HochschildMining plc. Denver Gold Forum Ignacio Bustamante, CEO. 20 September 2011

Transcription

1 HochschildMining plc Denver Gold Forum Ignacio Bustamante, CEO 20 September 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 14 largest primary silver mines in the world Operations in Peru, Argentina and Mexico Long term core asset production 20-23m 23m oz Ag Eq FTSE 250 with market cap of US$2.8bn Ticker: HOC Arcata Pallancata Ares Inmaculada Azuca Crespo Peru Significanticant organic project pipeline 3 Advanced Projects 10 potential tial Company Makers 13 Medium Scale projects US$70 million exploration budget in 2011 Current operations Advanced Projects Drill sites Chile San Jose Argentina Strong financial position: Cash balance of approximately US$691m Minority investments of US$420m years production experience in high margin, precious metal assets

4 2011: Half year highlights A record half year Revenue up 62% to $497m Adjusted EBITDA up 98% to $297m EPS up 145% to $0.27 per share Strong progress at Advanced Projects Inmaculada& Crespo feasibility studies due Q Azuca feasibility study due H m Ag. eqoz production target on track Solid core asset portfolio Arcata, Pallancata and San Jose yielding outstanding intercepts 3 new early stage exploration projects acquired: San Antonio, Coriwasi and Huachoja Exploration programmeset to deliver Bulk of drilling results for 2011 due in H2 Extensive drilling programme at Victoria, Mercurio, Valeriano prospects 50% increase in interim dividend to $0.03 per share 3 A strong set of results with exploration results to come

5 Strong and flexible financial position Cash generation Project capex : +US$ m H EBITDA $297m Cash balance Maintenance capex +US$ m $691m Exploration US$70m (as at 30/6/11) Minority investments $420m (as at 30/06/11) 4 Selective M&A Dividend increase 2011: 3 cps per half Growth strategy financed and capital structure improved

6 Good progress on strategic delivery Arcata 22.5m Ag eq. target for 2011 on track M&A Core Optimise LOM Pallancata Further LOM increases expected Assets Improve productivity San Jose Stable long term core asset production Exploration 2011 progress Core Assets Exploration Land package People Incentives Budget 3 Advanced Projects 8 Company Makers 12 Medium Scale Projects Solid pipeline 3 new prospects added Exploration campaign in progress Bulk of results due in H2 Project pipeline M&A M&A Early stage Strong geological potential Highly accretive Control Bolt-on M&A Substantial flexible cash position Opportunistic acquisition strategy Strong emphasis on exploration led growth

7 Continued operational delivery CORE ASSETS Core asset base delivering 20-23m attrib. oz Ag Eq per year moz target on track San Jose increased contribution Stable production at Pallancata Arcata lower production due to move to mining reserve grade Strong core asset brownfield potential Arcata, Pallancata and San Jose yielding outstanding intercepts including: Arcata- Au & 1,008g/t Ag Pallancata Au & 1,614g/t Ag San Jose Au & 243g/t Ag; Au & 7,747g/t Ag Feasibility studies due: Q4 2011: Inmaculada/Crespo H1 2012: Azuca ADVANCED PROJECTS Advanced projects to start production end 2013 Ongoing resource increases at all advanced projects 22.5moz target Production forecast SOLID ASSET BASE: MOZ AG EQ PER YEAR FROM CURRENT OPERATIONS 6 Core asset base underpinning project pipeline development

8 Main operations Arcata Pallancata San Jose Peru LIMA Arcata 100% owned Grades moving towards reserve grade to ensure consistent production Low grade material also processed (7% of total Ag) H unit cost: $76.0/t Unit costs up only 3% versus H excluding royalties Strong long term geological potential Pallancata 60% Hochschild/40% International Minerals Corp. (IMZ) Focus on deeper, narrower veins Lower grade material processed to capitalise on high metal prices H unit cost: $60.3/t Unit costs up only 7% versus H excluding royalties San Jose 51% Hochschild/49% Minera Andes (MAI) Strong H1 performance Ag Eq. production up 23% to 5.2m oz Local price inflation (25-30%) continuing to impact unit costs Excellent progress made on LOM increases and resource extensions very strong intercepts reported 2010 Production moz Ag eq 3.6 Avg. Ag eq grade (g/t) 342 Capacity(tpd) 1,750 Unit cost($/t) 76.0 LOM resources (yrs) 2010 Production moz Ag eq 5.2 Avg. Ag eq grade (g/t) 299 Capacity(tpd) 3,000 Unit cost($/t) 60.3 LOM resources (yrs) 2010 Production moz Ag eq 5.2 Avg. Ag eq grade (g/t) 461 Capacity(tpd) 1,750 Unit cost($/t) LOM resources (yrs) 11.4 FY08 FY09 FY10 FY08 FY09 FY10 FY08 FY09 FY10 Solid core asset base with brownfield expansion potential

