period.
4 Corresponds to the fixed cost at the operations during stoppages of
US$905,000, net of the income for the insurance of US$486,000, and the
incremental idle capacity costs of US$2,586,000 (2022: Corresponds to the
unallocated fixed costs accumulated during operation below planned operating
capacity and excess absenteeism due to Covid-19 pandemic of US$2,081,000, and
the unallocated fixed cost accumulated during operations below planning
operating capacity due to the fire in San Jose of US$1,789,000).
7 Exploration expenses
Six months ended 30 June
2023 2022
(Unaudited) (Unaudited)
US$000
US$000
Mine site exploration1
Arcata 40 43
Ares 13 159
Inmaculada 368 1,618
Pallancata 591 3,714
San Jose 4,213 4,324
5,225 9,858
Prospects2
Canada 2,308 6,903
Peru 114 204
USA - 1,353
Chile (24) (20)
2,398 8,440
Generative3
Peru (206) 928
Mexico 7 270
USA 1 -
Brasil 1,120 -
922 1,198
Personnel 2,502 3,682
Depreciation right-of-use 48 102
Others 420 546
Total 11,515 23,826
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 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.
8 Selling expenses
Six months ended 30 June
2023 (Unaudited) 2022 (Unaudited) US$000
US$000
Personnel expenses 78 159
Warehouse services 743 511
Taxes1 5,143 5,219
Other 930 838
Total 6,894 6,727
1 Corresponds to the export duties in Argentina calculated as a fixed
amount in pesos per US$ of export.
9 Other income and expenses before exceptional items Six months ended 30 June
2023 (Unaudited) 2022 (Unaudited) US$000
US$000
Other income
Logistic services 712 -
Gain on recovery of expenses1 2,414 213
Recovery of previously written off account receivable - 543
Others2 1,737 1,824
Total 4,863 2,580
Other expenses
Increase in provision for mine closure (1,315) (10,799)
Depreciation right-of-use assets (54) (52)
Corporate social responsibility contribution in Argentina (1,696) (1,615)
Care and maintenance expenses of Ares mine unit (1,355) (1,921)
Care and maintenance expenses of Arcata mine unit (1,808) (2,271)
Voluntary retirement program in Argentina3 - (938)
Damage Inmaculada machine belt - (1,831)
Provision of obsolescence of supplies4 (1,730) -
Others(5) (4,859) (3,475)
Total (12,817) (22,902)
1 This is primarily the insurance collected in 2023 due to the damage of
the Inmaculada machine belt in 2022 of US$2,620,000, net of the loss on
recovery of expenses of US$206,000.
2 This mainly includes the sale of mine concessions in Chile of US$1,150,000
(2022: US$nil), export credits in Argentina of US$nil (2022: US$345,000), gain
on sale of property, plant and equipment of US$nil (2022: US$199,000), gain on
sale of supplies US$204,000 (2022: US$281,000) and the recovery of a
receivable in Canada of US$nil (2022: US$543,000).
3 This represents the voluntary retirement programme implemented at Minera
Santa Cruz as a result of the need to comply with the Provincial Employment
Law that requires at least 70% of the workforce to have resided in the
province of Santa Cruz for three years.
4 Mainly includes the provision for obsolescence of supplies related to the
ore sorting project amounting to US$1,713,000.
5 This is primarily the tax penalties of US$2,069,000 (2022: US$657,000),
loss on sale of property, plant and equipment of US$409,000 (2022: US$nil),
the contingencies of US$956,000 mainly explained by labor claims in Argentina
(2022: US$1,670,000), the remuneration of the employees included in the
voluntary retirement program of US$nil (June 2022 US$463,000), since Minera
Santa Cruz has to pay them until the employment relationship is terminated
even though they are prevented from attending the mining unit, and the
termination benefits of the Pallancata mine unit of US$400,000 (2022: US$nil).
10 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. Unless stated, exceptional items do not
correspond to a reporting segment of the Group.
Six months ended 30 June
2023 (Unaudited) US$000 2022 (Unaudited) US$000
Share of loss on an associate
Impairment of Aclara Resources Inc. (1 and refer note 15) (7,183) (9,923)
Total (7,183) (9,923)
Impairment and write-off of non-financial assets
Impairment of non-current assets (2) (59,719) -
Total (59,719) -
Income tax expense
Income tax credit 18,574 -
Total 18,574 -
The exceptional items for the period ended 30 June 2023 and 2022 correspond
to:
1 Corresponds to the impairment charge of US$7,183,000 (2022:
US$9,923,000) based on the updated valuation of the investment in Aclara
Resources Inc. as at 30 June 2023.
2 Corresponds to the impairment charge related to San Jose
(US$17,398,000) and Azuca and Crespo (US$42,321,000) projects.
11 Finance income and finance cost before exceptional items
The Group recognised the following finance income and finance costs before
exceptional items:
Six months ended 30 June
2023 (Unaudited) US$000 2022 (Unaudited) US$000
Finance income:
Interest on deposits and liquidity funds 2,313 562
Interest on loans 126 104
Unwind of discount on mine rehabilitation - 1,098
Others 189 399
Total finance income 2,628 2,163
Finance cost:
Interest on bank loans (5,468) (5,303)
Other interest (3,125) (1,045)
Total interest expense (8,593) (6,348)
Loss on discount of other receivables(1) (349) (957)
Loss from changes in the fair value of financial instruments(2) - (2,802)
Loss from changes in the fair value of financial assets at fair value through - (2,282)
profit and loss
Loss on sale of financial assets at fair value through profit and loss (292) -
Unwind of discount on mine rehabilitation (791) -
Others (985) (694)
Total finance costs (11,010) (13,083)
1 Mainly corresponds to the gain/(loss) on discount of tax credits in
Argentina.
