Preliminary Results

RNS Number : 7176H

Hochschild Mining PLC

18 March 2015

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18 March 2015

Hochschild Mining plc

Preliminary Results for the twelve months ended 31 December 2014

Inmaculada Advanced Project update

·	Overall project 90% complete
·	Plant construction 90% complete; contractor on track to commission plant in Q2 2015
·	Key underground development plan ahead of schedule - almost 200,000 tonnes of development mineral ready for processing
·	2015 production target of 6-7 million silver equivalent ounces

Financial Results highlights¹

· Net revenue of $493.0 million (2013: $622.2 million)

· Adjusted EBITDA of $135.6 million (2013: $201.0 million)²

· Earnings per share of $(0.15) (2013: $(0.15))

· Cash balance of $116.0 million as at 31 December 2014

· $75 million of short term lines drawn in 2015

Operational highlights

·	Full year production of 22.2 million attributable silver equivalent ounces exceeding 21.0 million target
·	Main operation all-in sustaining costs per silver equivalent ounce fell by 6% to $17.4 in 2014, exceeding guidance of 0-5% reduction³
·	Core operation mine plans revised to deliver profitable ounces in lower precious metal price environment

2015 Outlook

· Attributable production target of 24.0 million silver equivalent ounces

· All-in sustaining costs expected to be $15-16 per silver equivalent ounce

· Operational expenditure of $45 million

· Remaining Inmaculada construction expenditure of $72 million

$000, pre-exceptional unless stated	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Attributable silver production (koz)	16,187	16,639	(3)
Attributable gold production (koz)	101	127	(20)
Net Revenue⁴	492,951	622,158	(21)
Adjusted EBITDA	135,586	200,979	(33)
(Loss)/profit from continuing operations	(56,689)	(42,103)	(35)
(Loss)/profit from continuing operations (post-exceptional)	(70,831)	(128,677)	45
Earnings per share ($ pre-exceptional)	(0.15)	(0.15)	-
Earnings per share ($ post-exceptional)	(0.19)	(0.36)	47

Commenting on the results, Eduardo Hochschild, Chairman, said:

"In 2014, Hochschild continued to make good progress with our flagship low cost Inmaculada project, delivered further significant savings from our successful cashflow optimisation programme and skilfully managed our balance sheet despite ongoing commodity market weakness. With the Inmaculada commissioning process commencing soon, I am confident that completion and ramp-up of this exciting addition to our operating base will be delivered in the next few months and that we can look forward to a strong improvement in the Company prospects in the second half of 2015."

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A presentation will be held for analysts & investors at 9.30am (UK time) on Wednesday 18 March 2015 at the offices of J.P.Morgan, 60 Victoria Embankment, London, EC4Y 0JP

For a live webcast of the presentation please visit our website:

www.hochschildmining.com

To join the event via conference call, please see dial in details below:

UK: +44(0)20 3427 1908 (Please quote confirmation code 9667033)

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Enquiries:

Hochschild Mining plc
Charles Gordon	+44 (0)20 7907 2934
Head of Investor Relations
Hudson Sandler
Charlie Jack	+44 (0)207 796 4133
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 / 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.

CHAIRMAN'S STATEMENT

Throughout another year of weak commodity markets, we have executed a consistent strategy and I am delighted that we are now so close to the completion of Inmaculada, our next mine in Peru. Our management team has skilfully navigated its way through a continuing decline in silver prices whilst keeping the organisation competitive, allocating capital to project construction and maintaining our financial flexibility.

Following our acquisition of the remaining stake in Inmaculada in 2013, I remain confident about not only the plant commissioning and mine ramp-up in just a few weeks from now, but also the considerable potential within the mine's surrounding area. I believe that there is scope over the coming years to transform our Inmaculada land package into a world class mining district and provide Hochschild with low cost growth for many years to come and significantly beyond the originally envisaged mine life. In addition, the Arcata deposit still has strong geological potential and we continue to assess a variety of attractive exploration and partnership opportunities. I believe that the competitive advantages we have from our long regional experience, our strong local business relationships as well as long-standing partnerships with key local suppliers will allow us to develop our assets in a cost effective manner. Across the Americas, Hochschild has accumulated a number of highly prospective early stage projects which will provide a growth platform for years to come.

The speed and success of our cashflow optimisation programme, which has exceeded our initial expectations, has been vital in our drive to ensure our Company operates profitably in underlying commodity markets that unfortunately have not yet recovered after the initial steep declines in mid 2013. Indeed with the silver price once again reaching its lowest level since 2010, some necessary mine plan adjustments were made to our Peruvian assets which will ensure their viability in 2015 and especially during the key final stages of the Inmaculada project construction. We have also recently put in place further hedging for a portion of our Peruvian production for the year, which will provide us with a degree of cashflow stability in 2015.

Despite another highly creditable performance operationally, Hochschild's 2014 earnings remain in negative territory principally due to higher interest costs resulting from the inaugural senior notes issue in January 2014 which we expect to be offset once the Inmaculada project is complete. The Board therefore proposes not to reinstate the full year dividend whilst the cash position is still restricted by project capital expenditure. We remain committed to the long term principle of delivering shareholder returns and the Board intends to again reassess the position once the Company returns to profitability.

Operating Responsibly

Our commitment to safety remains steadfast and one that we are not willing to compromise and I am therefore delighted to report that for the first time since our listing in 2006, we have been able to achieve our on-going objective of Zero Fatalities in the year. This is a true testament to all our teams who have collectively worked to improve the safety culture across the Company and of course, to our workers themselves. Being a 'Responsible Operator' sits at the core of our business strategy and as showcased in the 2014 Sustainability Report, through the diverse range of initiatives we have undertaken during the year. In addition to building upon our successes with the Travelling Doctor programme, where we have extended its reach and the range of services offered, and the award-winning Digital Chalhuanca project, we have worked with the communities close to the Inmaculada project to establish business networks dealing in locally grown produce as a means of promoting sustainable economic development. Looking at our commitment to the environment, I am proud to report that our main operations have been re-certified as compliant with the ISO 14001 international standard, acknowledging the integrity of our environmental management systems.

Board

It is in these challenging times for the industry that the need for strong leadership is of paramount importance and, for this reason, I wish to commend our dedicated management team for their ongoing efforts and my fellow directors for their continued support during the year. Whilst mindful of the benefits of refreshing the composition of the Board, I consider the need for stability in this key transitionary period as being as crucial as ever. I am, therefore, also grateful to our directors for agreeing to delay the implementation of our Non-Executive succession plan.

The continued operating challenges prompted the Board to review its contribution to the Cashflow Optimisation Programme resulting in a further reduction in Board remuneration. This reflects an acknowledgment of the sacrifices made by colleagues across the business and the impact on shareholders from the volatile price environment.

After discussions with the Board, I took the decision to assume a Non-Executive role, as announced at the end of last year. Despite this recent change, I remain resolutely committed to the business as we position ourselves to optimise the delivery of value to all of our stakeholders.

Outlook

It remains challenging to predict the short term direction of precious metal markets although we retain our belief that the strong underlying fundamentals will reassert themselves. However, the Board is reassured that considerable steps have been taken to ensure the Company's resilience in a low price environment but also to capitalise on an upturn when it happens with low cost, value accretive growth.

Eduardo Hochschild

Chairman

17 March 2015

CHIEF EXECUTIVE OFFICER'S STATEMENT

Hochschild's key strategic aims for 2014 have been to advance our flagship Inmaculada project to its final stages, to continue to drive our successful cashflow optimisation programme and finally, to manage the Company's finances through what was always expected to be a challenging transitional phase. These objectives have been achieved despite further silver price weakness during 2014, a trend that has now extended to the majority of commodity markets.

Growth

The importance of the low cost Inmaculada mine for the future competitiveness of the Company was emphasised throughout the year whilst good progress was made at the project. The plant contractor, Graña y Montero, commenced work on the plant in early April and in spite of a few delays, plant completion has now reached 90%. Excellent progress has also been made in other key deliverables including the completion of the camp, connection to the national grid and all procurement and infrastructure targets achieved. We remain confident that the commissioning date in Q2 will be achieved. The key area of underground mine development has progressed well and consequently a substantial ore stockpile will be available for processing on completion of the plant, ensuring our production guidance from the mine in 2015 of six to seven million silver equivalent ounces remains in place.

Cost Savings

Throughout 2014, Hochschild has continued to make substantial progress in improving the cost position of its current mines as well as of the Company as a whole. Initiatives have encompassed all business areas including administration, exploration and most importantly at the operational level where we have achieved further efficiencies in supply chain management and commercial negotiations as well as significant working capital improvements. Both the Peruvian operations have been optimised with the focus now on accessible ore. This has reduced sustaining capital expenditure for 2015 and has resulted in a reduction in plant throughput at both sites with the Company focusing on the production of profitable ounces. Whilst the overall efficiency drive has necessitated further headcount reductions, the Company's all-in sustaining cost target for 2015 of between $15 and $16 per silver equivalent ounce represents a significant reduction and demonstrates the potential upside of our flexible strategy. Beyond 2015, it is essential to the ongoing competitiveness of the current Peruvian mines that further operational efficiencies are achieved and that the brownfield exploration programme continues to find additional high quality resources.

Financing

With the Company allocating significant growth capital expenditure to Inmaculada in a volatile precious metal environment, focused management of our financial position has been crucial. We began the year with our inaugural senior note offering raising approximately $350 million to finance the previous year's International Minerals acquisition and continued to demonstrate sufficient financial flexibility to fund the remaining Inmaculada expenditure as well as repaying the $115 million convertible bond in October. Liquidity has been further enhanced with a $100 million medium term credit facility secured late in the year. We also took advantage of short periods of price improvement to hedge almost 30% of our 2014 production in order to realise a degree of cashflow certainty during the year. We believe that such a strategy will remain appropriate during commissioning and ramp up of the new mine as we transition to lower cost production.

2014 overview

Despite our own ongoing programme of costs savings across the organisation, our current operations responded well, exceeding the forecast production target by almost 6% and delivering 22.2 million attributable silver equivalent ounces. Arcata in Peru and San Jose in Argentina both enjoyed robust years with their combined contribution lifting by 3% versus 2013 whilst the adjustment in production at Pallancata reflected the continuing move to thinner veins. We were also able to deliver a better than expected final production result from the Ares mine which was suspended in June.

Financial results for 2014 reflected the effect of a near 15% fall in the average price achieved of silver despite some relief provided by the hedges taken out during the year. Pre-exceptional EBITDA was $135.5 million as a result of the aggressive plan to reduce costs and expenses designed to offset the lower revenues. The increase in the annual finance costs is primarily related to the bond issued in January 2014 to complete the acquisition of Inmaculada and Pallancata minorities and consequently the Company expects that, once the new mine commences production and starts generating cashflow, this charge will be largely absorbed. Pre-exceptional EPS was (0.15) cents per share. The cash balance at the end of 2014 was $116 million although an additional $75 million of short term lines have been drawn down in early 2015.

Outlook

Production for 2015 is expected to increase to 24 million attributable silver equivalent ounces which takes into account between six and seven million ounces from Inmaculada. Costs are expected to fall substantially although a portion of the capital expenditure savings is non-recurring beyond 2015. The Company has also continued its policy of protecting cashflows during the Inmaculada construction by hedging a further six million silver ounces for 2015 at $17.75 per ounce on top of the 38,000 gold ounces already hedged at $1,300 per ounce.

In 2015, the focus of expenditure will remain firmly on completing and ramping up Inmaculada, brownfield exploration at our current operations and a drilling campaign at the Corina project in Peru. Whilst exploration-led growth remains an important part of Hochschild's long term strategy, the cashflow optimisation programme has led to significant reductions in our exploration initiatives especially at our greenfield projects, which we expect to resume once prices recover.

2014 has proved to be another challenging year for the Company and the management team is, once again, encouraged by the committed attitude shown by all our employees. We look forward to the commissioning of our new mine and expect to see the Company in a stronger position by the end of 2015. We are confident that Inmaculada will not only become our flagship low cost producer but, with the strong upside potential at the deposit, will represent an important engine of growth for the long term.

Ignacio Bustamante

Chief Executive Officer

17 March 2015

OPERATING REVIEW

2014 Highlights

· Full year production of 22.2 million attributable silver equivalent ounces achieved, exceeding guidance

· Main operation all-in sustaining costs reduced by 6% in 2014 to $17.4 per silver equivalent ounce

· Core operation mine plans revised to deliver profitable ounces in lower precious metal price environment

· Strong progress at Inmaculada Advanced Project with plant commissioning set for Q2 2015

CURRENT OPERATIONS

Production

In 2014, Hochschild has once again successfully exceeded its full year production target, delivering attributable production of 22.2 million silver equivalent ounces, including 16.2 million ounces of silver and 101 thousand ounces of gold. Hochschild's production target for 2015 is 24.0 million attributable silver equivalent ounces. The increase is mainly explained by the inclusion of between six to seven million ounces from the Inmaculada project offsetting the reduced contribution from the current operations in Peru following the revision of mine plans.

In order to reduce operating expenditure and ensure that all the Company's mines can deliver profitable ounces in 2015, the mine plans of the Arcata and Pallancata operations have been optimised to maximise cash generation with the operational focus expected to be on accessible ore areas requiring reduced capital expenditure with cut-off grades reflecting the current weaker metal price environment. Plant throughput is expected to be reduced to 1,500 tonnes per day at Arcata and 1,800 tonnes per day at Pallancata, with the San Jose operation in Argentina continuing at its current level.

Costs

The Company's all-in sustaining costs at its main operations were reduced by 6% in 2014 to $17.4 per ounce driven by operational initiatives resulting from the cashflow optimisation programme, an ongoing decrease in industry cost inflation and grade improvements particularly at Arcata.⁵ Unit cost per tonne at the main Peruvian operations was at $77.3 (2013: $74.2) with key factors being narrower veins at Pallancata and the absence of material from the low cost Macarena waste damn deposit at Arcata. In Argentina, unit cost per tonne was reduced by 6% to $197.8 (2013: $210.0). Please see page 16 of the Financial Review for further details on costs.

The emphasis on profitable ounces at all operations with reduced levels of sustainable capital expenditure for 2015 is expected to have a positive effect on the Company's overall costs with the all-in sustaining cost for the Company now expected to be reduced to between $15 to $16 per ounce in 2015.

Main operations: Arcata (Peru)

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

Arcata summary	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Ore production (tonnes)	701,947	900,861	(22)
Average silver grade (g/t)	286	217	32
Average gold grade (g/t)	0.85	0.74	15
Silver produced (koz)	5,827	4,984	17
Gold produced (koz)	16.89	16.83	-
Silver equivalent produced (koz)	6,841	5,994	14
Silver sold (koz)	5,621	4,924	14
Gold sold (koz)	15.66	15.95	(2)
Unit cost ($/t)	89.1	81.3	10
Total cash cost ($/oz Ag co-product)⁶	12.6	12.7	(1)
All-in sustaining cost ($/oz)	17.7	20.9	(15)

Production and sales

Full year silver equivalent production at Arcata was 6.8 million ounces, a very creditable 14% improvement on the 2013 result (6.0 million ounces) and was principally driven by a planned move to higher grade areas of the mine. Tonnage fell following the depletion of the Macarena Waste Dam deposit by the end of the first half of the year.

Table Showing Contribution from Macarena Waste Dam Deposit

	12 mths 2014	12 mths 2013
Total
Tonnage	701,947	900,861
Average head grade gold (g/t)	0.85	0.74
Average head grade silver (g/t)	286	217
Macarena
Tonnage	38,366	290,226
Average head grade gold (g/t)	0.25	0.29
Average head grade silver (g/t)	63	88
Stopes and Developments
Tonnage	663,581	610,635
Average head grade gold (g/t)	0.89	0.95
Average head grade silver (g/t)	299	278

Costs

In 2014, the unit cost at Arcata of $89.1 per tonne was up 10% versus 2013 with the overall effects of the ongoing cost savings initiatives offset by the planned depletion in the processing of the low cost Macarena material. However, all-in sustaining costs fell by 15% to $17.7 per silver equivalent ounce (2013: $20.9 per ounce) due to a decline in sustaining capex resulting from cashflow optimisation programme initiatives as well as better grades.

Brownfield exploration

In 2014, a total of 20,868 metres of drilling was carried out at Arcata. In the first half of the year, a detailed surface mapping and sampling campaign was completed covering a total of 1,330 ha. In addition, a drilling campaign with the aim of adding new resources was carried out at the property.

In 2015, a 17,440 metre exploration and drilling programme at Arcata will focus on inferred resource exploration at surface over Tunel 3 and Tunel 4 and underground resource exploration at the Lucero and Norte Sur veins.

Pallancata: Peru

The 100% owned Pallancata silver/gold property is located in the Department of Ayacucho in southern Peru, approximately 160 kilometres from the Arcata operation. Pallancata commenced production in 2007 and up until December 2013 was a joint venture, in which Hochschild held a controlling interest of 60% with International Minerals Corporation ("IMZ"). Following the purchase of IMZ, Hochschild now owns 100% of the operation. Ore from Pallancata is transported 22 kilometres to the Selene plant for processing.

Pallancata summary	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Ore production (tonnes)	1,051,068	1,088,712	(3)
Average silver grade (g/t)	238	264	(10)
Average gold grade (g/t)	1.03	1.13	(9)
Silver produced (koz)	6,527	7,628	(14)
Gold produced (koz)	24.34	27.83	(13)
Silver equivalent produced (koz)	7,988	9,298	(14)
Silver sold (koz)	6,502	7,567	(14)
Gold sold (koz)	24.02	26.67	(10)
Unit cost ($/t)	69.3	68.3	1
Total cash cost ($/oz Ag co-product)	11.0	10.3	7
All-in sustaining cost ($/oz)	16.7	16.7	-

Production and sales

At Pallancata, as a result of the Company's adjustment of mine plans to ensure the extraction of profitable ounces, as detailed in the November 2014 Operational Update, tonnage in the fourth quarter was moved downwards with grades increasing. For the full year, Pallancata produced 8.0 million silver equivalent ounces (2013: 9.3 million ounces) with the fall in the second half reflecting the scheduled move to thinner veins in the mix.

Costs

Cost per tonne at Pallancata were $69.3 per tonne in 2014 (2013: $68.3 per tonne). As at Arcata, costs were positively impacted by the cashflow optimisation programme although the impact was offset by a higher proportion of mineral extracted using conventional methods due to narrower veins. All-in sustaining costs however, were flat versus 2013 at $16.7 per silver equivalent ounce.

Brownfield exploration

During the first half of 2014, the exploration programme focused on mapping and sampling a total of 1,200 ha. New surface structures have also been recognised and drilling was carried out at two vein systems. 10,466 metres of drilling was completed on potential areas with further mapping campaigns also carried out over an area of 686ha.

In 2015, a 19,100 metre exploration and drilling programme at Pallancata will focus on inferred resource exploration at surface and also geological mapping of the west and south side of the district for new target definition.