9 San Jose resource evolution October 2009 October 2010 August 2011 San Jose is part of a high grade district Strong growth in resources and LOM since operations began Only partial exploration of a 50,500ha property 6.2 FY FY09 LOM (yrs) 11.4 FY10? FY11e 49 FY08 Total Resources (Ag Eqmoz) 56 FY09 80 FY10? FY11e Exploration success has significantly increased resources

10 San Jose: creating more value through exploration Comparable transaction supports strong valuation Ongoing discovery of new veins Cerro Negro: high grade district San Jose* 3.2 mozau eq at13.5 g/t Au eq SJD-895 Au; 2,285g/t Ag SJD-872 Au; 243g/t Ag 100% HOC 100% HOC DJD-871 1m at 44.48g/t Au; 7,747g/t Ag Cerro Negro (Goldcorp)* 6.1 mozau eq at8.5 g/t Au eq Acquired by Goldcorpin 2010: US$3.6bn *Total endowment (Metals Economic Group) An undervalued asset

11 Advanced Projects: Inmaculada (Peru) Hochschild s most exciting advanced project On track for feasibility study delivery in Q Infill drill programme underway to convert Inferred into Measured & Indicated resources 8, 105m of brownfielddrilling already executed at Jimena, Martha and Angela SW veins * All NPV figures quoted pre-tax Project Timeline Strong potential to exceed Pallancata scale RESOURCES 180 g/t cutoff 98 g/t cutoff Ounces Gold moz Silver moz Gold equivalent moz Grades Gold g/t Silver g/t Gold equivalent g/t SCOPING STUDY ECONOMICS Au: $1,000/oz Ag: $17/oz Au: $1,500/oz Ag: $40/oz NPV (non-discounted)* $m 660 1,653 5% $m 434 1,152 IRR % 41% 82%

12 Advanced Projects: Crespo (Peru) 100% owned project On track for feasibility study delivery in Q Total resources of 49.4m oz (Ag Eq)* Scoping study only used 31.3m of M&I resources Exploration potential Project Timeline SCOPING STUDY ECONOMICS Au: $1,000/oz Ag: $17/oz Au: $1,500/oz Ag: $40/oz NPV (non-discounted)** $m % $m IRR % 19% 71% 11 Simple open pit, heap leach operation *Includes measured, indicated and inferred resources 11 **All NPV figures quoted pre-tax

13 Advanced Projects: Azuca (Peru) On track for feasibility study delivery in H Minimum of 3.5m oz per annum Ag Eq. Total drill programme of over 90,000m planned for 2011 Significant geological potential Project Timeline SCOPING STUDY ECONOMICS Au: $1,000/oz Ag: $17/oz Au: $1,500/oz Ag: $40/oz NPV (non-discounted)* $m % $m IRR % 21% 119% 12 Azuca district potential to match Arcata * All NPV figures quoted pre-tax

14 High quality project pipeline Medium scale Peru Argentina Company Makers Chile Mexico CURRENT OPERATIONS Ares Arcata Pallancata San Jose Moris ADVANCED PROJECTS Inmaculada Azuca Crespo Key targets Victoria Valeriano Parihuana Mercurio Sabina DRILL TARGETS Encrucijada Mosquito La Flora Cerro Blanco Copper projects Key targets Key prospects Huachoja Coriwasi Josnitoro Apacheta Corazon De Tinieblas PROSPECTS Cricket Astana Ibel San Martin San Antonio Key prospects Land Package > 1 MILLION HECTARES GENERATIVE 13 40% increase in exploration budget versus 2010

15 Company Makers -Chile Victoria Valeriano Chile Chile Ownership: 60% Hochschild/40% Iron Creek Domekyofault zone hosts majority of copper porphyries in N.Chile Vida target: g/t Au, 29g/t Ag Vaquillas target: Au, 57g/t Ag 5,000m drilling programme to recommence in H Mine Company Endowment Escondida BHP/Rio 3Moz Au; +78Moz Ag; +144Blbs Cu El Peñon Yamana +7Moz Au; +170Moz Ag Guanaco Austral Gold +3Moz Au; +6Moz Ag OptionagreementsignedNov2010 Acquisition cost of US$5.5m Right to increase stake to 100% 2011 drilling campaign to begin in October Historicaldrillingresults(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 Xstrata +5Moz Au; +4Blbs Cu Pascua-Lama Barrick +20Moz Au; +700Moz Ag 14 Two highly prospective projects acquired in 2010 *All endowment figures from Metals Economics Group