2 Represents the foreign exchange transaction costs to acquire
US$3,289,000 dollars through the sale of bonds in Argentina.
12 Income tax expense
Six months ended 30 June
2023 (Unaudited) 2022 (Unaudited) US$000
US$000
Current tax
Current income tax expense 7,405 9,386
Withholding tax 297 -
Current mining royalty charge 2,130 2,475
Current special mining tax charge 618 1,533
Total 10,450 13,394
Deferred tax
Origination and reversal of temporary differences (23,880) (7,604)
Total (13,430) (7,604)
Total taxation (credit)/charge in the income statement (13,430) 5,790
The pre-exceptional tax charge for the period was US$5,144,000 (2022:
US$5,790,000).
The weighted average statutory income tax rate was 31.5% for 2023 and 35.0%
for 2022. This is calculated as the average of the statutory tax rates
applicable in the countries in which the Group operates, weighted by the
profit or loss before tax of the Group companies in their respective countries
as included in the consolidated financial statements. The interim income tax
rate calculation is based on the estimate average annual effective tax rate of
the Group.
The change in the weighted average statutory income tax rate is due to a
change in the weighting of profit or loss before tax in the various
jurisdictions in which the Group operates.
The profit before income tax (pre-exceptional) excluding the exchange
difference of US$ 4,268,000 was US$ 5,055,000. The weighted average
effective annual income tax rate expected for the full financial year was
47.5% generating an income tax expense of US$ 2,401,000. The higher tax in H1
2023 versus US$ 2,401,000 is due to the one-time effect occurred in the half
year related to the local currency revaluation of US$ 1,906,000 and the
non-deductible loss on the sale of C3 Metals Inc. shares of US$ 837,000.
The UK Government increased the rate of Corporation Tax to 25% on profits over
£250,000, approximately US$318,000, from April 2023. There is no impact on
the deferred tax calculation of the Group.
13 Property, plant and equipment
During the six months ended 30 June 2023, the Group acquired and developed
assets with a cost of US$126,523,000 (2022: US$88,471,000). The additions for
the six months ended 30 June 2023 relate to:
Mining properties and development (Unaudited) Other property plant and equipment (Unaudited) Total additions of property plant and equipment (Unaudited)
US$000 US$000 US$000
San Jose 16,086 5,401 21,487
Pallancata 3,065 43 3,108
Inmaculada 34,748 2,894 37,642
Mara Rosa 16,423 47,593 64,016
Others 192 78 270
Total 70,514 56,009 126,523
Assets with a net book value of US$1,006,000 were disposed of by the Group during the six month period ended 30 June 2023 (30 June 2022: US$nil) resulting in a net loss on disposal of US$409,000 (30 June 2022: gain of US$199,000).
For the six months ended 30 June 2023, the depreciation charge on property, plant and equipment was US$74,429,000 (2022: US$70,020,000).
There were borrowing costs capitalised in property, plant and equipment amounting to US$6,807,000 (31 December 2022: US$1,974,000).
30 June 2023
In 2023, management determined that there was a trigger of impairment in the
San Jose mine unit due to the increase in the discount rate from 19.8% to
21.7% mainly explained by the rise in country risk premium in Argentina, and
higher costs than expected due to local inflation. The impairment test
performed over the San Jose CGU resulted in an impairment recognised as at 30
June 2023 of US$17,398,000 (US$16,588,000 in property, plant and equipment,
US$376,000 in evaluation and exploration assets and US$434,000 in
intangibles).
The Group is conducting a sales process for its Azuca and Crespo projects.
This decision to evaluate the sale of these assets is part of the Group´s
strategy to focus its capital on larger-scale projects. Management is
currently negotiating with interested parties and has not entered into a
definitive agreement for the sale of these assets. As at 30 June 2023, Azuca
and Crespo do not meet the conditions to be classified as an asset held-for
sale under IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations".
Based on preliminary discussions with interested parties on the investment and
costs required for these projects, given their operational capabilities,
management determined that there were triggers of impairment in both the Azuca
and Crespo projects. An impairment test was carried out, adjusting the key
inputs used to determine the projects recoverable value, resulting in an
impairment charge of US$42,321,000 (US$15,898,000 in property, plant and
equipment, US$26,420,000 in evaluation and exploration assets and US$3,000 in
intangibles) for Azuca, and Crespo.
No indicators of impairment or reversal of impairment were identified in the
other CGUs, which includes other exploration projects.
The recoverable value of the San Jose, CGU, and the Crespo and Azuca assets
was determined using a fair value less costs of disposal (FVLCD) methodology.
The key assumptions on which management has based its determination of FVLCD
and the associated recoverable values calculated for the San Jose CGU and
Crespo assets are gold and silver prices, future capital requirements,
production costs, reserves and resources volumes (reflected in the production
volume), and the discount rate.
Real prices US$ per oz. 2024 2025 2026 2027 Long-term
Gold 1,850 1,735 1,582 1,557 1,600
Silver 24.3 22.6 21.4 21.8 22.0
San Jose Crespo
Discount rate (post-tax) 21.7% 6.0%
The period of 7 years and 9 years was used to prepare the cash flow
projections of San Jose mine unit and Crespo, respectively, which were in line
with their life of mine.
