_____________________________________________________________________________________

20 February 2019

Preliminary Results for the year ended 31 December 2018

Financial highlights

§ Revenue of $704.3 million (2017: $722.6 million)^{^[1]}

§ Adjusted EBITDA of $268.0 million (2017: $300.8 million)^{^[2]}

§ Pre-exceptional profit before income tax of $54.7 million (2017: $66.8 million)

§ Post-exceptional profit before income tax of $38.4 million (2017: $64.1 million)

§ Adjusted basic earnings per share of $0.05 (2017: $0.08)^{^[3]}

§ Cash and cash equivalent balance of $79.7 million as at 31 December 2018 (2017: $257.0 million)

§ Gross debt of $157.1 million as at 31 December 2018 (2017: $359.8 million)

§ Net debt of $77.4 million as at 31 December 2018 (2017: $102.8 million)

§ Final proposed dividend of 1.959 cents per share ($10 million) bringing the full-year total dividend to $20 million (2017: $17 million)

2018 operational delivery exceeding guidance

§ 2018 All-in sustaining costs (AISC) from operations of $931 per gold equivalent ounce (2017: $910) or $12.6 per silver equivalent ounce (2017: $12.3) exceeding positively revised full year cost guidance of $940-$970 per gold equivalent ounce or $12.7-13.1 per silver equivalent ounce[4]

§ Full year attributable production of 526,650 gold equivalent ounces (39.0 million silver equivalent ounces) exceeding positively revised full year production guidance of 520,000 gold equivalent ounces (38.5 million silver equivalent ounces)

§ Record production at Inmaculada: 251,090 gold equivalent ounces (2017: 239,479 ounces)

§ Inmaculada brownfield drilling programme added 102 million silver or 1.3 million gold equivalent ounces of inferred resources in 2018 (using a gold/silver ratio of 81:1)[5]

§ Brownfield drilling programmes set to continue at Inmaculada and San Jose in Q1 2019 and at Pallancata in Q3 2019 following receipt of permits

2019 outlook^{^[6]}

§ Production target of 457,000 gold equivalent ounces (37.0 million silver equivalent ounces) excluding Arcata

§ Arcata placed on care and maintenance

§ AISC from operations expected to be $960-$1,000 per gold equivalent ounce ($11.8-12.3 per silver equivalent ounce)

§ Total sustaining and development capital expenditure expected to be approximately $130-140 million including $15 million of mine development at Inmaculada to access newly discovered veins

§ 2019 brownfield exploration budget estimated at $27 million with greenfield budget set at $10 million

$000 unless stated	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Attributable silver production (koz)	19,700	19,141	3
Attributable gold production (koz)	260	255	2
Revenue	704,290	722,572	(3)
Adjusted EBITDA	268,010	300,750	(11)
Profit from continuing operations (pre-exceptional)	18,225	53,355	(66)
Profit from continuing operations (post-exceptional)	6,701	53,881	(88)
Basic earnings per share (pre-exceptional) $	0.05	0.08	(38)
Basic earnings per share (post-exceptional) $	0.03	0.08	(63)

________________________________________________________________________________________

Ignacio Bustamante, Chief Executive Officer said:

"2018 results reflect another strong year of record production and prudent cost control. The highlight of 2018 has been the discovery of significant additional resources surrounding our flagship Inmaculada mine and, in 2019, we anticipate another year of ambitious exploration with exciting drill targets at all our current operations. In addition, we expect further progress from a number of our growth options including greenfield opportunities, early stage projects and our strategic alliances."

________________________________________________________________________________________

A presentation will be held for analysts and investors at 9.30am (UK time) on Wednesday 20 February 2019 at the offices of Hudson Sandler,

25 Charterhouse Square, London, EC1M 6AE

The presentation and a link to the live audio webcast of the presentation can be found at the Hochschild website:

www.hochschildmining.com

To join the event via conference call, please see dial in details below:

UK: +44 (0) 20 7192 8000 (Please quote confirmation code 6185529)

________________________________________________________________________________________

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) 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 currently operates three underground epithermal vein mines, two located in southern Peru and one in southern Argentina. Hochschild also has numerous long-term projects throughout the Americas.

CHAIRMAN'S STATEMENT

Hochschild's performance in 2018 demonstrates the rigorous execution of our strategy and is testament to the passion and commitment of all our people. Whilst maintaining strict focus on safety and environmental performance, a sixth year of production growth has been complimented by exciting results from our brownfield exploration programme especially at our flagship Inmaculada mine. Significant new veins have been discovered at Inmaculada, supporting a life-of-mine extension unprecedented at Hochschild since the IPO. Such an increase allows our employees, management and shareholders to plan ahead with a higher degree of certainty and fundamentally changing how our company is perceived. 2018 was also marked by the repayment of our senior notes, delivering on our commitment to prioritise the repayment of debt and strengthen our financial position. With further solid cashflow and a comfortable balance sheet position, the Board is pleased to recommend a final dividend of 1.959 cents per share ($10 million).

At the operations we delivered record output, with a record contribution from Inmaculada and a significant increase in production from Pallancata. Our cost position has remained under control and despite a deteriorating price environment in the second half of the year, we were still able to generate healthy cashflow. Over the year, we have therefore been able to repay a further $198 million in debt including, the early redemption of our senior bonds in January 2018. This bond repayment will allow us to save materially on our interest payments going forward, giving us added flexibility to sustain the commitment to our various exploration programmes, execute a number of attractive option agreements and continue to return capital to our shareholders.

Our company is always evolving and a commitment to a responsible and innovative operational approach has to be balanced by a disciplined focus on the financial realities of our business. Consequently, the decision to place our oldest mine, Arcata, on care and maintenance following an extensive review, has been a difficult one for our management but is a necessary result of declining silver prices. Exploration is expected to continue at the deposit and it is to be hoped that higher commodity prices or a sufficient improvement in geology would justify a restart in the future.

Our brownfield programme remains the key pillar of our growth strategy and excellent progress was made at Inmaculada in 2018. Drilling yielded over one million gold equivalent ounces of inferred resources and also demonstrated that this rich district could continue to deliver economic resources and therefore mine life extensions for many years to come. We are confident that the momentum can be maintained this year at Inmaculada and we can also look forward to an exciting drill programme scheduled later in the year at Pallancata.

Innovation and technology is critical in improving safety, environmental performance and optimising our operations over time. We have recently established innovation as an important input into our strategy with the ultimate aim of working towards the ideal Hochschild mine of the future. During the last few years, we have established a framework targeted throughout our value chain and involving initiatives in exploration, mine planning, mining and mineral processing as well as key support areas. The Board believes that significant progress has been made in 2018 in such areas as long hole drilling, mine planning software and ore sorting testing. We believe that by continuing to invest in such technology initiatives our management can drastically improve our business model in the long-term.

Safety

The importance of our people is paramount and, therefore, nothing takes a higher priority than ensuring their safety. Accidents at our mine sites in late 2017 prompted management to launch a Safety Culture Transformation Plan, an extensive programme comprising: compulsory training on a weekly basis; a suite of employee initiatives to promote safe working; the implementation of risk management systems; and a communications campaign. Despite these efforts, it is deeply regrettable that there were two accidents during 2018 which claimed the lives of three workers. On behalf of the Board, I would like to express our deepest condolences to the families of the victims involved.

We maintain our focus on safety and I am encouraged that the Plan mentioned above is delivering improved results. In particular, during 2018, the number of high potential safety events across our operations almost halved and the number of lost time safety events fell by 36% compared to 2017. The management team, and indeed the Board, are firm in their collective commitment that safety will never be compromised at Hochschild and that every one of us has a part to play in achieving our safety goals.

Environmental Performance

In last year's statement, I talked of the new environmental corporate objective that had been launched to measure the Group's performance in this key area. Our "ECO" score is calculated using a number of performance metrics including water and air quality, the results from regulatory inspections, water consumption and the generation of non-recyclable waste. The stretch target score for the year was set at 4 (out of 6) and I am delighted that this was significantly exceeded by a score of 5.37, a result that is a testament to our people who have risen to the "Green Challenge" that was launched in 2017.

Outlook

Although 2018 was a relatively disappointing year for precious metal prices, the gold price actually held up well versus other commodities with the background of a weaker US dollar proving to be a key influence. Furthermore, whilst silver experienced a challenging year, the prospects for precious metals in 2019 have improved as global financial markets have started to experience a period of volatility. We are confident that our long-term growth strategy based around low cost brownfield exploration, low risk greenfield exploration, optimisation of our early stage projects and a targeted approach to strategic alliances will deliver shareholder value and attractive capital returns for many years to come.

Another record-breaking year of production is of course only achievable through the efforts of our people. I wish to thank them and my fellow Board members for their contributions in making 2018 another successful year. Hochschild has come a long way since the IPO in 2006 and last year, we held a series of discussions surrounding our purpose. It is our belief that we have a responsibility to lead by example and manage our daily operations whilst raising standards in employee safety, employee growth, environmental practices and the development of local communities. We will also aim to constantly develop better practices through the adoption of new technologies that improve our business model. In summary, the core purpose of Hochschild is to be a responsible and innovative mining company committed to a better world.

Eduardo Hochschild, Chairman

19 February 2019

CHIEF EXECUTIVE OFFICER'S STATEMENT

2018 represented a unique milestone for Hochschild as we have redefined our purpose to ensure that it embodies the values and aspirations that define us as a company. It is not only our responsibility to excel in our operations, but to guarantee the safety and wellbeing of our people. We aim to ensure everyone goes home safe and that our people, suppliers, communities and shareholders - our partners - continue to share in future success. We believe that the only way to be successful is through sustainability, working in harmony with the environment and with the local communities where we operate. Our approach to business is underpinned by a desire to leave a sustainable legacy and acknowledging that our purpose is to be a responsible and innovative mining company committed to a better world.

This year also contained operational highlights for Hochschild, including a material life-of-mine increase achieved at the key Inmaculada deposit, further substantial debt repayment, and the generation of strong optionality in our project and acquisition pipeline. Taking these into account alongside another record production performance, continuing strong cost control, robust cashflow generation and a record environmental performance, I believe Hochschild is successfully delivering on its long term strategic goals. Our operational results, however, were overshadowed by the two fatal accidents that claimed the lives of three workers. We have redoubled our efforts to strengthen our safety culture through the implementation of the Safety Culture Transformation Plan and we will continue to work tirelessly to ensure that we achieve our goal of zero fatalities.

Operations

Our operations produced a record 526,650 gold equivalent ounces (39.0 million silver equivalent ounces) in 2018 which represents a sixth year of output increases and improved on our original target for the year of 514,000 gold equivalent ounces (38.0 million silver equivalent ounces). This was delivered at an all-in sustaining cost of $12.6 per silver equivalent ounce ($931 per gold equivalent ounce) which was also within positively revised expectations. Unsurprisingly, the Inmaculada mine played a key role with its own contribution of just over a quarter of a million gold equivalent ounces (also a record) at $731 per gold equivalent ounce. However, we also delivered a material increase at Pallancata (up 22% to 9.4 million silver equivalent ounces) with production from the Pablo vein now successfully ramped up. Finally, despite a collapse in the Argentinian currency and the resulting government re-introduction of export taxes, San Jose was a model of consistency, producing 13.3 million silver equivalent ounces at a cost of $14.5 per silver equivalent ounce.

The Arcata mine started operations in 1964 and has proved to be a resilient deposit with volatile historic production often reinvigorated by brownfield discoveries. In recent years, the operation has had to contend with a two year delay in exploration as well as increasingly narrow and disseminated vein structures. It is a testament to the skill of the operational and geological teams that production has continued running until now with a series of cost efficiencies and new discoveries. Indeed, in 2018 the mine still managed to produce just over 4 million silver equivalent ounces. However, whilst exploration during the year proved to be encouraging, a significant fall in the silver price does not support the operating and capital costs needed to sustain production and has led management to take the difficult decision to place the mine on care and maintenance. The focus for management going forward remains optimising care and maintenance costs whilst minimising inevitable job losses and providing support to those affected by the decision. However, there remains considerable optionality in the area surrounding Arcata. This includes the Azuca project, the newly optioned Condor deposit and additional brownfield potential close to current operations that could lead to a future restart of the processing plant or indeed the mine itself.

Exploration

Hochschild's brownfield exploration programme has started to gain real momentum with the highlight of 2018 undoubtedly being the first campaign at Inmaculada. The Company has been drilling an area to the south east of the original Angela vein and has confirmed the presence of a considerable number of structures, all in close proximity to the current mine infrastructure. In the year as whole, approximately 1.3 million gold equivalent ounces (95 million silver equivalent ounces) of inferred resources have been added, a highly encouraging result which confirms the strong potential in this district and establishes a long life for the Inmaculada operation. In 2019, the team will continue with campaigns scheduled to the north and west of the Angela vein. We can also look forward to a Q2/Q3 start for an exciting set of drill targets to the south of Pallancata at Cochaloma and Palca whilst at San Jose exploration will continue in the area surrounding the mine as well as further investigation of the Aguas Vivas deposit to the north west.

Business Development

The Company's growth strategy has been augmented in 2018 by a series of business development initiatives which we believe will create valuable optionality for the Company. The aim has been to maintain a balanced portfolio of advanced and early stage opportunities using a mix of greenfield drilling and project options with the focus on stable jurisdictions in the Americas. We have signed several agreements including exploration initiatives with Skeena Resources Ltd of Canada for their Snip mine, with Mirasol Resources Ltd in Chile for their Indra and Agni projects, and with a private owner for the Condor deposit, which is located close to Arcata in our Southern Peru Cluster. In addition to this dynamic greenfield strategy, we are also aiming to optimise the ounces we already have in the portfolio at our Volcan, Azuca and Crespo projects with further brownfield exploration and by applying the knowledge we have gained through our innovation programme.

Financial position

Our balance sheet remains in a strong position with the repayment of our bonds in January 2018 and the refinancing of a portion of that debt at attractive rates. Furthermore, despite deteriorating precious metal prices in the second half of the year, cashflow from operations remained robust with our net debt position falling to $77.4 million (31 December 2017: $102.8 million). Overall, the Company repaid approximately $198 million in 2018.

Financial results

The average gold price received in 2018 was flat versus the previous year but this was offset by a 9% fall in the silver price received and therefore despite record production once again, revenue fell by a modest 3% to $704 million (2017: $723 million). The operational all-in sustaining cost of $12.6 per silver equivalent ounce (2017: $12.3 per ounce) was in line with positively revised forecasts and reflected an increased investment in brownfield exploration as well as one-off hydraulic backfill project costs at San Jose, offset by a fall in unit costs in Argentina due to the significant devaluation of the Peso. This resulted in adjusted EBITDA of $268 million (2017: $301 million). Finally, adjusted earnings per share was lower at $0.05 per share (2017: $0.08 per share) with the elevated tax charge and foreign exchange loss resulting from the above-mentioned devaluation offsetting the effects of the reduction in interest costs.

Outlook

We expect attributable production in 2019 to be 457,000 gold equivalent ounces (37 million silver equivalent ounces) assuming the average silver to gold ratio of 81:1. This figure now excludes Arcata and represents a further 2% increase on 2018 (assuming a constant gold/silver ratio of 74x) and will be driven by: 242,000 gold equivalent ounces from Inmaculada; a further increased contribution of 10.2 million silver equivalent ounces from Pallancata with the Pablo vein in full production; and 7.5 million ounces from the dependable San Jose mine. All in sustaining costs for operations are expected at between $960 to $1,000 per gold equivalent ounce ($11.8 to $12.3 per silver equivalent ounce). This forecast includes a $15 million investment at Inmaculada to begin development of the resources discovered in 2018 and the effect of removing the high cost Arcata operation.

The budget for brownfield exploration has increased to approximately $27 million in 2019 with an additional budget of $10 million being assigned to greenfield drilling targets in Peru, Canada and Chile. We will continue to assess early-stage acquisitions as well as advancing existing opportunities whilst also investing in our innovation programme to aid in the delivery of upside in our operations and projects.

Although 2019 has started with a small rise in precious metal prices, cost control will remain a top priority. We look forward to further results from our comprehensive brownfield drilling programme and, in recognition of the success achieved so far, I am pleased to announce the appointment of Oscar Garcia as Vice-President of Brownfield Exploration. We remain confident that our recent history of operational success and low-cost growth can be extended well into the future. Above all, we are committed to a strategy that we believe will achieve our purpose to be a responsible and innovative mining company committed to a better world.

Ignacio Bustamante, Chief Executive Officer

19 February 2019

OPERATING REVIEW

OPERATIONS

Note: 2017/2018 equivalent figures calculated using the previous Company gold/silver ratio of 74x. All 2019 forecasts assume the average gold/silver ratio of 81x.

Production

In 2018, Hochschild exceeded its revised full year production guidance of 38.5 million silver equivalent (520,000 gold equivalent ounces). Production was a record 39.0 million silver equivalent ounces (526,650 gold equivalent ounces) comprising 260,436 ounces of gold and 19.7 million ounces of silver. This was mostly due to a record year at Inmaculada as well as higher production from Pallancata. The overall attributable production target for 2019 is 457,000 gold equivalent ounces or 37.0 million silver equivalent ounces.

Total group production

	Year ended 31 Dec 2018	Year ended 31 Dec 2017
Silver production (koz)	22,720	22,301
Gold production (koz)	307.77	304.16
Total silver equivalent (koz)	45,495	44,809
Total gold equivalent (koz)	614.80	605.52
Silver sold (koz)	22,687	22,295
Gold sold (koz)	304.51	300.21

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

Attributable group production

	Year ended 31 Dec 2018	Year ended 31 Dec 2017
Silver production (koz)	19,700	19,141
Gold production (koz)	260.44	254.93
Silver equivalent (koz)	38,972	38,006
Gold equivalent (koz)	526.65	513.60

Attributable production includes 100% of all production from Arcata, Inmaculada, Pallancata and 51% from San Jose.

2019 Production forecast split

Operation	Gold production (oz approx)	Silver production (m oz approx)
Inmaculada	170,000	5.8
Pallancata	30,000	7.8
San Jose (100%)	103,000	6.4
Total	303,000	19.9

Costs

All-in sustaining cost from operations in 2018 was $931 per gold equivalent ounce or $12.6 per silver equivalent ounce (2017: $910 per gold equivalent ounce or $12.3 per silver equivalent ounce), improving on the positively revised guidance of between $12.7 and $13.1 per silver equivalent ounce. This was driven by Inmaculada's competitive $731 per gold equivalent ounce (2017: $721 per ounce) in addition to a better result from Pallancata ($12.1 per silver equivalent ounce). Please see page 13 of the Financial Review for further details on costs.

