Ignacio BustamaB. BMO Global Metals & Mining Conference 1 March 2011

Transcription

1 Ignacio BustamaB stamante, CEO BMO Global Metals & Mining Conference 1 March 2011

2 Disclaimer Some statements contained in this presentation or in documents referred to in it are or may be forwardlooking 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. Nothing in this presentation is to be construed as a profit forecast. 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 s advantageous positioning Moris Mexico A leading precious metals producer in the Americas 3 of the 12 largest primary silver mines in the world Operations in Peru, Argentina and Mexico Long term core asset production:20 23m oz Ag Eq Peru FTSE 250 with market cap of US$3.0bn Ticker: HOC Arcata Pallancata Ares Inmaculada Azuca Crespo Chile Argentina Significant organic project pipeline 3 Advanced Projects 8 potential Company Makers 26 drill targets in 2011 throughout Latin America US$70 million exploration budget in 2011 Current operations Advanced Projects Drill sites San Jose Cash position of about US$500m as at February 2011 Following payment of $115m syndicated loan years of production experience of high margin, precious metal assets

4 Continued strategic and operational delivery 2010: A historic year for Hochschild 2010 production targets achieved Strong progress at our 3 Advanced Projects Significant improvement in LOM at all operations Disposal of 35% stake in Lake Shore Gold Cash of about US$500m 2011: Key focus on organic growth Exploration investment increased to US$70m in 2011 Advanced Projects in feasibility Extensive ongoing drilling campaign in 4 countries 8 potential Company Makers 26 drill targets Attributable Ag Eq moz SOLID ASSET BASE: ~20 23 MOZ AG EQ PER YEAR FROM CURRENT OPERATIONS 2011E 2012E 2013E 2014E 2015E Current operations New operations 3 New operations expected to deliver +12m oz per annum from 2013

5 Strategy M&A Exploration 1 Optimise LOM Improve productivity Arcata Pallancata San Jose Core Assets 2 Land package People Incentives Budget 3 Advanced Projects 8 Company Makers Solid pipeline Project pipeline M&A 3 Early stage Strong geological potential Highly accretive Control Bolt on M&A 4 Strong emphasis on exploration led growth

6 1 Core Assets: maximising LOM Arcata LOM FY08 FY09 FY10 Pallancata LOM Main Operations LOM 44% Resource life of mine at main operations is now approx 8.5 years* (core assets) Reserve cut off grades applied to resources FY08 FY09 H110 San Jose LOM * FY08 FY09 H110 High conversion rate from resources to reserves FY08 FY09 5 * Preliminary unaudited figures Oct10 Potential to further increase resources at core assets

7 1 Core Assets: Arcata Located in Arequipa, Southern Peru 100% owned Production commenced in 1964 Produces silver & gold concentrate and doré World class district +447moz Ag eq endowment New high grade veins continue to be found Peru LIMA Arcata Units 2010 PRODUCTION Total moz. Ag eq. 9.7 AVG. GRADE Ag (g/t) 439 Au (g/t) RESOURCES Total moz. Ag eq LOM RESOURCES Years 8.3 CAPACITY Tpd 1,750 Flagship mine with strong exploration potential

8 1 Core Assets: Pallancata Located in Ayacucho, Southern Peru 60% Hochschild/40% International Minerals Corp. (IMZ) Production commenced in Q % concentrate 2010 Ag eq production up 19% on 2009 Significant brownfield expansion potential Peru Pallancata LIMA Units 2010 PRODUCTION Total moz. Ag eq AVG. GRADE* Ag (g/t) 344 Au (g/t) 1.41 RESOURCES Total moz. Ag eq LOM RESOURCES Years 7.0 CAPACITY Tpd 3,000 7 Further Peruvian success story with strong exploration potential

9 1 Core Assets: San Jose Located in Santa Cruz, Southern Argentina 51% Hochschild/49% Minera Andes (MAI) Production commenced in Q307; capacity doubled to 1,500tpd in % concentrate / 50% doré High grade mineral district San Jose Units 2010 PRODUCTION Total moz. Ag eq 10.4 AVG. GRADE* Ag (g/t) 397 Au (g/t) 6.14 RESOURCES Total moz. Ag eq LOM RESOURCES* Years 12.5 CAPACITY Tpd 1,500 8 * Oct 2010 figure 50,500 ha property only partially explored

