Rights Issue Announcement

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, RUSSIA OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE. PLEASE SEE THE IMPORTANT NOTICE IN THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND SHOULD NOT BE RELIED UPON IN CONNECTION WITH ANY OFFER OR COMMITMENT WHATSOEVER IN ANY JURISDICTION.  ANY OFFER TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES PURSUANT TO THE PROPOSED RIGHTS ISSUE REFERRED TO IN THIS ANNOUNCEMENT WILL BE MADE, AND ANY INVESTOR SHOULD MAKE THEIR INVESTMENT DECISION SOLELY ON THE BASIS OF THE INFORMATION CONTAINED IN THE PROSPECTUS TO BE PUBLISHED BY HOCHSCHILD MINING PLC IN CONNECTION WITH THE RIGHTS ISSUE. COPIES OF THE PROSPECTUS WILL, FOLLOWING PUBLICATION, BE AVAILABLE FROM THE REGISTERED OFFICE OF HOCHSCHILD MINING PLC AND ON ITS WEBSITE AT WWW.HOCHSCHILDMINING.COM.

For immediate release

15 October 2015

Hochschild Mining plc

Proposed £64.8 million rights issue

The Board of Hochschild Mining plc ("Hochschild Mining") today announces the launch of a rights issue to raise approximately £64.8 million in proceeds (£61.1 million net of expenses).

Hochschild Mining is one of the world's leading precious metal groups, focusing on the exploration, mining, processing and sale of silver and gold with more than 50 years of experience operating in the Americas.

Highlights

·     Whilst to date the Group has managed to execute its strategy within the constraints of its existing resources, the proceeds from the Rights Issue will substantially increase the Group's financial flexibility going forward.

·     In accordance with the ongoing focused management of the Group's financial position, the net proceeds of the Rights Issue will strengthen the balance sheet and provide the flexibility necessary to enable the Company to continue to implement its strategy to increase long-term value for shareholders.

Eduardo Hochschild, Chairman of Hochschild Mining plc, said:

"This fundraising comes at an important time for Hochschild, following the successful ramp-up of production at the Inmaculada mine and the commencement of commercial production in August 2015. We remain proud of our initiatives over the past couple of years, including our cash flow optimisation programme, through which, despite the challenging market environment, we successfully preserved capital, achieved operational efficiencies and focused on delivering substantial value through the ongoing construction of Inmaculada.  We are looking ahead to the continued success of our strategy which we believe will generate sustainable long-term value for Hochschild shareholders."

 

Ignacio Bustamante, Chief Executive Officer of Hochschild Mining, said:

"The rights issue will provide Hochschild with financial flexibility to begin the process of strengthening our balance sheet. With the additional comfort of our new flagship Inmaculada mine performing in line with expectations and the other operations continuing to be on track in 2015, we believe we will be in a good position to withstand any further price volatility and capitalise on our ongoing growth strategy at Inmaculada and our other operations."

Reasons for the Rights Issue and Use of Proceeds

·     Whilst to date the Group has managed to execute its strategy within the constraints of its existing resources, the proceeds from the Rights Issue will substantially increase the Group's financial flexibility going forward.

·     In accordance with the ongoing focused management of the Group's financial position, the net proceeds of the Rights Issue will strengthen the balance sheet and provide the flexibility necessary to enable the Company to continue to implement its strategy to increase long-term value for shareholders.

·     Not less than 50% of the net proceeds of the Rights Issue will be applied to repay outstanding bank indebtedness. The balance will be held as cash on deposit to ensure certainty of access to the funds and liquidity in light of the prevailing price volatility in precious metal prices.

Details of the Rights Issue

·     Hochschild Mining is proposing to raise £64.8 million (£61.1 million net of expenses) by way of a 3 for 8 Rights Issue of 137,883,138 New Ordinary Shares at a price of 47.00 pence per New Ordinary Share.

