Preliminary Results

RNS Number : 0705J

Hochschild Mining PLC

24 March 2010

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24 March 2010

Hochschild Mining plc

Preliminary Results for the twelve months ended 31 December 2009

Strategic & Operational Highlights

· Record full year production, up 8%, achieving target of 28m attributable silver equivalent ounces

· 11% reduction in unit cost per tonne - exceeding 2009 target of 5%

· Continued delivery of M&A strategy:

· $172.9 million invested in Lake Shore Gold, increasing the Group's stake to 38%¹

· $58.5 million invested in Gold Resource Corp, increasing the Group's stake to 29%²

· Acquisition of Southwestern Resources completed for $19.2 million

· Resource life of mine for main operations up 20% to 7.1 years³

· 2010 exploration budget up 75% to $50 million

· 2010 production target of 29 million silver equivalent ounces, including 2.7 million silver equivalent ounces from Hochschild's interests in Lake Shore Gold and Gold Resource Corp

· Directorate and management appointments

Financial Highlights

· 24% increase in revenue to $539.7 million

· Administrative expenses down by 26% to $51.1 million

· Record attributable profit after tax of $98.1 million, positively impacted by an exceptional one-off gain of $42.3 million relating to the Lake Shore Gold/West Timmins Mining transaction

· EPS up from $(0.08) to $0.31

· Solid financial position with year end cash balance of $77.8 million

· Proposed dividend of $0.02 per share, bringing the total dividend to $0.04 per share

· $85.7 million pre-payment of $200 million syndicated loan facility

· $260 million convertible bond offering and equity placing⁴

($ millions, unless stated)	12 months to 31 December 2009	12 months to 31 December 2008	% change
Attributable silver production (koz)	18,754	16,941	11%
Attributable gold production (koz)	156.8	152.9	3%
Revenue	539,741	433,779	24%
Adjusted EBITDA^*	249,869	142,292	76%
Attributable profit after tax (before exceptionals)	52,892	15,782	235%
Attributable profit after tax (after exceptionals)	98,080	(24,718)	n/a
Earnings per share (before exceptionals) ⁵	0.17	0.05	240%
Earnings per share (after exceptionals) ⁵	0.31	(0.08)	n/a

*Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs and income tax plus depreciation, amortisation and exploration expenses other than personnel and other expenses.

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1 On a fully diluted basis, Hochschild's equity interest at 31 December 2009 was 35.7%. In addition, to date in 2010, $4.9m has been invested increasing Hochschild's stake to 35.9%. On an outstanding basis, Hochschild´s interest increased from 37.4% to 37.7% in 2010.

2 On a fully diluted basis, Hochschild's equity interest at 31 December 2009 was 25.0%. In addition, to date in 2010, $9.5m has been invested, increasing Hochschild's stake to 26.7%. On an outstanding basis, Hochschild´s interest increased from 27.0% to 28.7% in 2010.

3 Main operations are Arcata, Pallancata and San José. Resource life of mine includes the Company's reported reserves

4 Gross proceeds

5 Restated to reflect changes in the depreciation calculation (see note 2)

Eduardo Hochschild, Executive Chairman of Hochschild Mining commented:

"This has been a year of delivery for Hochschild with strong financial results and an excellent operational performance. We have delivered record production, exceeded our cost reduction target with an 11% saving and decreased administrative expenses by 26%. We delivered on our M&A strategy with continued investments in Lake Shore Gold and Gold Resource Corp as well as the acquisition of Southwestern Resources. We have made solid progress on exploration with resource life of mine extending to 7.1 years and Azuca's resources almost doubling to 44.1 million silver equivalent ounces.

It is with regret that the board has accepted the resignation of Miguel Aramburú, CEO, who is leaving Hochschild for personal reasons, and Ignacio Rosado, CFO, who is leaving to further develop his career by pursuing a CEO role. I would like to thank them both for their enormous dedication over a number of years as well as for their contribution in delivering yet another strong set of results.

I would like to welcome Ignacio Bustamante and Ramón Barúa as CEO and CFO, respectively. Both are experienced, well qualified professionals who will continue to develop and deliver our strategy going forward.

With a sound financial position, experienced management team and a positive outlook for precious metals, we are well placed to continue to deliver our long term growth strategy."

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A conference call will be held at 9.30am (London time) on Wednesday 24 March 2010 for analysts and investors.

Dial in details as follows:

UK (& International) +44 (0) 203 003 2666

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

UK +44 (0) 208 198 1996

Access code: 7993057#

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Enquiries:

Hochschild Mining plc

Isabel Lütgendorf +44 (0)20 7907 2934

Head of Investor Relations

Ignacio Rosado +511 437 6007

Chief Financial Officer

Finsbury

Faeth Birch

Robin Walker +44 (0)20 7251 3801

Public Relations

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About Hochschild Mining plc:

Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over forty years' experience in the mining of precious metal epithermal vein deposits and currently operates five underground epithermal vein mines, four located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has numerous long-term prospects throughout the Americas. For further details, please visit the Company's website at www.hochschildmining.com.

Chairman's Statement

After implementing a number of measures to deal with challenging market conditions in 2008, we entered 2009 with a firm focus on producing profitable ounces and a clear strategy for growth. Now, 12 months later, I am proud to say that 2009 has been a year of delivery for Hochschild Mining. Our strategy is supported by three pillars - organic, M&A, and exploration growth and we have delivered in each area with record production, continued strategic investments and an expanding portfolio of assets.

Operationally, we are as strong as ever with five mines in three countries, producing a total of 24.6 million ounces of silver and 211.6 thousand ounces of gold. Our results continue to benefit from the plant expansions completed at the end of 2008, which increased capacity by 29%. A continued focus on cost control has resulted in an impressive 11% decrease in unit cost per tonne at our underground mines, demonstrating management's ability to adapt quickly to changes in the price environment.

On the M&A side, we supported the merger between Lake Shore Gold Corporation ("Lake Shore Gold") and West Timmins Mining ("WTM") investing a further $91.1 million in the enlarged company⁶ and bringing our ownership to 38% on an outstanding basis. We have also delivered on our strategy by continuing to invest in Gold Resource Corporation ("GRC"), which started production in early 2010. The two companies have impressive production targets and, in aggregate, have a market capitalisation of $1,463.3 million, valuing Hochschild's stakes at $504.5 million⁷.

This has also been a year of delivery for our exploration team, with Azuca doubling resources to 44.1 million silver equivalent ounces and Crespo reporting resources of 44.7 million silver equivalent ounces, following extensive drilling campaigns. Azuca has the potential to be our next mine and an addition to our Peruvian operational cluster. We are in the process of initiating a scoping study at this project.

Resource life of mine (which includes reserves) for our three main operations; Arcata, Pallancata and San José increased by 20% from 5.9 to 7.1 years, whilst reserve life of mine has been maintained at 3.3 years. Our total attributable resource tonnage including all our operations, main projects and investments⁸, has more than doubled from 20.7 million to 43.6 million whilst contained silver equivalent ounces, on an attributable basis, increased from 313.4 million to 402.8 million.

We have delivered a strong set of financial results with revenue for the year up 24% to $539.7 million. Operating profit more than doubled to $153.6 million and, as a consequence, pre-exceptional EPS has increased from $0.05 to $0.17. Our results were also significantly impacted by $44.7 million of exceptional items, including a one-off gain of $42.3 million relating to the Lake Shore Gold/WTM transaction, bringing our post exceptional EPS to $0.31. Higher realised prices combined with lower costs allowed operating cash flow to more than double to $200.5 million.

In October 2009, we successfully raised $260 million⁹ through an equity placing and bond offering which provided us with increased financial flexibility and funded some of the investments mentioned above. Our ability to raise capital during a time when financial markets have been relatively unstable reflects investor support for our strategy and confidence in our growth prospects.

We continue to enjoy a healthy balance sheet with a year end cash balance of $77.8 million. This, in conjunction with cash generated from our operations will allow us to pursue our growth strategy going forward.

Organic growth

I am very proud to say that we have continued to deliver on our production targets since the IPO. 2009 was our best year so far, with record attributable production of 28.2 million attributable silver equivalent ounces - consolidating our position as the world's third largest primary silver producer. Results were particularly strong at Pallancata, where both silver and gold production doubled year-on-year and at San José, where silver and gold production increased 14% and 42% respectively.

Whilst we delivered on production, management were also particularly focused on cost control, and as mentioned above, unit cost per tonne decreased by 11% during the year. Including Moris, our only open pit mine, the reduction was even more impressive with a 15% saving. We have also lowered our administrative

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6 Amount invested from December 2009 to March 2010 following completion of the Lake Shore Gold/WTM transaction

7 As at 19 March 2010 on an outstanding basis

8 Arcata, Pallancata, San José, Moris, Ares, Azuca, Crespo, Lake Shore Gold, Inmaculada and San Felipe

9 Gross proceeds

expenses by $17.7 million, including a 28% reduction in personnel expenses and a 34% decrease in professional fees.