With respect to Azuca, given its 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 assets. The enterprise value used in
the calculation performed as at 30 June 2023 was $0.095 per silver equivalent
ounce of resources. The enterprise value figure is based on observable
external market information.
The estimated recoverable values of the Group's CGUs are equal to, or not
materially different than, their carrying values.
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.
A change in any of the key assumptions would have the following impact:
US$000
San Jose Crespo
Gold and silver prices (decrease by 10%) (45,400) (25,800)
Gold and silver prices (increase by 10%) 45,600 25,000
Production costs (increase by 10%) (31,100) (11,300)
Production costs (decrease by 10%) 30,300 11,100
Production volume (decrease by 10%) (28,600) (13,800)
Production volume (increase by 10%) 28,600 13,600
Post tax discount rate (increase by 3%)(1) (6,100) (17,800)
Post tax discount rate (decrease by 3%)(1) 6,900 22,400
Capital expenditure (increase by 10%) (8,900) (10,700)
Capital expenditure (decrease by 10%) 8,900 10,600
1 Management believed that a 3% change was a reasonably possible change in
the post-tax discount rate in Argentina. However, changes in the perception of
Argentina arising from political, social and financial disruption may give
rise to significant movement in the discount rate used in the assessment of
the San Jose CGU.
2022
The delay on the government decision on Inmaculada MEIA constituted a trigger
for impairment as at 31 December 2022. The MEIA was approved on 1 August 2023.
The company used an expected cash flow approach, assigning probabilities to
the following possible scenarios regarding the government decision on
Inmaculada´s MEIA: (i) MEIA was approved, (ii) MEIA was denied, reapplication
was needed and consequently Inmaculada was placed in care and maintenance by
end of 2023, resuming operations in H2 2026. Management considered scenario
(i) as the most likely one, and scenario (ii) to have a probability of less
than 25% of occurrence. The valuation test performed over Inmaculada CGU,
using a probability-weighted approach, resulted in no impairment. If the
probability of occurrence of scenario (ii) was higher than 25%, an impairment
charge would be required for Inmaculada.
The recoverable value of the Inmaculada CGU was determined using a fair value
less costs of disposal (FVLCD) methodology. FVLCD was determined using a
combination of level 2 and level 3 inputs, which result in fair value
measurements categorised in its entirety as level 3 in the fair value
hierarchy, 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.
Real prices US$ per oz. 2023 2024 2025 2026 2027 2028-2038
Gold 1,716 1,711 1,603 1,545 1,466 1,561
Silver 20.3 20.7 19.6 20.6 23.3 20.8
Inmaculada
Discount rate (post-tax) 5.2%
31 December 2022 (US$000) Inmaculada
Current carrying value of CGU, net of deferred tax 443,447
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.
A change in any of the key assumptions would have the following impact:
Inmaculada San Jose
Gold and silver prices (decrease by 10%) (175,100) (53,800)
Gold and silver prices (increase by 10%) 171,800 54,600
Production costs (increase by 10%) (96,700) (49,800)
Production costs (decrease by 10%) 94,700 49,800
Production volume (decrease by 10%) (73,300) (78,900)
Production volume (increase by 10%) 73,100 78,900
Post tax discount rate (increase by 3%) (69,000) (7,800)
Post tax discount rate (decrease by 3%) 91,700 8,800
Capital expenditure (increase by 10%) (35,600) (11,600)
Capital expenditure (decrease by 10%) 35,600 11,600
As at 31 December 2022, management determined that the newly discovered area
Royropata, west of current operations at Pallancata, was a trigger for
reversal of impairment. The new area is estimated to contain 51.2 million
silver equivalent ("Ag Eq") ounces. These new resources constitute a
significant change in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognised as at 31 December 2021.
The valuation test performed over the Pallancata CGU resulted in a reversal of
impairment recognised as at December 31, 2022 of US$15,145,000 in property,
plant and equipment, and US$417,000 in evaluation and exploration assets).
The recoverable value of the Pallancata CGU was determined using a fair value
less costs of disposal (FVLCD) methodology. FVLCD was determined using a
combination of level 2 and level 3 inputs, which result in fair value
measurements categorised in its entirety as level 3 in the fair value
hierarchy, to construct a discounted cash flow model to estimate the amount
that would be paid by a willing third party in an arm's length transaction.
Real prices US$ per oz. 2026 2027 2028
Gold 1,545 1,466 1,561
Silver 20.6 23.3 20.8
Pallancata
Discount rate (post-tax) 5.1%
31 December 2022 (US$000) Pallancata
Current carrying value of CGU, net of deferred tax 21,345
Sensitivity analysis
Given that Pallancata´s recoverable value is significantly higher than the
reversal of impairment amount recognised, there is no reasonably possible
change in any of the key assumptions that would decrease the reversal of
impairment amount recognised.
14 Evaluation and exploration assets
During the six months ended 30 June 2023, the Group capitalised evaluation and
exploration costs of US$1,828,000 (2022: US$113,625,000). The additions
correspond to the following mine units:
Unaudited
US$000
Mara Rosa 452
Azuca 367
Crespo 314
Volcan 695
Total 1,828
There were no transfers from evaluation and exploration assets to property,
plant and equipment during the period (30 June 2022: US$nil, 31 December 2022:
US$102,119,000).
At 30 June 2023, the Group recorded an impairment with respect to evaluation
and exploration assets of the San Jose mine unit of US$376,000, and the Azuca
and Crespo projects of US$26,420,000. The calculation of the recoverable
values is detailed in note 13.