San Jose: Argentina

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

San Jose summary^*	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Ore production (tonnes)	571,017	536,937	6
Average silver grade (g/t)	404	425	(5)
Average gold grade (g/t)	5.77	6.42	(10)
Silver produced (koz)	6,469	6,357	2
Gold produced (koz)	94.16	98.83	(5)
Silver equivalent produced (koz)	12,119	12,286	(1)
Silver sold (koz)	6,316	6,278	1
Gold sold (koz)	91.28	94.76	(4)
Unit cost ($/t)	197.8	210.0	(6)
Total cash cost ($/oz Ag co-product)	12.1	13.4	(10)
All-in sustaining cost ($/oz)	17.8	19.0	(6)

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

Production and sales

In 2014, San Jose again proved to be a very consistent performer with increased tonnage offsetting lower grades and resulting in almost unchanged year-on-year production of 12.1 million silver equivalent ounces (2013: 12.3 million ounces).

Costs

At San Jose, unit cost per tonne decreased by 6% versus 2013 to $197.8. This was mainly due to the impact of the cash optimisation. All-in sustaining costs were reduced by 6% versus the same period of 2013 with cash optimisation initiatives helping to reduce sustaining and development capital expenditure.

Brownfield exploration

In 2014, a 5,263 metre potential drilling campaign was focused on the definition of new veins. The team had already completed detailed surface mapping and sampling over the Los Pinos vein and identified another structure, Los Pinitos. In addition, mapping work identified additional corridors for subsequent drilling campaigns to focus on whilst further structures were identified in the north east and to the west.

In 2015, a drilling program over Los Pinos and Los Pinitos is planned - subject to obtaining environmental permits. A review and interpretation of the ground magnetic and electrical data collected on the property in the last 5 years is scheduled along with surface geology work to identify new drill targets for 2016.

Other operations

Ares: Peru

The Ares mine, which commenced production in 1998, is a 100% owned operation located approximately 25 kilometres from Hochschild's Arcata mine in southern Peru.

Ares summary	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Ore production (tonnes)	167,331	329,095	(49)
Average silver grade (g/t)	110	82	34
Average gold grade (g/t)	2.34	2.39	(2)
Silver produced (koz)	534	757	(29)
Gold produced (koz)	11.63	23.40	(50)
Silver equivalent produced (koz)	1,232	2,162	(43)
Silver sold (koz)	540	761	(29)
Gold sold (koz)	11.45	23.25	(51)

Production and sales

The Company's Ares mine in Peru was suspended in the second quarter of 2014 with total production for the first half and for the year as whole being a better-than-expected 1.2 million silver equivalent ounces (2013: 2.2 million ounces)

Brownfield exploration

Following the 2014 programme of geological mapping, a 2,500 metre drilling campaign is scheduled for 2015, subject to receiving the requisite exploration permits.

PROJECT REVIEW

Hochschild's portfolio currently includes one Advanced Project, Inmaculada and three Growth Projects, Crespo, Azuca and Volcan. The continuing weakness of the precious metal markets following the initial price declines in 2013 has led to the current focus on Hochschild's flagship Inmaculada project. The acquisition of IMZ, completed in December 2013, gave the Company 100% of this project which is expected to contribute, after a ramp-up period, approximately 12 million silver equivalent ounces per annum on average with the start of plant commissioning due in the second quarter of 2015.

The strategy with regards to Crespo, Azuca and Volcan was revised in late 2013 with work on these deposits remaining on hold throughout 2014. Despite the prioritisation of Inmaculada, all three projects remain an important component of the company's portfolio of development assets. It is management's intention that in the event that precious metals markets show sustained improvement, this would allow the Company to assess capital re-allocation to these assets and potentially re-initiate development.

Inmaculada

Inmaculada is a 20,000 hectare gold-silver project located in the Company's existing operational cluster in southern Peru and is 100% owned and controlled by Hochschild, following the acquisition of the remaining 40% from IMZ stake in December 2013.

The EPC contractor Graña y Montero continued construction of the plant throughout the year. Later in 2014, concrete foundations for the plant's SAG mill were found to not meet contractual technical specifications and were therefore re-built which, along with other delays in the project including slower than expected on-site recruitment, resulted in the commissioning date of the plant being rescheduled for Q2 2015. However, as a result of excellent progress being made by the Hochschild team in the originally envisaged bottleneck area of mine development, it has been possible to ensure that a stockpile of just over 260,000 tonnes will be available for processing on completion of the plant. Consequently, the Company confirms that the overall production forecast of 6-7 million silver equivalent ounces for 2015 remains in place.

Procurement of all main equipment was completed during the first half and by the end of the year, other key deliverables such as connection to the national grid, infrastructural and engineering requirements and relevant permitting were complete. Construction also commenced in the third quarter on the tailings dam, warehouses, laboratories and workshops as well as work on the paste backfill plant. In addition, a total of 15,406 metres of tunnelling and 2,445 metres of raise boring have been carried out to date at the project.

Construction capital expenditure at the project to date is $348 million with the remaining construction capital expenditure for 2015 expected to be $72 million bringing the total to $420 million.

Toward the middle of the year, mapping was carried out at the Puquiopata (to the North East of Inmaculada) and Huarmapata veins as well a re-logging of the Angela vein system in order to optimise the geological model.

In addition to exploration at the Inmaculada land package, a project was started to explore the overall properties available between the Pallancata mine and Inmaculada. Following a mapping programme in the Palca area further to the North East of Inmaculada, in August two anomalous zones were identified, Palca 1 and Palca 2. At Palca 1, six promising vein structures have been selected amongst others in a corridor of almost five kilometres with work at Palca 2 starting later on in the year. In addition, geochemical results have shown gold and silver presence at surface. The exploration team's resulting interpretation has allowed them to define the Palca corridor which continues to the North West into an area called Cochaloma, which is part of the Pallancata concession, where there are similar structures to Palca.

EXPLORATION REVIEW

In 2014, investment in exploration totalled $20.4 million and was split between exploration work at the Company's existing operations, the Inmaculada Advanced Project and greenfield opportunities in Peru and Mexico. As part of Hochschild's ongoing cashflow optimisation programme, the Company reduced its 2014 exploration budget with the main focus continuing to be on brownfield exploration. Exploration work at the core operations was principally focused on identifying new potential and near-mine high grade areas to further improve the resource quality whilst at the Inmaculada Advanced Project, efforts were focused on identifying new potential high grade areas.

Hochschild's greenfield strategy for 2014 was focused on only the most promising prospects, specifically in Peru and Mexico.

In 2015, exploration activity will be primarily focused on brownfield exploration in order to maintain or improve the resource base. As a direct consequence of the continued low price environment, the level of greenfield exploration and appraisal of acquisition/joint venture opportunities has been significantly reduced.

Mexico

Pachuca

In the first half of the year, at the Pachuca project in Mexico, the joint venture with Solitario Exploration & Royalty Corp, focused on the northwestern extension of the historical vein mining district. The 2014 plan included testing the actual extensions of prior intercepts tested by the previous operator. A total 2,454 metres were drilled on 13 holes during the 2013 and 2014 campaigns. However, despite some drill holes showing economic gold and silver grades, continuous mineralisation could not be identified and therefore the project was transferred back to Solitario.

Riverside Joint Venture

In the first half of the year, the exploration team accepted two targets generated by Riverside, the joint venture partners in the western Sonora in Mexico. The projects were Bohemia and Cajon and whereas Bohemia exhibited mineralised veins, orogenic type mineralisation was observed at Cajon with highly frequent small mineralised veins off a detachment fault. However sampling at Bohemia did not show continuity in the mineralisation, displaying poor gold values and consequently work at the target was halted. Trenching at Cajon also concluded and a drilling campaign will be performed in 2015.

During the fourth quarter, the Company decided to close its exploration office in Chihuahua and focus on financing and supporting Riverside from the head office. The venture continues to explore new opportunities in this prolific, low-cost mineral district.

Peru

During the year, the Company's exploration efforts in Peru focused on optimising the existing portfolio and reviewing any industry opportunities. One of these was the Corina project, located 15-20 km from the Selene plant and owned by Lara Exploration Ltd. The agreement drawn up includes an option giving Hochschild full ownership of the project over four years. Company community relations teams are currently negotiating access agreements that would allow the Company to drill in late 2015, subject to government permit approvals.

In addition, promising geochemical results have been obtained from the Ibel prospect in Peru.

FINANCIAL REVIEW

Key performance indicators

(before exceptional items, unless otherwise indicated)

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Net Revenue⁷	492,951	622,158	(21)
Attributable silver production (koz)	16,187	13,588	19
Attributable gold production (koz)	101	116	(13)
Cash costs ($/oz Ag co-product⁸	11.9	12.3	(3)
Cash costs ($/oz Au co-product)	847	748	13
Total all-in sustaining costs ($/oz)	18.2	19.9	(9)
Main operation all-in sustaining costs ($/oz)	17.4	18.6	(6)
Adjusted EBITDA⁹	135,586	200,979	(35)
(Loss)/profit from continuing operations	(56,689)	(42,103)	(33)
(Loss)/profit from continuing operations (post exceptional)	(70,831)	(128,677)	45
Earnings per share (pre exceptional)	(0.15)	(0.15)	-
Earnings per share (post exceptional)	(0.19)	(0.36)	47
Cash flow from operating activities¹⁰	93,779	64,674	45

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

Revenue

Gross revenue

Gross revenue from continuing operations decreased 18% to $540.9 million in 2014 (2013: $658.2 million) primarily driven by another substantial fall in precious metal prices.

Silver

Gross revenue from silver decreased 17% in 2014 to $358.2 million (2013: $432.6 million) as a result of lower prices as well as a 3% decrease in the total amount of silver ounces sold to 18,981 koz (2013:19,555 koz).

Gold

Gross revenue from gold decreased 19% in 2014 to $182.7 million (2013: $225.6 million) as a result of a 4% fall in the average price received although mostly due to a 15% decline in gold sales - the total amount of gold ounces sold in 2014 at 142.8 koz (2013: 168.6 koz).

Gross average realised sales prices

The following table provides figures for average realised prices and ounces sold for 2014 and 2013:

Average realised prices	Year ended 31 Dec 2014	Year ended 31 Dec 2013
Silver ounces sold (koz)	18,981	19,555
Avg. realised silver price ($/oz)	18.87	22.12
Gold ounces sold (koz)	142.77	168.56
Avg. realised gold price ($/oz)	1,279	1,338

Commercial discounts

Commercial discounts refer to refinery treatment charges, refining fees and payable deductions for processing concentrates, and are discounted 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 2014, the Group recorded commercial discounts of $48.1 million (2013: $36.1 million). This increase is explained by the decision to sell the majority of production from Arcata as concentrate due to improved commercial terms. The ratio of commercial discounts to gross revenue in 2014 increased to 9% (2013: 6%).

Net revenue

Net revenue decreased by 21% to $493.0 million (2013: $622.2 million), comprising silver revenue of $320.8 million and gold revenue of $172.0 million. In 2014 silver accounted for 65% and gold 35% of the Company's consolidated net revenue with no change from the 2013 split.

Revenue by mine

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Silver revenue
Arcata	103,963	115,522	(10)
Ares	10,896	17,712	(38)
Pallancata	129,042	163,394	(21)
San Jose	114,276	135,291	(16)
Moris	30	650	(95)
Commercial discounts	(37,369)	(27,050)	(38)
Net silver revenue	320,838	405,519	(21)
Gold revenue
Arcata	20,040	22,271	(10)
Ares	14,993	32,650	(54)
Pallancata	31,984	35,189	(9)
San Jose	115,211	123,905	(7)
Moris	441	11,597	(96)
Commercial discounts	(10,713)	(9,036)	19
Net gold revenue	171,956	216,576	(21)
Other revenue¹¹	157	63	(149)
Net revenue	492,951	622,158	(21)

Costs

Total pre-exceptional cost of sales decreased 13% to $404.6 million in 2014 (2013: $466.8 million). The direct production cost decreased by 15% in 2014, to $265.6 million (2013: $311.7 million) mainly due to the positive effects on operating costs of the Company's ongoing cash optimisation programme and lower tonnage treated at the Ares mine. Depreciation in 2014 was $126.0 million (2013: $144.1 million) with the decrease mainly due to lower tonnage and the lower cost of the conversion of resources into reserves. Other items, which principally includes the costs associated with stoppages in Argentina, was $4.4 million in 2014 (2013: $7.0 million) with change in inventories at $8.6 million in 2014 (2013: $3.9 million).

$000	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% Change
Direct production cost excluding depreciation	265,637	311,699	(15)
Depreciation in production cost	125,955	144,137	(13)
Other items	4,406	7,004	(37)
Change in inventories	8,641	3,926	120
Pre-exceptional cost of sales	404,639	466,766	(13)

Unit cost per tonne

The Company reported unit cost per tonne at its main operations of $106.6 in 2014, slightly up on 2013 (2013: $103.2). For further explanation on the increase in unit cost per tonne please refer to page 7 of the Operating Review.

Unit cost per tonne by operation (including royalties)¹²:

Operating unit ($/tonne)	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Main operations	106.6	103.2	3
Peru	77.3	74.2	4
Arcata	89.1	81.3	10
Pallancata	69.3	68.3	1
Argentina
San Jose	197.8	210.0	(6)
Others
Ares	119.3	128.3	(7)
Total	107.4	106.1	1

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 reconciliation¹³:

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Group cash cost	353,736	387,686	(9)
(+) Cost of sales	404,639	466,766	(13)
(-) Depreciation and amortisation in cost of sales	(128,480)	(144,923)	11
(+) Selling expenses	28,697	28,785	-
(+) Commercial deductions	48,880	37,058	32
Gold	10,752	9,065	19
Silver	38,128	27,993	36
Revenue	492,951	622,158	(21)
Gold	171,956	216,576	(21)
Silver	320,838	405,519	(21)
Others	157	63	149
Ounces Sold
Gold	142.8	168.6	(15)
Silver	18,981	19,555	(3)
Group Cash Cost ($/oz)
Co product Au	864	801	8
Co product Ag	12.1	12.9	(6)
By product Au	(38)	(272)	86
By product Ag	9.0	8.3	8

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

All-in sustaining cost reconciliation

All-in sustaining cash costs per silver equivalent ounce¹⁴

Year ended 31 Dec 2014

$000 unless otherwise indicated	Arcata	Pallancata	San José	Main Operations	Other Operations	Corporate & Others	Total
(+) Production cost excluding depreciation¹⁵	62,644	71,742	110,089	244,475	17,853	-	262,328
(+) Other items in cost of sales	1,301	834	1,724	3,859	546	-	4,406
(+) Operating and exploration capex for units	28,867	34,657	51,350	114,874		1,613	116,487
(+) Brownfield exploration expenses	2,038	1,728	1,003	4,769	42	3,232	8,043
(+) Administrative expenses (excl depreciation and before exceptional items)	5,266	7,317	8,270	20,853	362	20,049	41,263
(+) Royalties	-	1,370	-	1,370	241	-	1,611
Sub-Total	100,116	117,648	172,436	390,200	19,044	24,894	434,138
Ounces produced (Ag Eq oz)	6,841	7,988	12,119	26,947	1,232	-	28,179
Sub-total ($/oz)	14.6	14.7	14.2	14.5	15.5	-	15.4
(+) Commercial deductions	18,016	13,666	17,198	48,880	-	-	48,880
(+) Selling expenses	1,987	1,995	24,648	28,630	67	-	28,697
Sub-total	20,003	15,661	41,846	77,510	67	-	77,577
Ounces sold (Ag Eq oz)	6,560	7,944	11,793	26,297	1,250	-	27,547
Sub-total ($/oz)	3.0	2.0	3.5	2.9	0.1	-	2.8
All-in sustaining costs ($/oz Ag Eq)	17.7	16.7	17.8	17.4	15.5	-	18.2

Year ended 31 Dec 2013

$000 unless otherwise indicated	Arcata	Pallancata	San José	Main Operations	Other Operations	Corporate & Others	Total
(+) Production cost excluding depreciation	72,706	75,321	112,764	260,791	50,908	-	311,699
(+) Other items in cost of sales	-638	571	7,074	7,007	(3)	-	7,004
(+) Operating and exploration capex for units	43,255	44,356	56,502	144,113	4,715	2,510	151,338
(+) Brownfield exploration expenses	2,052	2,149	1,795	5,996	581	3,201	9,778
(+) Administrative expenses (excl depreciation and before exceptional items)	6,469	11,472	8,589	26,530	2,983	22,274	51,787
(+) Royalties	-	1,822	-	1,822	522	-	2,344
Sub-Total	123,844	135,691	186,724	446,259	59,706	27,985	533,950
Ounces produced (Ag Eq oz)	5,994	9,298	12,286	27,578	2,689	-	30,267
Sub-total ($/oz)	20.7	14.6	15.2	16.2	22.2	-	17.6
(+) Commercial deductions	920	16,788	19,335	37,043	15	-	37,058
(+) Selling expenses	325	2,369	25,899	28,593	192	-	28,785
Sub-total	1,245	19,157	45,234	65,636	207	-	65,843
Ounces sold (Ag Eq oz)	5,881	9,167	11,963	27,011	2,658	-	29,669
Sub-total ($/oz)	0.2	2.1	3.8	2.4	0.1	-	2.2
All-in sustaining costs ($/oz Ag Eq)	20.9	16.7	19.0	18.6	22.3	-	19.9

Administrative expenses

Administrative expenses before exceptional items decreased by 20% to $43.3 million (2013: $54.4 million) primarily due to the continuing impact of the cashflow optimisation programme. Post-exceptional administrative expenses in 2014 totalled $46.1 million (2013: $56.8 million).

Exploration expenses

In 2014, pre-exceptional exploration expenses, decreased by 60% to $17.3 million (2013: $42.9 million). Post-exceptional exploration expenses in 2014 totaled $18.1 million (2013: $46.3 million).

In addition, the Group capitalises part of its brownfield exploration, which mostly relates to costs incurred converting potential resource to the Inferred or Measured and Indicated category. In 2014, the Company capitalised $1.5 million relating to brownfield exploration compared to $1.7 million in 2013, bringing the total investment in exploration for 2014 to $18.8 million (2013: $44.6 million). In addition, $1.6 million was invested in the Company's Advanced and Growth Projects.

Selling expenses

Selling expenses were flat versus 2013at $28.7 million (2013: $28.8 million) due to lower prices impacting the export tax in Argentina, partially offset by higher production of concentrates in Arcata. Selling expenses mainly consist of export duties at San Jose (export duties in Argentina are levied at 10% of revenue for concentrate and 5% of revenue for dore) and logistic costs for the sale of concentrate.

Other income/expenses

Other income before exceptional items was $4.1 million (2013: $4.0 million). Other expenses before exceptional items reached $17.5 million (2013: $15.6 million) mainly due to an increase in mine closure provisions of $9.1 million (2013: $5.5 million) and the new reserves tax in Argentina of $3.5 million (2013: $2.5 million).

Adjusted EBITDA

Adjusted EBITDA decreased by 33% over the period to $135.6 million (2013 restated: $201.0 million) driven primarily by significantly lower silver prices.