M&A growth

In 2009, we continued to execute our cluster consolidation strategy by securing bolt-on acquisitions, joint ventures and strategic investments in a number of key mining districts, investing a total of $239.5 million during the year.

As I mentioned earlier, Lake Shore Gold and GRC are important strategic investments for Hochschild and provide exposure to impressive production potential and long term growth.

We were fully supportive of Lake Shore Gold's merger with WTM which created the new large-scale, wholly-owned Timmins West Gold Mine Complex, an extension of the world class Timmins gold mining trend. Lake Shore Gold has announced an updated production target of 65,000 ounces of gold (3.9 million silver equivalent ounces) in 2010, building production over the following three years with the potential to produce 350,000 ounces (21 million silver equivalent ounces) by 2013.

To date, we have invested $63.5 million in GRC, increasing our ownership to 29%¹⁰. Our investment in the company gives us access to high grade, low cost ounces expanding our operational cluster in southern Mexico, a mining friendly country with significant mineral potential. GRC started production in February 2010 with a production target of 70,000 ounces of gold (4.2 million silver equivalent ounces) in the first 12 months of operation.

During the year we have also completed the strategic acquisition of Southwestern Resources Corp ("SWG"), a Canadian mineral exploration company for $19.2 million. The acquisition consolidated our position in southern Peru by adding a number of early stage projects to our pipeline including Crespo and Josnitoro.

Exploration growth

In addition to the exploration success achieved at our existing operations, we are also confident about a number of projects in our pipeline which are delivering positive results.

Azuca is a 3,000 hectare project located in southern Peru, only 50km northwest of Arcata and within Hochschild's operational cluster. During 2009, we undertook 26,240 metres of drilling and doubled resources, with 3.7 million tonnes at 287.7 g/t Ag and 1.3 g/t Au. As mentioned above, Azuca has the potential to be our next mine and in 2010 we have initiated a scoping study, with a feasibility study to follow.

We have also made progress in Crespo, a low grade gold/silver disseminated deposit in our Peruvian cluster. Hochschild's drilling programme, which is focused on increasing resources, has identified significant high grade ore bodies and as at 31 December 2009, Crespo reported resources of 44.7 million silver equivalent ounces, with 17.8 million tonnes at 38.8 g/t Ag and 0.7 g/t Au.

In 2009, we also made progress at Victoria in northern Chile, which is part of a partnership with Iron Creek Capital Corp. During the year, 28 drill holes totalling 7,626 metres were completed and anomalous gold and silver mineralisation was encountered in all drill holes with significant intercepts.

Responsible mining

Efficient operations can only be achieved through good community support and we are dedicated to maintaining the highest standards of corporate and social responsibility. We are committed to the safety of all our employees and have made significant progress over the past year. In 2009, we reduced our accident frequency rate by 9% compared to 2008. Nonetheless, it is with deep regret that I report three mine fatalities in 2009. We have addressed the underlying safety deficiencies that led to the occurrence of these tragic events and we continue to view any fatalities as unacceptable.

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10 On a fully diluted basis, Hochschild's equity interest at 31 December 2009 was 25.0%. In addition, during 2010, $9.5m has been invested, increasing Hochschild's stake to 26.7%. On an outstanding basis, Hochschild´s interest increased from 27.0% to 28.7% in 2010

Board and management changes

During the year we welcomed a new Non Executive Director, Fred Vinton, to the Board. Fred has over 30 years' banking and commercial experience and brings a wide range of knowledge and skills to Hochschild.

It is with sadness that the Board has accepted the resignation of Miguel Aramburú, who wishes to step down as CEO for personal reasons, with effect from 1 April 2010. I would like to thank Miguel for his enormous contribution to the Company over the last fifteen years and particularly his successful tenure as CEO. I also want to thank him for his dedication to the business and, personally speaking, for his friendship over this period. Ignacio Bustamante, COO, will succeed Miguel Aramburú as CEO and as an Executive Director from 1 April 2010. Ernesto Balarezo, currently head of our Peruvian operations will assume the role of VP of Operations with effect from 1 April 2010.

The board also regrettably announces that it has accepted the resignation of Ignacio Rosado, CFO, who is leaving the Company with effect from 31 May 2010 to develop his career further by pursuing a CEO role. During his tenure as CFO, Ignacio has played a key role in the execution of Hochschild's strategy ensuring a strong financial platform and the continued delivery of the Company's objectives. I would also like to thank Ignacio for his significant contribution over the years and I wish him well in his future career. Ignacio will be succeeded by Ramón Barúa, currently CEO of Fosfatos del Pacifico and previously General Manager of Hochschild's Mexican operations.

I would also like to take this opportunity to thank all our employees for the hard work that has enabled Hochschild to progress its strategic goals.

Dividend

The board has declared a final dividend of $0.02per ordinary share resulting in a total dividend for the year of $0.04 per ordinary share. We will keep dividend policy under review in accordance with the capital availability and requirements of the business.

Outlook

We entered 2010 with a solid foundation for continued growth and a positive precious metals outlook. Our production target for 2010 is 29 million silver equivalent ounces. Production from existing operations is expected to be 26.3 million attributable silver equivalent ounces comprising approximately 17.6 million ounces of silver and 145,000 ounces of gold. The target also includes 2.7 million silver equivalent ounces from our interests in Lake Shore Gold and GRC.

In 2010, the Company expects Arcata's silver grades to be at similar levels to Q409 as accessible mine areas will continue to have narrower veins and changing geotechnical conditions. As anticipated, production and grades at the Company's ageing mine Ares will continue to decline, with closure expected in the second half of 2010.

We take an extremely rigorous approach to managing costs that are within our control and we are currently undertaking a number of initiatives which will contribute to cost containment. However, management expects an increase in unit cost per tonne at our underground mines of around 10% in 2010, mostly as a result of inflation related to labour and supply costs. At Ares, given the ageing nature of the deposit, operating costs are expected to increase through to its expected closure in the second half of 2010.

The Company is pleased to announce that it is significantly increasing its exploration spend from $28.6 million in 2009 to $50 million in 2010. The exploration programme will focus on extending the life of Hochschild's existing operations and identifying high-quality, early stage precious metal projects which will provide cost effective growth.

With $77.8 million in cash at the end of 2009, we are in a sound financial position and well placed to deliver our long term growth strategy. Our focus will continue to be on producing profitable ounces and expanding the business through appropriate investment and acquisition.

Eduardo Hochschild

Executive Chairman

23 March 2010

OPERATING REVIEW

Production

Hochschild successfully achieved its full year production target, producing a record 28.2 million attributable silver equivalent ounces in 2009, representing an 8% increase year-on-year. This comprises 18.8 million attributable ounces of silver, up 11% and 156.8 thousand attributable ounces of gold, up 3%.

Attributable silver production was primarily driven by strong performance at our main mines (Arcata, Pallancata and San José), which benefited from the expansions successfully completed in the second half of 2008. The increase in attributable gold production was also primarily a result of the above, partially offset by declining production at Ares.

Life of mine

Hochschild remains committed to maximising the life of its main underground operations with the long term objective of achieving a minimum 8 year total resource life, including a 4 year reserve life. To support this goal, the Company is increasing its investment in brownfield exploration to $20 million in 2010.

As at 31 December 2009, resource life of mine (which includes reserves) increased by 20% from 5.9 to 7.1 years, whilst reserve life of mine has been maintained at 3.3 years¹¹. Our total attributable resource tonnage including all our operations, main projects and investments¹², has more than doubled from 20.7 million to 43.6 million whilst contained silver equivalent ounces, on an attributable basis, increased from 313.4 million to 402.8 million.

Main operations

Arcata: Peru

Production and sales

Arcata, Hochschild's flagship silver mine, enjoyed another successful year with silver and gold production up 6% and 19% respectively. These increases were driven primarily by the plant expansion completed in 2008 which increased capacity by 46% to 1,750 tonnes per day.

In 2009, Arcata's concentrate production was sold to Cormin, Louis Dreyfus, Teck, Korea Zinc, MRI Trading AG and a small fraction to Doe Run.

