Interim Results
_____________________________________________________________________________________
14 August 2019
Interim Results for the six months ended 30 June 2019
Financial highlights
§ Revenue of $354.5 million (H1 2018: $372.3 million)[1]
§ Adjusted EBITDA of $153.7 million (H1 2018: $161.9 million)[2]
§ Pre-exceptional profit before income tax of $41.5 million (H1 2018: $54.9 million)
§ Post-exceptional profit before income tax of $29.5 million (H1 2018: $38.6 million)
§ Adjusted basic earnings per share of $0.04 (H1 2018: $0.05)[3]
§ Cash and cash equivalent balance of $95.4 million as at 30 June 2019 (31 December 2018: $79.7 million)
§ Gross debt of $157.8 million as at 30 June 2019 (31 December 2018: $157.1 million)
§ Net debt of $62.4 million as at 30 June 2019 (31 December 2018: $77.4 million)
§ Interim dividend of 2.0 cents per share totalling $10.2 million (H1 2018: 1.965 cents per share totalling $10.0 million)
H1 2019 operational delivery
§ All-in sustaining costs (AISC) from operations of $921 per gold equivalent ounce (H1 2018: $909 per ounce) or $11.4 per silver equivalent ounce (H1 2018: $11.2 per ounce)[4]
§ 2nd highest half-year of attributable production in Hochschild's history: 245,325 gold equivalent ounces or 19.9 million silver equivalent ounces (H1 2018: 256,939 gold equivalent ounces or 20.8 million silver equivalent ounces)
§ Record production of 135,033 gold equivalent ounces at Inmaculada (H1 2018: 134,789 ounces)
Exploration highlights
§ Several new veins discovered to the west of Angela at Inmaculada
§ Infill drilling ongoing at Inmaculada - Millet grade already increasing
§ Drilling started at Palca zone
§ New programmes scheduled for H2 at Cochaloma, Pablo Sur and Corina
H2 2019 outlook[5]
§ On track to deliver overall 2019 production target of 457,000 gold equivalent ounces (37.0 million silver equivalent ounces)
§ 2019 all-in sustaining costs on track to meet $960-$1,000 per gold equivalent ounce guidance ($11.8-12.3 per silver equivalent ounce)
|
$000 unless stated |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Attributable silver production (koz) |
8,687 |
9,674 |
(10) |
|
Attributable gold production (koz) |
138 |
138 |
- |
|
Revenue |
354,450 |
372,328 |
(5) |
|
Adjusted EBITDA |
153,734 |
161,906 |
(5) |
|
Profit from continuing operations (pre-exceptional) |
25,085 |
22,242 |
13 |
|
Profit from continuing operations (post-exceptional) |
16,661 |
10,718 |
55 |
|
Basic earnings per share (pre-exceptional) $ |
0.04 |
0.05 |
(20) |
|
Basic earnings per share (post-exceptional) $ |
0.03 |
0.03 |
- |
IGNACIO BUSTAMANTE, CHIEF EXECUTIVE OFFICER SAID:
"Hochschild has delivered another strong first half operational performance with the second highest level of production in our history and solid cost control leaving us firmly on track to meet our 2019 goals. In parallel, we are in the middle of another busy period of brownfield exploration with new veins discovered at Inmaculada and the first campaign at the Palca zone already underway whilst further programmes are due in the second half at all our operations as well as in new areas such as Corina, Cochaloma and Pablo Sur. Healthy cashflow generation has continued to strengthen our balance sheet and we are therefore in a good position to execute our brownfield and greenfield strategy in addition to assessing acquisitions and investing in our innovation programme.
Safety
I am delighted to report that our Safety Culture Transformation Plan which was launched in 2017 is continuing to deliver positive results. This wide-ranging programme, which encompasses frequent training sessions at all levels and enhancements to our risk management systems, has undoubtedly contributed to the longest continuous period in our corporate history in which there have been zero lost time accidents - over 120 days. This is reflected in our safety frequency index for the first half of 0.51 (H1 2018: 2.1) which is the lowest of any six-month period since 2007. We will continue to implement decisively the Transformation Plan to underline our commitment to safety first.
Operations
Hochschild's output in the first half of 2019 was 245,325 gold equivalent ounces (19.9 million silver equivalent ounces) almost matching our record in H1 2018 (256,939 gold equivalent ounces) and this was achieved despite the absence of the Arcata mine which was placed on temporary care and maintenance in February 2019. This result was mainly due to consistent performance from all our mines and leaves us in a strong position to meet our full-year target of 457,000 gold equivalent ounces or 37.0 million silver equivalent ounces. Inmaculada delivered a record half-year production of 135,033 gold equivalent ounces (H1 2018: 134,789 ounces) driven by better than expected grades and also boosted by inventory in process at the beginning of the year leaving the mine well ahead of the run rate to meet its forecasted 241,000 gold equivalent ounces. All-in sustaining costs at $726 per gold equivalent ounce were lower than guidance reflecting the good operational performance of the mine. However, with ore grades normalising in the second half, we reiterate our full year cost guidance of $790-$830 per gold equivalent ounce.
At Pallancata, we have now shifted production over to the much wider Pablo vein and consequently output improved by almost 16% versus H1 2018 to 4.9 million silver equivalent ounces (H1 2018: 4.2 million ounces) with the mine's all-in sustaining cost at a competitive $12.3 per silver equivalent ounce (H1 2018: $11.7 per ounce). In Argentina, better than expected grades led to the reliable San Jose operation increasing production by 5% in the first half to 7.1 million silver equivalent ounces (H1 2018: 6.8 million ounces) with costs in line with expectations at $14.4 per silver equivalent ounce (H1 2018: $14.0 per ounce).
Exploration
The 2019 brownfield programme is underway and includes drilling in and around the Angela vein at Inmaculada with current results identifying new structures to the west which we expect to yield substantial additional resources. Furthermore, we are confident that infill drilling being carried out at the new veins discovered in 2018 will improve grade consistency. We have also begun a surface drill programme to the north-west of Inmaculada at the Palca zone, with early results demonstrating mineralisation and a significant number of further targets to be drilled in the second half. During this period, we can also look forward to campaigns at Cochaloma to the south-west, at Pablo Sur close to where we are currently mining and at the promising Corina zone to the north of the Selene plant, where we have already begun a 3,500 metre drilling programme. Finally, at San Jose we have carried out further exploration of the polymetallic Aguas Vivas deposit in the north-west and will focus in the second half on structures to the south of the San Jose mine and magnetometry work on the area near to Newmont Goldcorp's Cerro Negro deposit.
Financial results
Total Group production was moderately lower versus H1 2018 and with a 7% fall in the average silver price achieved only partially offset by a 2% rise in the gold price achieved, revenue reduced slightly to $354.5 million (H1 2018: $372.3 million). All-in sustaining costs were lower than expected at $11.4 per silver equivalent ounce (H1 2018: $11.2 per ounce) but the budgeted rise in exploration expenses and also in selling expenses (resulting from the reintroduction of export taxes in Argentina in Q3 2018) has led to Adjusted EBITDA of $153.7 million (H1 2018: $161.9 million). These increases in expenses were not fully offset by falling interest costs and a reduced tax charge and therefore pre-exceptional earnings per share were moderately lower at $0.04 (H1 2018: $0.05). Post-exceptional earnings per share was held steady at $0.03 (H1 2018: $0.03) mainly due to the payment of the premium of $11.4 million to redeem the senior notes in H1 2018 being offset by this year's exceptional costs of $11.9 million associated with the temporary closure of the Arcata mine in February 2019.
Financial position
Our balance sheet remains in a strong position with cash and cash equivalents of approximately $95.4 million at the end of June (31 December 2018: $79.7 million) and gross debt of $157.8 million (31 December 2018: $157.1 million). In July 2019, we were able to refinance $150.0 million of short term debt with local Peruvian banks resulting in a significant reduction in the average borrowing rate from 3.1% to 2%.
Outlook
In mid-June, the gold price started to rise significantly on the back of global uncertainty and a fall in the US dollar and reached levels not seen in six years. Silver also rose in July and therefore we expect the Company's second half cashflow generation to be healthy provided the price strength is maintained. However, we are also confident that Hochschild's ongoing solid operational performance, disciplined cost control and a strong balance sheet leave us in an advantageous position to execute a busy second half of brownfield and greenfield activity and continue to assess value accretive acquisitions. The Board is pleased to declare an interim dividend of 2.0 cents per share ($10.2 million) which reflects the ongoing successful strategic and operational performance."
_______________________________________________________________________________________
A live conference call & audio webcast will be held at 2.30pm (London time) on Wednesday 14 August 2019 for analysts and investors.
For a live webcast of the presentation please click on the link below:
https://webcasting.brrmedia.co.uk/broadcast/5cb0a5b9eb566331974d6a39
Conference call dial in details:
UK: +44 (0)330 336 9125 (Please use the following confirmation code: 6706139).
_______________________________________________________________________________________
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) 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 has numerous long-term projects throughout the Americas.
OPERATING REVIEW
OPERATIONS
Note: silver/gold equivalent production figures assume a gold/silver ratio of 81:1.
Production
In H1 2019, Hochschild produced 245,325 gold equivalent ounces or 19.9 million silver equivalent ounces, the second highest in the Company's history. This was mainly due to solid performances from all the Company's mines especially at Inmaculada, where better than expected grades helped to deliver a record half-year of production.
Total group production
|
|
Six months to 30 June 2019 |
Six months to 30 June 2018 |
|
Silver production (koz) |
10,237 |
11,135 |
|
Gold production (koz) |
162.16 |
160.47 |
|
Total silver equivalent (koz) |
23,371 |
24,133 |
|
Total gold equivalent (koz) |
288.53 |
297.94 |
|
Silver sold (koz) |
10,221 |
11,067 |
|
Gold sold (koz) |
160.25 |
158.01 |
Total production includes 100% of all production, including production attributable to Hochschild's minority shareholder at San Jose.
Attributable group production
|
|
Six months to 30 June 2019 |
Six months to 30 June 2018 |
|
Silver production (koz) |
8,687 |
9,674 |
|
Gold production (koz) |
138.08 |
137.51 |
|
Silver equivalent (koz) |
19,871 |
20,812 |
|
Gold equivalent (koz) |
245.33 |
256.94 |
Attributable production includes 100% of all production from Arcata, Inmaculada, Pallancata and 51% from San Jose.
Costs
All-in sustaining cost from operations in H1 2019 was $921 per gold equivalent ounce or $11.4 per silver equivalent ounce (H1 2018: $909 per gold equivalent ounce or $11.2 per silver equivalent ounce). The Company is maintaining its guidance of all-in sustaining cost from operations in 2019 at between $960 and $1,000 per gold equivalent ounce (or $11.8 and $12.3 per silver equivalent ounce). Inmaculada's costs are expected to rise in the second half due to timing in the execution of sustaining and development capital expenditure and lower production.
Inmaculada
The 100% owned Inmaculada gold/silver underground operation is located in the Department of Ayacucho in southern Peru. It commenced operations in June 2015.
|
Inmaculada summary |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Ore production (tonnes) |
670,487 |
670,713 |
- |
|
Average silver grade (g/t) |
157 |
153 |
3 |
|
Average gold grade (g/t) |
4.62 |
4.58 |
1 |
|
Silver produced (koz) |
2,950 |
3,115 |
(5) |
|
Gold produced (koz) |
98.61 |
96.33 |
2 |
|
Silver equivalent produced (koz) |
10,938 |
10,918 |
- |
|
Gold equivalent produced (koz) |
135.03 |
134.79 |
- |
|
Silver sold (koz) |
2,942 |
3,108 |
(5) |
|
Gold sold (koz) |
97.48 |
95.35 |
2 |
|
Unit cost ($/t) |
90.8 |
83.5 |
9 |
|
Total cash cost ($/oz Au co-product) |
480 |
466 |
3 |
|
All-in sustaining cost ($/oz Au Eq) |
726 |
631 |
15 |
Production
In the first half of 2019, Inmaculada produced 135,033 gold equivalent ounces, in line with the same period of 2018 (134,789 gold equivalent ounces), with the solid result reflecting steady tonnage, strong grades and a contribution from products in process from Q4 2018.
Costs
All-in sustaining costs were lower than expectations at $726 per gold equivalent ounce (H1 2018: $631 per ounce). This was mostly due to the impact of higher than expected grades as well as the effect of the inventory in process (mentioned above). However, in the second half, costs are expected to normalise with sustaining and development capital expenditure scheduled to increase. Costs rose versus H1 2018 due to increased mine development costs to access the new vein discoveries and reduced low cost mineral from mine developments.
