Interim Results

RNS Number : 0954O

Hochschild Mining PLC

16 August 2017

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16 August 2017

Hochschild Mining plc

Interim Results for the six months ended 30 June 2017

2017 Interim Results Highlights

§ Revenue of $340.8 million (H1 2016: $339.3 million)¹

§ Adjusted EBITDA of $136.0 million (H1 2016: $170.3 million)²

§ Profit before income tax of $39.9 million (H1 2016: $60.3 million)

§ Adjusted basic earnings per share of $0.03 (H1 2016: $0.05)³

§ Cash and cash equivalent balance of $144.5 million as at 30 June 2017 (31 December 2016: $140.0 million)

§ Net debt of $164.7 million as at 30 June 2017 (31 December 2016: $187.4 million)

§ $18.5 million of debt repaid in H1 2017⁴

§ Net debt/annual Adjusted EBITDA of 0.56x as at 30 June 2017 (31 December 2016: 0.57x)

§ Interim dividend of 1.38 cents per share ($7.0 million)

§ Brownfield drilling programme ramping up in H2 - starting to deliver positive results

H1 2017 operational delivery in line with guidance

§ H1 2017 AISC per silver equivalent ounce from operations of $12.0 (H1 2016: $10.9) ahead of guidance of $12.2-12.7⁵

§ Half year production of 17.9 million attributable silver equivalent ounces (H1 2016: 17.0 million ounces)⁶

H2 2017 Outlook

§ On track to deliver record attributable production target of 37.0 million silver equivalent ounces for 2017

§ AISC expected to be in line with $12.2-12.7 per silver equivalent ounce guidance

$000 unless stated	Six months to 30 June 2017	Six months to 30 June 2016	% change
Attributable silver production (koz)	8,938	8,210	9
Attributable gold production (koz)	121	118	3
Revenue	340,796	339,277	-
Adjusted EBITDA	135,996	170,285	(20)
Profit from continuing operations (pre-exceptional)	18,246	35,994	(49)
Profit from continuing operations (post-exceptional)	27,543	37,744	(27)
Basic earnings per share (pre-exceptional) $	0.03	0.05	(40)
Basic earnings per share (post-exceptional) $	0.05	0.06	(17)

Ignacio Bustamante, Chief Executive Officer said:

"Hochschild Mining continues to deliver a robust operational performance with both production and cost targets for 2017 on track. Towards the end of the year, once permits are in place, we can expect further progress with the development of the Pablo vein at the Pallancata deposit as well as several brownfield drilling campaigns across the Company's portfolio. I am confident that our Company has the financial and operational flexibility to meet our upcoming debt commitment, fund an extensive brownfield programme and assess value accretive opportunities as they arise.

Operations

In the first half of the year, Hochschild's mines proved to be strong despite the effects of stoppages at two operations. Solid production from Inmaculada and San Jose and a better than expected result from Pallancata contributed to overall output of 17.9 million silver equivalent ounces (242,208 gold equivalent ounces), a 6% improvement on the first half of last year and on track to meet our overall annual target of 37 million silver equivalent ounces. At Inmaculada, tonnage lost in the first half was supplemented by the deposit's high grade stockpile and consequently production reached 8.6 million silver equivalent ounces, just over half the target for the year with the all-in sustaining cost figure at a very competitive $8.8 per silver equivalent ounce. The Pallancata mine enjoyed a strong period with better than expected silver grades and consequently all-in sustaining costs were reduced by over 30% versus the first half of 2016 to $10.9 per silver equivalent ounce. San Jose was once again a consistent contributor although costs rose due lower-than-expected local currency devaluation not fully offsetting ongoing high inflation in Argentina. Finally, Arcata has been mining narrower veins with a reduced number of stopes and consequently the operational focus has been on controlling costs and driving further efficiencies. Accordingly results in the first half reflecting this transitional phase as well as emphasising the need for our brownfield programme to continue to deliver higher quality resources.

Exploration

Over the last two years, the key discovery by our brownfield exploration team has been the Pablo vein at the Pallancata deposit in mid-2015 and since then, the quality and quantity of this resource has increased significantly whilst providing the team with the possibility for an ongoing reinterpretation of the surrounding district. Throughput at Pallancata is expected to rise towards the end of the year once the necessary permits are received from the Peruvian government in the fourth quarter. In addition, the Company's annual brownfield programme, which has already started to deliver positive results, is due to ramp up in the second half with drilling campaigns to be carried out at Inmaculada, San Jose and Arcata as well further initiatives at other prospects, again subject to permitting.

Financial results

Production and prices achieved in the first half were broadly similar to H1 2016 and therefore revenue was also in line at $341 million (H1 2016: $339 million). The Company's increased investment in exploration-led growth as well as the cancellation of the Patagonian port benefit in late 2016 and a fully-implemented backfill process at Inmaculada led to an increase in overall costs with Adjusted EBITDA at the half year of $136 million (H1 2016: $170 million). Pre-exceptional earnings per share was $0.03 whilst an impairment of $26 million at Arcata was offset by a reversal of $32 million at Pallancata and therefore post-exceptional earnings per share was $0.05.

Financial position

Financial discipline and an efficient use of capital remain cornerstones of our Company's strategy and in the first half continued strong cashflow from operations has ensured further progress in reducing our short term debt by almost $19 million. The Company is in a strong position to address the upcoming option to redeem early our remaining Senior Notes in January of next year thus substantially reducing our finance costs going forward. Cash and cash equivalents were approximately $145 million at the end of June (31 December 2016: $140.0 million) leading to a net debt position of $165 million (31 December 2016: $187.4 million) and a ratio of net debt to annual Adjusted EBITDA currently standing at a comfortable 0.56x.

Safety

Hochschild deeply regrets to report that four fatalities have occurred in the first seven months of the year: two previously reported at Inmaculada and another two most recently at the Arcata mine. Safety continues to be the Company's highest priority and therefore the incidents represent a significant setback for our safety programmes. The management recognises that despite the significant progress made over the last decade in our practices and systems, we still must endeavour to strengthen the culture of safety throughout our Company.

Outlook

Although precious metal prices have once again proved to be volatile so far this year, Hochschild's operational strength combined with a stringent cost discipline leads us to reiterate our 2017 production target of 37 million silver equivalent ounces at an all-in sustaining cost of between $12.2 and $12.7 per ounce. The Board is today declaring an interim dividend of 1.38 cents per share reflecting the success of our long term growth strategy as well as the progress made in the year-to-date."

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A live conference call & audio webcast will be held at 2.30pm (London time) on Wednesday 16 August 2017 for analysts and investors. For a live webcast of the presentation please click on the link below:

https://edge.media-server.com/m6/p/3tntxcih

Conference call dial in details:

UK: +44(0)20 3427 1906 (Please use the following confirmation code: 3657973).

A recording of the conference call will be available for one week following its conclusion, accessible from the following telephone number:

UK: (0)20 3427 0598 (Passcode: 3657973)

The On Demand version of the webcast will be available within two hours after the end of the presentation and is accessible using the same webcast link.

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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

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OPERATING REVIEW

OPERATIONS

Note: silver/gold equivalent production figures assume a gold/silver ratio of 74:1.

Production

In H1 2017, the Company delivered attributable production of 242,208 gold equivalent ounces or 17.9 million silver equivalent ounces. Pallancata is delivering grades above expectations and was significantly ahead of the H1 2016 result despite a community-related stoppage in the first quarter. At Inmaculada, mining operations were boosted by a contribution from existing high grade stockpiles whilst there was also another solid performance from the 51% owned San Jose operation.

TOTAL GROUP PRODUCTION

	Six months to 30 June 2017	Six months to 30 June 2016	% change
Silver production (koz)	10,429	9,744	7
Gold production (koz)	144.27	139.43	3
Total silver equivalent (koz)	21,105	20,062	5
Total gold equivalent (koz)	285.21	271.11	5
Silver sold (koz)	10,508	10,085	4
Gold sold (koz)	143.42	146.10	(2)

Total production includes 100% of all production, including production attributable to Hochschild's joint venture partner at San Jose.

ATTRIBUTABLE GROUP PRODUCTION

	Six months to 30 June 2017	Six months to 30 June 2016	% change
Silver production (koz)	8,938	8,210	9
Gold production (koz)	121.43	118.12	3
Silver equivalent (koz)	17,923	16,951	6
Gold equivalent (koz)	242.21	229.06	6

Attributable production includes 100% of all production from Arcata, Inmaculada, Pallancata and 51% from San Jose.

Costs

The Company's all-in sustaining cost increased in H1 2017 to $12.0 per silver equivalent ounce (H1 2016: $10.9 per ounce), slightly better than the Company's 2017 guidance of between $12.2 and $12.7 per silver equivalent ounce. This result versus H1 2016 reflects the elimination of the Patagonian port rebate in Argentina, higher backfill and detoxification costs at Inmaculada, net inflation in Argentina and reduced tonnage and grades at Arcata. These effects were partially offset by stronger grades and tonnage at Pallancata. Please see page 9 of the Financial Review for further details on costs.

Inmaculada (Peru)

The 100% owned Inmaculada gold/silver underground operation is located in the Department of Ayacucho in southern Peru. It started operations in September 2015.

Inmaculada summary	Six months to 30 June 2017	Six months to 30 June 2016	% change
Ore production (tonnes)	614,352	619,161	(1)
Average silver grade (g/t)	142	132	8
Average gold grade (g/t)	4.04	4.25	(5)
Silver produced (koz)	2,644	2,370	12
Gold produced (koz)	79.82	79.20	1
Silver equivalent produced (koz)	8,550	8,231	4
Gold equivalent produced (koz)	115.55	111.23	4
Silver sold (koz)	2,642	2,468	7
Gold sold (koz)	78.32	82.17	(5)
Unit cost ($/t)	84.8	64.6	31
Total cash cost ($/oz Ag co-product)	6.6	4.9	35
All-in sustaining cost ($/oz)	8.8	8.2	7

Production

Inmaculada recovered well following the stoppage at the operation in Q1 2017 with mining operations steadily ramped up back to full production in the second quarter and throughput and grades reverting to the forecasted level. In the first half, the operation was ahead of the same period of 2016, with gold equivalent production of 115,547 ounces (H1 2016: 111,233 ounces), consisting of 79,820 ounces of gold and 2.6 million ounces of silver. Inmaculada remains on track to meet its full year forecast of approximately 230,000 gold equivalent ounces (17 million silver equivalent ounces).

