TD Securities Mining Conference January 2012

Transcription

1 Hochschild Mining plc TD Securities Mining Conference January 2012

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 s advantageous positioning 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 current operations production 20 23m 23m oz Ag Eq 2011 production: 22.6m Ag. Eq oz, in line with guidance Moris Mexico FTSE 250 with market cap of US$2.6bn Ticker: HOC Focus on growth through exploration US$90 million exploration budget in potential tial Company Makers 13 Medium Scale projects Strong financial position: Cashbalance of approximately US$627m Minority investments of over US$400m 11 Jan 2012 Two Feasibility Studies to deliver 50% growth Current operations Advanced Projects Drill sites Arcata Pallancata Ares Inmaculada Azuca Crespo Peru Chile San Jose Argentina years production experience in high margin, precious metal assets

4 Good progress on strategic delivery M&A Exploration Core Assets Optimise LOM Improve productivity Arcata Pallancata San Jose 2011 production: 22.6m Ag. Eq oz in line with guidance Further LOM increases expected Stable long term core asset production Core Assets Exploration Land package People Incentives Budget 3 Advanced Projects 10 Company Makers 13 Medium Scale Projects Solid pipeline Inmaculada and Crespo Feasibility Studies delivered Exploration campaign in progress Project pipeline M&A M&A Early stage Strong geological potential Highly accretive Control Bolt on on M&A Substantial flexible cash position Opportunistic acquisition strategy 3 Strong emphasis on exploration led growth

5 Continued operational delivery CORE ASSETS 2011 production of 22.6m oz Ag eq. (attrib) in line with guidance 2012 target of 20m oz Ag eq. (attrib) Strong core asset brownfield potential 30 Production forecast LOM increased by 50% in 2yrs ADVANCED PROJECTS Attributable Ag Eq moz m oz target Feasibility studies delivered on Inmaculada and Crespo E 2013E 2014E 2015E Inmaculada & Crespo to start production by Q Current operations New operations Set to deliver combined 10m attrib. Ag eq oz per annum Ongoing resource increases at all 3 advanced projects 4 Core asset base underpinning project pipeline development

6 Main operations Peru LIMA Arcata Arcata Pallancata San Jose 100% owned Grades moving towards reserve grade to ensure consistent production Low grade material also processed (Macarena) 2011 Peruvian unit costs to have risen by 10 15% Strong long term geological potential Production moz Ag eq 7.1 Avg. Ag grade (g/t) 312 Capacity (tpd) 1,750 Pallancata 60% Hochschild/40% International Minerals Corp. (IMZ) Focus on deeper, narrower veins Lower grade material processed to capitalise on high metal prices 2011 Peruvian unit costs to have risen by 10 15% San Jose 51% Hochschild/49% Minera Andes (MAI) Solid 2011 performance Ag Eq. production up 3% to 5.5m oz (attrib) Local price inflation (25 30%) continuing to impact unit costs Excellent progress made on LOM increases and resource extensions very strong intercepts reported Production moz Ag eq 10.8 Avg. Ag grade (g/t) 301 Capacity (tpd) 3,000 Production moz Ag eq 10.7 Avg. Ag grade (g/t) 444 Capacity (tpd) 1,750 H Unit cost ($/t)* 76.0 H Unit cost ($/t)* 60.3 H Unit cost ($/t)* LOM resources (yrs) LOM resources (yrs) LOM resources (yrs) 11.4 FY08 FY09 FY10 FY08 FY09 FY10 FY08 FY09 FY10 5 * Costs per tonne include royalties Solid core asset base with brownfield expansion potential

7 San Jose resource evolution October 2009 October 2010 August 2011 Significant intercepts since August: 6 Luli vein SJD980: 2.6m at g/t Au & 2,113 g/t Ag SJD m at g/t Au & 1,372 g/t Ag SJD mat 2.5m g/t Au & 3,483 g/t Ag Orion vein SJD m at g/t Au & 1,806 g/t Ag SJD m at g/t Au & 1,105 g/t Ag Pilar vein SJD m at 7.68 g/t Au & 397 g/t Ag SJD m at g/t Au & 459 g/t Ag SJD m at g/t Au & 922 g/t Ag 6.2 FY FY09 LOM (yrs) 11.4 FY10? FY11e 49 FY08 Exploration success has significantly increased resources Total Resources (Ag Eq moz) 56 FY09 80 FY10? FY11e

