Hochschild Mining plc. RBC Capital Markets Silver Conference New York & Toronto 11 & 12 December 2007

Transcription

1 Hochschild Mining plc RBC Capital Markets Silver Conference New York & Toronto 11 & 12 December 27

2 Disclaimer Some statements contained in this presentation or in documents referred to in it are or may be forward-looking statements. Actual results may differ from those expressed in such statements, depending on a variety of factors. Past performance of the Company or its shares cannot be relied on as a guide to future performance. Any forward-looking information contained in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect, and accordingly, actual results may vary. This presentation does not constitute, or form part of or contain any invitation or offer to any person to underwrite, subscribe for, otherwise acquire, or dispose of any shares in Hochschild Mining plc or advise persons to do so in any jurisdiction, nor shall it, or any part of it, form the basis of or be relied on in any connection with or act as an inducement to enter into any contract or commitment therefore. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this document or on its completeness and no liability whatsoever is accepted for any loss howsoever arising from any use of this document or its contents otherwise in connection therewith. This presentation has been prepared in compliance with English law and English courts will have exclusive jurisdiction over any disputes arising from or connected with this presentation. 1

3 Hochschild Mining a snapshot Over 4 years of underground precious metal mining & exploration in the Americas 26 IPO to fund growth strategy~115% over the next 5 years Listed on the London Stock Exchange (HOC LN) $3 million net cash as of 3 June 27 Low cash costs $3.92/oz Ag and $159/oz Au (co-product basis) 1% unhedged Significant emphasis on exploration Strong track record on corporate social responsibility 2

4 Corporate information Stock information Trading statistics Stock exchange listing LSE Main Board Market cap US$2.8bn Ordinary shares in issue 37,35,266 Free float 32% 3 mo. ADTV 529,178 shares 3 mo. ADTV $4.m per day Institutional shareholders >3% Blackrock 52-wk high/low (p) 511 (7Nov7) / 294 (31May7) Institutional ownership split Share price performance Volume Hoc hsc hild Gold Silver 25% 8% 2% UK US Canada RoW , 4, 3, 1 2, 65% 1, 8 Nov-6 Jan-7 Mar-7 May-7 Jul-7 Sep-7 Nov-7 3

5 The 4th largest primary silver producer No. Company 26 production (moz Ag) % of global¹ 1 Industrias Industrias Peñoles Peñoles 47 7% 2 KGHM KGHM Polska Polska Miedz Miedz 4 6% 3 BHP BillitonBHP Billiton 37 6% 4 Kazakhmys Kazakhmys 22 3% 5 Polymetal Polymetal 17 3% 6 Buenaventura Buenaventura 17 3% 7 Grupo Mexico Grupo Mexico 8 Rio Tinto Rio Tinto 9 Coeur d'alene Coeur d'alene Primary silver producers 3% 2% 2% 1 Goldcorp Goldcorp 11 Volcan Volcan 12 Pan American Pan American 13 Hochschild Hochschild Polymetal Coeur Coeur Pan Pan American American Hochschild % 2% 2% 2% Source: Silver Institute, CRU ¹ World excluding China 4

6 and a mid-sized producer of gold Select companies 26 production (koz Au) % of global Randgold Randgold 4.5% Yamana Yamana 314.4% Meridian Meridian 268.3% Peter Hambro Peter Hambro 261.3% Polymetal Polymetal 256.3% Agnico Eagle Agnico Eagle 246.3% Hochschild Mining Hochschild Mining 196.2% Highland Gold Highland Gold 168.2% High River High River 135.2% Source: GFMS, Company filings 5

7 A roadmap for growth Investing San José expansion Q38 Increase capacity to 53 ktpa from 265 ktpa Capex ~$4 million Arcata expansion Q48 Increase capacity to 618 ktpa from 42 ktpa Capex ~$26 million San Felipe Complete feasibility 28 Commence production late 29 Capex ~$11 million Exploration ~$2 million per annum on greenfield exploration Moz Ag Eq to double production by 211 >5 ~ '6 H1 H2 '7 '8 '9 '1 '11 6