Total production	12 mths 2009	12 mths 2008	% change
Ore production (tonnes)	643,059	557,870	15
Average head grade silver (g/t)	503	571	-12
Average head grade gold (g/t)	1.56	1.53	2
Concentrate produced (tonnes)	22,352	20,639	8
Silver grade in concentrate (kg/t)	13.36	13.94	-4
Gold grade in concentrate (kg/t)	0.04	0.04	-
Silver produced (koz)	9,542	9,032	6
Gold produced (koz)	28.64	24.04	19
Silver sold (koz)	8,748	8,564	2
Gold sold (koz)	26.02	22.36	16

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11 Reserve life of mine relates to Hochschild's three main underground operations: Arcata, Pallancata and San José. 2008 numbers have been restated to reflect 2009 capacity.

12 Arcata, Pallancata, San José, Moris, Ares, Azuca, Crespo, Lake Shore Gold, Inmaculada and San Felipe

Exploration

The drilling programme at Arcata delivered positive results in 2009 with the discovery of three new mineralised structures in close proximity to the property's existing Mariana vein. The Company continues to increase resources at the Ramal, Julia and Soledad veins through diamond drilling.

The focus for the 2010 brownfield programme will be to evaluate new targets and develop resources in areas where potential mineralisation was identified in 2009.

Stated on an attributable basis	As at 31 December 2009	As at 31 December 2008	% change
Resources	4.56 mt @ 456 g/t Ag & 1.42 g/t Au	3.94 mt @ 583 g/t Ag & 1.75 g/t Au
Resource (moz Ag eq)	79.4	87.2	(9%)
Reserves	1.87 mt @ 417 g/t Ag & 1.31 g/t Au	1.61 mt @ 541 g/t Ag & 1.62 g/t Au
Reserve (moz Ag eq)	29.8	33.1	(10%)

Pallancata: Peru

Production and sales

Pallancata, which commenced production in 2007, is a joint venture with International Minerals Corporation ("IMC") in which Hochschild controls 60% and is the mine operator. Ore from Pallancata is transported 22 kilometres to the Selene plant for processing, demonstrating the Company's cluster consolidation strategy.

Pallancata recorded strong results in 2009 with silver and gold production doubling year-on-year to 8,420 koz of silver and 31.97 koz of gold. This was mainly a result of the plant expansion completed in 2008 which increased Selene's processing capacity from 2,000 to 3,000 tonnes per day, as well as the use of Selene's full capacity to process the ore from Pallancata.

In 2009 the silver/gold concentrate from Pallancata was sold to Teck and Aurubis.

Total production^{^[1]}	12 mths 2009	12 mths 2008	% change
Ore production (tonnes)	922,521	468,125	97
Average head grade silver (g/t)	327	312	5
Average head grade gold (g/t)	1.43	1.49	-4
Concentrate produced (tonnes)	7,684	4,265	80
Silver grade in concentrate (kg/t)	34.09	30.54	12
Gold grade in concentrate (kg/t)	0.13	0.12	8
Silver produced (koz)	8,420	4,188	101
Gold produced (koz)	31.97	16.16	98
Silver sold (koz)	8,147	3,852	112
Gold sold (koz)	29.77	14.81	101

^¹The Company has a 60% interest in Pallancata.

Exploration

At Pallancata in Peru, the Company is mainly focused on the newly discovered eastern extension of the main Pallacata vein and on the Virgen del Carmen vein. Wide spaced drilling at the Pallancata east vein defined mineralisation with intercepts including 3 metres at 829 g/t of silver and 2.5 g/t of gold. Underground mine preparation is progressing well with the Santa Angela ramp scheduled for completion in June 2010.

The focus for the 2010 brownfield programme will be to define resources along the Pallancata east vein and to explore new targets.

Stated on an attributable basis	As at 31 December 2009	As at 31 December 2008	% change
Resources	3.97 mt @ 409 g/t Ag & 1.73 g/t Au	3.32 mt @ 411 g/t Ag & 1.68 g/t Au
Resource (moz Ag eq)	65.3	54.6	20%
Reserves	2.35 mt @ 354 g/t Ag & 1.52 g/t Au	2.58 mt @ 366 g/t Ag & 1.51 g/t Au
Reserve (moz Ag eq)	33.5	37.8	(11%)

San José: Argentina

Production and sales

The Group's operation in Argentina, San José, commenced production in 2007 and is a joint venture with Minera Andes in which Hochschild controls 51% and acts as the mine operator.

San José reported strong results in 2009, with production up 14% and 42% year on year, for silver and gold respectively. This is mainly a result of the plant expansion undertaken in 2008, which doubled capacity from 750 to 1,500 tonnes per day and also due to the high grade Kospi vein, which was brought into production at the end of June 2009. The Kospi vein contributed over 80,000 tonnes of ore to the mine's production and is positively impacting the grade profile of the operation.

In 2009, the doré produced at San José was sold to Argor Heraeus S.A. and Johnson Matthey Inc. The concentrate produced at the operation was sold to Cormin, Aurubis and LS-Nikko.

Total production¹	12 mths 2009	12 mths 2008	% change
Ore production (tonnes)	460,971	295,963	56
Average head grade silver (g/t)	398	559	-29
Average head grade gold (g/t)	6.19	6.69	-7
Silver produced (koz)	4,998	4,381	14
Gold produced (koz)	77.08	54.26	42
Silver sold (koz)	5,072	4,588	11
Gold sold (koz)	77.22	57.70	34

^¹The Company has a 51% interest in San José.

Exploration

In Argentina, the Company has discovered two new split vein systems of the Kospi and Ayelen structures at San José which are rapidly being drilled to increase the resource and reserve base of the operation. Results included 1.5 metres at 1,376 g/t silver and 60.9 g/t gold and 1 metre at 655 g/t silver and 5.8 g/t gold.

The focus for the 2010 brownfield programme will be to evaluate the new Aguas Vivas target located 10 kilometres from the San José operation, to develop resources at the Saavedra target and to extend knowledge of the vein geology.

Stated on an attributable basis	As at 31 December 2009	As at 31 December 2008	% change
Resources	2.26 mt @ 406 g/t Ag & 6.08 g/t Au	1.68 mt @ 467 g/t Ag & 7.30 g/t Au
Resource (moz Ag eq)	56.1	49.0	14%
Reserves	0.78 mt @ 454 g/t Ag & 7.32 g/t Au	0.83 mt @ 522 g/t Ag & 7.90 g/t Au
Reserve (moz Ag eq)	22.3	26.7	(16%)

Other operations

Ares: Peru

Production and sales

As anticipated and previously disclosed, the average reserve grade at Ares is declining due to the geological nature of the deposit and the ageing of the mine and, as a consequence, gold and silver production decreased 34% and 41% respectively year on year. In line with the Company's focus on producing profitable ounces, Ares is expected to close in the second half of 2010.

Ares produces 100% doré, all of which was sold to Johnson Matthey in 2009.

Total production	12 mths 2009	12 mths 2008	% change
Ore production (tonnes)	341,273	347,910	-2
Average head grade silver (g/t)	96	157	-39
Average head grade gold (g/t)	4.17	6.06	-31
Doré total (koz)	947	1,608	-41
Silver produced (koz)	900	1,538	-41
Gold produced (koz)	42.59	64.16	-34
Silver sold (koz)	873	2,398	-64
Gold sold (koz)	41.82	77.44	-46

Moris: Mexico

Production and sales

Moris, which is 100% owned, is the Group's only open pit mine and provided a key stepping stone into Mexico, which is of key strategic importance to the Group. Moris produced 97 thousand ounces of silver and 28.34 thousand ounces of gold in 2009 and has an estimated one year mine life, with expected closure in 2011.

In 2009, all of the gold/silver doré produced at Moris was sold to Johnson Matthey.

Total production	12 mths 2009	12 mths 2008	% change
Ore production (tonnes)	1,282,461	876,148	46
Average head grade silver (g/t)	5.02	5.71	-12
Average head grade gold (g/t)	1.38	1.57	-12
Silver produced (koz)	97	65	49
Gold produced (koz)	28.34	26.85	6
Silver sold (koz)	87	68	28
Gold sold (koz)	26.29	28.01	-6

Selene: Peru

Production and sales

As previously reported, Selene's mine ceased production at the end of May 2009 due to the high level of capital expenditure required to extract profitable ounces. Selene's plant, which was upgraded during the year, continues to process ore from the Pallancata operation, which is located approximately 22 kilometres from Selene.

In 2009, approximately a quarter of Selene's production was converted into doré at the Ares plant and sold to Johnson Matthey. The remaining production was treated as concentrate and sold on a spot basis primarily to Aurubis and Teck.