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

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013	% change
Profit from continuing operations before exceptional items, net finance cost, foreign exchange loss and income tax	(14,374)	17,730	(181)
Operating margin	-	3%	-
Depreciation and amortisation in cost of sales	128,480	144,923	(11)
Depreciation and amortisation in administrative expenses	2,072	2,638	(21)
Exploration expenses	17,254	42,871	(60)
Personnel and other exploration related fixed expenses	(6,934)	(12,699)	45
Other non cash expenses¹⁶	9,088	5,516	65
Adjusted EBITDA	135,586	200,979	(33)
Adjusted EBITDA margin	28%	32%

Finance income

Finance income before exceptional items of $2.2 million reduced from 2013 ($10.7 million) mainly due to substantially lower interest received on deposits and liquidity funds ($5.2 million) as well as lower dividends received from Gold Resource Corporation ($3.0 million).

Finance costs

Finance costs before exceptional items increased from $11.7 million in 2013 to $33.1 million in 2014, principally due to the interest due on $350 million of Senior Notes (issued in January 2014 via the Company's wholly owned subsidiary, Compañía Minera Ares S.A.C) with a coupon rate of 7.75% due for repayment in 2021.

Foreign exchange losses

The Group recognised a foreign exchange loss of $5.0 million (2013: $19.8 million loss) as a result of exposures in currencies other than the functional currency principally the Peruvian Nuevo Sol and Argentinean Peso, both of which depreciated in the year against the US Dollar.

Income tax

The Company's pre-exceptional income tax was $6.5 million (2013: $45.0 million). The reduction is mainly explained by lower metal prices reflected in a reduced pre-exceptional loss before income tax ($(50.2) million in 2014 compared to $2.9 million pre-exceptional profit before tax in 2013).

Exceptional items

Exceptional items in 2014 totalled $(14.1) million after tax (2013: $(86.6) million). The tables below detail the exceptional items excluding the exceptional tax effect that amounted to $3.8 million (2013: $35.9 million).

Exceptional items in 2014 comprise the following items:

2014 positive exceptional items:

Main items

$000

Description of main items

Other income

1,643

Reversal of impairment of San Felipe property

Finance income

4,061

Gain on the sale of GRC shares ($2.6 million), Chaparral Gold shares ($0.8 million), Mirasol shares ($0.6 million) and others

2014 negative exceptional items:

Main items	$000	Description of main items
Cost of sales	(6,065)	Termination benefits ($4.8 million) and temporary stoppages at Arcata ($1.2 million)
Administrative Expenses	(2,752)	Termination benefits ($2.8 million)
Exploration Expenses	(886)	Termination benefits ($0.9 million)
Other expenses	(4,498)	Property, plant & equipment write-off ($1.5 million) and loss on the sale of the Moris operation in Mexico ($3.0 million)
Finance cost	(9,491)	The impairment of investments in Pembrook ($6.0 million) and other minor investments ($0.2 million), transaction costs on the syndicated loan ($3.3 million)

Cash flow & balance sheet review

Cash flow:

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013	Change
Net cash generated from operating activities	93,779	64,674	29,105
Net cash used in investing activities	(263,007)	(218,113)	(44,894)
Cash flows generated/(used) in financing activities	5,039	99,830	(94,791)
Net (decrease)/increase in cash and cash equivalents during the period	(164,189)	(53,609)	(110,580)

Operating cash flow increased from $64.7 million in 2013 to $93.8 million in 2014, mainly due to a significant improvement of working capital and the implementation of the cash optimisation plan, partially offset by lower prices. Net cash used in investing activities increased to $(263.0) million in 2014 from $(218.1) million in 2013 mainly due to higher pre-operating capex incurred at the Inmaculada project in 2014. Finally, cash generated from financing activities decreased to $5.0 million from $99.8 million in 2013, primarily as a result of the proceeds from the issuance of the unsecured notes ($350.0 million) and the Scotiabank Credit Facility ($100.0 million), partially offset by the repayment of the bridge loan facility ($270.0 million), Convertible Bond ($114.9 million) and reduction of short term borrowings ($30.0 million). As a result, total cash generated decreased from $(53.6) million in 2013 to $(164.2) million in 2014 ($110.6 million difference).

Working capital

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013
Trade and other receivables	173,526	179,868
Inventories	58,417	69,556
Net other financial assets / (liabilities)	2,809	(2,294)
Net income tax receivable / (payable)	20,467	20,842
Trade and other payables and provisions	(226,603)	(208,618)
Working Capital	28,616	59,354

The Group's working capital position decreased to $28.6 million in 2014 from $59.4 million in 2013. This was primarily explained by higher trade and other payables and provisions ($(18.0) million) and by lower inventories ($(11.1) million). Also, net other financial assets increased to $2.8 million in 2014 from $(2.3) million in 2013 principally due to gains from hedge agreements

Net cash

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013
Cash and cash equivalents	115,999	286,435
Long term borrowings	(440,834)	-
Short term borrowings¹⁷	(27,882)	(435,925)
Net cash/(debt)	(352,717)	(149,490)

The Group reported net cash position was $(352.7) million as at 31 December 2014 (2013: $149.5 million). The change was mainly driven by cash used to build the Inmaculada Project ($198 million capex in 2014).

Capital expenditure¹⁸

$000 unless otherwise indicated	Year ended 31 Dec 2014	Year ended 31 Dec 2013
Arcata	28,867	43,255
Ares	-	3,783
Selene	497	1,364
Pallancata	34,160	42,992
San Jose	51,350	56,502
Moris	-	932
Operations	114,874	148,828
Inmaculada	198,112	98,614
Crespo	4,206	21,469
Volcan	1,463	4,312
Azuca	853	4,741
Other	1,613	3,614
Total	321,121	281,578

2014 capital expenditure of $321.1 million (2013: $281.6 million) mainly composed of operational capex of $114.9 million and Inmaculada capital expenditure of $198.1 million.

Forward looking Statements

This announcement contains certain forward looking statements, including such statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In particular, such forward looking statements may relate to matters such as the business, strategy, investments, production, major projects and their contribution to expected production and other plans of Hochschild Mining plc and its current goals, assumptions and expectations relating to its future financial condition, performance and results.

Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "plans", "estimates" and words of similar import. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results, performance or achievements of Hochschild Mining plc may be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that could cause or contribute to differences between the actual results, performance or achievements of Hochschild Mining plc and current expectations include, but are not limited to, legislative, fiscal and regulatory developments, competitive conditions, technological developments, exchange rate fluctuations and general economic conditions. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.

The forward looking statements reflect knowledge and information available at the date of preparation of this announcement. Except as required by the Listing Rules and applicable law, Hochschild Mining plc does not undertake any obligation to update or change any forward looking statements to reflect events occurring after the date of this announcement. Nothing in this announcement should be construed as a profit forecast.

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge:

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

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

Consolidated income statement

For the year ended 31 December 2014

		Year ended 31 December 2014			Year ended 31 December 2013
	Notes	Before exceptional items US$000	Exceptional items (note 11) US$000	Total US$000	Before exceptional items US$000	Exceptional items (note 11) US$000	Total US$000
Continuing operations
Revenue	3,5	492,951	-	492,951	622,158	-	622,158
Cost of sales	6	(404,639)	(6,065)	(410,704)	(466,766)	(2,466)	(469,232)
Gross profit		88,312	(6,065)	82,247	155,392	(2,466)	152,926
Administrative expenses	7	(43,335)	(2,752)	(46,087)	(54,425)	(2,351)	(56,776)
Exploration expenses	8	(17,254)	(886)	(18,140)	(42,871)	(3,456)	(46,327)
Selling expenses	9	(28,697)	-	(28,697)	(28,785)	-	(28,785)
Other income		4,112	-	4,112	3,974	2,442	6,416
Other expenses	12	(17,512)	(2,963)	(20,475)	(15,555)	-	(15,555)
Impairment and write-off of assets net		-	109	109	-	(90,671)	(90,671)
(Loss)/profit from continuing operations before net finance income/(cost), foreign exchange loss and income tax		(14,374)	(12,557)	(26,931)	17,730	(96,502)	(78,772)
Share of post-tax profit of associates accounted for under equity method	19	-	-	-	5,921	-	5,921
Finance income	13	2,215	4,061	6,276	10,675	2,417	13,092
Gain on transfer from investment accounted for under the equity method to available-for-sale financial assets		-	-	-	-	107,942	107,942
Finance costs	13	(33,074)	(9,491)	(42,565)	(11,697)	(136,353)	(148,050)
Foreign exchange loss		(4,990)	-	(4,990)	(19,753)	-	(19,753)
(Loss)/profit from continuing operations before income tax		(50,223)	(17,987)	(68,210)	2,876	(122,496)	(119,620)
Income tax (expense)/benefit	14	(6,466)	3,845	(2,621)	(44,979)	35,922	(9,057)
Loss for the year from continuing operations		(56,689)	(14,142)	(70,831)	(42,103)	(86,574)	(128,677)
Attributable to:
Equity shareholders of the Company		(54,963)	(13,914)	(68,877)	(50,345)	(72,738)	(123,083)
Non-controlling interests		(1,726)	(228)	(1,954)	8,242	(13,836)	(5,594)
		(56,689)	(14,142)	(70,831)	(42,103)	(86,574)	(128,677)
Basic and diluted loss per ordinary share from continuing operations for the year (expressed in US dollars per share)	15	(0.15)	(0.04)	(0.19)	(0.15)	(0.21)	(0.36)

Consolidated statement of comprehensive income

For the year ended 31 December 2014

		Year ended 31 December
	Notes	2014 US$000	2013 US$000
Loss for the year		(70,831)	(128,677)
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translating foreign operations		(1,716)	(842)
Change in fair value of available-for-sale financial assets	20	(3,106)	(125,932)
Recycling of the loss on available-for-sale financial assets		2,096	130,286
Change in fair value of cash flow hedges		18,945	-
Recycling of the gain on cash flow hedges		(14,603)	-
Deferred income tax relating to components of other comprehensive income	14	(1,216)	-
Other comprehensive gain for the period, net of tax		400	3,512
Total comprehensive expense for the year		(70,431)	(125,165)
Total comprehensive expense attributable to:
Equity shareholders of the Company		(68,477)	(119,571)
Non-controlling interests		(1,954)	(5,594)
		(70,431)	(125,165)

Consolidated statement of financial position

As at 31 December 2014

	Notes	As at 31 December 2014 US$000	As at 31 December 2013 US$000
ASSETS
Non-current assets
Property, plant and equipment	16	1,0576,310	873,477
Evaluation and exploration assets	17	2207,290	204,643
Intangible assets	18	42,815	43,683
Available-for-sale financial assets	20	455	51,658
Trade and other receivables	21	6,488	12,128
Deferred income tax assets		1,574	2,416
		1,334,932	1,188,005
Current assets
Inventories	22	58,417	69,556
Trade and other receivables	21	167,038	167,740
Income tax receivable		25,584	22,156
Other financial assets	23	4,342	-
Cash and cash equivalents	24	115,999	286,435
		371,380	545,887
Total assets		1,706,312	1,733,892
EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Parent
Equity share capital		170,389	170,389
Share premium		396,021	396,021
Treasury shares		(898)	(898)
Other reserves		(217,335)	(211,143)
Retained earnings		451,047	511,492
		799,224	865,861
Non-controlling interests		95,160	104,375
Total equity		894,384	970,236
Non-current liabilities
Trade and other payables	26	92	174
Borrowings	27	440,834	-
Provisions	28	111,751	79,649
Deferred income	25	25,000	22,000
Deferred income tax liabilities		84,959	93,505
		662,636	195,328
Current liabilities
Trade and other payables	26	111,890	119,222
Other financial liabilities	23	1,533	2,294
Borrowings	27	27,882	435,925
Provisions	28	2,870	9,573
Income tax payable		5,117	1,314
		149,292	568,328
Total liabilities		811,928	763,656
Total equity and liabilities		1,706,312	1,733,892

These financial statements were approved by the Board of Directors on 17 March 2015 and signed on its behalf by:

Ignacio Bustamante

Chief Executive Officer

17 March 2015

Consolidated statement of cash flows

For the year ended 31 December 2014

		Year ended 31 December
	Notes	2014 US$000	2013 US$000
Cash flows from operating activities
Cash generated from operations		129,993	116,084
Interest received		1,931	6,236
Interest paid		(25,585)	(10,292)
Payment of mine closure costs	28	(5,524)	(4,781)
Income tax paid		(7,036)	(42,573)
Net cash generated from operating activities		84,810	64,674
Cash flows from investing activities
Purchase of property, plant and equipment		(309,033)	(248,335)
Purchase of evaluation and exploration assets		(6,071)	(10,781)
Purchase of intangibles		(281)	(1,625)
Acquisition of subsidiary	4(b)	-	(14,615)
Dividends received		494	2,423
Dividends received from associates		-	3,385
Proceeds from deferred income	25	3,223	17,593
Proceeds from sale of available-for-sale financial assets		48,097	33,498
Proceeds from sale of property, plant and equipment		564	344
Net cash used in investing activities		(263,007)	(218,113)
Cash flows from financing activities
Proceeds of borrowings		482,393	440,010
Repayment of borrowings		(458,132)	(116,701)
Transaction costs of borrowings		(9,166)	(9,145)
Acquisition of non-controlling interest		-	(272,127)
Proceeds from issue of ordinary shares		-	71,916
Dividends paid	29	(10,056)	(18,503)
Capital contribution from non-controlling interests		-	4,380
Cash flows generated in financing activities		5,039	99,830
Net decrease in cash and cash equivalents during the year		(164,189)	(53,609)
Exchange difference		(6,247)	(18,900)
Cash and cash equivalents at beginning of year		286,435	358,944
Cash and cash equivalents at end of year	24	115,999	286,435

Consolidated statement of changes in equity

For the year 31 December 2014

							Other reserves
	Notes	Equity share capital US$000	Share premium US$000	Treasury shares US$000	Unrealised gain/ (loss) on available-for-sale financial assets US$000	Unrealised gain/ (loss) on hedges US$000		Bond equity component (note 25(b)) US$000	Cumulative translation adjustment US$000	Merger reserve US$000	Share- based payment reserve US$000	Total Other reserves US$000	Retained earnings US$000	Capital and reserves attributable to shareholders of the Parent US$000	Non-controlling interests US$000	Total equity US$000
Balance at 1 January 2013		158,637	395,928	(898)	(3,330)	-		8,432	(10,447)	(210,046)	445	(214,946)	720,011	1,058,732	264,518	1,323,250
Other comprehensive (loss)/income		-	-	-	4,354	-		-	(842)	-	-	3,512	-	3,512	-	3,512
Loss for the year		-	-	-	-	-		-	-	-	-	-	(123,083)	(123,083)	(5,594)	(128,677)
Total comprehensive income/(loss) for 2013		-	-	-	4,354	-		-	(842)	-	-	3,512	(123,083)	(119,571)	(5,594)	(125,165)
Capital contribution from non-controlling interest		-	-	-	-	-		-	-	-	-	-	-	-	4,380	4,380
Purchase of shares from non-controlling interest	4(a)	-	-	-	-	-		-	-	-	-	-	(135,368)	(135,368)	(148,185)	(283,553)
Issuance of shares		11,752	93	-	-	-		-	-	60,071	-	60,071	-	71,916	-	71,916
Transfer to retained earnings		-	-	-	-	-		-	-	(60,071)	-	(60,071)	60,071	-	-	-
CEO LTIP		-	-	-	-	-		-	-	-	291	291	-	291	-	291
Expiration of dividends		-	-	-	-	-		-	-	-	-	-	-	-	(38)	(38)
Dividends	29	-	-	-	-	-		-	-	-	-	-	(10,139)	(10,139)	-	(10,139)
Dividends declared to non-controlling interests	29	-	-	-	-	-		-	-	-	-	-	-	-	(10,706)	(10,706)
Balance at 31 December 2013		170,389	396,021	(898)	1,024	-		8,432	(11,289)	(210,046)	736	(211,143)	511,492	865,861	104,375	970,236
Other comprehensive (loss)/income		-	-	-	(1,010)	3,126		-	(1,716)	-	-	400	-	400	-	400
Loss for the year		-	-	-	-	-		-	-	-	-	-	(68,877)	(68,877)	(1,954)	(70,831)
Total comprehensive income/(loss) for 2014		-	-	-	(1,010)	3,126		-	(1,716)	-	-	400	(68,877)	(68,477)	(1,954)	(70,431)
Transfer to retained earnings		-	-	-	-	-		(8,432)	-	-	-	(8,432)	8,432	-	-	-
Deferred bonus plan		-	-	-	-	-		-	-	-	1,230	1230	-	1,230	-	1,230
CEO LTIP		-	-	-	-	-		-	-	-	610	610	-	610	-	610
Dividends declared to non-controlling interests	29	-	-	-	-	-		-	-	-	-	-	-	-	(7,261)	(7,261)
Balance at 31 December 2014		170,389	396,021	(898)	14	3,126		-	(13,005)	(210,046)	2,576	(217,335)	451,047	799,224	95,160	894,384

1 Notes to the consolidated financial statements

For the year ended 31 December 2014

The financial information for the year ended 31 December 2014 and 2013 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 2014 and 2013 have been extracted from the consolidated financial statements of Hochschild Mining plc for the year ended 31 December 2014 which have been approved by the directors on 17 March 2015 and will be delivered to the Registrar of Companies in due course. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2 Significant accounting policies

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statement for the year ended 31 December 2013, except for the adoption of the following relevant standards and interpretations:

· IFRIC Interpretation 21 Levies (IFRIC 21), applicable to annual periods beginning on or after 1 January 2014

IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. This application of this interpretation has had no impact on the Group´s financial position or performance.

· IAS 39 Novation of Derivatives and Continuation of Hedge Accounting - Amendments to IAS 39, applicable to annual periods beginning on or after 1 January 2014

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The Group has not novated any of its derivatives during the current period,

· IFRS 7 'Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7', applicable for annual periods beginning on or after 1 July 2013

These amendments require an entity to disclose information about rights to set-off and related arrangements. The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity´s financial position. The new disclosures are required for all recognised financial instruments that are set off in accordance with IAS 32 'Financial Instruments Presentation.' The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These application of amendments have had no impact on the Group's financial position or performance.

· IFRS 10 'Consolidated Financial Statements', applicable for annual periods beginning on or after 1 January 2014

IFRS 10 replaces the portion of IAS 27 'Consolidated and separate financial statements' that addresses the accounting for consolidated financial statements. It also includes the issues raised in SIC-12 'Consolidation-special purposes entities'. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The adoption of this new standard has had no impact on the Group´s financial position or performance.

· IFRS 11 'Joint arrangements', applicable for annual periods beginning on or after 1 January 2014

IFRS 11 replaces IAS 31 'Interests in joint ventures' and SIC-13 'Jointly-controlled entities non-monetary contributions by venturers'. Instead, jointly-controlled entities that meet the definition of a joint venture must be accounted for using the equity method. The adoption of this new standard has had no impact on the Group's financial position or performance.

· IFRS 12 'Disclosure of involvement with other entities', applicable for annual periods beginning on or after 1 January 2014

IFRS 12 applies to an entity that has an interest in subsidiaries, joint arrangements, associates and/or structured entities. Many of the disclosure requirements of IFRS 12 were previously included in IAS 27, IAS 31, and IAS 28. A number of new disclosures are also required. The standard affects financial statement disclosure only, its adoption has had no impact on the Group's financial position or performance. The Group has made all additional disclosures required by this standard in respect of the financial information of its material non-controlling interest in Minera Santa Cruz S.A.

