REG - Hochschild MiningPLC - Interim Results
28/08/2024 07:00
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RNS Number : 9633B Hochschild Mining PLC 28 August 2024
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 (#_ftn1) ))
§ Adjusted EBITDA up 78% at $177.1 million (H1 2023: $99.5 million)(( 2
(#_ftn2) ))
§ 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 (#_ftn3)
Operational Highlights 4 (#_ftn4)
§ 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 (#_ftn5)
§ 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 (#_ftn6) ))
§ Accident Severity Index of 62 (FY 2023: 37)(( 7 (#_ftn7) ))
§ 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 (#_ftn8) ))
§ 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 Six months to
30
30 June 2024 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 Six months to
30
30 June 2024 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 $18.7 per silver equivalent ounce).
Inmaculada
The 100% owned Inmaculada gold/silver underground operation is located in the
Region of Ayacucho in southern Peru. It commenced operations in 2015.
Inmaculada summary Six months Six months to % change
to 30
30 June 2024 June 2023
Ore production (tonnes) 537,774 535,905 -
Average silver grade (g/t) 190 178 7
Average gold grade (g/t) 4.25 3.85 10
Silver produced (koz) 3,086 2,573 20
Gold produced (koz) 72.32 61.85 17
Silver equivalent produced (koz) 9,089 7,707 18
Gold equivalent produced (koz) 109.50 92.86 18
Silver sold (koz) 3,032 2,561 18
Gold sold (koz) 71.19 61.39 16
Unit cost ($/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: $1,272 per ounce). The
increase versus the same period of 2023 was forecasted and is mainly the
result of scheduled catch-up in deferred mine development capex resulting from
the MEIA delay in the first half of 2023, although this was partially offset
by higher grades. The result is lower than the guided cost for the year mainly
due to temporary lower capex that will be spent in the second half of 2024.
San Jose
The San Jose silver/gold mine is located in Argentina, in the province of
Santa Cruz, 1,750km southwest of Buenos Aires. San Jose commenced production
in 2007. Hochschild holds a controlling interest of 51% in the mine and is the
mine operator. The remaining 49% interest is owned by McEwen Mining Inc.
San Jose summary (100%) Six months Six months % change
to to
30 June 2024 30 June 2023
Ore production (tonnes) 268,853 272,063 (1)
Average silver grade (g/t) 255 254 -
Average gold grade (g/t) 4.47 4.68 (4)
Silver produced (koz) 1,930 1,941 (1)
Gold produced (koz) 33.49 35.09 (5)
Silver equivalent produced (koz) 4,709 4,854 (3)
Gold equivalent produced (koz) 56.74 58.48 (3)
Silver sold (koz) 2,079 1,941 7
Gold sold (koz) 35.29 34.66 2
Unit cost ($/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: $21.5 per ounce), in line
with the same period of 2023. The effect of slightly lower gold grades and
local inflation was offset by lower capex and devaluation of the local
currency.
Mara Rosa
The Mara Rosa gold mine is located in Brazil, in the province of Goias, 320km
northwest of Brasilia. Mara Rosa reached commercial production in mid-May
2024.
Mara Rosa summary Six months Six months % change
to to
30 June 2024 30 June 2023
Ore production (tonnes) 552,744 - -
Average silver grade (g/t) - - -
Average gold grade (g/t) 1.28 - -
Silver produced (koz) - - -
Gold produced (koz) 14.35 - -
Silver equivalent produced (koz) 1,191 - -
Gold equivalent produced (koz) 14.35 - -
Silver sold (koz) 2 - -
Gold sold (koz) 11.84 - -
Unit cost ($/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 (#_ftn9)
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: $126.3 million)
due to a 16% rise in the higher average realised silver price which offset the
absence of silver production from the Pallancata mine.
Gross average realised sales prices
The following table provides figures for average realised prices (before the
deduction of commercial discounts) and ounces sold for H1 2024 and H1 2023:
Average realised prices Six months to 30 Six months to 30 June
June 2024 2023
Gold ounces sold (koz) 118.25 99.79
Avg. realized gold price ($/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 Six months to 30 June % change
2024 2023
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 Six months to 30 June % change
2024 2023
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 Six months to 30 June % change
2024 2023
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 ($170.6 per tonne). This was mainly
due to the commencement of production in Mara Rosa with a lower cost per tonne
than the other operations.
Unit cost per tonne by operation (including royalties) 10 (#_ftn10) :
Operating unit ($/tonne) Six months to 30 June Six months to 30 June % change
2024 2023
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 (#_ftn11)
Six months to 30 June 2024
$000 unless otherwise indicated Inmaculada Pallancata San Jose Mara Rosa Total
(+) Cost of sales 12 (#_ftn12) 122,593 - 92,217 32,268 247,078
(-) Depreciation and amortisation in cost of sales (44,704) - (22,225) (1,498) (68,427)
(+) Selling expenses 286 14 7,042 273 7,615
(+) Commercial deductions 13 (#_ftn13) 1,614 11 8,302 73 10,000
Gold 1,167 1 4,807 73 6,048
Silver 447 10 3,495 - 3,952
Group cash cost 79,789 25 85,336 31,116 196,266
Gold 154,364 (186) 77,037 25,430 256,645
Silver 79,715 (69) 55,137 59 134,842
Revenue 234,079 (255) 132,174 25,489 391,487
Ounces sold
Gold 71.2 (0.1) 35.3 11.8 118.3
Silver 3,032.4 0.5 2,079.2 2.0 5,114.1
Group cash cost ($/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
$000 unless otherwise indicated Inmaculada Pallancata San Jose Total
(+) Cost of sales 14 (#_ftn14) 110,688 45,374 91,047 247,109
(-) Depreciation and amortisation in cost of sales (37,677) (11,588) (23,440) (72,705)
(+) Selling expenses 230 249 6,415 6,894
(+) Commercial deductions 15 (#_ftn15) 1,476 2,125 5,871 9,472
Gold 994 406 2,846 4,246
Silver 482 1,719 3,025 5,226
Group cash cost 74,717 36,160 79,893 190,770
Gold 118,764 7,082 66,278 192,124
Silver 60,047 19,931 41,656 121,634
Revenue 178,811 27,013 107,934 313,758
Ounces sold
Gold 61.4 3.7 34.7 99.8
Silver 2,561.1 923.2 1,940.7 5,425.0
Group cash cost ($/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 (#_ftn16)
All-in sustaining cash costs per silver equivalent ounce
Six months to 30 June 2024
$000 unless otherwise indicated Inmaculada Mara Rosa 17 (#_ftn17) San Jose Main operations Corporate & others Total
(+) Direct production cost excluding depreciation 75,884 46,444 72,522 194,850 - 194,850
(+) Other items and workers profit sharing in cost of sales 18 (#_ftn18) 853 (30,403) (8,399) (37,949) - (37,949)
(+) Operating and exploration capex for units 62,149 968 16,604 79,721 39 79,760
(+) Brownfield exploration expenses 1,374 - 4,489 5,863 1,346 7,209
(+) Administrative expenses (excl. depreciation) 2,382 580 3,003 5,965 14,747 20,712
(+) Royalties and special mining tax 19 (#_ftn19) 3,178 - - 3,178 3,151 6,329
Sub-total 145,820 17,589 88,219 251,628 19,283 270,911
Au ounces produced 72,317 11,937 33,491 117,745 - 117,745
Ag ounces produced (000s) 3,086 - 1,930 5,016 - 5,016
Ounces produced (Ag Eq 000s oz) 9,089 991 4,709 14,789 - 14,789
Sub-total ($/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 (#_ftn20) 1,349 1,495 1,809 1,510 109 1,619
Six months to 30 June 2023
$000 unless otherwise indicated Inmaculada Pallancata San Jose Main operations Corporate & others Total
(+) Direct production cost excluding depreciation 73,869 31,163 65,040 170,072 - 170,072
(+) Other items and workers profit sharing in cost of sales 732 441 - 1,173 - 1,173
(+) Operating and exploration capex for units 37,642 2,384 20,197 60,223 61 60,284
(+) Brownfield exploration expenses 368 591 4,213 5,172 1,446 6,618
(+) Administrative expenses (excl. depreciation) 1,950 291 2,744 4,985 14,981 19,966
(+) Royalties and special mining tax 21 (#_ftn21) 1,850 280 - 2,130 618 2,748
Sub-total 116,411 35,150 92,194 243,755 17,106 260,861
Au ounces produced 61,852 3,607 35,095 100,554 - 100,554
Ag ounces produced (000s) 2,573 879 1,941 5,393 - 5,393
Ounces produced (Ag Eq 000s oz) 7,707 1,179 4,854 13,740 - 13,740
Sub-total ($/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 (#_ftn22) 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 Six months to 30 June % change
2024 2023
Profit from continuing operations before exceptional items, net finance 96,272 14,222 577
income/(cost), foreign exchange loss and income tax
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 (#_ftn23) 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 Six months to 30 June % Change
2024 2023
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 As at
at 31 December 2023
30 June 2024
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 As
at at
30 June 2024 31 December 2023
Cash and cash equivalents 89,138 89,126
Non-current borrowings (229,165) (234,999)
Current borrowings 24 (#_ftn24) (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 (#_ftn25) .
