Strong Growth in Grades & Resources at Inmaculada

Highlights

·      59% increase in Measured & Indicated Resources to 76.0 million silver equivalent ounces

·      29% increase in silver equivalent grades to 498 g/t

·      12% increase in total resources to 128.3 million silver equivalent ounces

Hochschild Mining plc ("Hochschild" or "the Company") is pleased to announce an increase in both the total Mineral Resource estimate and Measured and Indicated Resources for the Inmaculada gold-silver project located in Hochschild's existing southern Peru cluster, following the announcement of a positive scoping study published by International Minerals Inc ("IMZ") in September 2010. The project, in which Hochschild now owns a controlling 60% stake (IMZ holds the remaining 40%), is currently at feasibility stage with completion expected in 2011. The Company is committed to commencing production in December 2013 at a processing capacity of 3,000 tonnes per day.

The previous resource estimate was based on drilling results prior to 15 May 2010. Subsequently, 67 drill holes from higher grade areas of the Angela vein have been completed and incorporated into the database. As a consequence, Measured & Indicated resources have increased by 59% to 76.0 million silver equivalent ounces with a corresponding grade increase of 29%. Summary results (on a 100% basis, applying a 180 g/t silver equivalent cut-off grade and a silver to gold ratio of 60:1) are as follows:

·      Measured & Indicated resources: 4.7mt at an average grade of 5.2 g/t gold and 186 g/t silver containing approximately 795,000 ounces of gold and 28.3 million ounces of silver. 

·      Inferred resources of 2.7mt at an average grade of 6.1 g/t gold and 247 g/t silver containing approximately 521,000 ounces of gold and 21.0 million ounces of silver. 

Hochschild expects the results to significantly improve the economics of the project detailed in the 2010 scoping study. Furthermore, after applying the Company's marginal silver equivalent cut-off grade of 98 g/t, the grade and resource figures increase further, see table 1 below for full details. The Company will publish updated valuations and sensitivity analysis relating to Inmaculada in its full year results announcement on 29 March 2011¹.

Ignacio Bustamante, CEO of Hochschild Mining comments:

"The significant increase in resources and grades at Inmaculada highlights the tremendous value of this joint venture in which we have a controlling stake and the excellent geological potential which will provide us with additional profitable ounces. The feasibility study at Inmaculada is also well underway and on track for completion this year with production coming on line in December 2013".

¹ The Company will apply a cut-off grade of 98 g/t in the annual resource statement

Table 1:For comparison purposes, updated resources based on silver equivalent cut-off grades of 98 g/t, 180 g/t and 250 g/t are summarised below:

² The Company will apply a cut-off grade of 98 g/t in the annual resource statement due to be published on 29 March 2011

Table 2 - Inmaculada scoping study results published on 10 September 2010 (on a 100% basis) (revised information to be provided with the full year results announcement on 29 March 2011):

1) This Preliminary Economic Assessment or Scoping study is preliminary in nature, in that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves, and there is no certainty that the results of the preliminary economic assessment study will be realised and actual results may vary substantially.

2) Initial Capital includes $32.9 million in contingency allowance. Costs are based on Q3 2010 estimates and no escalation factors have been applied. Value added tax has not been included in the cost estimates.

3) Total Cash Operating costs include smelting and refining and Peruvian Government royalties, but do not include employee profit sharing or depreciation, depletion or amortization.

4) Total Cash Costs per ounce of gold equivalent are calculated using a silver-to-gold ratio of 60:1.

5) By-product accounting subtracts the revenue generated by silver from the operating costs as a credit to determine the cost per ounce of gold.

6) Annual and life-of-mine production figures are after 5% mining losses, 20% mining dilution and the respective metallurgical recoveries for gold and silver.

7) Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Table 3 - Inmaculada sensitivity analyses published on 10 September 2010 (on a 100% basis) and revised information will be provided with the full year results announcement on 29 March 2011:

Cash flow and NPVs are all shown pre-tax, but do include Peruvian government royalties and smelter and transportation charges. Value added tax (generally recoverable in Peru) was not included in the cash flows.

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Enquiries:

Hochschild Mining plc

Charles Gordon                                                                                    +44 (0)20 7907 2934

Head of Investor Relations

Finsbury

Faeth Birch                                                                                          +44 (0)20 7251 3801

Public Relations 

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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 forty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has numerous long-term prospects throughout the Americas.