· IAS 28 'Investments in Associates and Joint Ventures (as revised in 2011)', applicable for annual periods beginning on or after 1 January 2014

IAS 28 'Investments in Associates', has been renamed IAS 28 'Investments in Associates and Joint Ventures', and describes the application of the equity method to investments in joint ventures in addition to associates. The application of this amendment has had no impact on the Group´s financial position or performance.

· IAS 36 'Impairment of Assets' - recoverable amount disclosures, applicable for annual periods beginning on or after 1 January 2014

The amendment removes the requirement to disclose recoverable amounts when there has been no impairment or reversal of impairment. Further to that, the disclosure requirements have been aligned with those under US GAAP for impaired assets. The application of this amendment has had no impact on the Group's financial position or performance, but has affected its impairment disclosures.

3 Segment reporting

The Group's activities are principally related to mining operations which involve the exploration, production and sale of gold and silver. Products are subject to the same risks and returns and are sold through the same distribution channels. The Group undertakes a number of activities solely to support mining operations including power generation and services. Transfer prices between segments are set on an arm's length basis in a manner similar to that used for third parties. Segment revenue, segment expense and segment results include transfers between segments at market prices. Those transfers are eliminated on consolidation.

For internal reporting purposes, management takes decisions and assesses the performance of the Group through consideration of the following reporting segments:

· Operating unit - Ares, which generates revenue from the sale of gold and silver

· Operating unit - Arcata, which generates revenue from the sale of gold, silver, dore and concentrate

· Operating unit - Pallancata, which generates revenue from the sale of concentrate

· Operating unit - San Jose, which generates revenue from the sale of gold, silver, concentrate and dore

· Operating unit - Moris, which generated revenue from the sale of gold and silver, disclosed as a segment until 31 December 2013. Minas Santa María de Moris, S.A. de C.V., which held the Moris operating unit, was sold to a third party on 28 February 2014 (note 4(c)). Accordingly, this operation did not meet the quantitative thresholds to be a separate reportable segment in 2014 and has been included in 'Other'. The comparative segment information has been restated to conform with these changes.

· Pre operating unit - Inmaculada, which will generate revenue from the sale of gold and silver is now considered as a segment due to the significant investment in the construction of the mine . Accordingly, the comparative segment information has been restated to reflect this change.

· Exploration, which explores and evaluates areas of interest in brownfield and greenfield sites with the aim of extending the life-of-mine of existing operations and to assess the feasibility of new mines. The exploration segment includes costs charged to the profit and loss and capitalised as assets.

· Other - includes the profit or loss generated by Empresa de Transmisión Callalli S.A.C. (a power transmission company), HMX, S.A. de C.V. (a service company in Mexico), Empresa de Transmisión Aymaraes S.A.C. (a power transmission company), the Selene mine, that closed in 2009 and which, as a consequence not considered to be a reportable segment, and the Moris mine, sold on 28 February 2014, and consequently not considered a reportable segment for 2014.

The Group's administration, financing, other activities (including other income and expense), and income taxes are managed at a corporate level and are not allocated to operating segments.

Segment information is consistent with the accounting policies adopted by the Group. Management evaluates the financial information based on International Financial Reporting Standards (IFRS) as adopted for use in the European Union.

The Group measures the performance of its operating units by the segment profit or loss that comprises gross profit, selling expenses and exploration expenses.

Segment assets include items that could be allocated directly to the segment.

(a) Reportable segment information

	Ares US$000	Arcata US$000	Pallancata US$000	San Jose US$000	Inmaculada US$000	ExplorationUS$000	Other¹ US$000	Adjustment and eliminations US$000	Total US$000
Year ended 31 December 2014
Revenue from external customers	25,889	106,061	147,360	213,013	-	-	628	-	492,951
Inter segment revenue	-	-	-	-	-	-	2,857	(2,857)	-
Total revenue	25,889	106,061	147,360	213,013	-	-	3,485	(2,857)	492,951

Segment profit/(loss)	(437)	5,054	20,894	28,429	-	(18,662)	884	(752)	35,410
Others²									(103,620)
Loss from continuing operations before income tax									(68,210)

Other segment information
Depreciation³	(418)	(31,348)	(48,008)	(46,820)	(7,558)	(930)	(2,596)	-	(137,678)
Amortisation	-	-	-	(1,181)	-	(458)	-	-	(1,639)
Impairment and write-off of assets net	(6)	(499)	(31)	(717)	(85)	1,580	(133)	-	109

Assets
Capital expenditure	(10)	28,867	34,160	51,350	193,445	6,522	6,787	-	321,121

Current assets	6,740	27,993	21,174	66,995	5,877	35	2,421	-	131,235
Other non-current assets	832	143,524	112,365	223,295	497,771	277,827	70,799	-	1,326,415
Total segment assets	7,572	171,517	133,539	290,290	503,648	277,864	73,220	-	1,457,650
Not reportable assets⁴	-	-	-	-	-	-	248,662	-	248,662
Total assets	7,572	171,517	133,539	290,290	503,648	277,864	321,882	-	1,706,312

1 'Other' revenue primarily relates to revenues earned by HMX S.A. de C.V. for services provided to the Moris mine, and the Mexican exploration activities, and revenue for the sale of gold and silver generated by the Moris mine.

2 Comprised of administrative expenses of US$46,087,000, other income of US$4,112,000, other expenses of US$20,475,000, gain on the reversal of impairment net of write-off of assets of US$109,000, finance income of US$6,276,000, finance expense of US$42,565,000, and foreign exchange loss of US$4,990,000.

3 Includes US$967,000 and US$7,558,000 of depreciation capitalised in the Crespo and the Inmaculada projects respectively.

4 Not reportable assets are comprised of available-for-sale financial assets of US$455,000, other receivables of US$100,708,000, income tax receivable of US$25,584,000, deferred income tax assets of US$1,574,000, other financial assets of US$4,342,000 and cash and cash equivalents of US$115,999,000.

3 Segment reporting (continued)

(a) Reportable segment information

	Ares US$000	Arcata US$000	Pallancata US$000	San Jose US$000	Inmaculada US$000	Exploration US$000	Other¹ US$000	Adjustment and eliminations US$000	Total US$000
Year ended 31 December 2013
Revenue from external customers	50,362	136,968	181,795	240,723	-	-	12,310	-	622,158
Inter segment revenue	-	-	-	-	-	-	8,796	(8,796)	-
Total revenue	50,362	136,968	181,795	240,723	-	-	21,106	(8,796)	622,158

Segment profit/(loss)	(3,515)	31,710	49,357	44,142	-	(50,894)	5,467	1,547	77,814
Others²									(197,434)
Profit from continuing operations before income tax									(119,620)

Other segment information
Depreciation³	(8,723)	(31,044)	(50,222)	(52,790)	(1,158)	(769)	(4,908)	-	(149,614)
Amortisation	-	-	-	(1,300)	-	(441)	-	-	(1,741)
Impairment and write-off of assets net	(3,791)	(115)	(271)	(41,382)	(2)	(45,109)	(1)	-	(90,671)

Assets
Capital expenditure	3,783	43,255	42,992	56,502	89,120	30,551	15,375	-	281,578

Current assets	13,211	14,009	31,563	73,844	1,421	453	4,757	-	139,258
Other non-current assets	1,328	142,618	122,058	217,344	297,311	284,802	56,342	-	1,121,803
Total segment assets	14,539	156,627	153,621	291,188	298,732	285,255	61,099	-	1,261,061
Not reportable assets⁴	-	-	-	-	-	-	472,831	-	472,831
Total assets	14,539	156,627	153,621	291,188	298,732	285,255	533,930	-	1,733,892

1 'Other' revenue primarily relates to revenues earned by Minas Santa Maria de Moris, S.A. de C.V., generated by the sale of gold and silver and HMX S.A. de C.V. for services provided to the Moris mine, and the Mexican exploration activities.

2 Comprised of administrative expenses of US$56,776,000, other income of US$6,416,000, other expenses of US$15,555,000, impairment and write-off of assets of US$90,671,000, share of gains of associates and joint ventures of US$5,921,000, gain on transfer from onvestments accounted under the equity method to available-for-sale financial assets of US$107,942,000, finance income of US$13,092,000, finance expense of US$148,050,000, and foreign exchange loss of US$19,753,000.

3 Includes US$28,000, US$613,000 and US$1,158,000 of depreciation capitalised in San Jose mine unit, the Crespo project and the Inmaculada project respectively.

4 Not reportable assets are comprised of available-for-sale financial assets of US$51,658,000, other receivables of US$110,166,000, income tax receivable of US$22,156,000, deferred income tax assets of US$2,416,000 and cash and cash equivalents of US$286,435,000.

3 Segment reporting (continued)

(b) Geographical information

The revenue for the period based on the country in which the customer is located is as follows:

	Year ended 31 December
	2014 US$000	2013 US$000
External customer
USA	96,427	148,201
Peru	178,217	91,781
Canada	36,421	53,664
Germany	10,987	4,901
Switzerland	45,020	149,452
United Kingdom	2,450	38,697
Korea	121,868	135,100
Japan	1,561	362
Total	492,951	622,158
Inter-segment
Peru	1,804	3,122
Mexico	1,053	5,674
Total	495,808	630,954

In the periods set out below, certain customers accounted for greater than 10% of the Group's total revenues as detailed
in the following table:

	Year ended 31 December 2014			Year ended 31 December 2013
	US$000	% Revenue	Segment	US$000	% Revenue	Segment
LS Nikko	121,868	25%	Arcata, Pallancata and San Jose	135,100	22%	Pallancata and San Jose
Glencore Perú S.A.C.	114,192	23%	Arcata and Pallancata	35,188	6%	Pallancata
Argor Heraus	45,045	9%	San Jose	105,730	17%	Ares, Arcata and San Jose
Johnson Matthey Inc.	26,850	5%	Ares, Arcata	70,547	11%	Ares, Arcata and Others

3 Segment reporting (continued)

Non-current assets, excluding financial instruments and income tax assets, were allocated based on the geographical area where the assets are located as follows:

	As at 31 December
	2014 US$000	2013 US$000
Peru	942,411	746,211
Argentina	223,295	217,415
Mexico	41,944	40,591
Chile	118,765	117,466
United Kingdom	-	120
Total non-current segment assets	1,326,415	1,121,803
Available-for-sale financial assets	455	51,658
Trade and other receivables	6,488	12,128
Deferred income tax assets	1,574	2,416
Total non-current assets	1,334,932	1,188,005

4 Acquisitions and disposals

(a) Acquisition of Non-controlling interest

Minera Suyamarca S.A.C.

In October 2013, Hochschild Mining entered into a binding agreement to acquire the 40% interest held by International Minerals Corporation ("IMZ") in Minera Suyamarca S.A.C., which holds the Pallancata mine and Inmaculada Advanced Project in Peru (the "Peruvian Assets"). Prior to the Acquisition, Hochschild held a 60% interest in the Peruvian Assets.

IMZ is also the 100% owner of Minera Oro Vega S.A.C. and Minera Qorihuayta S.A.C., all registered in Peru.

In compliance with the Group´s accounting policy, the difference between the consideration paid and the carrying value of the non-controlling interest at the acquisition date has been recognised in retained earnings as follows:

		US$000
Cash and cash equivalents (US$2.38 per share)		(271,036)
Cash and cash equivalents (transaction costs paid)		(1,091)
Transaction costs pending of payment		(4,264)
Available-for-sale financial assets (note 20)		(8,939)
Net assets received from Minera Oro Vega S.A.C		1,777
Total consideration		(283,553)
Non-controlling interest		148,185
Retained earnings		(135,368)

(b) Acquisition of assets

Andina Minerals Inc

On 20 February 2013 the Group completed the acquisition of Andina Minerals Inc.

Andina's principal asset, the 100% owned Volcan project, includes the Volcan area, located in Chile.

At 31 December 2012, the Group had paid US$90,156,869, for 112,124,252 common shares of Andina, representing an 81.4% interest on a fully diluted basis (86.7% on a basic basis). As a result of the acquisition, the Group incurred directly attributable transaction costs of US$11,441,742. The Group recognised a liability of US$13,787,427 in respect of the Group´s commitment to acquire 17,146,835 remaining shares as at 31 December 2012.

Based on the Group´s ownership interest as at 31 December 2012, the Group was deemed to have control over Andina and therefore consolidated it as a subsidiary undertaking from that date. The transaction was recognised as an asset acquisition, and the fair value of the net assets acquired was US$115,388,000.

The outstanding balance at 31 December 2012 of US$13,787,427 was paid between January 2013 (US$4,268,605) and February 2013 (US$9,518,822).The total consideration was settled in cash.

(c) Sale of subsidiary

Minas Santa María de Moris, S.A. de C.V.

On 28 February 2014 the Group sold its interest in Minas Santa María de Moris, S.A. de C.V. ("Moris") to Exploraciones y Desarrollos Regiomontanos, S.A. de C.V. ("EDR") and Arturo Préstamo Elizondo ("APE") for consideration with a fair value of nil. The terms of the transaction stipulate that:

· the Group was entitled to a 1% net smelter return over the Moris concessions once production reaches 50,000 ounces of gold equivalent following the sale; and

· EDR and APE would assume all costs associated with the mine and plant rehabilitation obligations.

The carrying value of the net assets disposed was:

		US$000
Property, plant and equipment		13
Inventories		278
Trade and other receivables		3,694
Income tax receivable		241
Cash and cash equivalents		33
Trade and other payables		(214)
Provisions		(1,266)
Net assets disposed		2,963

The transaction resulted in a loss of US$2,963,000.

5 Revenue

	Year ended 31 December
	2014 US$000	2013 US$000
Gold (from dore bars)	62,911	112,855
Silver (from dore bars)	67,418	179,773
Gold (from concentrate)	109,045	103,721
Silver (from concentrate)	253,420	225,746
Services	157	63
Total	492,951	622,158

Included within revenue is a loss of US$16,518,000 relating to provisional pricing adjustments representing the change in the fair value of embedded derivatives (2013: loss of US$29,867,000) arising on sales of concentrates and dore (refer to footnote 2 of note 23).

The realised gain on gold and silver swaps sales contracts in the period recognised within revenue was US$14,603,000
(gold: US$2,451,000, silver: US$12,152,000) (2013: US$Nil).

6 Cost of sales

Included in cost of sales are:

	Year ended 31 December
	2014 US$000	2013 US$000
Depreciation and amortisation	128,720	146,918
Personnel expenses (note 10)	114,322	124,834
Mining royalty (note 31)	6,581	8,293
Change in products in process and finished goods	8,641	3,926

7 Administrative expenses

	Year ended 31 December
	2014 US$000	2013 US$000
Personnel expenses (note 10 and 11)	24,206	28,445
Professional fees	3,846	5,553
Social and community welfare expenses¹	1,943	3,216
Lease rentals	1,442	1,925
Travel expenses	865	1,342
Communications	579	834
Indirect taxes	2,678	3,044
Depreciation and amortisation	2,072	2,638
Technology and systems	718	1,092
Security	951	1,083
Supplies	188	243
Other	6,599	7,361
Total	46,087	56,776

1 Represents amounts expended by the Group on social and community welfare activities surrounding its mining units.

8 Exploration expenses

	Year ended 31 December
	2014 US$000	2013 US$000
Mine site exploration¹
Arcata	2,038	2,052
Ares	42	452
Selene	58	-
Sipan	-	600
Pallancata	1,728	2,149
San Jose	1,003	1,795
Moris	-	129
	4,869	7,177
Prospects²
Peru	788	1,459
Argentina	73	294
Mexico	195	3,504
Chile	237	12,696
	1,293	17,953
Generative³
Peru	1,180	3,502
Argentina	11	53
Mexico	2,588	1,157
Chile	379	330
	4,158	5,042
Personnel (note 10 and 11(1))	7,412	12,302
Others	408	3,853
Total	18,140	46,327

1 Mine-site exploration is performed with the purpose of identifying potential minerals within an existing mine-site, with the goal of maintaining or extending
the mine's life.

2 Prospects expenditure relates to detailed geological evaluations in order to determine zones which have mineralisation potential that is economically viable
for exploration. Exploration expenses are generally incurred in the following areas: mapping, sampling, geophysics, identification of local targets and
reconnaissance drilling.

3 Generative expenditure is very early stage exploration expenditure related to the basic evaluation of the region to identify prospects areas that have the geological conditions necessary to contain mineral deposits. Related activities include regional and field reconnaissance, satellite images, compilation of public information and identification of exploration targets.

The following table lists the liabilities (generally payables) outstanding at the year-end, which relate to the exploration activities of Group companies engaged only in exploration. Liabilities related to exploration activities incurred by Group operating companies are not included since it is not practicable to separate the liabilities related to the exploration activities of these companies from their operating liabilities.

Cash flows on exploration activities are as follows:

	As at 31 December
	2014 US$000	2013 US$000
Payments	3,362	23,441

9 Selling expenses

	Year ended 31 December
	2014 US$000	2013 US$000
Transportation of dore, concentrate and maritime freight	6,020	4,256
Sales commissions	429	1,050
Personnel expenses (note 10)	249	210
Warehouse services	2,930	3,256
Taxes	15,609	16,596
Other	3,460	3,417
Total	28,697	28,785

10 Personnel expenses¹

	Year ended 31 December
	2014 US$000	2013 US$000
Salaries and wages	115,770	128,225
Workers' profit sharing	(34)	(737)
Other legal contributions	22,168	24,641
Statutory holiday payments	7,074	7,860
Long Term Incentive Plan	(657)	(1,127)
Termination benefits	11,570	10,487
Other	1,805	6,584
Total	157,696	175,933

1 Personnel expenses are distributed in cost of sales, administrative expenses, exploration expenses, selling expenses, other expenses and capitalised as property plant and equipment amounting to US$114,322,000 (2013: US$124,834,000), US$24,206,000 (2013: US$28,445,000), US$7,412,000 (2013: US$12,302,000), US$249,000 (2013: US$210,000), US$1,642,000 (2013: US$nil) and US$9,865,000 (2013: US$10,142,000) respectively.

Average number of employees for 2014 and 2013 were as follows:

	As at 31 December
	2014	2013
Peru	2,852	3,226
Argentina	1,179	1,227
Mexico	19	122
Chile	11	38
United Kingdom	9	12
Total	4,070	4,625

11 Pre-tax exceptional items

Exceptional items are those significant items which, due to their nature or the expected infrequency of the events giving rise to them, need to be disclosed separately on the face of the income statement to enable a better understanding of the financial performance of the Group and facilitate comparison with prior years.