16 Company Makers Mexico, Peru Mercurio Apacheta Mexico Chile Peru Chile 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 2011 drilling campaign begun in May Mine Company Endowment Sombrerete Grupo Mexico +180Moz Ag La Colorada Pan Am Silver +104Moz Ag; +1Blbs Zn; 100% owned High and intermediate sulfidation systems 5 drill targets already defined 5,000 metres planned for 2011 (50% core; 50% RC) Permitting process being completed 2011 drilling campaign to begin in September Fresnillo Fresnillo +1Moz Au; +915Moz Ag; +3Blbs Zn; 15 Further opportunities in highly prospective zones in Mexico and Peru *All endowment figures from Metals Economics Group

17 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 Xstrata +2Moz Au; +154 Moz Ag; +21Blbs Cu Tintaya Xstrata +2Moz Au; +39Moz Ag; +12Blbs Cu 16 Potential to add value *All endowment figures from Metals Economics Group

18 Three new prospects announced 9,800 hectare property in northern Peru High sulphidation, epithermal and porphyry copper-gold target 100% earn-in from $4.0m staged investment over 4 years Company Maker potential Coriwasi Coriwasi 3,000 hectare property in southern Peru High sulphidation, epithermal target optioned from Teck Peru SA $4m to be spent on exploration over 4 years to get to 60% holding Company Maker potential Huachoja Peru Huachoja 350 hectare gold replacement property in northern Chile Potential to earn in 60-80% after resource has been issued Medium Scale potential San Antonio San Antonio Chile 17 Exploration team continuing to generate new opportunities

19 An exciting H2 in prospect 22.5m target on track Two feasibility studies to be delivered Significant progress made in exploration programme Strong financial position Leverage to precious metal strength Well positioned for future growth

20 Hochschild Mining plc CONTACT US Charles Gordon

21 HochschildMining plc Appendix

22 P&L $million (pre-exceptional) H H % change Revenue Cost of sales (195.6) (152.0) (29) Gross profit Administrative exp. (30.6) (29.7) (3) Selling exp. (17.7) (11.0) (61) Exploration exp. (19.0) (14.3) (33) Others net 1.8 (2.0) 190 Finance net (8.9) (9.1) 2 Tax (79.5) (31.3) (154) Net profit Attrib. net profit EPS

23 Net profit reconciliation $m Net Profit H vs H (post exceptional) (26) (22) (5) (4) (3) (7) (5) (51) (3) (1) H net profit Prices Net effect of exceptional items in 2010 & 2011 Equity method GRC & LSG Ounces sold COGS Depreciation Royalties Workers Profit Share Selling expenses Exploration expenses Taxes FX Others H net profit

24 Segmental breakdown (US$m) Ares Arcata Pallancata San José Moris Consolidation adjustment Total/HOC Revenue Cost of sales (Pre consolidation) (21.7) (39.9) (57.2) (62.0) (14.0) (0.9) (195.6) Consolidation adjustment (0.0) (0.6) (0.9) - Cost of sales (Post consolidation) (21.8) (40.1) (58.4) (62.0) (13.4) 0.1 (195.6) Production cost w/o depreciation (18.5) (24.0) (28.5) (39.9) (9.7) - (120.6) Depreciation in production cost (0.4) (11.3) (16.8) (17.3) (1.4) - (47.2) WPS & Other (3.4) (4.6) (10.6) (3.7) (22.1) Change in inventories 0.5 (0.2) (2.5) (1.1) (2.3) (0.1) (5.7) Gross profit (0.7) Selling expenses - (1.3) (2.0) (14.4) - - (17.7) Operating profit before administrative, exploration & others (0.7) Depreciation Cash flow from operations before administrative, exploration & others (0.7) Capital expenditure (1.0) (12.8) (22.6) (24.5) (0.5) (24.0) (85.4) Cash flow from operations net of capex before administrative, exploration & others (24.7)

25 Unit costs Operating unit ($/tonne) Unit cost per tonne H Unit cost per tonne H % change % change excl. royalties Main Operations Peru Arcata Pallancata Argentina (San Jose) Others Ares Moris Total Company

26 Cost performance Total main operation unit cost increase: +21% to $92.0/t (H1 2010: $76.3/t) Excluding royalties, main operation unit cost increase: +16% vs H Wage cost increases but union negotiations concluded Avgincrease in Peru: +9% Avg increase in Argentina: +29% Continuing inflation in materials and supplies Oil, steel, cyanide cost increases $/t Main operation unit cost reconciliation +16% % vs H Increased $/oz Ag Eq Rising precious metal prices driving cash cost increases: Royalties Export taxes (Argentina) Workers Profit Share contributions Lower grades represent 17% of increase 7.8 Main operation cash cost reconciliation (pre excep) Main operation cash cost reconciliation (pre-excep) +11% H cash cost H adjusted Royalties, export taxes & WPS Lower grades Higher recoveries H cash cost 25