HOC Hochschild Mining Plc

 

28 August 2024

  

Hochschild Mining PLC

 

 

Interim Results

Six months ended 30 June 2024

Delivering Low-Cost Growth

 

Hochschild Mining PLC ("Hochschild" or the "Company") (LSE: HOC) (OTCQX: HCHDF) is pleased to announce its Interim Results for the six months ended 30 June 2024.

 

Financial Highlights

§ Revenue up 25% at $391.7 million (H1 2023: $314.0 million)^[1]

§ Adjusted EBITDA up 78% at $177.1 million (H1 2023: $99.5 million)^[2]

§ Profit before income tax (pre-exceptional) of $83.1 million (H1 2023: $0.8 million)

§ Profit before income tax (post-exceptional) of $69.4 million (H1 2023: loss of $66.1 million)

§ Basic earnings per share (pre-exceptional) of $0.10 (H1 2023: loss per share of $0.004)

§ Basic earnings per share (post-exceptional) of $0.08 (H1 2023: loss per share of $0.09)

§ Cash and cash equivalents balance of $89.1 million as at 30 June 2024 (31 December 2023: $89.1 million)

§ Net debt of $271.2 million as at 30 June 2024 (31 December 2023: $257.9 million)²

§ Net debt to EBITDA decreased from 0.9x on 31 December 2023 to 0.8x on 30 June 2024[3]

Operational Highlights[4] 

§ H1 2024 attributable production of 152,792 gold equivalent ounces or 12.7 million silver equivalent ounces (H1 2023: 136,878 gold equivalent ounces or 11.4 million silver equivalent ounces)

§ All-in sustaining costs (AISC) from operations of $1,510 per gold equivalent ounce (H1 2023: $1,572) or $18.2 per silver equivalent ounce (H1 2023: $18.9)[5]

§ Mara Rosa mine achieved commercial production on 13 May 2024

§ Optimisation projects ongoing at all operations to maximise throughput and mitigate ongoing inflationary pressures

Project & Exploration Highlights

§ 2024 Brownfield drilling programme commenced with encouraging early results from Inmaculada, Mara Rosa and San Jose

§ Cerrado Gold Inc. shareholders approved Hochschild's purchase of an option to acquire Monte do Carmo project

o  $15 million paid to date; remaining $45 million to be paid in instalments if the option is exercised

o  Exploration and technical work ongoing

§ Completed the sale of Crespo project for $15 million cash, and a 1.5% Royalty Net Smelter Return (NSR) 

Sustainability highlights

§ Continued strong performance across all key metrics

§ Lost Time Injury Frequency Rate of 1.08 (FY 2023: 0.99)^[6]

§ Accident Severity Index of 62 (FY 2023: 37)^[7]

§ Water Consumption of 136lt/person/day (FY 2023: 163lt/person/day)

§ Domestic waste generation of 0.94 kg/person/day (FY 2023: 0.93kg/person/day)

§ ECO score of 5.85 out of 6 (FY 2023: 5.76)^[8]

§ Recent entry into the FTSE4Good Index Series

Outlook and 2024 overall full year guidance unchanged

§ Production target:

o  343,000-360,000 gold equivalent ounces

§ All-in sustaining costs target:

o  $1,510-$1,550 per gold equivalent ounce

§ Total sustaining and development capital expenditure expected to be approximately $171-178 million

§ Board expects to reevaluate the potential for capital returns at the full year results in early 2025

Eduardo Landin, Chief Executive Officer of Hochschild, commented:

"I am pleased to report on an encouraging first half performance. We are delighted to have brought Mara Rosa into commercial production, an asset which underpins our strategy of increasing production and lowering costs. With Inmaculada enjoying a strong 2024 so far, as well as higher underlying commodity prices, we have delivered substantial improvements in our financial metrics compared to last year. We continue to focus on our extensive brownfield exploration programme, with encouraging progress being made across our portfolio, and are pleased to reiterate our full year 2024 guidance of producing 343,000-360,000 gold equivalent ounces at an AISC of $1,510-$1,550 per gold equivalent ounce."

 

$000 unless stated	Six months to 30 June 2024	Six months to 30 June 2023	% change
Attributable silver production (koz)	4,070	4,442	(8)
Attributable gold production (koz)	104	83	25
Revenue	391,740	314,023	25
Adjusted EBITDA	177,141	99,497	78
Profit/(loss) from continuing operations (pre-exceptional)	64,026	(4,357)	1,569
Profit/(loss) from continuing operations (post-exceptional)	51,486	(52,685)	198
Basic earnings/(loss) per share (pre-exceptional) $	0.10	(0.004)	2,600
Basic earnings/(loss) per share (post-exceptional) $	0.08	(0.09)	189

 

_______________________________________________________________________________________

 

A live conference call and audio webcast will be held at 2.30pm (London time) on Wednesday 28 August 2024 for analysts and investors.

For a live webcast of the presentation please click on the link below:

 

https://brrmedia.news/HOC_IR24

                       

Conference call dial in details:

UK: +44 (0)330 551 0200

UK Toll Free: 0808 109 0700

US Toll Free: 1 866 580 3963

Canada Toll Free: 1 866 378 3566

Pin: Hochschild - Interim Results

 

_______________________________________________________________________________________

 

Enquiries:

 

Hochschild Mining PLC

Charles Gordon                                                                                                                                                                                                                                                      +44 (0)20 3709 3264

Head of Investor Relations

 

Hudson Sandler

Charlie Jack                                                                                                                                                                                                                                       +44 (0)207 796 4133

Public Relations

_______________________________________________________________________________________

Non-IFRS Financial Performance Measures

The Company has included certain non-IFRS measures in this news release. The Company believes that these measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardised meaning prescribed under IFRS, and therefore may not be comparable to other issuers.

 

About Hochschild Mining PLC:

Hochschild Mining PLC is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) and crosstrades on the OTCQX Best Market in the U.S. (HCHDF), 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 operates two underground epithermal vein mines: Inmaculada, located in southern Peru; and San Jose in southern Argentina, and an open pit gold mine, Mara Rosa, located in the state of Goiás, Brazil.  Hochschild also has numerous long-term projects throughout the Americas.

CHIEF EXECUTIVE OFFICER'S STATEMENT

 

 

A year on from being appointed CEO of Hochschild Mining and entrusted to lead this Company, I believe that our team has made highly encouraging progress by setting the Company on a new strategic path which aims to focus on the core business and deliver long-term low-cost growth. We prioritise listening to and engaging with our employees, communities, suppliers and shareholders and believe that understanding what they care about enables us to create long-term sustainable value.

 

Whilst the second half of 2023 was about setting the strategic vision, the first half of 2024 has seen the first stages in the delivery of that strategy with Brazil being a considerable focus. We completed the construction of our new Mara Rosa mine, with commercial production being achieved in May, whilst our purchase of an option to acquire the Monte do Carmo project in a neighbouring state, demonstrates that assessing value accretive opportunities remains a priority. We also produced a solid operational performance in the first half and have made a good start to our 2024 exploration programmes as well as completing the sale of our non-core Crespo project.

 

ESG

Our ESG performance remains strong. In H1 2024, our social indicators highlighted further improvement versus 2023 with the local workforce now constituting 61% of our total staff, up from 59% in 2023, whilst local procurement has increased to 23% from 17% in 2023. I am also pleased that, with regards to our people KPIs, our employee turnover rate has improved to 3.5% from 4.5% in 2023, well within our target of less than 5% by 2030, and the percentage of women in our workforce is currently almost at 9%.