·     The Issue Price represents:

o  a 47.6% discount to the Closing Price of 89.75 pence per Existing Share on 14 October 2015 (being the last trading day prior to the announcement of the Rights Issue); and

o  a 39.8% discount to the TERP of 78.09 pence per Existing Share calculated by reference to the Closing Price on 14 October 2015.

·     Hochschild Mining has received an irrevocable undertaking from Inversiones ASPI S.A. (the company through which Mr. Eduardo Hochschild will exercise his rights to subscribe for the New Ordinary Shares) to subscribe for 68,887,508 New Ordinary Shares (the "Irrevocable Undertaking"). Mr. Eduardo Hochschild intends to retain a controlling shareholding in the Company for the foreseeable future and has agreed to a lock-up undertaking with respect to his shares that will be in force for 180 days after the completion of the proposed rights issue.

·     Other than the New Ordinary Shares which Mr. Eduardo Hochschild has agreed to subscribe for under the Rights Issue pursuant to the Irrevocable Undertaking, the Rights Issue is fully underwritten by J.P. Morgan Cazenove, BofA Merrill Lynch and RBC Capital Markets.

This summary should be read in conjunction with the full text of this announcement and its appendices (which include a summary of the expected timetable of events). Defined terms used herein have the meanings given to them in Appendix 2.

 

 

 

A conference call will be held at 9.00pm (London time) on Thursday 15 October 2015 for analysts and investors. 

Dial in details as follows:

International Dial in:    +44 (0)20 3139 4830

UK Toll-Free Number: +44(0)808 237 0030

Pin: 34439782#

A recording of the conference call will be available for one week following its conclusion, accessible from the following telephone number:

International: +44 (0)20 3426 2807

UK Toll Free: +44(0)808 237 0026

Pin: 663230#

 

Enquiries:

Hochschild Mining plc Charles Gordon Head of Investor Relations	+44 (0)20 3714 9040
Sponsor and Joint Bookrunner J.P. Morgan Cazenove    Ben Davies/Virginia Khoo/Laurene Danon	+44(0)20 7742 4000
Joint Bookrunner BofA Merrill Lynch Omar Davis/Edward Peel/Matthew Blawat	+44(0)20 7628 1000
Joint Bookrunner RBC Capital Markets Tristan Lovegrove/Duncan Smith/Ema Jakasovic	+44 (0)20 7653 4000

Notes to Editors:

About Hochschild Mining plc

Hochschild Mining is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild Mining has over fifty years' experience in the mining of precious metal epithermal vein deposits and currently operates three underground epithermal vein mines, two located in southern Peru and one in southern Argentina. Hochschild Mining also has numerous long-term projects throughout the Americas.

 

IMPORTANT NOTICE

This announcement has been issued by and is the sole responsibility of Hochschild Mining plc (the "Company"). A copy of the prospectus containing details of the rights issue (the "Prospectus") when published will be available from the registered office of the Company and on the Company's website at www.hochschildmining.com provided that the Prospectus will not, subject to certain exceptions, be available (whether through the website or otherwise) to Shareholders in the United States or any Excluded Territories.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

The Prospectus will give further details of the New Ordinary Shares, the Nil Paid Rights and the Fully Paid Rights being offered pursuant to the Rights Issue. This announcement is not a prospectus but an advertisement and investors should not acquire any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares referred to in this announcement except on the basis of the information contained in the Prospectus. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The information in this announcement is subject to change.  Any purchase of Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in the proposed Rights Issue should be made solely on the basis of the information contained in the Rights Issue Prospectus.

J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove"), Merrill Lynch International and RBC Europe Limited, each of which are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, are acting for the Company and no one else in connection with the Rights Issue, and will not regard any other person as their respective clients in relation to the Rights Issue and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Rights Issue or any matters referred to in this announcement or any transaction, arrangement or other matter referred to herein.