8 Focusing on the Americas Six operating mines in three countries & San Felipe in Mexico San Felipe (7%) Resource delineation x Polymetalic deposit Production 29 M&I: 3.7 moz Ag / 119 kt Zn / 52 kt Pb Pallancata (6%) Underground Silver/gold concentrate Since Q37 P&P 11.6 moz Ag / 46 koz Au Legend x Mine Development projects Resource delineation Selene (1%) Underground Silver /gold dore Since 23 6 prod: 28 koz Au / 4 moz Ag P&P 53 moz Au / 7.9 moz Ag x x Moris (7%) Open pit Gold dore Since Q37 P&P: 99 koz Au /.3 moz Ag Arcata (1%) Underground Silver/gold concentrate Since prod: 4.7 moz Ag / 12 koz Au P&P 27.5 moz Ag / 71 koz Au Ares (1%) Underground Gold/silver dore Since prod: 156 koz Au / 2.7 moz Ag P&P 221 koz Au / 6.1 moz Ag San José (51%) Underground Gold/silver dore Since Q27 P&P 18.6 moz Ag / 298 koz Au 7

9 Arcata a world class silver deposit Alexia Vein Ramal 2 Vein Macarena Mariana Vein Commenced production in 1964 Since 199 produced over 1 moz Ag & 39 koz Au 26 production: 4.7 moz Ag & 12 koz Au High grade silver resource M&I 29.8 moz Ag & 77 koz Au 586 g/t Ag & 1.5 g/t Au Capacity expansion completed ahead of schedule 35 ktpa 42 ktpa in Q2 27 Further expansion 618 ktpa in Q48 Significant mineralized potential provides upside 8

10 Exploring the region Exploration offices in Peru, Argentina, Mexico, Chile and the USA New opportunities Feasibility completed Claudia Azuca Manantiales Puesto Chacon Ares Arcata Selene San José Pallancata Moris San Felipe Peñon Blanco Moctezuma Gonzalito Existing mining operations El Gachi Pozos Paraíso Development projects Resource delineation La Flora Tres Chepas Gavilanes Ccello Punta Target definition Prospect To Divest / Drop / JV Quevar (JV) Tignamar Calderón El Pino (JV) Sierra Mojina (JV) El Pocito (JV) San Luis del Cordero Patahuasi 596,47 Has. 77,6 Has. 181,425 Has. 6,889 Has. Generative 9

11 Responsibility towards employees, the environment and local communities Health & safety Finalizing adoption of U.S. Department of Labor OSHAS 181 standards Ares Mining Unit National Safety Contest: 23 National Prize 25 Third Place Arcata Mining Unit 24 Second Place National Safety Contest: 1998 Second Place 1999 National Prize 2 Second Place 25 Second Place Trophy JOHN T.RYAN 21 Underground Mining 22 Underground Mining Selene Mining Unit National Safety Contest: 23 Second Place 24 National Prize 25 National Prize 26 Second Place Environmental Environmental Management System certified to ISO 141 standards Reforestation program Sipán before Sipán today Community TECSUP (leading technical institute in Peru) Self-sustaining programs Healthcare campaigns Schools Alpaca Genetic Improvement Program Community training programs focused on developing technical skills for future employment Ongoing negotiations with local communities for current & future development 1

12 Delivering IPO commitments Finance 1% hedge free Strong financial capacity 1% long-term debt repaid Actively looking for acquisitions Dividends declared & paid Explorations Reserves increased by 15% in H17 Resources increased by 9% in H17 Avg. LOM up from 3.7 years to 4.1 years in H17 Strong project pipeline Operations Capacity expansions completed in Ares and Arcata, and Selene on schedule San José, Moris and Pallancata in production on time San Felipe moved to feasibility stage Close to 26 moz Ag eq. in 27 On track to produce 5 moz Ag eq. in

13 Appendix 12

14 Financial highlights Financial strength to pursue our growth strategy $ million unless stated H17 H16 FY6 Revenue $121 $11 $211 Adjusted EBITDA 1 $56 $56 $18 Adjusted EBITDA 1 margin 46% 56% 51% Earnings per share 2 $.1 $.9 $.19 Operating cash flow $21 $34 $126 Net cash position $3 ($78) $46 Legacy hedges expired in June 27 ¹ Adjusted EBITDA is calculated as profit from continuing operations before exceptional items, net finance costs and income tax plus depreciation, amortization and exploration costs other than personnel and other expenses 2 Earnings per share using the weighted average number of shares outstanding for the period (26: 243 million; 25: 23 million). Current share outstanding 37 million. 13