 

Our environmental performance also continues to improve, with our ECO Score at 5.85 (out of 6) in the first half of 2024. This reflects, among other things, potable water consumption, which has been reduced to an average of 136 lt/person/day from 163 in 2023. Finally, safety remains a top priority, with zero fatalities recorded in H1 2024, and our lost time injury frequency rate of 1.08 continuing to be within our 2030 target of 1.2.

 

This ongoing positive performance is reflected in our ratings in several ESG indices. We are now a constituent company in the FTSE4Good Index Series, with a score of 3.4 and MSCI has issued a BB rating to Hochschild in June 2024 whilst our current Sustainalytics score (from April 2024) is 29.6. We can looking forward to incorporating our new Mara Rosa mine into our corporate ESG assessment on January 1st 2025.

 

Operations

Hochschild delivered a solid first half of production in 2024 and we are on track to meet our overall output and cost targets for the year. Overall attributable production was 152,792 gold equivalent ounces (12.7 million silver equivalent ounces), which was higher than the first half of 2023 due to a better-than-expected performance at Inmaculada and the first contribution from the new Mara Rosa operation. Production in the period was at an all-in sustaining cost ("AISC") of $1,510 per gold equivalent ounce ($18.2 per silver equivalent ounce). As mentioned, Inmaculada had a good H1 2024 with production of 109,502 gold equivalent ounces (H1 2023: 92,856 ounces) and AISC at $1,349 per gold equivalent ounce (H1 2023: $1,272 per ounce).

 

Mara Rosa commenced commercial production in May following a successful first gold pour in March. Output from the mine was 14,354 ounces of gold with the mine's AISC unsurprisingly reflecting the ramp-up process at $1,495 per ounce. Although in the last few months there have been a number of minor ramp-up issues involving the mechanical availability in the plant as well as the performance of the mining contractor, we can look forward to a stronger second half of production and a resulting fall in costs.

 

In Argentina, the annual holidays impacted the first quarter but the second quarter was stronger, leading to production of 4.7 million silver equivalent ounces in the first half of the year (H1 2023: 4.9 million ounces). AISC was $21.8 per silver equivalent ounce (H1 2023: $21.5 per ounce).

 

Optimisation projects have started at all our operations, with the main focus at Immaculada and San Jose, where we are aiming to maximise throughput capacity and deliver savings to help offset ongoing inflationary pressures.

 

Projects

As noted above, the Mara Rosa project, in the state of Goias in Brazil, was completed on time and on budget and ramped-up during the first half of the year. At the same time, the business development team continued to focus on Brazil and the acquisition of an option for the Monte do Carmo project presents a potential opportunity to repeat the successful Mara Rosa developmental process, in the neighbouring business friendly state of Tocantins. Technical and drilling work at the project has started and we are aiming to make a decision on the option in the near future. The team was also able to complete the sale of our non-core Crespo project for a cash consideration of $15 million and a 1.5% NSR royalty.  Finally, we have continued with work on the Modified Environmental Impact Assessment for our exciting Royropata project near Pallancata in southern Peru.

 

Exploration

Exploration remains a key focus and, after a disrupted exploration programme in 2023, our brownfield team has made a good start to this year's plans with almost 10,000 metres drilled at Inmaculada and some exciting results indicating that we are on track to add substantially to our resource base at the mine. We have also begun exploration work in at Mara Rosa, where early drill holes show resources below the existing Posse pit and, also as mentioned above, at the Monte do Carmo project.

 

Financial results

Strong financial results reflect the increased production and improved pricing in the period versus H1 2023. Gold production was higher versus H1 2023 and therefore, when combined with a 13% increase in the average gold price achieved, revenue increased by 25% to $391.7 million (H1 2023: $314.0 million). AISC was $1,510 per gold equivalent ounce (H1 2023: $1,572 per ounce) with the reduction due to increased production at Inmaculada and the absence of a contribution from the high cost Pallancata mine, which was placed on care and maintenance towards the end of 2023. Adjusted EBITDA of $177.1 million (H1 2023: $99.5 million) mostly reflects the increased production levels, higher precious metal prices and lower costs. Pre-exceptional earnings per share was $0.10 (H1 2023: $0.004 loss per share) and post-exceptional earnings per share was $0.08 (H1 2023: loss per share of $0.09). Finally, in terms of the balance sheet, cash and cash equivalents was $89.1 million at the end of June (31 December 2023: $89.1 million) and net debt was $271.2 million (31 December 2023: $257.9 million). Indebtedness ratios started to improve with net debt to EBITDA decreasing from 0.9x at 31 December 2023 to 0.8x at 30 June 2024.

 

Outlook

Third quarter production at Mara Rosa is currently behind schedule due to recent mechanical availability issues at the plant and the mining contractor's delayed ramp-up, as mentioned above. However, with Inmaculada delivering better-than-expected output due to the Company's optimisation projects helping to increase tonnage, the Company reiterates that overall 2024 production and cost guidance will not be impacted. Any required updates to the mine-by-mine split of production and costs will be provided in the Q3 production release in October. We are confident that we will generate substantial cashflow in the second half to finance further expenditure on our brownfield exploration programme, potentially repay some of our debt and continue to advance our growth projects in Brazil and Peru. The Board also expects to reevaluate the scope for capital returns at the full year results in early 2025.

 

While we are still in the early days of executing our strategic plan, we are pleased with the progress achieved to date. I congratulate and thank my many colleagues in all the countries we operate in for their efforts in helping to achieve our targets.

 

Eduardo Landin, Chief Executive Officer

27 August 2024

 

 

 

 

OPERATING REVIEW

OPERATIONS

Note: All 2024 and 2023 silver/gold equivalent production figures assume a gold/silver ratio of 83:1.

 

Production

In H1 2024, Hochschild delivered attributable production of 152,792 gold equivalent ounces or 12.7 million silver equivalent ounces (on an attributable basis), with the increase resulting from Inmaculada's recovery from the H1 2023 delay in the approval of the MEIA. The Company was also boosted by the contribution from the new Mara Rosa mine in Brazil, which reached commercial production in May 2024. The Company remains on track to meet its overall 2024 attributable production target of 343,000-360,000 gold equivalent ounces or 28.0-29.9 million silver equivalent ounces.

 

Total group production

	Six months to  30 June 2024	Six months to                                                                         30 June 2023
Silver production (koz)	5,016	5,393
Gold production (koz)	120.16	100.55
Total silver equivalent (koz)	14,989	13,739
Total gold equivalent (koz)	180.59	165.53
Silver sold (koz)	5,114	5,425
Gold sold (koz)	118.25	99.79

Total production includes 100% of all production, including production attributable to Hochschild's minority shareholder at San Jose.

 

Attributable group production

	Six months to  30 June 2024	Six months to                                                                         30 June 2023
Silver production (koz)	4,070	4,442
Gold production (koz)	103.75	83.36
Silver equivalent (koz)	12,682	11,361
Gold equivalent (koz)	152.79	136.88

Attributable production includes 100% of all production from Inmaculada and Mara Rosa and 51% from San Jose.  H1 2023 includes 100% of all production from Pallancata.