The all-in sustaining cost from operations in 2019 is expected to be between $960 and $1,000 per gold equivalent ounce (or $11.8 and $12.3 per silver equivalent ounce) which excludes Arcata, which is being placed on care and maintenance, and includes an investment of $15 million in development costs to incorporate the newly discovered resources at Inmaculada.

2019 AISC forecast split

Operation	AISC ($/oz)
Inmaculada	790-830 Au Eq
Pallancata	13.5-14.0 Ag Eq
San Jose	13.5-14.0 Ag Eq

Inmaculada

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

Inmaculada summary	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Ore production (tonnes)	1,323,525	1,295,701	2
Average silver grade (g/t)	150	145	3
Average gold grade (g/t)	4.36	4.15	5
Silver produced (koz)	5,690	5,506	3
Gold produced (koz)	174.20	165.07	6
Silver equivalent produced (koz)	18,581	17,721	5
Gold equivalent produced (koz)	251.09	239.48	5
Silver sold (koz)	5,676	5,498	3
Gold sold (koz)	172.40	162.32	6
Unit cost ($/t)	84.7	85.4	(1)
Total cash cost ($/oz Au co-product)	481	486	(1)
All-in sustaining cost ($/oz Au Eq)	731	721	1

Production

In 2018, Inmaculada delivered record gold equivalent production of 251,090 ounces, a 5% improvement on 2017 (2017: 239,479 ounces) driven mainly by better than expected grades and production efficiencies.

Costs

All-in sustaining costs were in line with expectations at $731 per gold equivalent ounce (2017: $721 per ounce). Despite unit cost per tonne falling moderately versus 2017, the all-in sustaining figure rose slightly due to an increase in capitalised exploration expenses to incorporate resources from the new veins discovered in 2018.

Pallancata

The 100% owned Pallancata silver/gold property is located in the Department of Ayacucho in southern Peru. Pallancata commenced production in 2007. Ore from Pallancata is transported 22 kilometres to the Selene plant for processing.

Pallancata summary	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Ore production (tonnes)	717,652	470,903	52
Average silver grade (g/t)	362	442	(18)
Average gold grade (g/t)	1.30	1.78	(27)
Silver produced (koz)	7,449	5,956	25
Gold produced (koz)	26.40	23.47	12
Silver equivalent produced (koz)	9,403	7,693	22
Gold equivalent produced (koz)	127.07	103.95	22
Silver sold (koz)	7,439	5,940	25
Gold sold (koz)	26.23	23.29	13
Unit cost ($/t)	93.6	101.5	(8)
Total cash cost ($/oz Ag co-product)	8.1	7.8	4
All-in sustaining cost ($/oz Ag Eq)	12.1	10.7	13

Production

Pallancata's full year production result was 9.4 million silver equivalent ounces, a 22% improvement versus 2017 (2017: 7.7 million ounces). The increase was driven by the incorporation of the new Pablo vein in the second half of the year with tonnage increasing and grades reducing in line with expectations. In addition, average grades from the mix of material from Pablo, mine developments and ancillary veins was better than planned in the first half of the year.

Costs

All-in sustaining costs were better than guidance at $12.1 per silver equivalent ounce (2017: $10.7 per ounce), mainly due to higher grades from the mix of material from the Pablo vein, developments and ancillary veins in the first half of the year. The AISC figure increased versus 2017, as expected, in line with the ramp up of the wider, but lower-grade Pablo vein.

San Jose

The San Jose silver/gold mine is located in Argentina, in the province of Santa Cruz, 1,750 kilometres south west 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% is owned by the minority interest, McEwen Mining Inc.

San Jose summary	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Ore production (tonnes)	556,185	532,676	4
Average silver grade (g/t)	397	436	(9)
Average gold grade (g/t)	6.20	6.71	(8)
Silver produced (koz)	6,165	6,448	(4)
Gold produced (koz)	96.59	100.47	(4)
Silver equivalent produced (koz)	13,313	13,883	(4)
Gold equivalent produced (koz)	179.90	187.60	(4)
Silver sold (koz)	6,175	6,501	(5)
Gold sold (koz)	95.95	99.63	(4)
Unit cost ($/t)	218.6	240.1	(9)
Total cash cost ($/oz Ag co-product)	10.1	10.5	(4)
All-in sustaining cost ($/oz Ag Eq)	14.5	14.0	4

Production

In 2018, San Jose produced 13.3 million silver equivalent ounces (2017: 13.9 million ounces), a 4% reduction versus 2017 due to lower-grades partially offset by an increase in tonnage.

Costs

All-in sustaining costs were $14.5 per silver equivalent ounce (2017: $14.0 per ounce) with the small increase versus last year due to lower grades, the hydraulic backfill project which was completed in the third quarter and the reintroduction of export taxes in September 2018. These factors were partially offset by the strong devaluation of the Argentinian peso during the year (102%)

On 4 September 2018, the Argentinian Government issued an Executive Order establishing a temporary export tax over all goods exported from Argentina, applicable from 4 September 2018 to 31 December 2020. The rate that applies for San Jose's production is AR$3 per U.S. dollar exported.

Arcata

The 100% owned Arcata underground operation is located in the Department of Arequipa in southern Peru. It commenced production in 1964.

Arcata summary	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Ore production (tonnes)	373,106	499,385	(25)
Average silver grade (g/t)	321	308	4
Average gold grade (g/t)	0.99	1.07	(7)
Silver produced (koz)	3,416	4,391	(22)
Gold produced (koz)	10.57	15.15	(30)
Silver equivalent produced (koz)	4,199	5,512	(24)
Gold equivalent produced (koz)	56.74	74.49	(24)
Silver sold (koz)	3,397	4,357	(22)
Gold sold (koz)	9.93	14.96	(34)
Unit cost ($/t)	167.7	124.8	34
Total cash cost ($/oz Ag co-product)	16.9	14.5	17
All-in sustaining cost ($/oz Ag Eq)	19.6	18.4	7

Production

Production for the year was 4.2 million silver equivalent ounces (2017: 5.5 million ounces), a result in line with expectations and reflecting significantly reduced tonnage.

On 13 February 2019, Hochschild announced the decision to place the mine on care and maintenance due to the volatile silver price and current geological conditions

Costs

Arcata's full year all-in sustaining cost was $19.6 per silver equivalent ounce (2017: $18.4 per ounce) with the rise resulting from reduced tonnage and investments to find additional resources. Sustaining and development expenditure from 2018 has been expensed due to the decision to place the mine on care and maintenance. Please see the Financial Review page 17 for further details.

EXPLORATION

Inmaculada

In 2018, Hochschild continued the comprehensive surface drilling programme begun in November 2017 with the campaign focusing on the area to the east of the Angela vein. 9,300m of drilling for potential and 65,600m of resource drilling was executed during the year. 17 veins were discovered with the result that 1.3 million gold equivalent ounces or 95 million silver equivalent ounces have been added to the inferred resource base at Inmaculada. All veins are close to the existing Inmaculada infrastructure with good widths and therefore represent significant low cost additions to the future Inmaculada mine plan. Please see the 2018 Resources table on page 49 for further details.

Key intercepts from the campaign are listed below:

Vein	Results
Millet	MIL-17-008: 5.1m @ 1.8g/t Au & 72g/t Ag MIL-17-010: 9.9m @ 2.0g/t Au & 61g/t Ag MIL-18-013: 5.0m @ 6.7g/t Au & 43g/t Ag MIL-18-014: 14.3m @ 4.0g/t Au & 205g/t Ag MIL-18-015: 8.0m @ 1.3g/t Au & 75g/t Ag MIL-18-015: 3.1m @ 2.0g/t Au & 127g/t Ag MIL-18-018: 7.8m @ 2.6g/t Au & 37g/t Ag MIL-18-018: 4.2m @ 3.9g/t Au & 27g/t Ag MIL-18-019: 7.7m @ 1.8g/t Au & 78g/t Ag MIL-18-019: 3.8m @ 3.2g/t Au & 108g/t Ag MIL-18-024: 7.0m @ 2.4g/t Au & 135g/t Ag MIL-18-028: 3.1m @ 1.8g/t Au & 64g/t Ag MIL-18-029: 3.9m @ 1.8g/t Au & 121g/t Ag MIL-18-030: 4.8m @ 1.7g/t Au & 80g/t Ag
Vero	MIL-17-010: 9.3m @ 3.3g/t Au & 24g/t Ag
Divina	LOL-18-003: 12.0m @ 6.2g/t Au & 46g/t Ag LOL-18-004: 3.0m @ 3.7g/t Au & 23g/t Ag LOL-18-005: 2.2m @ 4.2g/t Au & 5g/t Ag LOL-18-006: 7.0m @ 2.3g/t Au & 28g/t Ag LOL-18-008: 3.7m @ 2.2g/t Au & 66g/t Ag LOL-18-010: 3.8m @ 2.3g/t Au & 53g/t Ag LOL-18-014: 2.9m @ 1.9g/t Au & 256g/t Ag LOL-18-014: 8.7m @ 1.3g/t Au & 93g/t Ag LOL-18-014: 9.3m @ 3.1g/t Au & 258g/t Ag
Lola	LOL-18-005: 0.8m @ 5.1g/t Au & 356g/t Ag LOL-18-006: 3.3m @ 1.8g/t Au & 55g/t Ag LOL-18-008: 4.0m @ 4.1g/t Au & 82g/t Ag
Lizina	LOL-18-006: 6.2m @ 2.9g/t Au & 16g/t Ag LOL-18-011: 1.0m @ 8.6g/t Au & 135g/t Ag
Olinda	LOL-18-001: 2.2m @ 2.7g/t Au & 225g/t Ag
Veronica	MIL-18-028: 3.5m @ 2.0g/t Au & 91g/t Ag
Lourdes tensional	MIS-18-008: 4.2m @ 2.8g/t Au & 66g/t Ag MIS-18-010: 1.5m @ 2.2g/t Au & 218g/t Ag
Rosa	LOL-18-036: 1.3m @ 2.1g/t Au & 59g/t Ag LOL-18-039: 4.0m @ 1.8g/t Au & 271g/t Ag
Keyla	BEL-18-003: 1.9m @ 5.6g/t Au & 286g/t Ag BEL-18-007: 2.9m @ 2.8g/t Au & 183g/t Ag BEL-18-008: 1.0m @ 2.5g/t Au & 235g/t Ag BEL-18-014: 1.0m @ 2.0g/t Au & 177g/t Ag BEL-18-015: 3.2m @ 4.6g/t Au & 239g/t Ag BEL-18-019: 1.0m @ 4.1g/t Au & 49g/t Ag
Bety	BEL-18-001: 2.8m @ 14.5g/t Au & 1,453g/t Ag BEL-18-004: 2.9m @ 15.2g/t Au & 1,381g/t Ag BEL-18-012: 6.4m @ 2.1g/t Au & 107g/t Ag BEL-18-013: 2.6m @ 1.9g/t Au & 82g/t Ag
Thalia tensional	BEL-18-018: 3.5m @ 6.8g/t Au & 146g/t Ag

In 2019, a 38,000m drilling programme is planned to find potential resources to the east of the Angela vein and also to the west. In addition, the campaign will look to test the continuity of the Angela vein to the north.

Pallancata

Much of the focus for 2018 was on securing exploration permits for 2019 campaigns at Pablo Sur, Palca and Cochaloma. However, approximately 1,100m of potential underground drilling was carried out in Pablo Sur structure to test for a possible extension to the original Pallancata vein, whilst ore control drilling at the Cinthia vein in Ranichico and in Pablo Piso in the fourth quarter added additional resources.

Vein

Results

Pablo

DLEP-A38: 8.7m @ 3.6g/t Au & 1,105g/t Ag

DLEP-A39: 8.4m @ 1.0g/t Au & 327g/t Ag

Cinthia

DLCN-A01: 0.9m @ 2.7/t Au & 412g/t Ag

DLCN-A02: 1.0m @ 2.6/t Au & 355g/t Ag

As mentioned above, the 2019 campaign will concentrate on drilling for potential in the Pablo Sur, Palca and Cochaloma structures with over 30,000 metres current scheduled to be carried out and expected to commence in Q2/Q3 2019.

San Jose

At San Jose, inferred resources were added from a drilling campaign close to the mine infrastructure in the south from the Ayelen S.E., Molle, Maia and Guadalupe veins although the winter weather did disrupt progress towards the middle of the year.

Once the weather improved in the third quarter, the programme recommenced with reverse circulation drilling in the Saavedra zone to the south of the mine as well as long drill holes from the mine to look for potential east-west structures. In addition, a potential drilling campaign to the north west to test the polymetallic structure at the Aguas Vivas zone was also carried out. Overall, approximately 16,000m of potential drilling and 6,000m of resource drilling was completed in 2018.

Selected results are provided below:

Vein	Results
Ayelen S.E. extension	SJD-1708: 2.4m @ 8.7g/t Au & 652g/t Ag SJD-1711: 4.9m @ 6.7g/t Au & 151g/t Ag
Odin	SJM-351: 1.1m @ 5.6g/t Au & 739g/t Ag
Molle	SJM-351: 2.6m @ 1.6g/t Au & 320g/t Ag
S.Odin	SJD-1737: 2.4m @ 6.8g/t Au & 778g/t Ag
Guadalupe	SJD-1737: 1.5m @ 5.4g/t Au & 525g/t Ag SJD-1725: 2.8m @ 6.0g/t Au & 13g/t Ag
Aguas Vivas	SJD-1703: 0.4m @ 0.3g/t Au, 7g/t Ag, 1.3% Pb & 2.8% Zn SJD-1704: 1.4m @ 0.5g/t Au, 32g/t Ag, 2.5% Pb & 1.6% Zn SJD-1704: 0.6m @ 3.4g/t Au, 14g/t Ag, 1.0% Pb & 0.6% Zn SJD-1704: 1.2m @ 2.3g/t Au, 13g/t Ag, 0.2% Pb & 0.3% Zn SJD-1705: 0.4m @ 0.2g/t Au, 3g/t Ag, 1.8% Pb & 3.5% Zn SJD-1705: 0.3m @ 0.3g/t Au, 12g/t Ag, 1.6% Pb & 1.7% Zn SJD-1851: 2.7m @ 0.3g/t Au, 44g/t Ag, 1.2% Cu, 4.6% Pb & 6.4% Zn SJD-1853: 0.7m @ 0.1g/t Au, 149g/t Ag, 2.6% Cu, 8.2% Pb & 6.4% Zn SJD-1854: 0.8m @ 0.2g/t Au, 64g/t Ag, 1.2% Cu, 1.0% Pb & 0.3% Zn SJD-1855: 0.5m @ 4.0g/t Au, 5g/t Ag, 0.7% Pb & 2.4% Zn SJD-1857: 0.6m @ 1.6g/t Au, 18g/t Ag, 0.1% Cu, 2.7% Pb & 2.2% Zn SJD-1858: 0.6m @ 0.4g/t Au, 48g/t Ag, 1.0% Cu, 0.2% Pb & 0.1% Zn

The 2019 programme will focus on further potential drilling at Aguas Vivas as well as an underground long-hole drilling campaign to the south of the current mining area.

Arcata

At Arcata, an underground drilling programme for the year has been focused on areas close to the existing mine infrastructure with potential to be rapidly incorporated into the short-term Arcata mine plan. Just under 28,000 metres of resource drilling was carried out in the 1^st and 4^th quadrants targeting the Ruby, Cristina, Rosalia, Pablito East, Vein X, Frida, Pamela New, Cristina, Rosalia, veins whilst almost 15,000 metres of potential drilling was executed in the Tunel 4, Barbara, Tres Reyes, Silvia Yoselin, Pamela New, Soledad and Anomaly North structures.

Selected intercepts are shown below:

Vein	Results
Cristina	DDH-267-ST-18: 1.1m @ 1.3g/t Au & 454g/t Ag DDH-286-EX-18: 4.4m @ 0.4g/t Au & 145g/t Ag DDH-308-EX-18: 2.2m @ 2.6g/t Au & 1,089g/t Ag
Cristina Techo	DDH-279-ST-18: 1.0m @ 2.0g/t Au & 547g/t Ag
Frida	DDH-267-ST-18: 1.2m @ 0.9g/t Au & 300g/t Ag DDH-279-ST-18: 1.7m @ 3.6g/t Au & 1,461g/t Ag DDH-302-DI-18: 1.1m @ 0.6g/t Au & 338g/t Ag
Pablito	DDH-239-DI-18: 1.0m @ 2.4g/t Au & 819g/t Ag DDH-267-ST-18: 1.2m @ 3.6g/t Au & 1,535g/t Ag DDH-279-ST-18: 1.4m @ 6.9g/t Au & 2,852g/t Ag
Pamela W	DDH-301-EX-18: 1.3m @ 2.5g/t Au & 446g/t Ag DDH-311-EX-18: 1.2m @ 1.6g/t Au & 193g/t Ag DDH-286-EX-18: 2.4m @ 5.1g/t Au & 402g/t Ag
Pamela New	DDH-305-ST-18: 2.2m @ 2.7g/t Au & 758g/t Ag DDH-329-VE-18: 1.0m @ 0.6g/t Au & 320g/t Ag DDH-332-VE-18: 1.1m @ 0.9g/t Au & 282g/t Ag DDH-301-EX-18: 1.8m @ 0.9g/t Au & 264g/t Ag DDH-342-VE-18: 1.0m @ 3.4g/t Au & 2,019g/t Ag
Rosalita	DDH-300-EX-18: 1.0m @ 2.1g/t Au & 908g/t Ag DDH-290-EX-18: 1.1m @ 0.9g/t Au & 254g/t Ag DDH-339-DI-18: 2.4m @ 2.2g/t Au & 1,504g/t Ag
Ruby 2	DDH-217-DI-18: 1.2m @ 0.7g/t Au & 236g/t Ag DDH-231-DI-18: 1.2m @ 0.7g/t Au & 317g/t Ag DDH-248-DI-18: 1.0m @ 2.3g/t Au & 1,003g/t Ag DDH-276-DI-18: 1.2m @ 1.4g/t Au & 547g/t Ag
Vein X	DDH-255-DI-18: 3.2m @ 1.3g/t Au & 447g/t Ag DDH-285-ST-18: 3.0m @ 1.9g/t Au & 2,714g/t Ag
Elena	DDH-269-ST-18: 1.0m @ 1.2g/t Au & 584g/t Ag DDH-339-DI-18: 1.0m @ 5.5g/t Au & 2,175g/t Ag
Alexia	DDH-318-EX-18: 1.3m @ 3.3g/t Au & 563g/t Ag DDH-337-DE-18: 1.1m @ 5.3g/t Au & 356g/t Ag DDH-344-DI-18: 2.5m @ 2.0g/t Au & 238g/t Ag
Diana	DDH-350-DI-18: 2.2m @ 1.4g/t Au & 648g/t Ag
Paloma	DDH-342-VE-18: 2.2m @ 1.7g/t Au & 468g/t Ag
Yoselin	DDH-353-JK-18: 1.3m @ 4.6g/t Au & 2,109g/t Ag
NW System 1	DDH-355-JK-18: 2.0m @ 2.0g/t Au & 778g/t Ag
NW System 2	DDH-355-JK-18: 1.0m @ 1.9g/t Au & 534g/t Ag
Soledad NW	DDH-354-ST-18: 0.8m @ 6.8g/t Au & 1,204g/t Ag DDH-595-S-18: 0.8m @ 1.1g/t Au & 288g/t Ag

The current programme continues into 2019 with an 8,000m underground and surface drilling programme to further evaluate the new Quadrant 4 area as well as potential shallower mineralisation at the Alexia, Marion and Mariana veins.