Pallancata
The 100% owned Pallancata silver/gold property is located in the Department of Ayacucho in southern Peru. Pallancata commenced production in 2007. Ore from Pallancata is transported 22km to the Selene plant for processing.
|
Pallancata summary |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Ore production (tonnes) |
472,294 |
285,568 |
65 |
|
Average silver grade (g/t) |
284 |
399 |
(29) |
|
Average gold grade (g/t) |
1.01 |
1.47 |
(31) |
|
Silver produced (koz) |
3,812 |
3,278 |
16 |
|
Gold produced (koz) |
13.44 |
11.86 |
13 |
|
Silver equivalent produced (koz) |
4,901 |
4,238 |
16 |
|
Gold equivalent produced (koz) |
60.51 |
52.33 |
16 |
|
Silver sold (koz) |
3,768 |
3,256 |
16 |
|
Gold sold (koz) |
13.20 |
11.58 |
14 |
|
Unit cost ($/t) |
80.9 |
101.9 |
(21) |
|
Total cash cost ($/oz Ag co-product) |
8.6 |
8.0 |
8 |
|
All-in sustaining cost ($/oz Ag Eq) |
12.3 |
11.7 |
5 |
Production
Pallancata's output in H1 2019 was 4.9 million silver equivalent ounces, a 16% improvement on the corresponding period of 2018 (H1 2018: 4.2 million ounces), reflecting full production from the wider but lower grade Pablo vein.
Costs
All-in sustaining costs were better than guidance at $12.3 per silver equivalent ounce (H1 2018: $11.7 per ounce), mainly due to capital expenditure being second half weighted in 2019. The AISC figure increased versus H1 2018, as expected, in line with the full production from the wider, but lower-grade Pablo vein.
San Jose
The San Jose silver/gold mine is located in Argentina, in the province of Santa Cruz, 1,750km south west of Buenos Aires. San Jose commenced production in 2007. Hochschild holds a controlling interest of 51% in the mine and is the mine operator. The remaining 49% is owned by the minority interest, McEwen Mining Inc.
|
San Jose summary |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Ore production (tonnes) |
251,753 |
264,341 |
(5) |
|
Average silver grade (g/t) |
446 |
407 |
10 |
|
Average gold grade (g/t) |
6.89 |
6.34 |
9 |
|
Silver produced (koz) |
3,162 |
2,982 |
6 |
|
Gold produced (koz) |
49.14 |
46.86 |
5 |
|
Silver equivalent produced (koz) |
7,143 |
6,778 |
5 |
|
Gold equivalent produced (koz) |
88.18 |
83.68 |
5 |
|
Silver sold (koz) |
3,189 |
2,955 |
8 |
|
Gold sold (koz) |
48.89 |
46.00 |
6 |
|
Unit cost ($/t) |
229.2 |
241.6 |
(5) |
|
Total cash cost ($/oz Ag co-product) |
9.3 |
10.6 |
(12) |
|
All-in sustaining cost ($/oz Ag Eq) |
14.4 |
14.0 |
3 |
Production
First half total production at San Jose was 7.1 million silver equivalent ounces, ahead of the same period of 2018 (H1 2018: 6.8 million ounces) due to better than expected grades.
Costs
All-in sustaining costs were $14.4 per silver equivalent ounce (H1 2018: $14.0 per ounce) with the increase versus the same period of last year due to the reintroduction of export taxes, local inflation and slightly reduced treated tonnage partially offset by the devaluation of the Argentinian peso and higher gold and silver grades.
Arcata
The 100% owned Arcata underground operation is located in the Department of Arequipa in southern Peru. It commenced production in 1964. In February 2019, Hochschild suspended operations at Arcata and placed it on temporary care and maintenance.
|
Arcata summary |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Ore production (tonnes) |
37,049 |
188,522 |
(80) |
|
Average silver grade (g/t) |
298 |
326 |
9 |
|
Average gold grade (g/t) |
0.94 |
1.01 |
(7) |
|
Silver produced (koz) |
311 |
1,760 |
(82) |
|
Gold produced (koz) |
0.97 |
5.42 |
(82) |
|
Silver equivalent produced (koz) |
390 |
2,199 |
(82) |
|
Gold equivalent produced (koz) |
4.81 |
27.15 |
(82) |
|
Silver sold (koz) |
322 |
1,748 |
(82) |
|
Gold sold (koz) |
0.67 |
5.08 |
(87) |
|
Unit cost ($/t) |
184.5 |
146.1 |
26 |
|
Total cash cost ($/oz Ag co-product) |
20.5 |
14.7 |
39 |
|
All-in sustaining cost ($/oz Ag Eq) |
22.4 |
18.8 |
19 |
Production
Production at Arcata in the first half was 0.4 million silver equivalent ounces (H1 2018: 2.2 million ounces).
EXPLORATION
Inmaculada
In the first half of 2019, almost 8,500m of potential resource drilling was carried out at the newly-discovered Susana Beatriz, Facundo and Salvador structures to the west of the Angela vein. Also, 9,172m of resource drilling was executed at the Angela and the newly discovered PIlar vein.
|
Vein |
Results (potential resource drilling) |
|
Salvador |
ANG-19-012: 2.1m @ 41.0g/t Au & 480g/t Ag |
|
Susana Beatriz |
ANE-19-010: 4.2m @ 2.9g/t Au & 280g/t Ag IMM-19-001: 1.5m @ 8.1g/t Au & 114g/t Ag IMM-19-002: 2.5m @ 2.5g/t Au & 105g/t Ag |
|
Lady |
IMS-19-003: 1.1m @ 6.3g/t Au & 58g/t Ag |
|
Facundo |
HUA-19-001: 3.1m @ 6.0g/t Au & 136g/t Ag |
|
M.Mamani |
MM-19-001: 1.0m @ 2.2g/t Au & 155g/t Ag |
|
Vein |
Results (resource drilling) |
|
Salvador |
ANE-19-010: 0.8m @ 16.7g/t Au & 349g/t Ag ANE-19-011: 0.8m @ 20.7g/t Au & 667g/t Ag ANE-19-013: 0.8m @ 5.9g/t Au & 399g/t Ag IMM-19-001: 1.1m @ 31.9g/t Au & 5,053g/t Ag IMM-19-007: 0.6m @ 3.6g/t Au & 98g/t Ag |
|
Pilar |
ANG-18-023: 0.5m @ 5.0g/t Au & 236g/t Ag ANG-19-011A: 2.3m @ 7.4g/t Au & 250g/t Ag ANG-19-012: 2.2m @ 41.0g/t Au & 480g/t Ag IMM-19-001: 1.1m @ 31.9g/t Au & 5,053g/t Ag IMM-19-003: 1.9m @ 1.4g/t Au & 110g/t Ag IMM-19-008: 1.5m @ 3.7g/t Au & 203g/t Ag IMM-19-011: 3.1m @ 4.4g/t Au & 192g/t Ag IMM-19-014: 11.0m @ 18.2g/t Au & 773g/t Ag HUA-19-003: 1.4m @ 19.4g/t Au & 438g/t Ag |
Infill drilling commenced in the first half targeting the Millet vein which was discovered in 2018. Results to date have already increased the resource grade by over 20% with results below:
|
Vein |
Results (infill drilling) |
|
Millet |
MIL-19-001: 0.9m @ 1.7g/t Au & 80g/t Ag MIL-19-002: 4.5m @ 2.6g/t Au & 204g/t Ag MIL-19-003: 2.8m @ 3.6g/t Au & 153g/t Ag MIL-19-004: 1.3m @ 0.9g/t Au & 42g/t Ag MIL-19-005: 0.9m @ 3.2g/t Au & 25g/t Ag MIL-19-006: 4.2m @ 0.8g/t Au & 67g/t Ag MIL-19-007: 2.7m @ 7.0g/t Au & 129g/t Ag MIL-19-008: 1.5m @ 2.5g/t Au & 139g/t Ag MIL-19-009: 2.0m @ 4.8g/t Au & 557g/t Ag MIL-19-010: 5.0m @ 3.3g/t Au & 104g/t Ag MIL-19-011: 0.9m @ 2.0g/t Au & 37g/t Ag MIL-19-012: 6.8m @ 2.4g/t Au & 81g/t Ag MIL-19-013: 1.2m @ 1.3g/t Au & 8g/t Ag MIL-19-014: 2.0m @ 3.8g/t Au & 342g/t Ag MIL-19-015: 1.2m @ 0.9g/t Au & 97g/t Ag MIL-19-016: 5.9m @ 1.9g/t Au & 88g/t Ag MIL-19-017: 1.4m @ 2.0g/t Au & 344g/t Ag MIL-19-018: 1.2m @ 1.4g/t Au & 30g/t Ag MIL-19-019: 4.6m @ 1.3g/t Au & 67g/t Ag MIL-19-020: 1.2m @ 0.2g/t Au & 52g/t Ag MIL-19-021: 2.6m @ 9.4g/t Au & 184g/t Ag MIL-19-022: 4.0m @ 1.2g/t Au & 61g/t Ag MIL-19-023: 3.5m @ 3.1g/t Au & 208g/t Ag MIL-19-024: 1.0m @ 2.8g/t Au & 213g/t Ag MIL-19-025: 5.8m @ 2.9g/t Au & 174g/t Ag MIL-19-026: 6.2m @ 2.1g/t Au & 167g/t Ag MIL-19-027: 5.1m @ 2.7g/t Au & 264g/t Ag MIL-19-028: 3.0m @ 2.7g/t Au & 162g/t Ag MIL-19-029: 4.0m @ 2.9g/t Au & 470g/t Ag MIL-19-030: 0.7m @ 1.4g/t Au & 67g/t Ag MIL-19-031: 2.3m @ 1.6g/t Au & 113g/t Ag MIL-19-032: 2.5m @ 1.7g/t Au & 133g/t Ag MIL-19-033: 3.3m @ 3.0g/t Au & 14g/t Ag MIL-19-034: 1.4m @ 0.7g/t Au & 41g/t Ag MIL-19-035: 3.0m @ 2.7g/t Au & 77g/t Ag MIL-19-036: 2.3m @ 2.1g/t Au & 71g/t Ag MIL-19-037: 2.8m @ 4.5g/t Au & 509g/t Ag MIL-19-038: 1.0m @ 1.0g/t Au & 93g/t Ag MIL-19-039: 0.8m @ 0.9g/t Au & 68g/t Ag MIL-19-040: 3.5m @ 3.0g/t Au & 111g/t Ag MIL-19-041: 0.6m @ 0.2g/t Au & 347g/t Ag |
The drilling programme in the second half will focus mainly on 7,000m of resource drilling with the main targets of the Susana Beatriz, Salvador, Facundo, Laidy and Rosy veins. It will also include 1,200m of potential drilling in the Rosy and Lady structures. In addition, infill drilling will continue at the Millet, Divina and other veins discovered in 2018 with completion scheduled for early in the fourth quarter.
Pallancata
At Pallancata, 817m of potential resources were drilled from the Mariel and Pablo veins with results pending from the Mariel target.
|
Vein |
Results (potential resource drilling) |
|
Pablo |
DLEP-A49: 3.4m @ 1.4g/t Au & 553g/t Ag |
Drilling in the Pablo Sur area is scheduled for the second half along with the programme at Cochaloma to the south. Superficial work has also been completed at the Huachuilca target to the north of the Selene plant and drilling is expected for the fourth quarter.
Palca
The Palca drilling programme started late in the half with potential resource drilling in the Roxana, Santa Beatriz and Prometida structures. Early results confirm mineralisation with 200m of depth. The key result was obtained from the Prometida vein.
|
Vein |
Results (potential resource drilling) |
|
Roxana |
PLC-195-001: 1.8m @ 1.0g/t Au & 27g/t Ag PLC-195-004: 0.8m @ 1.0g/t Au & 33g/t Ag |
|
Santa Beatriz |
PLC-195-001: 1.2m @ 0.7g/t Au & 13g/t Ag |
|
Prometida |
PLC-195-006: 2.9m @ 5.0g/t Au & 35g/t Ag |
For the second half, 3,810m of drilling is scheduled for the Blanca, Alejandra, Rafaela, Escondida, Escandalosa and Kimberly targets.