 

Costs

AISC from operations in H1 2024 was $1,510 per gold equivalent ounce or $18.2 per silver equivalent ounce (H1 2023: $1,572 per gold equivalent ounce or $18.9 per silver equivalent ounce), slightly lower than H1 2023 mainly due to the absence of high-cost production from Pallancata which was put into care & maintenance in Q4 2023, as well as cost control initiatives in all our operating units.

 

The Company reiterates that its all-in sustaining cost for the full year 2024 is expected to be in line with the guidance of between $1,510 and $1,550 per gold equivalent ounce (or $18.2 and $18.7 per silver equivalent ounce).

 

Inmaculada

The 100% owned Inmaculada gold/silver underground operation is located in the Region of Ayacucho in southern Peru. It commenced operations in 2015.

 

Inmaculada summary	Six months to                                                               30 June 2024	Six months to                                                                         30 June 2023	% change
Ore production (tonnes)	537,774	535,905	-
Average silver grade (g/t)	190	178	7
Average gold grade (g/t)	4.25	3.85	10
Silver produced (koz)	3,086	2,573	20
Gold produced (koz)	72.32	61.85	17
Silver equivalent produced (koz)	9,089	7,707	18
Gold equivalent produced (koz)	109.50	92.86	18
Silver sold (koz)	3,032	2,561	18
Gold sold (koz)	71.19	61.39	16
Unit cost ($/t)	144.6	140.5	3
Total cash cost ($/oz Au co-product)	739	808	(9)
All-in sustaining cost ($/oz Au Eq)	1,349	1,272	6

 

Production                    

Inmaculada's first half production was 72,317 ounces of gold and 3.1 million ounces of silver, which amounts to a gold equivalent output of 109,502 ounces (H1 2023: 92,856 ounces), which is an 18% improvement on the first half of 2023 when the mine was impacted by permit delays. There was also a boost in grades and tonnage from the implementation of continuous improvement initiatives at site.

 

Costs

AISC was $1,349 per gold equivalent ounce (H1 2023: $1,272 per ounce). The increase versus the same period of 2023 was forecasted and is mainly the result of scheduled catch-up in deferred mine development capex resulting from the MEIA delay in the first half of 2023, although this was partially offset by higher grades. The result is lower than the guided cost for the year mainly due to temporary lower capex that will be spent in the second half of 2024.

 

San Jose

The San Jose silver/gold mine is located in Argentina, in the province of Santa Cruz, 1,750km southwest of Buenos Aires. San Jose commenced production in 2007. Hochschild holds a controlling interest of 51% in the mine and is the mine operator. The remaining 49% interest is owned by McEwen Mining Inc.

 

San Jose summary (100%)	Six months to                                                               30 June 2024	Six months to                                                                         30 June 2023	% change
Ore production (tonnes)	268,853	272,063	(1)
Average silver grade (g/t)	255	254	-
Average gold grade (g/t)	4.47	4.68	(4)
Silver produced (koz)	1,930	1,941	(1)
Gold produced (koz)	33.49	35.09	(5)
Silver equivalent produced (koz)	4,709	4,854	(3)
Gold equivalent produced (koz)	56.74	58.48	(3)
Silver sold (koz)	2,079	1,941	7
Gold sold (koz)	35.29	34.66	2
Unit cost ($/t)	268.4	270.1	(1)
Total cash cost ($/oz Ag co-product)	17.1	15.9	8
All-in sustaining cost ($/oz Ag Eq)	21.8	21.5	1

 

Production

The first half of the year at San Jose in Argentina is traditionally a shorter operational period due to the scheduled hourly workers' holiday, which occurs in the first quarter. The operation delivered a strong second quarter with higher-than-forecast grades resulting in the H1 total of 4.7 million silver equivalent ounces (H1 2023: 4.9 million ounces).

 

Costs

AISC was $21.8 per silver equivalent ounce (H1 2023: $21.5 per ounce), in line with the same period of 2023. The effect of slightly lower gold grades and local inflation was offset by lower capex and devaluation of the local currency.

 

Mara Rosa

The Mara Rosa gold mine is located in Brazil, in the province of Goias, 320km northwest of Brasilia. Mara Rosa reached commercial production in mid-May 2024.

 

Mara Rosa summary	Six months to                                                               30 June 2024	Six months to                                                                         30 June 2023	% change
Ore production (tonnes)	552,744	-	-
Average silver grade (g/t)	-	-	-
Average gold grade (g/t)	1.28	-	-
Silver produced (koz)	-	-	-
Gold produced (koz)	14.35	-	-
Silver equivalent produced (koz)	1,191	-	-
Gold equivalent produced (koz)	14.35	-	-
Silver sold (koz)	2	-	-
Gold sold (koz)	11.84	-	-
Unit cost ($/t)	66.6	-	-
Total cash cost ($/oz Au co-product)	2,622	-	-
All-in sustaining cost ($/oz Au Eq)	1,495	-	-

 

Production

The Mara Rosa mine produced 14,354 ounces of gold in H1 2024 and reached commercial production in mid-May. There were a number of minor ramp-up issues involving the mechanical availability in the plant as well as the performance of the mining contractor. The plant has already reached nominal capacity of 7,000 tonnes per day and ongoing optimisation initiatives are currently in place with the aim of reaching a stable throughput of 8,000 tonnes per day.

 

Costs

AISC was $1,495 per ounce with the high costs reflecting the mine being in commissioning and ramp-up phase and only reaching commercial production in mid-May. The costs are expected to decrease during the second half.

 

BROWNFIELD EXPLORATION

Inmaculada

During the first half of the year, the team carried out 10,000m of drilling for potential and resources in the Tesoro, Nicolas, Andrea, Josefa, Rita, Split Josefa, Laura and Sara vein structures with the key results coming from the Tesoro and Nicolas veins.

 

Vein	Results (potential)
Tesoro	IMM23-361: 2.0m @ 21.4g/t Au & 1,284g/t Ag IMM24-375: 5.0m @ 13.9g/t Au & 1,036g/t Ag IMS24-213A: 3.2m @ 4.0g/t Au & 53g/t Ag IMS24-216: 1.3m @ 1.2g/t Au & 216g/t Ag IMS24-217: 1.5m @ 0.6g/t Au & 85g/t Ag IMS24-231A: 7.1m @ 7.6g/t Au & 794g/t Ag IMS24-221: 1.0m @ 8.8g/t Au & 27g/t Ag IMS24-222: 38.8m @ 5.1g/t Au & 303g/t Ag IMS24-227A: 3.1m @ 6.4g/t Au & 141g/t Ag IMM24-380: 4.6m @ 3.5g/t Au & 242g/t Ag IMS24-219: 3.3m @ 0.3g/t & 21g/t Ag
Sara	IMM24-386: 1.2m @ 3.2g/t Au & 250g/t Ag IMM24-384: 1.6m @ 2.8g/t Au & 164g/t Ag IMM24-390: 1.0m @ 2.9g/t Au & 123g/t Ag IMM24-388: 1.3m @ 1.8g/t Au & 115g/t Ag IMM24-389: 1.2m @ 1.8g/t Au & 111g/t Ag
Nicolas	IMS24-213A: 23.5m @ 4.8g/t Au & 164g/t Ag Including 5.6m @ 16.0g/t Au & 409g/t Ag IMS24-216: 0.8m @ 1.4g/t Au & 199g/t Ag IMM24-380: 1.2m @ 0.7g/t Au & 12g/t Ag
Andrea	IMS24-375: 0.9m @ 2.3g/t Au & 102g/t Ag IMS24-213A: 1.7m @ 2.6g/t Au & 120g/t Ag IMM24-380: 0.9m @ 3.5g/t Au & 223g/t Ag IMS24-221: 2.3m @ 1.7g/t Au & 60g/t Ag
Josefa	IMS24-213A: 0.8m @ 2.5g/t Au & 99g/t Ag IMM24-380: 1.5m @ 11.0g/t Au & 885g/t Ag
Rita	IMS24-375: 0.9m @ 4.1g/t Au & 27g/t Ag
Split Josefa	IMM23-212: 0.9m @ 5.0g/t Au & 5g/t Ag
Laura	IMS24-215: 1.6m @ 3.3g/t Au & 3g/t Ag
Juliana NE piso	IMS24-218: 2.6m @ 8.2g/t Au & 184g/t Ag
Split Juliana NE	IMS24-375: 1.8m @ 2.8g/t Au & 293g/t Ag
Juliana NE	IMS24-218: 0.8m @ 3.4g/t Au & 116g/t Ag