Apart from the responsibilities and liabilities, if any, which may be imposed on J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited by FSMA or the regulatory regime established thereunder or otherwise under law, J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited do not accept any responsibility or liability whatsoever for the contents of this announcement, and no representation or warranty, express or implied, is made by J.P. Morgan Cazenove, Merrill Lynch International or RBC Europe Limited in relation to the contents of this announcement (or whether any information has been omitted from this announcement), including its accuracy, completeness or verification or regarding the legality of any investment in the Nil Paid Rights, the Fully Paid Rights or the New Ordinary Shares or any other information relating to the Company, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection herewith, by any person under the laws applicable to such person or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares, the Rights Issue, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. To the fullest extent permissible J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited accordingly disclaim all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement.

In connection with the Rights Issue, J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited and any of their affiliates, may take up a portion of the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in the Rights Issue as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such Nil Paid Rights, Fully Paid Rights or New Ordinary Shares and other securities of the Company or related investments in connection with the Offering or otherwise.  Accordingly, references in the Prospectus, once published, to the Nil Paid Rights, Fully Paid Rights or New Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited and any of their affiliates acting as investors for their own accounts.  J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, Nil Paid Rights, Fully Paid Rights or New Ordinary Shares or to take up any entitlements to Nil Paid Rights in any jurisdiction. This announcement cannot be relied upon for any investment contract or decision. The information contained in this announcement is not for release, publication or distribution to persons in the United States, Australia, Japan, New Zealand, the Republic of South Africa or Russia and should not be distributed, forwarded to or transmitted in or into any jurisdiction where to do so might constitute a violation of the securities laws or regulations of such jurisdiction. There will be no public offer of Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in the United States, Australia, Japan, New Zealand, the Republic of South Africa or Russia or any other Excluded Territory. The distribution of this announcement and/or the Prospectus and/or the Provisional Allotment Letter and/or the transfer of Nil Paid Rights, Fully Paid Rights and/or New Ordinary Shares into jurisdictions other than the United Kingdom may be restricted by law, and, therefore, persons into whose possession this announcement and/or the Prospectus and/or the Provisional Allotment Letter comes should inform themselves about and observe any such restrictions. Any failure to comply with any such restrictions may constitute a violation of the securities laws of such jurisdiction. In particular, subject to certain exceptions, the information contained herein, the Prospectus and the Provisional Allotment Letter should not be distributed, forwarded or transmitted in or into the United States, Australia, Japan, New Zealand, the Republic of South Africa or Russia or any other Excluded Territory.

This announcement does not constitute or form part of an offer or solicitation to purchase or subscribe for securities of the Company in the United States, Australia, Japan, New Zealand, the Republic of South Africa or Russia or any other Excluded Territory. The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or under any securities laws of any state or other  jurisdiction of the United States and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except  pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.  The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters have not been approved or disapproved by the SEC, any state securities  commission  in  the United  States or any other U.S. regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters or the accuracy or adequacy of the Prospectus. Any representation to the contrary is a criminal offence in the United States.

Accordingly, subject to certain exceptions, the Rights Issue is not being made in the United States and neither this announcement, the Prospectus nor the Provisional Allotment Letters constitute or will constitute an offer, or an invitation to apply for, or an offer or an invitation to subscribe for or acquire any Nil Paid Rights, Fully Paid Rights or New Ordinary Shares in the United States. Subject to certain limited exceptions, Provisional Allotment Letters have not been, and will not be, sent to, and Nil Paid Rights have not been, and will not be, credited to the CREST account of, any Qualifying Shareholder with a registered address in or that is located in the United States.

This announcement does not constitute a recommendation concerning the Rights Issue. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each Shareholder or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

This announcement contains "forward-looking statements" with respect to the Company's plans and its current goals and expectations relating to its future financial condition, performance, results of operations, strategic initiatives and objectives, including in relation to the Rights Issue. Generally, words such as "may", "could", "will," "expect," "intend," "estimate," "anticipate," "aim," "outlook," "pro forma," "believe," "plan," "seek," "continue" or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company's control, and which may cause actual results to differ materially from those expressed in the statements contained in this announcement. These risks include, but are not limited to, those related to: the price of and changes in demand for silver and gold; the amount of ore that the Company can extract from its projects and related production costs, as well as the Company's ability to replenish ore reserves and resources; the Company's ability to achieve expected cost savings; the outcome of litigation and disputes; the Company's relations and agreements with local communities; risks related to health, safety, environmental and other applicable laws and relevant permitting requirements; risks relating to labour relations; risks relating to economic, social and political instability in Peru and the Company's other markets; and other risk factors identified in the Prospectus.  The Company will update this announcement as required by applicable law, including the Prospectus Rules, the Listing Rules, the Disclosure and Transparency Rules, and any other applicable law or regulations, but otherwise expressly disclaims any obligation or undertaking to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

Each of J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited and their respective affiliates expressly disclaim any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.