Costs

All-in sustaining costs were better than expected at $8.8 per silver equivalent ounce (H1 2016: $8.2 per ounce). Reduced mined tonnage resulting from the stoppage in the first quarter and budgeted lower mined gold grades were largely offset by the processing of the high grade stockpile as well as operational efficiencies versus plan. AISC for 2017 is still expected to be between $9.5 and $10.0 per silver equivalent ounce reflecting the above-mentioned lower gold grades and the previously disclosed investment in the expansion of the tailings dam and other infrastructure.

Arcata (Peru)

The 100% owned Arcata underground operation is located in the Department of Arequipa in southern Peru. It commenced production in 1964.

Arcata summary	Six months to 30 June 2017	Six months to 30 June 2016	% change
Ore production (tonnes)	261,643	333,397	(22)
Average silver grade (g/t)	309	327	(6)
Average gold grade (g/t)	1.09	1.22	(11)
Silver produced (koz)	2,303	2,970	(22)
Gold produced (koz)	8.04	10.36	(22)
Silver equivalent produced (koz)	2,898	3,736	(22)
Gold equivalent produced (koz)	39.16	50.49	(22)
Silver sold (koz)	2,261	2,922	(23)
Gold sold (koz)	7.94	10.14	(22)
Unit cost ($/t)	119.7	106.0	13
Total cash cost ($/oz Ag co-product)	14.1	11.1	27
All-in sustaining cost ($/oz)	17.6	13.0	35

Production

At Arcata, first half, production was 2.9 million silver equivalent ounces (H1 2016: 3.7 million ounces) with tonnage and silver grades adjusted following a revision of the mine plan to accommodate a reduced number of stopes and narrower veins. The focus at Arcata is to improve its cost position by increasing the quality of resources through the brownfield exploration programme as well as other efficiency and productivity measures in order to ensure the long term sustainability of the mine. The forecasts for Arcata's output for the year have been revised to 5.5 million silver equivalent ounces in 2017.

Costs

In H1 2017, as expected, Arcata's all-in sustaining cost rose substantially versus H1 2016 to $17.6 per silver equivalent ounce (H1 2016: $13.0 per ounce) reflecting the reduced tonnage and grades resulting from the revised mine plan as well as the previously-announced increased investment in the mine's brownfield exploration programme. In line with the lower production levels, the Company now expects Arcata's all-in sustaining cost for 2017 to be approximately $17.0 per silver equivalent ounce.

Pallancata (Peru)

The 100% owned Pallancata silver/gold property is located in the Department of Ayacucho in southern Peru. Pallancata commenced production in 2007. Ore from Pallancata is transported 22 kilometres to the Selene plant for processing.

Pallancata summary	Six months to 30 June 2017	Six months to 30 June 2016	% change
Ore production (tonnes)	192,744	135,736	42
Average silver grade (g/t)	440	341	29
Average gold grade (g/t)	1.82	1.77	3
Silver produced (koz)	2,439	1,273	92
Gold produced (koz)	9.79	6.37	54
Silver equivalent produced (koz)	3,163	1,745	81
Gold equivalent produced (koz)	42.75	23.58	81
Silver sold (koz)	2,437	1,315	85
Gold sold (koz)	9.72	6.50	50
Unit cost ($/t)	106.3	141.2	(25)
Total cash cost ($/oz Ag co-product)	8.4	12.3	(32)
All-in sustaining cost ($/oz)	10.9	15.9	(31)

Production

The first half of the year's performance was a better-than-expected 3.2 million silver equivalent ounces (H1 2016: 1.7 million ounces) consisting of 2.4 million ounces of silver and 9,790 ounces of gold, a significant improvement versus the same period of 2016. The forecast for the full year has now been upgraded to approximately 7.5 million silver equivalent ounces.

Costs

All-in sustaining costs at Pallancata in the first half fell by 31% versus the same period of 2016 to $10.9 per silver equivalent ounce (H1 2016: $15.9 per ounce). The reduction was due to better than expected tonnage and silver grades which offset the loss of January's production due to the stoppage. AISC for full year 2017 is now expected to be approximately $12.0 per silver equivalent ounce.

San Jose (Argentina)

The San Jose silver/gold mine is located in Argentina, in the province of Santa Cruz, 1,750 kilometres south-southwest of Buenos Aires. San Jose commenced production in 2007 and is a joint venture with McEwen Mining Inc. Hochschild holds a controlling interest of 51% in the mine and is the mine operator.

San Jose summary^*	Six months to 30 June 2017	Six months to 30 June 2016	% change
Ore production (tonnes)	250,396	248,766	1
Average silver grade (g/t)	436	446	(2)
Average gold grade (g/t)	6.60	6.16	7
Silver produced (koz)	3,044	3,132	(3)
Gold produced (koz)	46.62	43.49	7
Silver equivalent produced (koz)	6,494	6,350	2
Gold equivalent produced (koz)	87.75	85.81	2
Silver sold (koz)	3,168	3,380	(6)
Gold sold (koz)	47.43	47.29	-
Unit cost ($/t)	251.6	201.7	25
Total cash cost ($/oz Ag co-product)	11.0	9.1	21
All-in sustaining cost ($/oz)	14.4	11.7	23

^*The Company has a 51% interest in San Jose

Production

The San Jose mine in Argentina has continued to be a solid performer in the first half with production of 3.0 million ounces of silver and 46,618 ounces of gold which is 6.5 million silver equivalent ounces, a 2% improvement compared to the same period of 2016 (H1 2016 6.4 million ounces) and principally driven by better gold grades.

Costs

At San Jose, all-in sustaining costs increased to $14.4 per silver equivalent ounce (H1 2016: $11.7 per ounce) mainly due to the elimination of the Patagonian port rebate in the fourth quarter of 2016. In addition, lower than expected currency devaluation in Argentina only partially offset ongoing unit cost inflation. Overall 2017 all-in sustaining costs are now expected to be between $13.5 to $14.0 per silver equivalent ounce.

EXPLORATION

Brownfield exploration

At Arcata, over 15,000m of resource drilling has been carried out at the Tunel 4, Paralela 3, Ramal Marion and Paralela Sur veins although there were a few delays in surface drilling due to the heavy rain in Peru in the first quarter. The outcome of drilling year-to-date is promising with selected results below:

Vein	Results
Ramal Marion	DDH-018-GE-17: 1.0m @ 1.0g/t Au & 326g/t Ag DDH-023-GE-17: 0.8m @ 0.6g/t Au & 154g/t Ag DDH-049-EX-17: 0.8m @ 0.6g/t Au & 146g/t Ag DDH-054-EX-17: 0.8m @ 0.4g/t Au & 201g/t Ag DDH-023-GE-17: 0.8m @ 0.9g/t Au & 246g/t Ag DDH-043-EX-17: 1.2m @ 0.3g/t Au & 159g/t Ag DDH-058-EX-17: 1.0m @ 2.1g/t Au & 712g/t Ag DDH-066-EX-17: 1.3m @ 0.4g/t Au & 167g/t Ag DDH-018-GE-17: 1.2m @ 2.6g/t Au & 1,229g/t Ag DDH-023-GE-17: 0.8m @ 1.0g/t Au & 227g/t Ag DDH-043-EX-17: 0.8m @ 0.2g/t Au & 477g/t Ag DDH-058-EX-17: 0.9m @ 0.5g/t Au & 309/t Ag DDH-043-EX-17: 0.8m @ 0.2g/t Au & 132g/t Ag DDH-052-EX-17: 0.8m @ 0.4g/t Au & 106g/t Ag DDH-066-EX-17: 1.2m @ 1.1g/t Au & 408g/t Ag DDH-018-GE-17: 0.8m @ 0.9g/t Au & 303g/t Ag DDH-023-GE-17: 1.1m @ 3.8g/t Au & 1,025g/t Ag
Paralela	DDH-036-GE-17: 0.8m @ 4.9g/t Au & 605g/t Ag DDH-038-GE-17: 0.8m @ 1.5g/t Au & 198g/t Ag DDH-048-DI-17: 0.4m @ 3.9g/t Au & 389g/t Ag DDH-074-DI-17: 1.2m @ 1.8g/t Au & 176g/t Ag DDH-056-DI-17: 0.8m @ 1.5g/t Au & 177g/t Ag
Paralela 1	DDH-036-GE-17: 0.8m @ 5.2g/t Au & 692g/t Ag DDH-038-GE-17: 0.8m @ 1.4g/t Au & 240g/t Ag DDH-048-DI-17: 0.8m @ 6.6g/t Au & 765g/t Ag
Paralela 2	DDH-057-DI-17: 1.1m @ 3.0g/t Au & 244g/t Ag DDH-028-GE-17: 0.9m @ 2.6g/t Au & 226g/t Ag
Paralela 3	DDH-056-DI-17: 1.1m @ 2.1g/t Au & 331g/t Ag DDH-074-DI-17: 1.8m @ 12.2g/t Au & 1,339g/t Ag DDH-041-DI-17: 1.3m @ 1.4g/t Au & 173g/t Ag DDH-038-GE-17: 0.8m @ 1.7g/t Au & 117g/t Ag
Socorro+800	DDH-074-DI-17: 2.5m @ 12.2g/t Au & 399g/t Ag

In addition, long horizontal drilling for potential resources also started in the Pamela and Paralelas vein systems in the second quarter with results pending.

