WORLD MINING CONGRESS June 2008

Transcription

1 Hochschild hild Mining i plc WORLD MINING CONGRESS June 2008

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 Leading precious metals producer Hochschild: Almost 100 years in Latin America Quality & diversified asset base Significant growth: double production by 2011 Underground mining and regional expertise Strong financial performance & low cash costs Proven track record in reserve replacement A responsible operator Experienced management team 2

4 A brief history of Hochschild... h 1911: Group founded 1995: Extensive exploration programme launched 2006: IPO in London 2008: Strategic investment in a Canadian gold company 1925: 2001: Exploration 2007: Expand from Peruvian operations commence offices opened in Argentina, Mexico and Chile 3 mines in Peru to 6 mines in 3 countries 3

5 Latin America a mining friendly region Latin America has a long and successful history of mining A vast region with enormous mineral potential Strong economic growth GDP in Latin America grew by 5.6% in 2007, despite global economic concerns Achieved foreign direct investment of $95 billion in 2007 Stable governments and supportive regulatory frameworks in the key mining i countries Latin America accounts for 45% of global silver production and 16% of global gold production Source: GFMS, Economic Commission for Latin America and the Caribbean 4

6 Latin America accounts for 45% of global l silver production Source: GFMS, The Silver Institute 5

7 Quality & diversified asset base 6

8 Focused on the Americas x CANADA Lake Shore Gold Corp. (19.99% with option to increase to 40%) x MEXICO Moris (70%) San Felipe (70%) PERU Arcata (100%) Ares (100%) x Selene (100%) Pallancata (60%) ARGENTINA San José (51%) x 7

9 Peru: Arcata - a world class silver deposit Flagship mine, record production High grade deposit (476 g/t Ag and 1.2 g/t Au)¹ Ag & Au production up 38% and 29%, respectively Capacity expansion completed further expansion underway Reserves & resources up 59% and 16%, respectively 1 Reserves as at 31 December

10 Peru: Pallancata Production commenced Q at initial rate of 180 ktpa Significant synergies with Selene plant Reserves & resources up 74% and 69% respectively Plan to increase throughput to 500 ktpa in

11 Argentina: San José Production commenced Q High grade deposit (403 g/t Ag and 6.01 g/t Au)¹ Plant operating at full capacity of 265 ktpa Plant expansion underway due to positive exploration results Reserves & resources up 19% and 28% respectively 1 Reserves as at 31 December

12 Mexico: San Felipe 1 Measured + indicated + inferred, includes reserves Mexico 70% earn in JV High grade polymetalic deposit resources: Total Dec % Zn, 3.19% Pb, 0.41% Cu and 71 g/t Ag 1 18,627 meters drilled, more than the half of it in 2007 in the Ventana ore-body Significant upside in 7 other outcropping targets Goal of 4.0 Mt of indicated resources (total) by Q308 In feasibility stage Taking steps to ensure infrastructure in place to commence production in

13 Canada: Lake Shore Gold Corp. Phased, low-risk approach to establishing a foothold in a prolific gold mining region Strong portfolio of projects and exploration expertise Production expected to commence early 2009, reaching approximately 200, oz Au by 2011 Initial purchase of 19.99% (Feb 2008) Hochschild will increase position to 40% in the next 2 months (shareholder approval granted on 15 May 2008) Use of proceeds - advance projects towards production & accelerate Lake Shore s exploration campaign moz Au of total resources Accretive - $120 per ounce Funding type: Cash 12

14 Significant growth potential 13

15 Hochschild the 3 rd largest primary silver producer No. Company 2007 production (moz Ag) % of global¹ 1 BHP Billiton 7% 2 Industrias Peñoles 3 KGHM Polska Miedz 4 Volcan 5 Kazakhmys 6 Pan American Silver 7 Goldcorp 8 Buenaventura 9 Polymetal 10 Southern Copper 11 Hochschild Mining 12 Rio Tinto 13 Teck Cominco Primary silver producers Pan American Polymetal Hochschild Coeur 7% 6% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% Source: GFMS; Hochschild Mining considered a primary silver producer with approximately 60% of revenue derived from silver ¹ Assumes 2007 production of million ounces 14

16 and a mid-sized producer of gold Select companies 2007 production (koz Au) % of global Randgold 0.6% Industrias Peñoles Peter Hambro Teck Cominco Polymetal Agnico Eagle Hochschild Mining Oceana 0.5% 04% 0.4% 0.4% 0.3% 03% 0.3% 0.3% 0.2% BHP Billiton Aurizon 0.2% 0.2% Equigold 0.2% Source: GFMS, Company filings 15

17 Long-term growth Commitment to achieve 50 moz Ag eq by 2011 ~ ~ m oz Ag/ 196 6k oz Au moz Ag/ 201 1k oz Au moz Ag/ 15 3k oz Au Note: Silver equivalent ounces assumes a 60:1 conversation rate 16

18 Our strategy for growth 1 Maximize the potential of our existing operations through exploration and expansion 2 Bring into production new, profitable precious metal projects throughout the Americas LONG TERM PROFITABLE GROWTH 17