 

 

Hochschild Mining plc

Proposed 3 for 8 Rights Issue of 137,883,138 New Ordinary Shares at 47.00 pence per New Ordinary Share

1.   Introduction

The Board of Hochschild Mining plc today announces that Hochschild Mining is proposing to raise £64.8 million (£61.1 million net of expenses) by way of a 3 for 8 Rights Issue of 137,883,138 New Ordinary Shares at a price of 47.00 pence per New Ordinary Share. The Issue Price represents a 47.6% discount to the Closing Price of 89.75 pence per Existing Share on 14 October 2015 (being the last trading day prior to the announcement of the Rights Issue) and a 39.8% discount to the TERP of 78.09 pence per Existing Share calculated by reference to the Closing Price on 14 October 2015.

Hochschild Mining has received an irrevocable undertaking from its largest shareholder, Mr. Eduardo Hochschild, to subscribe for 68,887,508 New Ordinary Shares (the "Irrevocable Undertaking"). Mr. Eduardo Hochschild intends to retain a controlling shareholding in the Company for the foreseeable future and has agreed to a lock-up undertaking with respect to his shares that will be in force for 180 days after the completion of the proposed rights issue.

Other than the New Ordinary Shares which Mr. Eduardo Hochschild has agreed to subscribe for under the Rights Issue pursuant to the Irrevocable Undertaking, the Rights Issue is fully underwritten by J.P. Morgan Cazenove, BofA Merrill Lynch and RBC Capital Markets.

2.   Background to and Reasons for the Rights Issue

2.1  Background

Whilst to date the Group has managed to execute its strategy within the constraints of its existing resources, the proceeds from the Rights Issue will substantially increase the Group's financial flexibility going forward.

The Group's business is directly affected by volatility in silver and gold prices. In recent years the mining industry has had to adjust to a broader decline in precious metals prices by significantly reducing costs, capital expenditure and expenses and focusing on higher quality assets. In April 2013, the Company responded to these conditions by commencing a cash flow optimisation programme aimed at conserving cash to mitigate the impact of lower prices, which has delivered targeted cost savings to date of approximately US$300 million.

The Group continues to make substantial progress in improving its cost position. Initiatives being pursued encompass all business areas, including operations, administration and exploration. At the operational level, the Company has achieved material  improvements though labour optimisation, efficiencies in supply chain management and  renegotiation of commercial terms as well as significant working capital improvements.  In order to reduce capital expenditure and ensure that the Group's mines can continue to deliver profitable ounces in 2015, the mine plans of the Arcata and Pallancata operations in Peru have been optimised, allowing the operations to maximise cash generation by focusing on accessible ore areas requiring less capital deployment, lowering throughput and increasing cut-off grades which reflect the weaker metal price environment. Whilst exploration-led growth remains an important part of the Group's long term strategy, the cash flow optimisation programme has led to a significant reduction of the level of greenfield exploration and appraisal of acquisition and joint venture opportunities until a sustained improvement in gold and silver prices.