	Year ended 31 December 2014 US$000	Year ended 31 December 2013 US$000
Cost of sales
Termination benefits¹	(1,327)	(2,466)
Termination benefits Ares mine unit²	(3,511)	-
Work stoppage at Arcata mine unit	(1,227)	-
Total	(6,065)	(2,466)
Administrative expenses
Termination benefits¹	(2,752)	(2,351)
Total	(2,752)	(2,351)
Exploration expenses
Termination benefits¹	(886)	(3,456)
Total	(886)	(3,456)
Other income
Gain on sale of property, plant and equipment	-	2,442
Total	-	2,442
Other expenses
Loss on sale of subsidiary³	(2,963)	-
Total	(2,963)	-
Impairment and write-off of assets (net)
Impairment and write-off of assets⁴	(1,534)	(105,071)
Reversal of impairment of assets⁵	1,643	14,400
Total	109	(90,671)
Finance income
Gain on sale of available-for-sale financial assets⁶	4,061	-
Gain from changes in the fair value of financial instruments⁷	-	2,417
Total	4,061	2,417
Gain on transfer from investment accounted under the equity method to available-for-sale financial assets⁸	-	107,942
Total	-	107,942
Finance costs
Amortisation of transaction costs on secure bank loans⁹	(3,336)	(1,072)
Transaction costs on bank loans¹⁰	-	(2,577)
Loss from changes in the fair value of financial instruments¹¹	(6,155)	(124,899)
Loss on sale of available-for-sale financial assets¹²	-	(7,805)
Total	(9,491)	(136,353)

1 Termination benefits paid to workers following the restructuring plan approved by management, amounting to US$4,965,000 (2013:US$8,273,000).

2 Termination benefits generated in connection with the suspension of the Ares mine unit.

3 Loss generated by the sale of the Group´s interest in Moris (refer to note 4(c)).

4 As at 31 December 2014 corresponds to the write-off of assets of US$1,534,000. As at 31 December 2013 corresponds to the impairment of the San José mine unit of US$40,869,000, the Azuca project of US$30,290,000, the Crespo project of US$29,150,000 and the Ares unit of US$3,771,000, and to the write-off of assets of US$991,000.

5 Corresponds to a reversal of previously recorded impairment at the San Felipe property of US$1,643,000 (2013: US$14,400,000) (note 17)

6 Corresponds to the gain on sale of the Group´s holding in Gold Resource Corp ('GRC') of US$2,642,000, Chaparral Gold of US$842,000, Mirasol Resources Ltd of US$556,000 and Northern Superior Resources Inc of US$21,000.

7 Corresponds to the recycling of the unrealised gain generated by the shares of International Minerals Corporation, at the time of acquisition (refer to note 4(a)).

8 Gain on the reclassification of GRC shares from an investment accounted for under the equity method to an available-for-sale financial asset of US$107,942,000 as a result of the Company ceasing to have the ability to exercise significant influence (refer to note 19).

9 Corresponds to the attributable issue cost of the syndicated loan granted to Compañía Minera Ares S.A.C. (note 27), disclosed as an exceptional item
as a significant one-off expense.

10 Corresponds to the write-off of transaction costs related to bank facilities never drawn by Minera Suyamarca S.A.C.

11 As at 31 December 2014 corresponds to the impairment of the investments in Pembrook Mining Corp of US$6,000,000, Brionor Resources of US$54,000, Revelo Resources Corp (formerly Iron Creek Capital Corp) of US$53,000, Northern Superior Resources Inc of US$45,000 and Empire Petroleum Corp of US$3,000. As at 31 December 2013 corresponds to the impairment of investments in Gold Resource Corp. of US$105,298,000, International Minerals of US$12,920,000, Pembrook Mining Corp. of US$5,745,000, Mariana Resources Ltd. of US$281,000, Northern Superior Resources Inc. of US$422,000, Iron Creek Capital Corp. of US$207,000, Empire Petroleum Corp. of US$22,000 and Brionor Resources of US$4,000.

12 Corresponds to the loss on sale of part of the Group's holding in GRC of US$7,805,000. The Group sold 3,375,000 and 1,800,000 GRC shares on 11 July 2013 and 12 December 2013, respectively.

12 Other expenses before exceptional items

	Year ended 31 December 2014	Year ended 31 December 2013
	Before exceptional items US$000	Before exceptional items US$000
Increase of provision for mine closure (note 28(4))	9,088	5,516
Tax on mining reserves in Argentina (note 31)	3,453	2,453
Contingencies	1,680	845
Other	3,291	6,741
Total	17,512	15,555

13 Finance income and finance costs before exceptional items

	Year ended 31 December 2014	Year ended 31 December 2013
	Before exceptional items US$000	Before exceptional items US$000
Finance income
Interest on deposits and liquidity funds	1,567	6,751
Interest income	1,567	6,751
Dividends	525	3,551
Other	123	373
Total	2,215	10,675
Finance costs
Interest on secured bank loans (note 27)	(5,027)	(4,633)
Interest on convertible bond (note 27)	(5,364)	(4,594)
Interest on bond (note 27)	(20,302)	-
Interest expense	(30,693)	(9,227)
Unwind of discount rate	(1,865)	(1,267)
Loss from changes in the fair value of financial instruments	(90)	(220)
Other	(426)	(983)
Total	(33,074)	(11,697)

14 Income tax expense

	Year ended 31 December 2014			Year ended 31 December 2013
	Before exceptional items US$000	Exceptional items US$000	Total US$000	Before exceptional items US$000	Exceptional items US$000	Total US$000
Current corporate income tax from continuing operations
Current corporate income tax charge	10,082	(251)	9,831	10,971	(752)	10,219
Current mining royalty charge (note 31)	1,611	-	1,611	2,344	-	2,344
Current special mining tax charge (note 31)	375	-	375	905	-	905
Withholding taxes	(343)	-	(343)	(641)	-	(641)
	11,725	(251)	11,474	13,579	(752)	12,827
Deferred taxation
Origination and reversal of temporary differences from continuing operations	(457)	(3,851)	(4,308)	31,400	(35,170)	(3,770)
Effect of change in tax rate	(4,802)	257	(4,545)	-	-	-
	(5,259)	(3,594)	(8,853)	31,400	(35,170)	(3,770)
Total taxation charge in the income statement	6,466	(3,845)	2,621	44,979	(35,922)	9,057

The weighted average statutory income tax rate was 28.7% for 2014 and 28.5% for 2013. 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.

On December 2014, the Peruvian government approved a gradually reduction in the Income tax rate, applicable since 2015 year.

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

	As at 31 December
	2014 US$000	2013 US$000
Deferred taxation:
Deferred income tax relating to fair value gains on cash flow hedges	1,216	-
Total tax charge in the statement of other comprehensive income	1,216	-

The total taxation charge on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the consolidated profits of the Group companies as follows:

	As at 31 December
	2014 US$000	2013 US$000
Loss from continuing operations before income tax	(68,210)	(119,620)
At average statutory income tax rate of 28.7% (2013: 28.5%)	(19,547)	(34,140)
Expenses not deductible for tax purposes	3,058	2,685
Non-taxable income¹	(851)	(1,366)
Non-taxable share of gains of associates	-	(1,377)
Deferred tax recognised on special investment regime	(780)	(4,246)
Movement in unrecognised deferred tax	6,700	13,048
Change in statutory income tax rate	(4,545)	-
Withholding tax	(343)	(641)
Special mining tax and mining royalty²	1,986	3,249
Foreign exchange rate effect³	14,473	30,366
Other	2,470	1,479
At average effective income tax rate of -3.8% (2013: -11.8%)	2,621	9,057
Taxation charge attributable to continuing operations	2,621	9,057
Total taxation charge in the income statement	2,621	9,057

1 Mainly corresponds to the gain on sale of Gold Resource Corp shares (2013: Mainly corresponds to dividends received from Gold Resource Corp. and International Minerals Corporation).2

2 Corresponds to the impact of a mining royalty and special mining tax in Peru (note 31).

3 Mainly corresponds to the foreign exchange effect of converting tax bases and monetary items from local currency to the functional currency.

15 Basic and diluted (loss)/earnings per share

Earnings per share ('EPS') is calculated by dividing profit/(loss) for the year attributable to equity shareholders of the Company by the weighted average number of ordinary shares issued during the year.

The Company has dilutive potential ordinary shares.

As at 31 December 2014 and 2013, EPS has been calculated as follows:

	As at 31 December
	2014	2013
Basic loss per share from continuing operations
Before exceptional items (US$)	(0.15)	(0.15)
Exceptional items (US$)	(0.04)	(0.21)
Total for the year and from continuing operations (US$)	(0.19)	(0.36)
Diluted loss per share from continuing operations
Before exceptional items (US$)	(0.15)	(0.15)
Exceptional items (US$)	(0.04)	(0.21)
Total for the year and from continuing operations (US$)	(0.19)	(0.36)

Net loss from continuing operations before exceptional items and attributable to equity holders of the parent is derived
as follows:

	As at 31 December
	2014	2013
Loss attributable to equity holders of the parent - continuing operations (US$000)	(68,877)	(123,083)
Exceptional items after tax - attributable to equity holders of the parent (US$000)	13,914	72,738
Loss from continuing operations before exceptional items attributable to equity holders of the parent (US$000)	(54,963)	(50,345)
Diluted loss from continuing operations before exceptional items attributable to equity holders of the parent (US$000)	(54,963)	(50,345)

The following reflects the share data used in the basic and diluted loss per share computations:

	As at 31 December
	2014	2013
Basic weighted average number of ordinary shares in issue (thousands)	366,975	345,225
Dilutive potential ordinary shares related to convertible bond (thousands)¹	-	-
Dilutive potential ordinary shares related to contingently issuable shares (thousands)¹	-	-
Diluted weighted average number of ordinary shares in issue and dilutive potential ordinary shares (thousands)	366,975	345,225

1 The potential ordinary shares related to the convertible bond and the contingently issuable shares under the Enhanced Long Term Incentive Plan and Restricted Share Plan have not been included in the calculation of diluted EPS for 2014 and 2013 as they have an antidilutive effect.

16 Property, plant and equipment

	Mining properties and development costs² US$000	Land and buildings US$000	Plant and equipment US$000	Vehicles US$000	Mine closure asset US$000	Construction in progress and capital advances US$000	Total US$000
Year ended 31 December 2014
Cost
At 1 January 2014	869,780	220,083	371,079	6,511	74,362	136,383	1,678,198
Additions	136,742	1,913	20,281	46	-	157,192	316,174
Change in discount rate	-	-	-	-	4,357	-	4,357
Change in mine closure estimate	-	-	-	-	18,741	-	18,741
Disposals	-	(178)	(2,657)	(309)	-	(61)	(3,205)
Write-offs	(114)	(276)	(3,943)	(308)	-	-	(4,641)
Disposal of subsidiary (note 4(c))	(11,015)	(7,851)	(6,972)	(355)	(1,247)	-	(27,440)
Transfers and other movements¹	4,384	43,480	11,254	445	-	(56,206)	3,357
At 31 December 2014	999,777	257,171	389,042	6,030	96,213	237,308	1,985,541
Accumulated depreciation and impairment
At 1 January 2014	452,777	120,923	175,453	3,645	48,425	3,498	804,721
Depreciation for the year	84,928	19,836	29,854	752	2,308	-	137,678
Disposals	-	(178)	(2,385)	(256)	-	-	(2,819)
Write-offs	(51)	(184)	(2,677)	(195)	-	-	(3,107)
Disposal of subsidiary (note 4(c))	(11,015)	(7,851)	(6,969)	(345)	(1,247)	-	(27,427)
Transfers and other movements¹	185	2,092	(66)	62	-	(2,088)	185
At 31 December 2014	526,824	134,638	193,210	3,663	49,486	1,410	909,231
Net book amount at 31 December 2014	472,953	122,533	195,832	2,367	46,727	235,898	1,076,310

The carrying value of plant and equipment held under finance leases at 31 December 2014 was US$Nil (2013: US$539,627). Additions during
the year included US$Nil (2013: US$Nil) of plant and equipment under finance leases. Leased assets are pledged as security for the related finance lease.

There were borrowing costs capitalised in property, plant and equipment amounting to US$9,904,000 (2013:US$5,736,000). The capitalisation rate used was 8.83% (2013: 9.45%).

1 Net of transfers and other movements of US$3,172,000 were transferred from evaluation and exploration assets.

2 Mining properties and development costs related to Azuca, Crespo, Inmaculada and Volcan projects are not currently being depreciated.

At the end of 2014, given the continued challenging environment for the mining sector, the Group carried out an impairment review of all of its operating mines (Arcata, Pallancata, and San Jose), its Advanced Project (Inmaculada), and its growth projects (Crespo, Azuca, and Volcan). As a result of this review, no impairment charges were identified.

The recoverable values of these CGUs were determined using a fair value less costs of disposal (FVLCD) methodology. FVLCD was determined using a combination of level 2 and level 3 inputs to construct a discounted cash flow model to estimate the amount that would be paid by a willing third party in an arm's length transaction. The key assumptions on which management has based its determination of fair value less costs of disposal, and the associated recoverable values calculated are presented below.

Gold and silver prices

$ per oz.	2015	2016	2017	2018	Long-term
Gold	1,266	1,288	1,288	1,325	1,300
Silver	19.4	20.1	21.3	21.8	20.0

Other key assumptions

	Arcata	Pallancata	San Jose	Inmaculada	Crespo	Azuca	Volcan
Discount rate	5.1%	5.1%	12.8%	6.1%	6.6%	n/a	n/a
Value per in-situ ounce	n/a	n/a	n/a	n/a	n/a	0.56¹	18.00¹

1 With respect to the Azuca and Volcan growth projects, given their early stage, the Group applied a value in-situ methodology, which applies a realisable 'enterprise value' to unprocessed mineral resources. The methodology is used to determine the fair value less costs of disposal of the Azuca and Volcan CGUs, which includes the water permits held by the Group. The enterprise value used in the calculation performed at 31 December 2014 was US$18.00 per gold equivalent ounce of resources (Volcan) and $0.56 per silver equivalent ounce of resources (Azuca). The enterprise value figures are based on observable external market information.

Sensitivity analysis

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

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

Approximate impairment resulting from the following changes (US$000)	Arcata	Pallancata	Inmaculada	San Jose	Crespo	Azuca
Prices (10% decrease)	(52,000)	(47,000)	(98,000)	(84,000)	(21,000)	n/a
Discount rate (3% increase)	(9,000)	(3,000)	(59,000)	(18,000)	(16,000)	n/a
Production costs (10% increase)	(25,000)	(20,000)	(5,000)	(41,000)	(10,000)	n/a
Value per in-situ ounce (10% decrease)	n/a			n/a	n/a	(3,000)

Current carrying value of CGU, net of deferred tax (US$000)	Arcata	Pallancata	Inmaculada	San Jose	Crespo	Azuca
31 December 2014	135,356	108,388	464,355	171,977	64,877	39,288

16 Property, plant and equipment (continued)

	Mining properties and development costs US$000	Land and buildings US$000	Plant and equipment US$000	Vehicles US$000	Mine closure asset US$000	Construction in progress and capital advances US$000	Total US$000
Year ended 31 December 2013
Cost
At 1 January 2013	540,324	179,940	313,457	5,360	67,356	119,381	1,225,818
Additions	141,504	2,823	49,700	323	-	73,421	267,771
Change in discount rate	-	-	-	-	(1,481)	-	(1,481)
Change in mine closure estimate	-	-	-	-	8,487	-	8,487
Disposals	-	-	(724)	(43)	-	-	(767)
Write-offs	(321)	(57)	(7,089)	(150)	-	-	(7,617)
Transfers and other movements	(50)	37,377	15,611	1,021	-	(56,419)	(2,460)
Transfers from evaluation and exploration assets	188,323	-	-	-	-	-	188,323
Foreign exchange	-	-	124	-	-	-	124
At 31 December 2013	869,780	220,083	371,079	6,511	74,362	136,383	1,678,198
Accumulated depreciation and impairment
At 1 January 2013	306,443	87,679	146,823	2,574	44,808	936	589,263
Depreciation for the year	96,862	20,377	29,316	989	2,070	-	149,614
Disposals	-	-	(351)	(14)	-	-	(365)
Write-offs	(41)	(9)	(5,567)	(110)	-	-	(5,727)
Impairment¹	42,080	5,883	8,520	204	1,547	3,899	62,133
Transfers from evaluation and exploration assets	7,418	-	-	-	-	-	7,418
Transfers and other movements	15	6,993	(3,350)	2	-	(1,337)	2,323
Foreign exchange	-	-	62	-	-	-	62
At 31 December 2013	452,777	120,923	175,453	3,645	48,425	3,498	804,721
Net book amount at 31 December 2013	417,003	99,160	195,626	2,866	25,937	132,885	873,477

1 In 2013, the Group recorded an impairment of US$450,000 with respect to the Azuca project, US$22,535,000 with respect to the Crespo project, US$35,377,000 with respect to the San Jose mine unit and US$3,771,000 with respect to the Ares mine unit. These impairment charges arose primarily as a result of decreases in the prices of silver and gold and were determined using the fair value less costs to dispose (FVLCD) methodology. FVLCD was determined using a combination of level 2 and level 3 inputs to construct a discounted cash flow model to estimate the amount that would be paid by a willing third party in an arm's length transaction. The key assumptions on which management has based its determination of fair value less costs of disposal include: forecast commodity prices, discount rates, production volumes, production costs, and required capital expenditures. Where applicable, the post-tax discount rates used in the measurement of the fair value less costs of disposal were: Azuca: 5.1%, Crespo: 6.8%, San Jose: 11.7%. Any variation in these key assumptions would either result in further impairment or a reduction of the impairment. The recoverable amount of Azuca, Crespo and San Jose was US$28,285,000, US$50,005,000 and US$154,214,000 respectively.

17 Evaluation and exploration assets

	Azuca US$000	Crespo US$000	Inmaculada US$000	San Felipe US$000	Volcan US$000	Others US$000	Total US$000
Cost
Balance at 1 January 2013	70,804	67,615	116,762	55,950	86,301	41,172	438,604
Additions	4,736	179	965	-	4,300	2,006	12,186
Foreign exchange	-	(512)	-	-	-	-	(512)
Write-off	-	-	-	-	(26)	(4)	(30)
Transfers to property, plant and equipment	-	(38,106)	(117,727)	-	-	(32,490)	(188,323)
Balance at 31 December 2013	75,540	29,176	-	55,950	90,575	10,684	261,925
Additions	821		779	-	1,463	1,603	4,666
Transfers from/(to) property plant and equipment	3,593	(3,620)	(92)	-	(3)	(3,730)	(3,852)
Balance at 31 December 2014	79,954	25,556	687	55,950	92,035	8,557	262,739
Accumulated impairment
Balance at 1 January 2013	22	9,904	-	30,950	-	1,171	42,047
Impairment¹	29,840	5,507	-	(14,400)	-	1,706	22,653
Transfers to property, plant and equipment	-	(6,281)	-	-	-	(1,137)	(7,418)
Balance at 31 December 2013	29,862	9,130	-	16,550	-	1,740	57,282
Impairment¹	-	-	-	(1,643)	-	-	(1,643)
Transfers from/(to) property, plant and equipment	3,430	(3,620)	-	-	-	-	(190)
Balance at 31 December 2014	33,292	5,510	-	14,907	-	1,740	55,449
Net book value as at 31 December 2013	45,678	20,046	-	39,400	90,575	8,944	204,643
Net book value as at 31 December 2014	46,662	20,046	687	41,043	92,035	6,817	207,290

There were no borrowing costs capitalised in evaluation and exploration assets.

1 In 2014, the group partially reversed the impairment of the San Felipe project of US$1,643,000. In 2013, the Group recorded an impairment with respect to the Azuca project of US$29,840,000 , the Crespo project of US$5,507,000 and the San Jose mine unit of US$1,706,000, and partially reversed the impairment of the San Felipe project of US$14,400,000 (refer to note 17).