8 San Jose: creating more value through exploration Comparabletransactionsupports supports strong valuation Ongoing discovery of new veins Cerro Negro: high grade district SJD 872 San Jose* SJD 895 Au; 243g/t Ag 3.2 moz Au eq Au; 2,285g/t Ag at 13.5 g/t Au eq 100% HOC DJD % HOC 1m at 44.48g/t Au; 7,747g/t Ag Cerro Negro (Goldcorp)* 6.1 moz Au eq at 8.5 g/t Au eq Acquired by Goldcorp in 2010: US$3.6bn 7 An undervalued asset *Total endowment (Metals Economic Group)

9 Advanced Projects: Inmaculada (Peru) Hochschild s hild most exciting advanced dproject 60% Hochschild: 40% International Minerals Positive Feasibility Study announced: 11 Jan 2012 On track to deliver 11.6m oz Ag eq. p.a. (Total) Total initial capex: $315m 3,500 tpd underground operation Unit cost per tonne expected at: $74/t Commissioning set for Q Feasibility study considers 85m Ag Eq M&I resources from one vein (Angela) 61m Ag Eq oz of Inferred not yet included Strong geological potential from known veins in surrounding district Resource Estimate Category Tonnes Gold Silver Contained Oz Grade Grade (g/t) (g/t) Au Ag Ag Eq Measured k 13.5m 39.4m Indicated k 19.3m 48.8m M&I k 32.8m 88.3m Inferred k 24.2m2 61.3m Economics* Au: $1,100/oz Ag: $18/oz Au: $1,600/oz Ag: $30/oz Au: $1,800/oz Ag: $40/oz NPV@5% (M&I) $m (M&I+ Inferred) $m ,024 (M&I+ Inferred+ 50% of total) $m 398 1,039 1, Strong potential to exceed Pallancata scale *Post tax NPVs (Total) Note: NPV figures are total, not attributable

10 Advanced Projects: Inmaculada (Peru) Inmaculada Vein Structure Angela vein 9 9 Only current Angela vein resources included in Feasibility Study

11 Advanced Projects: Crespo (Peru) 100% owned Positive Feasibility Study announced: 11 Jan 2012 On track to deliver 2.7m oz Ag eq. p.a. from 2014 Total initial capex: $111m 6,850 tpd open pit operation Unitcost per tonne expected at: $13.5/t 3.8 mt of in pit inferred resource not included in project economics Potential to add c.18% of mineable material ilat no further mining i cost Further geological potential from Queshca target in the North and from intermediate areas between Crespo and Queshca Resource Estimate Category Tonnes Gold Silver Contained Oz Grade Grade (g/t) (g/t) Au Ag Ag Eq Measured Indicated M&I Inferred Economics Au: $1,300/oz Ag: $23/oz Au: $1,600/oz Ag: $30/oz Au: $1,800/oz Ag: $40/oz NPV@5% (M&I) $m (M&I+ Inferred) $m (M&I+ Inferred+ 50% of total) $m Simple open pit, heap leach operation

12 Advanced Projects: Crespo (Peru) Crespo and Queshca drillholemap 11 Geological potential to the North of Crespo *Includes measured, indicated and inferred resources 11 **All NPV figures quoted pre tax

13 Advanced Projects: Azuca (Peru) Feasibility study delayed dl dto deepen understanding of Azuca s complex vein structures Several promising higher grade intercepts suggest presence of new higher grade areas Drilling programme of 28,000 metres planned for 2012 Focused on identifying further extensions of the Vivian Yanamayo, y, Colombiana and Azuca West veins Additional $10m budget approved Resource Estimate Category Tonnes Gold Silver Contained Oz Grade Grade (g/t) (g/t) Au Ag Ag Eq Measured Indicated M&I Inferred Azuca district potential to match Arcata * All NPV figures quoted pre tax