Throughout 2013 and 2014, the Company has actively managed its financial position, including raising proceeds from an offering of senior notes to fund the acquisition of International Minerals Corporation ("IMZ"). Proceeds were also raised through medium-term credit facilities and the refinancing of its convertible bonds to fund the development of a new world-class mine at Inmaculada, which commenced commercial production in August 2015. The Company's balance sheet has been further strengthened by ongoing implementation of management's cash flow optimisation programme. The Company has also taken advantage of short periods of precious metal price improvement to hedge almost 44% and 41% of 2015 and 2016 production, respectively, in order to improve cash flow certainty during these years. As a result of these initiatives, and despite the backdrop of the challenging market environment, management has successfully preserved capital, optimised cash flow and focused on delivering substantial value through the development of, and subsequent commencement of production at, the Inmaculada mine. However, after careful deliberation, the Board and management feel it is a prudent time to reassess the capital structure of the Group with a view to reducing the Group's overall net debt level so as to strengthen the Group's balance sheet.  The Board is of the view that the Rights Issue provides the best opportunity for the Group to both retain strategic flexibility and to preserve and grow long-term shareholder value.

 

2.2  Strategy

The Group has been focusing on the development and construction of the Inmaculada mine in recent years and successfully commenced commercial production at the mine in August 2015. Approximately 39.5 thousand ounces of gold and 970 thousand ounces of silver have been produced up to 30 September 2015, a portion of which was produced during the ramp-up and commissioning phase in June 2015. The mine is expected to produce between 6 and 7 million silver equivalent ounces in 2015 and between 11 and 12 million silver equivalent ounces in 2016.

Inmaculada is a world class gold and silver project which is expected to be the Group's lowest cost operation with all-in sustaining costs of US$759 per ounce of gold equivalent and US$10.40 per ounce of silver equivalent over an initial projected 6.3 year reserve mine life. Inmaculada will contribute to an increase in the Group's attributable production from 20.5 million silver-equivalent ounces in 2013 to a projected 29.0 million silver equivalent ounces in 2016. In addition, Inmaculada will also drive a reduction in Group-wide all-in sustaining costs to between US$13 and US$14 per silver-equivalent ounce in 2015 (from US$16.90 per silver-equivalent ounce in 2014). The Company expects its liquidity position and financial leverage levels to progressively improve as its Inmaculada mine delivers significant operating cash flow in the second half of 2015.

In addition, the Group is also focused on the near to medium term objective of developing its recent discovery of a significant new high grade, wide vein at the Pallancata mine in south west Peru, which was announced in September 2015. Management expects the new east-west vein, called the Pablo vein, to lead to a significant expansion of the mine's mineral resources and to improve the operational outlook for the Pallancata mine. The Group is currently conducting a comprehensive exploration and infill drilling programme through to the end of November 2015 to better understand the potential of the new discovery and to achieve an initial inferred resource. As the Pablo vein is easily accessible through the existing infrastructure at the Pallancata mine and the mineral mined from the Pablo vein can be processed using the excess plant capacity at Selene, it is expected that limited capital expenditure will be required to bring the Pablo vein into production.

3.   Use of Proceeds

In accordance with the ongoing focused management of the Group's financial position, the net proceeds of the Rights Issue will strengthen the balance sheet and provide the flexibility necessary to enable the Company to continue to continue to implement its strategy to increase long-term value for shareholders.

Not less than 50% of the net proceeds of the Rights Issue will be applied to repay outstanding bank indebtedness. The balance will be held as cash on deposit to ensure certainty of access to the funds and liquidity in light of the prevailing price volatility in precious metal prices.

4.   Current Trading and Prospects

For the three months ended 30 September 2015, the Group produced 7.6 million attributable silver equivalent ounces (assuming the 60:1 gold/silver ratio) consisting of 4.1 million ounces of silver and 57.0 thousand ounces of gold, which includes 36.1 thousand ounces of gold and 875 thousand ounces of silver from the new Inmaculada mine. For the period from 1 January 2015 to 30 September, the Group has produced 16.3 million attributable silver equivalent ounces (assuming the average gold/silver ratio for the period) consisting of 10.4 million ounces of silver and 97.6 thousand ounces of gold. The Group is therefore on track to achieve its 2015 production target of 24.0 million attributable silver equivalent ounces (assuming the 60:1 gold/silver ratio). The Group expects its all-in sustaining cost per silver equivalent ounce to be reduced from US$16.9 in the year ended 31 December 2014 to an estimated US$13 to US$14 for the year ending 31 December 2015. All-in sustaining costs in the month of September 2015 is expected to be below $10 per silver equivalent ounce at Inmaculada. Management estimates the total cash held by the Group to be approximately US$75 million as at 30 September 2015.