At Pallancata, during the quarter, 1,000m of resource drilling was carried out in the Marco vein, a structure identified close to the Pablo vein with just over 1 million ounces of silver equivalent resources already expected to have been identified year-to-date. Selected results are below:

Vein

Results

Marco

DLYU-A92A: 1.4m @ 0.7g/t Au & 235g/t Ag

DLYU-A88: 1.1m @ 2.2g/t Au & 1,108g/t Ag

DLNE-A05: 0.6m @ 1.1g/t Au & 470g/t Ag

DLYU-A92A: 2.0m @ 0.7g/t Au & 169g/t Ag

DLNE-A07: 0.6m @ 1.1g/t Au & 152g/t Ag

At Inmaculada, although the main drilling programmes have not begun yet, mine development during the period has allowed a reinterpretation of the geological model at the deposit and has so far identified a further 9.7 million silver equivalent ounces of resources.

At San Jose, 4,837m of drilling for potential resources was carried out in the first quarter at the Aguas Vivas zone as well as the Juanita structure with preliminary results from Aguas Vivas below.

Vein

Results

Aguas Vivas NW

SJD-1627: 2.6m @ 0.1g/t Au, 43g/t Ag, 8.2% Pb & 5.5% Zn

SJD-1616: 2.8m @ 0.3g/t Au, 40g/t Ag, 7.0% Pb & 6.0% Zn

During the second half of 2017, approximately 40,000 metres of drilling will be executed with targets including: 3,100 metres of long horizontal drilling for potential resources at Arcata as well as a further 10,000 metres of resource drilling; 1,000 metres of potential resource drilling to test the Millet structure at Inmaculada; 2,500 metres of potential resource drilling to the north east of Inmaculada at the Puquiopata area; and 5,500 metres at the Aguas Vivas zone to the north west of San Jose. Further drilling campaigns are subject to the receipt of the requisite permits.

FINANCIAL REVIEW

The reporting currency of Hochschild Mining plc is U.S. dollars. In discussions of financial performance the Group removes the effect of exceptional items, unless otherwise indicated, and in the income statement results are shown both pre and post such exceptional items. Exceptional items are those items, which due to their nature or the expected infrequency of the events giving rise to them, need to be disclosed separately on the face of the income statement to enable a better understanding of the financial performance of the Group and to facilitate comparison with prior years.

Revenue

Gross revenue

Gross revenue from continuing operations increased by 2% to $359.5 million in H1 2017 (H1 2016: $353.3 million) due to a slight increase in sales of silver as well as a small rise in the average gold price received.⁷

Silver

Gross revenue from silver increased by 4% in H1 2017 to $180.1 million (H1 2016: $172.7 million) as a result of the above-mentioned increase in the total amount of silver ounces sold to 10,508 koz (H1 2016:10,085 koz), which was driven by increases at Pallancata and Inmaculada offsetting a decline at Arcata.

Gold

Gross revenue from gold in H1 2017 was similar to the same period of 2016 at $179.4 million (H1 2016: $180.5 million) the total amount of gold ounces sold falling slightly in H1 2017 (143.4 koz) but offset by a 1% increase in the average gold price received.

Gross average realised sales prices

The following table provides figures for average realised prices (which are reported before the deduction of commercial discounts and include the effects of the hedging agreements in place during 2016) and ounces sold for H1 2017 and H1 2016:

Average realised prices	Six months to 30 June 2017	Six months to 30 June 2016
Silver ounces sold (koz)	10,508	10,085
Avg. realised silver price ($/oz)	17.1	17.1
Gold ounces sold (koz)	143.42	146.10
Avg. realised gold price ($/oz)	1,251	1,236

Commercial discounts

Commercial discounts refer to refinery treatment charges, refining fees and payable deductions for processing concentrates, and are deducted from gross revenue on a per tonne basis (treatment charge), per ounce basis (refining fees) or as a percentage of gross revenue (payable deductions). In H1 2017, the Group recorded commercial discounts of $18.9 million (H1 2016: $14.1 million) with the increase explained by the higher production from the concentrate-only Pallancata mine. The ratio of commercial discounts to gross revenue in H1 2017 was 5% (H1 2016: 4%).

Net revenue

Net revenue was $340.8 million (H1 2016 $339.3 million), comprising net gold revenue of $174.6 million (H1 2016: $176.0 million) and net silver revenue of $166.0 million (H1 2016: $163.1 million). In H1 2017, gold accounted for 51% and silver 49% of the Company's consolidated net revenue (H1 2016: gold 52% and silver 48%) with the minor increase in the silver contribution due to an increase in sales from the predominantly-silver Pallancata mine.

Revenue by mine⁸

$000	Six months to 30 June 2017	Six months to 30 June 2016	% change
Silver revenue
Arcata	39,146	51,204	(24)
Inmaculada	44,880	40,813	10
Pallancata	40,928	23,123	77
San Jose	55,134	57,594	(4)
Commercial discounts	(14,078)	(9,650)	46
Net silver revenue	166,010	163,084	2
Gold revenue
Arcata	10,088	12,283	(18)
Inmaculada	97,016	98,724	(2)
Pallancata	12,179	8,362	46
San Jose	60,091	61,156	(2)
Commercial discounts	(4,784)	(4,497)	6
Net gold revenue	174,590	176,028	(1)
Other revenue	196	165	19
Net revenue	340,796	339,277	-

Costs

Total cost of sales was $261.2 million in H1 2017 (H1 2016: $238.7 million). The direct production cost excluding depreciation was higher at $157.2 million (H1 2016: $139.0 million) due to an increase in costs of Inmaculada mine resulting from two new processes (the paste backfill plant and the tailings detoxification). Costs were also negatively impacted by lower than expected currency devaluation in Argentina only partially offsetting high ongoing unit cost inflation. Depreciation was lower at $83.8 million (H1 2016: $88.6 million) driven by lower extracted tonnage in Pallancata as a result of the community-related stoppage and in Inmaculada as a result of the fatalities in January. Other items, which principally includes stoppage costs and personnel related provisions, was $2.6 million in H1 2017 (H1 2016: ($0.1 million)). Change in inventories was higher at $17.6 million in H1 2017 (H1 2016: $11.3 million) due an important decrease in products in process and finished goods.

$000	Six months to 30 June 2017	Six months to 30 June 2016	% Change
Direct production cost excluding depreciation	157,237	139,037	13
Depreciation in production cost	83,803	88,516	(5)
Other items	2,557	(78)	3,378
Change in inventories	17,601	11,273	56
Pre-exceptional cost of sales	261,198	238,748	9

Unit cost per tonne

The Company reported unit cost per tonne at its operations of $127.8 per tonne in H1 2017, a 18% increase versus H1 2016 ($108.7 per tonne) mostly due to reduced mined tonnage at Inmaculada and significant cost inflation in Argentina.

Unit cost per tonne by operation (including royalties)⁹:

Operating unit ($/tonne)	Six months to 30 June 2017	Six months to 30 June 2016	% change
Peru	98.1	87.2	13
Arcata	119.7	106.0	13
Inmaculada	84.8	64.6	31
Pallancata	106.3	141.2	(25)
Argentina
San Jose	251.6	201.7	25
Total	127.8	108.7	18

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 reconciliation¹⁰:

$000 unless otherwise indicated	Six months to 30 June 2017	Six months to 30 June 2016	% change
Group cash cost	196,415	168,128	17
(+) Cost of sales	261,198	238,748	9
(-) Depreciation and amortisation in cost of sales	(90,184)	(93,527)	(4)
(+) Selling expenses	5,194	7,077	(27)
(+) Commercial deductions¹¹	20,207	15,830	28
Gold	4,943	5,934	(17)
Silver	15,264	9,896	54
Revenue	340,796	339,277	-
Gold	174,590	176,028	(1)
Silver	166,010	163,084	2
Others	196	165	19
Ounces sold
Gold	143.4	146.1	(2)
Silver	10,508	10,085	4
Group cash cost ($/oz)
Co product Au	702	597	18
Co product Ag	9.1	8.0	14
By product Au	106	(33)	(421)
By product Ag	1.6	(1.4)	(214)

Cash costs are calculated based on pre-exceptional figures. Co-product cash cost per ounce is the cash cost allocated to the primary metal (allocation based on proportion of revenue), divided by the ounces sold of the primary metal. By-product cash cost per ounce is the total cash cost minus revenue and commercial discounts of the by-product divided by the ounces sold of the primary metal.

All-in sustaining cost reconciliation

All-in sustaining cash costs per silver equivalent ounce

Six months to 30 June 2017

$000 unless otherwise indicated	Arcata	Inmaculada	Pallancata	San José	Main operations	Corporate & others	Total
(+) Production cost excluding depreciation	30,557	47,753	18,519	60,408	157,237	-	157,237
(+) Other items in cost of sales	-	-	1,461	1,096	2,557	-	2,557
(+) Operating and exploration capex for units	9,346	22,246	8,412	16,333	56,337	30	56,367
(+) Brownfield exploration expenses	1,156	145	414	2,044	3,759	2,118	5,877
(+) Administrative expenses (excl depreciation and before exceptional items)	469	1,639	565	4,387	7,060	18,139	25,199
(+) Royalties and special mining tax¹²	-	1,444	498	-	1,941	969	2,910
Sub-total	41,528	73,227	29,868	84,268	228,891	21,256	250,147
Au ounces produced	8,042	79,820	9,794	46,618	144,273	-	144,273
Ag ounces produced (000s)	2,303	2,644	2,439	3,044	10,429	-	10,429
Ounces produced (Ag Eq 000s oz)	2,898	8,550	3,163	6,494	21,105	-	21,105
Sub-total ($/oz Ag Eq)	14.3	8.6	9.4	13.0	10.8	-	11.9
(+) Commercial deductions	8,604	1,078	4,211	6,314	20,207	-	20,207
(+) Selling expenses	850	522	507	3,315	5,194	-	5,194
(-) Export credits	-	-	-	-	-	-	-
Sub-total	9,454	1,600	4,718	9,629	25,401	-	25,401
Au ounces sold	7,944	78,323	9,718	47,433	143,418	-	143,418
Ag ounces sold (000s)	2,261	2,642	2,437	3,168	10,508	-	10,508
Ounces sold (Ag Eq 000s oz)	2,849	8,438	3,156	6,678	21,121	-	21,121
Sub-total ($/oz Ag Eq)	3.3	0.2	1.5	1.4	1.2	-	1.2
All-in sustaining costs ($/oz Ag Eq)	17.6	8.8	10.9	14.4	12.0	-	13.1