14 Advanced Projects: Azuca (Peru) Azuca veins Azuca district potential to match Arcata

15 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 Soranpampa Mercurio Apacheta DRILL TARGETS Encrucijada Mosquito La Flora San Antonio Copper projects pojects Key targets Key prospects Huachoja Coriwasi Josnitoro Corazon De Tinieblas PROSPECTS Cricket Astana Ibel San Martin Key prospects Land Package > 1 MILLION HECTARES GENERATIVE 14 30% increase in exploration budget versus 2011 record $90m

16 Company Makers Chile Chile Victoria Valeriano (100%) Sandón Vetas Negras Chile CHAR 3500 Picarón Vaquillas Mine Cenizas Vida Leña Incahuasi Barros Luco San Bernardo Ownership: 60% Hochschild/40% Iron Creek 2,300m drilled in 2011 Domekyo fault zone hosts majority of copper porphyries in N.Chile Vida target: g/t Au, 29g/t Ag Vaquillas target: Au, 57g/t Ag 2011 drilling confirms copper/moly porphyry p y 6,800 metres to be drilled in 2012 Mine Company Endowment 10 km Strong alteration/visible sulphide mineralisation reported Partial results from first hole indicate strong copper/moderate gold mineralisation 2012 drilling to test geochemical/geophysical anomalies 2,500 metres to be drilled in 2012 Historical drillingresults results (pre1997 Phelps Dodge, Barrick): 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 Escondida BHP/Rio 3Moz Au; +78Moz Ag; +144Blbs Cu El Peñon Yamana +7Moz Au; +170Moz Ag Guanaco Austral Gold +3Moz Au; +6Moz Ag Mine Company Endowment El Morro Xstrata +5Moz Au; +4Blbs Cu Pascua Lama Barrick +20Moz Au; +700Moz Ag 15 Two highly prospective projects acquired in 2010 *All endowment figures from Metals Economics Group

17 Company Makers Mexico, Peru Mercurio (100%) Apacheta (100%) Mexico MAG: Analytical Signal Chile Peru Chile 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 Results indicate strong base metal/moderate silver mineralisation associated with large vein system e.g. Fresnillo 8,000m to be drilled in km 5 km High and intermediate sulfidation systems Geophysics, geochemistry anddetailedmappingcompleted detailed Drilling campaign commenced in September ,000 metres drilled in Q4 assay results pending 7, metres to be drilled in 2012 Mine Company Endowment Sombrerete Grupo Mexico +180Moz Ag La Colorada Pan Am Silver +104Moz Ag; +1Blbs Zn; Fresnillo Fresnillo +1Moz Au; +915Moz Ag; +3Blbs Zn; 16 Further opportunities in highly prospective zones in the continent *All endowment figures from Metals Economics Group

18 Copper projects Peru Copper projects acquired as part of Southwestern Resources acquisition Significant land package in southern Peru Dedicated team/budget assigned to highly yprospective p copper properties p Strategic decision to be made following drill completion Focus on three targets: t Jasperoide, Alpacocha, Antay Mine Company Endowment Las Bambas Xstrata +2Moz Au; +154 Moz Ag; +21Blbs Cu Tintaya Xstrata +2Moz Au; +39Moz Ag; +12Blbs Cu 17 Potential to add value *All endowment figures from Metals Economics Group

19 Strong and flexible financial position Cash generation Project capex US$425m (US$335m attrib) H EBITDA $297m Cash balance Maintenance capex US$150m $627m Exploration 2012: US$90m (as at 31/12/11) Minority investments $350m + (as at 31/12/11) 18 Selective M&A Dividend i id d iincrease 2011: 3 cps per half Growth strategy financed and capital structure improved

20 Summary 22.6m production in 2011 in line with guidance Two feasibility studies delivered offering 50% growth Strong exploration focus record $90m budget for 2012 Exciting and growing project pipeline Strong financial position Leverage to precious metal strength 19 Well positioned for future growth

21 Hochschild Mining plc CONTACT US Charles Gordon Marianna Adams