5.   Dividends and Dividend Policy

The Directors did not recommend a dividend in respect of the years ended 31 December 2013 and 31 December 2014. Future decisions regarding the dividend will be based on a number of factors, including market conditions, distributable reserves, liquidity, operational performance and the impact of project capital expenditure.

Since the Company is the holding company for the Group, its stand-alone income and its ability to pay dividends depends in part on the receipt of dividends and distributions from other members of the Group. The payment of dividends by these subsidiaries and associated companies is contingent upon the sufficiency of earnings, cash flows and distributable reserves.

Future dividend payments will also be adjusted to take account of the indicative bonus factor of the Rights Issue.

6.   Summary of the Principal Terms of the Rights Issue

The Company is proposing to raise approximately £61.1 million (net of expenses) by way of the Rights Issue of 137,883,138 New Ordinary Shares. The Issue Price of 47.00 pence per New Ordinary Share, which is payable in full on acceptance by not later than 11.00 a.m. on 3 November 2015, represents a 47.6% discount to the Closing Price of 89.75 pence per Existing Share on 14 October 2015 (being the last trading day prior to the announcement of the Rights Issue) and a 39.8% discount to the TERP of 78.09 pence per Existing Share calculated by reference to the Closing Price on 14 October 2015.

The Company proposes to offer New Ordinary Shares by way of the Rights Issue to Qualifying Shareholders on the following basis:

3 New Ordinary Shares for every 8 Existing Shares

held by Qualifying Shareholders on the Record Date and so in proportion to any other number of Existing Shares then held, and otherwise on the terms and conditions as set out in this document and, in the case of Qualifying Non-CREST Shareholders only, the Provisional Allotment Letter.

Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Rights Issue. New Ordinary Shares representing fractional entitlements will not be allotted to Qualifying Shareholders and, where necessary, entitlements to New Ordinary Shares will be rounded down to the nearest whole number. Such fractional entitlements will be aggregated and, if possible, sold in the market for the benefit of the Company.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Shares, including the right to all future dividends or other distributions made, paid or declared after the date of issue of the New Ordinary Shares.

The Rights Issue is conditional upon:

·     Admission becoming effective by not later than 8.00 a.m. on 20 October 2015 (or such later time and/or date as the Company and the Underwriters may agree (being not later than 4 November 2015));

·     the execution by the Company's largest shareholder, Mr. Eduardo Hochschild, of an irrevocable undertaking to subscribe for 68,887,508 New Ordinary Shares; and

·     the Underwriting Agreement having become unconditional in all respects (save for conditions relating to Admission) and not having been terminated in accordance with its terms prior to Admission.

Other than the New Ordinary Shares which Mr. Eduardo Hochschild has agreed to subscribe for under the Rights Issue pursuant to the Irrevocable Undertaking, the Rights Issue is fully underwritten on the basis set out in the Underwriting Agreement. The Underwriters have agreed under the terms of the Underwriting Agreement to procure subscribers for, or failing which to itself subscribe for, New Ordinary Shares not taken up in the Rights Issue at the Issue Price.

Mr Eduardo Hochschild intends to retain a controlling shareholding in the Company for the foreseeable future and, accordingly, both Pelham Investment Corporation and Inversiones ASPI S.A. (the companies through which Mr Hochschild will hold his ordinary shares in the Company upon completion of the Rights Issue) have agreed to a lock-up undertaking with respect to the ordinary shares in the Company that will be in force for 180 days after completion of the Rights Issue, subject to customary exceptions and waiver by the Joint Bookrunners.

If the Underwriting Agreement is not declared or does not become unconditional in all respects or if it is terminated in accordance with its terms, the Rights Issue will be revoked and will not proceed. Revocation cannot occur after Admission, and therefore if Admission has occurred by 8.00 a.m. on 20 October 2015 (or such later time and/or date as the Company and the Underwriters agree), the Rights Issue will proceed.