Six months to 30 June 2016

$000 unless otherwise indicated	Arcata	Inmaculada	Pallancata	San José	Main operations	Corporate & others	Total
(+) Production cost excluding depreciation	34,119	37,580	18,790	48,548	139,037	-	139,037
(+) Other items in cost of sales	(151)	44	(150)	179	(78)	-	(78)
(+) Operating and exploration capex for units	8,851	25,693	5,049	15,712	55,305	24	55,329
(+) Brownfield exploration expenses	313	1	531	619	1,464	1,294	2,758
(+) Administrative expenses (excl depreciation and before exceptional items)	750	1,743	361	3,880	6,734	14,749	21,483
(+) Royalties and special mining tax¹⁰	-	1,373	284	-	1,657	1,369	3,026
Sub-total	43,882	66,434	24,866	68,938	204,119	17,436	221,555
Au ounces produced	10,362	79,204	6,372	43,493	139,430	-	139,430
Ag ounces produced (000s)	2,970	2,370	1,273	3,132	9,744	-	9,744
Ounces produced (Ag Eq 000s oz)	3,736	8,231	1,745	6,350	20,062	-	20,062
Sub-total ($/oz Ag Eq)	11.7	8.1	14.3	10.9	10.2	-	11.0
(+) Commercial deductions	4,077	828	2,570	8,355	15,830	-	15,830
(+) Selling expenses	693	510	365	5,509	7,077	-	7,077
(-) Export credits	-	-	-	(8,360)	(8,360)		(8,360)
Sub-total	4,770	1,338	2,935	5,504	14,547	-	14,547
Au ounces sold	10,136	82,167	6,499	47,294	146,096	-	146,096
Ag ounces sold (000s)	2,922	2,468	1,315	3,380	10,085	-	10,085
Ounces sold (Ag Eq 000s oz)	3,672	8,548	1,796	6,880	20,896	-	20,896
Sub-total ($/oz Ag Eq)	1.3	0.2	1.6	0.8	0.7	-	0.7
All-in sustaining costs ($/oz Ag Eq)	13.0	8.2	15.9	11.7	10.9	-	11.7

Administrative expenses

Administrative expenses before exceptional items increased by 17% to $26.0 million (H1 2016: $22.2 million) primarily due to increased personnel expenses.

Exploration expenses

In H1 2017, exploration expenses increased to $7.1 million (H1 2016: $4.0 million). In addition, the Group capitalises part of its brownfield exploration, which mostly relates to costs incurred converting potential resource to the Inferred or Measured and Indicated category. In H1 2017, the Company capitalised $1.9 million relating to brownfield exploration compared to $0.3 million in H1 2016, bringing the total investment in exploration for H1 2017 to $9.0 million (H1 2016: $4.3 million).

Selling expenses

Selling expenses decreased by 27% versus H1 2016 to $5.2 million (H1 2016: $7.1 million) mainly due to the elimination of export duties at San Jose. Selling expenses consisted mainly of logistic costs for the sale of concentrate whilst H1 2016 expenses also included approximately 1.5 months of export duties on concentrate until their elimination on 12 February 2016. Previously, export duties in Argentina were levied at 10% of revenue for concentrate.

Other income/expenses

Other income before exceptional items was $5.2 million (H1 2016: $12.9 million). The reduction is mainly due to the elimination of the Patagonian port rebate in the fourth quarter of 2016, partially offset by the sale of land concessions and properties in Peru.

Other expenses before exceptional items were $6.2 million (H1 2016: $6.2 million).

Adjusted EBITDA

Adjusted EBITDA decreased by 19% versus the same period of 2016 to $136.0 million (H1 2016: $170.3 million) primarily due the cancellation of the Patagonian port benefit in Q4 2016 in addition to increases in costs at Inmaculada and San Jose.

Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs and income tax plus non-cash items (depreciation and changes in mine closure provisions) and exploration expenses other than personnel and other exploration related fixed expenses.

$000 unless otherwise indicated	Six months to 30 June 2017	Six months to 30 June 2016	% change
Profit from continuing operations before exceptional items, net finance cost, foreign exchange (loss)/gain and income tax	40,055	73,923	(46)
Depreciation and amortisation in cost of sales	90,184	93,527	(4)
Depreciation and amortisation in administrative expenses	806	689	17
Exploration expenses	7,122	4,043	76
Personnel and other exploration related fixed expenses	(2,567)	(1,897)	35
Other non-cash income, net ¹³	396	-	-
Adjusted EBITDA	135,996	170,285	(19)
Adjusted EBITDA margin	40%	50%

Finance income

Finance income before exceptional items of $2.7 million increased from H1 2016 ($0.5 million) primarily due the impact of a higher net present value of the Patagonian port rebate ($1.8 million). Collection dates have been updated and are shorter than the originally expected 2 year period. The remainder consists of interest received on deposits.

Finance costs

Finance costs before exceptional items decreased from $17.4 million in H1 2016 to $13.3 million in H1 2017, principally due to the reduction of interest resulting from the repayment of Scotiabank medium term loan in H1 2016 and the short-term borrowings.

Foreign exchange (losses)/gains

The Group recognised a foreign exchange loss of $0.5 million (H1 2016: $0.4 million gain) as a result of exposures in currencies other than the functional currency specifically the Peruvian Nuevo Sol and Argentinean Peso.

Income tax

The Company's pre-exceptional income tax charge was $10.7 million (H1 2016: $21.4 million). The substantial decrease in the charge is explained by the Company's decrease in profitability in the period. The effective tax rate for the period was 23.6% (H1 2016: 32.4%), compared to the weighted average statutory tax rate of 32.1%, and 30.9% if the mining royalty and the special mining tax are included (H1 2016: 37.4%) with the primary reason for the reduction being the impairment reversal at San Felipe.

Exceptional items

Exceptional items in H1 2017 totalled a $9.3 million gain after tax (H1 2016: $1.8 million). Exceptional items principally included impairment reversals of $31.9 million for Pallancata and $5.3 million at San Felipe partially offset by a $26.3 million impairment of Arcata.

These items excluded the exceptional tax effect that amounted to a $1.7 million tax charge (H1 2016: $1.1 million tax charge).

Cash flow and balance sheet review

Cash flow:

$000	Six months to 30 June 2017	Six months to 30 June 2016	Change
Net cash generated from operating activities	80,495	144,596	(64,101)
Net cash used in investing activities	(45,427)	(54,840)	9,413
Cash flows used in financing activities	(30,617)	(70,775)	40,158
Net increase in cash and cash equivalents during the period	4,451	18,981	(14,530)

Operating cash flow reduced from $144.6 million in H1 2016 to $80.5 million in H1 2017, mainly due to higher backfill and detoxification costs at Inmaculada, the impact of the net inflation in Argentina and reduced tonnage and grades at Arcata. This was partially offset by lower costs at Pallancata due to stronger grades and tonnage. Net cash used in investing activities decreased to $47.4 million in H1 2017 from $54.8 million in H1 2016 mainly due to lower capex at Inmaculada and at the Company's projects. Finally, cash used in financing activities reduced to $30.6 million from $70.8 million in H1 2016, primarily due to the lower amount of debt repaid. As a result, total cash flows resulted in a net increase of $4.5 million from $19.0 million in H1 2016 ($(14.5) million difference).

Working capital

$000	Six months to 30 June 2017	As at 31 Dec 2016
Trade and other receivables	106,704	93,837
Inventories	42,920	57,056
Other financial (liability)/assets	(2,772)	(1,726)
Income tax (payable)/receivable	12,112	(9,025)
Trade and other payables and provisions	(113,567)	(108,848)
Mine closure provisions	(101,816)	(102,429)
Working capital	(56,419)	(71,135)

The Group's working capital position moved by $14.7 million from $(71.1) million reduction to a $(56.4) million reduction in H1 2017. Key drivers were: lower inventories ($14.1 million), higher income tax receivable resulting from $21.2 million of tax payments in Argentina; and higher trade and other payables and provisions $(4.7) million in line with higher costs. These were partially offset by: an increase in trade and other receivables $(12.9) million mainly due to Pallancata's trade receivables in line with its higher production.

Net debt

$000 unless otherwise indicated	As at 30 June 2017	As at 31 Dec 2016
Cash and cash equivalents	144,497	139,979
Long term borrowings	(291,395)	(291,073)
Short term borrowings¹⁴	(17,800)	(36,312)
Net debt	164,698	(187,406)

The Group reported net debt position was $164.7 million as at 30 June 2017 (2016: $187.4 million). The reduction in H1 2017 includes the net effect of: the repayment of short-term loans ($18.5 million) and; the operating cash generated during the period.

Capital expenditure¹⁵

$000	Six months to 30 June 2017	Six months to 30 June 2016
Arcata	9,346	8,851
Selene	33	13
Pallancata	8,379	5,036
San Jose	17,493	15,712
Inmaculada	22,246	25,693
Operations	57,497	55,305
Other	1,265	3,888
Total	58,762	59,193

H1 2017 capital expenditure of $58.8 million (H1 2016: $59.2 million) mainly comprised of operational capex of $57.5 million (H1 2016: $55.3 million) with the small decrease versus H1 2016 comprising decreases at Inmaculada and projects partially offset by increases in capital expenditure at Pallancata.

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. 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 2016 are set out in detail in the Risk Management & Viability section of the 2016 Annual Report and in Note 36 to the 2016 Consolidated Financial Statements.