 

During the third quarter, the Company expects to carry out four potential drill holes in the Kary vein (approximately 2,500m of drilling) as well as 12,000m of resource drilling in the Tesoro and Nicolas veins.

 

San Jose

During the first half of the year, the team carried out a further 4,460m of drilling for potential and resources in the Dalia, Emilia, Sigmoide Odin Sur and Frea vein structures.

 

Vein	Results (potential)
Dalia	SJD-2775: 2.8m @ 1.1g/t Au & 221g/t Ag SJD-2776: 2.6m @ 2.0g/t Au & 513g/t Ag SJD-2777: 3.5m @ 1.3g/t Au & 86g/t Ag SJD-2778: 1.7m @ 0.5g/t Au & 19g/t Ag SJD-2788: 1.5m @ 4.8g/t Au & 51g/t Ag SJD-2789: 0.9m @ 1.4g/t Au & 125g/t Ag SJD-2795: 0.9m @ 0.6g/t Au & 90g/t Ag SJD-2800: 1.5m @ 30.8g/t Au & 66g/t Ag SJD-2801: 0.8m @ 0.1/t Au & 3g/t Ag
Majo	SJD-2771: 0.9m @ 1.0g/t Au & 173g/t Ag SJD-2772: 2.7m @ 1.5g/t Au & 161g/t Ag SJD-2774: 1.1m @ 0.3g/t Au & 14g/t Ag
Odin	SJD-2775: 1.0m @ 1.9g/t Au & 216g/t Ag SJD-2776: 1.3m @ 0.4g/t Au & 12g/t Ag SJD-2777: 2.3m @ 5.5g/t Au & 70g/t Ag SJD-2778: 1.4m @ 0.3g/t Au & 54g/t Ag SJD-2788: 2.7m @ 7.6g/t Au & 360g/t Ag SJD-2789: 1.6m @ 3.2g/t Au & 287g/t Ag SJD-2795: 1.7m @ 2.8g/t Au & 137g/t Ag
Sigmoide Odin Sur	SJD-2775: 1.5m @ 1.8g/t Au & 166g/t Ag SJD-2776: 0.9m @ 0.1g/t Au & 13g/t Ag SJD-2777: 0.9m @ 0.2g/t Au & 43g/t Ag SJD-2778: 1.0m @ 1.4g/t Au & 70g/t Ag SJD-2788: 6.2m @ 23.3g/t Au & 314g/t Ag SJD-2789: 1.5m @ 3.5g/t Au & 281g/t Ag SJD-2795: 4.7m @ 2.6g/t Au & 60g/t Ag SJD-2801: 0.9m @ 1.0g/t Au & 11g/t Ag SJD-2802: 0.9m @ 0.2g/t Au & 47g/t Ag
Saavedra	SJD-2773: 1.1m @ 0.2g/t Au & 1g/t Ag
Emilia	SJM-664: 1.0m @ 6.5g/t Au & 47g/t Ag SJM-669: 0.8m @ 1.6g/t Au & 108g/t Ag SJM-663: 0.8m @ 1.0g/t Au & 74g/t Ag SJM-666: 0.9m @ 0.4g/t Au & 6g/t Ag SJM-668: 0.8m @ 0.1g/t Au & 4g/t Ag
Frea	SJD-2844: 3.9m @ 31.6g/t Au & 1,809g/t Ag SJM-663: 12.1m @ 12.4g/t Au & 94g/t Ag SJM-666: 12.0m @ 5.8g/t Au & 45g/t Ag SJM-673: 3.6m @ 3.4g/t Au & 50g/t Ag SJM-669: 2.9m @ 0.9g/t Au & 15g/t Ag SJM-670: 1.0m @ 0.3g/t Au & 8g/t Ag SJD-2847: 1.1m @ 0.3g/t Au & 3g/t Ag SJD-2846: 3.0m @ 0.3g/t Au & 7g/t Ag SJM-668: 4.9m @ 0.2g/t Au & 3g/t Ag SJM-664: 6.2m @ 0.1g/t Au & 5g/t Ag

 

Mara Rosa

The Mara Rosa brownfield programme commenced in the second quarter and 137m of potential drilling was executed in the Caxias-Anglelim target as well as 2,800m of resource drilling below the existing Posse pit, which confirmed economic mineralisation.

 

Vein	Results (resources)
Posse	24POSP_003: 14.2m @ 0.8g/t Au Including: 9.2m @ 1.1g/t Au 24POSP_004: 35.7m @ 1.4g/t Au including: 9.2m @ 2.4g/t Au                     11.0m @ 2.1g/t Au                     1.1m @ 15.1g/t Au

 

The plan for the third quarter of 2024 is to carry out six holes of resource drilling once 2,495m of drilling has been completed below the Posse pit

 

 

 

FINANCIAL REVIEW

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

 

Revenue

Gross revenue[9]

Gross revenue from continuing operations increased by 24% to $399.8 million in H1 2024 (H1 2023: $321.9 million) due to higher silver and gold production resulting from the first contribution from the Mara Rosa mine and a more normalised period for Inmaculada versus H1 2023 when the operation was impacted by permit delays.  Revenue was also boosted by higher average realised precious metal prices. These were partially offset by the absence of revenue from the Pallancata mine which was placed on care and maintenance towards the end of 2023.

 

Gold

Gross revenue from gold in H1 2024 increased to $261.3 million (H1 2023: $195.3 million) due to higher gold produced at Inmaculada and a first contribution from the Mara Rosa gold mine in Brazil as well as a higher average realised gold price.

 

Silver

Gross revenue increased in H1 2024 to $138.2 million (H1 2023: $126.3 million) due to a 16% rise in the higher average realised silver price which offset the absence of silver production from the Pallancata mine.

 

Gross average realised sales prices

The following table provides figures for average realised prices (before the deduction of commercial discounts) and ounces sold for H1 2024 and H1 2023:

 

Average realised prices	Six months to 30 June 2024	Six months to                            30 June 2023
Gold ounces sold (koz)	118.25	99.79
Avg. realized gold price ($/oz)	2,210	1,957
Silver ounces sold (koz)	5,114	5,425
Avg. realized silver price ($/oz)	27.0	23.3

 

Hedges

H1 2024 realised prices and revenue include the effect of the following hedges: forwards for 27,600 gold ounces of 2024 production at a price of $2,100 per ounce, and zero cost collars for 100,000 gold ounces of 2024 production at a strike put of $2,000 per ounce and a strike call of $2,252 per ounce, the impact of which was a loss of $4.2 million in H1 2024. H1 2023 includes forwards for 29,250 gold ounces of 2023 production at a price of $2,047 per ounce, and for 3.3 million silver ounces of 2023 production at a price of $25 per ounce, the impact of which was a gain of $3.4 million in H1 2023.