Capital expenditure(( 26 (#_ftn26) ))
$000 Six months to 30 June Six months to 30 June
2024 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 Six months ended
30 June 2024 (Unaudited) 30 June 2023 (Unaudited)
Notes Before exceptional items US$000 Exceptional items Total US$000 Before exceptional items US$000 Exceptional items Total US$000
(Note 9) (Note 9)
US$000 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 96,272 (13,732) 82,540 14,222 (59,719) (45,497)
exchange loss and income tax
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 0.10 (0.02) 0.08 (0.004) (0.083) (0.087)
period (expressed in U.S. dollars per share)
Diluted earnings/(loss) per ordinary share from continuing operations for the 0.10 (0.02) 0.08 (0.004) (0.081) (0.085)
period (expressed in U.S. dollars per share)
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$000
Profit/(loss) for the period 51,486 (52,685)
Other comprehensive income that might be reclassified to profit or loss in
subsequent periods; net of tax:
Net (loss)/gain on cash flow hedges 15 (52,458) 4,113
Deferred tax credit/(charge) on cash flow hedges 17,218 (1,269)
Exchange differences on translating foreign operations(1) (22,250) 22,554
Share of other comprehensive gain reclassified to profit and loss (2) -
Share of other comprehensive (loss)/gain of an associate 14 (1,560) 1,058
(59,052) 26,456
Other comprehensive income that will not be reclassified to profit or loss in
subsequent periods; net of tax:
Net loss on equity instruments at fair value through other comprehensive (151) (106)
income ("OCI")
(151) (106)
Other comprehensive (loss)/income for the period, net of tax (59,203) 26,350
Total comprehensive loss for the period (7,717) (26,335)
Total comprehensive loss attributable to:
Equity shareholders of the parent (19,685) (18,364)
Non-controlling interests 11,968 (7,971)
(7,717) (26,335)
1 Foreign exchange effect generated in the Group´s companies when the
functional currency is the local currency, mainly generated by the increase
(2023: decrease) of the US$ exchange rate in Brazil.
Interim condensed consolidated statement of financial position
As at 30 June 2024
Notes As at 30 As at 31
June
December
2024
2023
(Unaudited) US$000 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
Interim condensed consolidated statement of changes in equity
Six month ended 30 June 2024
Other reserves
Notes Equity Dividends expired US$000 Fair value reserve of financial assets at fair Cumulative translation adjustment US$000 Merger reserve US$000 Share-based payment reserve US$000 Total Retained earnings US$000 Capital and reserves attributable to shareholders Non-controlling interests US$000 Total equity US$000
value through OCI US$000
other
of the Parent US$000
share
reserves US$000
capital US$000 Share
Unrealised gain/ of other compre- hensive
(loss/gain on hedges gain of an associate US$000
US$000
Balance at 1 January 2024 9068 - (11,546) 419 (127) (20,180) (210,046) 6,643 (234,837) 834,231 608,462 60,122 668,584
Other comprehensive loss - - (35,240) (1,562) (151) (22,250) - - (59,203) - (59,203) - (59,203)
Profit for the period - - - - - - - - - 39,518 39,518 11,968 51,486
Total comprehensive (loss)/income for the period - - (35,240) (1,562) (151) (22,250) - - (59,203) 39,518 (19,685) 11,968 (7,717)
Dividends paid to non-controlling interest 22 - - - - - - - - - - - (388) (388)
Change of ownership in associate - - - 1,865 - - - - 1,865 - 1,865 - 1,865
Modification of share based payment awards - - - - - - - (7,415) (7,415) 980 (6,435) - (6,435)
Accrual of share-based payment awards - - - - - - - 772 772 - 772 - 772
Balance at 30 June 2024 (unaudited) 9,068 - (46,786) 722 (278) (42,430) (210,046) - (298,818) 874,729 584,979 71,702 656,681
Balance at 1 January 2023 9061 99 1,541 1,274 (78) (37,902) (210,046) 6,312 (238,800) 886,980 657,241 65,475 722,716
Other comprehensive income/(loss) - - 2,844 1,058 (106) 22,554 - - 26,350 - 26,350 - 26,350
Loss for the period - - - - - - - - - (44,714) (44,714) (7,971) (52,685)
Total comprehensive income/(loss) for the period - - 2,844 1,058 (106) 22,554 - - 26,350 (44,714) (18,364) (7,971) (26,335)
Dividends paid to non-controlling interest 22 - - - - - - - - - - - (326) (326)
Cancellation of dividends expired - (99) - - - - - - (99) 152 53 - 53
Exercise of share based payment awards 7 - - - - - - (584) (584) 577 - - -
Accrual of share-based payment awards - - - - - - - 1,261 1,261 - 1,261 - 1,261
Forfeiture of share options - - - - - - - (1,528) (1,528) 1,528 - - -
Balance at 30 June 2023 (unaudited) 9,068 - 4,385 2,332 (184) (15,348) (210,046) 5,461 (213,400) 844,523 640,191 57,178 697,369
Notes to the interim condensed consolidated financial statements
1 Corporate Information
Hochschild Mining PLC (hereinafter the "Company" and together with its
subsidiaries, the "Group") is a public limited company incorporated on 11
April 2006 under the Companies Act 1985 as a limited company and registered in
England and Wales with registered number 05777693. The Company's registered
office is located at 17 Cavendish Square, London W1G 0PH, United Kingdom. Its
ordinary shares are traded on the London Stock Exchange.
The Group's principal business is the mining, processing and sale of gold and
silver. The Group has one operating mine (Inmaculada) located in southern
Peru, one operating mine (San Jose) located in Argentina, and one operating
mine (Mara Rosa) located in Brazil. The Group´s previously operating
Pallancata mine went into care and maintenance in November 2023. The Group
also has a portfolio of projects located across Peru, Argentina, Brazil and
Chile at various stages of development.
These interim condensed consolidated financial statements were approved for
issue on behalf of the Board of Directors on 27 August 2024.
2 Material Accounting Policies
Basis of preparation
These interim condensed consolidated financial statements set out the Group's
financial position as at 30 June 2024 and 31 December 2023 and its financial
performance and cash flows for the six months ended 30 June 2024 and 30 June
2023.
These interim condensed consolidated financial statements have been prepared
in accordance with the Disclosure and Transparency Rules of the Financial
Conduct Authority and UK adopted International Accounting Standard 34,
"Interim Financial Reporting". Accordingly, the interim condensed consolidated
financial statements do not include all the information required for full
annual financial statements and therefore, should be read in conjunction with
the Group's 2023 annual consolidated financial statements as published in the
2023 Annual Report. The annual financial statements of the Group will be
prepared in accordance with UK adopted IFRS.
The interim condensed consolidated financial statements do not constitute
statutory accounts as defined in the Companies Act 2006. The financial
information for the full year is based on the statutory accounts for the
financial year ended 31 December 2023. A copy of the statutory accounts for
that year, which were prepared in accordance with UK adopted International
Accounting Standards has been delivered to the Registrar of Companies. The
auditor's report under section 495 of the Companies Act 2006 in relation to
those accounts was unmodified and did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying the
report and did not contain a statement under s498(2) or s498(3) of the
Companies Act 2006.
The impact of the seasonality or cyclicality of operations is not regarded as
significant on the interim condensed consolidated financial statements.
The interim condensed consolidated financial statements are presented in US
dollars ($).
Critical accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of
judgement and/or estimation. These judgements and estimates are based on
management's best knowledge of the relevant facts and circumstances, having
regard to prior experience, but actual results may differ from the amounts
included in the financial statements. Information about such judgements and
estimates is contained in the accounting policies and/or the notes to the
financial statements.
The significant accounting judgements, estimates and assumptions remain
consistent with those disclosed in the consolidated financial statements for
the year ended 31 December 2023. The most significant are:
Critical judgements:
· Assessment of impairment indicators for the Group's CGUs
- notes 12 and 13
Assessment of impairment indicators are performed during the period and they
were identified in certain of the CGUs - refer to notes 12 and 13 for details
Significant estimates:
· Recoverable values of mining assets - note 12
The values of the Group's mining assets are sensitive to a range of
characteristics unique to each mine unit. Key sources of estimation for all
assets include uncertainty around ore reserve estimates and cash flow
projections. In performing impairment reviews, the Group assesses the
recoverable amount of its operating assets principally with reference to fair
value less costs of disposal ("FVLCD"), assessed using discounted cash flow
models. The recoverable values of the CGUs and advanced exploration projects
are determined using a FVLCD methodology. FVLCD for CGUs was determined using
a combination of level 2 and level 3 inputs. The FVLCD of the producing and
developing stage mine assets is determined using a discounted cash flow model
and for the advanced exploration projects is determined using a discounted
cash flow model or the value-in-situ methodology, which applies a realisable
'enterprise value' to unprocessed mineral resources per ounce of resources, to
estimate the amount that would be paid by a willing third party in an arm's
length transaction.
For the CGU´s discounted cash flow model, the Group uses two approaches,
depending on the circumstances: (i) the traditional approach, which uses a
single cash flow projection, and (ii) the expected cash flow approach, which
uses multiple, probability-weighted cash flow projections. As at 30 June 2024,
the impairment reviews for the Group´s operating assets were performed using
a traditional approach.
There is judgement involved in determining the assumptions that are considered
to be reasonable and consistent with those that would be applied by market
participants. Significant estimates used include future gold and silver
prices, future capital requirements, reserves and resources volumes,
production costs and the application of discount rates which reflect the
macro-economic risk in Peru, Brazil and Argentina, as applicable.
Judgement is also required in determining the risk factor that will be applied
by market participants to take into account the water restrictions imposed by
the Chilean government over the Volcan cash-generating unit. Changes in
these assumptions will affect the recoverable amount of the property, plant
and equipment, evaluation and exploration assets, and intangibles.