The key risks disclosed in the 2016 Annual Report (available at www.hochschildmining.com) are categorised as:

o Financial risks comprising commodity price risk;

o Operational risks including the risks associated with operational performance, business interruption, exploration & reserve and resource replacement and personnel risks;

o Macro-economic risks which include political, legal and regulatory risks; and

o Sustainability risks including risks associated with health and safety, environmental and community relations.

These risks continue to apply to the Company in respect of the remaining six months of the financial year.

RELATED PARTIES TRANSACTION

Related parties transactions are disclosed in note 19 to the condensed set of financial statements.

GOING CONCERN

The Company's business activities, together with the factors likely to affect future development, performance and position are set out in the Operating Review on pages 3 to 7. The financial position of the Company, its cash flow and liquidity position are described in the Financial Review on pages 8 to 12.

The Directors believe that the financial resources available at the date of the issue of these condensed interim financial statements are sufficient for the Company to manage its business risks successfully.

The Company's forecasts and projections, taking into account reasonably possible changes in operational performance and in particular the price of gold and silver, and other mitigating actions described in the Risks section above, show that there are reasonable expectations that the Company will be able to operate on funds currently held and those generated internally, for the foreseeable future.

After making enquiries and considering the above, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and consider the going concern basis of accounting to be appropriate. As a result they continue to adopt the going concern basis of accounting in preparing the condensed interim 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 IAS 34 "Interim Financial Reporting" as adopted by the European Union and that the interim management report includes a fair review of the information required by Disclosure 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

Ignacio Bustamante
Chief Executive Officer

15 August 2017

INDEPENDENT REVIEW REPORT TO HOCHSCHILD MINING PLC

Introduction

We have been engaged by Hochschild Mining plc (the 'Company') to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 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 20. 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.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP
London
15 August 2017

Interim condensed consolidated income statement

	Notes	Six-months ended 30 June 2017 (Unaudited)			Six-months ended 30 June 2016 (Unaudited)
		Before exceptional items US$000	Exceptional items ^{Note 7} US$000	Total US$000	Before exceptional items US$000	Exceptional items ^{Note 7} US$000	Total US$000
Continuing operations
Revenue	4	340,796	-	340,796	339,277	-	339,277
Cost of sales	5	(261,198)	-	(261,198)	(238,748)	-	(238,748)
Gross profit		79,598	-	79,598	100,529	-	100,529
Administrative expenses		(26,004)	-	(26,004)	(22,172)	-	(22,172)
Exploration expenses		(7,122)	-	(7,122)	(4,043)	-	(4,043)
Selling expenses		(5,194)	-	(5,194)	(7,077)	-	(7,077)
Other income	6	5,186	-	5,186	12,900	3,418	16,318
Other expenses		(6,188)	-	(6,188)	(6,214)	(1,000)	(7,214)
(Impairment)/impairment reversal and write-off of non-financial assets, net		(221)	10,952	10,731	-	(498)	(498)
Profit from continuing operations before net finance income/(cost), foreign exchange (loss)/gain and income tax		40,055	10,952	51,007	73,923	1,920	75,843
Finance income	8	2,700	-	2,700	483	959	1,442
Finance costs	8	(13,288)	-	(13,288)	(17,430)	-	(17,430)
Foreign exchange (loss)/gain		(547)	-	(547)	442	-	442
Profit from continuing operations before income tax		28,920	10,952	39,872	57,418	2,879	60,297
Income tax expense	9	(10,674)	(1,655)	(12,329)	(21,424)	(1,129)	(22,553)
Profit for the period from continuing operations		18,246	9,297	27,543	35,994	1,750	37,744
Attributable to:
Equity shareholders of the Company		14,064	9,297	23,361	27,220	596	27,816
Non-controlling interests		4,182	-	4,182	8,774	1,154	9,928
		18,246	9,297	27,543	35,994	1,750	37,744
Basic earnings per ordinary share from continuing operations and for the period (expressed in U.S. dollars per share)		0.03	0.02	0.05	0.05	0.01	0.06
Diluted earnings per ordinary share from continuing operations and for the period (expressed in U.S. dollars per share)		0.03	0.02	0.05	0.05	-	0.05

Interim condensed consolidated statement of comprehensive income

	Note	Six-months ended 30 June
		2017 (Unaudited) US$000	2016 (Unaudited) US$000

Profit for the period		27,543	37,744
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translating foreign operations		90	2
Change in fair value of available-for-sale financial assets		(415)	502
Recycling of the loss on available-for-sale financial assets		-	(38)
Change in fair value of cash flow hedges		-	(43,382)
Recycling of the loss on cash flow hedges		-	3,116
Deferred income tax relating to components of other comprehensive income	9	-	11,274
Other comprehensive loss for the period, net of tax		(325)	(28,526)
Total comprehensive income for the period		27,218	9,218
Total comprehensive income/(expense) attributable to:
Equity shareholders of the Company		23,036	(710)
Non-controlling interests		4,182	9,928
		27,218	9,218

Interim condensed consolidated statement of financial position

	Notes	As at 30 June 2017 (Unaudited) US$000	As at 31 December 2016 US$000
ASSETS
Non-current assets
Property, plant and equipment	10	953,101	975,483
Evaluation and exploration assets	11	145,824	138,985
Intangible assets		25,499	26,379
Available-for-sale financial assets	16	3,356	991
Trade and other receivables		8.356	25,717
Deferred income tax assets		1,392	1,027
		1,137,528	1,168,582
Current assets
Inventories		42,920	57,056
Trade and other receivables		98,348	68,120
Income tax receivable		18,539	20,988
Cash and cash equivalents	14	144,497	139,979
		304,304	286,143
Total assets		1,441,832	1,454,725

EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Parent
Equity share capital	17	224,315	224,315
Share premium	17	438,041	438,041
Treasury shares		(140)	(426)
Other reserves		(217,120)	(217,288)
Retained earnings		275,155	258,269
		720,251	702,911
Non-controlling interests		86,558	90,442
Total equity		806,809	793,353
Non-current liabilities
Trade and other payables		1,194	1,266
Borrowings	15	291,395	291,073
Provisions		104,951	106,121
Deferred income	16	30,593	25,000
Deferred income tax liabilities		70,253	65,971
		498,386	489,431
Current liabilities
Trade and other payables		99,108	98,484
Other financial liabilities	12	2,772	1,726
Borrowings	15	17,800	36,312
Provisions		10,130	5,406
Deferred income		400	-
Income tax payable		6,427	30,013
		136,637	171,941
Total liabilities		635,023	661,372
Total equity and liabilities		1,441,832	1,454,725

Interim condensed consolidated statement of cash flows

		Six-months ended 30 June
	Notes	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Cash flows from operating activities
Cash generated from operations	20	110,153	158,827
Interest received		451	431
Interest paid	15	(11,992)	(14,341)
Payment of mine closure costs		(1,899)	(1,427)
Income tax (paid)/received, net		(16,218)	1,106
Net cash generated from operating activities		80,495	144,596
Cash flows from investing activities
Purchase of property, plant and equipment		(49,019)	(53,982)
Purchase of evaluation and exploration assets		(2,552)	(2,050)
Purchase of intangibles		(8)	-
Proceeds from sale of subsidiary		-	1,100
Proceeds from sale of other assets		1,556	-
Proceeds from deferred income	16	4,000	-
Proceeds from sale of available-for-sale financial assets		-	54
Proceeds from sale of property, plant and equipment	10	596	38
Net cash used in investing activities		(45,427)	(54,840)
Cash flows from financing activities
Proceeds from borrowings	15	10,500	12,497
Repayment of borrowings	15	(29,000)	(77,928)
Dividends paid	18	(6,997)	-
Dividends paid to non-controlling interests	18	(5,120)	(5,344)
Cash flows used in financing activities		(30,617)	(70,775)
Net increase in cash and cash equivalents during the period		4,451	18,981
Impact of foreign exchange		67	(152)
Cash and cash equivalents at beginning of period		139,979	84,017
Cash and cash equivalents at end of period	14	144,497	102,846

Interim condensed consolidated statement of changes in equity

				Other reserves
Notes	Equity share capital US$000	Share premium US$000	Treasury shares US$000		Unrealised gain/(loss) on available-for-sale financial assets US$000	Unrealised gain on hedges US$000	Cumulative translation adjustment US$000	Merger reserve US$000	Share-based payment reserve US$000	Total other reserves US$000	Retained earnings US$000	Capital and reserves attributable to shareholders of the Parent US$000	Non-controlling interests US$000	Total equity US$000

Balance at 1 January 2017		224,315	438,041	(426)	740	-	(13,851)	(210,046)	5,869	(217,288)	258,269	702,911	90,442	793,353
Other comprehensive gain/(loss)		-	-	-	(415)		90	-	-	(325)	-	(325)	-	(325)
Profit for the period		-	-	-	-	-	-	-	-	-	23,361	23,361	4,182	27,543
Total comprehensive (loss)/income for the period		-	-	-	(415)	-	90	-	-	(325)	23,361	23,036	4,182	27,218
Dividends	18	-	-	-	-	-	-	-	-	-	(6,997)	(6,997)	-	(6,997)
Dividends declared to non-controlling interests	18	-	-	-	-	-	-	-	-	-	-	-	(8,066)	(8,066)
Share-based payments									541	541	760	1,301	-	1,301
Exercise of share options	17	-	-	286	-	-	-	-	(48)	(48)	(238)	-	-	-
Balance at 30 June 2017 (unaudited)		224,315	438,041	(140)	325	-	(13,761)	(210,046)	6,362	(217,120)	275,155	720,251	86,558	806,809

Balance at 1 January 2016		223,805	438,041	(898)	32	15,312	(13,602)	(210,046)	4,655	(203,649)	218,093	675,392	90,113	765,505
Other comprehensive gain/(loss)		-	-	-	464	(28,992)	2	-	-	(28,526)	-	(28,526)	-	(28,526)
Profit for the period		-	-	-	-	-	-	-	-	-	27,816	27,816	9,928	37,744
Total comprehensive (loss)/income for the period		-	-	-	464	(28,992)	2	-	-	(28,526)	27,816	(710)	9,928	9,218
Dividends declared to non-controlling interests	18	-	-	-	-	-	-	-	-	-	-	-	(5,244)	(5,244)
Share-based payments									1,529	1,529	383	1,912	-	1,912
Exercise of share options	17	-	-	472	-	-	-	-	(157)	(157)	(315)	-	-	-
Balance at 30 June 2016 (unaudited)		223,805	438,041	(426)	496	(13,680)	(13,600)	(210,046)	6,027	(230,803)	245,977	676,594	94,797	771,391

Notes to the interim condensed consolidated financial statement

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 silver and gold. The Group has three operating mines (Arcata, 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 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 15 August 2017.