GREENFIELD AND BUSINESS DEVELOPMENT

Hochschild's strategy with regards to its greenfield exploration programme has been to maintain and drill a balanced portfolio of early-stage to advanced opportunities using a combination of earn-in joint ventures, private placements with junior exploration companies and the staking of properties. This strategy is being executed throughout the Americas with opportunities currently being reviewed in Peru, Chile, the US and Canada.

During 2018, a number of projects were drilled including Loro in Chile belonging to Revelo Resources Corp, Moho and Redlitch in Nevada belonging to KA Gold and Fresia in Peru which is 100% owned by Hochschild. There were no significant results to report and therefore, with the exception of Fresia, these options have not been taken up.

To date, options have been secured on properties across the Americas including: the Snip mine in Canada owned by Skeena Resources; the Cobalt project in Canada owned by Cobalt Power Group; the Agni and Indra projects in Chile owned by Mirasol Resources; and the Ferguson Mountain and Mars projects in Nevada owned by Renaissance Gold. In addition, the Company has also secured an option on the Condor project located in Arequipa (Peru) close to the Arcata operation. The deposit current hosts a small private mine and has significant under-explored concessions with 40km of veins already identified. Drilling is expected to commence in 2019.

In 2019, a $10 million budget has been assigned and work will continue on the above-mentioned projects as well superficial geological work and applications for access rights on a number of Peruvian projects.

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 years.

Revenue

Gross revenue

Gross revenue from continuing operations decreased by 3% to $733.3 million in 2018 (2017: $759.1 million) due to a fall in the average silver price received offsetting small rises in ounces sold of both gold and silver in line with increased production.[7]

Gold

Gross revenue from gold in 2018 increased slightly to $386.2 million (2017: $381.3 million) due to small increase in the total amount of gold ounces sold in 2018. This resulted from increases at the Inmaculada and Pallancata mines offsetting a fall in gold sales from the Arcata mine.

Silver

Gross revenue fell in 2018 to $347.0 million (2017: $377.8 million) mainly due to a 9% decline in the average silver price received. This was partially offset by a small increase in the total amount of silver ounces sold to 22,687 koz (2017: 22,295 koz) resulting from the rise in silver production at Pallancata.

Gross average realised sales prices

The following table provides figures for average realised prices (before the deduction of commercial discounts) and ounces sold for 2018 and 2017:

Average realised prices	Year ended 31 Dec 2018	Year ended 31 Dec 2017
Silver ounces sold (koz)	22,687	22,295
Avg. realised silver price ($/oz)	15.3	16.9
Gold ounces sold (koz)	304.51	300.21
Avg. realised gold price ($/oz)	1,268	1,270

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 2018, the Group recorded commercial discounts of $29.4 million (2017: $36.9 million) with the decrease explained by the lower production from the concentrate-only Arcata mine. The ratio of commercial discounts to gross revenue in 2018 was 4% (2017: 5%).

Net revenue[8]

Net revenue was $704.3 million (2017 $722.6 million), comprising net gold revenue of $378.8 million (2017: $372.3 million) and net silver revenue of $325.1 million (2017: $349.8 million). In 2018, gold accounted for 54% and silver 46% of the Company's consolidated net revenue (2017: gold 52% and silver 48%).

Revenue by mine[9]

$000	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Silver revenue
Arcata	52,292	74,452	(30)
Inmaculada	86,810	91,943	(6)
Pallancata	113,108	100,285	13
San Jose	94,804	111,088	(15)
Commercial discounts	(21,958)	(27,926)	(21)
Net silver revenue	325,056	349,842	(7)
Gold revenue
Arcata	12,573	19,183	(34)
Inmaculada	219,293	204,651	7
Pallancata	33,176	29,877	11
San Jose	121,202	127,602	(5)
Commercial discounts	(7,395)	(8,998)	(18)
Net gold revenue	378,849	372,315	2
Other revenue	385	415	(7)
Net revenue[10]	704,290	722,572	(3)

Costs

Total cost of sales was $531.8 million in 2018 (2017: $549.0 million). The direct production cost excluding depreciation was higher at $363.9 million (2017: $345.4 million) mainly due to higher production volumes at Inmaculada and also at Pallancata due to the ramp up of the Pablo vein and the reclassification of logistics costs of $6.1 million from selling expenses to production costs as a consequence of adopting IFRS 15 Revenue from Contracts with Customers.[11] This was partially offset by costs savings at San Jose due to the high Argentinian peso devaluation. Depreciation in production cost decreased to $164.2 million (2017: $196.2 million) due to the increased mine life at Inmaculada resulting from the strong inferred resource additions. Other items, which principally includes personnel-related provisions and stoppage costs (at San Jose), declined to $1.1 million in 2018 (2017: $3.2 million). Change in inventories was $2.5 million in 2018 (2017: $4.1 million) due to a slight rise in products in process.

$000	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Direct production cost excluding depreciation	363,922	345,436	5
Depreciation in production cost	164,244	196,241	(16)
Other items	1,141	3,241	(65)
Change in inventories	2,481	4,131	(40)
Cost of sales	531,788	549,049	(3)

Unit cost per tonne

The Company reported unit cost per tonne at its operations of $121.1 per tonne in 2018, a 3% decrease versus 2017 ($125.0 per tonne) due to increased mined tonnage at Pallancata and the depreciation of the Argentine peso offsetting the decline in tonnage at Arcata and inflation in Argentina.

Unit cost per tonne by operation (including royalties)[12]:

Operating unit ($/tonne)	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Peru	99.7	97.7	2
Arcata	167.7	124.8	34
Inmaculada	84.7	85.4	(1)
Pallancata	93.6	101.5	(8)
Argentina
San Jose	218.6	240.1	(9)
Total	121.1	125.0	(3)

Cash costs

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

Cash cost reconciliation[13]:

$000 unless otherwise indicated	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Group cash cost	409,719	403,552	2
(+) Cost of sales	531,788	549,049	(3)
(-) Depreciation and amortisation in cost of sales	(164,819)	(196,150)	(16)
(+) Selling expenses	10,068	11,024	(9)
(+) Commercial deductions[14]	32,682	39,629	(18)
Gold	7,558	9,256	(18)
Silver	25,124	30,373	(17)
Revenue	704,290	722,572	(3)
Gold	378,849	372,315	2
Silver	325,056	349,842	(7)
Others	385	415	(7)
Ounces sold
Gold	304.5	300.2	1
Silver	22,687	22,295	2
Group cash cost ($/oz)
Co product Au	724	693	4
Co product Ag	8.3	8.8	(5)
By product Au	195	78	151
By product Ag	1.0	1.0	4

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

All-in sustaining cash costs per silver equivalent ounce

Year ended 31 Dec 2018

$000 unless otherwise indicated	Arcata	Inmaculada	Pallancata	San José	Main operations	Corporate & others	Total
(+) Production cost excluding depreciation	62,559	114,291	68,907	118,165	363,922	-	363,922
(+) Other items in cost of sales	-	-	-	1,141	1,141	-	1,141
(+) Operating and exploration capex for units	526	57,678	28,939	42,849	129,992	634	130,626
(+) Brownfield exploration expenses	9,024	1,732	2,162	4,224	17,142	3,563	20,705
(+) Administrative expenses (excl depreciation)	651	3,516	1,560	6,952	12,679	31,618	44,297
(+) Royalties and special mining tax[15]	-	3,113	1,381	-	4,494	2,746	7,240
Sub-total	72,760	180,330	102,949	173,331	529,370	38,561	567,931
Au ounces produced	10,575	174.,199	26,399	96,595	307,768	-	307,768
Ag ounces produced (000s)	3,416	5,690	7,499	6,165	22,720	-	22,720
Ounces produced (Ag Eq 000s oz)	4,199	18,581	9,403	13,313	45,495	-	45,495
Sub-total ($/oz Ag Eq)	17.3	9.7	10.9	13.0	11.6	-	12.5
(+) Commercial deductions	8,273	2,788	10,441	11,180	32,682	-	32,682
(+) Selling expenses	999	344	728	7,997	10,068	-	10,068
Sub-total	9,272	3,132	11,169	19,177	42,750	-	42,750
Au ounces sold	9,926	172,395	26,234	96,595	304,505	-	304,505
Ag ounces sold (000s)	3,397	5,676	7,439	6,175	22,687	-	22,687
Ounces sold (Ag Eq 000s oz)	4,132	18,433	9,380	13,275	45,220	-	45,220
Sub-total ($/oz Ag Eq)	2.2	0.2	1.2	1.4	0.9	-	0.9
All-in sustaining costs ($/oz Ag Eq)	19.6	9.9	12.1	14.5	12.6	-	13.4
All-in sustaining costs ($/oz Au Eq)[16]	1,448	731	898	1,071	931	-	994

Year ended 31 Dec 2017

$000 unless otherwise indicated	Arcata	Inmaculada	Pallancata	San José	Main operations	Corporate & others	Total
(+) Production cost excluding depreciation	62,340	109,005	46,874	127,217	345,436	-	345,436
(+) Other items in cost of sales	-	-	1,461	1,780	3,241	-	3,241
(+) Operating and exploration capex for units	17,557	52,903	19,186	33,998	123,644	453	124,097
(+) Brownfield exploration expenses	3,029	1,127	1,279	3,407	8,842	4,041	12,883
(+) Administrative expenses (excl depreciation)	880	3,351	1,362	8,701	14,294	35,425	49,719
(+) Royalties and special mining tax	-	2,987	1,214	-	4,201	2,229	6,430
Sub-total	83,806	169,373	71,376	175,103	499,658	42,148	541,806
Au ounces produced	15,146	165,074	23,471	100,474	304,165	-	304,165
Ag ounces produced (000s)	4,391	5,506	5,956	6,448	22,301	-	22,301
Ounces produced (Ag Eq 000s oz)	5,512	17,721	7,693	13,883	44,809	-	44,809
Sub-total ($/oz Ag Eq)	15.2	9.6	9.3	12.6	11.2	-	12.1
(+) Commercial deductions	15,695	2,134	9,633	12,167	39,629	-	39,629
(+) Selling expenses	1,931	1,118	1,298	6,677	11,024	-	11,024
Sub-total	17,626	3,252	10,931	18,844	50,653	-	50,653
Au ounces sold	14,963	162,323	23,287	99,634	300,207	-	300,207
Ag ounces sold (000s)	4,357	5,498	5,940	6,501	22,296	-	22,296
Ounces sold (Ag Eq 000s oz)	5,464	17,510	7,663	13,874	44,511	-	44,511
Sub-total ($/oz Ag Eq)	3.2	0.2	1.4	1.4	1.1	-	1.1
All-in sustaining costs ($/oz Ag Eq)	18.4	9.7	10.7	14.0	12.3	-	13.2
All-in sustaining costs ($/oz Au Eq)	1,362	721	792	1,036	910	-	977

Administrative expenses

Administrative expenses before exceptional items decreased by 11% to $45.8 million (2017: $51.3 million) primarily due to a decrease in personnel expenses.

Exploration expenses

In 2018, exploration expenses increased to $34.4 million (2017: $17.2 million) in line with the overall rise in the Company's investment in brownfield and greenfield exploration. In addition, the Group capitalises part of its brownfield exploration, which mostly relates to costs incurred converting potential resource to the Inferred or Measured and Indicated categories. In 2018, the Company capitalised $9.2 million relating to brownfield exploration compared to $2.3 million in 2017, bringing the total investment in exploration for 2018 to $43.6 million (2017: $19.5 million).

Selling expenses

Selling expenses decreased by 9% versus 2017 to $10.1 million (2017: 11.0 million) due to the reclassification of logistics costs of $6.1 million to cost of sales as a consequence of adopting IFRS 15 (Revenue from Contracts with Customers). This was offset by the reintroduction of export taxes in Argentina from September 2018 ($5.1 million) and moderately higher expenses in line with higher sales volumes.

Other income/expenses

Other income before exceptional items was lower at $8.1 million (2017: $10.2 million) with 2017 income including a one-off gain from the sale of mining rights in Peru for $1.5 million.

Other expenses before exceptional items were higher at $17.1 million (2017: $11.5 million) mainly due to uncollected receivables from Republic Metals Corp of $4.9 million.

Adjusted EBITDA

Adjusted EBITDA decreased by 11% to $268.0 million (2017: $300.8 million) primarily due to the fall in the average silver price received, the reintroduction of export taxes in Argentina in September 2018 and uncollected receivables from Republic Metals Corp of $4.9 million. These were partially offset by costs savings at San Jose due to Argentinian peso devaluation.

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

$000 unless otherwise indicated	Year ended 31 Dec 2018	Year ended 31 Dec 2017	% change
Profit from continuing operations before exceptional items, net finance cost, foreign exchange (loss)/gain and income tax	72,804	92,255	(21)
Depreciation and amortisation in cost of sales	164,819	196,150	(16)
Depreciation and amortisation in administrative expenses	1,486	1,564	(5)
Exploration expenses	34,381	17,199	100
Personnel and other exploration related fixed expenses	(5,916)	(5,395)	10
Other non-cash income, net [17]	(436)	(1,023)	(57)
Adjusted EBITDA	268,010	300,750	(11)
Adjusted EBITDA margin	38%	42%

Finance income

Finance income before exceptional items of $2.0 million decreased from 2017 ($5.9 million) primarily due to the impact of one-off gains in 2017 from the discount of tax credits in Argentina ($1.9 million) and the sale of shares in Mariana Resources ($1.4 million).

Finance costs

Finance costs before exceptional items decreased from $26.1 million in 2017 to $11.2 million in 2018, principally due to the reduction in the interest rate from 7.75% (Senior Notes) to an average of 2.48% (short and medium term loan rates) resulting from the repayment of the Company's Senior Notes. In addition, gross debt was reduced from $353.8 million ($294.8 million of Senior Notes and $59.0 million of short term debt) to $156.0 million (comprising medium-term loan facility of $50.0 million and short-term debt of $106.0 million).

Foreign exchange (losses)/gains

The Group recognised a foreign exchange loss of $8.9 million (2017: $5.3 million loss) as a result of exposures in currencies other than the functional currency - primarily the Argentinean peso which significantly depreciated in 2018 but also the Peruvian sol which also fell moderately.

Income tax

The Company's pre-exceptional income tax charge was $36.5 million (2017: $13.5 million). The 2018 charge includes the negative impact of converting local currency tax basis at a higher FX rate in Argentina and Peru thus reducing future tax shields in dollar terms. The total effective rate before royalties, the Special Mining Tax and the FX impact was 31%, in line with the average statutory rates. The royalties and Special Mining Tax resulted in a charge of $7.2 million, increasing the rate by 10% whilst the impact of local currency devaluation was $12.6 million, increasing the rate further by 26%. Accordingly the final effective tax rate was 67%.

Exceptional items

Exceptional items in 2018 totalled an $11.5 million loss after tax (2017: $0.5 million gain after tax). Exceptional items principally included the payment of the premium of $11.4 million to redeem early the Senior Notes and the reversal of capitalised Senior Notes issuance costs of $4.9 million.

In addition to these items, the exceptional tax effect was a $4.8 million tax gain (2017: $3.3 million tax charge).

Cash flow and balance sheet review

Cash flow:

$000	Year ended 31 Dec 2018	Year ended 31 Dec 2017	change
Net cash generated from operating activities	185,942	233,919	(47,977)
Net cash used in investing activities	(129,981)	(121,054)	(8,927)
Cash flows used in financing activities	(228,300)	4,919	(233,219)
Net increase in cash and cash equivalents during the period	(172,339)	117,784	(290,123)

Net cash generated from operating activities decreased from $233.9 million in 2017 to $185.9 million in 2018 mainly due to lower EBITDA of $268.0 million (2017: $ 300.8 million) and higher exploration expenses of $34.4 million (2017: $17.2 million).

Net cash used in investing activities increased to $130.0 million in 2018 from $121.1 million in 2017 mainly due to the construction of the hydraulic backfill plant in Argentina, the development of the Pablo vein at Pallancata and higher capitalised exploration.

Cash used in financing activities increased to $228.3 million used from a $4.9 million inflow in 2017, primarily due the repayment of the Company's Senior Notes ($294.8 million) and $3.0 million of short term debt in Argentina. This was partially offset by new short term loans of $100.0 million raised to repurchase the Senior Notes. In addition, $20 million of dividends were paid to Hochschild Mining plc shareholders and $10.3 million to McEwen Mining.

Working capital

$000	As at 30 December 2018	As at 31 December 2017
Trade and other receivables	84,187	88,553
Inventories	58,035	56,678
Other financial assets/(liability)	47	2,591
Income tax receivable/(payable)	17,462	15,442
Trade and other payables	(126,262)	(117,860)
Provisions	(97,793)	(110,310)
Working capital	(64,324)	(64,906)

The Group's working capital position increased modestly by $0.6 million from $(64.9) million to $(64.3) million in 2018. The key drivers of the increase were: higher inventories of $1.4 million mainly due to an increase in stockpiles at the Peruvian operations; a decrease in provisions of $12.5 million mainly due to mine closure disbursements and a lower bonus provision; and an increase in income tax receivable of $2.0 million. These effects were partially offset by: lower trade and other receivables of $(4.4) million mainly in San Jose resulting from an improvement in commercial terms; an increase in trade and other payables of $(8.4) million in line with higher costs and capex; and a reduction in other financial assets of $(2.5) million resulting from the embedded derivative associated with provisional pricing within sales.