At 31 December 2022, the Group recorded a reversal of impairment with respect
to evaluation and exploration assets of the Pallancata mine unit of US$417,000
and an impairment of the Azuca project of US$4,199,000. The calculation of the
recoverable values of the Pallancata mine unit is detailed in note 13.
There were borrowing costs capitalised in evaluation and exploration assets of
US$38,000 (31 December 2022: US$1,087,000).
15 Investment in an associate
The Group retains a 20.0% interest in Aclara Resources Inc. ("Aclara"), a
listed company involved in the exploration of, rare-earth metals in Chile. The
company was incorporated under the laws of British Columbia, Canada, where the
principal executive offices are located. The operations are conducted through
one wholly owned subsidiary named REE UNO SpA, located in Chile.
Upon Aclara´s Initial Public Offering ('IPO') on 10 December 2021, HM
Holdings retained 20% of Aclara shares. The investment was recorded at initial
recognition at fair value, based on the IPO´ offering price, and is accounted
for using the equity method in the consolidated financial statements.
The following table summarises the financial information of the Group's
investment in Aclara Resources Inc:
As at 30 As at 31
June
December
2023
2022
(Unaudited) US$000
US$000
Current assets 52,658 67,291
Non-current assets 105,236 90,271
Current liabilities (2,328) (3,674)
Non-current liabilities - (1)
Equity 155,566 153,887
Group's share in equity (20%) 31,113 30,777
Fair value adjustment allocated to the evaluation and exploration assets on 12,325 12,388
initial recognition(1)
Impairment of non-current assets(2) (17,106) (9,923)
Group´s carrying amount of the investment 20% 26,332 33,242
Summarised consolidated statement of profit and loss
Revenue - -
Administrative expenses (2,914) (5,261)
Exploration expenses (2,580) (3,642)
Other income 33 -
Finance income 1,460 648
Finance cost (13) (18)
Foreign exchange gain/(loss) 87 (111)
Loss from continuing operations for the period (3,927) (8,384)
Loss from continuing operation for the period (3,927) (8,384)
Group's share of loss for the period (785) (1,677)
Other comprehensive profit that may be reclassified to profit or loss in
subsequent periods, net of tax
Exchange differences on translating foreign operations 5,292 6,417
Total comprehensive profit for the period 5,292 6,417
Total comprehensive profit 5,292 6,417
Group´s share of comprehensive profit/(loss) for the period 1,058 1,283
1. This represents the 20% of the fair value adjustment, estimated by the
Group, to Aclara's exploration and evaluation assets on initial recognition,
representing US$12,010,000 (2022:US$61,940,000).
2. This represents the 20% share in the total impairment, estimated by the
Group, of Aclara´s exploration and evaluation assets of US$85,530,000 (2022:
US$49,615,000)
The movement of investment in associate is as follows:
Period ended 31 December
30 June 31 December 2022
US$000
2023
US$000
Beginning balance 33,242 43,559
Initial recognition - -
Impairment of non-current assets (7,183) (9,923)
Share of loss for the period (785) (1,677)
Share of comprehensive profit for the period 1,058 1,283
Ending balance 26,332 33,242
At the moment of the acquisition of the associate the loss of the period was
US$483,000 and the comprehensive loss for the period was US$4,480,000.
On July 4th, 2023, Aclara announced the receipt of a notice from the
Environmental Service Assessment in Chile of its decision to terminate the
review of Aclara´s application for an environmental impact assessment of the
Penco Module due to the finding of trees considered as ´vulnerable species´
in the area of the project. Aclara is currently working to refile a revised
application.
Aclara´s recent announcement and the impact that it could have in the first
production date of Penco project, were considered as indicators of impairment.
Therefore, in compliance with IAS 36, the Group has performed a valuation on
Aclara, and determined an impairment charge of US$7,183,000.
The recoverable value of Aclara was determined using a value-in-use
methodology. The key assumptions on which management has based its valuation
of Aclara´s shares are the independent technical report of Penco module
issued in September 2021, adjusted by: a 3-year delay in the first production
date, local inflation and additional risk impacting costs; latest forecast
prices; and a discount rate of 9.6%.
Sensitivity analysis
An increase of 1% in the discount rate and a delay of one additional year in
the first production date would have the following impact in the Group´s
investment in Aclara:
US$000
Discount rate (increase by 1%) (3,578)
Delay in first production date (1 additional year) (2,551)
The carrying amount of the investment recognised the changes in the Group's
share of net assets of the associate since the acquisition date. The balance
as at 30 June 2023, after recognising the changes in the Group´s share of net
assets of the associate and the impairment charge is US$26,332,000 (31
December 2022: US$33,242,559,000).
Aclara´s fair value based on share price as of 30 June 2023 was US$14,810,000
(31 December 2022: US$7,679,000 ).
No dividends were received from the associate during 2023 and 2022.
The associate had no contingent liabilities or capital commitments as at 30
June 2023 and 31 December 2022.
16 Financial instruments
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities.
Level 2: other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
At 30 June 2023 and 31 December 2022, the Group held the following financial
instruments measured at fair value:
As at Level 1 Level 2 Level 3
30 June 2023 (Unaudited) US$000 US$000 US$000
US$000
Assets measured at fair value
Equity shares(1) 403 403 - -
Derivative financial assets(2) 7,253 - 7,253 -
Trade receivables 27,158 - - 27,158
Liabilities measured at fair value
Derivative financial liabilities(3) (954)
(954)
33,860 403 6,299 27,158
1 These investments were classified as financial assets at fair value
through OCI. The C3 Metals Inc. shares, classified as financial assets at fair
value through profit and loss, were sold during 2023.