2 Significant Accounting Policies

(a) Basis of preparation

These interim condensed consolidated financial statements set out the Group's financial position as at 30 June 2017 and 31 December 2016 and its financial performance and cash flows for the six months ended 30 June 2017 and 30 June 2016.

They have been prepared in accordance with IAS 34 Interim Financial Reporting in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. Accordingly, the interim condensed consolidated financial statements do not include all the information required for full annual financial statements and therefore, should be read in conjunction with the Group's 2016 annual consolidated financial statements as published in the 2016 Annual Report.

The interim condensed consolidated financial statements do not constitute statutory accounts as defined in the Companies Act 2006. The financial information for the full year is based on the statutory accounts for the financial year ended 31 December 2016. A copy of the statutory accounts for that year, which were prepared in accordance with IFRS as adopted by the European Union 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.

(b) Changes in accounting policies and disclosures

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2016, except for the adoption of new standards and interpretations effective for the Group from 1 January 2017, which has not had a material impact on the annual consolidated financial statements or the interim condensed consolidated financial statements of the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

Except as set out below, the Group's assessment of new standards issued but not yet effective is consistent with that disclosed in the Annual Report 2016.

The Group is continuing to evaluate in detail the potential impact of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers but does not currently expect these to have a material impact on the financial statements. In respect of IFRS 16 Leases, the Group is yet to estimate the impact of the new rules on the Group's financial statements.

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the condensed set of financial statements. For further detail refer to the detailed discussion of the assumptions outlined in the Going Concern section of the announcement.

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 2017 and 2016 and asset information as at 30 June 2017 and 31 December 2016 respectively:

Six months ended 30 June 2017 (unaudited)	Arcata US$000	Pallancata US$000	San Jose US$000	Inmaculada US$000	Exploration US$000	Other US$000	Adjustments and eliminations US$000	Total US$000
Revenue from external customers	40,630	48,896	109,178	141,896	-	196	-	340,796
Inter segment revenue	-	-	-	-	-	862	(862)	-
Total revenue	40,630	48,896	109,178	141,896	-	1,058	(862)	340,796

Segment profit/(loss)	(1,132)	20,329	18,355	37,715	(7,122)	(937)	74	67,282
Others¹								(27,410)
Profit from continuing operations before income tax								39,872

As at 30 June 2017 (unaudited)
Assets
Capital expenditure	9,346	8,379	17,493	22,246	1,101	197	-	58,762

Current assets	8,133	18,932	49,983	13,275	30	3,379	-	93,732
Other non-current assets	21,871	91,357	190,892	567,133	191,302	61,869	-	1,124,424
Total segment assets	30,004	110,289	240,875	580,408	191,332	65,248	-	1,218,156
Not reportable assets²	-	-	-	-	-	223,676	-	223,676
Total assets	30,004	110,289	240,875	580,408	191,332	288,924	-	1,441,832

1 Comprised of administrative expenses of US$26,004,000, other income of US$5,186,000, other expenses of US$6,188,000, write off of assets of US$221,000, impairment of assets of US$26,281,000, reversal of impairment of assets of US$37,233,000, finance income of US$2,700,000, finance costs of US$13,288,000 and foreign exchange loss of US$547,000.

2 Not reportable assets are comprised of available-for-sale financial assets of US$3,356,000, other receivables of US$55,892,000, income tax receivable of US$18,539,000, deferred income tax assets of US$1,392,000, and cash and cash equivalents of US$144,497,000.

Six months ended 30 June 2016 (unaudited)	Arcata US$000	Pallancata US$000	San Jose US$000	Inmaculada US$000	Exploration US$000	Other US$000	Adjustments and eliminations US$000	Total US$000
Revenue from external customers	60,009	28,915	110,651	139,537	-	165	-	339,277
Inter segment revenue	-	-	-	-	-	1,363	(1,363)	-
Total revenue	60,009	28,915	110,651	139,537	-	1,528	(1,363)	339,277

Segment profit/(loss)	12,810	99	30,681	50,135	(3,855)	(320)	(141)	89,409
Others¹								(29,112)
Profit from continuing operations before income tax								60,297


As at 31 December 2016
Assets
Capital expenditure	20,819	16,105	35,311	54,199	4,910	301	-	131,645

Current assets	6,721	7,017	53,299	22,899	30	3,911	-	93,877
Other non-current assets	48,843	55,380	196,056	589,666	185,825	65,077	-	1,140,847
Total segment assets	55,564	62,397	249,355	612,565	185,855	68,988	-	1,234,724
Not reportable assets²	-	-	-	-	-	220,001	-	220,001
Total assets	55,564	62,397	249,355	612,565	185,855	288,989	-	1,454,725

1 Comprised of administrative expenses of US$22,172,000, other income of US$16,318,000, other expenses of US$7,214,000, write off of assets of US$498,000, finance income of US$1,442,000, finance costs of US$17,430,000 and foreign exchange gain of US$442,000.

2 Not reportable assets are comprised of available-for-sale financial assets of US$991,000, other receivables of US$57,016,000, income tax receivable of US$20,988,000, deferred income tax assets of US$1,027,000 and cash and cash equivalents of US$139,979,000.

4 Revenue

	Six-months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Gold (from dore bars)	124,230	128,144
Silver (from dore bars)	69,824	94,373
Gold (from concentrate)	50,360	47,884
Silver (from concentrate)	96,186	68,711
Services	196	165
	340,796	339,277

In 2016, the realised loss on gold and silver swaps and zero cost collar forward sales contracts in the period recognised within revenue was US$3,116,000 (loss on gold: US$3,501,000, gain on silver: US$385,000). There were no forward contracts in the 2017 period.

5 Cost of sales before exceptional items

Included in cost of sales are:

	Six-months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Depreciation and amortisation in cost of sales1	90,184	93,527
Personnel expenses	61,615	49,241
Mining royalty	3,113	3,024
Change in products in process and finished goods	17,601	11,273

1 The depreciation and amortisation in production cost is US$83,803,000 (2016: US$88,516,000).

6 Other income before exceptional items

Included in other income are:

	Six-months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Export credit	587	8,360
Logistic services	1,808	2,566
Gain on sale of other assets	1,556	1,550
Others	1,235	424
	5,186	12,900

7 Exceptional items

Exceptional items relate to:

	Six-months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Other income
Gain on sale of subsidiaries³	-	751
Reversal of reserves tax⁴	-	2,667
Total	-	3,418
Other expenses
Donations (note 19)	-	(1,000)
Total	-	(1,000)
(Impairment)/impairment reversal and write-off of non-financial assets, net
Impairment of assets¹	(26,281)	-
Reversal of impairment of assets¹	37,233
Write-off of non-current asset⁵	-	(498)
Total	10,952	(498)
Finance income
Reversal of interests on reserves tax⁴	-	959
Total	-	959
Income tax expense
Income tax charge^{2 and 6}	(1,655)	(1,129)
Total	(1,655)	(1,129)

The exceptional items for the period ended 30 June 2017 are as follows:

1.Corresponds to the impairment of the Arcata mine unit of US$26,281,000, and the reversal of impairment related to the Pallancata mine unit of US$31,892,000 and the San Felipe project of US$5,341,000 (notes 10, 11 and 16).

2.Corresponds to the deferred tax charge generated by the reversal on impairment of the Pallancata mine unit, net by the impairment of the Arcata mine unit.

For the six months period ended 30 June 2016, the exceptional items are as follows:

3.Gain generated by the sale of the Group´s subsidiary Asociación Sumac Tarpuy to Inversiones ASPI S.A. of US$811,000 net of the loss generated by the sale of HMX S.A. de C.V. to Sergio Salinas Salinas and Servicios de Integración Fiscal S.A. de C.V. of US$60,000

4.Corresponded to the reversal of the reserves tax liability and their associated interests due to an agreement reached with the Fiscal Authority in Argentina.

5.Write-off of non-current assets in Compañía Minera Ares S.A.C. ("CMA") of US$495,000 and Minera Santa Cruz S.A. ("MSC") of US$3,000.

6.Corresponded to the current tax charge generated by the reversal of the tax over reserves and its interests (US$1,269,000) net of the deferred tax credit generated by the write-off of non-current assets (US$140,000).

8 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
	2017 (Unaudited) US$000		2016 (Unaudited) US$000
Finance income:
Interest on deposits and liquidity funds	420		328
Interest on loans	74		103
Gain on discount of other receivables¹	1,940		-
Gain on discount of deferred income	203		-
Others	63		52
Total	2,700		483
Finance cost:
Interest on bank loans	(70	)	(2,258)
Interest on bond	(12,132	)	(11,662)
Other interest	(537)		(700)
Total interest expense	(12,739	)	(14,620)
Unwind of discount rate	(184	)	(1,722)
Loss from changes in the fair value of financial instruments	-		(829)
Others	(365	)	(259)
Total	(13,288	)	(17,430)

1 Mainly corresponds to the gain on the unwinding of the discount of tax credits in Argentina.

Finance costs above are presented net of borrowing costs capitalised in property, plant and equipment amounting to US$100,000 (2016: US$674,000).

