Report on Payments to Governments 2019

RNS Number : 2570R

Hochschild Mining PLC

26 June 2020

 

Introduction

This Report provides an overview of the payments to governments made by Hochschild Mining PLC ("Hochschild") and its subsidiaries (the "Group") in 2019 as required under the UK's Report on Payments to Governments Regulations 2014 (as amended) (the "UK Regulations"). The UK Regulations apply to large UK incorporated companies like Hochschild that are involved in the exploration, prospection, discovery, development and extraction of minerals. This Report is also intended to satisfy the requirements of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority in the United Kingdom.

Basis for preparation 

Legislation: This Report is prepared in accordance with the UK Regulations.

Reporting entities:  This Report includes payments to governments made by the Group.

Activities:  Payments made by the Group to governments arising from activities involving the exploration, prospection, discovery, development and extraction of minerals ("extractive activities") are disclosed in this Report. For a fully integrated project, which does not have an interim contractual cut off point where a value can be attached or ascribed separately to the extractive activities and to other processing activities, payments to governments will not be artificially split but disclosed in full.

Government:  Government includes any national, regional or local authority of a country, and includes a department, agency or entity that is a subsidiary of a government.

Project:  Payments are reported at project level except that payments that are not attributable to a specific project or are in respect of obligations imposed at entity level are reported by entity. Project is defined as operational activities which are governed by a single contract, licence, lease, concession or similar legal agreement, and form the basis for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a single project.  "Substantially interconnected" means forming a set of operationally and geographically integrated contracts, licences, leases or concessions or related agreements with substantially similar terms that are signed with a government giving rise to payment liabilities. Such agreements can be governed by a single contract, joint venture or other overarching legal agreement. Indicators of integration include, but are not limited to, geographic proximity, the use of shared infrastructure and common operational management. 

Payment:  Of the types of payments required to be reported on under the UK Regulations, the payments made by the Group in 2019 fall within the following categories:

· Taxes:  These are taxes paid by Hochschild on its income, profits or production (which include resource severance tax), including those settled by a government on behalf of Hochschild under a tax-paid concession. Payments are reported net of refunds. Consumption taxes, personal income taxes, sales taxes, property and environmental taxes are excluded.

·     Royalties: These are payments for the rights to extract mineral resources, typically at set percentage of revenue less any deductions that may be taken.

· Licence fees, rental fees, entry fees and other considerations for licences and/or concessions ("Fees"):  These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where extractive activities are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. Also excluded are payments made in return for services provided by a government.

To clarify, the Group did not make any of the other types of payments in 2019 to a government that are required to be disclosed in accordance with the UK Regulations.  Such payments are:

- Production entitlements

- Dividends

- Signature, discovery and production bonuses; and

- Infrastructure improvements

OTHER

Operatorship: When a member of the Group makes a payment directly to a government arising from a project, regardless of whether it is the operator, the full amount paid is disclosed even where that Group member, as the operator, is proportionally reimbursed by its non-operating venture partners through a partner billing process (cash-call).

Cash and in-kind payments:  Payments are reported on a cash basis. There were no in-kind payments made in respect of the reporting year.

Materiality Level:  For each payment type, total payments below £86,000 to a government are excluded from this Report.

Exchange Rate: Payments made in currencies other than US Dollars are translated for the purposes of this Report using the exchange rate on the date of payment.

 

1.  SUMMARY OF PAYMENTS TO GOVERNMENTS (Unaudited) (in USD)

Countries	Taxes	Royalties			Fees			Total
Peru	6,708,776	38,708			1,089,964			7,837,448
Argentina	6,308,948	6,273,936			1,095,166			13,678,050
Chile	-	-			283,050			283,050
Totals	$13,017,724	$6,312,644			$2,468,180			$21,798,548
2.  PAYMENTS BY COUNTRY (Unaudited) (a)  Peru
-  By Government Department (in USD)
			Taxes	Royalties			Fees		Total
Superintendencia Nacional de Administración Tributaria			6,708,776	38,708			-		6,747,484
Instituto Geológico Minero y Metalúrgico			-	-			1,089,964		1,089,964
Totals			$6,708,776	$38,708			$1,089,964		$7,837,448
-  By Entity/Project (in USD)
			Taxes	Royalties			Fees		Total
Entity
Compaña Minera Ares S.A.C.			6,708,776	38,708			392,944		7,140,428
Project
Arcata			-	-			159,730		159,730
Inmaculada			-	-			256,051		256,051
Selene			-	-			136,063		136,063
Pallancata			-	-			145,176		145,176
Totals			$6,708,776	$38,708			$1,089,964		$7,837,448
(b)  Argentina (in relation to the San Jose mine)
			Taxes	Royalties		Fees			Total
Consejo Agrario Provincial			-	-		1,095,166			1,095,166
Administración Federal de Ingresos Públicos			6,308,948	-		-			6,308,948
Rentas Generales de la Provincia de Santa Cruz			-	6,273,936		-			6,273,936
Totals			$6,308,948	$6,273,936		$1,095,166			$13,678,050
-  By Entity (in USD)
			Taxes	Royalties		Fees			Total
Minera Santa Cruz S.A.			6,308,948	6,273,936		1,095,166			13,678,050
Totals			$6,308,948	$6,273,936		$1,095,166			$13,678,050

(c)  Chile (in relation to the Volcan project)
	Taxes	Royalties	Fees		Total
Tesorería General de la República	-	-	283,050		283,050
Totals	-	-	$283,050		$283,050
-  By Entity (in USD)
	Taxes	Royalties	Fees		Total
Andina Minerals Chile Ltd.	-	-	283,050		283,050
Totals	-	-	$283,050		$283,050

 

END

 

 

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