Changes in accounting policies and disclosures
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
year ended 31 December 2023, except for the adoption of new standards
effective as of 1 January 2024. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2024, but do not have an impact
on the interim condensed consolidated financial statements of the Group.
· Supplier Finance Arrangements - Amendments to IAS 7 and
IFRS 7
· Amendments to IFRS 16: Lease Liability in a Sale and
Leaseback
· Amendments to IAS 1: Classification of Liabilities as
Current or Non-current
Going concern
The Directors have reviewed the Group's liquidity, including cash resources
and borrowings and related covenant forecasts to assess whether the Group is
able to continue in operation for the period to 31 August 2025 (the
"Going Concern Period") which is at least 12 months from the date of
these interim condensed consolidated financial statements. The Directors
also considered the impact of a severe but plausible downside scenario on
the Group's future cash flows and liquidity position as well as debt covenant
compliance.
For purposes of the going concern review, the base case scenario reflects
life-of-mine plans and latest production forecasts for Inmaculada, San Jose
and Mara Rosa, and assumes average precious metal prices of US$2,207.9/oz for
gold and US$26.8/oz for silver (the "Assumed Prices"), based on analysts'
consensus prices as of July 2024 for the period to 31 August 2025. The
Directors also considered a severe but plausible downside scenario ("the
Severe scenario"), taking into account, the combined impact of a four-week
suspension of all operations, community relations-related cost increases,
precious metal prices which are 10% lower than the Assumed Prices, and the
deferral of discretionary exploration expenditures. Even in the Severe
scenario it has been assumed that all employees remain on full pay and
that additional mitigating actions such as the deferral of additional
investments and capital expenditure, which are under the Group's
control, would be available to maintain a comfortable level of
liquidity. Moreover, the Group is well progressed with refinancing its
US$300m medium-term facility, expected to be completed in the second half
of 2024. This refinancing will reschedule a portion of the quarterly debt
payments otherwise required during the going concern period to future
periods, if needed. The forecasts do not consider the refinancing under any of
the scenarios modelled.
Under both of the above scenarios, the Group's liquid resources remained
more than adequate for the Group's forecast expenditure and the quarterly
payments of the outstanding amounts on its medium term loans of US$300m and
US$200m, maturing in 2026 and 2027, respectively (as set out in Note
18), with sufficient headroom maintained to comply with debt covenants. The
results of reverse stress tests were also considered in the Directors´
assessment.
After their review, the Directors have a reasonable expectation that the Group
has adequate resources to continue in operational existence during
the Going Concern Period. Accordingly, they continue to adopt
the going concern basis of accounting in preparing the interim condensed
consolidated financial statements.
3 Segment reporting
The following tables present revenue and profit/(loss) information for the
Group's operating segments for the six months ended 30 June 2024 and 30 June
2023 and asset information as at 30 June 2024 and 31 December 2023,
respectively:
Six months ended 30 June 2024 Inmaculada San Jose US$000 Mara Rosa Exploration US$000 Other((3)) Adjustments and eliminations US$000 Total
(Unaudited) US$000 US$000 US$000 US$000
Revenue from external customers 234,081 125,909 25,555 - (63) - 385,482
Inter segment revenue - - - - 1,843 (1,843) -
Total revenue from customers 234,081 125,909 25,555 - 1,780 (1843) 385,482
Provisional pricing adjustments (2) 6,265 (5) - - - 6,258
Total revenue 234,079 132,174 25,550 - 1,780 (1,843) 391,740
Segment profit/(loss) 110,297 31,853 (7,354) (13,622) 979 323 122,476
Others((1)) (53,116)
Profit from continuing operations before income tax 69,360
As at 30 June 2024 (Unaudited)
Assets
Capital expenditure 62,149 18,767 24,175 17,273 6,936 - 129,300
Current assets 17,419 64,437 27,636 5,356 9,810 124,658
Other non-current assets 550,522 132,763 350,629 55,402 47,520 - 1,136,836
Total segment assets 567,941 197,200 378,265 60,758 57,330 - 1,261,494
Not reportable assets((2)) - - - - 235,786 - 235,786
Total assets 567,941 197,200 378,265 60,758 293,116 - 1,497,280
1 Comprised of administrative expenses of US$23,649,000, other income of
US$12,402,000, other expenses of US$14,781,000, impairment and write off of
non-financial assets of US$13,908,000, share of losses of an associate of
US$668,000, finance income of US$7,263,000, finance costs of US$15,179,000 and
foreign exchange loss of US$4,596,000.
2 Not reportable assets are comprised of financial assets at fair value
through OCI of US$309,000, other receivables of US$93,310,000, income tax
receivable of US$99,000, deferred income tax asset of US$24,430,000, deferred
income tax assets in assets held for sale of US$3,453,000, investment in
associate of US$22,562,000, other financial assets of US$2,485,000 and cash
and cash equivalents of US$89,138,000.
3 Pallancata mine went into care and maintenance in November 2023 and
consequently it is not an operating segment and is reported in others. Segment
revenue is US$(255,000), segment loss is US$269,000, capital expenditure is
US$6,897,000, current assets US$2,067,000, other non-current assets
US$16,974,000, total segment assets US$19,041,000.
Six months ended 30 June 2023 (Unaudited) Inmaculada US$000 San Jose Mara Rosa Exploration US$000 Other((3)) Adjustments and eliminations US$000 Total
US$000 US$000 US$000 US$000
Revenue from external customers 178,772 107,964 - - 27,488 - 314,224
Inter segment revenue - - - - 4,669 (4,669) -
Total revenue from customers 178,772 107,964 - - 32,157 (4,669) 314,224
Provisional pricing adjustments 39 (30) - - (210) - (201)
Total revenue 178,811 107,934 - - 31,947 (4,669) 314,023
Segment profit/(loss) 62,447 9,297 - (11,593) (15,485) 78 44,744
Others((1)) (110,859)
Profit from continuing operations before income tax (66,115)
As at 31 December 2023
Assets
Capital expenditure 86,031 47,682 145,804 2,320 6,555 - 288,392
Current assets 23,703 63,795 1,734 14,980 8,450 - 112,662
Other non-current assets 524,504 135,680 349,920 60,150 45,904 - 1,116,158
Total segment assets 548,207 199,475 351,654 75,130 54,354 - 1,228,820
Not reportable assets((2)) - - - - 186,990 - 186,990
Total assets 548,207 199,475 351,654 75,130 241,344 - 1,415,810
1 Comprised of administrative expenses of US$20,884,000, other income of
US$4,863,000, other expenses of US$12,817,000, impairment and write off of
non-financial assets of US$61,403,000, share of losses of an associate of
US$7,968,000, finance income of US$2,628,000, finance costs of US$11,010,000
and foreign exchange loss of US$4,268,000.
2 Not reportable assets are comprised of financial assets at fair value
through OCI of US$460,000, other receivables of US$63,473,000, income tax
receivable of US$4,713,000, deferred income tax asset of US$763,000,
investment in associate US$22,927,000, derivative financial assets of
US$846,000, other financial assets of US$2,264,000, assets held for sale of
US$2,418,000, and cash and cash equivalents of US$89,126,000.
3 Pallancata mine went into care and maintenance in November 2023 and
consequently it is not an operating segment since 2024. For comparative
purposes, Pallancata is reported in others. Segment revenue is US$27,013,000,
segment loss is US$19,501,000, capital expenditure is US$6,428,000, current
assets US$4,125,000, other non-current assets US$10,325,000, total segment
assets US$14,450,000.
4 Revenue
Six months ended 30 June 2024 (unaudited)(1) Six months ended 30 June 2023 (unaudited)(1)
Revenue from customers Revenue from customers
Goods/ services sold US$000 Shipping services US$000 Total US$000 Provisional pricing US$000 Total US$000 Goods/ services sold US$000 Shipping services US$000 Total US$000 Provisional pricing US$000 Total US$000
Gold (from dore bars) 206,225 371 206,596 (1) 206,595 142,854 321 143,175 21 143,196
Silver (from dore bars) 98,072 257 98,329 (17) 98,312 77,055 226 77,281 (3) 77,278
Gold (from concentrate) 46,159 1,290 47,449 2,601 50,050 46,796 1,871 48,667 261 48,928
Silver (from concentrate) 31,916 939 32,855 3,675 36,530 43,293 1,543 44,836 (480) 44,356
Services 253 - 253 - 253 265 - 265 - 265
Total 382,625 2,857 385,482 6,258 391,740 310,263 3,961 314,224 (201) 314,023
1 Includes commercial discounts (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
2024, the Group recorded commercial discounts for concentrates of US$8,029,000
(2023: US$7,843,000).
5 Cost of sales before exceptional items
Cost of sales comprises:
Six months ended 30 June
2024 (Unaudited) 2023
US$000
US$000
Direct production costs excluding depreciation and amortisation 194,850 170,072
Depreciation and amortisation in production costs 68,612 71,903
Other items and workers profit sharing 853 1,174
Fixed costs during operational stoppages and reduced capacity1 1,062 3,005
Change in inventories (17,237) 4,716
Cost of sales 248,140 250,870
1 Corresponds to the fixed cost at the operations during stoppages of
US$1,062,000 in San Jose (2023: Corresponds to the fixed cost at the
operations during stoppages of US$905,000, net of the income for the insurance
of US$486,000, in San Jose, and the incremental idle capacity costs of
US$2,586,000 in Pallancata and Inmaculada mines).