Net debt

$000 unless otherwise indicated	As at 30 December 2018	As at 31 December 2017
Cash and cash equivalents	79,704	256,988
Long term borrowings	(50,000)	(291,955)
Short term borrowings[18]	(107,067)	(67,863)
Net debt	(77,363)	(102,830)

The Group's reported net debt position was $77.4 million as at 31 December 2018 (31 December 2017: $102.8 million). In the first quarter of 2018, the Company repurchased its Senior Notes ($294.8 million) and raised $150 million in loans to finance the repurchase. This consisted of a short-term loan with Nova Scotia Bank of $50.0 million and a medium term loan with Nova Scotia Bank and Citibank of $100.0 million. During the year, the Company repaid $50 million of the medium-term facility and refinanced the $100 million of short term loans. In addition, short-term debt in Argentina was reduced by $3.0 million.

Capital expenditure^{^[19]}

$000	Year ended 31 Dec 2018	Year ended 31 Dec 2017
Arcata	526	17,557
Pallancata	28,939	19,186
San Jose	44,632	36,288
Inmaculada	57,678	52,903
Operations	131,775	125,934
Other	2,630	2,614
Total	134,405	128,548

2018 capital expenditure of $134.4 million (2017: $128.5 million) mainly comprised of operational capex of $131.8 million (2017: $125.9 million) with the small increase versus 2017 comprising increases in capital expenditure at Inmaculada (capitalised exploration and mine development), Pallancata (development of the Pablo vein) and San Jose (the hydraulic backfill project) partially offset by the significant decrease at Arcata where capital expenditure for the year has been expensed.

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. 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.

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge:

o the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

o the Management report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2018

		Year ended 31 December 2018			Year ended 31 December 2017
	Notes	Before exceptional items US$000	Exceptional items (note 10) US$000	Total US$000	Before exceptional items US$000	Exceptional items (note 10) US$000	Total US$000
Continuing operations
Revenue	3,4	704,290	-	704,290	722,572	-	722,572
Cost of sales	5	(531,788)	-	(531,788)	(549,049)	-	(549,049)
Gross profit		172,502	-	172,502	173,523	-	173,523
Administrative expenses	6	(45,783)	-	(45,783)	(51,283)	-	(51,283)
Exploration expenses	7	(34,381)	-	(34,381)	(17,199)	-	(17,199)
Selling expenses	8	(10,068)	-	(10,068)	(11,024)	-	(11,024)
Other income	11	8,062	-	8,062	10,192	-	10,192
Other expenses	11	(17,144)	-	(17,144)	(11,549)	-	(11,549)
Impairment and write-off of non-current assets, net	10	(384)	-	(384)	(405)	(2,753)	(3,158)
Profit/(loss) from continuing operations before net finance income/(cost), foreign exchange loss and income tax		72,804	-	72,804	92,255	(2,753)	89,502
Finance income	12	2,048	-	2,048	5,927	-	5,927
Finance costs	10 and 12	(11,194)	(16,346)	(27,540)	(26,095)	-	(26,095)
Foreign exchange loss		(8,946)	-	(8,946)	(5,257)	-	(5,257)
Profit/(loss) from continuing operations before income tax		54,712	(16,346)	38,366	66,830	(2,753)	64,077
Income tax (expense)/benefit	13	(36,487)	4,822	(31,665)	(13,475)	3,279	(10,196)
Profit/(loss) for the year from continuing operations		18,225	(11,524)	6,701	53,355	526	53,881
Attributable to:
Equity shareholders of the Company		24,360	(11,524)	12,836	41,035	526	41,561
Non-controlling interests		(6,135)	-	(6,135)	12,320	-	12,320
		18,225	(11,524)	6,701	53,355	526	53,881
Basic earnings/(loss) per ordinary share from continuing operations for the year (expressed in US dollars per share)	14	0.05	(0.02)	0.03	0.08	-	0.08
Diluted earnings/(loss) per ordinary share from continuing operations for the year (expressed in US dollars per share)	14	0.05	(0.02)	0.03	0.08	-	0.08

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2018

		Year ended 31 December
	Notes	2018 US$000	2017 US$000
Profit for the year		6,701	53,881
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translating foreign operations		4	139
Change in fair value of financial assets at fair value through other comprehensive income ('OCI')		(6,447)	-
Change in fair value of available-for-sale financial assets		-	(323)
Recycling of the gain on available-for-sale financial assets		-	(1,354)
Other comprehensive loss for the year, net of tax		(6,443)	(1,538)
Total comprehensive income for the year		258	52,343
Total comprehensive income attributable to:
Equity shareholders of the Company		6,393	40,023
Non-controlling interests		(6,135)	12,320
		258	52,343

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2018

	Notes	As at 31 December 2018 US$000	As at 31 December 2017 US$000
ASSETS
Non-current assets
Property, plant and equipment	15	849,172	895,666
Evaluation and exploration assets	16	155,241	147,399
Intangible assets	17	24,363	24,544
Financial assets at fair value through other comprehensive income ('OCI')	18	5,296	-
Available-for-sale financial assets	18	-	6,264
Trade and other receivables	19	5,451	7,487
Other financial assets		47	1,333
Deferred income tax assets	26	1,504	2,400
		1,041,074	1,085,093
Current assets
Inventories	20	58,035	56,678
Trade and other receivables	19	78,736	81,066
Income tax receivable		20,733	21,241
Other financial assets		-	1,258
Cash and cash equivalents	21	79,704	256,988
		237,208	417,231
Total assets		1,278,282	1,502,324
EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Parent
Equity share capital		225,409	224,315
Share premium		438,041	438,041
Treasury shares		-	(140)
Other reserves		(223,156)	(217,061)
Retained earnings		278,995	286,356
		719,289	731,511
Non-controlling interests		71,003	90,177
Total equity		790,292	821,688
Non-current liabilities
Trade and other payables	23	787	1,081
Borrowings	24	50,000	291,955
Provisions	25	94,640	104,107
Deferred income	22	31,966	30,409
Deferred income tax liabilities	26	71,231	56,040
		248,624	483,592
Current liabilities
Trade and other payables	23	125,475	116,779
Borrowings	24	107,067	67,863
Provisions	25	3,153	6,203
Deferred income	22	400	400
Income tax payable		3,271	5,799
		239,366	197,044
Total liabilities		487,990	680,636
Total equity and liabilities		1,278,282	1,502,324

These financial statements were approved by the Board of Directors on 19 February 2019 and signed on its behalf by:

Ignacio Bustamante

Chief Executive Officer

19 February 2019

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2018

		Year ended 31 December
	Notes	2018 US$000	2017 US$000
Cash flows from operating activities
Cash generated from operations		222,667	287,799
Interest received		2,337	1,445
Interest paid		(28,758)	(23,942)
Payment of mine closure costs	25	(4,494)	(4,359)
Income tax, special mining tax and mining royalty paid		(5,810)	(27,024)
Net cash generated from operating activities		185,942	233,919
Cash flows from investing activities
Purchase of property, plant and equipment		(114,498)	(119,630)
Purchase of evaluation and exploration assets	16	(10,221)	(4,878)
Purchase of intangibles	17	(1,907)	(16)
Purchase of financial assets at fair value through OCI	18	(6,433)	-
Purchase of available-for-sale financial assets		-	(4,383)
Proceeds from sale of financial assets at fair value through OCI		954	-
Proceeds from sale of available-for-sale financial assets		-	1,567
Proceeds from sale of other assets	18	30	1,570
Proceeds from deferred income	22	2,000	4,000
Proceeds from sale of property, plant and equipment		94	716
Net cash used in investing activities		(129,981)	(121,054)
Cash flows from financing activities
Proceeds from borrowings	24	266,500	69,500
Repayment of borrowings	24	(463,393)	(38,000)
Purchase of treasury shares		(579)	-
Dividends paid to non-controlling interests	27	(10,829)	(12,585)
Dividends paid	27	(19,999)	(13,996)
Cash flows generated from/(used in) financing activities		(228,300)	4,919
Net (decrease)/increase in cash and cash equivalents during the year		(172,339)	117,784
Exchange difference		(4,945)	(775)
Cash and cash equivalents at beginning of year		256,988	139,979
Cash and cash equivalents at end of year	21	79,704	256,988

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year 31 December 2018

					Other reserves
	Notes	Equity Share capital US$000	Share premium US$000	Treasury shares US$000	Unrealised gain on available- for-sale financial assets and financial assets at fair value through OCI US$000	Dividends expired US$000	Cumulative translation adjustment US$000	Merger reserve US$000	Share- based payment reserve US$000	Total other reserves US$000	Retained earnings US$000	Capital and reserves attributable to shareholders of the Parent US$000	Non-controlling interests US$000	Total equity US$000
Balance at 1 January 2017		224,315	438,041	(426)	740	-	(13,851)	(210,046)	5,869	(217,288)	258,269	702,911	90,442	793,353
Other comprehensive income/(expense)		-	-	-	(1,677)	-	139	-	-	(1,538)	-	(1,538)	-	(1,538)
Profit for the year		-	-	-	-	-	-	-	-	-	41,561	41,561	12,320	53,881
Total comprehensive income/ (expense) for the year		-	-	-	(1,677)	-	139	-	-	(1,538)	41,561	40,023	12,320	52,343
Exercise of share options		-	-	286	-	-	-	-	(48)	(48)	(238)	-	-	-
Dividends	27	-	-	-	-	-	-	-	-	-	(13,996)	(13,996)	-	(13,996)
Dividends to non - controlling interests	27	-	-	-	-	-	-	-	-	-	-	-	(12,585)	(12,585)
Share-based payments		-	-	-	-	-	-	-	1,813	1,813	760	2,573	-	2,573
Balance at 31 December 2017		224,315	438,041	(140)	(937)	-	(13,712)	(210,046)	7,634	(217,061)	286,356	731,511	90,177	821,688
Other comprehensive income/(expense)		-	-	-	(6,447)	-	4	-	-	(6,443)	-	(6,443)	-	(6,443)
Profit for the year		-	-	-	-	-	-	-	-	-	12,836	12,836	(6,135)	6,701
Total comprehensive income/ (expense) for the year		-	-	-	(6,447)	-	4	-	-	(6,443)	12,836	6,393	(6,135)	258
Sale of financial assets at fair value through OCI		-	-	-	3,060	-	-	-		3,060	(3,060)	-	-	-
Issuance of shares		1,094	-	-	-	-	-	-	-	-	-	1,094	-	1,094
Exercise of share options		-	-	719	-	-	-	-	(4,675)	(4,675)	2,862	(1,094)	-	(1,094)
Expiration of dividends		-	-	-	-	62	-	-	-	62	-	62	-	62
Dividends	27	-	-	-	-	-	-	-	-	-	(19,999)	(19,999)	-	(19,999)
Dividends to non - controlling interests	27	-	-	-	-	-	-	-	-	-	-	-	(13,039)	(13,039)
Purchase of treasury shares		-	-	(579)	-	-	-	-	-	-	-	(579)		(579)
Share-based payments		-	-	-	-	-	-	-	1,901	1,901	-	1,901	-	1,901
Balance at 31 December 2018		225,409	438,041	-	(4,324)	62	(13,708)	(210,046)	4,860	(223,156)	278,995	719,289	71,003	790,292

1 Notes to the consolidated financial statements

For the year ended 31 December 2018

The financial information for the year ended 31 December 2018 and 2017 contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the years ended 31 December 2018 and 2017 have been extracted from the consolidated financial statements of Hochschild Mining plc for the year ended 31 December 2018 which have been approved by the directors on 19 February 2019 and will be delivered to the Registrar of Companies in due course. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2 Significant accounting policies

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the Companies Act 2006.

The basis of preparation and accounting policies used in preparing the consolidated financial statements for the years ended 31 December 2018 and 2017 are set out below. The consolidated financial statements have been prepared on a historical cost basis except for the revaluation of certain financial instruments that are measured at fair value at the end of each reporting period, as explained below. These accounting policies have been consistently applied, except for the effects of the adoption of new and amended accounting standard.

The financial statements are presented in US dollars (US$) and all monetary amounts are rounded to the nearest thousand ($000) except when otherwise indicated.

Changes in accounting policy and disclosures

The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statement for the year ended 31 December 2017. Amendments to standards and interpretations which came into force during the year did not have a significant impact on the Group's financial statements and are as follows:

• IFRS 15 Revenue from Contracts with Customers, applicable for annual periods beginning on or after 1 January 2018.

The IASB has issued a new standard for the recognition of revenue arising from contracts with customers. The new revenue standard supersedes all current revenue recognition requirements under IFRS.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The Group evaluated recognition and measurement of revenue based on the five-step model in IFRS 15 and has not identified significant financial impacts, hence no adjustments were recorded derived from the adoption of IFRS 15 other than certain reclassifications as explained below.

The Group adopted the new standard from 1 January 2018 applying the simplified transition method and modified retrospective approach. Certain disclosures changed as a result of the requirements of IFRS 15.

The key issues identified, and the Group's views and perspective are set below.

- Embedded derivatives arising from the sales: As discussed in note 2(p), some of the Group's sales of gold and silver contain provisional pricing features which were considered to be embedded derivatives recorded within sales. The fair value is based on the most recent determined estimate of metal content and the estimated forward price that the entity expects to receive at the end of the quotational period stipulated in the contract. The revaluation of provisionally priced contracts is recorded as an adjustment to revenue. IFRS 15 does not change the assessment of the provisional price adjustment, but they are not considered within the scope of IFRS 15, and consequently have to be disclosed separately (refer to note 4).

- Impact of shipping terms: The Group sells a portion of its production on CIF Incoterms and therefore the Group is responsible for shipping services after the date at which control of the gold and silver passes to the customer. Under IAS 18, these shipping services were not considered to be part of the revenue transaction and thus the Group disclosed them as selling expenses. However, under IFRS 15 the group reclassified the portion of those selling expenses relating to transport of gold and silver from the Group's production plants to the ports and to the customers, and reclassify those costs to cost of sales. . The shipping services reclassified for the period ending 31 December 2018 amounted to US$6,102,000. The Group assessed the amount of costs related to shipping services which are considered a separate performance obligation under IFRS 15 and therefore, a portion of the revenue currently recognised when the tittle has passed to the customer will need to be deferred and recognised as the shipping services are subsequently provided. Under IFRS 15 the costs related to shipping services are considered a separate performance obligation and therefore they should be deferred and recognised as the shipping services are subsequently provided. Based on the Group's assessment, the shipping services being provided at the end of the reporting period are immaterial and therefore these have not been deferred. The total shipping services recognised during the year as a separate performance obligation under IFRS 15 amount to $5,485,000 and have been disclosed in note 4.

• IFRS 9 Financial Instruments, applicable for annual periods beginning on or after 1 January 2018.

IFRS 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

Based on the assessment performed, the new guidance has the following impacts on the classification and measurement of its financial instruments:

- Classification and measurement of the embedded derivatives arising from sales: The financial assets and liabilities arising from the revaluation provisional priced contracts are currently disclosed separately in the balance sheet as part of "other financial assets/liabilities". Under IFRS 9, the embedded derivative will no longer be separated from the host contract and therefore the revaluation of provisionally priced contracts is disclosed within the receivable of the host contract in "trade and other receivables".

- Financial assets at fair value through Other Comprehensive Income ('OCI'): The equity instruments that were classified as available-for-sale financial assets satisfy the conditions for classification as at fair value through other comprehensive income (FVOCI) and therefore there is no impact in classification. Gains and losses accumulated in other comprehensive income are not recycled to the income statement. Furthermore, under IFRS 9 there is no exception to carry investments in entities at costs less any recognised impairment and therefore, fair value will need to be calculated. There are no other significant changes to the accounting treatment of these assets.

- Impairment: The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. The Group applies the simplified approach and records lifetime expected losses on all trade receivables. However, given the short term nature of the Groups receivables, there is not a significant impact in the financial statements.

- Disclosures: The standard introduces expanded disclosure requirements and changes in presentation included in these report.

The Group also assessed other changes introduced by IFRS 9 that have no impacts in the financial statements as explained below:

- There is no impact on the accounting for financial liabilities, as the new requirements of IFRS 9 only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the group does not have any such liabilities.

- The Group does not currently apply hedge accounting and therefore there are no impacts in the financial statements.

- No impacts in relation to derecognition of financial instruments as the same rules have been transferred from IAS 39 Financial Instruments: Recognition and Measurement.

• IFRS 2 Classification and Measurement of Share-based Payment Transactions - Amendments to IFRS 2, applicable for annual periods beginning on or after 1 January 2018.

The amendments are related to the classification and measurement of share-based payment transactions and it does not require to restate prior periods. The adoption of these amendments does not have a significant impact on the Group´s financial position or performance.

Standards, interpretations and amendments to existing standards that are not yet effective and have not been previously adopted by the Group

Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2019 or later periods but which the Group has not previously adopted. Those that are applicable to the Group are as follows:

• IFRS 16 Leases, applicable for annual periods beginning on or after 1 January 2019.

IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. The standard provides a single lessee accounting model, including the exemptions to recognise assets and liabilities for all leases unless the lease term is 12 months or less or when the underlying asset has a low value. Lease costs will be recognised in the income statement over the lease term in the form of depreciation on the right of use asset and finance charges representing the unwinding of the discount on the lease liability. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. The Group has progressed its implementation project, focusing on a review of contracts, aggregation of data to support the evaluation of the accounting impacts of applying the new standard and assessment of the need for changes to systems and processes. Accordingly, the Group has decided to apply the exemption of short term leases (12 months or above) and determined that only contracts with a value of US$1,000,000 or more will have a significant effect on the Group´s Financial Statements, increasing the assets and liabilities and changing the classification and timing of expenses, so contracts with a value less than US$1,000,000 are not to be considered. As at 31 December 2018, the Group has identified one contract applicable for a total value of US$5,413,000, then since 1 January 2019 the Group will recognise a right of use asset by contract and its corresponding liability and finance expenses.

• IFRIC 23 Uncertainty over income tax treatments, applicable for annual periods beginning on or after 1 January 2019.

IFRIC 23 clarifies the accounting for uncertainties in income taxes. This interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. The Group will adopt. The Interpretation specifically addresses the following:

o Whether an entity considers uncertain tax treatments separately;

o The assumptions an entity makes about the examination of tax treatments by taxation authorities;

o How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and

o How an entity considers changes in facts and circumstances

The interpretation is effective for annual reporting periods beginning on or after 1 January 2019, but certain transition reliefs are available. The Group will apply interpretation from its effective date, however we do not expect significant impacts on the financial statements on the implementation as the Group's current treatment is in line with the requirements of the interpretation.

The Group is analysing the effect of the standards and plans to adopt the new standards on the required effective date.

3 Segment reporting

The Group's activities are principally related to mining operations which involve the exploration, production and sale of gold and silver. Products are subject to the same risks and returns and are sold through similar distribution channels. The Group undertakes a number of activities solely to support mining operations including power generation and services. Transfer prices between segments are set on an arm's length basis in a manner similar to that used for third parties. Segment revenue, segment expense and segment results include transfers between segments at market prices. Those transfers are eliminated on consolidation.