9 Income tax expense

	Six-months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Current tax
Current income tax expense	5,501	14,072
Current mining royalty charge	1,941	1,657
Current special mining tax charge	969	1,369
Withholding taxes	-	552
Total	8,411	17,650
Deferred tax
Origination and reversal of temporary differences	3,918	4,903
Total	3,918	4,903
Total taxation charge in the income statement	12,329	22,553

The pre-exceptional tax charge for the period was US$10,674,000 (2016: US$21,424,000).

The effective tax rate for corporate income tax for the six months ended 30 June 2017 is 23.6% (30 June 2016: 32.4%), compared to the weighted average statutory tax rate of 32.1%, and 30.9% including the mining royalty and the special mining tax (30 June 2016: 37.4%). The main factor that reduced the effective tax rate for corporate income tax is the reversal of San Felipe impairment, which does not attract deferred tax liability, on the basis that no deferred tax asset arose when the impairment was originally recognised.

The tax related to items charged or credited to equity is as follows:

	Six-months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000

Deferred income tax relating to fair value gains on cash flow hedges	-	(11,274	)
Total taxation (credit)/charge in the statement of comprehensive income	-	(11,274	)

10 Property, plant and equipment

During the six months ended 30 June 2017, the Group acquired and developed assets with a cost of US$56,202,000 (30 June 2016: US$57,143,000). The additions for the six months ended 30 June 2017 relate to:

	Mining properties and development US$000	Other property plant and equipment US$000	Total US$000
San Jose	11,777	4,554	16,331
Pallancata	6,118	2,261	8,379
Inmaculada	11,814	10,424	22,238
Arcata	7,448	1,187	8,635
Crespo	422	-	422
Others	-	197	197
	37,579	18,623	56,202

Assets with a net book value of US$674,000 were disposed of by the Group during the six month period ended 30 June 2017 (30 June 2016: US$5,000) resulting in a net loss on disposal of US$78,000 (30 June 2016: gain of US$33,000).

For the six months ended 30 June 2017, the depreciation charge on property, plant and equipment was US$85,293,000 (30 June 2016: US$90,605,000).

Management determined there were triggers of impairment in the Arcata mine unit as it has experienced difficulties to replace production with incremental resources and to convert resources into reserves. An impairment test was carried out resulting in an impairment charge of US$26,281,000 (US$25,344,000 in property, plant and equipment and US$937,000 and evaluation and exploration assets).

In the case of the Pallancata mine unit, there was an improvement in terms of tonnage and grades of its resources and reserves due to the Pablo vein. An impairment test was carried out resulting in an impairment reversal of US$31,892,000 (US$31,509,000 in property, plant and equipment and US$383,000 and evaluation and exploration assets).

In addition, as a result of the proceeds received in the period, management evaluated the value of the San Felipe Project, recognising an impairment reversal of US$5,341,000 (all in evaluation and exploration assets) (refer to notes 7, 11 and 16).

The recoverable values of these CGUs were determined using a fair value less costs of disposal (FVLCD) methodology. FVLCD was determined using a combination of level 2 and level 3 inputs to construct a discounted cash flow model to estimate the amount that would be paid by a willing third party in an arm's length transaction. With respect to the San Felipe CGU, given the early stage of the project, to determine the FVLCD, the Group applied a value in-situ methodology which applies a realisable 'enterprise value' to unprocessed mineral resources. The enterprise value used is based on observable external market information.

The key assumptions on which management has based its determination of FVLCD and the associated recoverable values calculated are gold and silver prices, production costs, the discount rate and the value per in-situ regarding the San Felipe project. Gold and silver prices used, discount rate applied and value per in-situ per zinc equivalent tonne are presented below.

Gold and silver prices

US$ per oz.	2017	2018	2019	2020	Long-term
Gold	1,250	1,295	1,300	1,300	1,300
Silver	18	19	19	19	20

Other key assumptions

	Arcata	Pallancata	San Felipe
Discount rate (post tax)	5.4%	5.4%	n/a
Value per in-situ per zinc equivalent tonne (US$)	n/a	n/a	17.92

Current carrying value of CGU, net of deferred tax (US$000)		Arcata		Pallancata		San Felipe
30 June 2017		21,871		91,357		4,662

Sensitivity analysis

Other than as disclosed below, management believes that no reasonably possible change in any of the key assumptions above would cause the carrying value of any of its cash generating units to exceed its recoverable amount.

The estimated recoverable amounts of the following of the Group's CGUs are equal to, or not materially greater than, their carrying values; consequently, any adverse change in the following key assumptions would, in isolation, cause the following additional (impairment loss)/reversal of impairment to be recognised:

Approximate impact resulting from the following changes (US$000)	Arcata	Pallancata	San Felipe
Prices (10% decrease)	(19,068)	-	n/a
Post tax discount rate (3% increase)	(889)	-	n/a
Production costs (10% increase)	(12,480)	-	n/a
Value per in-situ tonne (10% decrease)	n/a	n/a	(1,145)

11 Evaluation and exploration assets

During the six months ended 30 June 2017, the Group capitalised evaluation and exploration costs of US$2,552,000 (30 June 2016: US$2,050,000). The additions correspond to the following properties:

			US$000
San Jose			1,154
Arcata			711
Volcan			445
Others			242
			2,552

There were no transfers from evaluation and exploration assets to property, plant and equipment during the period (2016: US$nil).

At 30 June 2017, the Group has recorded an impairment charge with respect to evaluation and exploration assets of the Arcata mine unit of US$937,000, and reversals of impairment with respect to the Pallancata mine unit of US$383,000 and the San Felipe project of US$5,341,000. The FVLCD calculation is detailed in note 10.

12 Other financial liabilities

	As at 30 June 2017 (unaudited) US$000	As at 31 December 2016 US$000

Other financial liabilities
Embedded derivatives¹	2,772	1,726
Other financial liabilities	2,772	1,726

1 Sales of concentrate and certain gold and silver volumes are provisionally priced at the time the sale is recorded (note 13).

13 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 2017 and 31 December 2016, the Group held the following financial instruments measured at fair value:

	As at 30 June 2017 (unaudited) US$000		Level 1 US$000	Level 2 US$000	Level 3 US$000
Assets measured at fair value
Equity shares	3,356		3,356	-	-
	3,356		3,356	-	-
Liabilities measured at fair value
Embedded derivatives (note 12)		(2,772)	-	-	(2,772)
		(2,772)	-	-	(2,772)

	As at 31 December 2016 US$000	Level 1 US$000	Level 2 US$000	Level 3 US$000
Assets measured at fair value
Equity shares	991	991	-	-
	991	991	-	-
Liabilities measured at fair value
Embedded derivatives (note 12)	(1,726)	-	-	(1,726)
	(1,726)	-	-	(1,726)

During the six months ended 30 June 2017 and the year ended 31 December 2016, there were no transfers between these levels.

The reconciliation of the financial instruments categorised as Level 3 is as follows:

				Embedded derivatives liabilities US$000
Balance at 1 January 2016				(1,141)
Changes in fair value				(10,328)
Realised embedded derivatives during the period				9,743
Balance 31 December 2016				(1,726)
Changes in fair value				(623)
Realised embedded derivatives during the period				(423)
Balance 30 June 2017 (unaudited)				(2,772)

The movement of the period has been recognised in revenue.

Valuation techniques:

Level 3: Embedded derivatives and equity shares

Embedded derivatives: Sales of concentrate and certain gold and silver volumes are provisionally priced at the time the sale is recorded. The price is then adjusted after an agreed period of time (usually linked to the length of time it takes for the smelter to refine and sell the concentrate or for the refiner to process the dore into gold and silver), with the Group either paying or receiving the difference between the provisional price and the final price. This price exposure is considered to be an embedded derivative in accordance with IAS 39 'Financial Instruments: Recognition and Measurement'. The gain or loss that arises on the fair value of the embedded derivative is recorded in 'Revenue' (note 4). The selling price of metals can be reliably measured as these are actively traded on international exchanges but the estimated metal content is a non-observable input to this valuation.

Equity shares: The investments in unlisted shares (Pembrook Mining Corp. and ECI Exploration and Mining Inc.) were recognised at cost less any recognised impairment losses given that there is not an active market for these investments. The investments in ECI Exploration and Mining Inc. and Pembrook Mining Corp. are fully impaired as at 30 June 2017 and 31 December 2016, based on available observable market data of similar peers.

14 Cash and cash equivalents

	As at 30 June 2017 (unaudited) US$000	As at 31 December 2016 US$000

Cash at bank	306	353
Liquidity funds¹	1,270	203
Current demand deposit accounts²	52,627	68,643
Time deposits³	90,294	70,780
Cash and cash equivalents	144,497	139,979

1 The liquidity funds are mainly invested in certificate of deposits, commercial papers and floating rate notes with a weighted average maturity of 3 days as at 30 June 2017 (as at 31 December 2016: 16 days).

2 Relates to bank accounts which are readily accessible to the Group and bear interest.

3 These deposits have an average maturity of 65 days (as at 31 December 2016: 3 days).

15 Borrowings

The movement in borrowings during the six month period to 30 June 2017 is as follows:

	As at 1 January 2017 US$000	Additions US$000	Repayments US$000	Reclassifications US$000	As at 30 June 2017 (Unaudited) US$000
Current
Bank loans¹	27,534	10,570	(29,083)	-	9,021
Bond payable²	8,778	12,232	(11,909)	(322)	8,779
	36,312	22,802	(40,992)	(322)	17,800
Non-current
Bond payable²	291,073	-	-	322	291,395
	291,073	-	-	322	291,395

Accrued interest:	(8,812)	(12,302)	11,992	322	(8,800)
Before accrued interest	318,573	10,500	(29,000)	322	300,395

1 Relates to pre-shipment loans for a total amount of US$9,021,000 (2016: US$2,524,000) which are credit lines given by banks to meet payment obligations arising from the exports of the Group. In addition the balance at 1 January 2017 includes US$25,010,000 short-term credit lines with the BBVA Bank that were repaid on February 2017.

