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22 April 2021

2020 Annual Financial Report and

2021 Annual General Meeting ("AGM")

Following the release of Hochschild Mining PLC's 2020 full year results announcement on 18 February 2021 (the "Preliminary Announcement"), the Company announces it has published its Annual Report and Accounts for the year ended 31 December 2020 (the "2020 Annual Report").

In accordance with LR 9.6.1 R, the following documents have been submitted to the National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

·      2020 Annual Report

·      2021 AGM circular (incorporating the Notice of 2021 AGM) 

·      Notice of Availability of the 2020 Annual Report and 2021 AGM circular

The above documents have been posted or otherwise made available to shareholders and, in accordance with the Disclosure Guidance and Transparency Rules ("DTR"), the 2020 Annual Report and the 2021 AGM circular have been published on the Company's website at www.hochschildmining.com

AGM ARRANGEMENTS

The 2021 AGM will be held at 17 Cavendish Square, London W1G 0PH on Thursday 27^th May 2021 at 2.30pm. 

Current legislation and government guidance relating to Covid-19 prohibits public gatherings and restricts non-essential travel. In light of the government's announced Covid roadmap, it appears highly unlikely that shareholders will be legally able to physically attend the AGM.  The Board has therefore decided to hold the AGM as a closed meeting with only the requisite Company personnel attending to enable the formal business of the AGM to be conducted.  Shareholders should therefore not attend the AGM in person and are strongly encouraged to submit their votes by appointing the chairman of the meeting as their proxy.

Full details on how to submit proxy votes and the deadline to do so can be found on page 6 of the Notice of AGM.

The Board regrets not being able to meet with shareholders at the AGM and so, to facilitate direct engagement, a call has been arranged to take place immediately after the AGM. Shareholders wishing to participate in the call are requested to register their attendance by email or telephone and to submit any questions they may have in relation to the proposed items of business as detailed in the Notice of AGM.

In the event circumstances change before the time of the AGM, we will notify shareholders of any change to the arrangements through announcements via the London Stock Exchange and by publishing details on the Company website as early as is possible before the date of the meeting.

The appendices to this announcement contain the information required to be disclosed under DTR 6.3.5 which has been reproduced from the 2020 Annual Report and should be read in conjunction with the Preliminary Announcement.  All page references and cross-references in the appendices are to the 2020 Annual Report.

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Enquiries:

Hochschild Mining PLC

Raj Bhasin                                                                        +44 (0)7825 533495

Company Secretary

Hudson Sandler

Charlie Jack                                                                    +44 (0)20 7796 4133

Public Relations

________________________________________________________________________________________________

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.

LEI: 549300JK10TVQ3CCJQ89

APPENDICES

Appendix 1

Risk Management

(reproduced from pages 64 to 71 of the 2020 Annual Report)

Successful risk management requires a full understanding of the environment in which we operate and the commitment of resources in implementing internal controls that mitigate key risks to within levels acceptable to the Board.

As with all businesses, management of the Group's operations and execution of its growth strategies are subject to a number of risks, the occurrence of which could adversely affect the performance of the Group. The Group's risk management framework is premised on the continued monitoring of the prevailing environment, the risks posed by it, and the evaluation of potential actions to mitigate those risks.

The Management Risk Committee ('Risk Committee') is responsible for implementing the Group's policy on risk management and monitoring the effectiveness of controls in support of the Group's business objectives. It meets four times a year and more frequently if required. The Risk Committee comprises the CEO, the Vice Presidents, Country General Managers and the head of the Internal Audit function. A 'live' risk matrix is reviewed which maps the significant risks faced by the business as well as those considered to be emerging risks. The matrix is updated at each Risk Committee meeting, and the most significant current and emerging risks, as well as actions to mitigate them, are reported to the Group's Audit Committee, and if considered appropriate, also to the Board. In light of their strategic importance, sustainability risks and their mitigation plans are monitored by the Sustainability Committee.

The Covid-19 pandemic

Like every business across the world, Hochschild Mining has seen numerous aspects of its operations impacted by the Covid pandemic. Peru was initially one of the hardest hit countries in the world and, as a result, a government-imposed lockdown was mandated resulting in the suspension of Inmaculada and Pallancata for 11 weeks. Similar action in Argentina resulted in San Jose being suspended for six weeks. In the second half of the year, a localised outbreak at Inmaculada meant that the mine had to be stopped for a further three weeks and activity at San Jose was stopped for a similar period due to restrictions imposed on mining operations across the region by the provincial authorities.