The main components included in cost of sales are:
Six months ended 30 June
2024 (Unaudited) US$000 2023 (Unaudited) US$000
Depreciation and amortisation in cost of sales1 68,427 72,705
Personnel expenses2 58,119 58,905
Mining royalty 3,481 2,844
Change in products in process and finished goods(3) (17,237) 4,716
Fixed costs during operational stoppages and reduced capacity(4) 1,062 3,005
1 The depreciation and amortisation in production cost is US$68,612,000
(2023: US$71,903,000).
2 Includes workers' profit sharing of US$853,000 (2023: US$1,173,000).
3 Corresponds to the difference between the beginning and ending balance
of the finished products and products in process included in the production
cost during the period.
4 Corresponds to the fixed cost at the operations during stoppages of
US$1,062,000 in San Jose (2023: Corresponds to the fixed cost at the
operations during stoppages of US$905,000, net of the income for the insurance
of US$486,000, in San Jose, and the incremental idle capacity costs of
US$2,586,000 in Pallancata and Inmaculada mines).
6 Exploration expenses
Six months ended 30 June
2024 2023
(Unaudited) (Unaudited)
US$000
US$000
Mine site exploration1
Arcata 42 40
Ares 241 13
Inmaculada 1,374 368
Pallancata 1,261 591
San Jose 4,489 4,213
7,407 5,225
Prospects2
Canada - 2,308
Peru 27 114
Brazil 1,581 -
Chile (14) (24)
1,594 2,398
Generative3
Peru 717 (206)
Mexico - 7
USA - 1
Brazil 1,209 1,120
1,926 922
Personnel 2,510 2,502
Depreciation right-of-use 22 48
Others 50 420
Total 13,509 11,515
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 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.
7 Selling expenses
Six months ended 30 June
2024 (Unaudited) 2023 (Unaudited) US$000
US$000
Personnel expenses 96 78
Warehouse services 669 743
Taxes1 5,837 5,143
Other 1,013 930
Total 7,615 6,894
1 Corresponds to the export duties in Argentina calculated as a fixed
amount in pesos per US$ of export.
8 Other income and expenses before exceptional items Six months ended 30 June
2024 (Unaudited) 2023 (Unaudited) US$000
US$000
Other income
Logistic services 616 712
Gain on recovery of expenses1 - 2,414
Decrease in provision for mine closure 116 -
Income from export programme in Argentina2 8,399 -
Others3 3,271 1,737
Total 12,402 4,863
Other expenses
Increase in provision for mine closure - (1,315)
Depreciation right-of-use assets (156) (54)
Corporate social responsibility contribution in Argentina (1,907) (1,696)
Care and maintenance expenses of Pallancata mine unit (3,662) -
Care and maintenance expenses of Ares mine unit (1,166) (1,355)
Care and maintenance expenses of Arcata mine unit (1,774) (1,808)
Provision of obsolescence of supplies4 (282) (1,730)
Others(5) (5,834) (4,859)
Total (14,781) (12,817)
1 This is primarily the insurance collected in 2023 due to the damage of
the Inmaculada machine belt in 2022 of US$2,620,000, net of the loss on
recovery of expenses of US$206,000.
2 Benefit arising from being able to access the Argentina government's
Export Incentive Programme, allowing certain companies to translate a certain
proportion of US dollar sales at a preferential market exchange rate.
3 Mainly includes the profit for sale of the Crespo project of
US$1,170,000 and the revaluation of the contingent consideration of
US$478,000, gain on sale of property, plant and equipment of US$417,000, lease
rentals of US$165,000, and the gain on sale of supplies of US$146,000 (2023:
this mainly includes the sale of mine concessions in Chile of US$1,150,000,
and gain on sale of supplies US$204,000).
4 In 2023 mainly includes the provision for obsolescence of supplies
related to the ore sorting project amounting to US$1,713,000.
5 This is primarily the termination benefits of the San Jose mine unit of
US$1,460,000 (2023: the termination benefits of the Pallancata mine unit of
US$400,000), the contingencies of US$924,000 mainly explained by labour claims
in Argentina (2023: US$956,000), the tax penalties of US$296,000 (2023:
US$2,069,000), cost of recovery of expenses of US$1,234,000 (2023: US$nil) and
the loss on sale of property, plant and equipment of US$nil (2023:
US$409,000).
9 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. Unless stated, exceptional items do not
correspond to a reporting segment of the Group.
Six months ended 30 June
2024 (Unaudited) US$000 2023 (Unaudited) US$000
Share of loss on an associate
Impairment of Aclara Resources Inc. - (7,183)
Total - (7,183)
Impairment and write-off of non-financial assets
Impairment of non-current assets (2) (13,732) (59,719)
Total (13,732) (59,719)
Income tax expense
Income tax credit 1,192 18,574
Total 1,192 18,574
The exceptional items for the period ended 30 June 2023 correspond to:
1 Corresponds to the impairment charge of US$7,183,000 based on
the updated valuation of the investment in Aclara Resources Inc. as at 30 June
2023 (see note 14).
2 Corresponds to the impairment charge related to Azuca project
and Arcata mine (US$13,732,000) (see note 13). June 2023: Corresponds to the
impairment charge related to San Jose (US$17,398,000) and Azuca and Crespo
(US$42,321,000) projects (see note 12).
10 Finance income and finance cost before exceptional items
The Group recognised the following finance income and finance costs before
exceptional items:
Six months ended 30 June
2024 (Unaudited) US$000 2023 (Unaudited) US$000
Finance income:
Interest on deposits and liquidity funds 1,427 2,313
Interest on loans 100 126
Changes in the fair value of financial instruments through profit or loss(1) 4,611 -
Others(2) 1,125 189
Total finance income 7,263 2,628
Finance cost:
Interest on bank loans (7,065) (5,468)
Other interest (2,530) (3,125)
Total interest expense (9,595) (8,593)
Loss on discount of other receivables(3) (623) (349)
Loss from changes in the fair value of financial assets at fair value through (2,366) -
profit and loss(4)
Loss on sale of financial assets at fair value through profit and loss - (292)
Unwind of discount on mine rehabilitation (1,494) (791)
Others (1,101) (985)
Total finance costs (15,179) (11,010)
1 Income generated by the mutual funds in Argentina.
2 Mainly due to the debit valuation adjustment of the hedges of US$465,000
and other finance income related to taxes in Argentina of US$303,000.
3 Mainly corresponds to the loss on discount of tax credits in Argentina.
4 Foreign exchange effect of US$2,366,000 related to the bonds in
Argentina.
Six months ended 30 June
2024 (Unaudited) 2023 (Unaudited) US$000
US$000
Current corporate income tax
Current income tax expense 11,359 7,405
Withholding tax (157) 297
11,202 7,702
Deferred taxation
Origination and reversal of temporary differences 343 (23,880)
343 (23,880)
Corporate income tax 11,545 (16,178)
Current mining royalties
Current mining royalty charge 3,178 2,130
Current special mining tax charge 3,151 618
Total 6,329 2,748
Total taxation expense/(benefit) in the income statement 17,874 (13,430)
Deferred taxation in Other comprehensive income
Origination and reversal of temporary differences (17,218) 1,269
Total taxation expense/(benefit) in Other comprehensive income 656 (12,161)
11 Income tax expense
The pre-exceptional tax charge for the period was US$19,066,000 (2023:
US$5,144,000).
The weighted average statutory income tax rate was 33.0% for 2024 and 31.5%
for 2023. This is calculated as the average of the statutory tax rates
applicable in the countries in which the Group operates, weighted by the
profit or loss before tax of the Group companies in their respective countries
as included in the consolidated financial statements. The interim income tax
rate calculation is based on the estimated average annual effective tax rate
of the Group.
The change in the weighted average statutory income tax rate is due to a
change in the weighting of profit or loss before tax in the various
jurisdictions in which the Group operates.
The profit before income tax (pre-exceptional) excluding the exchange
difference of US$4,596,000 was US$87,688,000 (2023: US$5,055,000). The
weighted average effective annual income tax rate expected for the full
financial year is 38.6% generating an income tax expense of US$33,880,000
(2023: US$2,401,000). The lower tax in H1 2024 versus US$33,880,000 is due to
the one-time effect that occurred in the half year related to the impact of
inflation and exchange rate fluctuations on deferred taxes of US$8,657,000
(net inflation in Argentina of US$7,443,000, local currency devaluation in
Brazil of US$2,957,000, and Peru of -US$1,743,000), the recognition of a
deferred tax asset related to the energy transmission line of Mara Rosa of
US$3,708,000, the tax loss of the sale of the Crespo project of US$1,915,000
and the adjustment of 2023 current income tax of Minera Santa Cruz of
US$534,000 (2023: local currency revaluation of US$1,906,000 and
non-deductible loss on the sale of C3 Metals Inc. shares of US$837,000).
12 Property, plant and equipment
During the six months ended 30 June 2024, the Group acquired and developed
assets with a cost of US$111,106,000 (2023: US$126,523,000). The additions for
the six months ended 30 June 2024 relate to:
Mining properties and development (Unaudited) Other property plant and equipment (Unaudited) Total additions of property plant and equipment (Unaudited)
US$000 US$000 US$000
San Jose 14,124 4,643 18,767
Pallancata 6,897 - 6,897
Inmaculada 43,554 17,722 61,276
Mara Rosa 5,800 18,327 24,127
Others - 39 39
Total 70,375 40,731 111,106
Assets with a net book value of US$4,000 were disposed of by the Group during the six month period ended 30 June 2024 (30 June 2023: US$1,006,000) resulting in a net gain on disposal of US$417,000 (30 June 2023: loss of US$409,000).