18 Intangible assets

	Goodwill US$000	Transmission line¹ US$000	Water permits² US$000	Software licences US$000	Legal rights³ US$000	Total US$000
Cost
Balance at 1 January 2013	2,091	22,157	26,583	1,337	-	52,168
Additions	-	-	-	-	1,621	1,621
Transfer	-	-	-	11	4,783	4,794
Balance at 31 December 2013	2,091	22,157	26,583	1,348	6,404	58,583
Additions	-	-	-	4	277	281
Transfer	-	-	-	421	-	421
Balance at 31 December 2014	2,091	22,157	26,583	1,773	6,681	59,285
Accumulated amortisation and impairment
Balance at 1 January 2013	-	7,138	-	1,127	-	8,265
Amortisation for the year⁴	-	1,213	-	87	441	1,741
Impairment of the period⁵	2,091	1,671	-	24	1,108	4,894
Balance at 31 December 2013	2,091	10,022	-	1,238	1,549	14,900
Amortisation for the year⁴	-	1,102	-	79	458	1,639
Transfer	-	-	-	(69)	-	(69)
Balance at 31 December 2014	2,091	11,124	-	1,248	2,007	16,470
Net book value as at 31 December 2013	-	12,135	26,583	110	4,855	43,683
Net book value as at 31 December 2014	-	11,033	26,583	525	4,674	42,815

1 The transmission line is amortised using the units of production method. At 31 December 2014 the remaining amortisation period is approximately 10 years.

2 Corresponds to the acquisition of water permits of Andina Minerals Group ("Andina") (refer to note 4(b)). They have an indefinite life according to Chilean law.

3 Legal rights correspond to expenditures required to give the Group the right to use a property for the surface exploration work, development and production. At 31 December 2014 the remaining amortisation period is 12 years.

4 The amortisation for the period is included in cost of sales and administrative expenses in the income statement.

5 In 2013 the Group recorded an impairment in relation to all of the goodwill of US$2,091,000 and other intangibles of US$1,695,000 related to the San Jose mine unit, and US$1,108,000 related to the Crespo project (refer to note 16).

The carrying amount of water permits is reviewed annually to determine whether it is in excess of its recoverable amount.

(a) Goodwill:

The calculation of fair value less cost of disposal is most sensitive to the following assumptions:

· Commodity prices - Commodity prices of gold and silver are based on prices considered in the Group's 2013 forecast and external market consensus forecasts. The prices considered in the 2013 impairment tests were:

Year	2013	2014	2015	2016	2017	2018	2019	2020-2024
2013 - Gold - US$/oz	1,343.9	1,405.9	1,379.3	1,319.3	1,272.1	1,272.1	1,272.1	1,272.1
2013 - Silver - US$/oz	21.2	25.0	23.5	20.7	22.3	22.3	22.3	22.3

· Estimation of reserves and resources - Reserves and resources are based on management's estimates using appropriate exploration and evaluation techniques;

· Production volumes and grades - Tonnage produced was estimated at plant capacity with 12 days of maintenance per year;

· Capital expenditure - The cash flows for each mining unit include capital expenditures to maintain the mine and to convert resources to reserves;

· Operating costs - Costs are based on historical information from previous years and current mining conditions;

· Discount rates - The cash flows are discounted at real pre-tax rates that reflect the current market assessments of the time value of money and the risks specific to the cash-generating unit. These rates are based on the weighted average cost of capital specific to each cash-generating unit. The post-tax discount rate used in the 2013 impairment test was 11.7%.

The period approved by management to project the cash flows was 10 years.

(b) Water permits:

In the case of the water permits the Group applied a value in situ methodology, which applies a realisable 'enterprise value' to unprocessed mineral resources. The methodology is used to determine the fair value less costs of disposal of the Volcan cash-generating unit, which includes the water permits held by the Group. The enterprise value used in the calculation performed at 31 December 2014 was US$18.00 per gold equivalent ounce of resources (2013: US$13.60).

The enterprise value figures are based on observable external market information.

Headroom for the 2014 impairment test was US$53,185,000 (2013: US$14,172,000).

19 Investments accounted under equity method

Gold Resource Corp.

The Group has an interest in Gold Resource Corp.("GRC"), which is involved in the exploration for and production of gold and silver in Mexico.

On 27 March 2013 equity accounting for the investment was discontinued as a result of developments during the period which resulted in the Group concluding that it no longer had the ability to influence significantly that company´s strategic, operational and financial direction. Accordingly, the investment in GRC was reclassified as an available-for-sale financial asset. As of 27 March 2013 the Group had a 27.77% interest in GRC. In the period prior to reclassification, the Group's share of the profit and total comprehensive income of GRC was US$5,921,000. A portion of the Group's interest in GRC was disposed of in 2013 following the reclassification to an available-for-sale financial asset.

The Group disposed of its available-for-sale investment in GRC during 2014 (note 20).

20 Available-for-sale financial assets

	Year ended 31 December
	2014 US$000	2013 US$000
Beginning balance	51,658	30,609
Additions¹	-	1,119
Reclassification from investments accounted under the equity method²	-	189,418
Fair value change recorded in equity	(3,106)	(125,932)
Disposals³	(48,097)	(33,498)
Other⁴	-	(10,058)
Ending balance	455	51,658

1 In 2013 represents 3,755,746 shares of Chaparral Gold Corp. received as a result of the Group´s 3.2% original interest in International Minerals Corporation ("IMZ") (refer to note 4(a))

2 Reclassification of the Group's Gold Resource Corp. shares from an associate accounted for under the equity method to an available-for-sale financial asset on 27 March 2013. Equity accounting of the investment was discontinued as a result of developments during the period which resulted in the Group concluding that it no longer had the ability to influence significantly that company's strategic, operational and financial direction. Consequently, the asset is recognised as an available-for-sale asset at fair value.

3 Sale of 9,451,874 shares of Gold Resource Corp., 3,334,000 shares of Norther Superior Resources Inc., 3,755,746 shares of Chaparral Gold Corp., and 500,000 shares of Mirasol Resources Ltd. (2013: Sale of 3,375,000 and 1,800,000 shares of Gold Resource Corp on 11 July 2013 and 12 December 2013 respectively).

4 In connection with the acquisition of the non-controlling interest of Minera Suyamarca S.A.C. the Group disposed of its 3,755,746 ordinary shares of IMZ and received 3,755,746 class A shares of IMZ, which was recognised as an investment in a subsidiary and consequently eliminated on consolidation (refer to note 4(a))

20 Available-for-sale financial assets (continued)

Available-for-sale financial assets include the following:

	Year ended 31 December
	2014 US$000	2013 US$000
Equity securities - quoted Canadian companies	216	2,030
Equity securities - quoted US companies¹	12	42,883
Equity securities - quoted British companies	227	745
Equity securities - unquoted²	-	6,000
Total	455	51,658

1 Includes Gold Resource Corp shares of US$Nil (2013: US$42,817,000l).

2 Includes Pembrook Mining Corp and ECI Exploration and Mining Inc. shares.

The fair value of the listed shares is determined by reference to published price quotations in an active market.

The investments in unlisted shares (Pembrook Mining Corp. and ECI Exploration and Mining Inc.) were recognised at cost less any recognised impairment losses given that there is not an active market for these investments. The investments in ECI Exploration and Mining Inc. and Pembrook Mining Corp. are fully impaired as at 31 December 2014 (2013: impairment of US$5,745,000).

Available-for-sale financial assets are denominated in the following currencies:

	2014 US$000	2013 US$000
Canadian dollars	216	8,030
US dollars	12	42,883
Pounds sterling	227	745
Total	455	51,658

21 Trade and other receivables

	As at 31 December
	2014		2013
	Non-current US$000	Current US$000	Non-current US$000	Current US$000
Trade receivables	-	72,818	-	69,702
Advances to suppliers	-	5,347	-	22,667
Duties recoverable from exports of Minera Santa Cruz	2,016	6,000	5,776	-
Receivables from related parties	-	45	-	111
Loans to employees	1,192	748	2,030	909
Interest receivable	-	78	-	600
Receivable from Kaupthing, Singer and Friedlander Bank	-	264	-	294
Other¹	2,186	15,939	2,638	19,115
Provision for impairment²	-	(5,136)	-	(5,084)
Financial assets classified as receivables	5,394	96,103	10,444	108,314
Prepaid expenses	389	11,336	755	11,602
Value Added Tax (VAT)³	705	59,599	929	47,824
Total	6,488	167,038	12,128	167,740

The fair values of trade and other receivables approximate their book value.

1 Mainly corresponds to account receivables from contratists for the sale of supplies of US$9,763,000 (2013: US$6,870,000), a tax claim related to the withholding tax on the GRC dividends received of US$1,447,000 (2013: US$2,724,000), other tax claims of US$2,767,000 (2013: US$1,835,000).

2 Includes the provision for impairment of trade receivable from a customer in Peru of US$1,108,000 (2013: US$1,108,000), the impairment of deposits in Kaupthing, Singer and Friedlander of US$264,000 (2013: US$294,000) and other receivables of US$3,764,000 (2013: US$3,682,000) that mainly relates to an exploration project that would be recovered through an ownership interest if it succeeds.

3 This includes an amount of US$19,583,000 (2013: US$17,807,000) of VAT receivable related to the San Jose project that will be recovered through future
sales of gold and silver by Minera Santa Cruz S.A. It also includes the VAT of Minera Suyamarca of US$Nil (2013: US$10,639,000), Compañía Minera Ares S.A.C. of US$35,026,000 (2013: US$11,005,000) and Minas Santa María de Moris of US$Nil (2013: US$3,108,000). The VAT is valued at its recoverable amount.

Movements in the provision for impairment of receivables:

		Individually impaired US$000
At 1 January 2013		3,819
Provided for during the year		1,485
Released during the year		(220)
At 31 December 2013		5,084
Provided for during the year		110
Released during the year		(58)
At 31 December 2014		5,136

As at 31 December, the ageing analysis of financial assets classified as receivables net of impairment is as follows:

			Past due but not impaired
Year	Total US$000	Neither past due nor impaired US$000	Less than 30 days US$000	30 to 60 days US$000	61 to 90 days US$000	91 to 120 days US$000	Over 120 days US$000
2014	101,497	101,497	-	-	-	-	-
2013	118,758	118,758	-	-	-	-	-

22 Inventories

	As at 31 December
	2014 US$000	2013 US$000
Finished goods	7,147	7,871
Products in process	13,326	21,246
Raw materials	-	2
Supplies and spare parts	42,404	47,118
	62,877	76,237
Provision for obsolescence of supplies	(4,460)	(6,681)
Total	58,417	69,556

Finished goods include ounces of gold and silver, dore and concentrate.

Products in process include dore, concentrate and stockpile.

Dore is an alloy containing a variable mixture of silver, gold and minor impurities. The Group either sells dore bars as a finished product or if it is commercially advantageous to do so, delivers the bars for refining into gold and silver ounces which are then sold. In the latter scenario, the dore bars are classified as products in process. The amount of dore on hand at 31 December 2014 included in products in process is US$1,405,000 (2013: US$697,000).

Concentrate is a product containing sulphides with a variable content of base and precious metals and is sold to smelters, but in addition could be used as a product in process to produce dore.

As part of the Group's short-term financing policies, it acquires pre-shipment loans which are guaranteed by the sales contracts.

The amount of expense recognised in profit and loss related to the consumption of inventory of supplies, spare parts and raw materials is US$75,066,000 (2013: US$94,235,000).

Movements in the provision for obsolescence comprise an increase in the provision of US$192,000 (2013: US$1,832,000) and the reversal of US$1,137,000 relating to the sale of supplies and spare parts, that had been provided for (2013: US$Nil).

The amount of income relating to the reversal of the inventory provision is US$Nil (2013: US$90,000).

23 Other financial assets and liabilities

	As at 31 December
	2014 US$000	2013 US$000
Other financial assets
Swap contracts¹	4,342	-
Derivative instruments in designated hedge accounting relationships	4,342	-
Other financial liabilities
Embedded derivatives²	1,533	2,294
Total financial liabilities at fair value through profit or loss	1,533	2,294

1 Corresponds to the fair value of the unsettled commodity forward contract signed in 19 August 2014 with JP Morgan to hedge the sale of 38,000 ounces of gold at US$1300 per ounce, during the period from January to December 2015.

2 Sales of concentrate and certain gold and silver volumes are provisionally priced at the time the sale is recorded. The price is then adjusted after an agreed period of time (usually linked to the length of time it takes for the smelter to refine and sell the concentrate or for the refiner to process the dore into gold and silver), with the Group either paying or receiving the difference between the provisional price and the final price. This price exposure is considered to be an embedded derivative in accordance with IAS 39 'Financial Instruments: Recognition and Measurement'. The gain or loss that arises on the fair value of the embedded derivative is recorded in 'Revenue' (refer to note 5).

24 Cash and cash equivalents

	As at 31 December
	2014 US$000	2013 US$000
Cash at bank	293	454
Liquidity funds¹	935	8,751
Current demand deposit accounts²	76,850	62,259
Time deposits³	37,921	214,971
Cash and cash equivalents considered for the statement of cash flows⁴	115,999	286,435

The fair value of cash and cash equivalents approximates their book value. The Group does not have undrawn borrowing facilities available in the future for operating activities or capital commitments.

1 The liquidity funds are mainly invested in certificates of deposit, commercial papers and floating rate notes with a weighted average maturity of 10 days as at 31 December 2014 (2013: average of 8 days).

2 Relates to bank accounts which are freely available and bear interest.

3 These deposits have an average maturity of 2 days (2013: Average of 27 days).

4 Funds deposited in Argentinean institutions are effectively restricted for transfer to other countries and are invested locally. Included within cash and cash equivalents at 31 December 2014 is US$14,233,000 (2013: US$29,112,000), which is not readily available for use in subsidiaries outside of Argentina.

25 Deferred income

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

	As at 31 December
	2014 US$000	2013 US$000
San Felipe contract	25,000	22,000

These payments reduce the total consideration IMSC will be required to pay upon exercise of the option on December 2016, and constitute an advance of the final purchase price, rather than an option premium, as such, they were recorded as deferred income.

26 Trade and other payables

	As at 31 December
	2014		2013
	Non-current US$000	Current US$000	Non-current US$000	Current US$000
Trade payables¹	-	64,458	-	73,339
Salaries and wages payable²	-	23,890	-	18,620
Dividends payable	-	1,789	-	4,584
Taxes and contributions	-	11,441	-	8,264
Guarantee deposits	-	7,327	-	7,266
Mining royalty (note 31)	-	951	-	840
Accounts payable to related parties	-	11	-	16
Other	92	2,023	174	6,293
Total	92	111,890	174	119,222

The fair value of trade and other payables approximate their book values.

1 Trade payables relate mainly to the acquisition of materials, supplies and contractors' services. These payables do not accrue interest and no guarantees have been granted.

2 Salaries and wages payable were as follows:

	2014 US$000	2013 US$000
Remuneration payable	23,890	17,885
Board members' remuneration	-	152
Executive Long Term Incentive Plan	-	583
Total	23,890	18,620

27 Borrowings

	As at 31 December
	2014			2013
	Effective interest rate	Non-current US$000	Current US$000	Effective interest rate	Non-current US$000	Current US$000
Bond payable (a)	8.48%	342,043	13,457	-	-	-
Secured bank loans (b)
· Pre-shipment loans in Minera Santa Cruz (note 22)	-	-	13,843	-	-	24,122
· Pre-shipment loans in Minera Suyamarca S.A.C.(note 22)	-	-	-	-	-	30,053
· Syndicated loan	-	-	-	25.26%	-	265,877
· Medium-term bank loan	3.47%	98,791	582	-	-	-
Convertible bond payable (c)	-	-	-	8.26%	-	115,873
Total		440,834	27,882		-	435,925

(a) Bond payable

On 23 January 2014 the Group issued US$ 350,000,000 7.75% Senior Unsecured Notes of Compañía Minera Ares S.A.C. guaranteed by Hochschild Mining plc and Hochschild Mining (Argentina) Corporation S.A.The interest will be paid semiannually, commencing 23 July 2014 until maturity in 23 January 2021. The balance at 31 December 2014 is comprised the carrying value of US$355,500,000 determined in accordance with the effective interest method.

The following options could be taken before the maturity:

Optional Redemption with Proceeds of Equity Offerings: Up to 35% at 107.750% prior to January 23, 2017

Optional Redemption with Make-Whole Premium: At any time prior to January 23, 2018, the issuer may redeem all or part of the notes, at a price equal to 100% of the outstanding principal amount of the notes plus accrued and unpaid interest and additional amounts, if any, to the redemption date, plus a "make-whole" premium at Treasury Rate + 50 bps.

Optional Redemption without Make-Whole Premium: The issuer may redeem all or part of the notes on or after January 23, 2018 at the redemption prices specified below plus accrued and unpaid interest and additional amounts, if any, to the redemption date

On or after:

2018, price 103.875%

2019, price 101.938%

2020, price 100%

Optional Redemption Upon Tax Event: 100% of the outstanding principal amount plus accrued and unpaid interest and additional amounts, if any.

Change of Control Offer: 101% of principal amount plus accrued and unpaid interest.

(b) Secured bank loans:

Syndicated loan:

Loan facility with a syndicate of lenders with Bank of America acting as the Administrative Agent. Total secured term loan facility of US$340,000,000, of which $270,000,000 was drawn with an effective interest rate of 25.26% and was guaranteed by a group of subsidiaries headed by Hochschild Mining plc. The balance at 31 December 2013 is comprised the carrying value of US$265,877,000 determined in accordance with the effective interest method. This loan was repaid on 23 January 2014.

Medium-term bank loan:

Credit agreement of US$ 100,000,000 with Scotiabank Peru S.A.A. acting as Lead Arranger and The Bank of Nova Scotia and Corpbanca as lenders. The borrower is Compañía Minera Ares SAC and the loan is guaranteed by Hochschild Mining plc. The loan has an interest rate of LIBOR + 2.6% payable quarterly. The first principal repayment is scheduled for July 2016, with subsequent payments quarterly thereafter until maturity in April 2019. The carrying value at 31 December 2014 of US$99,373,000 was determined in accordance with the effective interest method.

Relates to the placement of US$115,000,000 of senior unsecured convertible bonds, due 2014, which were convertible into ordinary shares of Hochschild Mining plc. The Group settled the convertible bonds in cash upon their maturity in October 2014. The bonds had a coupon of 5.75% per annum payable semi-annually on 28 January and 28 July of each year.

Upon initial recognition, the convertible bonds were recorded at a value of US$ 103,827,000, representing a principal
of US$115,000,000 less transaction costs of US$2,741,000 and the bond equity component of $8,432,000.

The convertible bonds were repaid on 16 October 2014.

The maturity of non-current borrowings is as follows:

	As at 31 December
	2014 US$000	2013 US$000
Between 1 and 2 years	16,660	-
Between 2 and 5 years	82,131	-
Over 5 years	342,043	-
Total	440,834	-

The carrying amount of current borrowings differs their fair value only with respect to differences arising under the effective interest rate calculations described above. The carrying amount and fair value of the non‑current borrowings are as follows:

	Carrying amount as at 31 December		Fair value as at 31 December
	2014 US$000	2013 US$000	2014 US$000	2013 US$000
Secured bank loans	98,791	-	99,083	-
Bond payable	342,043	-	348,250	-
Total	440,834	-	447,333	-

The fair value of secured bank loans was determined by discounting the remaining principal and interest payments at the three month U.S. LIBOR rate plus 1 percent. The U.S. LIBOR rate is a Level 1 input. In the case of the bond payable, the fair value was determined with reference to the quoted price of these bonds in an active market, another Level 1 input.