Total production¹	12 mths 2009	12 mths 2008	% change
Ore production (tonnes)	109,893	269,150	-59
Average head grade silver (g/t)	217	210	3
Average head grade gold (g/t)	1.09	1.21	-10
Concentrate produced (tonnes)	1,057	3,201	-67
Silver grade in concentrate (kg/t)	18.55	15.04	23
Gold grade in concentrate (kg/t)	0.09	0.08	13
Silver produced (koz)	628	1,579	-60
Gold produced (koz)	3.02	8.50	-64
Silver sold (koz)	636	1,929	-67
Gold sold (koz)	2.96	9.93	-70

^¹Selene was closed on 28 May 2009

ACQUISITIONS & INVESTMENTS

Growth through investment and acquisition is a key element of Hochschild's strategy. The Company has maintained its disciplined approach in 2009, focusing on high grade, underground precious metals assets in the Americas, which have the potential to create long term shareholder value. The Company is continually evaluating opportunities with particular interest in existing operational clusters: the highlands of southern Peru, southern Mexico, the Argentine Patagonia, northern Chile and the Timmins region in Canada, as well as in other new mineral rich regions of the Americas.

In October 2009, the Company undertook a successful capital raising to provide the increased financial flexibility to pursue its acquisition strategy and during the year secured a number of strategic investments with a total spend of $239.5 million:

Lake Shore Gold

In August 2009, Lake Shore Gold Corp. ("Lake Shore Gold"), announced a definitive business combination agreement to acquire all of the outstanding common shares of West Timmins Mining Inc. ("WTM"). The transaction created the new large-scale, wholly-owned Timmins West Gold Mine Complex, an extension of the world class Timmins gold mining trend which has supplied approximately 70 million ounces of gold over the last century. As a result of the business combination, Hochschild's 40% stake in Lake Shore Gold was diluted to approximately 27% (on an outstanding basis).

In line with its stated strategy, Hochschild invested a further $172.8 million¹³ in Lake Shore Gold following the announcement of the WTM transaction, increasing its stake to 38% (36% on a fully diluted basis). This included the purchase of WTM shares totalling $63.8 million.

Lake Shore Gold is progressing towards commercial gold production at its Timmins Mine, expected during the fourth quarter of 2010, and is advancing towards its objective of becoming a mid-tier gold producer. Lake Shore Gold has announced an updated production target of 65,000 ounces of gold (3.9 million silver equivalent ounces) in 2010, building production over the following three years with the potential to produce 350,000 ounces (21 million silver equivalent ounces) by 2013.

Since its initial acquisition in February 2008, Hochschild has invested a total of $336.9 million in Lake Shore Gold reflecting its confidence in the significant production potential and long-term growth of the company. Lake Shore Gold has a current market capitalisation of approximately $936.4 million, valuing Hochschild's investment at $353.0 million.¹³

Lake Shore Gold is an important strategic investment for Hochschild and it maintains three positions on the company's board.

Gold Resource Corp

In 2009, Hochschild invested $49.0 million in Gold Resource Corporation ("GRC"), increasing its ownership from 5% to 27% (on an outstanding basis). In March 2010, the Company further increased its ownership to 29% bringing its total investment in the Company to $63.5 million. GRC is an underground precious metals mining company with a number of prime development projects in Mexico's southern state of Oaxaca,including a 100% interest in five potential high-grade gold and silver properties. This additional investment increases Hochschild's exposure to GRC's high grade, low cost ounces and expands the Company's southern Mexico operational cluster.

GRC commenced production from its El Aguila operation in February 2010 and has a stated production target of 70,000 ounces of gold (4.2 million silver equivalent ounces) in the first year of operation. In addition, GRC is accelerating the underground mine development at Arista, a gold and silver polymetalic deposit which is one of three high grade deposits discovered to date at the El Aguila project.

GRC has a current market capitalisation of approximately $526.9 million, valuing Hochschild's investment at $151.4 million¹⁴. GRC is also an important strategic investment for Hochschild and it maintains one position on the company's board.

Southwestern Resources Corp

_______________________________

13 Amount invested from August 2009 to March 2010 following announcement of the Lake Shore Gold/WTM merger. In 2009, the Company invested $168m. In 2010, the Company invested $4.9 million

14 As at 19 March 2010 on an outstanding basis

In March 2009, Hochschild completed the strategic acquisition of Southwestern Resources Corp ("SWG"), a Canadian mineral exploration company for $19.2 million. The acquisition consolidated the Company's position in southern Peru by adding a number of early stage gold, silver and base metals projects to its pipeline including 100% ownership of the Liam property, of which the Company originally acquired a 50% interest in August 2008. The 282,000 hectare land package is in close proximity to Hochschild's existing operational cluster: Arcata, Ares andPallancata and therefore enables the Group to leverage existing infrastructure and knowledge of the regional geology.

Hochschild's exploration team is currently evaluating numerous exploration targets at Liam as well as other properties included in the acquisition, and is progressing drilling in areas which have reported positive results, including Crespo and Cristo Los Andes.

The SWG land package included an increased stake in the Pacapausa project which comprises 7,933 hectares of exploration concessions and is a potential satellite source of material for Hochschild's Pallancata operation as well as 50% of Millo, a high grade deposit located adjacent to Hochschild's 100% owned Azuca project.

The SWG acquisition also included a 37% stake in Zincore Metals Inc ("Zincore"), a listed mining exploration company with zinc projects in Peru. On 5 March 2010, Hochschild divested its interest in Zincore for total proceeds of C$10.3 million as it did not constitute a core asset for the Company. The purchase of SWG also included minor stakes in Empire Petroleum, Northern Superior and Lara Exploration, which have a combined value of $2.0 million¹⁵, as well as in copper projects Jasperoide and Alpacocha.

Other acquisitions & investments

During the year, the Company also undertook a number of smaller investments in early stage exploration companies and joint ventures which provide the potential for cost effective future growth.

In October 2009, Hochschild signed an agreement with Mariana Resources in which it already holds an 11% stake following its $1.5 million investment in December 2008. The agreement builds on the relationship between the two companies and provides Hochschild with additional exposure to a number of Mariana's projects.

Under the terms of the agreement, Hochschild has the right to explore three adjoining prospective gold and silver properties totalling 13,455 hectares, located in the Santa Cruz area in the western sector of the Deseado Massif in southern Argentina. These tenements consist of Mariana's Amigos I and Amigos II license areas and Hochschild's San Augustin joint venture property with Iamgold which are located approximately 110 kilometres south of the Company's San José operation. Hochschild can increase its interest to 70% by committing 60% of the $3 million exploration budget within two years and by taking the project to a pre-feasibility stage.

_______________________________

15 As at February 2010

EXPLORATION REVIEW

Exploration is a vital part of Hochschild's growth strategy and the Company continues to commit significant investment to its geological programme. In 2009, the Company invested $28.6 million in this area and is increasing spend to $50 million in 2010.

Hochschild's exploration is focused in two areas; mine-site exploration & advanced projects (brownfield), which is aimed at increasing reserves and resources at a low cost per ounce, and early stage exploration (greenfield), which focuses on finding new, high-quality deposits.

Brownfield exploration

In addition to Hochschild's mine site exploration programme, which is focused in and around the Company's current mines, the Company also invests in other advanced stage projects, either located in or around one of the Group's existing clusters or in new mining friendly districts. The Company currently has two projects located within its southern Peru operational cluster:

Azuca

Azuca is a 100% owned project located in southern Peru, near the Company's existing operational cluster. Mineralisation is present in intermediate sulfidation silver and gold epithermal quartz veins. The Company is moving the project towards a scoping study and during 2009 undertook 26,240 metres of drilling achieving a significant increase in its resource base to 3.7 million tonnes at 288 g/t silver and 1.3 g/t gold, corresponding to 44.1 million silver equivalent ounces. Azuca's location, 50 kilometres from Hochschild's Arcata operation, could realise economies of scale due to the close proximity of existing plant and transport infrastructure.

Crespo

The Crespo project in southern Peru is 100% owned as a result of the Southwestern acquisition in 2009. Crespo is a low grade gold and silver disseminated deposit with 17.8 million tonnes at 38.8 g/t silver and 0.7 g/t gold, corresponding to 44.7 million silver equivalent ounces. Hochschild's drilling program, which is focused on increasing resources, reported the best historical intercept of the project with 76 metres at 1.0 g/t Au and 95 g/t Ag, including 7.4 metres at 11.9 g/t Au and 1,050 g/t Ag. Further drilling will be undertaken in 2010 to increase resources along strike of this high-grade intercept. Underground workings will help delineate the ore geometry, evaluate the high grade irregular ore bodies identified in the drilling and complete metallurgical testing towards a scoping study.

Greenfield exploration

The Company is continually evaluating new opportunities throughout Argentina, Chile, Mexico and Peru and has an extremely active project pipeline.