Tailored risk matrix

In response to the pandemic, the Risk Committee compiled a tailored risk matrix which was considered and approved by the Board which identified the aspects of the business that could be potentially impacted by the outbreak.

This tailored risk matrix formed the basis of management's mitigation and control plans - the Covid-19 Crisis Plan.

Impact of Covid-19 on principal risks

In light of the events during the year and the resumption of the Group's operations in the second half of the year, the Directors have concluded that the Covid pandemic has heightened the Group's principal risks; in particular those related to Health & Safety and Operational Performance. The discussion over the following pages highlights how these risks have become more pronounced in light of the pandemic and describes the mitigating effects of the Group's Covid-19 Crisis Plan.

Outlook

At the time of approval of this Annual Report, Peru is experiencing an increasing number of daily cases of Covid-19 but the Government has nevertheless confirmed that mining operations will continue given the importance of the industry to the economy. In Argentina, like many parts of the world, the infection rate is volatile and currently appears to be on a reducing trend. Central government and the local authorities in the Santa Cruz province (where the San Jose mine is located) acknowledge the significant role of the mining sector in supporting the national and regional economies.

The sign of another wave of infections has prompted the Peruvian Government to announce restrictions in certain regions including the Lima metropolitan area which may therefore result in disruption to the transportation of personnel, supplies and finished goods.

The table below summarises the framework of the Covid-19 risk matrix:

1. FINANCIAL RISKS

a) Commodity Price

Change in risk profile vs 2019: LOWER

Impact

Adverse movements in precious metal prices could materially impact the Group in various ways beyond a reduction in the financial results of operations. These include impacts on the feasibility of projects, the economics of mineral resources, heightened personnel retention and sustainability related risks.

Mitigation

-      Constant focus on maintaining a low all-in sustaining cost of production and an efficient level of administrative expense.

-      Policy to maintain low levels of financial leverage to ensure flexibility through price cycles.

-      Flexible hedging policy that allows the Company to contract hedges to mitigate the effect of price movements taking into account the Group's asset mix and forecast production

Commentary

The Group's principal strategy to mitigate against commodity price volatility is focused on conserving capital and optimising cash flow through:

-      Controlling operating and administrative costs;

-      Optimising sustaining capital expenditure; and

-      Maintaining low working capital.

However, as reported in the Financial Review, the Covid-19 pandemic necessitated higher borrowings in Argentina to finance working capital during stoppages at the mine. The Group incurred exceptional costs as a direct result of the pandemic but these were offset by higher commodity prices, reduced administrative expenses, deferred capital expenditure and lower exploration costs due to regional lockdowns.

The Group has ended the year with a net cash position and is therefore in a robust financial position.

In early February 2021 the Group hedged 4 million ounces of silver for both 2021 and 2022 at an average price of c.$27 per ounce to protect cashflows in Peru. This will ensure profitable production from existing resources at Pallancata while brownfield exploration efforts continue to add near-term resources

See the Market Review on pages 8 to 11 for further details on how commodity prices performed in 2020.

b) Commercial Counterparty

Change in risk profile vs 2019: HIGHER

Impact

Insolvency of a customer or other business counterparty (bank, insurance company, contractor, etc) could result in the Group's inability to collect accounts receivable or to access funds or to receive services which could adversely impact the Group's profitability.

Mitigation

-      Active assessment of customers and business counterparties.

-      Risk mitigation practices seeking to diversify the Group's customer base and/or to limit the size of shipments.

-      Ongoing assessment of methods to mitigate collection risk.

Commentary

During the year, the Group undertook the following:

-      Annual counterparty analysis: The annual review of existing customers incorporated analysis of corporate governance, balance sheet strength and other aspects of credit quality. As a result of the review, a number of customer relationships were terminated and risk mitigation was achieved through the requirement to make advance payments, delaying the passing of title of sold goods until full payment and obtaining parent guarantees;

-      Review of financial counterparties: The Group has implemented policies to identifying suitable financial counterparties to support the Group's treasury and insurance needs. On an ongoing basis, the Group has adopted a number of practices such as the placing of limits on cash balances invested with financial institutions, monitoring of advanced payments from customers and ensuring diversification.