For internal reporting purposes, management takes decisions and assesses the performance of the Group through consideration of the following reporting segments:

• Operating units - San Jose, which generates revenue from the sale of gold, silver (dore and concentrate).

• Operating unit - Arcata and Pallancata, which generate revenue from the sale of gold and silver (concentrate).

• Operating unit - Inmaculada, which generates revenue from the sale of gold and silver (dore).

• Exploration, which explores and evaluates areas of interest in brownfield and greenfield sites with the aim of extending the life‑of‑mine
of existing operations and to assess the feasibility of new mines. The exploration segment includes costs charged to the profit and loss
and capitalised as assets.

• Other - includes the profit or loss generated by Empresa de Transmisión Aymaraes S.A.C. (a power transmission company that absorbed Empresa de Transmisión Callalli S.A.C. on 1 June 2016).

The Group's administration, financing, other activities (including other income and expense), and income taxes are managed at a corporate
level and are not allocated to operating segments.

Segment information is consistent with the accounting policies adopted by the Group. Management evaluates the financial information
based on International Financial Reporting Standards (IFRS) as adopted for use in the European Union.

The Group measures the performance of its operating units by the segment profit or loss that comprises gross profit, selling expenses
and exploration expenses.

Segment assets include items that could be allocated directly to the segment.

(a) Reportable segment information

	Arcata US$000	Pallancata US$000	San Jose US$000	Inmaculada US$000	Exploration US$000	Other1 US$000	Adjustment and eliminations US$000	Total US$000
Year ended 31 December 2018
Revenue from external customers	57,836	138,221	207,431	306,108	-	340	-	709,936
Inter segment revenue	-	-	-	-	-	6,328	(6,328)	-
Total revenue from customers	57,836	138,221	207,431	306,108	-	6,668	(6,328)	709,936
Provisional pricing adjustment	(1,199)	(2,378)	(2,064)	(5)	-	-	-	(5,646)
Total revenue	56,637	135,843	205,367	306,103	-	6,668	(6,328)	704,290

Segment profit/(loss)	(7,314)	31,226	20,289	116,361	(34,800)	11,178	(8,887)	128,053
Others2								(89,687)
Profit from continuing operations before income tax								38,366

Other segment information
Depreciation3	(178)	(36,377)	(52,006)	(74,878)	(377)	(4,771)	-	(168,587)
Amortisation	-	-	(1,324)	(221)	(462)	(84)	-	(2,091)
Impairment and write-off of assets, net	(38)	(31)	(233)	(56)	-	(26)	-	(384)

Assets
Capital expenditure	526	27,079	44,632	57,678	1,856	2,634	-	134,405

Current assets	5,155	27,076	40,220	27,479	7	3,299	-	103,236
Other non-current assets	6,395	84,449	172,726	517,321	195,975	51,910	-	1,028,776
Total segment assets	11,550	111,525	212,946	544,800	195,982	55,209	-	1,132,012
Not reportable assets4	-	-	-	-	-	146,270	-	146,270
Total assets	11,550	111,525	212,946	544,800	195,982	201,479	-	1,278,282

1 'Other' revenue relates to revenues earned by Empresa de Transmisión Aymaraes S.A.C.

2 Comprised of administrative expenses of US$45,783,000, other income of US$8,062,000, other expenses of US$17,144,000, write-off of assets (net) of US$384,000, finance income of US$2,048,000, finance expense of US$27,540,000, and foreign exchange loss of US$8,946,000.

3 Includes depreciation capitalised in the Crespo project (US$810,000), and San Jose unit (US$1,783,000).

4 Not reportable assets are comprised of financial assets at fair value through OCI of US$5,296,000, other receivables of US$38,986,000, other financial assets of US$47,000, income tax receivable of US$20,733,000, deferred income tax asset of US$1,504,000 and cash and cash equivalents of US$79,704,000.

	Arcata US$000	Pallancata US$000	San Jose US$000	Inmaculada US$000	Exploration US$000	Other1 US$000	Adjustment and eliminations US$000	Total US$000
Year ended 31 December 2017
Revenue from external customers	77,940	120,529	227,094	296,594	-	415	-	722,572
Inter segment revenue	-	-	-	-	-	5,712	(5,712)	-
Total revenue	77,940	120,529	227,094	296,594	-	6,127	(5,712)	722,572

Segment profit/(loss)	(4,212)	48,926	43,162	73,737	(17,393)	10,832	(9,752)	145,300
Others2								(81,223)
Profit from continuing operations before income tax								64,077

Other segment information
Depreciation3	(17,447)	(19,479)	(49,019)	(107,489)	(413)	(5,228)	-	(199,075)
Amortisation	-	-	(1,247)	-	(462)	(142)	-	(1,851)
Impairment and write-off of assets	(43,135)	31,872	(205)	(31)	8,364	(23)	-	(3,158)

Assets
Capital expenditure	17,557	18,906	36,288	52,903	2,026	868	-	128,548

Current assets	5,483	21,699	47,398	22,707	30	2,570	-	99,887
Other non-current assets	5,859	91,065	182,138	535,840	194,777	57,930	-	1,067,609
Total segment assets	11,342	112,764	229,536	558,547	194,807	60,500	-	1,167,496
Not reportable assets4	-	-	-	-	-	334,828	-	334,828
Total assets	11,342	112,764	229,536	558,547	194,807	395,328	-	1,502,324

1 'Other' revenue relates to revenues earned by Empresa de Transmisión Aymaraes S.A.C.

2 Comprised of administrative expenses of US$51,283,000, other income of US$10,192,000, other expenses of US$11,549,000, impairment and write-off of assets (net) of US$3,158,000, finance income of US$5,927,000, finance expense of US$26,095,000, and foreign exchange loss of US$5,257,000.

3 Includes depreciation capitalised in the Crespo project (US$831,000), and San Jose unit (US$2,290,000).

4 Not reportable assets are comprised of available-for-sale financial assets of US$6,264,000, other receivables of US$45,344,000, other financial assets of US$2,591,000, income tax receivable of US$21,241,000, deferred income tax asset of US$2,400,000 and cash and cash equivalents of US$256,988,000.

(b) Geographical information

The revenue for the period based on the country in which the customer is located is as follows:

	Year ended 31 December
	2018 US$000	2017 US$000
External customer
USA	357,096	370,035
Korea	97,943	102,596
Switzerland	89,285	73,186
Peru	70,842	45,274
Germany	32,277	34,777
Canada	28,661	60,991
Japan	26,084	8,502
Bulgaria	2,102	27,211
Total	704,290	722,572
Inter-segment
Peru	6,328	5,712
Total	710,618	728,284

In the periods set out below, certain customers accounted for greater than 10% of the Group's total revenues as detailed in the following table:

	Year ended 31 December 2018			Year ended 31 December 2017
	US$000	% Revenue	Segment	US$000	% Revenue	Segment
Bank of Nova Scotia	162,843	23%	Inmaculada	44,758	6%	Inmaculada
LS Nikko	97,943	14%	Pallancata and San Jose	102,596	14%	Pallancata and San Jose
Republic Metals Corporation	86,974	12%	Inmaculada and San Jose	116,274	16%	Inmaculada and San Jose
Asahi Refining USA	85,136	12%	Inmaculada	130,024	18%	Inmaculada
Argor Heraus	74,210	11%	San Jose	48,843	7%	San Jose

Non-current assets, excluding financial instruments and deferred income tax assets, were allocated to the geographical areas in which the assets are located as follows:

	As at 31 December
	2018 US$000	2017 US$000
Peru	753,016	782,659
Argentina	172,727	182,139
Mexico	38,834	38,841
Chile	64,199	63,970
Total non-current segment assets	1,028,776	1,067,609
Available-for-sale financial assets	-	6,264
Financial assets at fair value through OCI	5,296	-
Trade and other receivables	5,451	7,487
Other financial assets	47	1,333
Deferred income tax assets	1,504	2,400
Total non-current assets	1,041,074	1,085,093

4 Revenue

	Year ended 31 December
	2018 US$000	2017 US$000
Gold (from dore bars)	277,357	266,214
Silver (from dore bars)	131,818	144,762
Gold (from concentrate)	101,492	106,101
Silver (from concentrate)	193,238	205,080
Other minerals (from concentrate)	45	-
Services	340	415
Total	704,290	722,572

Included within revenue is a loss of US$5,646,000 relating to provisional pricing adjustments arising on sales of concentrates and dore, mainly contributed by provisional pricing of $4,515,000 from silver concentrates and $1,080,000 from gold concentrates, resulting in total revenue from customers in the amount of US$709,936,000 (2017: included within revenue is a gain of US$2,578,000 relating to provisional pricing adjustments representing the change in the fair value of embedded derivatives).

Included within revenue is a transaction price of US$5,485,000 related to the shipping services provided by the Group to the customers arising on sale of concentrates (US$3,965,000, Gold: US$1,806,000, Silver: US$2,159,000) and doré (US$1,520,000, Gold: 856,000, Silver: US$664,000).

Other sources of revenue are disclosed in note 12.

5 Cost of sales

Included in cost of sales are:

	Year ended 31 December
	2018 US$000	2017 US$000
Depreciation and amortisation in cost of sales1	164,819	196,150
Personnel expenses (notes 10)	116,065	124,507
Mining royalty (note 29)	5,857	6,677
Change in products in process and finished goods	2,481	4,131
Other items2	1,141	3,241

1 The depreciation and amortisation in production cost is US$164,244,000 (2017: US$196,241,000).

2 Other items includes costs related to stoppage of US$202,000 and termination benefits of US$939,000 at the San José mine unit (2017: Other items included costs related to stoppage at Pallancata and San Jose mine units).

6 Administrative expenses

	Year ended 31 December
	2018 US$000	2017 US$000
Personnel expenses (note 9)	28,165	34,775
Professional fees	3,614	3,233
Donations	785	586
Lease rentals	1,372	1,474
Travel expenses	1,061	1,020
Communications	430	415
Indirect taxes	1,041	2,173
Depreciation and amortisation	1,486	1,564
Technology and systems	537	686
Security	784	773
Supplies	145	123
Other1	6,363	4,461
Total	45,783	51,283

1 Predominantly related to third-party services of US$3,434,000 (2017: US$1,273,000), technical services of US$144,000 (2017: US$553,000), repair and maintenance of US$480,000 (2017: US$388,000) and impairment of receivables of US$nil (2017: US$79,000).

7 Exploration expenses

	Year ended 31 December
	2018 US$000	2017 US$000
Mine site exploration1
Arcata	9,024	3,029
Ares	699	69
Inmaculada	1,732	1,127
Pallancata	2,162	1,279
San Jose	4,224	3,407
	17,841	8,911
Prospects2
Peru	815	336
USA	2,928	-
Argentina	-	30
Chile	2,213	267
	5,956	633
Generative3
Peru	4,640	1,862
USA	28	398
	4,668	2,260
Personnel (note 9)	5,397	4,646
Others	519	749
Total	34,381	17,199

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.

The increase in exploration expenses is mainly explained by the work performed at the Arcata mine unit trying to identify new possible ore targets and the signature of new agreements related to projects in United States, Chile and Peru.

The Group determines the cash flows which relate to the exploration activities of the companies engaged only in exploration. Exploration activities incurred by Group operating companies are not included since it is not practicable to separate the liabilities related to the exploration activities of these companies from their operating liabilities.

Cash outflows on exploration activities were US$10,498,000 in 2018 (2017: US$2,600,000).

8 Selling expenses

	Year ended 31 December
	2018 US$000	2017 US$000
Transportation of dore, concentrate and maritime freight1	-	6,477
Personnel expenses (note 10)	302	296
Warehouse services	2,032	1,742
Taxes2	5,148	16
Other	2,586	2,493
Total	10,068	11,024

1 Since 2018, under IFRS 15 the Group reclassified the portion of the selling expenses relating to transport of gold and silver from the Group's production plants to the ports and to the customer, to cost of sales (2018: US$6,102,000).

2 Corresponds to the export duties in Argentina, applicable since September 2018.

9 Personnel expenses

	Year ended 31 December
	2018 US$000	2017 US$000
Salaries and wages	110,290	116,597
Other legal contributions	23,268	26,937
Statutory holiday payments	7,282	7,124
Long Term Incentive Plan	4,487	9,348
Restricted share plan	1,374	2,090
Termination benefits	4,101	2,228
Other	2,764	2,670
Total	153,566	166,994

Personnel expenses are distributed as follows:

	Year ended 31 December
	2018 US$000	2017 US$000
Cost of sales	116,065	124,507
Administrative expenses	28,165	34,775
Exploration expenses	5,398	4,646
Selling expenses	302	296
Other expenses	3,225	1,621
Capitalised as property, plant and equipment	411	1,149
Total	153,566	166,994

Average number of employees for 2018 and 2017 were as follows:

	Year ended 31 December
	2018	2017
Peru	2,878	2,920
Argentina	1,220	1,175
Chile	3	3
United Kingdom	10	10
Total	4,111	4,108

10 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.

	Year ended 31 December 2018 US$000	Year ended 31 December 2017 US$000
(Impairment)/impairment reversal and write-off of non-financial assets, net
Impairment of assets3	-	(43,009)
Reversal of impairment of assets3	-	40,256
Total	-	(2,753)
Finance costs
Expenses related to the repayment of the bond1	(16,346)	-
Total	(16,346)	-
Income tax benefit2 and 4	4,822	3,279
Total	4,822	3,279

The exceptional items for the year ended 31 December 2018 are as follows:

1 Premium and other finance expenses related to the repayment of Compañia Minera Ares ("CMA") bond (refer to note 24 (a)).

2 Deferred tax credit generated by the premium and other finance expenses related to the repayment of the CMA bond.

The exceptional items for the year ended 31 December 2017 are as follows:

3 Impairment of the Arcata mine unit of US$43,009,000 and reversals of impairment related to the Pallancata mine unit of US$31,892,000 and San Felipe project of US$8,364,000.

4 Deferred tax credit generated by the impairment of the Arcata mine unit, net by the reversal on impairment of the Pallancata mine unit.

11 Other income and other expenses before exceptional items

	Year ended 31 December 2018	Year ended 31 December 2017
	Before exceptional items US$000	Before exceptional items US$000
Other Income
Decrease in provision for mine closure (note 25(3))	-	1,428
Export credits1	1,287	1,613
Lease rentals	97	253
Gain on sale of other assets2	-	1,495
Logistic services	4,128	3,552
Other3	2,550	1,851
Total	8,062	10,192
Other expenses
Increase in provision for mine closure (note 25(3))	(52)	-
Provision of obsolescence of supplies	(384)	(542)
Contingencies	(140)	(347)
Donations	(9)	(754)
Write off of value added tax	(66)	(221)
Corporate social responsibility contribution in Argentina4	(2,382)	(3,063)
Termination benefits Arcata mine unit5	(1,324)	-
Impairment of receivables6	(5,656)	(722)
Other7	(7,131)	(5,900)
Total	(17,144)	(11,549)

1 Corresponds to the benefit of silver refund in Argentina.

2 Corresponds to the gain generated by the sale of mining rights of the Ricky project in 2017.

3 Mainly corresponds to the gain on recovery of expenses of US$930,000 (2017: US$462,000), gain on sale of supplies of US$410,000 (2017: US$Nil) and the gain recognised for the Mosquito project of US$400,000 (2017: US$400,000).

4 Relates to a contribution in Argentina to the Santa Cruz province, effective since January 2016 and calculated as a proportion of sales.

5 Due to the redundancy of 107 employees in the Arcata mine unit, aligned with the mine plan for 2018.

6 Mainly related to the accrual of a trade receivable from Republic Metals Corp, a costumer declared bankrupt under the United States bankruptcy code chapter 11.

7 Mainly corresponds to the expenses due to care and maintenance of Ares mine unit of US$5,688,000 (2017: US$4,369,000), concessions of US$320,000 (2017: US$491,000) and rentals of US$191,000 (2017: US$205,000)

12 Finance income and finance costs before exceptional items

	Year ended 31 December 2018	Year ended 31 December 2017
	Before exceptional items US$000	Before exceptional items US$000
Finance income
Interest on deposits and liquidity funds	2,001	1,696
Interest income	2,001	1,696
Gain from changes in the fair value of financial instruments	-	647
Gain on exchange of available-for-sale financial assets	-	1,386
Gain on discount of other receivables 1	47	1,946
Other	-	252
Total	2,048	5,927
Finance costs
Interest on secured bank loans (note 24)	(4,923)	(185)
Other interest	(726)	(813)
Interest on bond (note 24)	(1,392)	(24,088)
Interest expense	(7,041)	(25,086)
Unwind of discount on mine rehabilitation (note 25)	(368)	(280)
Loss on discount of other receivables1	(1,625)	-
Loss from changes in the fair value of financial instruments2	(1,256)	-
Loss on sale of available-for-sale financial assets	-	(32)
Other	(904)	(697)
Total	(11,194)	(26,095)

1 Mainly related to the effect of the discount of tax credits in Argentina and Peru.

2 Related to the fair value adjustments of the warrants of Red Eagle Mining Corporation acquired in 2017.

13 Income tax expense

	Year ended 31 December 2018			Year ended 31 December 2017
	Before exceptional items US$000	Exceptional items US$000	Total US$000	Before exceptional items US$000	Exceptional items US$000	Total US$000
Current corporate income tax from continuing operations
Corporate income tax charge	8,338	-	8,338	15,070	-	15,070
	8,338	-	8,338	15,070	-	15,070
Deferred taxation
Origination and reversal of temporary differences from continuing operations (note 26)	20,909	(4,822)	16,087	2,755	(3,279)	(524)
Effect of change in income tax rates1	-	-	-	(10,780)	-	(10,780)
	20,909	(4,822)	16,087	(8,025)	(3,279)	(11,304)
Corporate income tax	29,247	(4,822)	24,425	7,045	(3,279)	3,766

Current mining royalties
Mining royalty charge (note 29)	4,494	-	4,494	4,201	-	4,201
Special mining tax charge (note 29)	2,746	-	2,746	2,229	-	2,229
Total current mining royalties	7,240	-	7,240	6,430	-	6,430

Total taxation charge/(credit) in the income statement	36,487	(4,822)	31,665	13,475	(3,279)	10,196

1 On 29 December 2017, the Argentinian government enacted a tax reform. The main change is the reduction in the statutory income tax rate, from its current level of 35% to 30% with effect from 1 January 2018 and to 25% with effect from 1 January 2020.

The weighted average statutory income tax rate was 32.2% for 2018 and 31.9% for 2017. This is calculated as the average of the statutory tax rates applicable in the countries in which the Group operates, weighted by the profit/(loss) before tax of the Group companies in their respective countries as included in the consolidated financial statements.