2 Derivative financial assets - Silver forward and Gold forward.
3 Derivative financial liabilities - Gold forward.
On 8 February 2021, the Group signed agreements with JP Morgan to hedge the
sale of 4,000,000 ounces of silver at US$27.10 per ounce for 2021 and a
further 4,000,000 ounces of silver at US$26.86 per ounce for 2022.
On 10 November 2021, the Group signed agreements with JP Morgan to hedge the
sale of 3,300,000 ounces of silver at US$25.0 per ounce for 2023.
On 12 April 2023, the Group signed agreements with Citibank to hedge the sale
of 27,600 ounces of gold at US$2,100 per ounce for 2024.
On 20 April 2023, the Group signed agreements with JP Morgan to hedge the sale
of 29,250 ounces of gold at US$2,047 per ounce for 2023.
On 19 June 2023, the Group signed agreements with Citibank to hedge the sale
of 150,000 ounces of gold at US$2,117.05, US$2,166.65 and US$2,205.50 per
ounce in 2025, 2026 and 2027 respectively.
The gold and silver forwards are being used to hedge exposure to changes in
cash flows from gold and silver commodity prices. There is an economic
relationship between the hedged item and the hedging instruments due to a
common underlying. In accordance with IFRS 9, the derivative instruments are
categorised as cash flow hedges at the inception of the hedging relationship
and, on an ongoing basis, the Group assesses whether a hedging relationship
meets the hedge effectiveness requirements. The Group has established a hedge
ratio of 1:1 for the hedging relationships as the underlying risk of the
silver and gold forwards is identical to the hedged risk components. To test
the hedge effectiveness, the Group uses the hypothetical derivative method and
compares the changes in the fair value of the gold and silver forwards against
the changes in fair value of the hedged item attributable to the hedged risk.
That said, it is observed that the effectiveness tests comply with the
requirements of IFRS 9 and that the hedging strategy is highly effective.
The fair values of the gold and silver forwards were calculated using a
discounted cash flow model applying a combination of level 1 (USD quoted
market commodity prices) and level 2 inputs. The models used to value the
commodity forward contracts are standard models that calculate the present
value of the fixed-legs (the fixed gold and silver leg) and compare them with
the present value of the expected cash flows of the flowing legs (the London
metal exchange "LME" gold and silver fixing). In the case of the commodity
forward contracts, the models use the LME AU and AG forward curve and the US
LIBOR swap curve for discounting.
This approach results in the fair value measurement categorised in its
entirety as level 2 in the fair value hierarchy. The fair values of the gold
and silver forwards as at 30 June 2023 are as follows:
US$000
Current assets 5,679
Non-current assets 1,574
Non-current liabilities (954)
6,299
The effect recorded is as follows:
US$000
Income statement - revenue 3,362
Equity - Unrealised gain on hedges 4,113
The sensitivity to a reasonable movement in the commodity prices, with all
other variables held constant, determined as a +/-10% change in prices
-US$31,778,000 / US$42,288,000 effect on OCI.
As at Level 1 Level 2 Level 3
December 2022 (Unaudited) US$000 US$000 US$000
US$000
Assets measured at fair value
Equity shares(1) 1,524 1,524 - -
Derivative financial assets 2,186 2,186 -
Trade receivables 42,364 42,364
46,074 1,524 2,186 42,364
1 These investments were classified as financial assets at fair value
through OCI (US$509,000) and financial assets at fair value through profit and
loss (US$ 1,015,000).
During the six months ended 30 June 2023 and the year, ended 31 December 2022
there were no transfers between these levels.
The reconciliation of the financial instruments categorised as Level 3 is as
follows:
Trade receivables subject to price adjustments US$000
Balance at 1 January 2022 27,773
Net change in trade receivables from goods sold 8,063
Changes in fair value of price adjustments (1,323)
Realised price adjustments during the year 7,851
Balance at 31 December 2022 42,364
Net change in trade receivables from goods sold (6,704)
Changes in fair value of price adjustments (201)
Realised price adjustments during the period (8,301)
Balance at 30 June 2023 (Unaudited) 27,158
The Group has price adjustments arising from the sale of concentrate and dore
which were provisionally priced at the time the sale was recorded. The
sensitivity of the fair value to an immediate 10% favourable or adverse change
in the price of gold and silver (assuming all other variables remain
constant), is as follows:
Period Increase/ Effect on
decrease in price of
profit before tax
ounces of:
US$000
30 June 2023 Gold +/-10% +/-28
Silver+/-10%
+/-51
31 December 2022 Gold +/-10% +/-165
Silver+/-10%
+/-138
17 Deferred income tax assets and liabilities
The changes in the net deferred income tax assets/(liabilities) are as
follows:
As at 30 June 2023 As at 31 December 2022
(Unaudited) US$000 US$000
Beginning of the period (75,832) (86,744)
Income statement credit 23,880 2,687
Equity (charge)/credit (927) 8,167
Deferred tax recognised for payment - 58
End of the period (52,879) (75,832)
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 amounts after offset, as presented on the face of the Consolidated
statement of financial position, are as follows:
As at As at
31 December 2022
30 June 2023
US$000
(Unaudited) US$000
Deferred income tax assets(1) 1,029 4,213
Deferred income tax liabilities (53,908) (80,045)
Net deferred income tax liabilities (52,879) (75,832)
1 The decrease is driven principally by the recognition of the impairment
charge of the period (US$18,574,000).
