Acquisition

RNS Number : 0311W

Hochschild Mining PLC

05 June 2008

 



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5 June 2008 

Hochschild Mining plc acquires 100% ownership of

the San Felipe project

Highlights:

• Hochschild acquires 100% ownership of the San Felipe project for $51.5 million in cash

• Asset located in northern Sonora , Mexico 

• Verification drilling has indicated total resources of 2.32 million tonnes 

• Feasibility study underway, with production expected in 2010 

Hochschild Mining plc ('Hochschild' or 'Group') is pleased to announce that it has acquired 100% ownership of the San Felipe project in Mexico for a total consideration of US$51.5 million payable to its former local partner, Grupo Serrana S.A. de C.V. The transaction closed on 4 June 2008 and was funded with existing cash.  

San Felipe is located in northern Sonora, Mexico. The land package acquired consists of 24 underground mining concessions and one mining concession application covering a total of approximately 62,900 hectares. In addition to San Felipe, the concessions acquired include the El Gachi and Moctezuma projects, two promising advanced exploration projects in resource definition stage located approximately 70 kilometres from the San Felipe project.  The original joint venture agreement, signed on 15 May 2006, gave the Group the right to earn a 70% interest in the San Felipe project once investment thresholds in exploration and mine development were met.  To date, the Group has invested approximately $8.8 million in the property. With the acquisition of the San Felipe project, the original joint venture agreement has now been terminated.

San Felipe is a significant growth project for the Group and is currently undergoing a feasibility study with production scheduled to commence in 2010. Verification drilling has indicated total resources of 2.32 million tonnes, primarily at La Ventana, with 7.32% zinc, 71 g/t silver, 3.19% lead and 0.14% copper and total inferred resources of 0.40 million tonnes, with 6.25% zinc, 49 g/t silver, 2.98% lead and 0.27% copper.  Hochschild will announce updated reserve and resource figures on 21 August 2008 in conjunction with its interim results.

As the sole owner of the asset, Hochschild will increase its exposure to near-term production of zinc, lead, silver and copper in a mining friendly jurisdiction while leveraging its existing knowledge of the property.  This acquisition is consistent with the Group's strategy of finding accretive opportunities that allow it to establish clusters in key mining districts, such as southern Peru, Patagonia in Argentina, northern Mexico and the Timmins region in Canada.

Eduardo Hochschild, Executive Chairman of Hochschild Mining plc, commented: 

'The San Felipe Project has the potential to be our largest and most important project since listing and will contribute significantly to our growth strategy to 2011 and beyond. We are consolidating our ownership in the San Felipe Project and the surrounding land package to ensure that our shareholders reap the full benefit of its development and to enable us more easily to expand the operation in the future.'

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A conference call will be held at 2:30 pm (London time) on Thursday 5 June for the investment market.  

Dial in details as follows:

UK                            [phone]

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

UK                            [phone]

Access code              798902

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Enquiries:

Hochschild Mining plc

Wray Barber                                        [phone]

Head of Investor Relations

Ignacio Rosado                                    [phone]

Chief Financial Officer

Jose-Augusto Palma                            [phone]

Senior Adviser, Executive Committee

Finsbury

Robin Walker                                       [phone]

Public Relations

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About Hochschild Mining plc:

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

 

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