The change in the weighted average statutory income tax rate is due to a change in the weighting of profit/(loss) before tax in the various jurisdictions in which the Group operates.

The tax related to items charged or credited to equity is as follows:

	As at 31 December
	2018 US$000	2017 US$000
Deferred taxation:
Total tax credit in the statement of other comprehensive income	-	-

The total taxation charge on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to the consolidated profits of the Group companies as follows:

	As at 31 December
	2018 US$000	2017 US$000
Profit from continuing operations before income tax	38,366	64,077
At average statutory income tax rate of 32.2% (2017: 31.9%)	12,352	20,459
Expenses not deductible for tax purposes	593	776
Deferred tax recognised on special investment regime1	(1,399)	(1,819)
Movement in unrecognised deferred tax2	2,915	(1,324)
Change in statutory income tax rate3	-	(10,780)
Utilisation of losses not previously recognised	-	(1,618)
Special mining tax and mining royalty deductible for corporate income tax	(2,136)	(1,897)
Other	(1,971)	1,012
Corporate income tax at average effective income tax rate of 27.0% (2017: 7.5%) before foreign exchange effect	10,354	4,809
Special mining tax and mining royalty4	7,240	6,430
Corporate income tax and mining royalties at average effective income tax rate of 45.9% (2017: 17.5%)	17,594	11,239
Foreign exchange rate effect5	14,071	(1,043)
Total taxation charge in the income statement at average effective tax rate 82.5% (2017: 15.9%) from continuing operations	31,665	10,196

1 Argentina benefits from a special investment regime that allows for a super (double) deduction in calculating its taxable profits for all costs relating to prospecting, exploration and metallurgical analysis, pilot plants and other expenses incurred in the preparation of feasibility studies for mining projects.

2 Includes the income tax credit on mine closure provision of US$412,000 (2017: US$3,010,000), the tax charge related to the Inmaculada mine unit depreciation of US$1,631,000 (2017: US$3,246,000), the effect of not recognised tax losses of US$1,696,000 (2017: US$949,000) and the unrecognised deferred tax on San Felipe of US$nil (2017: credit of US$2,509,000).

3 The Argentinian government approved a reduction in the statutory income tax rate, from 35% to 30% with effect from 1 January 2018 and 25% with effect from 1 January 2020.

4 Corresponds to the impact of a mining royalty and special mining tax in Peru (note 29).

5 The foreign exchange effect is composed of US$9,311,000 (2017: US$2,893,000) from Argentina and US$4,760,000 (2017: credit of US$3,936,000) from Peru. This mainly corresponds to the foreign exchange effect of converting tax bases and monetary items from local currency to the corresponding functional currency. The main contributor of the foreign exchange effect on the tax charge in 2018 is the devaluation of the Argentinian peso.

14 Basic and diluted earnings per share

Earnings per share ('EPS') is calculated by dividing profit for the year attributable to equity shareholders of the Company by the weighted average number of ordinary shares issued during the year.

The Company has dilutive potential ordinary shares.

As at 31 December 2018 and 2017, EPS has been calculated as follows:

	As at 31 December
	2018	2017
Basic earnings/(loss) per share from continuing operations
Before exceptional items (US$)	0.05	0.08
Exceptional items (US$)	(0.02)	-
Total for the year and from continuing operations (US$)	0.03	0.08
Diluted earnings/(loss) per share from continuing operations
Before exceptional items (US$)	0.05	0.08
Exceptional items (US$)	(0.02)	-
Total for the year and from continuing operations (US$)	0.03	0.08

Profit from continuing operations before exceptional items and attributable to equity holders of the parent is derived as follows:

	As at 31 December
	2018	2017
Profit attributable to equity holders of the parent - continuing operations (US$000)	12,836	41,561
Exceptional items after tax - attributable to equity holders of the parent (US$000)	11,524	(526)
Profit from continuing operations before exceptional items attributable to equity holders of the parent (US$000)	24,360	41,035
Profit from continuing operations before exceptional items attributable to equity holders of the parent for the purpose of diluted earnings per share (US$000)	24,360	41,035

The following reflects the share data used in the basic and diluted earnings per share computations:

	As at 31 December
	2018	2017
Basic weighted average number of ordinary shares in issue (thousands)	508,878	507,204
Effect of dilutive potential ordinary shares related to contingently issuable shares (thousands)	4,018	7,768
Weighted average number of ordinary shares in issue for the purpose of diluted earnings per share (thousands)	512,896	514,972

15 Property, plant and equipment

	Mining properties and development costs1 US$000	Land and buildings US$000	Plant and equipment US$000	Vehicles US$000	Mine closure asset US$000	Construction in progress and capital advances US$000	Total US$000
Year ended 31 December 2018
Cost
At 1 January 2018	1,259,902	496,924	557,482	6,611	98,537	33,409	2,452,865
Additions	83,106	754	18,888	82	-	19,447	122,277
Change in discount rate	-	-	-	-	(1,126)	-	(1,126)
Change in mine closure estimate	-	-	-	-	(1,014)	-	(1,014)
Disposals	-	-	(156)	(212)	-	-	(368)
Write-offs	-	(176)	(1,094)	(392)	-	(21)	(1,683)
Transfers and other movements2	2,508	21,948	15,327	591	-	(37,869)	2,505
At 31 December 2018	1,345,516	519,450	590,447	6,680	96,397	14,966	2,573,456
Accumulated depreciation and impairment
At 1 January 2018	899,381	266,069	318,817	4,745	67,155	1,032	1,557,199
Depreciation for the year	100,185	32,095	31,983	476	3,848	-	168,587
Disposals	-	-	(141)	(191)	-	-	(332)
Write-offs	-	(141)	(808)	(350)	-	-	(1,299)
Impairment/(reversal of impairment), net	-	-	-	-	-	-	-
Transfers and other movements2	129	1	57	27	-	(85)	129
At 31 December 2018	999,695	298,024	349,908	4,707	71,003	947	1,724,284
Net book amount at 31 December 2018	345,821	221,426	240,539	1,973	25,394	14,019	849,172

1 Within mining properties and development costs there is a balance at 31 December 2018 related to Crespo project (US$26,855,000) that is not currently being depreciated.

2 Transfers and other movements include US$2,379,000 that was transferred from evaluation and exploration assets (note 16).

3 Includes borrowing costs capitalised in property, plant and equipment amounting to US$239,000. The capitalisation rate used was 2.88%.

In 2018, management determined there were triggers of impairment in the San Jose mine unit due to the devaluation of the US$, inflation and the new export tax approved in Argentina since September 2018. Impairment test result did not show a difference versus the carrying value given that the level of devaluation offset inflation and the new export tax. Therefore, no impairment was recognised.

In addition, during 2018, management evaluated the carrying value of the San Felipe Project, not recognising any impairment in the period (refer to note 16).

No indicators of impairment or reversal of impairment were identified in the other CGUs, which includes other exploration projects.

In 2017, management determined there were triggers of impairment in the Arcata mine unit due to difficulties in replacing production with incremental resources and to convert resources into reserves, and there was a significant decrease in production during the year. An impairment test was carried out resulting in an impairment charge of US$43,009,000 (US$39,905,000 in property, plant and equipment and US$3,104,000 and evaluation and exploration assets).

Also in 2017, in the case of the Pallancata mine unit, there was an increase in terms of tonnage, grades, and resources and reserves due to the Pablo vein. An impairment test was carried out resulting in an impairment reversal of US$31,892,000 (US$31,509,000 in property, plant and equipment and US$383,000 and evaluation and exploration assets).

Finally, in 2017, management evaluated the carrying value of the San Felipe Project, recognising an impairment reversal of US$8,364,000 (all in evaluation and exploration assets) (refer to notes 10 and 16).

The recoverable values of the San Jose, Arcata and Pallancata CGUs were determined using a fair value less costs of disposal (FVLCD) methodology. FVLCD was determined using a combination of level 2 and level 3 inputs, which result in fair value measurements categorised in its entirety as level 3 in the fair value hierarchy, to construct a discounted cash flow model to estimate the amount that would be paid by a willing third party in an arm's length transaction.

In assessing the recoverable value of the San Felipe CGU, given the early stage of the project, the Group applied a value in-situ methodology which applies a realisable 'enterprise value' to unprocessed mineral resources. The enterprise value used is based on observable external market information. Together with the US$31,396,000 (2017: US$29,396,000) recognised as a deferred income (refer to note 22) that will be realised once the option is exercised or terminated; the total recoverable value of the project under a VIU approach amounts to US$37,081,000 (2017: US$37,081,000).

The key assumptions on which management has based its determination of FVLCD and the associated recoverable values calculated are gold and silver prices, production costs, reserves and resources, the discount rate and the value per in-situ regarding the San Felipe project. Gold and silver prices used, discount rate applied and value per in-situ per zinc equivalent tonne are presented below.

2018

US$ per oz.

2019

2020

2021

Long

term

Gold

1,273

1,300

Silver

16.0

17.5

18.0

	San Jose	San Felipe
Discount rate (post tax)	6.6%	n/a
Value per in-situ per zinc equivalent tonne (US$)	n/a	22.12

The period of 6 years was used to make the cash flow projections of San Jose mine unit and it is not shorter than the life of mine.

Current carrying value of CGU, net of deferred tax (US$000)		San Jose		San Felipe
31 December 2018		138,877		37,081

2017

US$ per oz.	2018	2019	2020	Long-term
Gold	1,298	1,300	1,303	1,300
Silver	18	18	19	19

	Arcata	Pallancata1	San Felipe
Discount rate (post tax)	4.3%	5.4%	n/a
Value per in-situ per zinc equivalent tonne (US$)	n/a	n/a	29.53

1 The Pallancata CGU was assessed for impairment reversal at 30 June 2017 and therefore the above reflects the relevant assumption at that date.

Current carrying value of CGU, net of deferred tax (US$000)		Arcata		Pallancata		San Felipe
31 December 2017		5,859		91,065		37,081

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.

The estimated recoverable amounts of the following of the Group's CGUs are equal to, or not materially greater than, their carrying values.

A change in any of the key assumptions would have the following impact in the San Jose mine unit:

		US$000
Prices (decrease by 10%)		(85,590)
Post tax discount rate (increase by 3%)		(9,937)
Production costs (increase by 10%)		(56,551)
Inflation (increase by 10%)		(19,425)
Devaluation of Argentinian peso (increase by 10%)		20,765

With respect to the impairment assessment performed at the San Felipe CGU, a decrease of 10% in the value in-situ per tonne would result in a reversal of impairment of US$504,000, whilst an increase of 10% would result in a reversal of previously recognised impairment of US$647,000.

	Mining properties and development costs1 US$000	Land and buildings US$000	Plant and equipment US$000	Vehicles US$000	Mine closure asset US$000	Construction in progress and capita advance US$000	Total US$000
Year ended 31 December 2017
Cost
At 1 January 2017	1,180,904	488,486	536,929	6,210	95,390	24,943	2,332,862
Additions	79,054	187	16,339	29	-	28,045³	123,654
Change in discount rate	-	-	-	-	575	-	575
Change in mine closure estimate	-	-	-	-	2,572	-	2,572
Disposals	-	-	(2,927)	(3)	-	-	(2,930)
Write-offs	-	(127)	(3,492)	(172)	-	(19)	(3,810)
Transfers and other movements2	(56)	8,378	10,633	547	-	(19,560)	(58)
At 31 December 2017	1,259,902	496,924	557,482	6,611	98,537	33,409	2,452,865
Accumulated depreciation and impairment
At 1 January 2017	791,641	218,123	277,692	4,554	64,480	889	1,357,379
Depreciation for the year	109,642	44,431	40,356	325	4,321	-	199,075
Disposals	-	-	(2,564)	(3)	-	-	(2,567)
Write-offs	-	(98)	(3,152)	(155)	-	-	(3,405)
Impairment/(reversal of impairment), net	(2,369)	3,613	8,631	24	(1,646)	143	8,396
Transfers and other movements2	467	-	(2,146)	-	-	-	(1,679)
At 31 December 2017	899,381	266,069	318,817	4,745	67,155	1,032	1,557,199
Net book amount at 31 December 2017	360,521	230,855	238,665	1,866	31,382	32,377	895,666

1 Within mining properties and development costs there is a balance at 31 December 2017 related to Crespo project (US$26,016,000) that is not currently being depreciated.

2 Transfers and other movements include US$1,607,000 that was transferred from evaluation and exploration assets (note 16).

3 Includes borrowing costs capitalised in property, plant and equipment amounting to US$601,000, the capitalisation rate used was 8.27%.

16 Evaluation and exploration assets

	Azuca US$000	Crespo US$000	San Felipe US$000	Volcan US$000	Others US$000	Total US$000
Cost
Balance at 1 January 2017	81,402	26,031	55,950	93,684	11,037	268,104
Additions	197	208	-	768	3,705	4,878
Disposals	-	-	(500)	-	-	(500)
Transfers to property, plant and equipment	-	-	-	-	(2,074)	(2,074)
Balance at 31 December 2017	81,599	26,239	55,450	94,452	12,668	270,408
Additions	427	360	-	230	9,204	10,221
Transfers to property plant and equipment	-	-	-	-	(2,508)	(2,508)
Balance at 31 December 2018	82,026	26,599	55,450	94,682	19,364	278,121
Accumulated impairment
Balance at 1 January 2017	45,876	9,878	25,834	44,381	3,150	129,119
Transfers to property, plant and equipment	-	-	-	-	(467)	(467)
Impairment/(reversal of impairment)1	-	-	(8,364)	-	2,721	(5,643)
Balance at 31 December 2017	45,876	9,878	17,470	44,381	5,404	123,009
Transfers to property, plant and equipment	-	-	-	-	(129)	(129)
Balance at 31 December 2018	45,876	9,878	17,470	44,381	5,275	122,880
Net book value as at 31 December 2017	35,723	16,361	37,980	50,071	7,264	147,399
Net book value as at 31 December 2018	36,150	16,721	37,980	50,301	14,089	155,241

1 At 31 December 2017, the Group has recorded an impairment charge with respect to evaluation and exploration assets of the Arcata mine unit of US$3,104,000, and reversals of impairment with respect to the Pallancata mine unit of US$383,000 and the San Felipe project of US$8,364,000. The calculation of the recoverable values is detailed in note 15.

2 There were no borrowing costs capitalised in evaluation and exploration assets.

17 Intangible assets

	Transmission line1 US$000	Water permits2 US$000	Software licences US$000	Legal rights3 US$000	Total US$000
Cost
Balance at 1 January 2017	22,157	26,583	1,856	6,686	57,282
Additions	-	-	16	-	16
Balance at 31 December 2017	22,157	26,583	1,872	6,686	57,298
Additions	-	-	13	1,894	1,907
Transfer	-	-	3	-	3
Balance at 31 December 2018	22,157	26,583	1,888	8,580	59,208
Accumulated amortisation and impairment
Balance at 1 January 2017	13,074	12,686	1,371	3,772	30,903
Amortisation for the year4	1,089	-	158	604	1,851
Balance at 31 December 2017	14,163	12,686	1,529	4,376	32,754
Amortisation for the year4	1,113	-	212	766	2,091
Balance at 31 December 2018	15,276	12,686	1,741	5,142	34,845
Net book value as at 31 December 2017	7,994	13,897	343	2,310	24,544
Net book value as at 31 December 2018	6,881	13,897	147	3,438	24,363

1 The transmission line is amortised using the units of production method. At 31 December 2018 the remaining amortisation period is approximately 7 years (2017: 8 years).

2 Corresponds to the acquisition of water permits of Andina Minerals Group ("Andina"). These permits have an indefinite life according to Chilean law. To determine the fair value less costs of disposal of the Volcan cash-generating unit, which includes the water permits held by the Group, the Group used the value-in-situ methodology. This methodology applies a realisable 'enterprise value' to unprocessed mineral resources which was US$6.70 per gold equivalent ounce of resources at 31 December 2018 (2017: US$7.10). The risk adjusted enterprise value figure has been determined using a combination of level 2 and level 3 inputs, which result in a fair value measurement categorised in its entirety as level 3 in the fair value hierarchy, to estimate the amount that would be paid by a willing third party in an arm's length transaction, taking into account the water restrictions imposed by the Chilean government.

3 Legal rights correspond to expenditures required to give the Group the right to use a property for the surface exploration work, development and production.
At 31 December 2018 the remaining amortisation period is from 5 to 20 years (2017: 10 to 20 years).

4 The amortisation for the period is included in cost of sales and administrative expenses in the income statement.

The carrying amount of the Volcan CGU, which includes the water permits, is reviewed annually to determine whether it is in excess of its recoverable amount. No impairments were recognised in 2018 and 2017.

Key assumptions

		2018		2017
Risk adjusted value per in-situ (gold equivalent ounce) US$		6.70		7.10

US$000		2018		2017
Current carrying value Volcan CGU		64,198		63,968

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 exceed its recoverable amount.

The estimated recoverable amount is not materially greater than its carrying value. A change in the value in situ assumption could cause an impairment loss or reversal of impairment to be recognised as follows:

Approximate (impairment)/reversal of impairment resulting from the following changes (US$000)	2018	2017
Value per in-situ ounce (10% decrease)	(6,407)	(2,667)
Risk factor (increase by 5%)	(1,725)	(1,095)
Risk factor (decrease by 5%)	1,725	9,384

18 Financial assets at fair value through OCI

	Year ended 31 December
	2018 US$000	2017 US$000
Beginning balance	6,264	-
Acquisitions1	6,433	-
Fair value change recorded in equity	(6,450)	-
Disposals2	(951)	-
Ending balance	5,296	-

1 Corresponds to the purchase of 591,326,947 shares of REE UNO SpA (REE UNO) (US$2,000,000), 7,519,331 shares of Skeena Resources Limited (Skeena) (US$4,313,000) and 15,600 shares of Cobalt Power Group (Cobalt) (US$120,000).

2 As the investments were not considered to be strategic, the Group sold 14,545,454 shares of Red Eagle with a fair value at the date of sale of US$799,000 and 3,383,000 shares of Santa Cruz Silver Mining with a fair value at the date of sale of US$155,000, generating a loss on disposal of US$2,514,000 and US$546,000 respectively.

The Group made the election at initial recognition to measure the equity investments at fair value through OCI as they are not held for trading.

The fair value at 31 December 2018 is as follows:

		US$000
Listed equity investments:
Cobalt Power Group		53
Santa Cruz Silver Mining		435
Revelo Resources Corp.		4
Skeena Resources Limited		1,599
Empire Petroleum Corp.		19
Total listed equity investments		2,110
Non-listed equity investments:
Pembrook Mining Corp.		-
ECI Exploration and Mining Inc.		-
Goldspot Discoveries Inc.		1,240
REE UNO SpA		1,946
Total non-listed equity investments		3,186
Total		5,296

Fair value of the listed shares is determined by reference to published price quotations in an active market and they are categorised as level 1.