18 Cash and cash equivalents
As at 30 June 2023 As at
31 December 2022
(Unaudited) US$000
US$000
Cash in hand 986 922
Current demand deposit accounts(1) 64,960 53,697
Time deposits(2) 27,632 89,225
Cash and cash equivalents 93,578 143,844
1 Relates to bank accounts, which are readily accessible to the Group and
bear interest.
2 These deposits have an average maturity of 9 days (as at 31 December
2022: 18 days).
Cash and cash equivalents comprise cash on hand and deposits held with banks
that are readily convertible into known amounts of cash and which are subject
to insignificant risk of changes in value.
The fair value of cash and cash equivalents approximates their book value.
19 Borrowings
As at 30 June 2023 (Unaudited) As at 31 December 2022
Effective Non-current Current Effective Non-current Current
interest rate
US$000
US$000
interest rate
US$000
US$000
Secured bank loans
· Pre-shipment and short-term loans in Minera Santa Cruz 13.00% to 95.00% - 5,407 47.25% and 48.00% - 2,161
· Mid-term loans in Minera Ares 8.74% 224,999 78,726 7.74% 275,000 27,328
· Stock market promissory notes in Minera Santa Cruz - - 11,500 - - 14,500
Total 224,999 95,633 275,000 43,989
The movement in borrowings during the six-month period to 30 June 2023 is as
follows:
As at 31 Additions US$000 Repayments US$000 As at 30
December 2022 US$000 June 2023 (Unaudited) US$000
Reclassifications US$000
Current
Bank loans(1) 26,693 8,653 (4,775) 49,464 80,035
Stock market promissory notes(2) 14,500 3,907 (6,907) - 11,500
Accrued interest 2,796 5,468 (11,139) 6,973 4,098
43,989 18,028 (22,821) 56,437 95,633
Non-current
Bank loans(1) 275,000 - - (50,001) 224,999
275,000 - - (50,001) 224,999
1 Relates to pre-shipment loans for a total amount of US$2,589,000 (31
December 2022: US$2,161,000) which are credit lines given by banks to meet
payment obligations arising from the exports of the Group and other short-term
loans of US$2,818,000. In addition, the balance at 30 June 2023 and 31
December 2022 includes a five-year credit agreement signed between Minera Ares
and Scotiabank Peru S.A.A., The Bank of Nova Scotia and BBVA Securities Inc.,
with Hochschild Mining PLC as guarantor. The US$200,000,000 medium term loan
was payable on equal quarterly instalments from the second anniversary of the
loan with an interest rate of Libor three months plus 1.15% payable quarterly
until maturity on 13 December 2024. In September 2021, the Group negotiated
with the same counterpart a US $ 200,000,000 loan to replace the original
loan, plus an additional US $ 100,000,000 optional loan. US $ 200,000,000 was
withdrawn on 21 September 2021, and the optional US $ 100,000,000 loan was
withdrawn on 1 December 2021. The maturity was extended until September 2026,
and the interest rate increased to 3-month USD Libor plus a spread of 1.65%.
The carrying value including accrued interests at 30 June 2023 is
US$303,725,000 (31 December 2022: US$302,328,000).
2 Corresponds to 11 Stock market promissory notes signed from August 2022 to
June 2023 by Minera Santa Cruz with Max Capital, a finance advisory company
located in Argentina, amounting to US$11,500,000. The expiration date of the
notes is from July 2023 to August 2024. During the period 2023 the Group
repaid US$6,907,000. The balance as at 30 June 2023 is US$11,500,000 (31
December 2022: US$14,500,000).
As at 30 June 2023, the Group has US$200,000,000 of undrawn medium-term debt
facility that is available due to the receipt of the Inmaculada MEIA approval.
The carrying amount of the pre-shipment and short-term loans approximates
their fair value. The carrying amount and fair value of the mid-term loan are
as follows:
Carrying amount Fair value
As at 30 June 2023 As at 31 As at 30 June 2023 As at
(Unaudited) December 2022 US$000 (Unaudited) 31
US$000
US$000 December 2022 US$000
Bank loans 303,725 302,328 291,766 283,677
Total 303,725 302,328 291,766 283,677
20 Provisions
As at 30 June 2023 (Unaudited) As at 31 December 2022
Non-current Current Non-current Current
US$000
US$000
US$000
US$000
Provision for mine closure1 124,618 14,711 119,332 17,668
Workers' profit sharing2 - 1,989 - 4,947
Provision for contingencies(3) 6,802 3,398 4,174 1,562
Total 131,420 20,098 123,506 24,177
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 inflation as at 30 June 2023 and
31 December 2022 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
pre-tax real discount rate used was 1.25% (2022: 0.95%). Movement in the
provision relates to an increase due to change in estimate of US$5,939,000
(mainly in the mine unit Mara Rosa US$4,173,000), net of payments of
US$4,787,000, and the increase related to change in discount rate of
US$386,000 and related unwind of discount on mine rehabilitation of
US$791,000.
A change in any of the following key assumptions used to determine the
provision would have the following
impact:
US$000
Closure costs (increase by 10%) increase of provision 13,933
Discount rate (increase by 0.5%) (decrease of provision) (8,082)
2 Corresponds to worker's profit sharing in Compania Minera Ares.
3 Mainly corresponds to the increase due to an income tax contingency in
Compañía Minera Ares of US$2,213,000.