Projects enter the Company's pipeline either by way of internal discovery or through joint venture and are subject to a strict evaluation process to ensure that investment is targeted towards quality assets that will ultimately be brought to production. All opportunities are ranked and prioritised based on specific criteria and any project that does not meet the Company's requirements is farmed out or dropped. Projects are either 100% owned or allow Hochschild to earn into majority ownership over time.

Victoria

In Q409, Hochschild reported positive drilling results at the Vaquillas target in northern Chile, which is part of the Victoria project with Iron Creek Capital Corpwhere Hochschild has the right to earn-in 60% by completing $6 million of work on the property. The project lies along the prolific Domeyko fault zone in Region II, 120 kilometres east of the costal town of Taltal. During 2009, 28 drill holes totalling 7,626 metres were completed which, together with previous drilling results, suggest that the Vaquillas project has potential for high-grade gold and silver veins, as well as bulk-tonnage low-grade gold and silver mineralisation. In December 2009, the Victoria project, which covers 29,050 hectares,was expanded to include Iron Creek's remaining properties in their adjoining porphyry copper project, representing an additional 17,000 hectares.

In addition, Hochschild will advance various early stage projects in southern Peru, such as Josnitoro, Astana Farallón and Cerro Blanco. In Argentina, the Company is focused in the Patagonia region and commenced drilling at the La Flora project in late 2009 with the Mosquito and Los Pinos vein systems following in 2010. In central Mexico, Hochschild is undertaking work in early exploration projects and is expecting to complete a first pass drilling programme at Mercurio.

FINANCIAL REVIEW

Key performance indicators:

(before exceptional items, unless otherwise indicated)

US$(000) unless otherwise indicated	Year ended 31 December 2009	Year ended 31 December 2008	% change
Net Revenue	539,741	433,779	24%
Attributable silver production (koz)	18,754	16,941	11%
Attributable gold production (koz)	157	153	3%
Cash costs ($/oz Ag co-product)¹	7.11	7.05	1%
Cash costs ($/oz Au co-product)¹	476	469	1%
Adjusted EBITDA²	249,869	142,292	76%
Earnings per share³	$0.17	$0.05	240%
Earnings per share (after exceptionals)³	$ 0.31	$(0.08)	n/a
Cash flow from operating activities	200,524	78,641	155%
Reserve life of mine (years)⁴	3.3	3.3	-

¹Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales.

²Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance cost, foreign exchange loss and income tax plus depreciation, amortisation and exploration costs other than personnel and other expenses.

³ 2008 EPS figures have been restated to reflect changes in the depreciation calculation (see note 2).

⁴Reserve life of mine relates to our three main underground operations: Arcata, Pallancata and San Jose.2008 figure was restated to reflect the Pallancata´s 2009 capacity.

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

Revenue

Gross revenue: Gross revenue from continuing operations increased 27% to $589.9 million in 2009 (2008: $463.4 million) as a result of higher production and higher metal prices during the year.

Silver: Gross revenue from silver increased 32% in 2009 to $382.4 million (2008: $288.8 million) as a result of increased production following the H208 capacity expansions at Arcata, Pallancata and San José, as well as higher prices. The total amount of silver ounces sold in 2009 was 23,563 koz (2008: 20,593 koz).

Gold: Gross revenue from gold increased 19% in 2009 to $207.5 million (2008: $174.6 million) also as a result of increased production following capacity expansions at Arcata, Pallancata and San José as well as higher prices. The total amount of gold ounces sold in 2009 was 204.1 koz (2008: 198.3 koz).

Commercial discounts: Commercial discounts primarily refer to refinery charges for processing mineral ore and are discounted from revenue on a per tonne or per ounce basis. In 2009, the Group recorded commercial discounts of $50.4 million, up $20.3 million on 2008. This was as a result of the capacity expansions completed in 2008 which led to higher volumes and, consequently, higher commercial discounts at Pallancata and San José. In addition, the Company experienced higher treatment charges at Arcata. Consequently, the ratio of commercial discounts to gross revenue in 2009 increased to 8.5% (2008: 6.5%). For 2010, the company has secured improved commercial terms relating to concentrate sales.

Net revenue: Revenue from continuing operations, net of commercial discounts, increased by 24% to $539.7 million, comprising silver revenue of $341.5 million and gold revenue of $198.0 million. In 2009, silver accounted for 63% and gold 37% of the Company's consolidated revenue compared to 61% and 39% respectively in 2008.

Revenue by mine

US$(000) unless otherwise indicated	Year ended 31 December 2009	Year ended 31 December 2008	% change
Silver revenue
Arcata	141,816	119,284	19%
Ares	13,038	38,196	(66%)
Selene	8,805	29,168	(70%)
Pallancata	139,125	48,207	189%
San José	78,352	52,942	48%
Moris	1,245	992	26%
Commercial discounts	(40,904)	(24,712)	66%
Net silver revenue	341,477	264,077	29%
Gold revenue
Arcata	27,364	20,344	35%
Ares	40,278	67,899	(41%)
Selene	2,819	8,714	(68%)
Pallancata	32,443	13,214	146%
San José	79,430	40,095	98%
Moris	25,195	24,380	3%
Commercial discounts	(9,492)	(5,423)	75%
Net gold revenue	198,037	169,223	17%

Other revenue¹	227	479	(53%)
Net revenue	539,741	433,779	24%

¹Other revenue includes revenue from base metal components in the concentrate sold from the Arcata mine net of commercial discounts and revenue from sale of energy.

Net average realised sale prices¹

	Twelve months to 31 December 2009	Twelve months to 31 December 2008	% change
Silver ($/oz)	$14.49	$12.82	13%
Gold ($/oz)	$970.33	$853.28	14%

¹Net average realisable prices include commercial discounts.

Costs

Hochschild is committed to producing profitable ounces and diligently controlling costs. The Company committed to reducing unit cost per tonne at its underground operations by 5% in 2009 and has exceeded this target with a full year reduction of 11%, bringing unit cost from $79.7 in 2008 to $71.2 in 2009. Including Moris, the Group's only open pit mine, unit cost per tonne decreased 15% to $51.1.

These savings are mainly a result of the economies of scale achieved by the capacity expansions completed last year and cost control measures implemented during the year as well as external factors such as the devaluation of local currencies.

Depreciation and amortisation within production cost increased to $83.4 million (2008: $59.6 million) as a consequence of higher capital expenditure and higher throughput related to the significant expansions completed by the Group in the last three years. During the year the depreciation calculations were amended and the 2008 depreciation charge was restated.

Cash costs

Co-product cash costs include cost of sales, commercial deductions and selling expenses before exceptional items, less depreciation included in cost of sales. Silver/gold cash costs are total cash costs multiplied by the percentage of revenue from silver/gold, divided by the number of silver/ gold ounces sold in the year.

Silver and gold cash costs increased from $7.05 to $7.11 per ounce and $469 to $476 per ounce respectively. The increase was mainly explained by higher commercial discounts and selling expenses and lower extracted grades.

By-product cash costs include cost of sales, commercial deductions and selling expenses before exceptional items, less depreciation included in cost of sales. Silver/gold cash costs are total cash costs less revenue from gold/silver, divided by the number of silver/gold ounces sold in the year. By-product cash costs for the period were $2.43 per silver ounce (2008: $3.08 per ounce) and ($576) per gold ounce (2008: ($256) per gold ounce).

Administrative expenses

Administrative expenses before exceptional items decreased by 26% from $68.8 million to $51.1 million as a result of the measures undertaken by management at the end of 2008 to reduce expenses and preserve cash. These included a 28% reduction in personnel expenses, which decreased from $35.5 to $25.4 million and a 34% reduction in professional fees, decreasing from $10.0 to $6.6 million.

Exploration expenses

Exploration expenses, which primarily relate to greenfield exploration, decreased to $19.9 million in 2009 (2008: $23.8 million) as a result of the Group's decision to reduce expenditure and preserve cash following the deterioration in market conditions at the end of 2008.

In addition to exploration expenses, the Group capitalises part of its brownfield exploration, which mostly relates to costs incurred converting potential resource to the inferred or measured and indicated category. In 2009, the Group capitalised $8.6 million relating to brownfield exploration compared to $6.7 million in 2008.

The Company is pleased to announce that it is significantly increasing its total exploration planned expenditure (including greenfield and brownfield investment) by 75% to $50 million in 2010. The exploration programme will focus on identifying high-quality, early stage precious metal projects which will provide cost effective growth and also on extending the life of Hochschild's existing operations.

Selling expenses

Selling expenses increased to $21.0 million (2008: $11.3 million) mainly as a result of the higher volume of concentrate sold at San José and Pallancata. The increase was also a result of higher export duties relating to higher production and metal prices in San José (export duties in Argentina are levied at 10% of revenue for concentrate and 5% of revenue for doré).