Impact of Covid-19

During the year, the Group closely monitored the impact of the Covid-19 pandemic on the creditworthiness of its financial counterparties.

2. OPERATIONAL RISKS

a) Operational Performance

Change in risk profile vs 2019: HIGHER

Impact

Failure to meet production targets and manage the cost base could adversely impact the Group's profitability. Failure in handling and storing tailings could result in environmental liabilities including fines, corrective measures and stoppage.

Mitigation

- Close monitoring of operational performance, costs and capital expenditure as well as the overall profitability at all stages of the mining value chain.

- Monitoring the adequacy and safety of key mining components such as tailing dams, waste rock deposits and pipelines in close liaison with relevant departments ensuring that procurement, construction and permitting are undertaken appropriately.

- A specific tailings management framework is in place, including an independent third-party review of Tailings Storage Facilities (TSFs).

Commentary

The Group met its targeted production range which was revised downwards as a result of the Covid-19 pandemic.

In setting budgets for the year, the Group continued to focus on maintaining controlled levels of costs, capital expenditure and expenses. As reported in the Financial Review from page 36, the all-in sustaining cost from operations was below the revised guidance for the year, at $12.8 per silver equivalent ounce.

The Group has published information on its website regarding its TSFs, including their construction method and risk profile. It also continues to commission independent third-party reviews of all such facilities and monitors on an ongoing basis their stability, with particular emphasis on older TSFs such as the Ares facility which is in the process of being closed.

Impact of Covid-19

Mitigation: Covid-19 Crisis Plan which, among other things, established the Covid-19 Crisis Committee led by the Group's most senior physician.

Commentary: The Covid-19 Crisis Committee oversaw the implementation of a number of actions in Q1 2020 across operations in Peru and Argentina including:

- The establishment of strict health protocols which, in Peru, were more stringent than those mandated by law. These covered employee re-allocation and testing and, in relation to the operations, oversaw:

- the adaptation of physical sites and changes to operational procedures to facilitate social distancing and to treat suspected cases; and

- a reinforced presence of Health teams.

- Installation of increased IT infrastructure with enhanced security.

Following a localised outbreak at Inmaculada in July 2020, the Group suspended the mine and instigated actions including the following:

- Engagement of a specialist contractor to undertake a deep-clean of the mine site.

- Working shift patterns were changed to reduce risks associated with the transportation of workers.

- Developed technology-based systems to (a) report, in real time, suspected cases and to provide daily updates on treatment and (b) ensure that working shift changes are undertaken in a Covid-secure manner through planning hotel room allocations, lab test results and transportation planning.

- Established a programme of testing.

Similar actions were taken following the detection of a number of Covid cases at San Jose in November 2020.

Given the significant costs associated with the above, the Group put in place a Cash Optimisation Plan which resulted in the cancellation/ postponement of certain operational, administrative and exploration expenditure and the deferral of the proposed 2019 final dividend.

b) Business Interruption

Change in risk profile vs 2019: UNCHANGED

Impact

Assets used in the Group's operations may cease to function or the provision of supplies or of electricity may be disrupted (e.g. as a result of technical malfunction or earthquake damage) thereby causing production stoppages with material effects.

Mitigation

- Insurance coverage to protect against major risks.

- Management reporting systems to support appropriate levels of inventory.

- Inspections every 18 months (to co-incide with renewal) by insurance brokers and insurers assist management's efforts to understand and mitigate operational risks.

- Negotiation of long-term power supply contracts and the procurement of contingent generators.

Commentary

In addition to maintaining insurance policies covering machinery breakdown, mitigating actions during the year include the following:

- A thorough review of critical supplies and inventory was performed with data uploaded onto the Maintenance Module of SAP HANA;

- Maintaining back-up equipment to ensure power supply in Peru and Argentina; and

- A Crisis Response Plan ('CRP') was developed in 2019 with the support of external consultants. Management received training on the CRP in Q1 2020 on how to mount a co-ordinated response to unforeseen disruption.

Impact of Covid-19

Although government-mandated restrictions within Peru resulted in delays in the transportation of mine supplies, these were overcome through raising inventory levels and agreeing expedited deliveries with individual suppliers.

c) Information security and cybersecurity

Change in risk profile vs 2019: UNCHANGED

Impact

Failure of any of the Group's business critical information systems as a result of unauthorised access by third parties may affect the Group's ability to operate.