Application will be made to the UK Listing Authority for the New Ordinary Shares to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on its main market for listed securities. It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence on the London Stock Exchange, nil paid, at 8.00 a.m. on 20 October 2015.

The latest time and date for acceptance and payment in full of the New Ordinary Shares will be 11.00 a.m. on 3 November 2015.

 

APPENDIX 1

Each of the times and dates in the table below is indicative only and may be subject to change. Please read the notes to this timetable set out below.

	2015
Record Date for entitlements under the Rights Issue	close of business on 13 October
Announcement of Rights Issue	15 October
Publication of Prospectus	15 October
Provisional Allotment Letters despatched (to Qualifying Non-CREST Shareholders only)	15 October
Admission and dealings in New Ordinary Shares, nil paid, commence on the London Stock Exchange	8.00 a.m. on 20 October
Shares marked "ex-rights" by the London Stock Exchange	8.00 a.m. on 20 October
Nil Paid Rights credited to stock accounts in CREST (Qualifying CREST Shareholders only)	as soon as practicable after 8.00 a.m. on 20 October
Nil Paid Rights and Fully Paid Rights enabled in CREST	as soon as practicable after 8.00 a.m. on 20 October
Recommended latest time for requesting withdrawal of Nil Paid Rights or Fully Paid Rights from CREST (i.e. if your Nil Paid Rights or Fully Paid Rights are in CREST and you wish to convert them into certificated form)	4.30 p.m. on 28 October
Latest time and date for depositing renounced Provisional Allotment Letters, nil paid or fully paid, into CREST or for dematerialising Nil Paid Rights or Fully Paid Rights into a CREST stock account (i.e. if your Nil Paid Rights or Fully Paid Rights are represented by a Provisional Allotment Letter and you wish to convert them to uncertificated form)	3.00 p.m. on 29 October
Latest time and date for splitting Provisional Allotment Letters, nil paid or fully paid	3.00 p.m. on 30 October
Latest time and date for acceptance, payment in full and registration of renounced Provisional Allotment Letters	11.00 a.m. on 3 November
Results of Rights Issue to be announced	by 8.00 a.m. on 4 November
Dealings in New Ordinary Shares taken up pursuant to the Rights Issue, fully paid, commence on the London Stock Exchange	8.00 a.m. on 4 November
New Ordinary Shares credited to CREST stock accounts (uncertificated holders only)	as soon as possible after 8.00 a.m. on 4 November
Expected despatch of definitive share certificates for the New Ordinary Shares in certificated form	by not later than 11 November

Notes:

(i)   Each of the times and dates set out in the above timetable and mentioned in this announcement, the Provisional Allotment Letter and in any other document issued in connection with the Rights Issue is subject to change by the Company (with the agreement of, in certain circumstances, the Sponsor), in which event details of the new times and dates will be notified to the FCA and, where appropriate, to Shareholders.

(ii)   Any reference to a time in this announcement is to London time, unless otherwise specified.

(iii)   The ability to participate in the Rights Issue is subject to certain restrictions relating to Shareholders with registered addresses or located or resident in countries outside the UK, details of which are set out in the Prospectus.

 

 

 