The fair value of non-listed equity investments is determined based on financial information available of the companies and they are categorised as level 3.

19 Trade and other receivables

	As at 31 December
	2018		2017
	Non-current US$000	Current US$000	Non-current US$000	Current US$000
Trade receivables	-	45,201	-	43,209
Advances to suppliers	-	2,950	-	4,482
Duties recoverable from exports of Minera Santa Cruz 1	1,546	1,788	1,570	2,681
Receivables from related parties (note 28(a))	-	76	-	160
Loans to employees	744	206	877	353
Interest receivable	-	66	-	402
Receivable from Kaupthing, Singer and Friedlander Bank	-	195	-	208
Other2	723	12,591	1,810	9,397
Provision for impairment3	-	(5,997)	-	(4,594)
Assets classified as receivables	3,013	57,076	4,257	56,298
Prepaid expenses	8	2,028	91	3,720
Value Added Tax (VAT)4	2,430	19,632	3,139	21,048
Total	5,451	78,736	7,487	81,066

The fair values of trade and other receivables approximate their book value.

1 Relates to export benefits through the Patagonian port and silver refunds in Minera Santa Cruz, discounted over 24 months (2017: 19 months) at a rate of 9.98% (2017: 5.40%) for dollars denominated amounts and 57.00% (2017: 29.60%) for Argentinian pesos. The loss on the unwinding of the discount is recognised within finance costs (2017: gain on discount is recognised within finance income).

2 Mainly corresponds to account receivables from contractors for the sale of supplies of US$6,111,000 (2017: US$4,773,000), and other tax claims of US3,227,000 (2017: US$3,903,000).

3 Includes the provision for impairment of trade receivable from customers in Peru of US$1,554,000 (2017: US$1,080,000), the impairment of deposits in Kaupthing, Singer and Friedlander of US$195,000 (2017: US$208,000), the impairment of the account receivable from a third party of US$3,233,000 (2017: US$2,501,000) and other receivables of US$1,1015,000 (2017: US$805,000).

4 Primarily relates to US$11,462,000 (2017: US$12,829,000) of VAT receivable related to the San Jose project that will be recovered through future sales of gold
and silver and also through the sale of these credits to third-parties by Minera Santa Cruz S.A. It also includes the VAT of Compañía Minera Ares S.A.C. of US$6,248,000 (2017: US$6,519,000) and Empresa de Transmisión Aymaraes S.A.C. of US$3,569,000 (2017: US$4,034,000). The VAT is valued at its recoverable amount.

Movements in the provision for impairment of receivables:

		Individually impaired US$000
At 1 January 2017		6,342
Provided for during the year		1,065
Released during the year1		(2,813)
At 31 December 2017		4,594
Provided for during the year		5,884
Released during the year1		(4,481)
At 31 December 2018		5,997

1 Corresponds to the reversal of the provision of US$2,000 (2017: US$9,000) and write off of US$4,479,000 (2017: US$2,804,000).

As at 31 December 2018 and 2017, none of the financial assets classified as receivables (net of impairment) were past due.

20 Inventories

	As at 31 December
	2018 US$000	2017 US$000
Finished goods valued at cost	1,543	3,011
Products in process valued at cost	16,085	17,099
Products in process accrual	8,030	-
Raw materials	-	-
Supplies and spare parts	37,765	41,572
	63,423	61,682
Provision for obsolescence of supplies	(5,388)	(5,004)
Total	58,035	56,678

Finished goods include ounces of gold and silver, dore and concentrate.

Products in process include stockpile and precipitates.

The Group either sells dore bars as a finished product or if it is commercially advantageous to do so, delivers the bars for refining into gold and silver ounces which are then sold. In the latter scenario, the dore bars are classified as products in process. At 31 December 2018 and 2017 the Group had no dore on hand included in products in process.

Concentrate is sold to smelters, but in addition could be used as a product in process to produce dore.

As part of the Group's short-term financing policies, it acquires pre-shipment loans which are guaranteed by the sales contracts.

The amount of expense recognised in profit and loss related to the consumption of inventory of supplies, spare parts and raw materials is US$111,485,000 (2017: US$104,689,000).

Movements in the provision for obsolescence comprise an increase in the provision of US$384,000 (2017: US$542,000) and the reversal of US$Nil relating to the sale of supplies and spare parts, that had been provided for (2017: US$2,997,000).

21 Cash and cash equivalents

	As at 31 December
	2018 US$000	2017 US$000
Cash at bank	366	335
Liquidity funds1	-	2,869
Current demand deposit accounts2	43,095	61,612
Time deposits3	36,243	192,172
Cash and cash equivalents considered for the statement of cash flows	79,704	256,988

The fair value of cash and cash equivalents approximates their book value. The Group does not have undrawn borrowing facilities available in the future for operating activities or capital commitments.

1 The liquidity funds are mainly invested in certificates of deposit, commercial papers and floating rate notes with a weighted average maturity of nil days as at
31 December 2018 (2017: average of 29 days).

2 Relates to bank accounts which are freely available and bear interest.

3 These deposits have an average maturity of 14 days (2017: Average of 32 days).

22 Deferred income

	As at 31 December
	2018 US$000	2017 US$000
San Felipe contract1	31,396	29,396
El Mosquito contract2	970	1,413
	32,366	30,809
Current balance	(400)	(400)
Non-current	31,966	30,409

1 On 3 August 2011, the Group entered into an agreement with Impulsora Minera Santa Cruz ("IMSC") whereby IMSC acquired the right to explore the San Felipe properties and an option to purchase the related concessions. Under the terms of this agreement the Group has received US$31,396,000 as non-refundable payments at 31 December 2018 (2017: US$29,396,000). These payments will reduce the total consideration that IMSC will be required to pay upon exercise of the option and constitute an advance of the final purchase price, rather than an option premium and, as such, they were recorded as deferred income.

On 30 November 2016, IMSC renegotiated the terms of the agreement, extending the validity of the agreement to 1 December 2017. As a result of this extension, on 9 March 2017 the Group received in payment 13,415,000 ordinary shares of Santa Cruz Silver Mining ("SCSM") quoted in the Toronto Stock Exchange, at the unit price of CAD 0.28 amounting to CAD 3,756,000 equivalent to US$2,780,000. The amount received included valued added taxes of US$384,000 and part consideration of US$2,396,000 recognised as deferred income.

On 28 February 2017, the Group signed a new option agreement with IMSC for the San Felipe properties for a total consideration of US$10,000,000. An initial payment of US$2,000,000 was received in cash on 7 March 2017.

In March 2017, IMSC entered into an agreement with Americas Silver Corporation ('ASC') to assign 100% of its interest in the San Felipe Project.

During 2018 the Group collected US$2,000,000 (January 2018:US$500,000, April 2018: US$500,000 and July 2018: US$1,000,000).

On 15 December 2018, the option to sell the San Felipe property to ASC was extended to 31 December 2020.

2 On 25 April 2017 the Group signed a five-year option agreement with Minas Argentinas S.A. ("MASA") giving MASA the right to explore and the option to purchase the Mosquito property, located in Argentina. The Group has received in cash US$2,000,000, recognising US$970,000 as deferred income at 31 December 2018.

23 Trade and other payables

	As at 31 December
	2018		2017
	Non-current US$000	Current US$000	Non-current US$000	Current US$000
Trade payables1	-	69,568	-	63,038
Salaries and wages payable2	-	36,272	-	36,143
Dividends payable	-	2,247	-	107
Taxes and contributions	14	6,314	32	6,425
Guarantee deposits	-	7,922	-	6,946
Mining royalties (note 29)	-	506	-	684
Accounts payable to related parties (note 28(a))	-	7	-	149
Other	773	2,639	1,049	3,287
Total	787	125,475	1,081	116,779

The fair value of trade and other payables approximate their book values.

1 Trade payables relate mainly to the acquisition of materials, supplies and contractors' services. These payables do not accrue interest and no guarantees have
been granted.

2 Salaries and wages payable relates to remuneration payable. There were Board members remuneration payable of US$nil (2017: US$nil) and long term incentive plan payable of US$8,215,000 (2017: US$7,520,000) at 31 December 2018.

24 Borrowings

	As at 31 December
	2018			2017
	Effective interest rate	Non-current US$000	Current US$000	Effective interest rate	Non-current US$000	Current US$000
Bond payable (a)	-	-	-	8.56%	291,955	8,779
Secured bank loans (b)
· Pre-shipment loans in Minera Santa Cruz (note 20)	4.0% to 5.0%	-	6,047	1.80% to 2.85%	-	9,043
· Bank loans	2.43% to 3.00%	50,000	101,020	1.75%	-	50,041
Total		50,000	107,067		291,955	67,863

(a) Bond payable

Relates to the issuance of US$350,000,000 7.75% Senior Unsecured Notes on 23 January 2014, fully repaid on 23 January 2018. The Group repaid the capital of US$294,775,000, plus interests of US$11,423,000, premium of US$11,423,000 and their corresponding withholding tax of US$946,000. The charge in profit and loss during the period is US$17,833,000, of which US$1,487,000 corresponds to the interests and its corresponding withholding tax generated in the period, and the balance of US$16,346,000, recognised as an exceptional item, includes the premium of US$11,423,000, its corresponding withholding tax of US$473,000 and the recognition of the capitalised expenses related to obtaining the bond of US$4,450,000 (refer to note 10).

(b) Secured bank loans:

Short-term bank loans:

Two credit agreements signed by Compañía Minera Ares S.A.C with BBVA Continental with an interest rate of 2.70% and Scotiabank with an interest rate of 3.00%. The carrying value including accrued interest payable at 31 December 2018 is US$50,581,000 and US$50,111,000 respectively.(2017: One credit agreement signed by Compañía Minera Ares S.A.C. with BBVA Continental with an interest rate of 1.75%, the carrying value including accrued interest payable at 31 December 2017 was US$50,041,000 and was repaid on the due date of 10 December 2018).

Medium-term bank loans:

Two credit agreements signed by Compañía Minera Ares S.A.C with Nova Scotia Bank with an interest rate of 2.43% and Citibank with an interest rate of 2.43%. The carrying value including accrued interest payable at 31 December 2018 is US$25,164,000 and US$25,164,000 respectively.

The maturity of non-current borrowings is as follows:

	As at 31 December
	2018 US$000	2017 US$000
Between 1 and 2 years	50,000	-
Between 2 and 5 years	-	291,955
Over 5 years	-	-
Total	50,000	291,955

The carrying amount of current borrowings differs their fair value only with respect to differences arising under the effective interest rate calculations described above. The carrying amount and fair value of the non‑current borrowings are as follows:

	Carrying amount as at 31 December		Fair value as at 31 December
	2018 US$000	2017 US$000	2018 US$000	2017 US$000
Secured bank loans	50,000	-	47,353	-
Bond payable	-	291,955	-	306,566
Total	50,000	291,955	47,353	306,566

In the case of the bond payable, the fair value was determined with reference to the quoted price of these bonds in an active market, it is Level 1 input.

The movement in borrowings during the year is as follows:



	As at 1 January 2018 US$000	Additions US$000	Repayments US$000	Reclassifications US$000	As at 31 December 2018 US$000
Current
Bank loans	59,084	171,567	(123,584)	-	107,067
Bond payable	8,779	17,833	(23,792)	(2,820)	-
	67,863	189,400	(147,376)	(2,820)	107,067
Non-current
Bank loans	-	100,000	(50,000)	-	50,000
Bond payable	291,955	-	(294,775)	2,820	-
	291,955	100,000	(344,775)	2,820	50,000
Accrued interest	(9,745)	(22,900)	28,758	2,820	(1,067)
Before accrued interest	350,073	266,500	(463,393)	2,820	156,000

25 Provisions

	Provision for mine closure1 US$000	Long Term Incentive Plan2 US$000	Other US$000	Total US$000
At 1 January 2017	102,429	4,649	4,449	111,527
Additions	-	8,702	347	9,049
Accretion	280	-	-	280
Change in discount rate⁴	863	-	-	863
Change in estimates⁴	8563	-	-	856
Foreign exchange effect	-	-	(352)	(352)
Transfer to trade and other payables	-	(7,520)	-	(7,520)
Payments	(4,359)	-	(34)	(4,393)
At 31 December 2017	100,069	5,831	4,410	110,310
Less: current portion	4,562	-	1,641	6,203
Non-current portion	95,507	5,831	2,769	104,107
At 1 January 2018	100,069	5,831	4,410	110,310
Additions	-	3,386	140	3,526
Accretion	368	-	-	368
Change in discount rate⁴	(1,609)	-	-	(1,609)
Change in estimates⁴	(479) 3	-	-	(479)
Foreign exchange effect	-	-	(1,614)	(1,614)
Transfer to trade and other payables	-	(8,215)	-	(8,215)
Payments	(4,494)	-	-	(4,494)
At 31 December 2018	93,855	1,002	2,936	97,793
Less: current portion	1,986	-	1,167	3,153
Non-current portion	91,869	1,002	1,769	94,640

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 quantitative easing as at 31 December 2018 and 2017 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 discount rate used was 0.30% (2017: 0.14%). Expected cash flows will be over a period from one to nineteen years.

2 Corresponds to the provision related to awards granted under the Long Term Incentive Plan ('LTIP') to designated personnel of the Group. Includes the following benefits: (i) 2018 awards, granted in May 2018, payable in May 2021, as 50% in cash, (ii) 2017 awards, granted in March 2017, payable in full on vesting in March 2020. Only employees who remain in the Group's employment on the vesting date will be entitled to vested awards, subject to exceptions approved by the Remuneration Committee of the Board. There are two parts to the performance conditions attached to LTIP awards: 70% is subject to the Company's TSR ranking relative to a tailored peer group of mining companies, and 30% is subject to the Company's TSR ranking relative to the constituents of the FTSE 350 mining index. The liability for the LTIP paid in cash is measured, initially and at the end of each reporting period until settled, at the fair value of the awards, by applying the Monte Carlo pricing model, taking into account the terms and conditions on which the awards were granted, and the extent to which the employees have rendered services to date. Changes to the provision of US$3,386,000 (2017: US$8,702,000) have been recorded as administrative expenses US$3,203,000 (2017: US$8,215,000) and exploration expenses US$183,000 (2017: US$487,000).

The following tables list the inputs to the Monte Carlo model used for the LTIPs as at 31 December 2017 and 2018, respectively:

	LTIP 2016		LTIP 2017		LTIP 2018
For the period ended	31 December 2018 US$000	31 December 2017 US$000	31 December 2018 US$000	31 December 2017 US$000	31 December 2018 US$000	31 December 2017 US$000
Dividend yield (%)	-	0.81	1.80	0.81	1.80	-
Expected volatility (%)	-	4.02	2.41	4.02	3.51	-
Risk-free interest rate (%)	-	0.25	0.71	0.25	0.71	-
Expected life (years)	-	1	1	2	2	-
Weighted average share price (pence £)	-	63.07	240.88	239.22	235.08	-

The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the awards and is indicative of future trends, which may not necessarily be the actual outcome.

3 Based on the 2018 (2017) internal and external review of mine rehabilitation estimates, the provision for mine closure (decreased)/increased by:

Arcata

US$000

Ares

US$000

Sipan

US$000

Selene

US$000

Azuca

US$000

Crespo

US$000

Inmaculada

US$000

Pallancata

US$000

Adjustment

San José

US$000

Total

US$000

At 31 December 2018

1,745

(68)

(11)

(1,131)

330

(117)

(903)

(324)

(479)

At 31 December 2017

(1,131)

(607)

1,191

1,385

(54)

856

4 An expense of US$52,000 related to changes in estimate and discount rates for mines already closed. 2017: an income of US$1,428,000 related to changes in estimate and discount rates for mines already closed and the Arcata mine unit which reduction of the estimated costs exceeded the carrying value of the mine asset, therefore the effect has been recognised directly in the income statement.

26 Deferred income tax

The changes in the net deferred income tax assets/(liabilities) are as follows:

	As at 31 December
	2018 US$000	2017 US$000
Beginning of the year	(53,640)	(64,944)
Income statement charge/(credit) (note 13)	(16,087)	11,304
End of the year	(69,727)	(53,640)

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 movement in deferred income tax assets and liabilities before offset during the year is as follows:

	Differences in cost of PP&E US$000	Mine development US$000	Provisional pricing adjustment US$000	Others US$000	Total US$000
Deferred income tax liabilities
At 1 January 2017	41,648	68,342	-	2,824	112,814
Income statement (credit)/charge	2,474	991	201	(1,197)	2,469
At 31 December 2017	44,122	69,333	201	1,627	115,283
Income statement (credit)/charge	(3,908)	14,255	809	49	11,205
At 31 December 2018	40,214	83,588	1,010	1,676	126,488

	Differences in cost of PP&E US$000	Provision for mine closure US$000	Tax losses US$000	Mine development US$000	Provisional pricing adjustment US$000	Others US$000	Total US$000
Deferred income tax assets
At 1 January 2017	16,325	19,534	946	912	304	9,849	47,870
Income statement credit/(charge)	14,347	(51)	893	(110)	(304)	(1,002)	13,773
At 31 December 2017	30,672	19,483	1,839	802	-	8,847¹	61,643
Income statement credit/(charge)	(4,374)	(1,080)	(1,635)	(109)	-	2,316	(4,882)
At 31 December 2018	26,298	18,403	204	693	-	11,163¹	56,761

1 Mainly related to long term incentive plan of US$2,655,000 (2017: US$3,966,000), statutory holiday provision of US$1,113,000 (2017: US$962,000) and inventory of US$635,000 (2017: US$784,000).

The amounts after offset, as presented on the face of the Statement of financial position, are as follows:

	As at 31 December
	2018 US$000	2017 US$000
Deferred income tax assets	1,504	2,400
Deferred income tax liabilities	(71,231)	(56,040)

Tax losses expire in the following years:

	As at 31 December
	2018 US$000	2017 US$000
Unrecognised
Expire in one year	465	3,517
Expire in two years	-	493
Expire in three years	4,511	42
Expire in four years	2,861	4,320
Expire after four years	121,583	119,461
	129,420	127,833

Other unrecognised deferred income tax assets comprise (gross amounts):

	As at 31 December
	2018 US$000	2017 US$000
Provision for mine closure1	6,596	7,287
Impairments of assets2	-	2,509

1 This relates to provision for mine closure expenditure which is expected to be incurred in periods in which taxable profits are not expected against which the expenditure can be offset.