21 Equity
Share capital and share premium
The movement in share capital of the Company from 31 December 2022 to 30 June
2023 is as follows:
Number of ordinary shares Share capital US$000 Share premium US$000
Shares issued as at 31 December 2021 513,875,563 226,506 438,041
Deferred bonus shares issued on 20 June 2022 513,875,563 303,268 -
Cancelation of deferred bonus shares on 22 June 2022 (513,875,563) (303,268) -
Cancelation of share premium account on 24 June 2022 - - (438,041)
Reduction of nominal value to 1 pence on 24 June 2022 - (217,445) -
Shares issued as at 31 December 2022 513,875,563 9,061 -
Issuance of shares for bonus payment on 12 May 2023 582,869 7 -
Shares issued as at 30 June 2023 514,458,432 9,068 -
Following the passing of certain special resolutions at an Extraordinary
General Meeting of shareholders held on 26th May 2022, the Company capitalised
the Company's merger reserve by applying its balance to the issuance
of 513,875,563 bonus shares with a nominal value of US$0.59 each (the "Bonus
Shares").
Subsequently, the Company obtained, on 21 June 2022, the approval of the High
Courts of Justice of England and Wales (the Companies Court (Ch D) of the
Business and Property Courts) to:
i. the cancellation of the Bonus Shares with the sum arising on
the cancellation being credited to the Company's retained earnings reserve;
ii. the reduction of the Company's share premium account to nil
and crediting the corresponding amount to the Company's retained earnings
reserve; and
iii. the reduction in the nominal value of the Ordinary Shares from
25 pence per Ordinary Share to 1 pence per Ordinary Share,
(both (ii) and (iii) above collectively referred to as "the Reductions").
The Reductions were effective on registration of the relevant court order by
the Registrar of Companies, which took place on 24th June 2022.
22 Dividends paid and declared
Dividends declared and paid to non-controlling interests in the six months
ended 30 June 2023 were US$326,000 (2022: US$286,000).
There was no final dividend in respect of the year 2022 (final dividend for
2021: US$11,998,000). An interim dividend in respect of the six months ended
30 June 2023 amounting to US$nil (2022: US$10,019,000) has been declared by
the Directors. Dividends paid to shareholders of the parent in the six months
ended 30 June 2023 were US$nil (2022: US$11,998,000).
23 Related party transactions
There were no significant transactions with related parties during the six
months period ended 30 June 2023.
24 Notes to the statement of cash flows
Six months ended 30 June
2023 2022
(Unaudited) (Unaudited)
US$000
US$000
Reconciliation of profit for the period to net cash generated from operating
activities
Loss for the period (52,685) (420)
Adjustments to reconcile Group profit to net cash inflows from operating
activities
Depreciation 72,513 69,444
Amortisation of intangibles 416 384
Impairment of non-financial assets 59,719 1,741
Write-off of non-financial assets, net 1,684 323
Impairment of an associate 7,183 9,923
Share of loss of an associate 785 551
Loss/(gain) on sale of property, plant and equipment 409 (199)
Increase of provision for mine closure 1,315 10,799
Loss from changes in the fair value of financial assets at fair value through 292 2,282
profit and loss
Finance income (2,628) (2,163)
Finance costs 11,010 13,083
Income tax expense (13,430) 5,790
Other 12,924 3,639
Increase/(decrease) of cash flows from operations due to changes in assets and
liabilities
Trade and other receivables (4,177) (39,469)
Income tax receivable (1,174) (2,725)
Other financial assets and liabilities - 2,802
Inventories 7,347 (9,240)
Trade and other payables (1,457) (19,345)
Provisions (236) (5,992)
Cash generated from operations 99,810 41,208
25 Subsequent events
(a) Volcan
On 6 July 2023, the Group signed a royalty agreement with Minera Global Copper
Chile S.A. Pursuant to the contract, the Group undertakes to pay a royalty of
1.5% of the net smelter returns of the ore from the Volcan project located in
Chile, for a consideration of US$15,000,000 which to date is pending payment.
(b) Loan facility
- On 28 June 2023 the Group signed a short-term credit facility agreement up
to US$80,000,000 with the Banco Santander S.A. Based on the agreement, the
Group drew down US$60,000,000 on 3 July 2023. This was repaid on 11 August
2023 amounting to US$60,525,541 including interests and commissions.
- On 9 August 2023 the Group drew down US$60,000,000 from the US$200,000,000
medium-term debt facility signed in 2022 with the Bank of Nova Scotia and BBVA
Securities Inc. These funds were used to repay other outstanding debts.
(c) Inmaculada
On 1 August 2023 the Group received the approval of the Inmaculada MEIA
"Modification of the Environmental Impact Study", extending the permit for an
additional 20 years.
Profit by operation¹
(Segment report reconciliation) as at 30 June 2023:
Group (US$000) Pallancata San Jose Inmaculada Consolidation adjustment and others Total/HOC
Revenue 27,013 107,934 178,811 265 314,023
Cost of sales (pre consolidation) (46,265) (92,222) (116,134) 3,751 (250,870)
Consolidation adjustment 224 - 3,527 (3,751) -
Cost of sales (post consolidation) (46,041) (92,222) (112,607) - (250,870)
Production cost excluding depreciation (31,163) (65,040) (73,869) - (170,072)
Depreciation in production cost (12,714) (22,435) (36,754) - (71,903)
Workers profit sharing (441) - (733) - (1,174)
Other items (667) (419) (1,919) - (3,005)
Change in inventories (1,056) (4,328) 668 - (4,716)
Gross profit (19,252) 15,712 62,677 4,016 63,153
Administrative expenses - - - (20,884) (20,884)
Exploration expenses - - - (11,515) (11,515)
Selling expenses (249) (6,415) (230) - (6,894)
Other expenses, net - - - (7,954) (7,954)
Operating profit/(loss) before impairment (19,501) 9,297 62,447 (36,337) 15,906
Impairment and write-off of non-financial assets, net - - - (61,403) (61,403)
Share of post-tax losses from associate - - - (7,968) (7,968)
Finance income - 2,628 2,628
Finance costs - - - (11,010) (11,010)
Foreign exchange loss - - - (4,268) (4,268)
Profit/(loss) from continuing operations before (19,501) 9,297 62,447 (118,358) (66,115)
income tax
Income tax - - - 13,430 13,430
Profit/(loss) for the period from continuing operations (19,501) 9,297 62,447 (104,928) (52,685)