For the six months ended 30 June 2024, the depreciation charge on property, plant and equipment was US$69,197,000 (30 June 2023: US$74,429,000).
There were borrowing costs capitalised in property, plant and equipment amounting to US$6,105,000 (31 December 2023: US$18,790,000).
In June 2024, management determined that there was a trigger of reversal of
impairment in the San Jose mine unit due to the increase in gold and silver
prices. The impairment test resulted in no impairment, or impairment reversal,
being recognised as the positive effect of the increased prices was mainly
offset by lower estimated mineral grades. The recoverable value of San Jose
was determined using a FVLCD methodology.
No impairment or reversal of impairment was recognised as at 30 June 2024.
The key assumptions on which management has based its determination of FVLCD
and the associated recoverable values calculated for the San Jose CGU are gold
and silver prices, future capital requirements, production costs, reserves and
resources volumes (reflected in the production volume), and the discount rate.
Real prices US$ per oz. 2024 2025 2026 2027 Long-term
Gold 2,226 2,198 2,002 1,959 1,875
Silver 26.6 26.9 25.5 25.1 24.0
San Jose
Discount rate (post-tax) 22.1%
The period of 5 years was used to prepare the cash flow projections of San
Jose mine unit which was in line with its respective life of mine.
No indicators of impairment or reversal of impairment were identified in the
other CGUs, which includes other exploration projects, except as noted below.
The estimated recoverable values of the Group's CGUs are equal to, or not
materially different than, their carrying values.
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.
A change in any of the key assumptions would have the following impact:
US$000 San Jose
Gold and silver prices (decrease by 10%) (41,209)
Gold and silver prices (increase by 10%) 41,209
Production costs (increase by 10%) (22,967)
Production costs (decrease by 10%) 22,967
Production volume (decrease by 10%) (17,826)
Production volume (increase by 10%) 17,826
Post tax discount rate (increase by 3%) (4,397)
Post tax discount rate (decrease by 3%) 4,757
Capital expenditure (increase by 10%) (5,149)
Capital expenditure (decrease by 10%) 5,149
2023
In June 2023, management determined that there was a trigger of impairment in
the San Jose mine unit due to the increase in the discount rate from 19.8% to
21.7% mainly explained by the rise in country risk premium in Argentina, and
higher costs than expected due to local inflation. The impairment test
performed over the San Jose CGU resulted in an impairment recognised as at 30
June 2023 of US$17,398,000 (US$16,588,000 in property, plant and equipment,
US$376,000 in evaluation and exploration assets and US$434,000 in
intangibles).
As at 30 June 2023, the Group conducted a sales process for its Azuca and
Crespo projects. This decision to evaluate the sale of these assets is part of
the Group´s strategy to focus its capital on larger-scale projects.
Based on preliminary discussions with interested parties on the investment and
costs required for these projects, given their operational capabilities,
management determined that there were triggers of impairment in both the Azuca
and Crespo projects. An impairment test was carried out, adjusting the key
inputs used to determine the projects recoverable value, resulting in an
impairment charge of US$42,321,000 (US$15,898,000 in property, plant and
equipment, US$26,420,000 in evaluation and exploration assets and US$3,000 in
intangibles) for Azuca, and Crespo.
The recoverable values of the San Jose CGU, and the Crespo and Azuca assets
were determined using a FVLCD methodology.
The key assumptions on which management has based its determination of FVLCD
and the associated recoverable values calculated for the San Jose CGU and
Crespo assets are gold and silver prices, future capital requirements,
production costs, reserves and resources volumes (reflected in the production
volume), and the discount rate.
Real prices US$ per oz. 2024 2025 2026 2027 Long- term
Gold 1,850 1,735 1,582 1,557 1,600
Silver 24.3 22.6 21.4 21.8 22.0
San Jose Crespo
Discount rate (post-tax) 21.7% 6.0%
The period of 7 years and 9 years was used to prepare the cash flow
projections of San Jose mine unit and Crespo, respectively, which were in line
with their respective life of mines.
With respect to Azuca, given its 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 assets. The enterprise value used in
the calculation performed as at 30 June 2023 was $0.095 per silver equivalent
ounce of resources. The enterprise value figure is based on observable
external market information.
On 28 December 2023, the Group entered into an agreement with a third party
whereby the third party acquired the assets and liabilities of the Crespo
project from Compañia Minera Ares (refer to note 18). The closing of the
transaction occurred in March 2024, the assets and liabilities were classified
at 31 December 2023 as assets and liabilities related to assets held for sale,
respectively. The Group recognised an additional impairment of US$21,124,000
(US$13,405,000 in property, plant and equipment, US$7,718,000 in evaluation
and exploration assets and US$1,000 in intangibles) as at 31 December 2023.
The recoverable amount of the Crespo project was determined using a FVLCD
methodology, based on the economic terms of the sale agreement.
As at 31 December 2023, Azuca did not meet the conditions to be classified as
an asset held-for sale under IFRS 5 "Non-current Assets Held for Sale and
Discontinued Operations".
No indicators of impairment or reversal of impairment were identified in the
other CGUs. The estimated recoverable values of the Group's CGUs are equal
to, or not materially different than, their carrying values.
13 Evaluation and exploration assets
During the six months ended 30 June 2024, the Group capitalised evaluation and
exploration costs of US$18,194,000 (30 June 2023: US$1,828,000). The additions
correspond to the following mine units:
Unaudited
US$000
Monte do Carmo(1) 16,200
Inmaculada 873
Azuca 366
Volcan 707
Mara Rosa 48
Total 18,194
1 On 4 March 2024, the Group entered in an option agreement pursuant to
which Cerrado Gold Inc. has granted Amarillo Mineracao do Brasil Ltd., a
brazilian subsidiary of the Group, the option to acquire a 100% interest in
the Monte do Carmo project located in the state of Tocantins, Brazil. The
Group has paid US$16,200,000, that were capitalised as evaluation and
exploration assets in accordance with the Group´s policy of capitalisation of
exploration expenses.
There were no transfers from evaluation and exploration assets to property,
plant and equipment during the period (30 June 2023: US$nil, 31 December 2023:
US$2,499,000).
At 30 June 2024, the Group recorded an impairment with respect to evaluation
and exploration assets of the Arcata mine and the Azuca project of
US$13,732,000, which takes into consideration the ongoing sell process (see
note 18).
At 31 December 2023, the Group recorded an impairment with respect to
evaluation and exploration assets of the San Jose mine unit of US$376,000, the
Crespo project of US$17,584,000 and the Azuca project of US$16,554,000 (refer
to note 12).
There were borrowing costs capitalised in evaluation and exploration assets of
US$38,000 (31 December 2023: US$95,000).
In June 2024, management determined that there was a trigger of reversal of
impairment in Volcan project due to the increase in gold prices. The
impairment test resulted in no impairment, or impairment reversal being
recognised as the positive effect of the increased long term prices was offset
by local inflation and an increase in the discount rate from 8.3% to 9.0%. The
recoverable value of the Volcan project was determined using a FVLCD
methodology.
The key assumptions on which management has based its determination of FVLCD
and the associated recoverable values calculated for the Volcan project are
gold prices, capital requirements, production costs, reserves and resources
volumes (reflected in the production volume), and the discount rate. The
period of 14 years was used to prepare the cash flow projections of Volcan.
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.
A change in any of the key assumptions would have the following impact:
US$000 Volcan
Gold prices (decrease by 10%) (39,202)(1)
Gold prices (increase by 10%) 42,408(2)
Production costs (increase by 10%) (39,202)(1)
Production costs (decrease by 10%) 42,408(2)
Production volume (decrease by 10%) (39,202)(1)
Production volume (increase by 10%) 42,408(2)
Post tax discount rate (increase by 3%) (39,202)(1)
Post tax discount rate (decrease by 3%) 42,408(2)
Capital expenditure (increase by 10%) (39,202)(1)
Capital expenditure (decrease by 10%) 42,408(2)
1 This represents the maximum impairment loss that could be recognised, as
it represents the carrying value of the CGU as at 30 June 2024.
2 This represents the maximum impairment loss that could be reversed, as
it represents the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
14 Investment in an associate
As at 30 June 2024 the Group retains a 19.6% (31 December 2023: 20%) interest
in Aclara Resources Inc. ("Aclara"), a listed company involved in the
exploration of rare-earth metals in Chile. The company was incorporated under
the laws of British Columbia, Canada, where the principal executive offices
are located. The operations are conducted through one wholly-owned subsidiary
named REE UNO SpA, located in Chile.
Upon Aclara´s Initial Public Offering ('IPO') on 10 December 2021, HM
Holdings retained 20% of Aclara shares. The investment was recorded at initial
recognition at fair value, based on the IPO´offering price, and is accounted
for using the equity method in the consolidated financial statements.