10 1 San Jose: more value through exploration Recent exploration success announced in Oct 2010 significantly increased resources Comparable transaction supports strong valuation Cerro Negro: high grade district Maximising LOM at San Jose San Jose* 3.1 moz Au eq at 12.8 g/t Au eq 1.84mt New veins & extensions 100% HOC 100% HOC Acquired by Goldcorp in 2010: US$3.6bn Cerro Negro (Andean) 6.2 moz Au eq at 9.1 g/t Au eq Resources at 31 Dec mt mt 2010 additions Existing veins 9 * Total endowment Significant upside exploration potential

11 2 Advanced Projects: Southern Peru cluster Peru LIMA ICA JUNIN HUANCAVELICA AYACUCHO APURIMAC CUSCO Azuca Selene Crespo Pallancata Arcata Inmaculada Ares AREQUIPA CUSCO MADRE DE DIOS Distance (km) Ares Arcata Selene Inmaculada Strong presence in Southern Peru Competitive advantage: 40+ years of experience in precious metals mining Unrivalled regional knowledge of operating/political landscape Extensive land package in key geological districts Experienced geological team aligned with company strategy Excellent regional reputation Solid infrastructure network in place Good relationships with local suppliers/engineering firms Excellent community relations programme Azuca Crespo Leveraging our Southern Peru cluster to drive near term growth

12 2 Advanced Projects: Key stages Project Scoping Feasibility Construction Production Production based on current resources Inmaculada Q /2013 Q moz Ag Eq (Avg p.a.attributable production) Crespo Q /2013 Q moz Ag Eq (Avg p.a. production) Azuca Q /2013 Q moz Ag Eq (Avg p.a. production) 11 Potential to add over 12m attributable oz from end 2013

13 2 Advanced Projects: Inmaculada (Peru) 60% owned project at feasibility stage Acquisition cost of US$ 84 per Au oz Estimated pre operating investment of US$168m Initial scoping study showing strong resource base: Approximately 50m oz Ag Eq (M&I) resources already Approximately 70m oz Ag Eq Inferred Angela vein structure at 6 metre width Mineralisation over 2,000m strike length and still open SCOPING STUDY ECONOMICS Au: $1,000/oz Ag: $17/oz Au: $1,400/oz Ag: $24/oz NPV (Non discounted)* $m 660 1,148 5% $m IRR % 41% 63% Announcement (25/02/2011) 59% increase in M&I resources to 76.0m oz Ag Eq 29% increase in Ag Eq grades to 498g/t 12% increase in total resources to 128.3m oz Ag Eq 12 12* All NPV figures quoted pre tax Strong potential to exceed Pallancata scale

14 2 Advanced Projects: Azuca (Peru) 100% owned project Estimated pre operating investment of US$75m Significant geological potential: 3 new veins discovered in 2010 Total inferred resources: 60.8m oz (Ag Eq) Arcata sized district system: +300m oz Ag Eq? SCOPING STUDY ECONOMICS Au: $1,000/oz Ag: $17/oz Au: $1,400/oz Ag: $24/oz NPV (Non discounted)* $m % $m IRR % 21% 57% 13 Azuca district potential to match Arcata * All NPV figures quoted pre tax

15 2 Advanced Projects: Crespo (Peru) 100% owned project Total resources of 49.4m oz (Ag Eq)* Scoping study only used 31.3m of M&I resources Estimated pre operating investment of US$65m Strong exploration potential Crespo pit design SCOPING STUDY ECONOMICS Au: $1,000/oz Ag: $17/oz Au: $1,400/oz Ag: $24/oz NPV (Non discounted)** $m % $m IRR % 19% 47% 14 *Includes measured, indicated and inferred resources 14**All NPV figures quoted pre tax Simple open pit, heap leach operation

16 2 Pipeline: Unique focus on the Americas Mercurio Corazon de Tinieblas Mexico Josnitoro Apacheta Pariguanas Sabina Peru 2011: Extensive and targeted greenfield drill programme: 335,000 metres 26targets Four countries Peru, Argentina, Chile &Mexico 2011 Exploration budget: $70m 2011 Greenfield Exploration by country Victoria Valeriano Chile Argentina 36% 15% 49% Greenfield Brownfield Advanced projects 19% 17% 52% Peru Argentina Chile Mexico 12% Company Makers 15 Strong prospective presence across the Americas