Mitigation

- Compliance with ISO 27001, an internationally recognised certification to evaluate information security management systems.

- Dedicated team within the IT department focused on preventing cyber-attacks.

- Audits performed by the internal audit department and third parties to test systems and issue recommendations.

- Primary information processing supported by SAP Hana which has best-in class security features.

Commentary

Security of the Group's network infrastructure is assured through the following means:

- Industrial networks have been incorporated into the Group's IS Management System ('ISMS') with associated security enhancements implemented;

- ISMS received BSI certification; and

- the principal recommendations arising from an ethical hacking assessment have been implemented.

Impact of Covid-19

To counter the heightened risks as a result of the widespread use of remote working, the Group adopted use of VPN software, enhanced security monitoring efforts and upgraded anti-spam software for use with corporate email services. In addition, internal communication campaigns were launched to ensure best practices in remote working.

d) Exploration & Reserve and Resource Replacement

(d)(i)Impact

The Group's future operating margins and profitability depend upon its ability to find mineral resources and to replenish reserves.

Change in risk profile vs 2019: HIGHER

Mitigation

-       Implementing and maintaining an annual exploration drilling plan.

-       Ongoing evaluation of acquisition and joint venture opportunities to acquire additional ounces.

-       Implementation of a comprehensive permitting strategy led by a Permitting Committee.

Commentary

For details on the results of the Group's 2020 brownfield exploration programme, refer to page 33.

The Group has an internal Permitting Committee led by two Vice Presidents to co-ordinate efforts with a view to streamlining the permitting process for exploration and operational requirements. Senior executives actively participate in industry initiatives to simplify the permitting process.

Greenfield exploration is primarily conducted through the negotiation of earn-in/joint venture opportunities. These provide the Group with a balanced portfolio of advanced and early-stage opportunities in stable jurisdictions in the Americas. Further details are provided on page 34.

Impact of Covid-19

The Group's exploration programme was significantly disrupted during the year due to government mandated lockdowns to contain the spread of coronavirus and, in the initial stages, due to the closure of governmental offices charged with permit administration.

Social and economic conditions in Peru have worsened leading to higher social demands and social conflicts involving mining projects. This has led to delays in securing permits from the communities to access new explorations areas which could impact the exploration programme.

The Group has worked closely with relevant government departments to expedite permit approvals of prioritised projects and targets.

(d)(ii) Impact

Reserves stated in this Annual Report are estimates.

Change in risk profile vs 2019: UNCHANGED

Mitigation

-       Engagement of independent experts to undertake annual audit of mineral reserve and resource estimates.

-       Adherence to the JORC Code and guidelines therein.

Commentary

The Group has engaged P&E Consultants to undertake the annual audit of mineral reserve and resource estimates.

See page 188 for further details

(e) Personnel: Recruitment and Retention

Change in risk profile vs 2019: UNCHANGED

Impact

Inability to attract or retain personnel through a shortage of skilled personnel.

Mitigation

The Group's approach to recruitment and retention provides for the payment of competitive compensation packages, well defined career plans and training and development opportunities.

Commentary

The Group has undertaken a number of initiatives to improve the retention of employees. These include the use of non-financial benefits (e.g. flexible working arrangements for office-based staff) and tailored personal development plans. In addition to the five-year Leadership programme implemented at all operations, a new Leadership model aligned with the Company's culture is being deployed. The Group actively works to enhance the Group's employee value proposition. This includes the launching of initiatives related to causes that are valued by employees; providing them with the opportunity to contribute to the relaunched purpose of the Company which includes innovation, community relations and environmental performance.

To assist retention of key personnel, the Company has a Long-Term Incentive Plan.

Impact of Covid-19

The Group's training programme for supervisors and hourly workers was suspended in Q1 2020 due to the pandemic.

Due to a shortage of adequately qualified medical staff to support the operations, one-off bonuses were offered to facilitate recruitment and retention.

The need to isolate employees identified as vulnerable and those presenting symptoms resulted in challenges in ensuring that the mines were adequately staffed to oversee operations.

In-house developed software was used to track various aspects including test-results, and each patient's health condition in order to facilitate the planning of logistics involved in managing shifts, transportation and accommodation.