The following table summarises the financial information of the Group's
investment in Aclara Resources Inc:
As at 30 As at 31
June
December
2024
2023
(Unaudited) US$000
US$000
Current assets 44,815 34,945
Non-current assets 117,610 112,064
Current liabilities (3,377) (6,048)
Non-current liabilities (2,609) (2,600)
Equity 156,439 138,361
Group's share in equity 19.6% (2023: 20%) 30,662 27,672
Non-controlling interest(1) (3,795) -
Accumulated adjustments for non-attributable changes to equity(2) 12,801 12,361
Impairment of non-current assets(3) (17,106) (17,106)
Group´s carrying amount of the investment 19.6% (2023: 20%) 22,562 22,927
Summarised consolidated statement of profit and loss
Revenue - -
Administrative expenses (4,112) (6,815)
Exploration expenses (213) (6,991)
Other income 135 59
Share of loss in joint venture (10) -
Finance income 846 2,338
Finance cost (30) (59)
Foreign exchange (loss)/gain (80) 85
Loss from continuing operations for the period (3,464) (11,383)
Loss from continuing operations attributable to shareholders (3,418) (11,383)
Group's share of loss for the period (670) (2,277)
Other comprehensive profit that may be reclassified to profit or loss in
subsequent periods, net of tax
Exchange differences on translating foreign operations (7,957) (4,273)
Total comprehensive loss for the period (7,957) (4,273)
Group´s share of comprehensive loss for the period (1,560) (855)
1 On April 17, 2024 Aclara closed a strategic financing of US$29,027,000
by the company CAP S.A. in Aclara´s Chilean subsidiary which owns the Penco
Module and all of Aclara´s mining concessions in Chile in exchange for 20%
equity participation in REE UNO Spa.
2 Includes the 20% of the fair value adjustment, estimated by the Group,
of Aclara´s exploration and evaluation asset on initial recognition of
US$12,307,000, and other non-attributable changes to equity of US$494,000 (31
December 2023: US$54,000).
3 This represents the 19.6% share in the total impairment, estimated by
the Group, of Aclara´s exploration and evaluation assets of US$85,530,000
(2023: 20% share in the total impairment of US$85,530,000).
The movement of investment in associate is as follows:
Period ended 31 December
30 June 31 December 2023
US$000
2024
US$000
Beginning balance 22,927 33,242
Impairment - (7,183)
Share of loss for the period (670) (2,277)
Share of comprehensive loss for the period (1,560) (855)
Equity increase in Aclara from CAP strategic financing 1,865 -
Ending balance 22,562 22,927
30 June 2024
No indicators of impairment or reversal of impairment were identified in
Aclara as of 30 June 2024.
2023
On 4 July 2023, Aclara announced the receipt of a notice from the
Environmental Service Assessment in Chile of its decision to terminate the
review of Aclara´s application for an environmental impact assessment of the
Penco Module due to the finding of trees considered as ´vulnerable species´
in the area of the project. Aclara is working to refile a revised application.
Aclara´s announcement and the impact that it could have in the first
production date of Penco project, were considered as indicators of impairment.
Therefore, in compliance with IAS 36, the Group performed a valuation on
Aclara, and determined an impairment charge of US$7,183,000.
The recoverable value of Aclara was determined using a value-in-use
methodology. The key assumptions on which management has based its valuation
of Aclara´s shares are the independent technical report of Penco module
issued in September 2021, adjusted by: a 3-year delay in the first production
date, local inflation and additional risk impacting costs; latest forecast
prices; and a discount rate of 9.6%.
Sensitivity analysis
An increase of 1% in the discount rate and a delay of one additional year in
the first production date would have the following impact in the Group´s
investment in Aclara:
US$000
Discount rate (increase by 1%) (3,578)
Delay in first production date (1 additional year) (2,551)
The carrying amount of the investment recognised the changes in the Group's
share of net assets of the associate since the acquisition date. The balance
as at 30 June 2024, after recognising the changes in the Group´s share of net
assets of the associate and the impairment charge is US$22,562,000 (31
December 2023: US$22,927,000).
Aclara´s fair value based on share price as of 30 June 2024 was US$12,595,000
(31 December 2023: US$12,296,000).
No dividends were received from the associate during 2024 and 2023.
The associate had no contingent liabilities or capital commitments as at 30
June 2024 and 31 December 2023.
15 Financial instruments
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities.
Level 2: other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
At 30 June 2024, the Group held the following financial instruments measured
at fair value:
As Level 1 Level 2 Level 3
at
30 June 2024 (Unaudited) US$000 US$000 US$000
US$000
Assets measured at fair value
Equity shares(1) 309 309 - -
Contingent consideration (note 18) 4,445 - - 4,445
Trade receivables 25,676 - - 25,676
Mutual funds 12,570 12,570 - -
Other financial assets(2) 2,485 2,485 - -
Liabilities measured at fair value
Derivative financial liabilities(3) (68,919) -
- (68,919)
(23,434) 15,364 (68,919) 30,121
1 These investments were classified as financial assets at fair value
through OCI.
2 Other financial assets are as follows:
As at 30 June 2024 As at
31 December 2023
(Unaudited)
US$000
US$000
Bonds in Minera Santa Cruz S.A. 2,485 2,264
Total 2,485 2,264
3 Derivative financial liabilities - Gold forward and collars. The
increase in the price of gold over the prices agreed in the contracts
determined the significant increase of the derivative financial liabilities.
On 10 November 2021, the Group signed agreements with JP Morgan to hedge the
sale of 3,300,000 ounces of silver at US$25.0 per ounce for 2023. The result
was a gain of US$5,324,000 recognised as revenue in 2023.
On 12 April 2023, the Group signed agreements with Citibank to hedge the sale
of 27,600 ounces of gold at US$2,100 per ounce for 2024.
On 20 April 2023, the Group signed agreements with JP Morgan to hedge the sale
of 29,250 ounces of gold at US$2,047 per ounce for 2023. The result was a gain
of US$2,522,000 recognised as revenue in 2023.
On 19 June 2023, the Group signed agreements with Citibank to hedge the sale
of 150,000 ounces of gold (50,000 ounces per year) at US$2,117.05, US$2,166.65
and US$2,205.50 per ounce in 2025, 2026 and 2027 respectively.
On 14 December 2023, the Group signed a gold collar agreement with JP Morgan
of 99,999.96 ounces of gold at strike put of US$2,000 and strike call of
US$2,252 per ounce for 2024.
On 14 February 2024, the Group signed a gold collar agreement with JP Morgan
of 60,000 ounces of gold at strike put of US$2,000 and strike call of US$2,485
per ounce for 2025.
The gold and silver hedges contracts are being used to hedge exposure to
changes in cash flows from gold and silver commodity prices. There is an
economic relationship between the hedged item and the hedging instruments due
to a common underlying. In accordance with IFRS 9, the derivative instruments
are categorised as cash flow hedges at the inception of the hedging
relationship and, on an ongoing basis, the Group assesses whether a hedging
relationship meets the hedge effectiveness requirements. The Group has
established a hedge ratio of 1:1 for the hedging relationships as the
underlying risk of the silver and gold forwards is identical to the hedged
risk components. To test the hedge effectiveness, the Group uses the
hypothetical derivative method and compares the changes in the fair value of
the gold and silver forwards against the changes in fair value of the hedged
item attributable to the hedged risk. That said, it is observed that the
effectiveness tests comply with the requirements of IFRS 9 and that the
hedging strategy is highly effective.
The fair values of the gold and silver forwards were calculated using a
discounted cash flow model applying a combination of level 1 (USD quoted
market commodity prices) and level 2 inputs. The models used to value the
commodity forward contracts are standard models that calculate the present
value of the fixed-legs (the fixed gold and silver leg) and compare them with
the present value of the expected cash flows of the flowing legs (the London
metal exchange "LME" gold and silver fixing). In the case of the commodity
forward contracts, the models use the LME AU and AG forward curve and the US
SOFR swap curve for discounting.
This approach results in the fair value measurement categorised in its
entirety as level 2 in the fair value hierarchy. The fair values of the gold
forwards and collars as at 30 June 2024 are as follows:
US$000
Current liabilities (20,744)
Non-current liabilities (48,175)
The effect recorded is as follows:
US$000
Income statement - revenue (4,286)
Equity - Unrealised loss on hedges (52,458)
The sensitivity to a reasonable movement in the commodity prices, with all
other variables held constant, determined as a +/-10% change in prices
-US$54,734,000 / -US$48,508,000 effect on OCI.
As Level 1 Level 2 Level 3
at
31 December 2023 US$000 US$000 US$000
US$000
Assets measured at fair value
Equity shares(1) 460 460 - -
Derivative financial assets(2) 846 - 846 -
Trade receivables 29,421 - - 29,421
Mutual funds 10,849 10,849 - -
Other financial assets 2,264 2,264 - -
Liabilities measured at fair value
Derivative financial liabilities(3) (17,771) -
- (17,771)
26,069 13,573 (16,925) 29,421
1 These investments were classified as financial assets at fair value
through OCI.
2 Derivative financial assets - Gold forward and collars.
3 Derivative financial liabilities - Gold forward and collars.
During the six months ended 30 June 2024 and the year, ended 31 December 2023
there were no transfers between these levels.
The reconciliation of the financial instruments categorised as Level 3 is as
follows:
Trade receivables subject to price adjustments US$000 Other non-current receivables
US$000
Balance at 1 January 2023 42,364 -
Net change in trade receivables from goods sold (8,644) -
Changes in fair value of price adjustments 1,174 -
Realised price adjustments during the year (5,473) -
Balance at 31 December 2023 29,421 -
Net change in trade receivables from goods sold (2,689) -
Changes in fair value of price adjustments 6,258 -
Realised price adjustments during the period (7,314) -
Initial recognition of contingent consideration of Crespo sale (note 18) - 3,967
Revaluation of contingent consideration of Crespo sale (note 18) - 478
Balance at 30 June 2024 (Unaudited) 25,676 4,445
The Group has price adjustments arising from the sale of concentrate and dore
which were provisionally priced at the time the sale was recorded. The
sensitivity of the fair value to an immediate 10% favourable or adverse change
in the price of gold and silver (assuming all other variables remain
constant), is as follows:
Period Increase/ Effect on
decrease in price of
profit before tax
ounces of:
US$000
30 June 2024 Gold +/-10% +/-261
Silver+/-10%
+/-368
31 December 2023 Gold +/-10% +/-127
Silver+/-10%
+/-45
16 Deferred income tax assets and liabilities
The changes in the net deferred income tax assets/(liabilities) are as
follows:
As at 30 June 2024 As at 31 December 2023
(Unaudited) US$000 US$000
Beginning of the period (66,276) (75,832)
Income statement (expense)/benefit (343) 4,560
Other comprehensive credit 16,497 7,414
Deferred tax recognised in assets held for sale (3,453) (2,418)
End of the period (53,575) (66,276)
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to the same
fiscal authority.