17 2 High quality project pipeline Ares Arcata Pallancata San Jose CURRENT Moris OPERATIONS Medium scale Peru Argentina Company Makers Chile Mexico Inmaculada Azuca Crespo ADVANCED PROJECTS Key targets Victoria Valeriano Parihuana Mercurio Company Company Makers Makers DRILL TARGETS Medium Scale Encrucijada Mosquito La Flora Cerro Blanco Key targets Key prospects Josnitoro Apacheta Corazon De Tinieblas PROSPECTS Cricket Astana Ibel San Martin Key prospects > 1 MILLION HECTARES GENERATIVE 16 Further 40% increase in exploration budget versus 2010

18 2 Victoria, Chile Company Makers Chile Ownership: 60% Hochschild/40% Iron Creek Domekyo fault zone hosts majority of copper porphyries in northern Chile Vida target: g/t Au, 29g/t Ag Vaquillas target: Au, 57g/t Ag Total drilling of 10,000m budgeted for 2011 Mine Company Endowment Escondida El Peñon Guanaco BHP/Rio Yamana Austral Gold 3Moz Au; +78Moz Ag; +144Blbs Cu +7Moz Au; +170Moz Ag +3Moz Au; +6Moz Ag 17 Highly prospective Domeyko fault zone *All endowment figures from Metals Economics Group

19 2 Valeriano, Chile Company Makers Chile Option agreement signed Nov 2010 Acquisition cost of US$5.5m Right to increase stake to 100% Historical drilling results (pre 1997): 100m at 1.37 g/t Au at 19m depth 41m at 0.61 g/t Au, 12 g/t Ag and 0.30% Cu, at 70m depth Mine Company Endowment El Morro Pascua Lama Xstrata Barrick +5Moz Au; +4Blbs Cu +20Moz Au; +700Moz Ag 18 Investment in key geological location *All endowment figures from Metals Economics Group

20 2 Mercurio, Mexico Company Makers Mexico 100% owned 36,388 hectare prospect DH5: g/t Ag, 0.22% Cu, 0.49% Pb, 1.40% Zn. includes: g/t Ag, 4.36% Cu, 1.18% Pb, 7.49% Cu Located between two high grade mines: Mine Company Endowment Sombrerete Grupo Mexico +180Moz Ag La Colorada Fresnillo Pan American Silver Fresnillo +104Moz Ag; +1Blbs Zn; +1Moz Au; +915Moz Ag; +3Blbs Zn; 19 Highly prospective land package *All endowment figures from Metals Economics Group 19

21 2 Copper projects Peru Copper projects acquired as part of Southwestern Resources Significant land package in southern Peru Dedicated team/budget assigned to highly prospective copper properties Strategic decision to be made following drill completion Mine Company Endowment Las Bambas Tintaya Xstrata Xstrata +2Moz Au; +154 Moz Ag; +21Blbs Cu +2Moz Au; +39Moz Ag; +12Blbs Cu 20 Potential to add value *All endowment figures from Metals Economics Group

22 3 Corporate development: realising value Lake Shore Gold (Canada) Net proceeds of approx $454m 34% gain on average purchase price Gold Resource Corp (Mexico) Market value of US$361m unrealised gain of 416% Inmaculada (Peru) Acquisition cost of US$84/oz (Au Eq) Valeriano (Chile) Highly prospective Company Maker acquisition cost of US$5.5m Southwestern Resources Delivered Crespo, Copper projects & Liam property package for net investment of US$2m 361* Strong balance sheet Disciplined acquisition criteria Substantial net cash position + Early stage Strong geological potential Highly accretive Control = Opportunistic acquisition strategy 21 Solid M&A track record

23 High potential for value creation Excellent asset base Solid Advanced Projects Promising exploration pipeline Clearly defined strategy Strong financial position Leverage to precious metals Million Attributable Ag Eq oz Growing resource base: 25% CAGR since IPO % * Arcata San Jose Pallancata Ares/Selene/Moris Azuca Crespo Inmaculada 22 *As of June Includes new discoveries at San Jose Well positioned for future growth

24 Hochschild Mining plc CONTACT US Charles Gordon