San Jose
At San Jose, potential drilling was executed at the Aguas Vivas system as well as at the Pluma 19 structure, the south-east Kospi projection and East and West Antonella. The intercepted structures at Aguas Vivas correspond to an intermediate sulphidation system with associated grades of zinc and lead.
|
Vein |
Results (potential resource drilling) |
|
Aguas Vivas |
SJD-1627: 3.0m @ 0.1g/t Au, 43/t Ag, 0.2% Cu, 8.2% Pb & 5.5% Zn SJD-1686: 1.1m @ 3.6g/t Au, 85g/t Ag, 0.1% Cu, 19.0% Pb & 10.3% Zn SJD-1703: 1.4m @ 0.2g/t Au, 55g/t Ag, 0.6% Pb & 1.9% Zn SJD-1720: 0.8m @ 2.4g/t Au, 9g/t Ag SJD-1851: 3.4m @ 0.3g/t Au, 44g/t Ag, 1.2% Cu, 4.6% Pb & 6.4% Zn SJD-1853: 1.1m @ 0.4g/t Au, 98g/t Ag, 1.6% Cu, 5.3% Pb & 4.2% Zn SJD-1855: 2.8m @ 0.9g/t Au, 9g/t Ag, 0.2% Cu, 0.7% Pb & 1.4% Zn SJD-1857: 0.9m @ 1.6g/t Au, 18g/t Ag, 0.1% Cu, 2.7% Pb & 2.2% Zn SJD-1865: 1.3m @ 0.4g/t Au, 12g/t Ag, 0.2% Cu, 2.1% Pb & 3.9% Zn SJD-1870: 1.1m @ 5.0g/t Au, 64g/t Ag, 0.4% Cu, 2.3% Pb & 3.9% Zn |
|
Antonella |
SJM-429: 3.9m @ 8.1g/t Au & 239/t Ag |
During the second half, the programme will focus on the Antonella structure and on the south-east Kospi projection. Also, a magnetometry study will be performed on the extension of Cerro Negro structures covering a total area of 14.3km2.
Arcata
At Arcata, a Titan geophysical programme and geological mapping for new targets has concluded and a drilling plan is scheduled for the third quarter of 2019.
Corina
During the half, final permits were obtained for the drilling programme planned for the Corina zone, approximately 15km to the north-east of the Selene plant. A 2,700m drilling campaign has recently commenced with results expected later in the year.
GREENFIELD AND BUSINESS DEVELOPMENT
Hochschild's strategy with regards to its greenfield exploration programme is to maintain and drill a balanced portfolio of early-stage to advanced opportunities using a combination of earn-in joint ventures, private placements with junior exploration companies and the staking of properties. To date, options have been secured on properties across the Americas including: the Snip mine in Canada owned by Skeena Resources; the Agni and Indra projects in Chile owned by Mirasol Resources; the Ferguson Mountain and Mars projects in Nevada owned by Renaissance Gold; the BP, Bellview and Horsethief projects in Nevada owned by Alianza Gold and the Stateline vein district in Nevada optioned from KA Gold.
A 2,000m Reverse Circulation (RC) drilling programme has already started at Ferguson Mountain whilst at the nearby Mars project, a 2,500m RC campaign is due for later in August as is a similar programme at the Agni-Indra projects. At Snip, the aim is to drill a further 9,000m by the year end.
Finally, the Company has also secured an option on the Condor project located in Arequipa (Peru) close to the Arcata operation with permitting and access rights currently being progressed.
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[6]
Gross revenue from continuing operations decreased by 5% to $366.5 million in H1 2019 (H1 2018: $386.4 million) due to a fall in the average realised silver price and in ounces sold of silver in line with reduced production. These effects were marginally offset by an increase in the realised gold price.
Gold
Gross revenue from gold in H1 2019 increased slightly to $213.0 million (H1 2018: $206.9 million) due to a small increase in the average realised gold price.
Silver
Gross revenue fell in H1 2019 to $153.5 million (H1 2018: $179.5 million) due to a 7% decline in the average silver price received as well as a reduction in the amount of silver ounces sold. This was mostly as a result of the absence of material production from the predominantly silver-producing Arcata mine, which was placed on care and maintenance in February 2019.
Gross average realised sales prices
The following table provides figures for average realised prices (before the deduction of commercial discounts) and ounces sold for H1 2019 and H1 2018:
|
Average realised prices |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
|
|
Silver ounces sold (koz) |
10,221 |
11,067 |
|
|
Avg. realised silver price ($/oz) |
15.0 |
16.2 |
|
|
Gold ounces sold (koz) |
160.25 |
158.01 |
|
|
Avg. realised gold price ($/oz) |
1,329 |
1,309 |
|
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 2019, the Group recorded commercial discounts of $12.1 million (H1 2018: $14.2 million) with the decrease explained by the significant reduction in production from the concentrate-only Arcata mine. The ratio of commercial discounts to gross revenue in H1 2019 was 3% (H1 2018: 4%).
Net revenue[7]
Net revenue was $354.5 million (H1 2018: $372.3 million), comprising net gold revenue of $209.4 million (H1 2018: $203.4 million) and net silver revenue of $144.9 million (H1 2018: $168.8 million). In H1 2019, gold accounted for 59% and silver for 41% of the Company's consolidated net revenue (H1 2018: gold 55% and silver 45%).
Revenue by mine[8]
|
$000 |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Silver revenue |
|
|
|
|
Arcata |
4,970 |
28,550 |
(83) |
|
Inmaculada |
43,359 |
50,242 |
(14) |
|
Pallancata |
57,114 |
52,537 |
9 |
|
San Jose |
48,087 |
48,186 |
- |
|
Commercial discounts |
(8,618) |
(10,746) |
(20) |
|
Net silver revenue |
144,912 |
168,769 |
(14) |
|
Gold revenue |
|
|
|
|
Arcata |
889 |
6,668 |
(87) |
|
Inmaculada |
127,315 |
125,432 |
2 |
|
Pallancata |
18,275 |
14,962 |
22 |
|
San Jose |
66,483 |
59,792 |
11 |
|
Commercial discounts |
(3,524) |
(3,499) |
1 |
|
Net gold revenue |
209,438 |
203,355 |
3 |
|
Other revenue |
100 |
204 |
(51) |
|
Net revenue[9] |
354,450 |
372,328 |
(5) |
Costs
Total cost of sales was $252.8 million in H1 2019 (H1 2018: $267.3 million). The direct production cost excluding depreciation was lower at $158.4 million (H1 2018: $174.0 million) mainly due to the reduced production costs from Arcata which was placed on care and maintenance in early 2019 as well as costs savings at San Jose due to the ongoing devaluation of the Argentinian peso. This was partially offset by higher costs due to increased production volumes at Pallancata (ramp-up of the Pablo vein). Depreciation in production cost increased to $90.4 million (H1 2018: $82.9 million) due to higher extracted volumes at Pallancata partially offset by the increased life-of-mine at Inmaculada. Other items, which principally includes personnel-related provisions and stoppage costs (at San Jose) was relatively flat at $1.1 million in H1 2019 (H1 2018: $0.9 million). Change in inventories was $2.9 million in H1 2019 (H1 2018: $9.4 million) due to a reduction in products in process and finished goods.
|
$000 |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Direct production cost excluding depreciation |
158,444 |
173,967 |
(9) |
|
Depreciation in production cost |
90,371 |
82,949 |
9 |
|
Other items |
1,135 |
939 |
21 |
|
Change in inventories |
2,881 |
9,404 |
(69) |
|
Cost of sales |
252,831 |
267,259 |
(5) |
Unit cost per tonne
The Company reported unit cost per tonne at its operations of $114.7 per tonne in H1 2019, a 8% decrease versus H1 2018 ($124.5 per tonne) due to good cost control, increased mined tonnage at Pallancata and the depreciation of the Argentine peso more than offsetting inflation in Argentina.
Unit cost per tonne by operation (including royalties)[10]:
|
Operating unit ($/tonne) |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Peru[11] |
86.6 |
98.7 |
(12) |
|
Inmaculada |
90.8 |
83.5 |
9 |
|
Pallancata |
80.9 |
101.9 |
(21) |
|
Arcata |
184.5 |
146.1 |
26 |
|
Argentina |
|
|
|
|
San Jose |
229.2 |
241.6 |
(5) |
|
Total |
114.7 |
124.5 |
(8) |
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[12]:
|
$000 unless otherwise indicated |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
% change |
|
Group cash cost |
185,735 |
199,140 |
(7) |
|
(+) Cost of sales |
252,831 |
267,259 |
(5) |
|
(-) Depreciation and amortisation in cost of sales |
(91,322) |
(86,579) |
5 |
|
(+) Selling expenses |
10,480 |
2,504 |
319 |
|
(+) Commercial deductions[13] |
13,746 |
15,956 |
(14) |
|
Gold |
3,636 |
3,595 |
1 |
|
Silver |
10,110 |
12,361 |
(18) |
|
Revenue |
354,450 |
372,328 |
(5) |
|
Gold |
209,438 |
203,355 |
3 |
|
Silver |
144,912 |
168,769 |
(14) |
|
Others |
100 |
204 |
(51) |
|
Ounces sold |
|
|
|
|
Gold |
160.2 |
158.0 |
1 |
|
Silver |
10,221 |
11,067 |
(8) |
|
Group cash cost ($/oz) |
|
|
|
|
Co product Au |
685 |
689 |
(1) |
|
Co product Ag |
7.4 |
8.2 |
(10) |
|
By product Au |
192 |
114 |
68 |
|
By product Ag |
(2.7) |
(0.7) |
286 |
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 2019
|
$000 unless otherwise indicated |
Inmaculada |
Pallancata |
San José |
Main operations |
Arcata |
Corporate & others |
Total |
|
(+) Production cost excluding depreciation |
58,598 |
36,603 |
56,430 |
151,631 |
6,813 |
- |
158,444 |
|
(+) Other items in cost of sales |
278 |
290 |
567 |
1,135 |
- |
- |
1,135 |
|
(+) Operating and exploration capex for units |
31,025 |
14,456 |
21,527 |
67,008 |
48 |
1,258 |
68,314 |
|
(+) Brownfield exploration expenses |
3,110 |
1,483 |
5,404 |
9,997 |
795 |
2,180 |
12,972 |
|
(+) Administrative expenses (excl depreciation) |
1,651 |
675 |
3,247 |
5,573 |
49 |
16,353 |
21,975 |
|
(+) Royalties and special mining tax[14] |
1,714 |
701 |
- |
2,414 |
51 |
1,132 |
3,597 |
|
Sub-total |
96,376 |
54,208 |
87,175 |
237,758 |
7,756 |
20,923 |
266,437 |
|
Au ounces produced |
98,608 |
13,444 |
49,137 |
161,188 |
966 |
- |
162,155 |
|
Ag ounces produced (000s) |
2,950 |
3,812 |
3,162 |
9,925 |
311 |
- |
10,237 |
|
Ounces produced (Ag Eq 000s oz) |
10,938 |
4,901 |
7,143 |
22,982 |
390 |
- |
23,371 |
|
Sub-total ($/oz Ag Eq) |
8.8 |
11.1 |
12.2 |
10.3 |
19.9 |
- |
11.4 |
|
(+) Commercial deductions |
1,358 |
5,596 |
6,016 |
12,970 |
776 |
- |
13,746 |
|
(+) Selling expenses |
315 |
474 |
9,545 |
10,334 |
146 |
- |
10,480 |
|
Sub-total |
1,673 |
6,070 |
15,561 |
22,304 |
922 |
- |
24,226 |
|
Au ounces sold |
97,484 |
13,200 |
48,891 |
159,575 |
674 |
- |
160,248 |
|
Ag ounces sold (000s) |
2,942 |
3,768 |
3,189 |
9,899 |
322 |
- |
10,221 |
|
Ounces sold (Ag Eq 000s oz) |
10,838 |
4,837 |
7,150 |
22,824 |
377 |
- |
23,201 |
|
Sub-total ($/oz Ag Eq) |
0.2 |
1.3 |
2.2 |
1.0 |
2.4 |
- |
1.0 |
|
All-in sustaining costs ($/oz Ag Eq) |
9.0 |
12.3 |
14.4 |
11.4 |
22.4 |
- |
12.4 |
|
All-in sustaining costs ($/oz Au Eq)[15] |
726 |
997 |
1,165 |
921 |
1,811 |
- |
1,008 |
Six months to 30 June 2018
|
$000 unless otherwise indicated |
Arcata |
Inmaculada |
Pallancata |
San José |
Main operations |
Corporate & others |
Total |
|
(+) Production cost excluding depreciation |
27,610 |
54,939 |
30,087 |
61,331 |
173,967 |
- |
173,967 |
|
(+) Other items in cost of sales |
- |
- |
- |
939 |
939 |
- |
939 |
|
(+) Operating and exploration capex for units |
7,328 |
24,551 |
12,453 |
20,414 |
64,746 |
30 |
64,776 |
|
(+) Brownfield exploration expenses |
1,126 |
314 |
645 |
1,962 |
4,047 |
1,340 |
5,387 |
|
(+) Administrative expenses (excl depreciation) |
302 |
1,726 |
617 |
3,540 |
6,184 |
14,764 |
20,948 |
|
(+) Royalties and special mining tax |
- |
1,755 |
627 |
- |
2,383 |
1,771 |
4,154 |
|
Sub-total |
36,366 |
83,285 |
44,429 |
88,186 |
252,266 |
17,905 |
270,171 |
|
Au ounces produced |
5,418 |
96,329 |
11,862 |
46,859 |
160,468 |
- |
160,468 |
|
Ag ounces produced (000s) |
1,760 |
3,115 |
3,728 |
2,982 |
11,135 |
- |
11,135 |
|
Ounces produced (Ag Eq 000s oz) |
2,199 |
10,918 |
4,238 |
6,778 |
24,133 |
- |
24,133 |
|
Sub-total ($/oz Ag Eq) |
16.5 |
7.6 |
10.5 |
13.0 |
10.5 |
- |
11.2 |
|
(+) Commercial deductions |
4,493 |
1,442 |
4,709 |
5,312 |
15,956 |
- |
15,956 |
|
(+) Selling expenses |
465 |
252 |
376 |
1,411 |
2,504 |
- |
2,504 |
|
Sub-total |
4,958 |
1,694 |
5,085 |
6,723 |
18,460 |
- |
18,460 |
|
Au ounces sold |
5,080 |
95,354 |
11,582 |
45,997 |
158,013 |
- |
158,013 |
|
Ag ounces sold (000s) |
1,748 |
3,108 |
3,256 |
2,955 |
11,067 |
- |
11,067 |
|
Ounces sold (Ag Eq 000s oz) |
2,160 |
10,832 |
4,194 |
6,680 |
23,866 |
- |
23,866 |
|
Sub-total ($/oz Ag Eq) |
2.3 |
0.2 |
1.2 |
1.0 |
0.8 |
- |
0.8 |
|
All-in sustaining costs ($/oz Ag Eq) |
18.8 |
7.8 |
11.7 |
14.0 |
11.2 |
|
12.0 |
|
All-in sustaining costs ($/oz Au Eq) |
1,525 |
631 |
947 |
1,135 |
909 |
- |
969 |
Administrative expenses
Administrative expenses increased by 6% to $23.0 million (H1 2018: $21.7 million) primarily due to higher personnel costs and the increase in innovation-related expenses.