APPENDIX 2

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

"Admission"	the admission of the New Ordinary Shares, nil paid and fully paid, to the premium listing segment of the Official List and to trading on the London Stock Exchange's main market for listed securities
"Articles"	the articles of association of the Company from time to time
"Board"	the board of directors of the Company
"BofA Merrill Lynch"	Merrill Lynch International
"Closing Price"	the closing, middle market quotation of an Ordinary Share as published in the Daily Official List on the relevant day
"Company"	Hochschild Mining plc
"CREST"	the relevant system (as defined in the Uncertificated Securities Regulations) for the paperless settlement of trades and the holding of securities in uncertificated form operated by Euroclear in accordance with the Uncertificated Securities Regulations
"CREST Manual"	the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedure, CREST Glossary of Terms and CREST Terms and Conditions (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996 and as amended since)
"Directors"	the directors of the Company and "Director" shall mean any one of them
"Disclosure and Transparency Rules"	the disclosure rules and transparency rules issued by the FCA acting in its capacity as the competent authority pursuant to s73A of FSMA
"Hochschild Mining"	the Company
"Euroclear"	Euroclear UK & Ireland Limited, as the operator of CREST
"Excluded Territories"	the United States, Australia, Japan, New Zealand, the Republic of South Africa, Russia and any other jurisdiction where the extension or availability of the Rights Issue (and any other transaction contemplated thereby) would breach any applicable law (and "Excluded Territory" means any one of them)
"Existing Shares"	the Shares in issue at the date of the Prospectus
"FCA"	the Financial Conduct Authority
"FSMA" "Fully Paid Rights"	Financial Services and Markets Act 2000, as amended rights to acquire New Ordinary Shares, fully paid
"Group"	the Company and its subsidiaries and subsidiary undertakings as at the date of this document and from time to time
"IFRS"	International Financial Reporting Standards, as adopted by the European Union
"Issue Price"	47.00 pence, being the price at which New Ordinary Shares are to be issued
"Joint Bookrunners"	J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited
"J.P. Morgan Cazenove"	J.P. Morgan Securities plc
"Listing Rules"	the listing rules of the FCA made under Part VI (as set out in the FCA Handbook, as amended) of the FSMA
"London Stock Exchange"	London Stock Exchange plc
"New Ordinary Shares"	the new Shares to be issued pursuant to the Rights Issue
"Nil Paid Rights"	rights to acquire New Ordinary Shares, nil paid
"Official List"	the Official List of the FCA
"Overseas Shareholders"	Shareholders who are resident in, or who are citizens of, or who have registered addresses in, territories other than the United Kingdom
"PRA"	the Prudential Regulation Authority of the United Kingdom
"Prospectus"	the prospectus expected to be published by the Company on the date of this announcement
"Prospectus Directive"	EU Prospectus Directive (2003/71/EC), including any relevant implementing measure in each member state of the European Economic Area that has implemented Directive 2003/71/EC, as amended
"Prospectus Rules"	prospectus rules made by the FCA under s73A of FSMA
"Provisional Allotment Letter(s) or PAL(s)"	the renounceable provisional allotment letters to be issued to Qualifying Non-CREST Shareholders
"Qualifying CREST Shareholder(s)"	Qualifying Shareholders holding Ordinary Shares in uncertificated form
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Ordinary Shares in certificated form
"Qualifying Shareholders"	holders of Ordinary Shares on the Company's register of members at close of business on the Record Date
"RBC Capital Markets"	RBC Europe Limited
"Record Date"	close of business in the UK on 13 October 2015
"Rights Issue"	the offer by way of rights to Qualifying Shareholders to acquire New Ordinary Shares on the terms and conditions set out in the Prospectus and, in the case of Qualifying Non-CREST Shareholders only, the Provisional Allotment Letter
"Securities Act"	the United States Securities Act of 1933 (as amended)
"Shareholders"	holders of Common Shares, each individually being a "Shareholder"
"Shares or Ordinary Shares"	the ordinary shares of the Company
"TERP"	Theoretical Ex-Rights Price being the theoretical ex-Rights price of 78.09 pence per Share, based on the Closing Price of 89.75 pence per Share on 14 October 2015, being the latest practicable date prior to the publication of the Prospectus
"Underwriting Agreement"	the underwriting agreement dated 14 October 2015 between the Company and the Underwriters
"UK" or "United Kingdom"	the United Kingdom of Great Britain and Northern Ireland
"UK Listing Authority" or "UKLA"	the FCA acting in its capacity as competent authority for the purposes of Part VI of FSMA
"Underwriters"	J.P. Morgan Cazenove, Merrill Lynch International and RBC Europe Limited
"United States" or "U.S."	the United States of America, its territories and possessions, any State of the United States and the District of Columbia