1 On a post-exceptional basis.
SHAREHOLDER INFORMATION
Company website
Hochschild Mining PLC Interim and Annual Reports and results announcements are
available via the internet on our website at www.hochschildmining.com.
Shareholders can also access the latest information about the Company and
press announcements as they are released, together with details of future
events and how to obtain further information.
Registrars
The Registrars can be contacted as follows for information about the AGM,
shareholdings, dividends and to report changes in personal details:
BY EMAIL
shareholderenquiries@linkgroup.co.uk
POST
Link Group, 10(th) Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL
BY TELEPHONE
(+44 (0)) 371 664 0300 (Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 9am - 5:30pm, Monday to
Friday excluding public holidays in England and Wales)
17 Cavendish Square
London
W1G 0PH
Registered in England and Wales with Company Number 5777693
1 (#_ftnref1) Revenue presented in the financial statements is disclosed as
net revenue and is calculated as gross revenue less commercial discounts plus
services revenue
(2)Please see the Financial Review on page 14 for a definition of Adjusted
EBITDA
3 (#_ftnref3) All equivalent figures calculated using the Company's 2022
average gold/silver ratio of 83:1.
4All-in sustaining cost per (AISC) silver equivalent ounce: Calculated before
exceptional items and includes production cost excluding depreciation, other
items and workers profit sharing in cost of sales, administrative expenses
(excl. depreciation), brownfield exploration, operating and exploration capex
and royalties and special mining tax (presented with income tax) divided by
silver or gold equivalent ounces produced, plus commercial deductions and
selling expenses divided by silver or gold equivalent ounces sold using a
gold/silver ratio of 83:1. H1 2022 Excludes non-recurrent COVID-19 expenses of
$2.4 million..
5 (#_ftnref5) Calculated as total number of accidents per million labour
hours
(( 6 (#_ftnref6) ))Calculated as total number of days lost per million labour
hours.
7 (#_ftnref7) The ECO Score is an internally designed Key Performance
Indicator measuring environmental performance in one number and encompassing
numerous fronts including management of waste water, outcome of regulatory
inspections and sound environmental practices relating to water consumption
and the recycling of materials.
8 (#_ftnref8) Includes revenue from services
9 (#_ftnref9) Unit cost per tonne is calculated by dividing mine and
treatment production costs (excluding depreciation) by extracted and treated
tonnage respectively
10 (#_ftnref10) Cash costs are calculated to include cost of sales,
commercial discounts and selling expenses items less depreciation included in
cost of sales
(( 11 (#_ftnref11) ))Does not include unallocated fixed costs accumulated
during operation below planned operating capacity
12 (#_ftnref12) Includes commercial discounts from the sales of concentrate
and commercial discounts from the sale of dore
(( 13 (#_ftnref13) ))Does not include non-recurrent COVID-19 expenses of $2.4
million, unallocated fixed costs accumulated during operation below planned
operating capacity and excess absenteeism in Argentina due to the Covid-19
pandemic of $2.0 million, and unallocated fixed cost accumulated during
operations below planning operating capacity due to the fire in San Jose of
$1.7 million
14 (#_ftnref14) Includes commercial discounts (from the sales of
concentrate) and commercial discounts from the sale of dore
15 (#_ftnref15) Calculated using a gold/silver ratio of 83:1.
16 (#_ftnref16) Royalties arising from revised royalty tax schemes
introduced in 2011 and included in income tax line
17 (#_ftnref17) Calculated using a gold silver ratio of 83:1
18 (#_ftnref18) Excludes non-recurrent COVID expenses of $2.4 million
19 (#_ftnref19) Royalties arising from revised royalty tax schemes
introduced in 2011 and included in income tax line
20 (#_ftnref20) Calculated using a gold silver ratio of 83:1
21 (#_ftnref21) Adjusted EBITDA has been presented before the effect of
significant non-cash (income)/expenses related to changes in mine closure
provisions and the write-off of property, plant and equipment
22 (#_ftnref22) Includes pre-shipment loans and short term interest payables
23 (#_ftnref23) Includes additions in property, plant and equipment and
evaluation and exploration assets (confirmation of resources) and excludes
increases in the expected closure costs of mine asset
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR VELFBXKLLBBZRecent news on Hochschild Mining
See all newsREG - Hochschild MiningPLC - Q1 Production Report
AnnouncementREG - Hochschild MiningPLC - Sale of Crespo project for $15 million
AnnouncementREG - Hochschild MiningPLC - Final Results
AnnouncementREG - Hochschild MiningPLC - Notice of Results and Investor Presentation
AnnouncementREG - Hochschild MiningPLC - Option to acquire Monte Do Carmo project, Brazil
Announcement