2 Relates to the issuance of US$350,000,000 7.75% Senior Unsecured Notes on 23 January 2014.The carrying value at 30 June 2017 of US$300,174,000 (2016: US$299,851,000) was determined in accordance with the effective interest method.

The carrying amount of current borrowings approximates their fair value. The carrying amount and fair value of the non‑current borrowings are as follows:

	Carrying amount		Fair value
	As at 30 June 2017 (Unaudited) US$000	As at 31 December 2016 US$000	As at 30 June 2017 (Unaudited) US$000	As at 31 December 2016 US$000
Bond payable	291,395	291,073	313,935	318,062
Total	291,395	291,073	313,935	318,062

The fair value was determined using a level 1 valuation technique.

16 Deferred income

	As at 30 June 2017 (unaudited) US$000	As at 31 December 2016 US$000
San Felipe contract¹	29,396	25,000
El Mosquito contract	1,597	-
	30,993	25,000
Less current balance	(400)	-
Non-current balance	30,593	25,000

1 On 3 August 2011, the Group entered into an agreement with Impulsora Minera Santa Cruz ("IMSC") whereby IMSC acquired the right to explore the San Felipe properties and an option to purchase the related concessions. Under the terms of this agreement the Group has received US$29,396,000 as non-refundable payments to date (2016: US25,000,000).

These payments reduce the total consideration IMSC will be required to pay upon exercise of the option.

On 28 February 2017, the Group signed a new option agreement with IMSC for the San Felipe properties amounting to US$10,000,000 exercisable by 15 December 2017. An initial payment of US$2,000,000 was received on 7 March 2017.

In March 2017, IMSC entered into an agreement with Americas Silver Corporation ('ASC') to assign 100% of its interest in the San Felipe Project.

On 9 March 2017, the Group received in payment 13,415,000 ordinary shares of Santa Cruz Silver Mining ("SCSM") quoted in the Toronto Stock Exchange, at the market price of CAD 0.28 amounting to CAD 3,756,000 equivalent to US$2,780,000. The amount represents a deferred income payment of US$2,396,000 with the corresponding value added taxes of US$384,000.

At 30 June 2017 the SCSM shares, which have been classified as available for sale financial assets, have a fair value of US$1,914,000. The loss in fair value of US$866,000 has been recognised in equity accordingly.

17 Equity

Share capital and share premium

The movement in share capital of the Company from 31 December 2016 to 30 June 2017 is as follows:

	Number of ordinary shares	Share capital US$000	Share premium US$000
Shares issued as at 1 January 2017	507,232,310	224,315	438,041
Shares issued as at 30 June 2017	507,232,310	224,315	438,041

At 30 June 2017 and 31 December 2016 all issued shares with a par value of 25 pence each were fully paid (30 June 2017: weighted average of US$0.442 per share, 31 December 2016: weighted average of US$0.442 per share).

On 20 March 2017, 40,383 Treasury shares (31 December 2016: 66,727) with a value of US$286,000 (31 December 2016: US$472,000) (being the cost incurred to acquire the shares) were transferred to the CEO of the Group with respect to the Deferred Bonus Plan benefit. Treasury shares at 30 June 2017 is 19,659 (31 December 2016: 60,042) ordinary shares with a value of US$140,000 (31 December 2016: US$426,000).

18 Dividends paid and declared

Dividends declared and paid to non-controlling interests in the six months ended 30 June 2017 were US$8,066,000 (30 June 2016: US$5,244,000) and US$5,120,000 (30 June 2016: US$5,344,000) respectively.

A final dividend for 2016 of US$6,997,000 was recommended and paid in the six month period ended 30 June 2017 (30 June 2016: US$nil). The Directors of the Company declared an interim dividend in respect of the six months ended 30 June 2017 of US$1.38 cents per share (totalling US$7,000,000) (30 June 2016: US$6,998,000) which will be paid to shareholders on 21 September 2017 to those shareholders appearing on the register on 1 September 2017. These financial statements do not reflect this dividend payable.

19 Related party transactions

There were no significant related parties transactions during the six months period ended 30 June 2017.

On 17 May 2016 Asociación Sumac Tarpuy was sold to Inversiones ASPI S.A. generating a gain on disposal of US$811,000. The Group made a donation of US$1,000,000 to the Universidad de Ingenieria y Tecnología ("UTEC") with the proceeds from the sale of this entity.

20 Notes to the statement of cash flows

	Six- months ended 30 June
	2017 (Unaudited) US$000	2016 (Unaudited) US$000
Reconciliation of gain/(loss) for the period to net cash generated from operating activities
Profit for the period	27,543	37,744
Adjustments to reconcile Group loss to net cash inflows from operating activities
Depreciation	83,721	88,420
Amortisation of intangibles	888	785
Write-off of assets, net	221	498
Impairment of assets	26,281	-
Reversal of impairment of assets	(37,233)	-
Gain on sale of available-for-sale financial assets	-	(38)
Loss/(gain) on sale of property, plant and equipment	78	(33)
(Reversal of)/provision for obsolescence of supplies	289	267
Gain on sale of subsidiary	-	(751)
Finance income	(2,700)	(1,404)
Finance costs	13,288	17,430
Income tax expense	12,329	22,553
Other	(75)	2,063
(Decrease)increase of cash flows from operations due to changes in assets and liabilities
Trade and other receivables	(31,917)	2,587
Income tax receivable	(750)	(754)
Other financial assets and liabilities	1,046	(6,490)
Inventories	13,847	10,845
Trade and other payables	(870)	(18,483)
Provisions	4,167	3,588
Cash generated from operations	110,153	158,827

Profit by operation¹

(Segment report reconciliation) as at 30 June 2017

Company (US$000)	Arcata	Pallancata	San Jose	Inmaculada	Consolidation adjustment and others	Total/HOC
Revenue	40,630	48,896	109,178	141,896	196	340,796
Cost of sales (Pre consolidation)	(40,912)	(28,060)	(87,508)	(103,659)	(1,059)	(261,198)
Consolidation adjustment	74	(297)	-	(836)	1,059	-
Cost of sales (Post consolidation)	(40,838)	(28,357)	(87,508)	(104,495)	-	(261,198)
Production cost excluding depreciation	(30,557)	(18,519)	(60,408)	(47,753)	-	(157,237)
Depreciation in production cost	(9,966)	(5,633)	(21,798)	(46,406)	-	(83,803)
Other items	-	(1,461)	(1,096)	-	-	(2,557)
Change in inventories	(315)	(2,744)	(4,206)	(10,336)	-	(17,601)
Gross profit	(282)	20,836	21,670	38,237	(863)	79,598
Administrative expenses	-	-	-	-	(26,004)	(26,004)
Exploration expenses	-	-	-	-	(7,122)	(7,122)
Selling expenses	(850)	(507)	(3,315)	(522)	-	(5,194)
Other income/expenses	-	-	-	-	(1,002)	(1,002)
Operating profit before impairment	(1,132)	20,329	18,355	37,715	(34,991)	40,276
Impairment of assets	-	-	-	-	10,731	10,731
Finance income	-	-	-	-	2,700	2,700
Finance costs	-	-	-	-	(13,288)	(13,288)
FX loss	-	-	-	-	(547)	(547)
Profit/(loss) from continuing operations before income tax	(1,132)	20,329	18,355	37,715	(35,395)	39,872
Income tax	-	-	-	-	(12,329)	(12,329)
Profit/(loss) for the year from continuing operations	(1,132)	20,329	18,355	37,715	(47,724)	27,543

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 POST

Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

BY TELEPHONE

If calling from the UK: 0371 664 0300 (Calls charged at the standard geographic rate and will vary by provider. Lines are open 8.30am-5.30pm Mon to Fri).

If calling from overseas: +44 371 664 0300 (Calls charged at the applicable international rate).

Currency option and dividend mandate

Shareholders wishing to receive their dividend in US dollars should contact the Company's registrars to request a currency election form. This form should be completed and returned to the registrars by 5 September 2017 in respect of the 2017 interim dividend.

The Company's registrars can also arrange for the dividend to be paid directly into a shareholder's UK bank account. To take advantage of this facility in respect of the 2017 interim dividend, a dividend mandate form, also available from the Company's registrars, should be completed and returned to the registrars by 5 September 2017. This arrangement is only available in respect of dividends paid in UK pounds sterling. Shareholders who have already completed one or both of these forms need take no further action.

Financial Calendar

Dividend dates	2017
Ex-dividend date	31 August
Record date	1 September
Deadline for return of currency election forms	5 September
Payment date	21 September

17 Cavendish Square

London

W1G 0PH

Registered in England and Wales with Company Number 5777693

¹Revenue presented in the financial statements is disclosed as net revenue and is calculated as gross revenue less commercial discounts plus services revenue

²Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs, foreign exchange loss/(gain) and income tax plus depreciation, and exploration expenses other than personnel and other exploration related fixed expenses and other non-cash (income)/expenses

³On a pre-exceptional basis

⁴Includes gross debt repayments of $25.0 million offset by $6.5 million of refinanced short-term borrowings

⁵All-in sustaining cost per (AISC) silver equivalent ounce: Calculated before exceptional items and includes cost of sales less depreciation and change in inventories, administrative expenses, brownfield exploration, operating capex and royalties divided by silver equivalent ounces produced using a gold/silver ratio of 74:1

⁶All equivalent figures assume the average gold/silver ratio of 74:1

⁷Includes revenue from services

⁸Reconciliation of gross revenue by mine to Group net revenue

⁹Unit cost per tonne is calculated by dividing mine and treatment production costs (excluding depreciation) by extracted and treated tonnage respectively

¹⁰Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales

¹¹Includes commercial discounts (from the sales of concentrate) and commercial discounts from the sale of dore

¹²Royalties arising from revised royalty tax schemes introduced in 2011 and included in income tax line

¹³Adjusted 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

¹⁴Includes pre-shipment loans and short term interest payables

¹⁵Includes 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 company news service from the London Stock Exchange

END

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