2 Related to the impairment of San Felipe project) (note 16).

Unrecognised deferred tax liability on retained earnings

At 31 December 2018 and 2017, there was no recognised deferred tax liability for taxes that would be payable on the unremitted earnings
of certain of the Group's subsidiaries as the intention is that these amounts are permanently reinvested.

27 Dividends

	2018 US$000	2017 US$000
Dividends paid and proposed during the year
Equity dividends on ordinary shares:
Final dividend for 2017: 1.965 US cent per share (2016: 1.38 US cents per share)	9,999	6,997
Interim dividend for 2018: 1.965 US cent per share (2017: 1.38 US cents per share)	10,000	6,999
Total dividends paid on ordinary shares	19,999	13,996
Proposed dividends on ordinary shares:
Final dividend for 2018: 1.959 US cents per share (2017: 1.965 US cent per share)	10,000	9,967

Dividends paid to non-controlling interests: 0.08 US$ per share (2017: 1.80 US cents per share)	13,039	12,585
Total dividends paid to non-controlling interests	13,039	12,585

Dividends per share

The interim dividend paid in September 2018 was US$10,000,000 (1.965 US cents per share). A proposed dividend in respect of the year ending 31 December 2018 of 1.959 US cents per share, amounting to a total dividend of US$10,000,000, is subject to approval at the Annual General Meeting to be held on 6 June 2019 and is not recognised as a liability as at 31 December 2018.

28 Related-party balances and transactions

(a) Related-party accounts receivable and payable

The Group had the following related-party balances and transactions during the years ended 31 December 2018 and 2017. The related parties are companies owned or controlled by the main shareholder of the parent company or associates.

	Accounts receivable as at 31 December		Accounts payable as at 31 December
	2018 US$000	2017 US$000	2018 US$000	2017 US$000
Current related party balances
Cementos Pacasmayo S.A.A.1	76	160	7	149
Total	76	160	7	149

1 The account receivable relates to reimbursement of expenses paid by the Group on behalf of Cementos Pacasmayo S.A.A. The account payable relates to the payment of rentals.

As at 31 December 2018 and 2017, all accounts are, or were, non-interest bearing.

No security has been granted or guarantees given by the Group in respect of these related party balances.

Principal transactions between affiliates are as follows:	Year ended
	2018 US$000	2017 US$000
Expenses
Expense recognised for the rental paid to Cementos Pacasmayo S.A.A.	(200)	(200)

Transactions between the Group and these companies are on an arm's length basis.

(b) Compensation of key management personnel of the Group

	As at 31 December
Compensation of key management personnel (including Directors)	2018 US$000	2017 US$000
Short-term employee benefits	6,619	6,086
Long Term Incentive Plan, Deferred Bonus Plan and Restricted Share Plan	2,899	5,446
Total compensation paid to key management personnel	9,518	11,532

This amount includes the remuneration paid to the Directors of the Parent Company of the Group of US$4,601,000 (2017: US$5,439,000).

29 Mining royalties

Peru

In accordance with Peruvian legislation, owners of mining concessions must pay a mining royalty for the exploitation of metallic and non‑metallic resources. Mining royalties have been calculated with rates ranging from 1% to 3% of the value of mineral concentrate
or equivalent sold, based on quoted market prices.

In October 2011 changes came into effect for mining companies, with the following features:

a) Introduction of a Special Mining Tax ('SMT'), levied on mining companies at the stage of exploiting mineral resources. The
additional tax is calculated by applying a progressive scale of rates ranging from 2% to 8.4%, of the quarterly operating profit.

b) Modification of the mining royalty calculation, which consists of applying a progressive scale of rates ranging from 1% to 12%,
of the quarterly operating profit. The former royalty was calculated on the basis of monthly sales value of mineral concentrates.

The SMT and modified mining royalty are accounted for as an income tax in accordance with IAS 12 "Income Taxes".

c) For companies that have mining projects benefiting from tax stability regimes, mining royalties are calculated and recorded as they were previously, applying an additional new special charge on mining that is calculated using progressive scale rates, ranging from 4% to 13.12% of quarterly operating profit.

d) In the case of the Arcata mine unit, the company left the tax stability agreement, but has maintained the agreement for the mining royalties, such that the Arcata unit, is liable for the new SMT but the mining royalties remain payable at the same rate as they were, before the modification in 2011.

As at 31 December 2018, the amount payable as under the former mining royalty (for the Arcata mining unit), the new mining royalty (for the Ares, Pallancata and Inmaculada mining units), and the SMT amounted to US$39,000 (2017: US$108,000), US$975,000 (2017: US$1,133,000), and US$279,000 (2017: US$492,000) respectively. The former mining royalty is recorded as 'Trade and other payables', and the new mining royalty and SMT as 'Income tax payable' in the Statement of Financial Position. The amount recorded in the income statement was US$561,000 (2017: US$885,000) representing the former mining royalty, classified as cost of sales, US$4,494,000 (2017: US$4,201,000) of new mining royalty and US$2,727,000 (2017: US$2,229,000) of SMT, both classified as income tax.

Argentina

In accordance with Argentinian legislation, Provinces (being the legal owners of the mineral resources) are entitled to collect royalties from mine operators. For San Jose, the mining royalty applicable to dore and concentrate is 3% of the pit-head value. As at 31 December 2018, the amount payable as mining royalties amounted to US$467,000 (2017: US$576,000). The amount recorded in the income statement as cost of sales was US$5,296,000 (2017: US$5,792,000).

30 Subsequent events

a) The Group announced its intention to suspend operations at the Arcata mine, in south west Peru, and place it on care and maintenance. It is anticipated that full care and maintenance will be in effect by the second quarter of 2019. An exploration programme and permitting work are expected to continue along with a regular review of the market conditions for potential restart of operations in the future.

Profit by operation

(Segment report reconciliation) as at 31 December 2018

Company (US$000)	Arcata	Pallancata	Inmaculada	San Jose	Consolidation adjustment and others	Total/HOC
Revenue	56,637	135,843	306,103	205,367	340	704,290
Cost of sales (Pre consolidation)	(62,952)	(103,889)	(189,398)	(177,081)	1,532	(531,788)
Consolidation adjustment	(177)	(553)	(996)	194	1,532	-
Cost of sales (Post consolidation)	(62,775)	(103,336)	(188,402)	(177,275)	-	(531,788)
Production cost excluding depreciation	(62,559)	(68,907)	(114,291)	(118,165)	-	(363,922)
Depreciation in production cost	(178)	(36,721)	(76,699)	(50,646)	-	(164,244)
Other items	-	-	-	(1,141)	-	(1,141)
Change in inventories	(38)	2,292	2,588	(7,323)	-	(2,481)
Gross profit	(6,315)	31,954	116,705	28,286	1,872	172,502
Administrative expenses	-	-	-	-	(45,783)	(45,783)
Exploration expenses	-	-	-	-	(34,381)	(34,381)
Selling expenses	(999)	(728)	(344)	(7,997)	-	(10,068)
Other income/expenses	-	-	-	-	(9,082)	(9,082)
Operating profit before impairment	(7,314)	31,226	116,361	20,289	(87,374)	73,188
Impairment and write-off of assets	-	-	-	-	(384)	(384)
Finance income	-	-	-	-	2,048	2,048
Finance costs	-	-	-	-	(27,540)	(27,540)
FX loss	-	-	-	-	(8,946)	(8,946)
Profit/(loss) from continuing operations before income tax	(7,314)	31,226	116,361	20,289	(122,196)	38,366
Income tax	-	-	-	-	(31,665)	(31,665)
Profit/(loss) for the year from continuing operations	(7,314)	31,226	116,361	20,289	(153,861)	6,701

1 On a post exceptional basis.

RESERVES AND RESOURCES

Ore reserves and mineral resources estimates

Hochschild Mining plc reports its mineral resources and reserves estimates in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 edition ("the JORC Code"). This establishes minimum standards, recommendations and guidelines for the public reporting of exploration results and mineral resources and reserves estimates. In doing so it emphasises the importance of principles of transparency, materiality and confidence. The information on ore reserves and mineral resources on pages 43 to 45 were prepared by or under the supervision of Competent Persons (as defined in the JORC Code). Competent Persons are required to have sufficient relevant experience and understanding of the style of mineralisation, types of deposits and mining methods in the area of activity for which they are qualified as a Competent Person under the JORC Code. The Competent Person must sign off their respective estimates of the original mineral resource and ore reserve statements for the various operations and consent to the inclusion of that information in this report, as well as the form and context in which it appears.

Hochschild Mining plc employs its own Competent Person who has audited all the estimates set out in this report. Hochschild Mining Group companies are subject to a comprehensive programme of audits which aim to provide assurance in respect of ore reserve and mineral resource estimates. These audits are conducted by Competent Persons provided by independent consultants. The frequency and depth of an audit depends on the risks and/or uncertainties associated with that particular ore reserve and mineral resource, the overall value thereof and the time that has lapsed since the previous independent third-party audit.

The JORC Code requires the use of reasonable economic assumptions. These include long-term commodity price forecasts (which, in the Group's case, are prepared by ex-house specialists largely using estimates of future supply and demand and long-term economic outlooks).

Ore reserve estimates are dynamic and are influenced by changing economic conditions, technical issues, environmental regulations and any other relevant new information and therefore these can vary from year-to-year. Mineral resource estimates can also change and tend to be influenced mostly by new information pertaining to the understanding of the deposit and secondly the conversion to ore reserves.

The estimates of ore reserves and mineral resources are shown as at 31 December 2018, unless otherwise stated. Mineral resources that are reported include those mineral resources that have been modified to produce ore reserves. All tonnage and grade information has been rounded to reflect the relative uncertainty in the estimates; there may therefore be small differences. The prices used for the reserves calculation were: Au Price: US$1,150 per ounce and Ag Price: US$15.0 per ounce.

ATTRIBUTABLE METAL RESERVES AS AT 31 DECEMBER 2018

Reserve category	Proved and probable (t)	Ag (g/t)	Au (g/t)	Ag (moz)	Au (koz)	Ag Eq (moz)
OPERATIONS¹
Inmaculada
Proved	2,700,618	153	4.4	13.3	378.3	43.9
Probable	1,195,838	205	4.4	7.9	170.9	21.7
Total	3,896,456	169	4.4	21.2	549.2	65.6
Pallancata
Proved	1,498,793	281	1.1	13.6	51.2	17.7
Probable	279,843	213	0.9	1.9	8.2	2.6
Total	1,778,637	271	1.0	15.5	59.3	20.3
San Jose
Proved	371,108	584	8.4	7.0	100.2	15.1
Probable	129,959	566	7.7	2.4	32.1	5.0
Total	501,067	579	8.2	9.3	132.3	20.1
GRAND TOTAL
Proved	4,570,519	230	3.6	33.8	529.7	76.7
Probable	1,605,641	235	4.1	12.1	211.2	29.3
TOTAL	6,176,159	231	3.7	46.0	740.9	106.0

Note: Where reserves are attributable to a joint venture partner, reserve figures reflect the Company's ownership only. Includes discounts for ore loss and dilution.

1 Operations were audited by P&E Consulting.

ATTRIBUTABLE METAL RESOURCES AS AT 31 DECEMBER 2018¹

Resource category	Tonnes (t)	Ag (g/t)	Au (g/t)	Ag Eq (g/t)	Ag (moz)	Au (koz)	Ag Eq (moz)
OPERATIONS
Arcata
Measured	834,000	438	1.35	547	11.7	36.1	14.7
Indicated	1,304,000	411	1.36	521	17.2	56.9	21.8
Total	2,138,000	421	1.35	531	29.0	93.0	36.5
Inferred	3,533,000	371	1.26	472	42.1	142.6	53.6
Inmaculada
Measured	2,532,000	190	5.34	622	15.4	434.7	50.7
Indicated	1,430,000	248	5.25	673	11.4	241.2	30.9
Total	3,962,000	211	5.31	640	26.8	676.0	81.6
Inferred	11,505,000	102	3.12	355	37.7	1,154.1	131.1
Pallancata
Measured	1,804,000	395	1.60	525	22.9	92.7	30.4
Indicated	574,000	295	1.32	402	5.4	24.3	7.4
Total	2,378,000	371	1.53	495	28.4	117.0	37.8
Inferred	2,314,000	310	1.28	414	23.1	95.2	30.8
San Jose
Measured	719,100	627	9.41	1,389	14.5	217.6	32.1
Indicated	545,700	464	6.86	1,019	8.1	120.3	17.9
Total	1,264,800	557	8.31	1,230	22.6	338.0	50.0
Inferred	864,960	386	6.73	931	10.7	187.1	25.9
GROWTH PROJECTS
Crespo
Measured	5,211,000	47	0.47	85	7.9	78.7	14.3
Indicated	17,298,000	38	0.40	70	20.9	222.5	39.0
Total	22,509,000	40	0.42	74	28.8	301.0	53.2
Inferred	775,000	46	0.57	92	1.1	14.2	2.3
Azuca
Measured	191,000	244	0.77	307	1.5	4.7	1.9
Indicated	6,859,000	187	0.77	249	41.2	168.8	54.9
Total	7,050,000	188	0.77	250	42.7	173.5	56.7
Inferred	6,946,000	170	0.89	242	37.9	199.5	54.1
Volcan
Measured	105,918,000	-	0.74	60	-	2,513.1	203.6
Indicated	283,763,000	-	0.70	57	-	6,368.0	515.8
Total	389,681,000	-	0.71	57	-	8,881.1	719.4
Inferred	41,553,000	-	0.50	41	-	670.7	54.3
GRAND TOTAL
Measured	117,209,100	20	0.90	92	74.0	3,377.5	347.6
Indicated	311,773,700	10	0.72	69	104.3	7,202.0	687.7
Total	428,982,800	13	0.77	75	178.3	10,579.6	1,035.2
Inferred	67,490,960	70	1.14	162	152.6	2,463.4	352.1

1 Prices used for resources calculation: Au: $1,150/oz and Ag: $15.0/oz and Ag/Au ratio of 81x.

CHANGE IN ATTRIBUTABLE RESERVES AND RESOURCES

Ag equivalent content (million ounces)	Category	Percentage attributable December 2018	December 2017 Att.¹	December 2018 Att.¹	Net difference	% change
Arcata	Resource	100%	107.1	90.1	(17.0)	(15.9%)
	Reserve		12.3	-	(12.3)	(100.0%)
Inmaculada	Resource	100%	134.2	212.7	78.5	58.5%
	Reserve		79.1	65.6	(13.5)	(17.1%)
Pallancata	Resource	100%	76.7	68.6	(8.1)	(10.6%)
	Reserve		18.8	20.3	1.5	7.8%
San Jose	Resource	51%	72.0	75.9	3.9	5.4%
	Reserve		23.5	20.1	(3.4)	(14.6%)
Crespo	Resource	100%	55.5	55.5	-	-
	Reserve		-	-	-	-
Azuca	Resource	100%	110.8	110.8	-	-
	Reserve		-	-	-	-
Volcan	Resource	100%	773.7	773.7	-	-
	Reserve		-	-	-	-
Total	Resource		1,330.1	1,387.4	57.3	4.3%
	Reserve		133.7	106.0	(27.7)	(20.7%)

1 Attributable reserves and resources based on the Group's percentage ownership of its joint venture projects.

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, and dividends and to report changes in personal details:

BY POST

Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.

BY TELEPHONE

If calling from the UK: 0371 664 0300 (calls cost 12p per minute plus your phone company's access charge. Lines are open 9.00am-5.30pm Mon to Fri excluding public holidays in England and Wales).

If calling from overseas: +44 371 664 0300 (Calls charged at the applicable international rate).

Currency option and dividend mandate

Shareholders wishing to receive their dividend in US dollars should contact the Company's registrars to request a currency election form. This form should be completed and returned to the registrars by 24 May 2019 in respect of the 2018 final dividend.

The Company's registrars can also arrange for the dividend to be paid directly into a shareholder's UK bank account. To take advantage of this facility in respect of the 2018 final dividend, a dividend mandate form, also available from the Company's registrars, should be completed and returned to the registrars by 24 May 2019. This arrangement is only available in respect of dividends paid in UK pounds sterling. Shareholders who have already completed one or both of these forms need take no further action.

Financial Calendar

Dividend dates	2019
Ex-dividend date	16 May
Record date	17 May
Deadline for return of currency election forms	24 May
Payment date	12 June

17 Cavendish Square

London

W1G 0PH

United Kingdom

[1]Revenue presented in the financial statements is disclosed as net revenue and is calculated as gross revenue less commercial discounts plus services revenue

²Please see the Financial Review page 15 for a definition of Adjusted EBITDA

4All-in sustaining cost per (AISC) silver equivalent ounce: Calculated before exceptional items and includes cost of sales less depreciation in production cost and change in inventories, administrative expenses, brownfield exploration, operating and exploration capex and royalties (presented with income tax) divided by silver equivalent ounces produced, plus commercial deductions and selling expenses divided by silver equivalent ounces sold using a gold/silver ratio of 74:1

[5]Assuming a gold/silver ratio of 74:1, Inmaculada brownfield drilling programme added 95 million silver or 1.3 million gold equivalent ounces of inferred resources in 2018

[6]2018 equivalent figures calculated using the previous Company gold/silver ratio of 74x. All 2019 forecasts assume the average gold/silver ratio of 81x.

[8]Included within revenue is a loss of US$5,646,000, comprising net gold loss of US$1,088,000 and net silver loss of US$4,558,000, relating to provisional pricing adjustments arising on sales of concentrates and dore (2017: included within revenue is a gain of US$2,578,000 relating to provisional pricing adjustments representing the change in the fair value of embedded derivatives)

[9]Reconciliation of gross revenue by mine to Group net revenue

[10]Included within revenue is a transaction price of US$5,485,000 related to the shipping services provided by the Group to customers arising on the sale of concentrates (US$3,965,000, Gold: US$1,806,000, Silver: US$2,159,000) and doré (US$1,520,000, Gold: 856,000, Silver: US$664,000).

^{^[11]}Following the options provided by IFRS 15, this reclassification has not been applied to 2017 figures and therefore affects comparability

[12]Unit cost per tonne is calculated by dividing mine and treatment production costs (excluding depreciation) by extracted and treated tonnage respectively

[13]Cash costs are calculated to include cost of sales, treatment charges, and selling expenses before exceptional items less depreciation included in cost of sales

[14]Includes commercial discounts (from the sales of concentrate) and commercial discounts from the sale of dore

[15]Royalties arising from revised royalty tax schemes introduced in 2011 and included in income tax line

[16]Calculated using a gold silver ratio of 74:1

[17]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

[18]Includes pre-shipment loans and short term interest payables

[19]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