 

Commercial discounts

Commercial discounts refer to refinery treatment charges, refining fees and payable deductions for processing concentrate, and are deducted from gross revenue on a per tonne basis (treatment charge), per ounce basis (refining fees) or as a percentage of gross revenue (payable deductions). In H1 2024, the Group recorded commercial discounts of $8.0 million (H1 2023: $7.8 million). The ratio of commercial discounts to gross revenue in H1 2024 was 2.0% (H1 2023: 2.4%).

 

Net revenue

Net revenue was $391.7 million (H1 2023: $314.0 million), comprising net gold revenue of $256.6 million (H1 2023: $192.1 million) and net silver revenue of $134.8 million (H1 2023: $121.6 million). In H1 2024, gold accounted for 66% and silver for 34% of the Company's consolidated net revenue (H1 2023: gold 61% and silver 39%).

 

Reconciliation of gross revenue by mine to Group net revenue

$000	Six months to                            30 June 2024	Six months to                            30 June 2023	% change
Gold revenue
Inmaculada	154,364	118,764	30
Pallancata	(185)	7,488	(102)
San Jose	81,671	69,031	18
Mara Rosa	25,430	-	-
Commercial discounts from concentrates	(4,635)	(3,159)	47
Net gold revenue	256,645	192,124	34
Silver revenue
Inmaculada	79,715	60,047	33
Pallancata	(59)	21,650	(100)
San Jose	58,521	44,621	31
Mara Rosa	59	-	-
Commercial discounts from concentrates	(3,394)	(4,684)	(28)
Net silver revenue	134,842	121,634	11
Other revenue	253	265	(5)
Net revenue	391,740	314,023	25

 

Costs

Total cost of sales before exceptional items was $248.1 million in H1 2024 (H1 2023: $250.9 million). The direct production cost excluding depreciation was higher at $194.9 million (H1 2023: $170.1 million) mainly due to higher production in Inmaculada and the commencement of production in Mara Rosa, partially offset by no production in Pallancata. Depreciation in production cost decreased to $68.6 million (H1 2023: $71.9 million) mainly due to the absence of production in Pallancata, partially offset by higher depreciation in Inmaculada due to higher production. Fixed costs incurred during total or partial production stoppages in San Jose (due to bad weather) were $1.1 million in H1 2024 (H1 2023: $3.0 million). Increase in inventories was $17.2 million in H1 2024 (H1 2023: decrease in inventories of $4.7 million) mainly due to higher products in process of $12.0 million, and higher finished products of $4.5 million in Mara Rosa.  

 

$000	Six months to                            30 June 2024	Six months to                            30 June 2023	% change
Direct production cost excluding depreciation	194,850	170,072	15
Depreciation and amortisation in production cost	68,612	71,903	(5)
Other items and workers profit sharing	853	1,174	(27)
Fixed costs during operational stoppages and reduced capacity	1,062	3,005	(65)
Change in inventories	(17,237)	4,716	(466)
Cost of sales	248,140	250,870	(1)

 

Fixed costs during operational stoppages and reduced capacity:

$000	Six months to                            30 June 2024	Six months to                            30 June 2023	% change
Personnel	703	2,410	(71)
Third party services	301	1,030	(71)
Supplies	33	34	(3)
Others	25	(469)	(105)
Cost of sales	1,062	3,005	(65)

 

Unit cost per tonne

The Company reported unit cost per tonne at its operations of $128.8 per tonne in H1 2024, a 25% decrease versus H1 2023 ($170.6 per tonne). This was mainly due to the commencement of production in Mara Rosa with a lower cost per tonne than the other operations. 

 

Unit cost per tonne by operation (including royalties)[10]:

Operating unit ($/tonne)	Six months to                            30 June 2024	Six months to                            30 June 2023	% change
Peru	144.6	138.3	5
Inmaculada	144.6	140.5	3
Pallancata	-	133.8	-
Argentina
San Jose	268.4	270.1	(1)
Brazil Mara Rosa	66.6	-	-
Total	128.8	170.6	(25)

 

 

Cash costs

Cash costs include cost of sales, commercial deductions and selling expenses before exceptional items, less depreciation and amortisation included in cost of sales.

 

Cash cost reconciliation[11]

Six months to 30 June 2024

$000 unless otherwise indicated	Inmaculada	Pallancata	San Jose	Mara Rosa	Total
(+) Cost of sales[12]	122,593	-	92,217	32,268	247,078
(-) Depreciation and amortisation in cost of sales	(44,704)	-	(22,225)	(1,498)	(68,427)
(+) Selling expenses	286	14	7,042	273	7,615
(+) Commercial deductions[13]	1,614	11	8,302	73	10,000
Gold	1,167	1	4,807	73	6,048
Silver	447	10	3,495	-	3,952
Group cash cost	79,789	25	85,336	31,116	196,266
Gold	154,364	(186)	77,037	25,430	256,645
Silver	79,715	(69)	55,137	59	134,842
Revenue	234,079	(255)	132,174	25,489	391,487
Ounces sold
Gold	71.2	(0.1)	35.3	11.8	118.3
Silver	3,032.4	0.5	2,079.2	2.0	5,114.1
Group cash cost ($/oz)
Co product Au	739	(230)	1,409	2,622	1,088
Co product Ag	8.96	14.94	17.12	35.67	13.22
By product Au	(5)	(1,058)	757	2,623	486
By product Ag	(24.98)	463.91	1.68	2,779.59	(12.99)

 

Six months to 30 June 2023

$000 unless otherwise indicated	Inmaculada	Pallancata	San Jose	Total
(+) Cost of sales[14]	110,688	45,374	91,047	247,109
(-) Depreciation and amortisation in cost of sales	(37,677)	(11,588)	(23,440)	(72,705)
(+) Selling expenses	230	249	6,415	6,894
(+) Commercial deductions[15]	1,476	2,125	5,871	9,472
Gold	994	406	2,846	4,246
Silver	482	1,719	3,025	5,226
Group cash cost	74,717	36,160	79,893	190,770
Gold	118,764	7,082	66,278	192,124
Silver	60,047	19,931	41,656	121,634
Revenue	178,811	27,013	107,934	313,758
Ounces sold
Gold	61.4	3.7	34.7	99.8
Silver	2,561.1	923.2	1,940.7	5,425.0
Group cash cost ($/oz)
Co product Au	808	2,531	1,416	1,171
Co product Ag	9.8	28.9	15.89	13.63
By product Au	231	3,874	1,016	640
By product Ag	(17.59)	31.06	5.55	(1.03)

                       

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[16]

All-in sustaining cash costs per silver equivalent ounce

 

Six months to 30 June 2024

 