Exploration expenses
In H1 2019, exploration expenses increased to $18.6 million (H1 2018: $13.0 million) in line with the overall rise in the Company's investment in brownfield and greenfield exploration. 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 2019, the Company capitalised $2.4 million relating to brownfield exploration compared to $4.9 million in H1 2018, bringing the total investment in exploration for H1 2019 to $20.9 million (H1 2018: $18.0 million).
Selling expenses
Selling expenses increased to $10.5 million (H1 2018: $2.5 million) principally due to the reintroduction of export taxes in Argentina from September 2018 ($8.1 million).
Other income/expenses
Other income was lower at $4.5 million (H1 2018: $4.9 million) mainly due to a reduction in export credits in Argentina partially offset by higher income from logistics services.
Other expenses before exceptional items were slightly higher at $8.8 million (H1 2018: $7.9 million) mainly due to an increase in mine closure provisions.
Adjusted EBITDA
Adjusted EBITDA decreased by 5% to $153.7 million (H1 2018: $161.9 million) primarily due to the 7% fall in the average silver price and the reintroduction of export taxes in Argentina in September 2018.
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 2019 |
Six months to 30 June 2018 |
% change |
|
Profit from continuing operations before exceptional items, net finance cost, foreign exchange (loss)/gain and income tax |
44,693 |
64,628 |
(31) |
|
Depreciation and amortisation in cost of sales |
91,322 |
86,579 |
5 |
|
Depreciation and amortisation in administrative expenses |
1,167 |
743 |
57 |
|
Exploration expenses |
18,552 |
13,048 |
42 |
|
Personnel and other exploration related fixed expenses |
(3,087) |
(2,786) |
11 |
|
Other non-cash income, net [16] |
1,087 |
(306) |
(455) |
|
Adjusted EBITDA |
153,734 |
161,906 |
(5) |
|
Adjusted EBITDA margin |
43% |
43% |
|
Finance income
Finance income before exceptional items was $1.4 million (H1 2018: $1.1 million) with the main reason for the small increase in H1 2019 being the lower gain on discount of tax credits in Argentina ($0.5 million).
Finance costs
Finance costs before exceptional items decreased from $6.5 million in H1 2018 to $3.5 million in H1 2019, principally due to the reduction in the interest payments resulting from the repayment of the Company's Senior Notes in H1 2018.
Foreign exchange losses
The Group recognised a foreign exchange loss of $1.1 million (H1 2018: $4.3 million loss) as a result of exposures in currencies other than the functional currency - the Argentinean peso which again significantly depreciated in H1 2019 and the Peruvian sol which appreciated during the period.
Income tax
The Company's pre-exceptional income tax charge was $16.4 million (H1 2018: $32.7 million). The substantial decrease in the charge is explained by the Company's decrease in profitability in the period and the impact of local currency devaluation in Argentina and Peru in H1 2018.
The effective tax rate (pre-exceptional) for the period was 39.5% (H1 2018: 59.5%), compared to the weighted average statutory tax rate of 30.5% (H1 2018: 31.2%). The increase is explained by royalties and the Special Mining Tax resulting in a charge of $3.6 million (H1 2018: $4.1 million), increasing the rate by 8.7% (H1 2018: 7.6%).
In H1 2019, there was no material impact from local currency devaluation. In H1 2018, the impact was $8.7 million, increasing the rate further by 15.9%.
Exceptional items
Exceptional items in H1 2019 totalled an $8.4 million loss after tax (H1 2018: $11.5 million loss after tax). Exceptional items included the payment of termination benefits due to the restructuring process generated by the temporary suspension of operations at the Arcata mine unit ($11.9 million) partially offset by the associated exceptional tax effect. H1 2018 included the premium and other financial expenses related to the repayment of the Compañia Minera Ares bond in January 2018 (US$16.3 million), partially offset by the exceptional tax effect.
Cash flow and balance sheet review
Cash flow:
|
$000 |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
Change |
|
Net cash generated from operating activities |
100,500 |
117,176 |
(16,676) |
|
Net cash used in investing activities |
(70,281) |
(64,050) |
(6,231) |
|
Cash flows used in financing activities |
(13,796) |
(164,639) |
150,843 |
|
Net increase/(decrease) in cash and cash equivalents during the period |
16,423 |
(111,513) |
127,936 |
Net cash generated from operating activities decreased from $117.2 million in H1 2018 to $100.5 million in H1 2019 mainly due to lower Adjusted EBITDA of $153.7 million (H1 2018: $161.9 million) and higher exploration expenses of $18.6 million (H1 2018: $13.0 million).
Net cash used in investing activities increased to $70.3 million in H1 2019 from $64.1 million in H1 2018 mainly due to higher operational capex and in particular mine development at the new veins found at Inmaculada.
Cash used in financing activities fell to $13.8 million in H1 2019 from $164.6 million in H1 2018, mainly as due to the effect of the net repayment of borrowings of $146.3 million in H1 2018, and the payment of lease liabilities of $1.3 million in H1 2019, and lower payment of dividends to non-controlling interests of $5.6 million. In H1 2018, debt restructuring consisted of the repayment of the Company's Senior Notes ($294.8 million) and $3.0 million of short term debt in Argentina. This was partially offset by new short-term loans of $100.0 million which were secured to repurchase the Senior Notes. In both periods, the Company paid $10 million of dividends to its own shareholders and also to McEwen Mining ($2.2 million in H1 2019 and $7.8 million in H1 2018).
Working capital
|
$000 |
As at 30 June 2019 |
As at 31 December 2018 |
|
Trade and other receivables |
102,951 |
84,187 |
|
Inventories |
49,776 |
58,035 |
|
Other financial assets |
47 |
47 |
|
Income tax receivable/(payable), net |
13,507 |
17,462 |
|
Trade and other payables |
(122,013) |
(126,262) |
|
Provisions |
(102,722) |
(97,793) |
|
Working capital |
(58,454) |
(64,324) |
The Group's working capital position in H1 2019 increased by $5.9 million from $(64.3) million to $(58.5) million. The key drivers of the increase were: higher trade receivables of $18.8 million and lower trade payables of $4.2 million. These effects were partially offset by higher provisions of $4.9 million, lower inventories of $8.3 million and lower income tax receivable of $4.0 million.
Net debt
|
$000 unless otherwise indicated |
As at 30 June 2019 |
As at 31 December 2018 |
|
Cash and cash equivalents |
95,443 |
79,704 |
|
Long term borrowings |
- |
(50,000) |
|
Short term borrowings[17] |
(157,820) |
(107,067) |
|
Net debt |
(62,377) |
(77,363) |
The Group's reported net debt position was $62.4 million as at 30 June 2019 (31 December 2018: $77.4 million). The decrease in net debt is mainly a result of the net cash generation in the period. The Company's total debt position remained similar in both periods.
Capital expenditure[18]
|
$000 |
Six months to 30 June 2019 |
Six months to 30 June 2018 |
|
Arcata |
48 |
7,328 |
|
Pallancata |
14,456 |
12,453 |
|
San Jose |
22,553 |
21,279 |
|
Inmaculada |
31,025 |
24,551 |
|
Operations |
68,082 |
65,611 |
|
Other |
2,749 |
1,645 |
|
Total |
70,831 |
67,256 |
H1 2019 capital expenditure of $70.8 million (H1 2018: $67.3 million) mainly comprised of operational capex of $68.1 million (H1 2018: $65.6 million) with the small increase versus H1 2018 resulting from increased capex at Inmaculada and Pallancata due to a rise in new mine developments partially offset by the almost total capex reduction at Arcata which was placed on temporary care and maintenance in February 2019.
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 2018 are set out in detail in the Risk Management & Viability section of the 2018 Annual Report and in Note 35 to the 2018 Consolidated Financial Statements.
The key risks disclosed in the 2018 Annual Report (available at www.hochschildmining.com) are categorised as:
o Financial risks comprising commodity price risk and commercial counterparty risk;
o Operational risks including the risks associated with operational performance, business interruption, information security and cybersecurity, 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 PARTY TRANSACTIONS
There were no significant related parties transactions during the six month period ended 30 June 2019.
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. The financial position of the Company, its cash flow and liquidity position are described in the Financial Review.
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. In doing so, the Company makes assumptions on the expected renewal of facilities where it is considered highly probable.