The amounts after offset, as presented on the face of the consolidated
statement of financial position, are as follows:
As at As at
31 December 2023
30 June 2024
US$000
(Unaudited) US$000
Deferred income tax assets(1) 24,430 763
Deferred income tax liabilities (78,005) (67,039)
Net deferred income tax liabilities (53,575) (66,276)
1 The decrease of the net liability is driven principally by the
recognition of the market value of the hedge of the period (US$17,218,000).
17 Cash and cash equivalents, and other financial assets
As at 30 June 2024 As at
31 December 2023
(Unaudited)
US$000
US$000
Cash in hand 725 782
Current demand deposit accounts(1) 24,731 40,311
Time deposits(2) 51,112 37,184
Mutual funds3 12,570 10,849
Cash and cash equivalents 89,138 89,126
1 Relates to bank accounts, which are readily accessible to the Group and
bear interest.
2 These deposits have an average maturity of 5 days (as at 31 December
2023: 9 days).
3 Corresponds to common investment funds that are assets that are formed
with the contributions made by the Group, consequently, becoming beneficiary
of the fund in which they decide to invest. As at 30 June 2024 the balance of
US$12,570,000 (31 December 2023: US$10,849,000) are deposited in Banco
Santander and BBVA in Argentina.
Cash and cash equivalents comprise cash on hand and deposits held with banks
that are readily convertible into known amounts of cash and which are subject
to insignificant risk of changes in value.
The fair value of cash and cash equivalents approximates their book value.
18 Assets held for sale
The Group is in an ongoing sale process that includes the assets and
liabilities of the Arcata mine and Azuca project. Prior to classifying
Arcata and Azuca disposal group as assets and liabilities related to asset
held for sale, the Group recognised an impairment of US$13,732,000. The
recoverable value of the Azuca and Arcata project was determined using a FVLCD
methodology, based on the proposed economic terms of sale.
The major classes of assets and liabilities classified as assets held for sale
as at 30 June 2024 are as follows:
US$000
Assets
Transfer from evaluation and exploration assets, net of impairment 4,722
Transfer from property, plant and equipment 4,179
Transfer from deferred tax asset 3,453
Total non-current assets 12,354
Transfer from inventory-supplies 366
Total current assets 366
Liabilities
Transfer from provision for mine closure (note 20) (9,688)
Total liabilities directly associated with assets held for sale (9,688)
Net assets directly associated with assets held for sale 3,032
In 2023, the Group entered into an agreement with a third party whereby the
third party would acquire the assets and liabilities of the Crespo project
from Compañia Minera Ares which resulted in the assets and liabilities of
project Crespo being classified as held for sale at 31 December 2023. In
March 2024, the Group received US$15,000,000 as a non-refundable cash payment
at closing, and a 1.5% Royalty Net Smelter Return (NSR) over the Crespo
project, recognised as a contingent consideration within non-current other
receivables with a fair value of US$3,967,000 at initial recognition and
revalued to US$4,445,000 at 30 June 2024. The buyer also took over the
environmental liabilities of the project amounting to US$711,000. Upon
completion of sale, the Group derecognised the asset held for sales amounting
to US$17,398,000 and the liabilities directly associated with assets held for
sale amounting to US$711,000. A profit on sales of asset of US$1,170,000 was
recognised as other income (note 8).
The net cash received for the sale of Crespo is as follows:
US$000
Cash received 15,000
Transaction costs (1,110)
Net cash received 13,890
19 Borrowings
As at 30 June 2024 (Unaudited) As at 31 December 2023
Effective Non-current Current Effective Non-current Current
interest rate
US$000
US$000
interest rate
US$000
US$000
Secured bank loans
· Pre-shipment loans in Minera Santa Cruz 8.45% to 15% - 3,947 12% to 15% - 3,977
· Medium-term Bank loans 6.24% to 9.15% 229,165 126,193 8.91% and 9.09% 234,999 106,087
Other loans
· Stock market promissory notes in Minera Santa Cruz - - 1,000 - - 2,000
Total 229,165 131,140 234,999 112,064
Effective interest rate includes the amortisation of the capitalised
transaction costs.
The movement in borrowings during the six-month period to 30 June 2024 is as
follows:
As at 1 Additions US$000 Repayments US$000 As at 30
January 2024 US$000 June 2024 (Unaudited) US$000
Reclassifications US$000
Current
Pre-shipment loans(1) 3,870 965 (1,193) - 3,642
Medium-term Bank loans(2) 100,001 - (50,000) 70,834 120,835
Stock market promissory notes(3) 2,000 - (1,000) - 1,000
Accrued interest 6,193 7,065 (13,577) 5,982 5,663
112,064 8,030 (65,770) 76,816 131,140
Non-current
Medium-term Bank loans (2) 234,999 65,000 - (70,834) 229,165
234,999 65,000 - (70,834) 229,165
Total current and non-current borrowings 347,063 73,030 (65,770) 5,982 360,305
1 As at 30 June 2024, Minera Santa Cruz has five (December 2023: seven)
loans with Citibank amounting to US$2,352,000 (December 2023: US$2,815,000)
plus interests of US$247,000 (December 2023: US$82,000), two loans (December
2023: One loan) with ICBC amounting to US$862,000 (December 2023: US$447,000)
plus interests of US$53,000 (December 2023: US$16,000), and two loans
(December 2023: one loan) with Santander of US$428,000 (December 2023:
US$608,000) plus interests of US$5,000 (December 2023: US$9,000).
2 In December 2019, a five-year credit agreement was signed between Minera
Ares and Scotiabank Peru S.A.A., The Bank of Nova Scotia and BBVA Securities
Inc, with Hochschild Mining PLC as guarantor. The US$200,000,000 medium term
loan was payable in equal quarterly instalments from the second anniversary of
the loan with an interest rate of 3-month USD Libor plus 1.15% payable
quarterly until maturity on 13 December 2024. In September 2021, the Group
negotiated with the same counterpart a US$200,000,000 loan to replace the
original loan, plus an additional US$100,000,000 optional loan. US$200,000,000
was withdrawn on 21 September 2021, and the optional US$100,000,000 loan was
withdrawn on 1 December 2021. The maturity was extended until September 2026,
and the interest rate increased to 3-month USD Libor plus a spread of 1.65%. A
structuring fee of US$900,000 was paid to the lender and additional US$193,000
was incurred as transaction costs. In addition, a commitment fee of US$120,000
was paid for the period that the optional US$100,000,000 loan remained
undrawn. This was considered a substantial modification to the terms of the
loan, and consequently, it was treated as an extinguishment of the loan which
resulted in the derecognition of the existing liability and recognition of a
new liability. The associated costs and fees incurred have been recognised as
part of the loss on the extinguishment. From 18 September 2023, the Libor
was replaced by the 3-month SOFR plus a spread of 1.91%. The Group repaid
US$25,000,000 of the loan in December 2023, and repaid US$50,000,000 of the
loan during the first half of 2024. Financial covenants under the agreement
are: (i) Consolidated Leverage Ratio <= 3 and (ii) Consolidated Interest
Coverage Ratio ≥ 4.00.
In December 2022, a credit agreement for up to US$200,000,000 was signed
between Amarillo Mineracao do Brasil Ltd and The Bank of Nova Scotia and BBVA
Securities Inc, with Hochschild Mining PLC as guarantor. The medium-term
facility can be withdrawn until December 2024, and is payable in equal
quarterly instalments from February 2025 through November 2027, with an
interest rate of 3-month SOFR plus a spread of 2.05%. US$60,000,000 was
withdrawn on 9 August 2023, US$65,000,000 was withdrawn in the first half of
2024, and the remaining balance of US$75,000,000 was undrawn as at 30 June
2024. Financial covenants under the agreement are: (i) Consolidated Leverage
Ratio <= 3 and (ii) Consolidated Interest Coverage Ratio ≥ 4.00.
3 From January to May 2023 Minera Santa Cruz signed 4 stock market
promissory notes with Max Capital, a finance advisory company located in
Argentina, amounting to US$3,907,000. The expiration date of the notes is from
July 2023 to August 2024. During the year 2023, the Group repaid the balance
as at 31 December 2022 of US$14,500,000 plus US$1,907,000. The balance as at
31 December 2023 is US$2,000,000. During the first half of 2024, the Group
repaid US$1,000,000.
