Hochschild Mining PLC Report on Payments to Governments (6875C)

TIDMHOC

RNS Number : 6875C

Hochschild Mining PLC

29 June 2016

Introduction

This Report provides an overview of the payments to governments made by Hochschild Mining plc and its subsidiaries (hereinafter referred to as "Hochschild") in 2015 as required under the UK's Report on Payments to Governments Regulations 2014 (as amended) (the "UK Regulations"). The UK Regulations apply to large UK incorporated companies like Hochschild that are involved in the exploration, prospection, discovery, development and extraction of minerals. This Report is also intended to satisfy the requirements of the Disclosure and Transparency Rules of the Financial Conduct Authority in the United Kingdom.

Basis for preparation

Legislation: This Report is prepared in accordance with the UK Regulations.

Reporting entities: This Report includes payments to governments made by Hochschild Mining plc and its subsidiary undertakings ("Hochschild").

Activities: Payments made by Hochschild to governments arising from activities involving the exploration, prospection, discovery, development and extraction of minerals ("extractive activities") are disclosed in this Report. For a fully integrated project, which does not have an interim contractual cut off point where a value can be attached or ascribed separately to the extractive activities and to other processing activities, payments to governments will not be artificially split but disclosed in full.

Government: Government includes any national, regional or local authority of a country, and includes a department, agency or entity that is a subsidiary of a government.

Project: Payments are reported at project level except that payments that are not attributable to a specific project or are in respect of obligations imposed at entity level are reported by entity. Project is defined as operational activities which are governed by a single contract, licence, lease, concession or similar legal agreement, and form the basis for payment liabilities with a government. If such agreements are substantially interconnected, those agreements are to be treated as a single project. "Substantially interconnected" means forming a set of operationally and geographically integrated contracts, licences, leases or concessions or related agreements with substantially similar terms that are signed with a government giving rise to payment liabilities. Such agreements can be governed by a single contract, joint venture or other overarching legal agreement. Indicators of integration include, but are not limited to, geographic proximity, the use of shared infrastructure and common operational management.

Payment: Of the types of payments required to be reported on under the UK Regulations, the payments made by Hochschild in 2015 fall within the following categories:

-- Taxes: These are taxes paid by Hochschild on its income, profits or production (which include resource severance tax), including those settled by a government on behalf of Hochschild under a tax-paid concession. Payments are reported net of refunds. Consumption taxes, personal income taxes, sales taxes, property and environmental taxes are excluded.

-- Royalties: These are payments for the rights to extract mineral resources, typically at set percentage of revenue less any deductions that may be taken.

-- Licence fees, rental fees, entry fees and other considerations for licences and/or concessions ("Fees"): These are fees and other sums paid as consideration for acquiring a licence for gaining access to an area where extractive activities are performed. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. Also excluded are payments made in return for services provided by a government.

OTHER

Operatorship: When Hochschild makes a payment directly to a government arising from a project, regardless of whether Hochschild is the operator, the full amount paid is disclosed even where Hochschild as the operator is proportionally reimbursed by its non-operating venture partners through a partner billing process (cash-call).

Cash and in-kind payments: Payments are reported on a cash basis. There were no in-kind payments made in 2015.

Materiality Level: For each payment type, total payments below GBP86,000 to a government are excluded from this Report.

Exchange Rate: Payments made in currencies other than US Dollars are translated for the purposes of this Report using the exchange rate on the date of payment.

        1.   SUMMARY OF PAYMENTS TO GOVERNMENT (Unaudited) (in USD) 
 
 Countries               Taxes    Royalties         Fees                    Total 
--------------  --------------  -----------  -----------  ----------------------- 
 Peru                3,944,634    2,279,027    1,537,675                7,761,336 
 Argentina           9,881,828    4,793,480    1,333,728               16,009,036 
 Chile                       -            -      235,204                  235,204 
--------------  --------------  -----------  -----------  ----------------------- 
 Totals            $13,826,462   $7,072,507   $3,106,607              $24,005,576 
 
     2. PAYMENTS BY COUNTRY (Unaudited) 
 
 
     (a) Peru 
 
    *    By Government Department (in USD) 
                                      Taxes    Royalties        Fees        Total 
------------------------------  -----------  -----------  ----------  ----------- 
 Superintendencia Nacional 
  de Administración 
  Tributaria                      3,944,634    2,279,027           -    6,223,661 
 Instituto Geológico 
  Minero y Metalúrgico               -            -   1,537,675    1,537,675 
------------------------------  -----------  -----------  ----------  ----------- 
 Totals                           3,944,634    2,279,027   1,537,675    7,761,336 
 
 
    *    By Entity/Project (in USD) 
                                      Taxes    Royalties        Fees        Total 
 Entity 
 Compañía 
  Minera Ares S.A.C.              3,944,634    2,279,027     620,955    6,844,616 
 Project 
 Arcata                                   -            -     181,475      181,475 
 Ares                                     -            -     196,765      196,765 
 Inmaculada                               -            -     167,319      167,319 
 Selene                                   -            -     371,161      371,161 
------------------------------  -----------  -----------  ----------  ----------- 
 Totals                           3,944,634    2,279,027   1,537,675    7,761,336 
 
 (b) Argentina (in relation 
  to the San Jose mine) 
 
    *    By Government Department (in USD) 
                                      Taxes    Royalties        Fees        Total 
------------------------------  -----------  -----------  ----------  ----------- 
 Tesorería General 
  de la Provincia de 
  Santa Cruz                              -            -     200,421      200,421 
 Consejo Agrario Provincial               -            -   1,133,307    1,133,307 
 Administración 
  General de Ingresos 
  Públicos                   9,881,828            -           -    9,881,828 
 Rentas Generales de 
  la Provincia de Santa 
  Cruz                                    -    4,793,480           -    4,793,480 
------------------------------  -----------  -----------  ----------  ----------- 
 Totals                           9,881,828    4,793,480   1,333,728   16,009,036 
 
 
    *    By Entity (in USD) 
                                      Taxes    Royalties        Fees        Total 
------------------------------  -----------  -----------  ----------  ----------- 
 Minera Santa Cruz 
  S.A.                            9,881,828    4,793,480   1,333,728   16,009,036 
------------------------------  -----------  -----------  ----------  ----------- 
 Totals                           9,881,828    4,793,480   1,333,728   16,009,036 
 
 (c) Chile (in relation to the 
  Volcan Project) 
 
   *    By Government Department (in USD) 
                                      Taxes    Royalties        Fees        Total 
------------------------------  -----------  -----------  ----------  ----------- 
 Tesorería General 
  de la República                    -            -     235,204      235,204 
------------------------------  -----------  -----------  ----------  ----------- 
 Totals                                   -            -     235,204      235,204 
 
 
   *    By Entity (in USD) 
                                      Taxes    Royalties        Fees        Total 
------------------------------  -----------  -----------  ----------  ----------- 
 Andina Minerals Chile 
  Ltd                                     -            -     235,204      235,204 
------------------------------  -----------  -----------  ----------  ----------- 
 Totals                                   -            -     235,204      235,204 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

PGRSESFLUFMSEFM

(END) Dow Jones Newswires

June 29, 2016 10:12 ET (14:12 GMT)