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
13 August 2019
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 2019 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 23. 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 Guidance 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 2019 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
13 August 2019
Interim condensed consolidated income statement
|
|
|
Notes |
|
Six-months ended 30 June 2019 (Unaudited) |
|
Six-months ended 30 June 2018 (Unaudited) |
|
|
||||||||||||||||||
|
|
|
|
|
Before exceptional items US$000 |
|
Exceptional items Note 9 US$000 |
|
Total US$000 |
|
Before exceptional items US$000 |
|
Exceptional items Note 9 US$000 |
|
Total US$000 |
|
|
||||||||||
|
Continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Revenue |
|
4 |
|
354,450 |
|
- |
|
354,450 |
|
372,328 |
|
- |
|
372,328 |
|
|||||||||||
|
Cost of sales |
|
5 |
|
(252,831) |
|
- |
|
(252,831) |
|
(267,259) |
|
- |
|
(267,259) |
|
|||||||||||
|
Gross profit |
|
|
|
101,619 |
|
- |
|
101,619 |
|
105,069 |
|
- |
|
105,069 |
|
|||||||||||
|
Administrative expenses |
|
|
|
(23,021) |
|
- |
|
(23,021) |
|
(21,691) |
|
- |
|
(21,691) |
|
|||||||||||
|
Exploration expenses |
|
6 |
|
(18,552) |
|
- |
|
(18,552) |
|
(13,048) |
|
- |
|
(13,048) |
|
|||||||||||
|
Selling expenses |
|
7 |
|
(10,480) |
|
- |
|
(10,480) |
|
(2,504) |
|
- |
|
(2,504) |
|
|||||||||||
|
Other income |
|
8 |
|
4,471 |
|
- |
|
4,471 |
|
4,949 |
|
- |
|
4,949 |
|
|||||||||||
|
Other expenses |
|
8 |
|
(8,827) |
|
(11,949) |
|
(20,776) |
|
(7,946) |
|
- |
|
(7,946) |
|
|||||||||||
|
Write-off of non-financial assets |
|
|
|
(517) |
|
- |
|
(517) |
|
(201) |
|
- |
|
(201) |
|
|||||||||||
|
Profit/(loss) from continuing operations before net finance income/(cost), foreign exchange loss and income tax |
|
|
|
44,693 |
|
(11,949) |
|
32,744 |
|
64,628 |
|
- |
|
64,628 |
|
|||||||||||
|
Finance income |
|
10 |
|
1,424 |
|
- |
|
1,424 |
|
1,088 |
|
- |
|
1,088 |
|
|||||||||||
|
Finance costs |
|
10 |
|
(3,504) |
|
- |
|
(3,504) |
|
(6,482) |
|
(16,346) |
|
(22,828) |
|
|||||||||||
|
Foreign exchange loss |
|
|
|
(1,146) |
|
- |
|
(1,146) |
|
(4,334) |
|
- |
|
(4,334) |
|
|||||||||||
|
Profit/(loss) from continuing operations before income tax |
|
|
|
41,467 |
|
(11,949) |
|
29,518 |
|
54,900 |
|
(16,346) |
|
38,554 |
|
|||||||||||
|
Income tax (expense)/benefit |
|
11 |
|
(16,382) |
|
3,525 |
|
(12,857) |
|
(32,658) |
|
4,822 |
|
(27,836) |
|
|||||||||||
|
Profit/(loss) for the period from continuing operations |
|
|
|
25,085 |
|
(8,424) |
|
16,661 |
|
22,242 |
|
(11,524) |
|
10,718 |
|
|||||||||||
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Equity shareholders of the Company |
|
|
|
22,319 |
|
(8,424) |
|
13,895 |
|
24,438 |
|
(11,524) |
|
12,914 |
|
|||||||||||
|
Non-controlling interests |
|
|
|
2,766 |
|
- |
|
2,766 |
|
(2,196) |
|
- |
|
(2,196) |
|
|||||||||||
|
|
|
|
|
25,085 |
|
(8,424) |
|
16,661 |
|
22,242 |
|
(11,524) |
|
10,718 |
|
|||||||||||
|
Basic earnings per ordinary share from continuing operations and for the period (expressed in U.S. dollars per share) |
|
|
|
0.04 |
|
(0.01) |
|
0.03 |
|
0.05 |
|
(0.02 |
) |
0.03 |
|
|||||||||||
|
Diluted earnings per ordinary share from continuing operations and for the period (expressed in U.S. dollars per share) |
|
|
|
0.04 |
|
(0.01) |
|
0.03 |
|
0.05 |
|
(0.02) |
|
0.03 |
|
|||||||||||
Interim condensed consolidated statement of comprehensive income
|
|
|
|
|
Six-months ended 30 June |
|
||
|
|
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
|
|
|
16,661 |
|
10,718 |
|
|
Other comprehensive income that may be reclassified to profit or loss in subsequent periods; net of tax: |
|
|
|
|
|
|
|
|
Exchange differences on translating foreign operations |
|
|
|
(17) |
|
39 |
|
|
Sub total |
|
|
|
(17) |
|
39 |
|
|
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods; net of tax |
|
|
|
|
|
|
|
|
Net gain/(loss) on equity instruments at fair value through other comprehensive income |
|
|
|
1,484 |
|
(1,647) |
|
|
Sub total |
|
|
|
1,484 |
|
(1,647) |
|
|
Other comprehensive profit/(loss) for the period, net of tax |
|
|
|
1,467 |
|
(1,608) |
|
|
Total comprehensive income for the period |
|
|
|
18,128 |
|
9,110 |
|
|
Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
Equity shareholders of the Company |
|
|
|
15,362 |
|
11,306 |
|
|
Non-controlling interests |
|
|
|
2,766 |
|
(2,196) |
|
|
|
|
|
|
18,128 |
|
9,110 |
|
Interim condensed consolidated statement of financial position
|
|
|
Notes |
|
As at 30 (Unaudited) US$000 |
|
As at 31 US$000 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
12 |
|
834,444 |
|
849,172 |
|
|
Evaluation and exploration assets |
|
13 |
|
159,095 |
|
155,241 |
|
|
Intangible assets |
|
|
|
23,298 |
|
24,363 |
|
|
Financial assets at fair value through OCI |
|
|
|
7,459 |
|
5,296 |
|
|
Trade and other receivables |
|
|
|
4,584 |
|
5,451 |
|
|
Other financial assets |
|
14 |
|
47 |
|
47 |
|
|
Deferred income tax assets |
|
15 |
|
1,680 |
|
1,504 |
|
|
|
|
|
|
1,030,607 |
|
1,041,074 |
|
|
Current assets |
|
|
|
|
|
|
|
|
Inventories |
|
|
|
49,776 |
|
58,035 |
|
|
Trade and other receivables |
|
|
|
98,367 |
|
78,736 |
|
|
Income tax receivable |
|
|
|
16,880 |
|
20,733 |
|
|
Cash and cash equivalents |
|
16 |
|
95,443 |
|
79,704 |
|
|
|
|
|
|
260,466 |
|
237,208 |
|
|
Total assets |
|
|
|
1,291,073 |
|
1,278,282 |
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
Capital and reserves attributable to shareholders of the Parent |
|
|
|
|
|
|
|
|
Equity share capital |
|
19 |
|
225,409 |
|
225,409 |
|
|
Share premium |
|
19 |
|
438,041 |
|
438,041 |
|
|
Other reserves |
|
|
|
(219,602) |
|
(223,156) |
|
|
Retained earnings |
|
|
|
281,438 |
|
278,995 |
|
|
|
|
|
|
725,286 |
|
719,289 |
|
|
Non-controlling interests |
|
|
|
73,769 |
|
71,003 |
|
|
Total equity |
|
|
|
799,055 |
|
790,292 |
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
3,427 |
|
787 |
|
|
Borrowings |
|
17 |
|
- |
|
50,000 |
|
|
Provisions |
|
|
|
96,688 |
|
94,640 |
|
|
Deferred income |
|
18 |
|
32,536 |
|
31,966 |
|
|
Deferred income tax liabilities |
|
15 |
|
73,154 |
|
71,231 |
|
|
|
|
|
|
205,805 |
|
248,624 |
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
118,586 |
|
125,475 |
|
|
Borrowings |
|
17 |
|
157,820 |
|
107,067 |
|
|
Provisions |
|
|
|
6,034 |
|
3,153 |
|
|
Deferred income |
|
18 |
|
400 |
|
400 |
|
|
Income tax payable |
|
|
|
3,373 |
|
3,271 |
|
|
|
|
|
|
286,213 |
|
239,366 |
|
|
Total liabilities |
|
|
|
492,018 |
|
487,990 |
|
|
Total equity and liabilities |
|
|
|
1,291,073 |
|
1,278,282 |
|
Interim condensed consolidated statement of cash flows
|
|
|
|
|
Six-months ended 30 June |
|
||
|
|
|
Notes |
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Cash generated from operations |
|
22 |
|
105,310 |
|
141,411 |
|
|
Interest received |
|
|
|
785 |
|
1,343 |
|
|
Interest paid |
|
17 |
|
(1,598) |
|
(24,751) |
|
|
Payment of mine closure costs |
|
|
|
(1,386) |
|
(1,422) |
|
|
Income tax (paid)/received |
|
|
|
(2,611) |
|
595 |
|
|
Net cash generated from operating activities |
|
|
|
100,500 |
|
117,176 |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
|
(67,231) |
|
(57,120) |
|
|
Purchase of evaluation and exploration assets |
|
|
|
(3,854) |
|
(6,003) |
|
|
Purchase of intangibles |
|
|
|
(2) |
|
(1,897) |
|
|
Purchase of financial assets at fair value to OCI |
|
14 |
|
(500) |
|
(120) |
|
|
Proceeds from deferred income |
|
18 |
|
750 |
|
1,000 |
|
|
Proceeds from sale of financial assets at fair value to OCI |
|
|
|
424 |
|
32 |
|
|
Proceeds from sale of property, plant and equipment |
|
12 |
|
132 |
|
58 |
|
|
Net cash used in investing activities |
|
|
|
(70,281) |
|
(64,050) |
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
17 |
|
63,500 |
|
157,500 |
|
|
Repayment of borrowings |
|
17 |
|
(63,500) |
|
(303,775) |
|
|
Purchase of treasury shares |
|
19 |
|
(309) |
|
(579) |
|
|
Payment of lease liabilities |
|
2(b) |
|
(1,275) |
|
- |
|
|
Dividends paid to shareholders |
|
20 |
|
(10,002) |
|
(10,000) |
|
|
Dividends paid to non-controlling interests |
|
20 |
|
(2,210) |
|
(7,785) |
|
|
Cash flows used in financing activities |
|
|
|
(13,796) |
|
(164,639) |
|
|
Net increase/(decrease) in cash and cash equivalents during the period |
|
|
|
16,423 |
|
(111,513) |
|
|
Impact of foreign exchange |
|
|
|
(684) |
|
(3,796) |
|
|
Cash and cash equivalents at beginning of period |
|
|
|
79,704 |
|
256,988 |
|
|
Cash and cash equivalents at end of period |
|
16 |
|
95,443 |
|
141,679 |
|
Interim condensed consolidated statement of changes in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reserves |
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
|
Note |
|
Equity share capital US$000 |
|
Share premium US$000 |
|
|
Treasury shares US$000 |
|
|
Dividends expired US$000 |
|
Fair value reserve of financial assets at fair value through OCI US$000 |
|
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 |
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||
|
Balance at 1 January 2019 |
|
|
|
225,409 |
|
438,041 |
|
|
|
|
|
62 |
|
(4,324) |
|
|
(13,708) |
|
(210,046) |
|
4,860 |
|
(223,156) |
|
278,995 |
|
719,289 |
|
71,003 |
|
790,292 |
|
|
|||||||||||||||||||
|
Other comprehensive income/(expense) |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
1,484 |
|
|
(17) |
|
- |
|
- |
|
1,467 |
|
- |
|
- |
|
- |
|
1,467 |
|
|
|||||||||||||||||||
|
Profit for the period |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
13,895 |
|
13,895 |
|
2,766 |
|
16,661 |
|
|
|||||||||||||||||||
|
Total comprehensive income/(loss) for the period |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
1,484 |
|
|
(17) |
|
- |
|
- |
|
1,467 |
|
13,895 |
|
15,362 |
|
2,766 |
|
18,128 |
|
|
|||||||||||||||||||
|
Sale of financial assets at fair value through OCI |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
1,656 |
|
|
- |
|
- |
|
- |
|
1,656 |
|
(1,656) |
|
- |
|
- |
|
- |
|
|
|||||||||||||||||||
|
Dividends |
|
20 |
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
(10,002) |
|
(10,002) |
|
- |
|
(10,002) |
|
|
|||||||||||||||||||
|
Treasury shares |
|
|
|
- |
|
- |
|
|
(309) |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(309) |
|
- |
|
(309) |
|
|
|||||||||||||||||||
|
Share-based payments |
|
19 |
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
946 |
|
946 |
|
- |
|
946 |
|
- |
|
946 |
|
|
|||||||||||||||||||
|
Exercise of share options |
|
19 |
|
- |
|
- |
|
|
309 |
|
|
- |
|
- |
|
|
- |
|
- |
|
(515) |
|
(515) |
|
206 |
|
- |
|
- |
|
- |
|
|
|||||||||||||||||||
|
Balance at 30 June 2019 (Unaudited) |
|
|
|
225,409 |
|
438,041 |
|
|
- |
|
|
62 |
|
(1,184) |
|
|
(13,725) |
|
(210,046) |
|
5,291 |
|
(219,602) |
|
281,438 |
|
725,286 |
|
73,769 |
|
799,055 |
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Balance at 1 January 2018 |
|
|
|
224,315 |
|
438,041 |
|
|
(140) |
|
|
- |
|
(937) |
|
|
(13,712) |
|
(210,046) |
|
7,634 |
|
(217,061) |
|
286,356 |
|
731,511 |
|
90,177 |
|
821,688 |
|
|
|||||||||||||||||||
|
Other comprehensive income/(expense) |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
(1,647) |
|
|
39 |
|
- |
|
- |
|
(1,608) |
|
- |
|
(1,608) |
|
- |
|
(1,608) |
|
|
|||||||||||||||||||
|
Profit/(loss) for the period |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
12,914 |
|
12,914 |
|
(2,196) |
|
10,718 |
|
|
|||||||||||||||||||
|
Total comprehensive (loss)/income for the period |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
(1,647) |
|
|
39 |
|
- |
|
- |
|
(1,608) |
|
12,914 |
|
11,306 |
|
(2,196) |
|
9,110 |
|
|
|||||||||||||||||||
|
Sale of financial assets at fair value through OCI |
|
|
|
- |
|
- |
|
|
- |
|
|
- |
|
14 |
|
|
- |
|
- |
|
- |
|
14 |
|
(14) |
|
- |
|
- |
|
- |
|
|
|||||||||||||||||||
|
Dividends |
|
20 |
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
(10,000) |
|
(10,000) |
|
- |
|
(10,000) |
|
|
|||||||||||||||||||
|
Dividends declared to non-controlling interests |
|
20 |
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(9,823) |
|
(9,823) |
|
|
|||||||||||||||||||
|
Treasury shares |
|
|
|
- |
|
- |
|
|
(579) |
|
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(579) |
|
- |
|
(579) |
|
|
|||||||||||||||||||
|
Share-based payments |
|
19 |
|
- |
|
- |
|
|
- |
|
|
- |
|
- |
|
|
- |
|
- |
|
853 |
|
853 |
|
- |
|
853 |
|
- |
|
853 |
|
|
|||||||||||||||||||
|
Exercise of share options |
|
19 |
|
563 |
|
- |
|
|
719 |
|
|
- |
|
- |
|
|
- |
|
- |
|
(2,608) |
|
(2,608) |
|
1,326 |
|
- |
|
- |
|
- |
|
|
|||||||||||||||||||
|
Balance at 30 June 2018 (Unaudited) |
|
|
|
224,878 |
|
438,041 |
|
|
- |
|
|
- |
|
(2,570) |
|
|
(13,673) |
|
(210,046) |
|
5,879 |
|
(220,410) |
|
290,582 |
|
733,091 |
|
78,158 |
|
811,249 |
|
|
|||||||||||||||||||
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. During the first quarter of 2019 the Arcata mine unit, located in Peru, ceased operations. The Group also has a portfolio of projects located across Peru, Argentina and Chile and the United States of America at various stages of development.