$000 unless otherwise indicated	Inmaculada	Mara Rosa[17]	San Jose	Main operations	Corporate & others	Total
(+) Direct production cost excluding depreciation	75,884	46,444	72,522	194,850	-	194,850
(+) Other items and workers profit sharing in cost of sales[18]	853	(30,403)	(8,399)	(37,949)	-	(37,949)
(+) Operating and exploration capex for units	62,149	968	16,604	79,721	39	79,760
(+) Brownfield exploration expenses	1,374	-	4,489	5,863	1,346	7,209
(+) Administrative expenses (excl. depreciation)	2,382	580	3,003	5,965	14,747	20,712
(+) Royalties and special mining tax[19]	3,178	-	-	3,178	3,151	6,329
Sub-total	145,820	17,589	88,219	251,628	19,283	270,911
Au ounces produced	72,317	11,937	33,491	117,745	-	117,745
Ag ounces produced (000s)	3,086	-	1,930	5,016	-	5,016
Ounces produced (Ag Eq 000s oz)	9,089	991	4,709	14,789	-	14,789
Sub-total ($/oz Ag Eq)	16.0	17.8	18.7	17.0	1.3	18.3
(+) Commercial deductions	1,614	11	8,302	9,927	-	9,927
(+) Selling expenses	286	190	7,042	7,518	-	7,518
Sub-total	1,900	201	15,344	17,445	-	17,445
Au ounces sold	71,194	9,464	35,293	115,951	-	115,951
Ag ounces sold (000s)	3,032	2	2,079	5,113	-	5,113
Ounces sold (Ag Eq 000s oz)	8,942	787	5,008	14,737	-	14,737
Sub-total ($/oz Ag Eq)	0.2	0.3	3.1	1.2	-	1.2
All-in sustaining costs ($/oz Ag Eq)	16.3	18.0	21.8	18.2	1.3	19.5
All-in sustaining costs ($/oz Au Eq)[20]	1,349	1,495	1,809	1,510	109	1,619

 

Six months to 30 June 2023

 

$000 unless otherwise indicated	Inmaculada	Pallancata	San Jose	Main operations	Corporate & others	Total
(+) Direct production cost excluding depreciation	73,869	31,163	65,040	170,072	-	170,072
(+) Other items and workers profit sharing in cost of sales	732	441	-	1,173	-	1,173
(+) Operating and exploration capex for units	37,642	2,384	20,197	60,223	61	60,284
(+) Brownfield exploration expenses	368	591	4,213	5,172	1,446	6,618
(+) Administrative expenses (excl. depreciation)	1,950	291	2,744	4,985	14,981	19,966
(+) Royalties and special mining tax[21]	1,850	280	-	2,130	618	2,748
Sub-total	116,411	35,150	92,194	243,755	17,106	260,861
Au ounces produced	61,852	3,607	35,095	100,554	-	100,554
Ag ounces produced (000s)	2,573	879	1,941	5,393	-	5,393
Ounces produced (Ag Eq 000s oz)	7,707	1,179	4,854	13,740	-	13,740
Sub-total ($/oz Ag Eq)	15.1	29.8	19.0	17.7	1.2	18.9
(+) Commercial deductions	1,476	2,125	5,871	9,472	-	9,472
(+) Selling expenses	230	249	6,415	6,894	-	6,894
Sub-total	1,706	2,374	12,286	16,366	-	16,366
Au ounces sold	61,389	3,746	34,656	99,791	-	99,791
Ag ounces sold (000s)	2,561	923	1,941	5,425	-	5,425
Ounces sold (Ag Eq 000s oz)	7,656	1,234	4,817	13,707	-	13,707
Sub-total ($/oz Ag Eq)	0.2	1.9	2.5	1.2	-	1.2
All-in sustaining costs ($/oz Ag Eq)	15.3	31.7	21.5	18.9	1.2	20.1
All-in sustaining costs ($/oz Au Eq)[22]	1,272	2,635	1,788	1,572	103	1,675

 

Administrative expenses

Administrative expenses were up by 13% to $23.6 million (H1 2023: $20.9 million) mainly due to higher personnel expenses arising from a higher performance bonus provision.

 

Exploration expenses

In H1 2024, exploration expenses increased to $13.5 million (H1 2023: $11.5 million) mainly due to higher exploration expenses at Inmaculada of $1.4 million (H1 2023: $0.4 million), higher expenses at Pallancata of $1.3 million (H1 2023: $0.6 million) and expenditure on exploration at Monte do Carmo ($1.6 million). These were partially offset by the absence of exploration expenses in Canada from the Snip project which was terminated in 2023 (H1 2023: $2.3 million).

 

In addition, the Group capitalises part of its brownfield exploration, which mostly relates to costs incurred converting potential resources to the Inferred or Measured and Indicated categories. In H1 2024, the Company capitalised $0.9 million relating to brownfield exploration (H1 2023: $0.4 million), bringing the total investment in exploration for H1 2024 to $14.4 million (H1 2023: $11.9 million).

 

Selling expenses

Selling expenses slightly increased slightly to $7.6 million (H1 2023: $6.9 million) mainly due to higher precious metal prices and its impact on Argentina export taxes.

 

Other income/expenses

Other income was $12.4 million (H1 2023: $4.9 million) with the increase mainly due to a gain in Argentina of $8.4 million resulting from the government's export incentive programme.

 

Other expenses before exceptional items were $14.8 million (H1 2023: $12.8 million) with the increase mainly due to care and maintenance expenses at Pallancata of $3.7 million and higher termination benefits in San Jose of $1.5 million (H1 2023: $0.4 million). These were partially offset by a lower provision for obsolescence of supplies of $0.3 million (H1 2023: $1.7 million), and no increases in the provision for mine closure in H1 2024 (H1 2023: $1.3 million).

 

Adjusted EBITDA

Adjusted EBITDA increased by 78% to $177.1 million (H1 2023: $99.5 million) mainly due to the increase in revenue resulting from higher gold production and increased precious metal prices.

 

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

 

$000 unless otherwise indicated	Six months to                            30 June 2024	Six months to                            30 June 2023	% change
Profit from continuing operations before exceptional items, net finance income/(cost), foreign exchange loss and income tax	96,272	14,222	577
Depreciation and amortisation in cost of sales	68,427	72,705	(6)
Depreciation and amortisation in administrative and other expenses	1,433	978	47
Exploration expenses	13,509	11,515	17
Personnel and other exploration related fixed expenses	(2,560)	(2,922)	(12)
Other non-cash income, net [23]	60	2,999	(98)
Adjusted EBITDA	177,141	99,497	78
Adjusted EBITDA margin	45%	32%

 

Finance income

Finance income was $7.3 million (H1 2023: $2.6 million), mainly due to the gain on Argentinean mutual funds of $4.6 million (H1 2023: $nil).

 

Finance costs

Finance costs increased from $11.0 million in H1 2023 to $15.2 million in H1 2024, principally due to a $2.4 million increase in losses on changes in the fair value of financial instruments (H1 2023: $nil), and higher interest expenses which totalled $9.6 million (H1 2023: $8.6 million). Higher interest expense mainly explained by lower capitalisation of interest expenses that are directly attributable to the construction of Mara Rosa of $5.9 million (H1 2023: $7.1 million), and a higher average medium-term loan balance.

 

Foreign exchange losses

The Group recognized a foreign exchange loss of $4.6 million (H1 2023: $4.3 million) as a result of exposures in currencies other than the functional currency, mainly in Argentina of $3.8 million (H1 2023: $3.8 million), Brazil of $0.9 million (H1 2023: $nil), and Peru of $0.1 million (H1 2023: $0.5 million).

