Hochschild Mining Plc · LSE:HOC
Hochschild Mining — H1 2010 Earnings Presentation
21 slides from Hochschild Mining's earnings presentation, Aug 18, 2010
Slide 1: Hochschild Mining plc Interim Results 2010
Hochschild Mining plc Interim Results 2010 Ignacio Bustamante, CEO Ramon Barúa, CFO Isabel Lutgendorf, Head of IR
Slide 2: Disclaimer
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
Slide 3: Proven track record & attractive land package
Proven track record & attractive land package Lake Shore Gold (37%) • Leading precious metals producer • Specialising in high margin, precious metal Mercurio assets in the Americas Gold Resource Corp (30%) Moris (100%) • Mine operators for more than 40 years Astana Farallon Josnitoro Crespo • FTSE 2
Slide 4: H110: Strong operational performance
H110: Strong operational performance • H110 production of 12.8 million attributable silver equivalent ounces • $24.4 million invested in exploration: • Resource life up 11% to 7.9 years, expected to further increase by year end • Scoping commenced at Azuca • Crespo progressing towards scoping • Impr
Slide 5: H110: Solid financial performance
H110: Solid financial performance Impressive results vs H109: • Record H1 revenue of $306.9m, up 33% • Costs remain in line with expectations • EBITDA of $150.1m, up 51% • Profit before tax trebled to $87.3m • Interim dividend of $0.02 per share • Solid financial position ‐ cash balance of $91.0m EP
Slide 6: H1 2010 P&L
H1 2010 P&L H110 H109 1 $million Pre‐exceptional Pre‐exceptional Main Exceptional Items H110 ($ million) Revenue 306.9 230.6 Cost of sales (152.0) (135.4) + Positive Unit costs ($/t)2 78.6 73.9 Other income 13.5 D&A 43.4 40.2 (‐) Negative Gross profit 154.8 95.1 Bonus to workers (8.9) Administrative
Slide 7: H1 2010 P&L by segment
H1 2010 P&L by segment1 Company Consolidation Total Ares Arcata Pallancata San José Moris (US$m) adjustment HOC Revenue 27.0 77.5 107.4 77.2 17.6 0.0 306.9 Cost of sales (Pre consolidation) (19.4) (35.2) (47.9) (46.7) (12.9) 1.3 (160.9) Consolidation adjustment (0.0) (0.0) (2.0) (0.2) ‐ 1.3 (1.0) Co
Slide 8: Strategy - pillars for growth
Strategy ‐ pillars for growth Maintain solid ‐ Arcata • Maximise life of mine at main operations 1 production through our • Increase productivity ‐ San José world class assets ‐ Pallancata ‐ Strategic • Fund exploration through largest ever budget Emphasis on exploration project 2 to generate value
Slide 9: Main operations: actively increasing resources
1 Main operations: actively increasing resources Arcata 8.3 • Resource life of mine at 7.4 6.4 34% main operations now at 7.9 years FY08 FY09 H110 • 11% increase over the Pallancata 7.9 last six months 7.1 7.0 5.9 • LOM expected to 5.2 6.2 increase further the end of the year FY08 FY09 H110 San Jose
Slide 10: Exploration - Largest ever budget
2 Exploration ‐ Largest ever budget $24 MILLION ALREADY INVESTED IN EXPLORATION IN THE FIRST HALF 9
Slide 11: Strong project pipeline
2 Strong project pipeline Peru CURRENT OPERATIONS Mexico Argentina Canada Chile Arcata Ares Pallancata Moris San José GRC ‐ El Aguila Mines Lake Shore Gold COMPANY MAKERS COMPANY MAINTAINERS Resource Azuca Development Crespo Quellopata Victoria Encrucijada Astana Farallon Mercurio Drill Targets Mosq
Slide 12: Azuca - advancing towards a new mine
2 Azuca - advancing towards a new mine Azuca Yanamayo • 100% owned, located in Peru cluster, with 50 moz Ag eq • Drilling commenced in May aims to deliver Azuca 1 km resources of +60moz Ag eq • Aggressive resource development and potential Arcata delineation drilling will continue in H210 ARE WE IN
Slide 13: Crespo – progressing to scoping
2 Crespo – progressing to scoping • Cross‐cut totals 255m in June, just entering the mineralised zone • Once cross‐cut is complete, underground drilling program scheduled for resource development with the aim of reaching 60 moz Ag eq • Preliminary metallurgy suggests excellent gold recovery (+90%)/i
Slide 14: Company Makers - Victoria, Chile
2 Company Makers - Victoria, Chile 102m @ 0.43 g/t Au, 34 g/t Ag 101.9m @ 0.91g/t Au , 57 g/t Ag Vaquillas Target • Other twin holes planned to prove the consistency of the difference between core and reverse circulation drilling 0 250 500m assay results Vida Target • New discovery (8m @ 10.5 g/t Au
Slide 15: Mercurio, Mexico - new discovery
2 Mercurio, Mexico - new discovery La Troje Manto: 2m @ 1.8 g/t Au, 997 g/t Ag Sombrerete Mercurio Fresnillo 30 km NW of Fresnillo (1,100 moz Ag @ 700 g/t Ag, 0.6 g/t Au) 35km SE of Sombrerete (210 moz Ag @ 700 g/t Ag, 1.5 g/t Au DH‐5: 40m (82‐122m) s86m @ 20 gIt Ag, 0.22% Cu; production) 0.49% Pb,
Slide 16: Sabina, Peru - Chaquella target
2 Sabina, Peru - Chaquella target Chaquella DDHSA1001 295m Turputa DDHSA1002 0 1 2km Surface sampling (0.1‐0.6 g/t Au) in line with partial results from first core hole: 11.8m @ 0.38 g/t Au, 1.6 g/t Ag 15
Slide 17: Other potential Company Maker targets
2 Other potential Company Maker targets Corazón de Tinieblas, Mexico (100% owned) • Guerrero Gold Belt: +10moz Au endowment • Project has similar geological characteristics • Field work commenced in H210 Apacheta, Peru (100% owned) • Footprint >12 x 6 km silicification & 4km advanced argillic altera
Slide 18: Other investments
3 Other investments LAKE SHORE GOLD • Ownership: 37% • Large land properties in the prolific Timmins Gold Camp in Ontario, Canada • Commercial production expected in Q4 2010 • Potential to produce over 300 koz of gold over the coming years • Low‐cost production GOLD RESOURCE CORPORATION • Located in
Slide 19: Strong re-rating opportunity
Strong re‐rating opportunity • LOM increased by 20% in 2009, already increased by a further 11% in H1 2010 • Advanced projects approaching feasibility stage (Azuca, Crespo) • Increased exploration targets and budget provides platform for further growth • Value of investments not fully recognised by
Slide 20: Appendix: Contact us
Appendix CONTACT US Isabel Lutgendorf Head of Investor Relations +44 207 907 2934 Isabel.lutgendorf@hocplc.com 19
Slide 21: Resources M+I+I at December 2009
Resources M+I+I at December 2009 100% mines and project basis Total Resources: Measured, indicated and inferred Tonnage (Mt) Ag (g/t) Au (g/t) Ag Eq (g/t) Ag Eq (Moz) Main operations 15.6 422 2.88 594 298.3 Arcata 4.6 456 1.42 541 79.4 Pallancata 6.6 409 1.73 512 108.9 San José 4.4 406 6.08 771 110.