(f) Personnel: Labour Relations

Change in risk profile vs 2019: UNCHANGED

Impact

Failure to maintain good labour relations with workers and/or unions may result in work slowdown, stoppage or strike.

Mitigation

-      Development of a tailored labour relations strategy focusing on profit sharing, working conditions, management style, development opportunities, motivation and communication

-      Monthly meetings with mineworkers and unions to ensure a complete understanding of expectations and to keep all parties updated on the Group's financial performance

Commentary

The Group's Peruvian operation generated sufficient taxable income to give rise to an entitlement to statutory profit sharing for Peruvian mineworkers.

As part of the salary increases agreed with the Peruvian labour unions, the Company has approved an additional bonus plan incorporating safety and productivity goals.

In Argentina the Company maintains constructive relations with the labour unions through ongoing and regular dialogue.

Impact of Covid-19

Mitigation: Covid-19 Crisis Plan.

Commentary: As previously discussed, one of the actions taken to mitigate the impact of Covid-19 was to temporarily increase the working shift cycles to reduce the frequency of transportation of workers to and from the mine sites in Peru. This measure was negotiated with the labour unions and will end in Q1 2021.

In Argentina, health protocols were implemented in Q4 2020 due to the rising level of cases detected in the Santa Cruz province in coordination with the union and local authorities.

3. MACRO-ECONOMIC RISKS

Political, Legal and Regulatory

Change in risk profile vs 2019: HIGHER

Impact

Changes in the political, legal, tax and regulatory landscape could result in significant additional expense, restrictions on or suspensions of operations and may lead to delays in the development of current operations and projects.

Mitigation

- Local specialist personnel continually monitor and react, as necessary, to policy changes.

- Participation in local industry organisations.

Commentary

In the midst of dealing with the severe impact of the Covid-19 pandemic, Peru had a politically turbulent year with the impeachment of President Vizcarra and the resignation of his successor within a very short period. An interim President has been appointed and will remain in office until the new Presidential term starts in July 2021. This situation led to increased political risk and reductions in public and private investment in an already severe economic downturn caused by the effects of Covid-19.

The Congress elected in January 2020 adopted a very populist agenda which has further impacted the economy and led at least one international rating agency to lower Peru's credit rating.

Mining continues to be a very highly regulated industry where multiple permits are required leading to increased delays and costs. While President Vizcarra's government implemented some deregulatory policies, the mining sector continues to suffer the negative effects of permitting delays. Moreover, the prior consultation process for indigenous communities continues to cause substantial delays in the permitting process for exploration and operational activities.

In terms of social conflicts, protests relating to the Las Bambas and Antapaccay, among others, have increased social demands and expectations, and have led to wider social unrest. Governmental authorities remain sensitive to conflicts between communities and mining companies and typically take a cautious approach by prioritising dialogue between parties. In addition, with the economic downturn caused by Covid-19, there has been a large inflow of people who have migrated from the cities to their hometowns. This has resulted in higher demands from mining companies and an increased risk of conflict.

Congress is expected to continue to push ahead with a populist anti-private sector agenda, which could lead to further tensions between the Executive and Legislative branches, increased political and economic risk and overall social conflict. Presidential elections are underway and several candidates have expressed their support for a new constitution, which would create further uncertainty and delay public and private investment. Several historically anti-mining candidates have already announced their candidacy for the presidency with election in April 2021.

In Argentina, President Fernandez's administration has been very cautious in supporting and promoting the mining industry. Covid-19 and certain populist measures have negatively impacted the overall investment climate in Argentina including in the extractive industry sector.

4. SUSTAINABILITY RISKS

(a) Health and Safety

Change in risk profile vs 2019: HIGHER

Impact

Group employees working in the mines may be exposed to severe health and safety risks.

Failure to manage these risks may result in occupational illness, accidents, a work slowdown, stoppage or strike and/or may damage the reputation of the Group and hence its ability to operate.

Mitigation

-      Health & Safety operational policies and procedures reflect the Group's zero tolerance approach to accidents.

-      Use of world-class DNV safety management systems.

-      Dedicated personnel to ensure the safety of employees at the operations via stringent controls, training and prevention programmes.

-      Systematic programme of training, communication campaigns and other initiatives promoting safe working practices.

-      Use of reporting and management information systems to monitor the incidence of accidents and enable preventative measures to be implemented.

Commentary

The Group reported one fatality during 2020 which occurred at the Pallancata mine. Further details are provided in the Sustainability Report on page 53.