 

Income tax

The Company's pre-exceptional income tax charge was $19.1 million (H1 2023: $5.1 million) and includes royalties and special mining tax of $6.3 million (H1 2023: $2.7 million). Includes deferred income tax of $8.7 million mainly due to the impact of net inflation in San Jose, and the recognition of a deferred tax asset of $3.7 million related to the energy transmission line of Mara Rosa.

 

Exceptional items

Exceptional items in H1 2023 totalled a $12.5 million loss after tax (H1 2023: $48.3 million loss after tax) related to impairment charges at the Azuca and Arcata projects of $13.7 million. H1 2023 include impairment losses at the Azuca and Crespo projects of $42.3 million, the San Jose mining unit of $17.4 million, and the investment in Aclara Resources Inc. of $7.2 million.

 

The tax effect of the exceptional items was a tax gain of $1.2 million (H1 2023: $18.6 million). The total effective tax rate was 25.8% (2023: 20.3%).

 

Cash flow and balance sheet review         

Cash flow

$000	Six months to                            30 June 2024	Six months to                            30 June 2023	% Change
Net cash generated from operating activities	100,795	86,374	17
Net cash used in investing activities	(112,141)	(134,448)	(17)
Cash flows generated (used in)/from financing activities	11,799	(178)	(6,729)
Foreign exchange adjustment	(441)	(2,014)	(78)
Net increase/(decrease) in cash and cash equivalents during the period	12	(50,266)	(100)

 

Net cash generated from operating activities increased from $86.4 million in H1 2023 to $100.8 million in H1 2024 mainly due to increased cash generation at the operations partially offset by lower cash inflows from working capital changes and increased interest paid.

 

Net cash used in investing activities decreased to $112.1 million in H1 2024 from $134.4 million in H1 2023 mainly due to lower capex in Mara Rosa of 18.3 million (H1 2023: $57.5 million), the consideration received for the sale of Crespo project net of transaction costs of $13.9 million, and lower capex in San Jose of $18.8 million (H1 2023: $21.5 million). These were partially offset by higher capex in Inmaculada of $62.1 million (H1 2023: $37.6 million), and the cash paid for Monte do Carmo´s option cost of $15 million.

 

Cash generated from/(used in) financing activities changed from an outflow of $0.2 million in H1 2023 to an inflow of $11.8 million in H1 2024 mainly due to the $65.0 million withdrawal from the $200 million medium-term facility in H1 2024 (H1 2023: $nil), partially offset by the repayment of $50 million of the $300 million medium-term facility (H1 2023: $nil).

 

Working capital

$000	As at                                          30 June 2024	As at                                              31 December 2023
Trade and other receivables	96,457	80,456
Inventories	89,715	68,261
Derivative financial assets/(liabilities)	(20,744)	(344)
Income tax receivable (payable), net	(8,491)	1,734
Trade and other payables	(137,513)	(135,839)
Provisions	(19,879)	(26,741)
Working capital	(455)	(12,473)

 

The Group's working capital position in H1 2024 increased by $12.0 million from $(12.5) million to $(0.5) million. The key drivers of the increase were: higher inventories of $21.5 million; higher trade and other receivables of $16.0 million; and lower provisions of $6.9 million. These were partially offset by higher derivative financial liabilities of $20.4 million and higher income tax payable of $10.2 million.

 

Net cash/ (debt)

$000 unless otherwise indicated	As at                                          30 June 2024	As at                                              31 December 2023
Cash and cash equivalents	89,138	89,126
Non-current borrowings	(229,165)	(234,999)
Current borrowings[24]	(131,140)	(112,064)
Net debt	(271,167)	(257,937)

 

The Group's reported net debt position was $271.2 million as at 30 June 2024 (31 December 2023: $257.9 million). Net debt to EBITDA was 0.8x (31 December 2023: 0.9x) [25].

 

 

Capital expenditure^[26]

$000	Six months to                            30 June 2024	Six months to                            30 June 2023
Inmaculada	62,149	37,642
San Jose	18,767	21,487
Mara Rosa	24,175	64,591
Operations	105,091	123,720
Monte do Carmo	16,200	-
Pallancata	6,897	3,108
Other	1,112	1,646
Total	129,300	128,474

 

H1 2024 capital expenditure increased slightly from $128.5 million in H1 2023 to $129.3 million in H1 2024 mainly due to a scheduled increase in capex at Inmaculada resulting from the need to execute development capex deferred in 2023 due to the MEIA permit delays, and the cash paid for Monte do Carmo option. These were mainly offset by reduced capex at Mara Rosa of $18.3 million (H1 2023: $57.5 million), and lower capitalised interest expenses that are directly attributable to the construction of Mara Rosa of $5.9 million (H1 2023: $7.1 million).

 

 

Non-IFRS Financial Performance Measures

The Company has included certain non-IFRS measures in this news release. The Company believes that these measures, in addition to conventional measures prepared in accordance with IFRS, provide investors an improved ability to evaluate the underlying performance of the Company. The non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These measures do not have any standardised meaning prescribed under IFRS, and therefore may not be comparable to other issuers.

 

Forward looking statements

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

 

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

 

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

 

RISKS

The principal risks and uncertainties facing the Company in respect of the year ended 31 December 2023 are set out in detail in the Risk Management section of the 2023 Annual Report and in Note 39 to the 2023 Consolidated Financial Statements.

 

The key risks disclosed in the 2023 Annual Report (available at hochschildmining.com) are categorised as:

 

§ Financial risks comprising commodity price risk and, commercial counterparty risk;

§ Operational risks including the risks associated with operational performance, business interruption/supply chain, information security and cybersecurity, exploration & reserve and resource replacement, personnel and project development, and political, legal and regulatory risks; and

§ Sustainability risks including risks associated with health and safety, environmental, climate change and community relations.

 

The risks referred to above continue to apply to the Company in respect of the remaining six months of the financial year. 

 

RELATED PARTY TRANSACTIONS

Related party transactions are disclosed in Note 23 to the interim condensed consolidated financial statements.

 

 

GOING CONCERN

After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the duration of the Going Concern Period until 31 August 2025. Accordingly, the Directors continue to adopt the going concern basis in preparing the interim condensed set of financial statements. For further detail, refer to the Going concern disclosure in Note 2 "Significant Accounting Policies" of the interim condensed consolidated financial statements.  

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that, to the best of their knowledge, the interim condensed consolidated financial statements have been prepared in accordance with UK adopted International Accounting Standard 34 "Interim Financial Reporting" and that the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rules 4.2.7R and 4.2.8R.

 

A list of current Directors and their functions is maintained on the Company's website.

 

For and on behalf of the Board

 

Eduardo Landin
Chief Executive Officer

27 August 2024

 

INDEPENDENT REVIEW REPORT TO HOCHSCHILD MINING PLC

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024, which comprises the interim condensed consolidated income statement, the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of financial position, the interim condensed consolidated statement of cash flows, the interim condensed consolidated statement of changes in equity and the related notes 1 to 24. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE) issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

 

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

 

This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.