28 Provisions

	Provision for mine closure¹ US$000	Workers' profit sharing² US$000	Long Term Incentive Plan³ US$000	Other US$000	Total US$000
At 1 January 2013	74,214	18,549	6,027	4,448	103,238
Additions	-	-	-	1,171	1,171
Accretion	224	-	-	-	224
Change in discount rate	(1,481)	-	-	-	(1,481)
Change in estimates	14,005⁴	(427)	(2,960)	-	10,618
Payments	(4,781)	(17,645)	(651)	(83)	(23,160)
Amounts transferred to payables	-	-	(537)	-	(537)
Foreign exchange	(32)	(103)	-	(716)	(851)
At 31 December 2013	82,149	374	1,879	4,820	89,222
Less current portion	(6,311)	(374)	-	(2,888)	(9,573)
Non-current portion	75,838	-	1,879	1,932	79,649
At 1 January 2014	82,149	374	1,879	4,820	89,222
Additions	-	-	-	1,680	1,680
Accretion	242	-	-	-	242
Change in discount rate	4,357	-	-	-	4,357
Change in estimates	27,829⁴	-	(1,285)		26,544
Payments	(5,524)	(374)	-	(260)	(6,158)
Sale of subsidiary (note 4(c))	(1,266)	-	-	-	(1,266)
At 31 December 2014	107,787	-	594	6,240	114,621
Less current portion	-	-	-	(2,870)	(2,870)
Non-current portion	107,787	-	594	3,370	111,751

1 The provision represents the discounted values of the estimated cost to decommission and rehabilitate the mines at the expected date of closure of each of the mines. The present value of the provision has been calculated using a real pre-tax annual discount rate, based on a US Treasury bond of an appropriate tenure adjusted for the impact of quantitative easing as at 31 December 2014 and 2013 respectively, and the cash flows have been adjusted to reflect the risk attached to these cash flows. Uncertainties on the timing for use of this provision include changes in the future that could impact the time of closing the mines, as new resources and reserves are discovered. The discount rate used was 0.02% (2013: 0.29% to 0.56%).

2 Corresponds to the legal and voluntary workers' profit sharing of the Group. Legal workers' profit sharing represents 8% of taxable income of Peruvian companies. Voluntary workers' profit sharing is determined by the Group taking into account the market conditions of employment. The balance of the provision as at 31 December 2014 is: (i) Legal US$Nil (2013: US$374,000), (ii) Voluntary US$Nil (2013: US$Nil).

3 Corresponds to the provision related to awards granted under the Long Term Incentive Plan to designated personnel of the Group. Includes the following benefits: (i) 2014 awards, granted in March 2014, payable in March 2017 (Ii) 2013 awards, granted in March 2013, payable in March 2016. Only employees who remain in the Group's employment on the vesting date will be entitled to a cash payment, subject to exceptions approved by the Remuneration Committee of the Board. The provision represents the discounted values of the estimated cost of the long-term employee benefit. In 2014 there is change to the provision and corresponding expense of US$-1,285,000 (2013: US$-2,960,000) that is disclosed under administrative expenses US$-1,064,000 (2013: US$-1,698,000), exploration expenses US$-221,000 (2013: US$-244,000) and capitalised as evaluation and exploration expenses US$Nil (2013: US$-1,018,000). The amount of US$537,000 corresponds to the Exploration Incentive Plan award and was transferred to salary and wages payable as the performance period ended on 31 December 2012 (note 25(2)).

4 Based on the 2014 and 2013 internal review of mine rehabilitation budgets, an increase of US$27,829,000 (2013: US$14,005,000) was recognised, of which US$9,088,000 (2013: US$5,516,000) related to project already closed and has therefore been recognised directly in the income statement.

29 Dividends paid and proposed

	2014 US$000	2013 US$000
Declared and paid during the year
Equity dividends on ordinary shares:
Final dividend for 2013: US$Nil (2012: US$0.03)	-	10,139
Interim dividend for 2014: US$Nil (2013: US$Nil)	-	-
Dividends declared to non-controlling interests: US$0.04 and US$Nil (2013: US$0.03 and 0.05)	5,542	6,197
Dividends declared and paid	5,542	16,336
Dividends declared to non-controlling interests: US$0.04 (2013: US$0.03)	1,719	4,509
Dividends declared and not paid	1,719	4,509
Total dividends declared	7,261	20,845
Final dividend for 2014: US$Nil (2013: US$Nil)	-	-

Dividends per share

The Directors of the Company are not recommending a dividend in respect of the year ended 31 December 2014 and
31 December 2013.

30 Related-party balances and transactions

(a) Related-party accounts receivable and payable

The Group had the following related-party balances and transactions during the years ended 31 December 2014 and 2013. The related parties are companies owned or controlled by the main shareholder of the parent company, joint ventures or associates.

	Accounts receivable as at 31 December		Accounts payable as at 31 December
	2014 US$000	2013 US$000	2014 US$000	2013 US$000
Current related party balances
Cementos Pacasmayo S.A.A.	45	111	49	16
Total	45	111	49	16

As at 31 December 2014 and 2013, all other accounts are, or were, non-interest bearing.

No security has been granted or guarantees given by the Group in respect of these related party balances.

Principal transactions between affiliates are as follows:

	Year ended
	2014 US$000	2013 US$000
Income
Dividend recognised for Gold Resource Corp. investment (note 19)	-	2,633
Expenses
Expense recognised for the rental paid to Cementos Pacasmayo S.A.A.	(185)	(164)

Transactions between the Group and these companies are on an arm's length basis.

(b) Compensation of key management personnel of the Group

	As at 31 December
Compensation of key management personnel (including Directors)	2014 US$000	2013 US$000
Short-term employee benefits	5,369	5,781
Termination benefits	-	77
Long Term Incentive Plan	679	(434)
Workers' profit sharing		-
Others		1
Total compensation paid to key management personnel	6,048	5,425

This amount includes the remuneration paid to the Directors of the parent company of the Group of US$4,005,780 (2013 US$4,410,956), out of which US$160,462 (2013: US$193,831) relates to pension payments.

(c) Participation in placing by Inversiones Pacasmayo S.A. ("IP SA")

IP SA, a company controlled by Eduardo Hochschild, participated in a placing of the Company's Ordinary Shares ("Shares") in October 2013 by subscribing for 16,905,066 Shares at a price of 155p per Share.

31 Mining royalties

Peru

In accordance with Peruvian legislation, owners of mining concessions must pay a mining royalty for the exploitation of metallic and non-metallic resources. Mining royalties have been calculated with rates ranging from 1% to 3% of the value of mineral concentrate or equivalent sold, based on quoted market prices.

In October 2011 changes came into effect for mining companies, with the following features:

a) Introduction of a Special Mining Tax ('SMT'), levied on mining companies at the stage of exploiting mineral resources. The additional tax is calculated by applying a progressive scale of rates ranging from 2% to 8.4%, of the quarterly operating profit.

b) Modification of the mining royalty calculation, which consists of applying a progressive scale of rates ranging from 1% to 12%, of the quarterly operating profit. The former royalty was calculated on the basis of monthly sales value of mineral concentrates.

The SMT and modified mining royalty are accounted for as an income tax in accordance with IAS 12.

c) For companies that have mining projects benefiting from tax stability regimes, mining royalties are calculated and recorded as they were previously, applying an additional new special charge on mining that is calculated using progressive scale rates, ranging from 4% to 13.12% of quarterly operating profit.

d) In the case of the Arcata mine unit, the company quit the tax stability agreement, but has mantained the agreement for the mining royalties, such that the Arcata unit, is liable for the new SMT but the mining royalties remain payable at the same rate as they were, before the modification in 2011.

As at 31 December 2014, the amount payable as under the former mining royalty (for the Arcata mining unit), the new mining royalty (for the Ares and Pallancata mining units), and the SMT amounted to US$395,000 (2013: US$389,000), US$266,000 (2013: US$629,000), and US$Nil (2013: US$148,000) respectively. The former mining royalty is recorded as 'Trade and other payables', and the new mining royalty and SMT as 'Income tax payable' in the Statement of Financial Position. The amount recorded in the income statement was US$1,279,000 (2013: US$1,784,000) representing the former mining royalty, classified as cost of sales, US$1,611,000 (2013: US$2,344,000) of new mining royalty and US$375,000 (2013: US$905,000) of SMT, both classified as income tax.

Argentina

In accordance with Argentinian legislation, Provinces (being the legal owners of the mineral resources) are entitled to request royalties from mine operators. For San Jose, the mining royalty was originally fixed at 1.85% of the pit-head value of the production where the final product is dore and 2.55% where the final product is mineral concentrate or precipitates. In October 2012 a new provincial law was passed, which increased the mining royalty applicable to dore and concentrate to 3% of the pit-head value. Since November 2012 Minera Santa Cruz S.A. has been paying and expensing the increased 3% royalty although it has filed an administrative claim against the new law. As at 31 December 2014, the amount payable as mining royalties amounted to US$556,000 (2013: US$451,000). The amount recorded in the income statement was US$5,302,000 (2013: as cost of sales of US$6,509,000).

On 13 June 2013, the congress of the Province of Santa Cruz passed Law No. 3318, which created a tax on mining reserves. Accordingly, the owners of mining concessions located in the Province of Santa Cruz must pay a tax on mining reserves at a rate of 1%, calculated at the end of each year and determined according to the international price of metals at that date. According to these regulations, the tax applies only on "proved reserves" and certain deductions (related to the production cost) apply. Minera Santa Cruz S.A. (a subsidiary of Hochschild Mining plc) is affected by this tax. On 20 December 2013, Minera Santa Cruz S.A. filed before the Argentine Supreme Court a legal claim against the tax on mining reserves. Such legal claim challenges the legality of the tax on mining reserves arguing its unconstitutionality on the grounds that it violates the Federal Mining Policy created by national law No. 24.196. As at 31 December 2014, the amount payable as tax on mining reserves was US$4,088,000 (2013: US$1,381,000) recorded as 'Trade and other payables'. The amount recorded in the income statement was US$3,453,000 (2013: US$2,453,000) as other expenses.

32 Subsequent events

(a) On 20 January 2015, the group signed a commodity swap contract with JPMorgan Chase Bank, National Association, London Branch to hedge 6,000,000 ounces of silver at a price of US$17.75 per ounce from 21 January 2015 to
31 December 2015.

(b) On 9 and 13 January 2015, and 11 and 12 February 2015 the Group drew down US$75,000,000 of its short-term credit lines in Peru. US$50,000,000 will mature in December 2015 and US$25,000,000 will mature in February 2016. The average annual interest rate is 1.56%.

Profit by operation¹

(Segment report reconciliation) as at 31 December 2014

Company (US$000)	Ares	Arcata	Pallancata	Inmaculada	San Jose	Consolidation adjustment and others	Total/HOC
Revenue	25,889	106,061	147,360	-	213,013	628	492,951
Cost of sales (Pre consolidation)	(26,259)	(99,020)	(124,471)	-	(159,936)	(1,018)	(410,704)
Consolidation adjustment	(2)	(245)	303	-	-	(56)	-
Cost of sales (Post consolidation)	(26,257)	(98,775)	(124,774)	-	(159,936)	(962)	(410,704)
Production cost excluding depreciation	(17,853)	(62,644)	(71,742)	(3,309)	(110,089)	-	(265,637)
Depreciation in production cost	(438)	(31,398)	(48,963)	-	(45,156)	-	(125,955)
Other items	(4,142)	(3,065)	(1,540)	-	(1,724)	-	(10,471)
Change in inventories	(3,824)	(1,668)	(2,529)	3,309	(2,967)	(962)	(8,641)
Gross profit	(370)	7,041	22,889	-	53,077	(390)	82,247
Administrative expenses	-	-	-	-	-	(46,087)	(46,087)
Exploration expenses	-	-	-	-	-	(18,140)	(18,140)
Selling expenses	(67)	(1,987)	(1,995)	-	(24,648)	-	(28,697)
Other income/expenses	-	-	-	-	-	(16,363)	(16,363)
Operating profit before impairment	(437)	5,054	20,894	-	28,429	(80,980)	(27,040)
Impairment of assets	-	-	-	-	-	109	109
Finance income	-	-	-	-	-	6,276	6,276
Finance costs	-	-	-	-	-	(42,565)	(42,565)
FX loss	-	-	-	-	-	(4,990)	(4,990)
Profit/(loss) from continuing operations before income tax	(437)	5,054	20,894	-	28,429	(122,150)	(68,210)
Income tax	-	-	-	-	-	(1,928)	(1,928)
Profit/(loss) for the year from continuing operations	(437)	5,054	20,894	-	28,429	(124,078)	(70,138)

1 On a post exceptional basis.

RESERVES AND RESOURCES

Ore reserves and mineral resources estimates

Hochschild Mining plc reports its mineral resources and reserves estimates in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 edition ("the JORC Code"). This establishes minimum standards, recommendations and guidelines for the public reporting of exploration results and mineral resources and reserves estimates. In doing so it emphasises the importance of principles of transparency, materiality and confidence. The information on ore reserves and mineral resources on pages 65 to 69 were prepared by or under the supervision of Competent Persons (as defined in the JORC Code). Competent Persons are required to have sufficient relevant experience and understanding of the style of mineralisation, types of deposits and mining methods in the area of activity for which they are qualified as a Competent Person under the JORC Code. The Competent Person must sign off their respective estimates of the original mineral resource and ore reserve statements for the various operations and consent to the inclusion of that information in this report, as well as the form and context in which it appears.

Hochschild Mining plc employs its own Competent Person who has audited all the estimates set out in this report. Hochschild Mining Group companies are subject to a comprehensive programme of audits which aim to provide assurance in respect of ore reserve and mineral resource estimates. These audits are conducted by Competent Persons provided by independent consultants. The frequency and depth of an audit depends on the risks and/or uncertainties associated with that particular ore reserve and mineral resource, the overall value thereof and the time that has lapsed since the previous independent third-party audit.

The JORC Code requires the use of reasonable economic assumptions. These include long-term commodity price forecasts (which, in the Group's case, are prepared by ex-house specialists largely using estimates of future supply and demand and long-term economic outlooks).

Ore reserve estimates are dynamic and are influenced by changing economic conditions, technical issues, environmental regulations and any other relevant new information and therefore these can vary from year-to-year. Mineral resource estimates can also change and tend to be influenced mostly by new information pertaining to the understanding of the deposit and secondly the conversion to ore reserves.

The estimates of ore reserves and mineral resources are shown as at 31 December 2014, unless otherwise stated. Mineral resources that are reported include those mineral resources that have been modified to produce ore reserves. All tonnage and grade information has been rounded to reflect the relative uncertainty in the estimates; there may therefore be small differences. The prices used for the reserves calculation were: Au Price: US$1,200 per ounce and Ag Price: US$20 per ounce.

ATTRIBUTABLE METAL RESERVES AS AT 31 DECEMBER 2014

Reserve category	Proved and probable (t)	Ag (g/t)	Au (g/t)	Ag (moz)	Au (koz)	Ag Eq (moz)
MAIN OPERATIONS¹
Arcata
Proved	782,317	341	1.0	8.6	24.7	10.1
Probable	1,307,744	308	1.0	12.9	43.1	15.5
Total	2,090,061	320	1.0	21.5	67.9	25.6
Pallancata
Proved	903,257	261	1.4	7.6	39.5	9.9
Probable	834,331	250	1.2	6.7	33.3	8.7
Total	1,737,588	256	1.3	14.3	72.8	18.7
San Jose
Proved	624,370	520	7.2	10.4	143.6	19.1
Probable	360,949	365	6.1	4.2	70.7	8.5
Total	985,319	463	6.8	14.7	214.2	27.5
Main operations total
Proved	2,309,944	358	2.8	26.6	207.9	39.1
Probable	2,503,025	297	1.8	23.9	147.1	32.7
Total	4,812,968	326	2.3	50.5	354.9	71.8
ADVANCED PROJECTS
Inmaculada²
Proved	3,840,000	106	3.4	13.1	424.7	38.6
Probable	3,960,000	134	3.3	17.0	424.5	42.5
Total	7,800,000	120	3.4	30.1	849.2	81.1
Group total
Proved	6,149,944	201	3.2	39.7	632.6	77.7
Probable	6,463,025	197	2.8	40.9	571.6	75.2
TOTAL	12,612,968	199	3.0	80.6	1,204.1	152.9

Note: Where reserves are attributable to a joint venture partner, reserve figures reflect the Company's ownership only. Includes discounts for ore loss and dilution.

1 Main operations were audited by P&E Consulting.

2 Inmaculada reserves as published in the Feasibility Study released on 11 January 2012. Prices used for reserves calculation: Au: $1,100/oz and Ag: $18/oz.