Management continued the implementation of 'Safety 2.0', an action plan to reinforce a safety-first culture. The Plan comprises seven key attributes covering training, effective communication, recognition and aligning compensation with measurable safety performance.

In addition, during the year:

- A significant reduction in the number of High Potential Events ('HPEs') was achieved with 4 HPEs in 2020 (2019: 14);

- Progress was made to certify 8 of the remaining 17 elements of the Group's safety risk information management system to DNV GL Level 7;

For further details on the above, please refer to the safety section of the Sustainability Report on pages 53 to 55.

Impact of Covid-19

Mitigation: Covid-19 Crisis Plan

Commentary:

Operational safety

The Group adapted the delivery of Safety 2.0 due to the pandemic by replacing face-to-face training with online sessions.

Focusing on employee welfare

The Group took decisive action to prioritise employee wellbeing at the onset of the pandemic by:

- Transporting workers to hometowns for medical examination;

- Facilitating remote working in Peru, Argentina and London before the imposition of formal lockdowns;

- Invoking strict health protocols which, among other things:

- identified high-risk employees for re-allocation of duties on a remote working basis; and

- designed a testing programme for all workers for active Covid-19 infection prior to travelling to mine units. Those tested remained in quarantine pending the results. Testing was also carried out on the presentation of symptoms with immediate transportation to the nearest medical facilities.

Following the localised outbreak at Inmaculada in H2 2020, the Health team worked together with the operations and, among other things, implemented:

- The use of rapid Covid tests in conjunction with molecular tests (designed to detect active cases of Covid) for all workers prior to transportation to the mine site; and

- Organised Health brigades to ensure compliance with the Group's Covid-19 protocols

(b) Environmental

Change in risk profile vs 2019:

(a) In relation to those risks arising from the Group's environmental performance/ infrastructure: UNCHANGED

(b) In relation to those risks arising from the increased oversight of the environmental regulator: UNCHANGED

Impact

The Group may suffer from reputational risk and may be liable for losses arising from environmental hazards associated with the Group's activities and production methods, ageing infrastructure, or may be required to undertake corrective actions or extensive remedial clean-up action or pay for governmental remedial clean-up actions or be subject to fines and/ or penalties.

Mitigation

-      The Group has a dedicated team responsible for environmental management.

-      The Group has adopted a number of policies and procedures to manage its environmental footprint.

-      The Group has developed a tool which allows it to measure and manage environmental performance.

-      The Group continues to adopt measures to minimise natural resource use, with particular emphasis on water consumption in its operations.

-      A specific tailings management framework is in place for TSFs, including independent third-party review

Commentary

With regards to the countries where the Group operates, environmental permitting and agency oversight in Peru in particular remained rigorous during the year.

In 2020, the Group performed highly in its ECO Score (with a score of 5.74 out of 6 (2019:4.82)), which quantifies, in a single score, the following aspects of environmental management:

-      Compliance with discharge regulatory limits;

-      Minimising the number of environmental incidents;

-      Minimising the number of findings from regulatory audits;

-      Efficient water consumption; and

-      Minimising domestic waste generation and maximising recycling of industrial waste.

In addition, during the year, the Environmental team:

-      launched the Environment Culture Transformation Plan with the support of Dupont to further embed an environmentally conscious culture across the Company;

-      received recognition from the Peruvian Water Authority for the Group's water reduction plan and associated programmes with local communities; and

-      continued with the progressive closure of certain discontinued mining components including the revegetation of a waste rock deposit at Arcata.

For further details on the above as well as the Group's approach to climate change, please refer to the environmental section of the Sustainability Report on pages 60 to 62.

Impact of Covid-19

As previously stated, the pandemic has resulted in delays in the processing of permits and licences by governmental authorities. Such permits include the requisite amended Environmental Impact Assessments in order to extend the operating areas of existing mines such as Inmaculada and Arcata.

(c) Community Relations

Change in risk profile vs 2019: HIGHER

Impact

Communities living in the areas surrounding the Group's operations may oppose the activities carried out at existing mines or, with respect to development projects and prospects, may invoke their rights to be consulted under new laws.

These actions may result in loss of production, increased costs and decreased revenues, longer lead times, additional costs for exploration and have an adverse impact on the Group's ability to obtain the relevant permits.