 

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

In preparing the half-yearly financial report, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

Use of our report

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

 

 

Ernst & Young LLP

London

28 August 2024

 

Interim condensed consolidated income statement

Six month ended 30 June 2024

				Six months ended 30 June 2024 (Unaudited)								Six months ended 30 June 2023 (Unaudited)
		Notes		Before exceptional items US$000			Exceptional items (Note 9) US$000		Total     US$000				Before exceptional items US$000		Exceptional items (Note 9) US$000		Total     US$000
Continuing operations
Revenue		4		391,740			-		391,740				314,023		-		314,023
Cost of sales		5		(248,140)			-		(248,140)				(250,870)		-		(250,870)
Gross profit				143,600			-		143,600				63,153		-		63,153
Administrative expenses				(23,649)			-		(23,649)				(20,884)		-		(20,884)
Exploration expenses		6		(13,509)			-		(13,509)				(11,515)		-		(11,515)
Selling expenses		7		(7,615)			-		(7,615)				(6,894)		-		(6,894)
Other income		8		12,402			-		12,402				4,863		-		4,863
Other expenses		8		(14,781)			-		(14,781)				(12,817)		-		(12,817)
Impairment and write-off of non-financial assets		12		(176)			(13,732)		(13,908)				(1,684)		(59,719)		(61,403)
Profit/(loss) from continuing operations before net finance cost, foreign exchange loss and income tax				96,272			(13,732)		82,540				14,222		(59,719)		(45,497)
Share of loss of an associate		14		(668)			-		(668)				(785)		(7,183)		(7,968)
Finance income		10		7,263			-		7,263				2,628		-		2,628
Finance costs		10		(15,179)			-		(15,179)				(11,010)		-		(11,010)
Foreign exchange loss				(4,596)			-		(4,596)				(4,268)		-		(4,268)
Profit/(loss) from continuing operations before income tax				83,092			(13,732)		69,360				787		(66,902)		(66,115)
Income tax (expense)/benefit		11		(19,066)			1,192		(17,874)				(5,144)		18,574		13,430
Profit/(loss) for the period from continuing operations				64,026			(12,540)		51,486				(4,357)		(48,328)		(52,685)
Attributable to:
Equity shareholders of the parent				52,058			(12,540)		39,518				(1,927)		(42,787)		(44,714)
Non-controlling interests				11,968			-		11,968				(2,430)		(5,541)		(7,971)
				64,026			(12,540)		51,486				(4,357)		(48,328)		(52,685)
Basic earnings/(loss) per ordinary share from continuing operations for the period (expressed in U.S. dollars per share)				0.10			(0.02)		0.08				(0.004)		(0.083)		(0.087)
Diluted earnings/(loss) per ordinary share from continuing operations for the period (expressed in U.S. dollars per share)				0.10			(0.02)		0.08				(0.004)		(0.081)		(0.085)

 

 

 

 

 

 

 

 

 

 

 

Interim condensed consolidated statement of comprehensive income

Six month ended 30 June 2024

				Six months ended 30 June
		Notes		2024 (Unaudited) US$000		2023 (Unaudited) US$000
Profit/(loss) for the period				51,486		(52,685)
Other comprehensive income that might be reclassified to profit or loss in subsequent periods; net of tax:
Net (loss)/gain on cash flow hedges		15		(52,458)		4,113
Deferred tax credit/(charge) on cash flow hedges				17,218		(1,269)
Exchange differences on translating foreign operations1				(22,250)		22,554
Share of other comprehensive gain reclassified to profit and loss				(2)		-
Share of other comprehensive (loss)/gain of an associate		14		(1,560)		1,058
				(59,052)		26,456
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods; net of tax:
Net loss on equity instruments at fair value through other comprehensive income ("OCI")				(151)		(106)
				(151)		(106)
Other comprehensive (loss)/income for the period, net of tax				(59,203)		26,350
Total comprehensive loss for the period				(7,717)		(26,335)
Total comprehensive loss attributable to:
Equity shareholders of the parent				(19,685)		(18,364)
Non-controlling interests				11,968		(7,971)
				(7,717)		(26,335)

1   Foreign exchange effect generated in the Group´s companies when the functional currency is the local currency, mainly generated by the increase (2023: decrease) of the US$ exchange rate in Brazil. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interim condensed consolidated statement of financial position

As at 30 June 2024

		Notes		As at 30 June 2024  (Unaudited) US$000		As at 31 December 2023  US$000
ASSETS
Non-current assets
Property, plant and equipment		12		1,039,509		1,018,853
Evaluation and exploration assets		13		69,501		67,322
Intangible assets				27,826		29,983
Investment in an associate		14		22,562		22,927
Financial assets at fair value through OCI		15		309		460
Trade and other receivables				22,529		12,438
Deferred income tax assets		16		24,430		763
				1,206,666		1,152,746
Current assets
Inventories				89,715		68,261
Trade and other receivables				96,457		80,456
Derivative financial assets		15		-		846
Income tax receivable				99		4,713
Other financial assets		15		2,485		2,264
Cash and cash equivalents		17		89,138		89,126
Assets held for sale		18		12,720		17,398
				290,614		263,064
Total assets				1,497,280		1,415,810
EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Parent
Equity share capital		20		9,068		9,068
Other reserves				(298,818)		(234,837)
Retained earnings				874,729		834,231
				584,979		608,462
Non-controlling interests				71,702		60,122
Total equity				656,681		668,584
Non-current liabilities
Trade and other payables				1,590		1,711
Derivative financial liabilities		15		48,175		16,581
Borrowings		19		229,165		234,999
Provisions		20		156,110		147,372
Deferred income tax liabilities		16		78,005		67,039
				513,045		467,702
Current liabilities
Trade and other payables				137,513		135,839
Derivative financial liabilities		15		20,744		1,190
Borrowings		19		131,140		112,064
Provisions		20		19,879		26,741
Income tax payable				8,590		2,979
Liabilities directly associated with assets held for sale		18		9,688		711
				327,554		279,524
Total liabilities				840,599		747,226
Total equity and liabilities				1,497,280		1,415,810

 

Interim condensed consolidated statement of cash flows

Six month ended 30 June 2024

				Six months ended 30 June
		Notes		2024 (Unaudited) US$000		2023 (Unaudited) US$000
Cash flows from operating activities
Cash generated from operations		24		119,336		99,810
Interest received				1,725		2,333
Interest paid		19		(13,577)		(11,139)
Payment of mine closure costs				(3,414)		(3,046)
Income tax paid				(3,275)		(1,584)
Net cash generated from operating activities				100,795		86,374
Cash flows from investing activities
Purchase of property, plant and equipment				(105,930)		(133,817)
Purchase of evaluation and exploration assets				(18,156)		(1,828)
Purchase of intangibles				-		(123)
Proceeds from sale of financial assets at fair value though profit and loss				-		723
Purchase of Argentinian bonds				(5,838)		-
Proceeds from sale of Argentinian bonds				3,472		-
Proceeds from sale of assets held for sale		18		13,890		-
Proceeds from sale of property, plant and equipment		12		421		597
Net cash used in investing activities				(112,141)		(134,448)
Cash flows from financing activities
Proceeds from borrowings		19		65,965		12,560
Repayment of borrowings		19		(52,193)		(11,682)
Payment of lease liabilities				(1,585)		(730)
Dividends paid to non-controlling interests		22		(388)		(326)
Cash flows generated from/(used in)  financing activities				11,799		(178)
Net increase/(decrease) in cash and cash equivalents during the period				453		(48,252)
Impact of foreign exchange				(441)		(2,014)
Cash and cash equivalents at beginning of period		17		89,126		143,844
Cash and cash equivalents at end of period		17		89,138		93,578