19 Delivering i on our strategy 1 2 Expanding existing operations: San José Arcata Pallancata (Selene) New projects: San Felipe feasibility Lake Shore production Q308 Q308 Q408 Q San Felipe production 2010 Exploration, joint ventures, acquisitions 18

20 Exploring the region Exploration offices in Peru, Argentina, Mexico and Chile New opportunities Argentina Canada Feasibility completed Chile Mexico Peru Lake Shore Ares Arcata Selene San José Pallancata Moris San Felipe Existing mining operations Tres Chepas Azuca Peñón Blanco El Gachi Manantiales Claudia Gavilanes Development projects Pozos Resource delineation Target definition To Divest / Drop / JV Quevar (JV) Tignamar Calderón El Pino (JV) Sierra Mojina (JV) El Pocito (JV) Cañadón del Moro La Flora El Mosquito Cacurani Encrucijada Moris Reg. Parihuana Ccello Punta Prospect San Luis Cordero Paraiso 554,298 Has. 35,400 Has. 181,425 Has. 60,889 Has. Generative 19

21 Strong financial performance & low cash costs 20

22 2007 financial highlights 100% unhedged silver and gold production Dec % change Production (moz Ag eq) % Revenue $305m +44% Adjusted EBITDA 1 $148m +37% Net profit $85m +104% EPS $ % ROCE (%) 2 23% 1 Calculated as profit from continuing operations before exceptional items, net finance income/(costs), foreign exchange (loss)/gain and income tax plus depreciation, amortisation and exploration costs other than personnel and other expenses 2 Return on capital employed is calculated as profit from continuing operations before exploration expense interest and taxes, and exceptional items divided by average capital (borrowings and total equity including minority interest) for the period 21

23 Strong financial position Dec $ millions Cash and cash equivalents 301 Long term borrowing¹ ¹ 55 Short term borrowings² 33 Available bank lines³ 200 Total dividend 9.2 Shares outstanding 307,350,226 1 Corresponds to loan from Minera Andes Inc to Minera Santa Cruz, the legal arm of San José 2 Corresponds to pre-shipment loans and current amount due to minority shareholders 3 Secured term loan facility arranged in

24 Low cost producer Hochschild vs. peer group 2007 silver cash costs for largest primary silver producers Hochschild Coeur Pan American Polymetal 2007 lowest cash cost global gold producers Yamana Northgate Hochschild 1 Goldcorp Newcrest Mining Buenaventura Industry Average Agnico-Eagle Source: Company disclosure; World Gold Analyst 1 Calculated on a co-product basis given company s production split. On a by-product basis Au cash costs would be ($440)/oz 23

25 OHSAS ISO A responsible operator 24

26 Responsibility towards employees, the environment and local communities Health & safety Adopted Department of Labor OSHAS standards at Peruvian mines Ares Mining Unit National Safety Contest: 2003 National Prize 2005 Third Place Arcata Mining Unit 2004 Second Place National Safety Contest: 1998 Second Place 1999 National Prize 2000 Second Place 2005 Second Place Trophy JOHN T.RYAN 2001 Underground Mining 2002 Underground Mining Selene Mining Unit National Safety Contest: 2003 Second Place 2004 National Prize 2005 National Prize 2006 Second Place Environmental Environmental Management System certified to ISO standards Reforestation program Sipán today Shared monitoring: water monitoring with the authorities and boarding communities 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 25

27 Experienced management team 26

28 Experienced management team Eduardo Hochschild Executive Chairman Roberto Dañino Deputy Chairman & Executive Director Miguel Aramburú Chief Executive Officer Jorge Benavides Senior Vice President Corporate Development Ignacio Bustamante Chief Operating Officer Raymond Jannas Vice President Exploration & Geology Javier Durand Legal Counsel José Augusto Palma Senior Adviser, Executive Committee Ignacio Rosado Chief Financial Officer Isac Burstein Business Development Manager 27

29 Delivering i on our commitments t Operations Explorations Finance Capacity expansions completed on schedule San José, Moris and Pallancata in production on time San Felipe moving to feasibility stage 2007 production target achieved On track to produce 50 moz Ag eq. in 2011 Increasing reserve and resource base Increased average LOM from 2.8 years (Jun 06) to 3.9 years (Dec 07) Strong project pipeline 100% hedge free Strong financial capacity Dividends declared 2007 results in line with expectations Contained unit costs 28

30 A positive outlook 29

31 2008 outlook Year of consolidation Stable production Focus on cost containment in inflationary environment Advancing on growth strategy t through: h Further expansions Feasibility at San Felipe Continue to pursue further acquisitions Positive on fundamentals for silver and gold Remain on track to achieve 50 moz Ag eq production target Q production inline with forecast 30

32 Contact t us Wray Barber, Head of Investor Relations (London) Miguel Aramburú, CEO (Lima) Ignacio Rosado, CFO (Lima)

33 Hochschild hild Mining i plc WORLD MINING CONGRESS June 2008