15 Hochschild price performance vs. peers (27 to date) UK peers 6% 5% 4% 3% 2% 1% % (1)% (2)% Hochschild Peter Hambro NA gold peers 3% 2% Highland Gold Randgold Polymetal Polyus NA silver peers 6% 5% 4% 3% 2% 1% % (1)% (2)% Hochschild Hecla Pan American Commodities & indices 5% 4% 3% Coeur D'Alene Apex Silver 1% % (1)% (2)% Hochschild Hochs- Agnico GoldCorp Barrick Newmont New- Yamana Kinross child Eagle Corp mont Gold 2% 1% % (1)% (2)% Hochschild Silver Gold FTSE 25 FTSE 35 Mining Source: Datastream, 1 January 27 to 19 November 27 14

16 Comparable companies trading multiples Share EBITDA EV/EBITDA EV/EBIT P/E YE Dec price (local) Market cap. ($m) EV ($m) 27E margin (%) 27E 28E 27E 28E 27E 28E Hochschild ,698 2, % 14.x 8.5x 19.2x 13.x 29.6x 23.7x Highland Gold % 18.4x 11.7x 3.6x 21.3x n.a. 49.x Peter Hambro 1,318. 2,193 2, % 28.x 12.x 31.4x 13.2x 46.3x 21.3x Randgold 1,82. 2,561 2, % 22.3x 19.4x 25.2x 22.7x 38.9x 37.8x Average of UK peers 1,764 1, % 22.9x 14.4x 29.1x 19.1x 42.6x 36.x North American peers AgnicoEagle ,616 6, % 23.3x 21.3x 27.8x 25.7x 46.3x 4.5x Barrick ,797 34, % 13.1x 1.8x 2.2x 14.2x 29.1x 21.9x Goldcorp ,64 22, % 18.5x 16.8x 27.4x 25.5x 39.6x 38.2x Coeur D'Alene 3.9 1,96 1,3 42.% 1.5x 5.3x 13.6x 6.4x 15.6x 8.4x Hecla Mining ,341 1, % 14.4x 14.4x 24.1x 22.3x 33.1x 28.4x Kinross ,14 1, % 24.2x 14.5x 38.1x 2.8x 51.3x 32.8x Newmont ,43 24, % 12.7x 9.5x 2.2x 14.3x 43.1x 26.3x Pan American ,438 2, % 17.6x 11.4x 2.3x 16.x 29.x 19.1x Average of North American peers 12,417 12, % 16.8x 13.x 24.x 18.2x 35.9x 27.x South American peers Buenaventura ,21 7, 53.5% 17.9x 17.8x 19.7x 19.8x 19.2x 17.2x Peñoles ,519 9, % 1.7x 8.7x 12.9x 12.1x 21.8x 17.1x Average of South American peers 7,86 8, % 14.3x 13.3x 16.3x 16.x 2.5x 17.2x Source: Brokers consensus and Datastream as of 19 November 27 15

17 Diversification Resources by country Resources by commodity 12% 11% 2% 1% 19% 27% 58% 69% Peru Argentina Mexico Silver Gold Zinc Lead Copper 16

18 Growing our asset base Exploration philosophy & goals Maintain a highly motivated, technically proficient, well funded exploration team with a successful track record Focus on high grade, low cost deposits / targets Consistent & rigorous approach for measuring value creation of exploration through technical excellence Best international industry practices Reserve growth (6 months) koz Au 1, Gold (+5%) Silver (+23%) Dec-6 Jun moz Ag As at 3 June 27 Silver (moz) Gold (koz) Zinc (kt) Lead (kt) Proven & Probable Reserve Measured & Indicated Resources Inferred

19 Executive Directors & Management Eduardo Hochschild Executive Chairman Roberto Dañino Deputy Chairman & Executive Director Alberto Beeck Executive Director, Strategy & Corporate Development Miguel Aramburú Chief Operating Officer Jorge Benavides Chief Executive of Exploration & Geology Officer Ignacio Rosado Chief Financial Officer Isac Burstein Business Development Manager Ignacio Bustamente General Manager, Operations Peru Raymond Jannas Corporate Exploration Manager Javier Durand Legal Manager José Augusto Palma Senior Adviser, Executive Committee 18

20 Arcata Peru (1%) Reserves & resources 4, Reserves Resources 1 3, 8 Tonne (kt) 2, 1, LOM High grade silver resource 586 g/t Ag & 1.5 g/t Au Capacity expansion completed ahead of schedule 35 ktpa 42 ktpa in Q2 27 Further expansion 618 ktpa in Q48 Significant mineralized potential provides upside 27 Exploration budget: $4.5 million program to expand R&R base in anticipation of expansion Produces silver/gold concentrate Au koz Production Dec-3 Dec-4 Dec-5 Dec-6 Jun-7 Au (koz) Ag (Moz) mo Ag moz 19