These interim condensed consolidated financial statements were approved for issue on behalf of the Board of Directors on 13 August 2019.
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 2019 and 31 December 2018 and its financial performance and cash flows for the six months ended 30 June 2019 and 30 June 2018.
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 2018 annual consolidated financial statements as published in the 2018 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 2018. 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 2018, except for the adoption of new standards and interpretations effective for the Group from 1 January 2019. The Group applies, for the first time, IFRS 16 Leases. As required by IAS 34, the nature and effect of these changes are disclosed below. Other amendments and interpretations apply for the first time in 2019, but do not have an impact on 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.
New international financial reporting standards adopted:
• IFRS 16 Leases, applicable for annual periods beginning on or after 1 January 2019.
IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, including the exemptions to recognise assets and liabilities for all leases unless the lease term is 12 months or less or when the underlying asset has a low value. Lease costs will be recognised in the income statement over the lease term in the form of depreciation on the right of use asset and finance charges representing the unwinding of the discount on the lease liability. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17.
The Group has adopted IFRS 16, Leases from 1 January 2019 but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard ("modified retrospective approach, alternative 2"). The adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate as of 1 January 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 4.12% for contracts denominated in US dollars. Contracts in other currencies are not material.
The associated right-of-use assets were measured at the amount equal to the lease liability, therefore there was no adjustment to retained earnings on adoption.
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
- The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
- The accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases,
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straightline basis.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability
• Any lease payments made at or before the commencement date less any lease incentives received
• Any initial direct costs, and
• Restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
New accounting policies as a result of implementing IFRS 16:
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straightline basis. Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments are recognised as expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value (i.e., below US$5,000). Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
The resulting lease liability as of 1 January 2019 was determined as follows:
|
|
|
(Unaudited) US$000 |
|
Operating lease commitments as at 31 December 2018 |
|
8,027 |
|
Discounted using the lessee's incremental borrowing rate of at the date of initial application |
|
7,923 |
|
(Less): short-term leases recognised on a straight-line basis as expense |
|
(730) |
|
(Less): low-value leases recognised on a straight-line basis as expense |
|
(1,474) |
|
(Less): other adjustments |
|
(244) |
|
Lease liability recognised as at 1 January 2019 |
|
5,475 |
|
(Less): current portion |
|
(2,619) |
|
Non-current portion |
|
2,856 |
The effect of adoption IFRS 16 is as follows:
|
|
|
Right-of-use assets vehicles (Unaudited)(1) US$000 |
|
Lease liabilities (Unaudited)(2) US$000 |
|
|
Recognised on transition as at 1 January 2019 |
|
5,475 |
|
(5,475) |
|
|
Depreciation expense |
|
(1,314) |
|
- |
|
|
Disposals |
|
(534) |
|
534 |
|
|
Additions |
|
184 |
|
(184) |
|
|
Interests expense(3) |
|
- |
|
(95) |
|
|
Payments |
|
- |
|
1,275 |
|
|
Balance at 30 June 2019 |
|
3,811 |
|
(3,945) |
|
1 Included in the Interim condensed consolidated statement of financial position in the line of "Property, plant and equipment".
2 Included in the Interim condensed consolidated statement of financial position in the line of "Trade and other payables" (Current: US$1,279,000, Non-current: US$2,666,000).
3 Included in the Interim condensed consolidated income statement in the line of "Finance costs".
• IFRIC 23 Uncertainty over income tax treatments, applicable for annual periods beginning on or after 1 January 2019.
IFRIC 23 clarifies the accounting for uncertainties in income taxes. This interpretation is applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. The Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments separately;
• The assumptions an entity makes about the examination of tax treatments by taxation authorities;
• How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and
• How an entity considers changes in facts and circumstances
The Group applied the interpretation from its effective date, and do not have impacts on the financial statements as the Group's current treatment is in line with the requirements of the interpretation.
(c) Going concern
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 2019 and 2018 and asset information as at 30 June 2019 and 31 December 2018 respectively:
|
Six months ended 30 June 2019 (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 |
|
5,083 |
|
69,793 |
|
108,800 |
|
170,674 |
|
- |
|
100 |
|
- |
|
354,450 |
||||||||||||||||||||||||||
|
Inter segment revenue |
|
- |
|
- |
|
- |
|
- |
|
- |
|
3,009 |
|
(3,009) |
|
- |
||||||||||||||||||||||||||
|
Total revenue |
|
5,083 |
|
69,793 |
|
108,800 |
|
170,674 |
|
- |
|
3,109 |
|
(3,009) |
|
354,450 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Segment profit/(loss) |
|
(2,021) |
|
5,830 |
|
19,944 |
|
65,494 |
|
(18,707) |
|
4,412 |
|
(2,365) |
|
72,587 |
||||||||||||||||||||||||||
|
Others(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(43,069) |
||||||||||||||||||||||||||
|
Profit from continuing operations before income tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,518 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
As at 30 June 2019 (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Capital expenditure |
|
48 |
|
13,758 |
|
22,553 |
|
31,025 |
|
1,486 |
|
1,961 |
|
- |
|
70,831 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Current assets |
|
2,559 |
|
26,785 |
|
38,823 |
|
19,551 |
|
7 |
|
3,518 |
|
- |
|
91,243 |
||||||||||||||||||||||||||
|
Other non-current assets |
|
6,569 |
|
77,073 |
|
172,271 |
|
512,140 |
|
197,561 |
|
51,223 |
|
- |
|
1,016,837 |
||||||||||||||||||||||||||
|
Total segment assets |
|
9,128 |
|
103,858 |
|
211,094 |
|
531,691 |
|
197,568 |
|
54,741 |
|
- |
|
1,108,080 |
||||||||||||||||||||||||||
|
Not reportable assets(2) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
182,993 |
|
- |
|
182,993 |
||||||||||||||||||||||||||
|
Total assets |
|
9,128 |
|
103,858 |
|
211,094 |
|
531,691 |
|
197,568 |
|
237,734 |
|
- |
|
1,291,073 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
1 Comprised of administrative expenses of US$23,021,000, other income of US$4,471,000, other expenses of US$20,776,000, write off of assets of US$517,000, finance income of US$1,424,000, finance costs of US$3,504,000 and foreign exchange loss of US$1,146,000.
2 Not reportable assets are comprised of other financial assets of US$47,000, financial assets at fair value through OCI of US$7,459,000, other receivables of US$61,484,000, income tax receivable of US$16,880,000, deferred income tax assets of US$1,680,000, and cash and cash equivalents of US$95,443,000.
|
Six months ended 30 June 2018 (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 |
|
30,732 |
|
62,790 |
|
102,935 |
|
175,674 |
|
- |
|
197 |
|
- |
|
372,328 |
||||||||||||
|
Inter segment revenue |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,092 |
|
(1,092) |
|
- |
||||||||||||
|
Total revenue |
|
30,732 |
|
62,790 |
|
102,935 |
|
175,674 |
|
- |
|
1,289 |
|
(1,092) |
|
372,328 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Segment profit/(loss) |
|
(1,305) |
|
19,082 |
|
13,315 |
|
72,840 |
|
(13,048) |
|
4,054 |
|
(5,421) |
|
89,517 |
||||||||||||
|
Others(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,963) |
||||||||||||
|
Profit from continuing operations before income tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,554 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
As at 31 December 2018 (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Capital expenditure |
|
526 |
|
27,079 |
|
44,632 |
|
57,678 |
|
1,856 |
|
2,634 |
|
- |
|
134,405 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Current assets |
|
5,155 |
|
27,076 |
|
40,220 |
|
27,479 |
|
7 |
|
3,299 |
|
- |
|
103,236 |
||||||||||||
|
Other non-current assets |
|
6,395 |
|
84,449 |
|
172,726 |
|
517,321 |
|
195,975 |
|
51,910 |
|
- |
|
1,028,776 |
||||||||||||
|
Total segment assets |
|
11,550 |
|
111,525 |
|
212,946 |
|
544,800 |
|
195,982 |
|
55,209 |
|
- |
|
1,132,012 |
||||||||||||
|
Not reportable assets(2) |
|
- |
|
- |
|
- |
|
- |
|
- |
|
146,270 |
|
- |
|
146,270 |
||||||||||||
|
Total assets |
|
11,550 |
|
111,525 |
|
212,946 |
|
544,800 |
|
195,982 |
|
201,479 |
|
- |
|
1,278,282 |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1 Comprised of administrative expenses of US$21,691,000, other income of US$4,949,000, other expenses of US$7,946,000, write off of assets of US$201,000, finance income of US$1,088,000, finance costs of US$22,828,000 and foreign exchange loss of US$4,334,000.
2 Not reportable assets are comprised of financial assets at fair value through OCI of US$5,296,000, other receivables of US$38,986,000, other financial assets of US$47,000, income tax receivable of US$20,733,000, deferred income tax assets of US$1,504,000, and cash and cash equivalents of US$79,704,000.
4 Revenue
|
|
|
Six-months ended 30 June |
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
Gold (from dore bars) |
|
154,141 |
|
154,804 |
|
Silver (from dore bars) |
|
62,824 |
|
73,819 |
|
Gold (from concentrate) |
|
55,297 |
|
48,551 |
|
Silver (from concentrate) |
|
82,088 |
|
94,950 |
|
Other |
|
100 |
|
204 |
|
|
|
354,450 |
|
372,328 |
Included within revenue is a gain of US$2,017,000 (2018: loss of US$4,382,000) relating to provisional pricing adjustments arising on sales of concentrates and dore, contributed by provisional pricing loss of US$678,000 (2018: loss of US$2,449,000) from silver concentrates and US$2,999,000 gain (2018: loss of US$1,710,000) from gold concentrates, US$339,000 loss (2018: loss of US$63,000) from silver dore and US$35,000 gain (2018: loss of US$160,000) from gold dore resulting in total revenue from customers in the amount of US$352,433,000 (2018: US$376,710,000).
Included within revenue is a transaction price of US$3,444,000 (2018: US$2,540,000) related to the shipping services provided by the Group to the customers arising on sale of concentrates of US$2,650,000, gold: US$1,244,000, silver: US$1,406,000 and dore ofUS$794,000, gold: US$460,000, silver: US$334,000 (2018: concentrates of US$1,762,000, gold: US$803,000, silver: US$959,000 and dore of US$778,000, gold: US$431,000, silver: US$347,000).
5 Cost of sales before exceptional items
Included in cost of sales are:
|
|
|
Six-months ended 30 June |
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
Depreciation and amortisation in cost of sales1 |
|
91,322 |
|
86,579 |
|
Personnel expenses |
|
51,071 |
|
61,901 |
|
Mining royalty |
|
2,797 |
|
3,094 |
|
Change in products in process and finished goods |
|
2,881 |
|
9,404 |
1 The depreciation and amortisation in production cost is US$90,371,000 (2018: US$82,949,000).
6 Exploration expenses
|
|
|
Six months ended 30 June |
||
|
|
|
2019 (Unaudited) |
|
2018 (Unaudited) |
|
Mine site exploration1 |
|
|
|
|
|
Arcata |
|
795 |
|
1,126 |
|
Ares |
|
241 |
|
108 |
|
Inmaculada |
|
3,110 |
|
314 |
|
Pallancata |
|
1,483 |
|
645 |
|
San Jose |
|
5,404 |
|
1,962 |
|
|
|
11,033 |
|
4,155 |
|
Prospects2 |
|
|
|
|
|
Peru |
|
277 |
|
311 |
|
USA |
|
2,293 |
|
1,867 |
|
Chile |
|
431 |
|
530 |
|
|
|
3,001 |
|
2,708 |
|
Generative3 |
|
|
|
|
|
Peru |
|
1,249 |
|
3,390 |
|
USA |
|
- |
|
9 |
|
|
|
1,249 |
|
3,399 |
|
Personnel |
|
2,886 |
|
2,613 |
|
Depreciation right-of-use |
|
182 |
|
- |
|
Others |
|
201 |
|
173 |
|
Total |
|
18,552 |
|
13,048 |
|
|
|
|
|
|
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.