Other income/expenses

Other income before exceptional items decreased marginally from $5.0 million in 2008 to $4.5 million in 2009.

Other expenses before exceptional items increased to $19.3 million (2008: $8.2 million) and are mainly comprised of a non cash $11.8 million increase in the provision for mine closure relating to Selene and Sipan and other expenses such as a labour contingency ($1.8 million), a loss on sale of other assets ($1.6 million) and provision for obsolescence of supplies ($1.1 million).

Profit from continuing operations

Profit from continuing operations before exceptional items, net finance costs and income tax increased to $153.6 million (2008: $70.1 million) as a result of the effects detailed above.

Impact of the Group's investments in joint ventures and associates

An associate is an entity in which Hochschild has significant influence but not control. The Group accounts for the following entities as associates: Lake Shore Gold (35.7%)¹⁶, GRC (25.0%)¹, Zincore (36.8%), Cabo Sur (51%) and Minas Pacapausa (80%). The Group's investments in associates are accounted for using the equity method of accounting.

Hochschild's share of the profit after tax of the associate totalled $7.6 million in 2009 compared to an $8.2 million loss in 2008. The 2009 profit included a $9.2 million gain in Lake Shore Gold mainly due to a progressive decrease in the statutory income tax rate in Canada and the subsequent impact on the deferred tax liability recognised on Hochschild's acquisitions of Lake Shore Gold and Lake Shore Gold's acquisition of WTM. This gain was partially offset by the share of net losses in GRC ($1 million) and Zincore ($0.4 million).

Adjusted EBITDA

Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs and income tax excluding depreciation, amortisation and exploration costs other than personnel and other expenses. Adjusted EBITDA increased by 76% over the period to $249.9 million (2008: $142.3 million) primarily driven by higher sales, lower costs and lower administrative expenses, which were partially offset by higher selling and other expenses.

US$(000) unless otherwise indicated	Year ended 31 December 2009	Year ended 31 December 2008	% change
Profit from continuing operations before exceptional items, net finance cost, foreign exchange loss and income tax	153,600	70,101	119%
Operating margin	28%	16%
Depreciation and amortisation in cost of sales	85,789	57,540	49%
Depreciation and amortisation in administrative expenses	796	1,125	(29%)
Exploration expenses	19,941	23,841	(16%)
Personnel and other exploration expenses	10,257	10,315	(1%)
Adjusted EBITDA	249,869	142,292	76%
Adjusted EBITDA margin	46%	33%

Finance income

Finance income before exceptional items decreased by 32% to $6.4 million (2008: $9.4 million) mainly as a result of the lower rate of interest on the Company's liquidity funds. In 2009, the Company reported a weighted average annual effective interest rate of 0.71% on these funds compared to 3.98% in 2008.

Finance costs

Finance costs before exceptional items of $46.0 million (2008: $18.8 million) include a realised loss of $26.0 million relating to the Group's 2009 forward sales contracts. It also includes an unrealised loss of $2.5 million

_______________________________

16 On a fully diluted basis.

relating to the Company's 2010 'zero cost collar' which was secured in mid 2009 to ensure an ongoing level of cash flow stability. The collar relates to 5.2 million ounces of the Company's 2010 silver production with an average 'floor' at $12.7/oz and an average 'cap' at $19.7/oz.

The company recorded an interest expense of $15.6 million related mainly to the outstanding syndicated loan ($114.3 million) and the convertible bond issued in August 2009 ($115 million). In July 2009, the Group fixed the interest rate on the syndicated loan at 2.75%.

Foreign exchange losses

The Group recognised a foreign exchange loss of $0.3 million (2008: $7.2 million loss) as a result of transactions in currencies other than the functional currency.

Income tax

The Company's pre-exceptional effective tax rate decreased to 36.8% in 2009 (2008: 54.7%) mainly as a result of:

(i) A lower proportion of non-deductible expenses and non-recognised tax losses to profit before income tax

(ii) A lower negative tax effect from the conversion of the tax bases of local currencies to US dollars

(iii) A non taxable gain of $6.8 million in Hochschild´s share on results of associates

(iv) A gain of $4.2 million as a result of tax restructuring in Mexico

These effects were partially offset by

(v) A $2.4 million provision related to tax credits in the Project Finance loan in Santa Cruz. (See note 7, (8) for further details).

(vi) A negative tax effect of $5.5 million due to lower expenses allowed for double deductions in Argentina. (See note 7, (i) for further details).

(vii) A negative impact of $3.5 million related to the increase in mine closure provision.

In addition, the post-exceptional effective tax rate decreased to 21.6% (2008: 847.6%) primarily driven by a non-taxable income of $74.4 million in 2009 including a $42.3 million gain from the merger between Lake Shore Gold and WTM, a $12.1 million gain on the exchange of WTM shares for Lake Shore Gold shares, a $7.7 million gain on the Southwestern acquisition and finance income of $7.4 million relating to GRC.

Exceptional items

Exceptional items totalled $44.7 million after tax (2008: ($42.0 million). This mainly includes:

Positive exceptional items principally include:

	$	Description of main ítems
Impact of the Group's investments in joint ventures and associates	39.6 million	In November 2009, Lake Shore Gold acquired all of the outstanding common shares of WTM creating a new large-scale, wholly-owned Timmins West Gold Mine Complex. As a consequence of this all-share transaction, Hochschild's 40.0% stake in Lake Shore Gold was diluted to approximately 26.1%. Upon completion of the business combination between Lake Shore Gold and WTM, Lake Shore Gold´s equity value increased by $386 million. As a result, Hochschild recognised an exceptional gain of $42.3 million in 2009, reflecting its share of the increased equity value of Lake Shore Gold, net of the loss on the dilution of Hochschild's interest in Lake Shore Gold. In December, after the Group acquired an additional interest in Lake Shore Gold of 3.9%, Lake Shore Gold issued a package of shares, options and warrants. As a result, Hochschild´s stake of 36.1% was diluted to 35.7% and the Group recognised an exceptional loss of $4.5 million.
Finance Income	22.3 million	The Company reported finance income of $28.7 million (2008: $13.3 million) due to the $12.1 million gain generated from the exchange of shares held in West Timmins Mining for shares in Lake Shore Gold and the $7.4 million gain realised from the exercise of options held in GRC. (See note 6 for further details).
Other income	8.8 million	Other income increased to $13.3 million (2008: $5.3 million). This was mainly generated due to a gain of $7.7 million arising from the acquisition of Southwestern Resources as a result of the difference between the total acquisition cost of $19.3 million and the fair value of the net assets of $26.9 million on the acquisition date.

Negative exceptional items principally include:

Description of main ítems

Impairment of fixed assets¹

26.7 million

In 2009, Hochschild has recorded a total impairment charge before tax of $26.7 million, mainly as a result of:

Ares - The Group has impaired the carrying amount of the assets related to the Ares mine by $15.3 million, due to the mine's expected closure in the second half of 2010 and the resulting revision to the remaining recoverable reserves and resources.

Liam - In the first half of 2009, the Liam property was written down by $10.0 million following a reassessment of the value of the property which was acquired in August 2008 for a total consideration of $33.3 million.

Selene - As a result of the closure of the Selene mine in June 2009, the Company has written down the remaining net book value of assets of $4.8 million.

Reversal of impairment - In June 2009, the Company reported an impairment charge of $5.7 million for Moris due to the small reserve and resource base at the operation. However, following the positive price environment during the year, this impairment has been reversed and the Company is therefore reporting an exceptional gain of $3.4 million.

After tax, the total impairment charge was $17.7 million representing an impact of $0.06 on EPS.

Cost of sales

$6.9 million

One-off bonus paid to workers at the Peruvian mines as a result of the negotiations with workers which were successfully resolved in March 2009

¹Impairment testing should be performed at an individual asset or cash-generating unit level. As required by IFRS, the Group conducts an impairment review on an annual basis every time any goodwill was allocated to an asset and every time indicators of impairment exist. Impairment indicators include: declines in metal prices; increases in costs, royalties or taxes; falling grades; lower reserves; production cut backs and significant project development over-runs. The presence of one or more indicators does not necessarily mean that the asset would be impaired but that it must be tested for impairment. See notes 9 & 10 for further details.

Cash flow & balance sheet review:

Cash flow:

$ thousands	12 months ended 31 December 2009	12 months ended 31 December 2008	Change
Net cash generated from operating activities	200,524	78,641	155%
Net cash used in investing activities	(373,021)	(475,790)	(22%)
Cash flows generated/(used) in financing activities	134,443	212,728	(37%)
Net (decrease)/increase in cash and cash equivalents during the period	(38,054)	(184,421)	(79%)

Total cash decreased to $38.1 million (2008: $184.4 million) driven by significant M&A activity. This was partially offset by strong operating cashflow as well as the capital raising undertaken in October 2009.