21 Ares Peru (1%) Reserves & resources 1,2 Reserves Resources 4 Tonne (kt) 1, LOM Mature high grade gold deposit 7.67 g/t Au & 211 g/t Ag 27 exploration budget: $1.5 million directed towards extensive exploration of surrounding areas Decreasing mine grade but maintaining mine life with increased capacity Capacity expansion completed on time and budget on Q1 27 to 325 ktpa Produces gold/silver dore Au koz Production Dec-3 Dec-4 Dec-5 Dec-6 Jun-7 Au (koz) Ag (Moz) mo Ag moz 2

22 Selene Peru (1%) Reserves & resources 2,5 Reserves Resources 6 Tonne (kt) 2, 1,5 1, LOM Grades g/t Ag & 1.9 g/t Au Continue to develop the Explorador vein 27 Exploration budget: $2.6 million focused on the expansion of R&R in the Explorador, Tumiri and Sofia veins Expanding plant capacity on schedule Q ktpa Expansion to accommodate Pallancata ore Produces silver/gold dore (processed at Ares plant) Au koz Production Dec-3 Dec-4 Dec-5 Dec-6 Jun-7 Au (koz) Ag (Moz) mo Ag moz 21

23 San José Argentina (51%) Mine installations and development completed and operational Production commenced Q27 27 Exploration budget: HOC: $3.8 million Minera Andes: $1.96 million Program to expand resources in the Frea, Kospi, Odin A&B Veins as well as test potential mineralization in other targets Jun 27 R&R total (HOC 51%) Reserves: g/t Ag, 6.7 g/t Au Resources*: g/t Ag, 7.8 g/t Au LOM (R&R): 1.3 years Q38 planned expansion to double capacity Produces silver/gold concentrate Successful entrance into a new country Successfully building relations with local communities * Measured + indicated + inferred, includes reserves 22

24 Pallancata Peru (6%) Commenced production on schedule in Q37 Underground development advancing according to plan Power line and road access to the Selene processing plant completed 27 Exploration budget: $3.4 million HOC + $1.6 million IMC (JV partner) designed to expand reserves and resources in the Pallancata and Mariana veins Future exploration targets: The Mercedes, Virgen del Carmen and San Javier veins Jun 27 R&R total (HOC 6%) Reserves: g/t Ag, 1.8 g/t Au Resources*: g/t Ag, 1.5 g/t Au LOM (R&R): 16.5 years 28 planned expansion to 35 ktpa Produces silver/gold concentrate (milled at Selene) * Measured + indicated + inferred, includes reserves 23

25 Moris Mexico (7%) Commenced production on schedule in 1 mtpa capacity open pit crush & heap leach operation 27 exploration budget: HOC: $.8 million EXMIN: $321, Program to explore La Nopalera, El Cajón and South Crestón targets to increase resources and test district potential Jun 27 R&R total ( Hoc 7%) Reserves: g/t Au Resources*: g/t Au LOM (R&R): 2.8 years Produces dore * Measured + indicated + inferred, includes reserves 24

26 San Felipe Mexico (7%) Mexico 7% earn in JV Polymetalic deposit High grade resources: Total Jun 27 (HOC 7%) % Zn, 3.21% Pb,.42% Cu and 71 g/t Ag* 18,627 meters drilled, more than the half of it in 27 in the Ventana ore-body Significant upside in 7 other out-cropping targets Commence feasibility mid-27 Capacity 7 ktpa late 29 to 1,8 ktpa by late 21 * Measured + indicated + inferred, includes reserves 25

27 El Gachi Mexico (7%) El Gachi providing additional upside to San Felipe, 6 km from San Felipe 2.5 to 8. m manto identified in the property Historic (no JORC) resource of ± 1 K 4 5 gr Ag & 15 2 % Pb + Zn Significant upside potential * Measured + indicated + inferred, includes reserves 26

28 Azuca Peru (1%) >5 km of plus metre wide veins mapped Encouraging results from previous Hochschild drilling programs on the Azuca 1 and Minaspata veins 5.6 g/t Au and 917 g/t Ag, and g/t Au and 488 g/t Ag respectively) +5 g/t drill intercepts published by another exploration company on an adjacent property (part of same vein district) * Measured + indicated + inferred, includes reserves 27

29 Hochschild Mining plc RBC Capital Markets Silver Conference New York & Toronto 11 & 12 December 27