Mitigation

-      The Group has a dedicated team responsible for Community Relations

-      Constructive engagement with local communities based on several years of positive relations.

-      Community Relations strategy focuses on promoting education, health and nutrition, and sustainable development.

-      Policy to actively recruit workers from local communities.

-      Policy of hiring service providers from local communities.

-      The Group has also engaged with local governments to support public investment initiatives through technical assistance and direct investment.

Commentary

In Southern Peru, there has been considerable tension between mining companies and local communities due to ongoing conflicts relating to mines in Apurimac, Cusco and Arequipa.

In recognition of its responsibilities to host communities, the Group invested significant resources to understand the needs and expectations of local communities and governments.

During the year:

-      the Group spent or donated $5.5m to benefit local communities and supported local community-run businesses;

-      we continued to engage with communities although adjusting our approach (see below for more details);

-      the Community Relations team continued to support the business, for example, by successfully securing surface rights and concluding prior consultation processes to facilitate exploration activities.

Impact of Covid-19

Mitigation: Covid-19 Crisis Plan

Commentary:

As a result of the Covid-19 pandemic, the Group's Community Relations strategy refocused on health and education. Initiatives included:

- Delivery of over 2,500 hygiene and food packs to employees and local communities;

- Donations of medical equipment, oxygen and other medical supplies to local hospitals and medical centres; and

- Donations of Covid-19 tests to local medical centres and contributed to the donation of Covid-19 tests made by the Mining Industry Association to the Government.

The Group launched the Keeping Connected project which provided 6,500 people across 13 communities with free access to the internet - an invaluable resource during the pandemic.

Our Permanent Information Office near Inmaculada and Pallancata was adapted during the period of Covid restrictions into a virtual office providing information and responses to queries through various channels including social media.

Further details can be found in the Sustainability Report from page 63.

Appendix 2

Related-Party Balances and Transactions, and

Compensation of key management personnel of the Group

(reproduced from pages 167 and 168 of the 2020 Annual Report)

 (a) Related-party accounts receivable and payable

The Group had the following related-party balances and transactions during the years ended 31 December 2020 and 2019. The related parties are companies owned or controlled by the main shareholder of the Parent Company or associates.

¹ The account receivable relates to reimbursement of expenses paid by the Group on behalf of Cementos Pacasmayo S.A.A., an entity controlled by Eduardo Hochschild. The account payable relates to the payment of rentals.

² Peruvian not for profit educational institutions controlled by Eduardo Hochschild.

As at 31 December 2020 and 2019, all other 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:

The Group entered in 2019 into transactions with Banco de Credito del Peru at arm's length such as short-term loan and deposits which are undertaken in the normal course of a banker-customer relationship. This bank is controlled by Dionisio Romero who is a Non-Executive Director of the Group.

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

(b) Compensation of key management personnel of the Group

This amount includes the remuneration paid to the Directors of the Parent Company of the Group of US$3,821,000 (2019: US$4,238,000).

Appendix 3

Statements of Directors' Responsibilities

A) Reproduced from page 79 of the 2020 Annual Report

The Directors confirm that to the best of their knowledge:

- the consolidated financial statements, prepared in accordance with IFRSs in conformity with the Companies Act 2006 (and IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union), give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole;

- the Annual Report, including the Strategic 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; and

- that they consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy.

B) Reproduced from page 120 of the 2020 Annual Report

The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable United Kingdom law and regulations.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Parent Company financial statements in accordance with International Financial Reporting Standards ('IFRS') in conformity with the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of their profit or loss for that period.

Under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, group financial statements are required to be prepared in accordance with IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

In preparing those financial statements, the Directors are required to:

- select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

- provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's financial position and financial performance;

- in respect of the Group financial statements, state whether IFRS in conformity with the Companies Act 2006 (and IFRSs adopted pursuant to Regulation(EC) No 1606/2002 as it applies in the European Union) have been followed, subject to any material departures disclosed and explained in the financial statements;

- in respect of the Parent Company financial statements, state whether IFRSs in conformity with the Companies Act 2006, have been followed, subject to any material departures disclosed and explained in the financial statements; and

- prepare the financial statements on the going concern basis unless it is appropriate to presume that the Parent Company and/ or the Group will not continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's and Group's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and the Group and enable them to ensure that the Parent Company and the Group financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Parent Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.