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"Your Board considers that high standards of corporate governance are essential elements of preserving and enhancing shareholder value." - Eduardo Hochschild, Chairman.

A Message from Eduardo Hochschild, Chairman

One of my key roles as Chairman is to ensure that the Board operates effectively with the right set of skills demanded of us as Directors to ensure that we can oversee the successful implementation of theGroup’s strategy.

After the challenges faced by the business in the aftermath of the significant falls in silver and gold prices, the relative trading stability of 2016 provided the Board with a fuller opportunity to review its effectiveness and to implement the succession plan that had been puton hold.

As reported more fully in the Nominations Committee report below, we were delighted to be able to announce the appointments of Eileen Kamerick and Sanjay Sarma as Non-Executive Directors. These appointments were made with succession in mind since, as already announced, Roberto Dañino and Nigel Moore will be stepping down at the forthcoming Annual General Meeting. Both have served as Directors since the Company’s listing in 2006 and the Board has benefited enormously from their contributions.

A key aspect of the Corporate Governance Code is the ongoing refreshing of the Board and hence, Eileen and Sanjay’s appointments will bring not only added diversity to the Board, but also different perspectives given their background and professional experience; in the case of Eileen, in relation to matters of audit and risk, and in the case of Sanjay, the potential for innovation within the mining industry.

As Directors, we are rightly expected to have a deep understanding of the business and the environment in which we operate. We were able to achieve this during 2016 through various means. Given the increased proportion of gold produced by the Group, as part of the annual strategic Board session, the Directors received a presentation from a representative of the World Gold Council which provided a detailed update on the economics driving demand and the outlook for the sector. In addition, at the operational level, a site visit was organised for Board members to visit our newest operation, Inmaculada which incorporated presentations from managers in the mine and the plant. Finally, the Board is kept updated on the ongoing changing landscape of regulationand market practice that affects the Company and the Board from its advisers, both externally and internally.

The continuation of the highly valued internal Board evaluation has, yet again, produced a number of improvements in the way the Board undertakes its role. It has also sourced themes from the Directors on areas for future consideration that have been, and will be incorporated into the annual Board schedule.