The increase in exploration expenses is mainly explained by the work performed at the mine units trying to identify new possible ore targets.
7 Selling expenses
|
|
|
Six-months ended 30 June |
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
Personnel expenses |
|
260 |
|
146 |
|
Warehouse services |
|
799 |
|
1,081 |
|
Taxes1 |
|
8,086 |
|
- |
|
Other |
|
1,335 |
|
1,277 |
|
Total |
|
10,480 |
|
2,504 |
1 Corresponds to the export duties in Argentina applicable since September 2018.
8 Other income and expenses before exceptional items
|
|
|
Six-months ended 30 June |
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
Other income |
|
|
|
|
|
Export credit |
|
- |
|
956 |
|
Logistic services |
|
2,448 |
|
1,997 |
|
Gain on recovery of expenses |
|
596 |
|
783 |
|
Income related to the San Felipe agreement (refer to note 18) |
|
600 |
|
- |
|
Decrease in provision for mine closure |
|
- |
|
507 |
|
Others |
|
827 |
|
706 |
|
|
|
4,471 |
|
4,949 |
|
Other expenses |
|
|
|
|
|
Increase in provision for mine closure |
|
(570) |
|
- |
|
Provision of obsolescence of supplies |
|
(55) |
|
(519) |
|
Contingencies |
|
- |
|
(394) |
|
Corporate social responsibility contribution in Argentina |
|
(1,417) |
|
(1,471) |
|
Care and maintenance expenses of Ares mine unit |
|
(2,346) |
|
(2,891) |
|
Termination benefits at Arcata mine unit |
|
- |
|
(1,324) |
|
Care and maintenance expenses of Arcata mine unit |
|
(2,920) |
|
- |
|
Others |
|
(1,519) |
|
(1,347) |
|
|
|
(8,827) |
|
(7,946) |
9 Exceptional items
Exceptional items relate to:
|
|
|
Six-months ended 30 June |
|
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
|
Other expense |
|
|
|
|
|
|
Restructuring of Arcata mine unit1 |
|
(11,949) |
|
- |
|
|
Total |
|
(11,949) |
|
- |
|
|
Finance cost |
|
|
|
|
|
|
Expenses related to the repayment of the bond3 |
|
- |
|
(16,346) |
|
|
Total |
|
- |
|
(16,346) |
|
|
Income tax expense |
|
|
|
|
|
|
Income tax credit2 and 4 |
|
3,525 |
|
4,822 |
|
|
Total |
|
3,525 |
|
4,822 |
|
The exceptional items for the period ended 30 June 2019 correspond to:
1 The termination benefits of 845 employees resulting from the restructuring process generated as the Arcata mine unit was placed on care and maintenance.
2 The current tax credit generated by the termination benefits arising from the restructuring process of the Arcata mine unit.
For the six months period ended 30 June 2018, the exceptional items correspond to:
1 The premium and other finance expenses related to the repayment of the Compañia Minera Ares ("CMA") bond in January 2018.
2 The current tax credit generated by the premium and other finance expenses related to the repayment of the CMA bond.
10 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 |
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
Finance income: |
|
|
|
|
|
Interest on deposits and liquidity funds |
|
749 |
|
991 |
|
Interest on loans |
|
63 |
|
59 |
|
Gain on discount of other receivables1 |
|
525 |
|
- |
|
Gain on discount of deferred income |
|
19 |
|
38 |
|
Others |
|
68 |
|
- |
|
Total |
|
1,424 |
|
1,088 |
|
Finance cost: |
|
|
|
|
|
Interest on bank loans |
|
(2,351) |
|
(2,335) |
|
Interest on bond |
|
- |
|
(1,487) |
|
Other interest |
|
(202) |
|
(473) |
|
Total interest expense |
|
(2,553) |
|
(4,295) |
|
Unwind of discount rate |
|
(284) |
|
(113) |
|
Loss on discount of other receivables1 |
|
- |
|
(658) |
|
Loss from changes in the fair value of financial instruments |
|
- |
|
(946) |
|
Others2 |
|
(667) |
|
(470) |
|
Total |
|
(3,504) |
|
(6,482) |
1 Mainly corresponds to the gain/(loss) on discount of tax credits in Argentina.
2 Includes the effect of the discount of the lease liabilities related to IFRS 16 (refer to note 2(b)).
11 Income tax expense
|
|
|
Six-months ended 30 June |
||
|
|
|
2019 (Unaudited) US$000 |
|
2018 (Unaudited) US$000 |
|
Current tax |
|
|
|
|
|
Current income tax expense |
|
7,512 |
|
5,453 |
|
Current mining royalty charge |
|
2,466 |
|
2,383 |
|
Current special mining tax charge |
|
1,132 |
|
1,771 |
|
Total |
|
11,110 |
|
9,607 |
|
Deferred tax |
|
|
|
|
|
Origination and reversal of temporary differences |
|
1,747 |
|
18,229 |
|
Total |
|
1,747 |
|
18,229 |
|
Total taxation charge in the income statement |
|
12,857 |
|
27,836 |
The pre-exceptional tax charge for the period was US$16,382,000 (2018: US$32,658,000).
The weighted average statutory income tax rate was 30.5% for 2019 and 31.2% for 2018. This is calculated as the average of the statutory tax rates applicable in the countries in which the Group operates, weighted by the profit/(loss) before tax of the Group companies in their respective countries as included in the consolidated financial statements.
The change in the weighted average statutory income tax rate is due to a change in the weighting of profit/(loss) before tax in the various jurisdictions in which the Group operates.
The effective tax rate for corporate income tax before foreign exchange effect for the six months ended 30 June 2019 is 32.9% (30 June 2018: 38.8%), compared to the corporate income tax and mining royalties before foreign exchange effect of 45.0% (30 June 2018: 49.5%) and the total taxation charge in the income statement of 43.6% (30 June 2018: 72.2%).
12 Property, plant and equipment
During the six months ended 30 June 2019, the Group acquired and developed assets with a cost of US$66,975,000 (30 June 2018: US$59,356,000). The additions for the six months ended 30 June 2019 relate to:
|
|
|
Mining properties and development (Unaudited) US$000 |
|
Other property plant and equipment (Unaudited) US$000 |
|
Total additions of property plant and equipment (Unaudited) US$000 |
|
San Jose |
|
11,835 |
|
10,716 |
|
22,551 |
|
Pallancata |
|
11,845 |
|
1,844 |
|
13,689 |
|
Inmaculada |
|
24,596 |
|
4,106 |
|
28,702 |
|
Others |
|
24 |
|
2,009 |
|
2,033 |
|
|
|
48,300 |
|
18,675 |
|
66,975 |
Assets with a net book value of US$130,000 were disposed of by the Group during the six month period ended 30 June 2019 (30 June 2018: US$20,000) resulting in a net gain on disposal of US$2,000 (30 June 2018: gain of US$38,000).
For the six months ended 30 June 2019, the depreciation charge on property, plant and equipment was US$89,661,000 (30 June 2018: US$83,908,000).
There are no indicators of impairment for the six months ended 30 June 2019 and 30 June 2018.
The effect of the application of IFRS 16 is disclosed in note 2(b).
13 Evaluation and exploration assets
During the six months ended 30 June 2019, the Group capitalised evaluation and exploration costs of US$3,854,000 (30 June 2018: US$6,003,000). The additions correspond to the following properties:
|
|
|
|
Unaudited US$000 |
|
Inmaculada |
|
|
2,323 |
|
Azuca |
|
|
553 |
|
Crespo |
|
|
448 |
|
Volcan |
|
|
461 |
|
Others |
|
|
69 |
|
|
|
|
3,854 |
There were no transfers from evaluation and exploration assets to property, plant and equipment during the period (2018: US$nil).
14 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 2019 and 31 December 2018, the Group held the following financial instruments measured at fair value:
|
|
As at 30 June 2019 (Unaudited) US$000 |
|
Level 1 US$000 |
|
Level 2 US$000 |
|
Level 3 US$000 |
|
Assets measured at fair value |
|
|
|
|
|
|
|
|
Equity shares |
7,459 |
|
5,011 |
|
- |
|
2,448 |
|
Warrants |
47 |
|
47 |
|
- |
|
- |
|
Trade receivables |
41,067 |
|
- |
|
- |
|
41,067 |
|
|
48,973 |
|
5,058 |
|
- |
|
43,915 |
|
|
As at 31 December 2018 US$000 |
|
Level 1 US$000 |
|
Level 2 US$000 |
|
Level 3 US$000 |
|
Assets measured at fair value |
|
|
|
|
|
|
|
|
Equity shares |
5,296 |
|
2,110 |
|
- |
|
3,186 |
|
Warrants |
47 |
|
47 |
|
- |
|
- |
|
Trade and other receivables |
45,201 |
|
- |
|
- |
|
45,201 |
|
|
50,544 |
|
2,157 |
|
- |
|
48,387 |
During the six months ended 30 June 2019 there were transfers between level 3 to level 1. During the year ended 31 December 2018, there were no transfers between these levels.
The reconciliation of the financial instruments categorised as Level 3 is as follows:
|
|
|
Unlisted equity shares US$000 |
|
Trade receivables subject to price adjustments US$000 |
|
|
|
|
|
|
|
Balance at 1 January 2018 |
|
581 |
|
43,201 |
|
Acquisition |
|
2,120 |
|
- |
|
Fair value adjustment recognised through OCI |
|
485 |
|
- |
|
Net change in trade receivables from goods sold |
|
- |
|
(2,305) |
|
Changes in fair value of price adjustments |
|
- |
|
(5,646) |
|
Realised price adjustments during the period |
|
- |
|
9,943 |
|
Balance at 31 December 2018 |
|
3,186 |
|
45,201 |
|
Acquisition |
|
500 |
|
- |
|
Fair value adjustment recognised through OCI |
|
37 |
|
- |
|
Listing of shares |
|
(1,275) |
|
- |
|
Net change in trade receivables from goods sold |
|
- |
|
(2,202) |
|
Changes in fair value of price adjustments |
|
- |
|
2,017 |
|
Realised price adjustments during the period |
|
- |
|
(3,549) |
|
Balance at 30 June 2019 (Unaudited) |
|
2,448 |
|
41,467 |
The fair value of non-listed equity investments is determined based on financial information available of the companies and they are categorised as level 3.
15 Deferred income tax assets and liabilities
The changes in the net deferred income tax assets/(liabilities) are as follows:
|
|
|
As at 30 June 2019 (Unaudited) US$000 |
|
As at 31 December 2018 US$000 |
|
|
|
|
|
|
|
Beginning of the period |
|
(69,727) |
|
(53,640) |
|
Income statement charge |
|
(1,747) |
|
(16,087) |
|
End of the period/year |
|
(71,474) |
|
(69,727) |
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 Statement of financial position, are as follows:
|
|
|
As at 30 June 2019 (Unaudited) US$000 |
|
As at 31 December 2018 US$000 |
|
|
|
|
|
|
|
Deferred income tax assets |
|
1,680 |
|
1,504 |
|
Deferred income tax liabilities |
|
(73,154) |
|
(71,231) |
|
Net deferred income tax liabilities |
|
(71,474) |
|
(69,727) |
16 Cash and cash equivalents
|
|
|
As at 30 June 2019 (Unaudited) US$000 |
|
As at 31 December 2018 US$000 |
|
|
|
|
|
|
|
Cash at bank |
|
324 |
|
366 |
|
Current demand deposit accounts1 |
|
31,339 |
|
43,095 |
|
Time deposits2 |
|
63,780 |
|
36,243 |
|
Cash and cash equivalents |
|
95,443 |
|
79,704 |
1 Relates to bank accounts which are readily accessible to the Group and bear interest.
2 These deposits have an average maturity of 8 days (as at 31 December 2018: 14 days).
17 Borrowings
The movement in borrowings during the six month period to 30 June 2019 is as follows:
|
|
As at 1 January 2019 US$000 |
|
Additions US$000 |
|
Repayments US$000 |
|
As at 30 June 2019 (Unaudited) US$000 |
|
Current |
|
|
|
|
|
|
|
|
Bank loans1 |
107,067 |
|
65,851 |
|
(15,098) |
|
157,820 |
|
|
107,067 |
|
65,851 |
|
(15,098) |
|
157,820 |
|
Non-current |
|
|
|
|
|
|
|
|
Bank loans1 |
50,000 |
|
- |
|
(50,000) |
|
- |
|
|
50,000 |
|
- |
|
(50,000) |
|
- |
|
|
|
|
|
|
|
|
|
|
Accrued interest: |
(1,067) |
|
(2,351) |
|
1,598 |
|
(1,820) |
|
Before accrued interest |
156,000 |
|
63,500 |
|
(63,500) |
|
156,000 |
|
|
|
|
|
|
|
|
|
1 Relates to pre-shipment loans for a total amount of US$6,036,000 (2018: US$6,047,000) which are credit lines given by banks to meet payment obligations arising from the exports of the Group. In addition the balance at 30 June 2019 includes US$151,784,000 of loans with the BBVA Bank and Scotia Bank.