The carrying amount of the pre-shipment and short-term loans approximates
their fair value. The carrying amount and fair value of the medium-term loans
are as follows:
Carrying amount Fair value
As at 30 June 2024 As at 31 As at 30 June 2024 As at
(Unaudited) December 2023 US$000 (Unaudited) 31
US$000
US$000 December 2023 US$000
Bank loans 355,358 341,086 331,519 335,899
Total 355,358 341,086 331,519 335,899
20 Provisions
As at 30 June 2024 (Unaudited) As at 31 December 2023
Non-current Current Non-current Current
US$000
US$000
US$000
US$000
Provision for mine closure1 147,188 11,166 143,660 19,056
Workers' profit sharing2 - 2,155 - 3,426
Provision for contingencies(3) 6,689 3,278 3,712 4,259
Provision for long term incentive plan (LTIP)(4) 2,233 3,280 - -
Total 156,110 19,879 147,372 26,741
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 inflation as at 30 June 2024 and
31 December 2023 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
pre-tax real discount rate used was 1.91% (December 2023: 1.25%). Movement
in the provision mainly relates to an increase resulting from the change in
estimate of US$8,863,000 due to the new activities performed in the mines
(mainly in the mine unit Inmaculada US$6,619,000 and San José US$2,299,000)
and related to the unwind of discount on mine rehabilitation of US$1,494,000,
net of payments of US$3,414,000, and the decrease related to change in
discount rate of US$1,617,000. The mine closure provision for the Azuca
project and the Arcata unit was reclassified to liabilities directly
associated with assets held for sale (see note 18).
A change in any of the following key assumptions used to determine the
provision would have the following impact:
US$000
Closure costs (increase by 10%) increase of provision 16,804
Discount rate (increase by 0.5%) (decrease of provision) (10,254)
2 Corresponds to worker's profit sharing in Compania Minera Ares.
3 Mainly corresponds to a labour contingency in Minera Santa Cruz of
US$6,689,000.
4 Corresponds to the LTIP 2022 of US$3,280,000, LTIP 2023 of US$1,720,000 and
LTIP 2024 of US$513,000. On 22 May 2024, beneficiaries of LTIPs were
communicated of a change in the payment mechanism resulting in a
modification of the LTIP from an equity settled to a cash settled transaction.
This resulted in a recognition of liability based on the fair valuation of the
cash settled LTIPs as at the date of modification and reversal of the
share-based payment reserves, the incremental fair value of the cash-settled
award over that of the equity-settled award as at the modification date
amounting to US$405,000 is expensed to the profit and loss. The liability is
remeasured as of 30 June 2024.
21 Equity
Share capital
The movement in share capital of the Company from 31 December 2022 to 30 June
2024 is as follows:
Number of ordinary shares Share capital US$000
Shares issued as at 31 December 2022 513,875,563 9,061
Issuance of shares for bonus payment on 12 May 2023 582,869 7
Shares issued as at 31 December 2023 514,458,432 9,068
Shares issued as at 30 June 2024 514,458,432 9,068
22 Dividends paid and declared
Dividends declared and paid to non-controlling interests in the six months
ended 30 June 2024 were US$388,000 (2023: US$326,000).
There were no final or interim dividends in respect of the six months ended 30
June 2024 and year 2023.
23 Related party transactions
There were no significant transactions with related parties during the six
months period ended 30 June 2024.
24 Notes to the statement of cash flows
Six months ended 30 June
2024 2023
(Unaudited) (Unaudited)
US$000
US$000
Reconciliation of profit for the period to net cash generated from operating
activities
Profit/(loss) for the period 51,486 (52,685)
Adjustments to reconcile Group profit to net cash inflows from operating
activities
Depreciation 69,643 72,513
Amortisation of intangibles 424 416
Impairment of non-financial assets 13,732 59,719
Write-off of non-financial assets, net 176 1,684
Impairment of an associate - 7,183
Share of loss of an associate 668 785
(Gain)/loss on sale of property, plant and equipment (417) 409
(Decrease)/increase of provision for mine closure (116) 1,315
Loss from changes in the fair value of financial assets at fair value through - 292
profit and loss
Finance income (7,263) (2,628)
Finance costs 15,179 11,010
Income tax expense 17,874 (13,430)
Other (2,662) 12,924
Increase/(decrease) of cash flows from operations due to changes in assets and
liabilities
Trade and other receivables (22,046) (4,177)
Income tax receivable (1,120) (1,174)
Other financial assets and liabilities 1,680 -
Inventories (23,782) 7,347
Trade and other payables 2,166 (1,457)
Provisions 3,714 (236)
Cash generated from operations 119,336 99,810
Profit by operation¹
(Segment report reconciliation) as at 30 June 2024:
Group (US$000) Inmaculada San Jose Mara Rosa Consolidation adjustment and others Total/HOC
Revenue 234,079 132,174 25,550 (63) 391,740
Cost of sales (pre consolidation) (123,496) (93,279) (32,631) 1,266 (248,140)
Consolidation adjustment 903 - 363 (1,266) -
Cost of sales (post consolidation) (122,593) (93,279) (32,268) - (248,140)
Production cost excluding depreciation (75,884) (72,522) (46,444) - (194,850)
Depreciation in production cost (42,839) (23,472) (2,301) - (68,612)
Workers profit sharing (853) - - - (853)
Other items - (1,062) - - (1,062)
Change in inventories (3,017) 3,777 16,477 - 17,237
Gross profit 110,583 38,895 (7,081) 1,203 143,600
Administrative expenses - - - (23,649) (23,649)
Exploration expenses - - - (13,509) (13,509)
Selling expenses (286) (7,042) (273) (14) (7,615)
Other expenses, net - - - (2,379) (2,379)
Operating profit/(loss) before impairment 110,297 31,853 (7,354) (38,348) 96,448
Impairment and write-off of non-financial assets, net - - - (13,908) (13,908)
Share of post-tax losses from associate - - - (668) (668)
Finance income - 7,263 7,263
Finance costs - - - (15,179) (15,179)
Foreign exchange loss - - - (4,596) (4,596)
Profit/(loss) from continuing operations before 110,297 31,853 (7,354) (65,436) 69,360
income tax
Income tax - - - (17,874) (17,874)
Profit/(loss) for the period from continuing operations 110,297 31,853 (7,354) (83,310) 51,486
1 On a post-exceptional basis.
SHAREHOLDER INFORMATION
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 EMAIL
shareholderenquiries@linkgroup.co.uk
POST
Link Group, 10(th) Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL
BY TELEPHONE
(+44 (0)) 371 664 0300 (Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 9am - 5:30pm, Monday to
Friday excluding public holidays in England and Wales)
17 Cavendish Square
London
W1G 0PH
Registered in England and Wales with Company Number 5777693
1 (#_ftnref1) Revenue presented in the financial statements is disclosed as
net revenue and is calculated as gross revenue less commercial discounts plus
services revenue.
(#_ftnref2) (2)Please see the Financial Review pages 10-16 for a definition
and calculation of Adjusted EBITDA, net debt and AISC
(#_ftnref3) (3)Net debt to EBITDA is a non-GAAP measure and is calculated as
net debt divided by Adjusted EBITDA over the preceding 12 month period. H2
2023 Adjusted EBITDA was $174.9 million.
(#_ftnref4) 4All equivalent figures calculated using the Company's 2023
average gold/silver ratio of 83:1.
(#_ftnref5) 5Please see the Financial Review on page 13 for the AISC
calculation and reconciliation.
6 (#_ftnref6) Calculated as total number of accidents per million labour
hours.
(( 7 (#_ftnref7) ))Calculated as total number of days lost per million labour
hours.
8 (#_ftnref8) The ECO Score is an internally designed Key Performance
Indicator measuring environmental performance in one number and encompassing
numerous fronts including management of waste water, outcome of regulatory
inspections and sound environmental practices relating to water consumption
and the recycling of materials.
9 (#_ftnref9) Includes revenue from services
10 (#_ftnref10) Unit cost per tonne is calculated by dividing mine and
treatment production costs (excluding depreciation) by extracted and treated
tonnage respectively
11 (#_ftnref11) Cash costs are calculated to include cost of sales,
commercial discounts and selling expenses items less depreciation included in
cost of sales
(( 12 (#_ftnref12) ))Does not include unallocated fixed costs accumulated
during operational stoppages and reduced capacity
13 (#_ftnref13) Includes commercial discounts from the sales of concentrate
and commercial discounts from the sale of dore
(( 14 (#_ftnref14) ))Does not include unallocated fixed costs accumulated
during operational stoppages and reduced capacity
15 (#_ftnref15) Includes commercial discounts from the sales of concentrate
and commercial discounts from the sale of dore
16 (#_ftnref16) Calculated using a gold/silver ratio of 83:1.
17 (#_ftnref17) Includes post-commercial production and costs
18 (#_ftnref18) Other items include costs incurred before the declaration of
commercial production in Mara Rosa and the gain in San Jose resulting from the
government's export incentive programme
19 (#_ftnref19) Royalties arising from revised royalty tax schemes
introduced in 2011 and included in income tax line
20 (#_ftnref20) Calculated using a gold silver ratio of 83:1
21 (#_ftnref21) Royalties arising from revised royalty tax schemes
introduced in 2011 and included in income tax line
22 (#_ftnref22) Calculated using a gold silver ratio of 83:1
23 (#_ftnref23) Adjusted EBITDA has been presented before the effect of
significant non-cash (income)/expenses related to changes in mine closure
provisions and the write-off of property, plant and equipment
24 (#_ftnref24) Includes pre-shipment loans and short term interest payables
25 (#_ftnref25) Net debt to EBITDA is a non-GAAP measure and is calculated
as net debt divided by Adjusted EBITDA over the preceding 12 month period.H2
2023 Adjusted EBITDA was $174.9 million
26 (#_ftnref26) Includes 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
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. END IR EVLBLZVLXBBQRecent news on Hochschild Mining
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