Cash flow from operating activities increased 155% to $200.5 million (2008 $78.6 million) as a consequence of higher production and prices and lower production costs and administrative expenses.

Cash outflows used in investing activities of $373.0 million (2008: $475.8 million) were comprised of investment in M&A, which totalled $239.5 million including $168.0 million in Lake Shore Gold, $49.0 million in Gold Resource Corp and $19.2 million in Southwestern Resources. In addition, the Company invested ($141.0 million) in PP&E.

Cash generated from financing activities increased to $134.4 million (2008: $212.7 million) as a result of the capital raising completed in October 2009 which included gross proceeds of $145 million from the equity placing and $115 million from the convertible bond offering. This was partially offset by Hochschild's repayment of $85.7 million of its $200 million syndicated loan.

Working capital:

$ millions	12 months ended 31 December 2009	12 months ended 31 December 2008
Trade and other receivables	168.0	162.0
Inventories	45.8	51.9
Derivative financial instruments	(1.9)	5.6
Income tax	(10.8)	14.3
Trade and other payables	(135.2)	(124.9)
Working capital	66.0	108.8

The Company's working capital position decreased to $66.0 million (2008: $108.8 million), primarily as a result of higher trade and income tax payables.

Net debt:

US$(000) unless otherwise indicated	As at 31 December 2009	As at 31 December 2008
Cash and cash equivalents	77,844	116,147
Long term borrowings	219,681	231,692
Short term borrowings less pre-shipment loans	84,158	48,410
Net debt/(net cash)	225,995	163,955

Net debt increased to $226.0 million (2008: $164.0 million) as a result of the issuance of the $115 million convertible bond, partially offset by the $85.7 million repayment of the Company's $200 million syndicated loan and lower cash balance as a consequence of a strong M&A activity.

Capital expenditure¹

US$(000) unless otherwise indicated	Year ended 31 December 2009	Year ended 31 December 2008
Arcata	29,688	43,977
Ares	3,484	10,438
Selene	16,579	47,226
Pallancata¹	24,117	14,619
San José¹	26,113	80,398
Moris¹	480	2,234
San Felipe¹	150	63,318
Other	7,924	49,061
Total	108,535	311,271

¹ Includes additions in property, plant and equipment and evaluation and exploration assets and excludes increases in closure of mine assets.

2009 capital expenditure of $108.5 million (2008: $311.3 million) includes mine developments of $51.0 million, equipment of $48.9 million and exploration of $8.6 million. The year-on-year decrease is mainly explained by the completion of capacity expansions at the Company's Arcata, Pallancata and San José operations in 2008.

Mine closure provision

The Group has updated its mine closure provision from $39.0 million to $61.3 million, partly as a result of the plant expansions completed in 2008 and also to ensure that it continues to fully comply with government requirements. From the $22.3 million increase, $11.8 million refers to mines that are already closed and is recorded under other expenses in the income statement, whilst $15.2 million refer to current operations and is recorded under provisions in the statement of financial position. These effects were partially offset by the expenditure in mine rehabilitation during the year and the change in discount rate. (See note 13 for further details).

Dividends:

The directors recommend a final dividend of $0.02 per ordinary share which, subject to shareholder approval at the 2010 AGM, will be paid on 27 May 2010 to those shareholders appearing on the register on 30 April 2010. If approved, this will result in a total dividend for the year of $0.04 per share. Dividends are declared in US dollars. Unless a shareholder elects to receive dividends in US dollars, they will be paid in pounds sterling with the US dollar dividend converted into pound sterling at exchange rates prevailing at the time of payment. Our dividend policy takes into account the profitability of the business and the underlying growth in earnings of the Company, as well as its capital requirements and cash flow.

Dividend dates	2010
Ex-dividend date	28 April
Record date	30 April
Deadline for return of currency election forms	4 May
Payment date	27 May

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A conference call will be held at 9.30am (London time) on Wednesday 24 March 2010 for analysts and investors.

Dial in details as follows:

UK (& International) +44 (0) 203 003 2666

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

UK +44 (0) 208 198 1996

Access code: 7993057#

_____________________________________________________________________

Enquiries:

Hochschild Mining plc

Isabel Lütgendorf +44 (0)20 7907 2934

Head of Investor Relations

Ignacio Rosado +511 437 6007

Chief Financial Officer

Finsbury

Robin Walker +44 (0)20 7251 3801

Public Relations

__________________________________________________________________

About Hochschild Mining plc:

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.

Directors

The names and biographical details of the Directors serving at the date of this report are listed in the 2009 Annual Report.

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge:

- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

- the Management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

Consolidated income statement

For the year ended 31 December 2009

			Year ended 31 December 2009			Year ended 31 December 2008
	Notes	Before exceptional items US$000		Exceptional items US$000	Total US$000		(Restated)¹ Before exceptional items US$000	(Restated)¹ Exceptional items US$000	(Restated)¹ Total US$000
Continuing operations
Revenue		539,741		-	539,741		433,779	-	433,779
Cost of sales		(279,298)		(6,918)	(286,216)		(256,608)	(234)	(256,842)
Gross profit		260,443		(6,918)	253,525		177,171	(234)	176,937
Administrative expenses		(51,068)		-	(51,068)		(68,751)	(1,127)	(69,878)
Exploration expenses		(19,941)		(1,049)	(20,990)		(23,841)	(69)	(23,910)
Selling expenses		(21,005)		-	(21,005)		(11,257)	-	(11,257)
Other income	5	4,501		8,782	13,283		5,025	252	5,277
Other expenses	5	(19,330)		(1,247)	(20,577)		(8,246)	(1,984)	(10,230)
Impairment and write-off of assets (net)	9	-		(26,713)	(26,713)		-	(30,212)	(30,212)
Profit from continuing operations before net finance income/(cost), foreign exchange loss and income tax		153,600		(27,145)	126,455		70,101	(33,374)	36,727
Share of post tax losses of associates and joint ventures accounted under equity method	4,11	7,617		39,606	47,223		(8,214)	-	(8,214)
Finance income	6	6,384		22,300	28,684		9,382	3,914	13,296
Finance costs	6,12	(46,040)		(1,256)	(47,296)		(18,833)	(18,088)	(36,921)
Foreign exchange loss		(256)		-	(256)		(7,161)	-	(7,161)
Profit/(loss) from continuing operations before income tax		121,305		33,505	154,810		45,275	(47,548)	(2,273)
Income tax expense	7	(44,688)		11,218	(33,470)		(24,767)	5,500	(19,267)
Profit/(loss) for the year from continuing operations		76,617		44,723	121,340		20,508	(42,048)	(21,540)
Attributable to:
Equity shareholders of the Company		52,892		45,188	98,080		15,782	(40,500)	(24,718)
Minority shareholders		23,725		(465)	23,260		4,726	(1,548)	3,178
		76,617		44,723	121,340		20,508	(42,048)	(21,540)
Basic earnings per Ordinary Share from continuing operations and for the year (expressed in US dollars per share)	8	0.17		0.14	0.31		0.05	(0.13)	(0.08)
Diluted earnings per Ordinary Share from continuing operations and for the year (expressed in US dollars per share)	8	0.17		0.14	0.31		0.05	(0.13)	(0.08)

1 Certain numbers shown here do not correspond to the 2008 financial statements and reflect adjustments made as detailed in note 2.

Consolidated statement of comprehensive income

For the year ended 31 December 2009

		Year ended 31 December
	Notes	2009 US$000	2008 US$000
Profit for the year		121,340	(21,540)1
Other comprehensive income
Exchange differences on translating foreign operations		25,707	(43,079)
Change in fair value of available-for-sale financial assets		4,313	(1,454)
Recycling of the gain on Fortuna Silver Mines		(623)	(1,613)
Change in fair value of cash flow hedges taken to equity		(13)	-
Share in gains directly recognised in equity by associates		-	620
Income tax relating to components of other comprehensive income		71	664
Other comprehensive income for the period, net of tax		29,455	(44,862)
Total comprehensive income for the year		150,795	(66,402)
Total comprehensive income attributable to
Equity shareholders of the Company		127,558	(69,373)
Minority interests		23,237	2,971
		150,795	(66,402)

1 This number shownhere does not correspond to the 2008 financial statements and reflect adjustments made as detailed in note 2.