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 2019 (Unaudited) |
|
As at 31 December 2018 US$000 |
|
As at 30 June 2019 (Unaudited) |
|
As at 31 December 2018 US$000 |
|
Bank loans |
|
- |
|
50,000 |
|
- |
|
47,353 |
|
Total |
|
- |
|
50,000 |
|
- |
|
47,353 |
18 Deferred income
|
|
|
As at 30 June 2019 (Unaudited) US$000 |
|
As at US$000 |
|
San Felipe contract1 |
|
32,146 |
|
31,396 |
|
El Mosquito contract |
|
790 |
|
970 |
|
|
|
32,936 |
|
32,366 |
|
Less current balance |
|
(400) |
|
(400) |
|
Non-current balance |
|
32,536 |
|
31,966 |
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$32,146,000 as non-refundable payments at 30 June 2019 (2018: US$31,396,000).
On 15 December 2018, the option to sell the San Felipe property to Americas Silver Corporation (as IMSC's assignee) was extended to 15 December 2020. In consideration for the deferral of a cash payment, the Group received 452,200 ASC common shares on 18 January 2019 at an issue price equal to US$600,000, that was recognised as other income.
During 2018 the Group collected US$2,000,000 (January 2018:US$500,000, April 2018: US$500,000 and July 2018: US$1,000,000).
During 2019 the Group has collected US$750,000.
19 Equity
Share capital and share premium
The movement in share capital of the Company from 31 December 2018 to 30 June 2019 is as follows:
|
|
|
Number of ordinary shares |
|
Share capital US$000 |
|
Share premium US$000 |
|
Shares issued as at 1 January 2019 |
|
510,553,920 |
|
225,409 |
|
438,041 |
|
Shares issued as at 30 June 2019 |
|
510,553,920 |
|
225,409 |
|
438,041 |
At 30 June 2019 and 31 December 2018 all issued shares with a par value of 25 pence each were fully paid (30 June 2019: weighted average of US$0.441 per share, 31 December 2018: weighted average of US$0.441 per share).
On 2 January 2018 the Group issued 1,660,805 ordinary shares under the Restricted Share Plan, to certain employees of the Group, including the CEO.
On 20 March 2018, 40,383 Treasury shares with a value of US$84,000 (being the cost incurred to acquire the shares) were transferred to the CEO of the Group with respect to the Deferred Bonus Plan benefit.
On 5 April 2018, the Group purchased 205,400 shares for a total consideration of £414,000 (equivalent to US$579,000).
On 5 April 2018, 232,172 Treasury shares with a value of US$635,000 (being the cost incurred to acquire the shares) were transferred to the CEO of the Group with respect to the Enhanced Long term Incentive Plan.
On 31 December 2018 the Group issued 1,660,805 ordinary shares, under the Restricted Share Plan, to certain employees of the Group.
On 21 March 2019, the Group purchased 115,640 shares for a total consideration of £236,000 (equivalent to US$309,000).
On 22 March 2019, 115,682 Treasury shares with a value of US$309,000 (being the cost incurred to acquire the shares) were transferred to the CEO of the Group with respect to the Enhanced Long term Incentive Plan.
At 30 June 2019 the balance of Treasury shares is nil (31 December 2018: 42) ordinary shares with a value of US$nil (31 December 2018: US$115).
20 Dividends paid and declared
Dividends declared to non-controlling interests in the six months ended 30 June 2019 were US$nil (30 June 2018: US$9,823,000). Dividends paid to non-controlling interests in the six months ended 30 June 2019 were US$2,210,000 (30 June 2018: US$7,785,000).
Final dividends for 2018 of US$10,002,000 were declared in the six months ended 30 June 2019 (30 June 2018: US$10,000,000). The Directors of the Company declared an interim dividend in respect of the six months ended 30 June 2019 of US$2.00 cents per share (totalling US$10,200,000) (30 June 2018: US$10,000,000) which will be paid to shareholders on 19 September 2019 to those shareholders appearing on the register on 30 August 2019. These financial statements do not reflect this dividend payable.
21 Related party transactions
There were no significant related party transactions during the six months period ended 30 June 2019.
22 Notes to the statement of cash flows
|
|
|
Six- months ended 30 June |
||
|
|
|
2019 (Unaudited) |
|
2018 (Unaudited) |
|
Reconciliation of profit for the period to net cash generated from operating activities |
|
|
|
|
|
Profit for the period |
|
16,661 |
|
10,718 |
|
Adjustments to reconcile Group profit to net cash inflows from operating activities |
|
|
|
|
|
Depreciation |
|
90,599 |
|
82,649 |
|
Amortisation of intangibles |
|
1,121 |
|
1,039 |
|
Write-off of non-financial assets |
|
517 |
|
201 |
|
Gain on sale of property, plant and equipment |
|
(2) |
|
(38) |
|
Provision for obsolescence of supplies |
|
55 |
|
519 |
|
Finance income |
|
(1,424) |
|
(1,088) |
|
Finance costs |
|
3,504 |
|
22,828 |
|
Income tax expense |
|
12,857 |
|
27,836 |
|
Other |
|
2,624 |
|
4,274 |
|
Increase/(decrease) of cash flows from operations due to changes in assets and liabilities |
|
|
|
|
|
Trade and other receivables |
|
(23,927) |
|
(2,352) |
|
Other financial assets and liabilities |
|
- |
|
2,207 |
|
Inventories |
|
5,846 |
|
10,163 |
|
Trade and other payables |
|
(5,079) |
|
(18,390) |
|
Provisions |
|
1,958 |
|
845 |
|
Cash generated from operations |
|
105,310 |
|
141,411 |
23 Subsequent events
a) On 1 July 2019 the Group signed two short term loans of US$50,000,000 each with Scotiabank del Perú, with an interest rate of 2.00%. The proceeds were employed to repay the two loans of US$50,000,000 each with the same institution.
b) On 1 July 2019 the Group signed a short term loan of US$50,000,000 with Banco de Credito del Peru with an annual interest rate of 2.06%. The proceeds were employed to repay the loan of US$50,000,000 with the BBVA Bank.
Profit by operation¹
(Segment report reconciliation) as at 30 June 2019 (Unaudited)
|
|
Company (US$000) |
|
Arcata |
Pallancata |
San Jose |
Inmaculada |
Consolidation adjustment and others |
Total/HOC |
|
|
|
|
Revenue |
|
5,083 |
69,793 |
108,800 |
170,674 |
100 |
354,450 |
|
|
|
|
Cost of sales (pre-consolidation) |
|
(6,958) |
(63,489) |
(79,311) |
(104,865) |
1,792 |
(252,831) |
|
|
|
|
Consolidation adjustment |
|
(86) |
(879) |
- |
(827) |
1,792 |
- |
|
|
|
|
Cost of sales (post-consolidation) |
|
(6,872) |
(62,610) |
(79,311) |
(104,038) |
- |
(252,831) |
|
|
|
|
Production cost excluding depreciation |
|
(6,813) |
(36,603) |
(56,430) |
(58,598) |
- |
(158,444) |
|
|
|
|
Depreciation in production cost |
|
(49) |
(25,619) |
(23,520) |
(41,183) |
- |
(90,371) |
|
|
|
|
Other items |
|
- |
(290) |
(567) |
(278) |
- |
(1,135) |
|
|
|
|
Change in inventories |
|
(10) |
(98) |
1,206 |
(3,979) |
- |
(2,881) |
|
|
|
|
Gross profit |
|
(1,875) |
6,304 |
29,489 |
65,809 |
1,892 |
101,619 |
|
|
|
|
Administrative expenses |
|
- |
- |
- |
- |
(23,021) |
(23,021) |
|
|
|
|
Exploration expenses |
|
- |
- |
- |
- |
(18,552) |
(18,552) |
|
|
|
|
Selling expenses |
|
(146) |
(474) |
(9,545) |
(315) |
- |
(10,480) |
|
|
|
|
Other income/(expenses) |
|
- |
- |
- |
- |
(16,305) |
(16,305) |
|
|
|
|
Operating profit/(loss) before impairment |
|
(2,021) |
5,830 |
19,944 |
65,494 |
(55,986) |
33,261 |
|
|
|
|
Write-off of non-financial assets |
|
- |
- |
- |
- |
(517) |
(517) |
|
|
|
|
Finance income |
|
- |
- |
- |
- |
1,424 |
1,424 |
|
|
|
|
Finance costs |
|
- |
- |
- |
- |
(3,504) |
(3,504) |
|
|
|
|
Foreign exchange |
|
- |
- |
- |
- |
(1,146) |
(1,146) |
|
|
|
|
Profit/(loss) from continuing operations before income tax |
|
(2,021) |
5,830 |
19,944 |
65,494 |
(59,729) |
29,518 |
|
|
|
|
Income tax |
|
- |
- |
- |
- |
(12,857) |
(12,857) |
|
|
|
|
Profit/(loss) for the period from continuing operations |
|
(2,021) |
5,830 |
19,944 |
65,494 |
(72,586) |
16,661 |
|
|
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
Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
BY TELEPHONE
If calling from the UK: 0371 664 0300 (calls cost 12p per minute plus your phone company's access charge. Lines are open 9.00am-5.30pm Mon to Fri excluding public holidays in England and Wales).
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 2019 in respect of the 2019 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 2019 interim dividend, a dividend mandate form, also available from the Company's registrars, should be completed and returned to the registrars by 5 September 2019. 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 |
2019 |
|
Ex-dividend date |
29 August |
|
Record date |
30 August |
|
Deadline for return of currency election forms |
5 September |
|
Payment date |
19 September |
17 Cavendish Square
London
W1G 0PH
Registered in England and Wales with Company Number 5777693
[1]Revenue presented in the financial statements is disclosed as net revenue and is calculated as gross revenue less commercial discounts plus services revenue
[2]Refer to page 12 of the Financial Review for a definition of Adjusted EBITDA
[2]On a pre-exceptional basis
[4]All-in sustaining cost (AISC) per silver equivalent ounce: Calculated before exceptional items and includes cost of sales less depreciation in production cost and change in inventories, administrative expenses, brownfield exploration, operating and exploration capex and royalties (presented with income tax) divided by silver equivalent ounces produced, plus commercial deductions and selling expenses divided by silver equivalent ounces sold using a gold/silver ratio of 81:1. The Arcata operation is excluded from the calculation of the AISC from operations in H1 2019.
[5]All equivalent figures assume the average gold/silver ratio of 81:1.
[6]Includes revenue from services
[7]Included within revenue is a gain of US$2,017,000 (2018: loss of US$4,382,000) comprising net gold gain of US$3,034,000 (2018: net loss of US$1,870,000) and net silver loss of US$1,017,000 (2018: net loss of US$2,512,000) relating to provisional pricing adjustments arising on sales of concentrates and dore. Also
[8]Reconciliation of gross revenue by mine to Group net revenue
[9]Included within revenue is a transaction price of US$3,444,000 (2018: US$2,540,000) related to the shipping services provided by the Group to the customers arising on sale of concentrates of US$2,650,000, gold: US$1,244,000, silver: US$1,406,000 and dore of US$794,000, gold: US$460,000, silver: US$334,000 (2018: concentrates of US$1,762,000, gold: US$803,000, silver: US$959,000 and dore of US$778,000, gold: US$431,000, silver: US$347,000).
[10]Unit cost per tonne is calculated by dividing mine and treatment production costs (excluding depreciation) by extracted and treated tonnage respectively
[11]Unit cost per tonne for Peru do not include the Arcata mine in H1 2019
[12]Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales
[13]Includes commercial discounts (from the sales of concentrate) and commercial discounts from the sale of dore
[14]Royalties arising from revised royalty tax schemes introduced in 2011 and included in income tax line
[15]Calculated using a gold silver ratio of 81:1
[16]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
[17]Includes pre-shipment loans and short term interest payables
[18]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 or visit www.rns.com.
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