ATTRIBUTABLE METAL RESOURCES AS AT 31 DECEMBER 2014

Resource category	Tonnes (t)	Ag (g/t)	Au (g/t)	Zn (%)	Pb (%)	Cu (%)	Ag Eq (g/t)	Ag (moz)	Au (koz)	Ag Eq (moz)	Zn (kt)	Pb (kt)	Cu (kt)
MAIN OPERATIONS
Arcata
Measured	1,566,470	467	1.40	-	-	-	551	23.5	70.4	27.8	-	-	-
Indicated	2,375,166	381	1.31	-	-	-	459	29.1	100.3	35.1	-	-	-
Total	3,941,636	415	1.35	-	-	-	496	52.6	170.7	62.8	-	-	-
Inferred	3,572,309	322	1.29	-	-	-	399	37.0	148.2	45.9	-	-	-
Pallancata
Measured	2,669,327	348	1.66	-	-	-	447	29.9	142.2	38.4	-	-	-
Indicated	1,268,572	287	1.37	-	-	-	370	11.7	56.1	15.1	-	-	-
Total	3,937,899	328	1.57	-	-	-	422	41.6	198.3	53.5	-	-	-
Inferred	2,560,082	263	1.12	-	-	-	330	21.7	92.0	27.2	-	-	-
San Jose
Measured	958,979	589	8.19	-	-	-	1,081	18.2	252.5	33.3	-	-	-
Indicated	1,384,056	390	5.83	-	-	-	740	17.4	259.3	32.9	-	-	-
Total	2,343,035	472	6.79	-	-	-	879	35.5	511.8	66.2	-	-	-
Inferred	887,930	380	6.21	-	-	-	753	10.8	177.4	21.5	-	-	-
Main operations total
Measured	5,194,776	428	2.78	-	-	-	596	71.6	465.1	99.5	-	-	-
Indicated	5,027,794	360	2.57	-	-	-	514	58.1	415.7	83.1	-	-	-
Total	10,222,570	395	2.68	-	-	-	555	129.7	880.8	182.6	-	-	-
Inferred	7,020,321	308	1.85	-	-	-	419	69.5	417.7	94.5	-	-	-
ADVANCED/GROWTH PROJECTS
Inmaculada¹
Measured	3,283,431	128	4.10	-	-	-	374	13.5	432.8	39.4	-	-	-
Indicated	3,782,818	159	4.05	-	-	-	402	19.3	492.3	48.9	-	-	-
Total	7,066,249	144	4.07	-	-	-	389	32.8	925.1	88.3	-	-	-
Inferred	4,937,776	152	3.91	-	-	-	387	24.2	620.0	61.4	-	-	-
Crespo²
Measured	5,211,058	47	0.47	-	-	-	75	7.9	78.6	12.6	-	-	-
Indicated	17,298,228	38	0.40	-	-	-	62	21.0	222.5	34.3	-	-	-
Total	22,509,286	40	0.42	-	-	-	65	28.8	301.0	46.9	-	-	-
Inferred	775,429	46	0.57	-	-	-	80	1.1	14.2	2.0	-	-	-
Azuca
Measured	190,602	244	0.77	-	-	-	290	1.5	4.7	1.8	-	-	-
Indicated	6,858,594	187	0.77	-	-	-	233	41.2	168.8	51.3	-	-	-
Total	7,049,197	188	0.77	-	-	-	234	42.7	173.5	53.1	-	-	-
Inferred	6,946,341	170	0.89	-	-	-	223	37.9	199.5	49.9	-	-	-
Volcan³
Measured	105,918,000	-.-	0.738	-	-	-	44	-.-	2,511.0	150.7	-	-	-
Indicated	283,763,000	-.-	0.698	-	-	-	42	-.-	6,367.0	382.0	-	-	-
Total	389,681,000	-.-	0.709	-	-	-	43	-.-	8,878.0	532.7	-	-	-
Inferred	41,553,000	-.-	0.502	-	-	-	30	-.-	671.0	40.3	-	-	-
Advanced/Growth Projects total
Measured	114,603,091	6	0.82	-	-	-	56	22.9	3,027.1	204.5	-	-	-
Indicated	311,702,641	8	0.72	-	-	-	52	81.5	7,250.6	516.5	-	-	-
Total	426,305,732	8	0.75	-	-	-	53	104.3	10,277.6	721.0	-	-	-
Inferred	54,212,547	36	0.86	-	-	-	88	63.2	1,504.7	153.5	-	-	-

1 Inmaculada resources as published in the Feasibility Study released on 11 January 2012. Prices used for resources calculation: Au: $1,100/oz and Ag: $18/oz.

ATTRIBUTABLE METAL RESOURCES AS AT 31 DECEMBER 2014 (CONTINUED)

Resource category	Tonnes (t)	Ag (g/t)	Au (g/t)	Zn (%)	Pb (%)	Cu (%)	Ag Eq (g/t)	Ag (moz)	Au (koz)	Ag Eq (moz)	Zn (kt)	Pb (kt)	Cu (kt)
OTHER PROJECTS
Jasperoide⁴
Measured	-	-	0.00	-	-	0.00	0	-	0.0	0.0	-	-	0.0
Indicated	-	-	0.00	-	-	0.00	0	-	0.0	0.0	-	-	0.0
Total	-	-	0.00	-	-	0.00	0	-	0.0	0.0	-	-	0.0
Inferred	12,187,270	-	0.32	-	-	1.32	147	-	126.8	57.6	-	-	161.2
San Felipe
Measured	1,393,716	69	0.02	7.12	3.10	0.39	315	3.1	0.9	14.1	99.3	43.1	5.5
Indicated	1,354,261	82	0.06	6.14	2.73	0.31	295	3.6	2.4	12.9	83.2	37.0	4.2
Total	2,747,977	76	0.04	6.64	2.92	0.35	305	6.7	3.3	27.0	182.4	80.1	9.7
Inferred	1,257,731	84	0.05	6.18	2.26	0.19	283	3.4	1.9	11.5	77.8	28.5	2.3
Other projects total
Measured	1,393,716	69	0.02	7.12	3.10	0.39	315	3.1	0.9	14.1	99.3	43.1	5.5
Indicated	1,354,261	82	0.06	6.14	2.73	0.31	295	3.6	2.4	12.9	83.2	37.0	4.2
Total	2,747,977	76	0.04	6.64	2.92	0.35	305	6.7	3.3	27.0	182.4	80.1	9.7
Inferred	13,445,001	8	0.30	0.58	0.21	1.22	160	3.4	128.6	69.0	77.8	28.5	163.6
GRAND TOTAL
Measured	121,191,583	25	0.90	0.08	0.04	0.00	82	97.5	3,493.1	318.1	99.3	43.1	5.5
Indicated	318,084,696	14	0.75	0.03	0.01	0.00	60	143.2	7,668.7	612.4	83.2	37.0	4.2
Total	439,276,279	17	0.79	0.04	0.02	0.00	66	240.7	11,161.8	930.5	182.4	80.1	9.7
Inferred	74,677,869	57	0.85	0.10	0.04	0.22	132	136.1	2,051.0	317.1	77.8	28.5	163.6

2 Prices used for resources calculation: Au: $1,200/oz and Ag: $20/oz.

3 Resources reported in the NI 43-101 Technical Report published by Andina Minerals, January 2011. Price used for resources calculation: Au: $950/oz.

4 The silver equivalent grade (147 g/t Ag Eq) has being calculated applying the following ratios, Cu/Ag=96.38 and Au/Ag=60

CHANGE IN TOTAL RESERVES AND RESOURCES

Ag equivalent content (million ounces)	Category	December 2014	Production¹	Movements²	December 2014	Net difference	% change
Arcata	Resource	99.4	-	9.2	108.7	9.2	9.3
	Reserve	23.5	7.6	9.7	25.6	2.1	8.8
Pallancata	Resource	109.7	-	(29.0)	80.7	(29.0)	(26.5)
	Reserve	29.0	10.1	(0.3)	18.7	(10.4)	(35.8)
San Jose	Resource	188.9	-	(16.9)	172.0	(16.9)	(8.9)
	Reserve	54.6	13.8	13.1	54.0	(0.6)	(1.2)
Main operations total	Resource	398.0	-	(36.7)	361.4	(36.7)	(9.2)
	Reserve	107.2	31.5	22.5	98.2	(9.0)	(8.4)
Inmaculada	Resource	149.7	-	-	149.7	-	-
	Reserve	81.1	-	-	81.1	-	-
Crespo	Resource	48.9	-	-	48.9	-	-
	Reserve	-	-	-	-	-	-
Azuca	Resource	103.0	-	-	103.0	-	-
	Reserve	-	-	-	-	-	-
Volcan	Resource	572.9	-	-	572.9	-	-
	Reserve	-	-	-	-	-	-
Advanced/Growth Projects total	Resource	874.5	-	-	874.5	-	-
	Reserve	81.1	-	-	81.1	-	-
Jasperoide	Resource	57.6	-	-	57.6	-	-
	Reserve	-	-	-	-	-	-
San Felipe	Resource	38.5	-	-	38.5	-	-
	Reserve	-	-	-	-	-	-
Other projects total	Resource	96.0	-	-	96.0	-	-
	Reserve	-	-	-	-	-	-
Total	Resource	1,368.5	-	(36.7)	1,331.9	(36.7)	(2.7)
	Reserve	188.3	31.5	22.5	179.3	(9.0)	(4.8)

1 Depletion: reduction in reserves based on ore delivered to the mine plant.

2 Variation in reserves and resources due mainly to mine site exploration but also to price changes.

CHANGE IN ATTRIBUTABLE RESERVES AND RESOURCES

Ag equivalent content (million ounces)	Category	Percentage attributable December 2013	December 2013 Att.¹	December 2014 Att.¹	Net difference	% change
Arcata	Resource	100%	99.4	108.7	9.2	9.3
	Reserve		23.5	25.6	2.1	8.8
Pallancata	Resource	100%	109.7	80.7	(29.0)	(26.5)
	Reserve		29.0	18.7	(10.3)	(35.5)
San Jose	Resource	51%	96.3	87.7	(8.6)	(8.9)
	Reserve		27.9	27.5	(0.3)	(1.1)
Main operations total	Resource		305.5	277.1	(28.4)	(9.3)
	Reserve		80.4	71.8	(8.6)	(10.7)
Inmaculada	Resource	100%	149.7	149.7	-	-
	Reserve		81.1	81.1	-	-
Crespo	Resource	100%	48.9	48.9	-	-
	Reserve		-	-	-	-
Azuca	Resource	100%	103.0	103.0	-	-
	Reserve		-	-	-	-
Volcan	Resource	100%	572.9	572.9	-	-
	Reserve		-	-	-	-
Advanced/Growth Projects total	Resource		874.5	874.5	-	-
	Reserve		81.1	81.1	-	-
Jasperoide	Resource	100%	57.6	57.6	-	-
	Reserve		-	-	-	-
San Felipe	Resource	100%	38.5	38.5	-	-
	Reserve		-	-	-	-
Other projects total	Resource		96.0	96.0	-	-
	Reserve		-	-	-	-
Total	Resource		1,276.0	1,247.6	(28.4)	(2.2)
	Reserve		161.5	152.9	(8.7)	(5.4)

1 Attributable reserves and resources based on the Group's percentage ownership of its joint venture projects.

2 The Company increased its holding in the Inmaculada project to 100% in 2013.

PRODUCTION

TOTAL GROUP PRODUCTION

	Year ended 31 December 2014	Year ended 31 December 2013	% change
Silver production (koz)	19,357	19,754	(2)
Gold production (koz)	147.03	175.22	(16)
Total silver equivalent (koz)	28,179	30,267	(7)
Total gold equivalent (koz)	469.65	504.45	(7)
Silver sold (koz)	18,981	19,555	(3)
Gold sold (koz)	142.77	168.56	(15)

Total production includes 100% of all production, including production attributable to Hochschild's joint venture partner at San Jose as well as production in 2013 from the now-sold Moris operation.

ATTRIBUTABLE GROUP PRODUCTION

	Year ended 31 December 2014	Year ended 31 December 2013	% change
Silver production (koz)	16,187	16,639	(3)
Gold production (koz)	100.89	126.80	(20)
Attrib. silver equivalent (koz)	22,241	24,247	(8)
Attrib. gold equivalent (koz)	370.68	404.11	(8)

Attributable production for Q4 2014 and Full Year 2014 includes 100% of all production from Arcata, Pallancata and Ares and 51% from San Jose. Comparatives for 2013 have been restated to include 100% of production from Pallancata and also include production from the now-sold Moris operation.

2014 PRODUCTION BY MINE

ARCATA

Product	Year ended 31 December 2014	Year ended 31 December 2013	% change
Ore production (tonnes)	701,947	900,861	(22)
Average silver grade (g/t)	286	217	32
Average gold grade (g/t)	0.85	0.74	15
Silver produced (koz)	5,827	4,984	17
Gold produced (koz)	16.89	16.83	-
Silver equivalent produced (koz)	6,841	5,994	14
Silver sold (koz)	5,621	4,924	14
Gold sold (koz)	15.66	15.95	(2)

ARES

Product	Year ended 31 December 2014	Year ended 31 December 2013	% change
Ore production (tonnes)	167,331	329,095	(49)
Average silver grade (g/t)	110	82	34
Average gold grade (g/t)	2.34	2.39	(2)
Silver produced (koz)	534	757	(29)
Gold produced (koz)	11.63	23.40	(50)
Silver equivalent produced (koz)	1,232	2,162	(43)
Silver sold (koz)¹	540	761	(29)
Gold sold (koz)²	11.45	23.25	(51)

PALLANCATA

Product	Year ended 31 December 2014	Year ended 31 December 2013	% change
Ore production (tonnes)	1,051,068	1,088,712	(3)
Average silver grade (g/t)	238	264	(10)
Average gold grade (g/t)	1.03	1.13	(9)
Silver produced (koz)	6,527	7,628	(14)
Gold produced (koz)	24.34	27.83	(13)
Silver equivalent produced (koz)	7,988	9,298	(14)
Silver sold (koz)	6,502	7,567	(14)
Gold sold (koz)	24.02	26.67	(10)

SAN JOSE

Product	Year ended 31 December 2014	Year ended 31 December 2013	% change
Ore production (tonnes)	571,017	536,937	6
Average silver grade (g/t)	404	425	(5)
Average gold grade (g/t)	5.77	6.42	(10)
Silver produced (koz)	6,469	6,357	2
Gold produced (koz)	94.16	98.83	(5)
Silver equivalent produced (koz)	12,119	12,286	(1)
Silver sold (koz)	6,316	6,278	1
Gold sold (koz)	91.28	94.76	(4)

The Company has a 51% interest in San Jose.

GLOSSARY

Ag Silver
Adjusted EBITDA Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs and income tax plus non-cash expenses (depreciation and changes in mine closure provision) and exploration expenses other than personnel and other exploration related fixed expenses. All-in sustaining costs (AISC) All-in sustaining cash cost per silver equivalent ounce is a non IFRS measure. It is calculated before exceptional items includes cost of sales less depreciation and change in inventories, administrative expenses, brownfield exploration, operating capex and royalties divided by silver equivalent ounces produced using a ratio of 60:1 (Au/Ag). Also includes commercial discounts and selling expenses divided by silver equivalent ounces sold using a ratio of 60:1 (Au/Ag).



Au Gold
Attributable after tax profit Profit for the year before dividends attributable to the equity shareholders of Hochschild Mining plc from continuing operations before exceptional items and after minority interest.

Average head grade Average ore grade fed into the mill
Board The Board of Directors of the Company
Company Hochschild Mining plc
CSR Corporate social responsibility
Cu Copper
Directors The Directors of the Company
DNV Det Norske Veritas is an independent foundation with the purpose of safeguarding life, property, and the environment
Dore Dore bullion is an impure alloy of gold and silver and is generally the final product of mining and processing; the dore bullion will be transported to be refined to high purity metal

Dollar or $ United States dollars
Effective Tax Rate Income tax expense as a percentage of profit from continuing operations before income tax
EPS The per-share (using the weighted average number of shares outstanding for the period) profit available to equity shareholders of the Company from continuing operations after exceptional items

eq equivalent
Exceptional item Events that are significant and which, due to their nature or the expected infrequency of the events giving rise to them, need to be disclosed separately
g/t Grammes per tonne
GAAP Generally Accepted Accounting Principles
Group Hochschild Mining plc and subsidiary undertakings
IAS International Accounting Standards
IASB International Accounting Standards Board
IFRS International Financial Reporting Standards
JV Joint venture
koz Thousand ounces
kt Thousand tonnes
ktpa Thousand tonnes per annum
Listing or IPO (Initial Public Offering) or Global Offer The listing of the Company's Ordinary Shares on the London Stock Exchange on 8 November 2006
LTI Lost Time Injury, meaning an occupational injury or illness that results in days away from work
LTIFR Lost Time Injury Frequency Rate = LTI x 1,000,000/hours worked
moz Million ounces
Ordinary Shares Ordinary Shares of 25p each in the Company
Pb Lead
Spot or spot price The purchase price of a commodity at the current price, normally this is at a discount to the long-term contract price
t tonne
tpa tonnes per annum
tpd tonnes per day
Zn Zinc

SHAREHOLDER INFORMATION

Annual General Meeting ('AGM')

The AGM will be held at 9:30am on 15 May 2015 at the offices of Linklaters LLP, One Silk Street, London, EC2Y 8HQ.

Company website

Hochschild Mining plc Interim and Annual Reports and results announcements are available via the internet on our website at www.hochschildmining.com. Shareholders can also access the latest information about the Company and press announcements as they are released, together with details of future events and how to obtain further information.

Registrars

The Registrars can be contacted as follows for information about the AGM, shareholdings, dividends and to report changes in personal details:

- By post

Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU

- By telephone

If calling from the UK: 0871 664 0300 (Calls cost 10p per minute plus network extras, lines are open 8.30am - 5.30pm Mon to Fri) If calling from overseas: +44 20 8639 3399

- By fax

+44 (0)1484 600 911

Investor relations

For investor enquiries please contact: Charles Gordon, by writing to the London Office address (see below), by phone on 020 3714 9042 or by email at charles.gordon@hocplc.com.

Financial calendar

Annual General Meeting	15 May 2015
Half-yearly results announced	19 August 2015

London Office and Registered Office address

23 Hanover Square
London
W1S 1JB
United Kingdom

Company Secretary

R D Bhasin

¹On a pre-exceptional basis

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

³All-in sustaining cash cost per silver equivalent ounce: Calculated before exceptional items includes cost of sales less depreciation and change in inventories, administrative expenses, brownfield exploration, operating capex and royalties divided by silver equivalent ounces produced using a ratio of 60:1 (Au/Ag). Also includes commercial discounts and selling expenses divided by silver equivalent ounces sold using a ratio of 60:1 (Au/Ag).

⁴Revenue presented in the financial statements is disclosed as net revenue (in the Financial Review it is calculated as gross revenue less commercial discounts)

⁵All-in sustaining cash cost per silver equivalent ounce: Calculated before exceptional items includes cost of sales less depreciation and change in inventories, administrative expenses, brownfield exploration, operating capex and royalties divided by silver equivalent ounces produced using a ratio of 60:1 (Au/Ag). Also includes commercial discounts and selling expenses divided by silver equivalent ounces sold using a ratio of 60:1 (Au/Ag).

⁶Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales.

⁷Revenue presented in the financial statements is disclosed as net revenue (in this Financial Review it is calculated as gross revenue less commercial discounts.

⁸Includes Hochschild's main operations: Arcata, Pallancata and San Jose. Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales.

⁹Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs, foreign exchange loss and income tax plus depreciation, and exploration expenses other than personnel and other exploration related fixed expenses and other non-cash expenses

¹⁰Cash flow from operations is calculated as profit for the year from continuing operations after exceptional items, plus the add-back of non-cash items within profit for the year (such as depreciation and amortisation, impairments and write-off of assets, gains/losses on sale of assets, amongst others) plus/minus changes in liabilities/assets such as trade and other payables, trade and other receivables, inventories, net tax assets, net deferred income tax liabilities, amongst others.

¹¹Other revenue includes revenue from (i) the sale of energy in Peru and, (ii) administrative services in Mexico.

¹²Unit cost per tonne is calculated by dividing mine and geology costs by extracted tonnage and plant and other costs by treated tonnage.

¹³Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales.

¹⁴ All-in sustaining cash cost per silver equivalent ounce: Calculated before exceptional items includes cost of sales less depreciation and change in inventories, administrative expenses, brownfield exploration, operating capex and royalties divided by silver equivalent ounces produced using a ratio of 60:1 (Au/Ag). Also includes commercial discounts and selling expenses divided by silver equivalent ounces sold using a ratio of 60:1 (Au/Ag).

¹⁵Production cost excluding depreciation does not include capitalised costs of Inmaculada of $3.3 million

¹⁶In 2014, Adjusted EBITDA has been presented before the effect of significant non-cash expenses related to changes in mine closure provisions for those mines which have already closed as these were material. The 2013 Adjusted EBITDA has been restated for comparability with the current presentation.

¹⁷Includes pre-shipment loans and short term interest payables.

¹⁸Includes additions in property, plant and equipment and evaluation and exploration assets (confirmation of resources) and excludes increases in the expected closure costs of mine asset

This information is provided by RNS

The company news service from the London Stock Exchange

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