Consolidated statement of FINANCIAL POSITION

As at 31 December 2009

	Notes	As at 31 December 2009 US$000	(Restated)¹ As at 31 December 2008 US$000	(Restated)¹ As at 1 January 2008 US$000
ASSETS
Non-current assets
Property, plant and equipment	9	438,958	416,565	243,027
Evaluation and exploration assets	10	55,828	44,726	6,034
Intangible assets		22,425	2,668	2,896
Investments accounted under equity method	11	450,665	136,019	-
Available-for-sale financial assets		19,181	17,794	15,100
Trade and other receivables		3,150	38,304	25,518
Income tax receivable		1,302	802	616
Deferred income tax assets		15,852	21,811	26,162
		1,007,361	678,689	319,353
Current assets
Inventories		45,813	51,855	47,628
Trade and other receivables		164,864	123,726	134,180
Income tax receivable		9,280	14,470	1,003
Financial assets at fair value through profit and loss		695	5,569	8,039
Cash and cash equivalents		77,844	116,147	301,426
		298,496	311,767	492,276
Total assets		1,305,857	990,456	811,629
EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Parent
Equity share capital		158,637	146,466	146,466
Share premium		395,928	395,928	395,928
Other reserves		(212,921)	(250,831)	(205,556)
Retained earnings		385,700	167,767	220,072
		727,344	459,330	556,910
Minority interest		76,126	66,293	49,769
Total equity		803,470	525,623	606,679
Non-current liabilities
Trade and other payables		81	627	859
Borrowings	12	219,681	231,692	55,209
Provisions	13	55,176	37,687	30,821
Deferred income tax liabilities		10,662	9,192	8,837
		285,600	279,198	95,726
Current liabilities
Trade and other payables		68,501	82,291	52,176
Financial liabilities at fair value through profit and loss		2,640	-	-
Borrowings	12	112,908	98,070	33,169
Provisions	13	11,405	4,277	13,029
Income tax payable		21,333	997	10,850
		216,787	185,635	109,224
Total liabilities		502,387	464,833	204,950
Total equity and liabilities		1,305,857	990,456	811,629

1 Certain numbers shown here do not correspond to the 2008 financial statements and reflect adjustments made as detailed in note 2.

These financial statements were approved by the Board of Directors on 23 March 2010 and signed on its behalf by:

Ignacio Rosado
Chief Financial Officer

23 March 2010

Consolidated statement of cash flows

For the year ended 31 December 2009

		Year ended 31 December
	Notes	2009 US$000	(Restated)¹ 2008 US$000
Cash flows from operating activities
Cash generated from operations		215,698	102,167
Interest received		1,041	7,512
Interest paid		(12,902)	(4,302)
Payments of mine closure costs		(2,831)	(1,476)
Tax paid		(482)	(25,260)
Net cash generated from operating activities		200,524	78,641
Cash flows from investing activities
Purchase of property, plant and equipment		(116,009)	(296,027)
Purchase of evaluation and exploration assets		(8,636)	-
Acquisition of subsidiary	4	(19,246)	-
Investment in an associate	4	(216,943)	(164,211)
Purchase of available-for-sale financial assets		(1,857)	(19,240)
Purchase of intangibles		(16,330)	(37)
Proceeds from sale of available-for-sale financial assets		3,861	3,321
Proceeds from sale of property, plant and equipment		2,139	392
Other		-	12
Net cash used in investing activities		(373,021)	(475,790)
Cash flows from financing activities
Proceeds of borrowings	12	285,461	484,041
Repayment of borrowings	12	(277,185)	(257,300)
Transaction costs associated with borrowing		(3,568)	(2,408)
Acquisition of minority interest	4	(1,500)	-
Dividends paid		(20,048)	(28,531)
Proceeds from issue of ordinary shares under Global offer		143,621	-
Transaction costs associated with issue of shares		(3,453)	-
Capital contribution from minority shareholders		11,115	16,926
Cash flows generated from financing activities		134,443	212,728
Net decrease in cash and cash equivalents during the year		(38,054)	(184,421)
Exchange difference		(249)	(858)
Cash and cash equivalents at beginning of year		116,147	301,426
Cash and cash equivalents at end of year		77,844	116,147

1 Certain numbers shown here do not correspond to the 2008 financial statements and reflect adjustments made as detailed in note 2.

Consolidated statement of changes in equity

For the year ended 31 December 2009

				Other reserves
	Notes	Equity share capital US$000	Share premium US$000	Unrealised gain/(loss) on available-for-sale financial assets and initial valuation of hedging US$000	Bond equity component US$000	Cumulative translation adjustment US$000	Merger reserve US$000	Total Other reserves US$000	Retained earnings US$000	Capital and reserves attributable to shareholders of the Parent US$000	Minority interest US$000	Total equity US$000
Balance at 1 January 2008 as reported		146,466	395,928	1,862	-	2,628	(210,046)	(205,556)	229,202	566,040	50,008	616,048
Adjustments due to restatement of financial statements		-	-	-	-	-	-	-	(9,130)	(9,130)	(239)	(9,369)
Balance at 1 January 2008, restated		146,466	395,928	1,862	-	2,628	(210,046)	(205,556)	220,072	556,910	49,769	606,679
Other comprehensive loss/income		-	-	(2,272)	-	(43,003)	-	(45,275)	620	(44,655)	(207)	(44,862)
Profit for the year		-	-	-	-	-	-	-	(24,718)	(24,718)	3,178	(21,540)
Total comprehensive loss for 2008		-	-	(2,272)	-	(43,003)	-	(45,275)	(24,098)	(69,373)	2,971	(66,402)
Dividends		-	-	-	-	-	-	-	(28,331)	(28,331)		(28,331)
Adjustment to deferred consideration¹		-	-	-	-	-	-	-	-	-	1,220	1,220
Expiration of dividends payable		-	-	-	-	-	-	-	124	124	4	128
Capital contribution from minority shareholders		-	-	-	-	-	-	-	-	-	12,329	12,329
Balance at 31 December 2008, restated		146,466	395,928	(410)	-	(40,375)	(210,046)	(250,831)	167,767	459,330	66,293	525,623
Other comprehensive loss/income		-	-	3,736	-	25,742	-	29,478	-	29,478	(23)	29,455
Profit for the year		-	-	-	-	-	-	-	98,080	98,080	23,260	121,340
Total comprehensive loss/income for 2009		-	-	3,736	-	25,742	-	29,478	98,080	127,558	23,237	150,795
Issuance of shares		12,171	-	-	-	-	127,997	127,997	-	140,168	-	140,168
Transfer to retained earnings		-	-	-	-	-	(127,997)	(127,997)	127,997	-	-	-
Issuance of convertible bond		-	-	-	8,432	-	-	8,432	-	8,432	-	8,432
Purchase of shares from minority interest	4	-	-	-	-	-	-	-	4,150	4,150	(5,650)	(1,500)
Dividends declared during the year		-	-	-	-	-	-	-	(12,294)	(12,294)		(12,294)
Dividends paid to minority interest		-	-	-	-	-	-	-	-	-	(7,754)	(7,754)
Balance at 31 December 2009		158,637	395,928	3,326	8,432	(14,633)	(210,046)	(212,921)	385,700	727,344	76,126	803,470

1. This amount represents the increase in the minority interests share of the assets of Pallancata, following the Group's investment during the year 2008 in accordance with the agreement signed with Minera Oro Vega S.A.C.

Notes to the consolidated financial statements

For the year ended 31 December 2009

The financial information for the year ended 31 December 2009 and 2008 contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the years ended 31 December 2009 and 2008 have been extracted from the consolidated financial statements of Hochschild Mining plc for the year ended 31 December 2009 which have been approved by the directors on 23 March 2009 and will be delivered to the Registrar of Companies in due course. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

1. Significant accounting policies

The accounting policies adopted in the preparation of the financial information are consistent with those applied to the year ended 31 December 2008 except for the adoption of new and amended standards and the retrospective restatement for change to the depreciation calculation (see note 2).

(a) Adoption of new and amended standards

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of new and amended standards.

The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial performance or position of the Group.

- IFRS 8 'Operating Segments' applicable for annual periods beginning on or after 1 January 2009.

The Group concluded that the operating segments determined in accordance with IFRS 8 were different in comparison with 2008 segments reported.

- IAS 23 Amendment, 'Borrowing Costs', applicable for annual periods beginning on or after 1 January 2009.

The Group has adopted the standard on a prospective basis. It did not have an impact on the financial position or performance of the Group.

- IAS 1 'Presentation of Financial Statements', applicable for annual periods beginning on or after 1 January 2009.

The most important change was the obligation to include the statement of comprehensive income.

- IFRS 2 'Amendment to IFRS 2 - Vesting Conditions and Cancellations', applicable for annual periods beginning on or after
1 January 2009.