Slide 1: Hochschild Mining plc 2012 Annual Results
Hochschild Mining plc 2012 Annual Results 13 March 2013
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: Highlights
Highlights Financial highlights • Revenue of $818m • Adjusted EBITDA of $385m • EPS of $0.19 • Full year dividend maintained at $0.06 per share Operational highlights • Full year production of 20.3m oz Ag Eq(attrib) in line with target • Overall unit cost performance in line with guidance • Good pro
Slide 4: 2012 Annual Results - Ramon Barua, CFO
Hochschild Mining plc 2012 Annual Results Ramon Barua, CFO
Slide 5: P&L
P&L $m (pre-exceptional) 2012 2011 variance % change Revenue 818.0 987.7 (169.7) (17) Cost of sales (420.3) (404.3) (16.0) 4 Gross profit 397.6 583.4 (185.7) (32) Administrative exp. (73.0) (64.4) (8.6) 13 Selling exp. (39.5) (39.0) (0.5) 1 Exploration exp. (64.6) (47.3) (17.3) 36 Others net (0.8) (
Slide 6: Net profit reconciliation
Net profit reconciliation Net Profit 2012 vs 2011 (pre-exceptional) $m 269 63 9 138 129 32 16 9 17 2011 Net profit Volumes Prices Cost of Sales Administrative Exploration Taxes Others 2012 Net profit expenses expenses 5
Slide 7: Cash cost reconciliation
Cash cost reconciliation Main operation cash cost reconciliation (pre-exceptional) Main operation 2012 total all-in cash cost $/oz Ag co product reconciliation 6.4 +12% 1.1 20.8 1.3 1.0 1.1 1.2 0.4 1.2 0.3 13.4 12.0 Cash Cost 2011 Grades Recoveries Direct Costs Selling & Comm Other Cash Cost 2012 Ad
Slide 8: Unit costs
Unit costs Unit cost per tonne by operation (excluding royalties & additional Arcata dore cost) Arcata Operating unit • Unit cost up 9% vs 2011 excluding additional dore cost 2012 2011 % change – Including dore impact increase was 17% ($/tonne) – Higher wage costs (industry inflation) – Local curren
Slide 9: Capex
Capex Current operations $m 2012 2011 • Operating capex: $173.3m Arcata 52.8 33.0 –Arcata capex up by $19.8m: Ares 7.5 2.7 Dore project Plant expansion to treat Macarena material Selene 1.2 4.6 –San Jose capex up by $8.2m: Pallancata 55.7 50.5 Local inflation San Jose 71.2 63.0 • Capitalised expl
Slide 10: Strong and flexible financial position
Strong and flexible financial position Sources of cash 2012 Uses of cash 2013 (guidance) Maintenance capex Maintenance capex $173m ≈$180m Cash generation* Exploration Exploration $434m $98m $77m budget $385m Dividend Dividend $0.06 per share $0.06 per share Cash balance Project capex Project capex $
Slide 11: 2012 Annual Results - Ignacio Bustamante, CEO
Hochschild Mining plc 2012 Annual Results Ignacio Bustamante, CEO
Slide 12: Hochschild's consistent strategy
Hochschild’s consistent strategy Long-term consistent strategy model Strategy 2012 progress Core Assets • 2012 production target of 20.0m Ag. Eq oz ― Improve productivity (attrib) achieved ― Optimise LOM • Focus on productivity and increased quality of LOM at core assets Exploration OPERATING RESPON
Slide 13: Current assets
Current assets 2012 production & cost targets achieved 2012 current asset production split (Moz Ag Eq attributable) • 20.3m oz Ag Eq achieved in line with expectations Other • Peruvian unit cost performance in line with guidance 2.6 Arcata • Arcata: 6.6 ― Dore project completed – 100% dore ― Mining
Slide 14: Brownfield exploration
Brownfield exploration Significant areas still to be explored Further potential • $32m invested in brownfield exploration in 2012 Arcata Pallancata • Main operations ― Total of almost 190,000m drilled ― Resource life replenished at all three operations ― High grade discoveries at all three operation
Slide 15: Resource base optimised
Resource base optimised Disciplined approach to resource additions LOM reconciliation Arcata • Resource life replenished at all three operations: 2.2 0.2 0.8 0.3 1.1 9.8 years LOM 11.5 11.7 • Focus shifted to improving quality of resource base 2011 LOM Additions 2012 Infill drilling Non- Others 2012
Slide 16: Southern Peru Cluster: Inmaculada Advanced Project
Southern Peru Cluster: Inmaculada Advanced Project Hochschild’s most exciting Advanced Project Progress Ownership:60% Hochschild / 40% International Minerals Corp 0% 50% 100% • Set to deliver 7.0m oz Ag eq. p.a. (attrib) Infrastructure & Access* 62% • 2012 progress: Electricity transmission line* 26
Slide 17: Inmaculada upside
Inmaculada upside 2012 exploration demonstrates... • Strong potential to increase current resource base • Angela vein open in both directions • Mirella, Susana and Martha veins set to add further resources • Room to further grow initial Tararunqui resource area in surrounding Padre - Padre Pararani
Slide 18: Southern Peru Cluster: Crespo Advanced Project
Southern Peru Cluster: Crespo Advanced Project Open pit, heap leach operation Progress 0% 50% 100% • Set to deliver 2.7m oz Ag eq. p.a. from 2014 Infrastructure & Access* 81% • Engineering contracts for plant, leach pads, waste Electricity transmission line* 15% 85% dump and parts of infrastructure
Slide 19: Andina Minerals acquisition
Andina Minerals acquisition Newest addition to our project pipeline Asset location • C$103m acquisition completed Peru • Boosts long-term ‘Company Maker’ pipeline • Assets in Chile - key targeted mining jurisdiction Chile ― Strategically located in prolific Maricunga Gold Belt • 120k drilling comple
Slide 20: High quality project pipeline
High quality project pipeline % split of 2013 Project pipeline exploration budget • Current operations: 26% • Advanced Projects: 14% • Greenfield: 44% ― Company Makers: 23% ― Medium Scale: 7% ― Success Fund: 10% ― Generative: 3% • Support: 16% 19 Exploration budget set at $77m for 2013
Slide 21: Greenfield exploration progress
Greenfield exploration progress Widening Hochschild’s exploration focus Selected Company Makers • $37m invested in greenfield exploration in 2012 - Mexico 53,188m drilled Mercurio • Company Makers ― 16 long-dated projects spread across Peru , Chile & Mexico ― Over 37,000m drilled in 2012; $20m inves
Slide 22: The Hochschild proposition
The Hochschild proposition Medium-term upside Exploration optionality Near-term upside Extensive project pipeline Volcan 50% production growth Current valuation •9.5moz Au $77m investment in Current mkt cap: $1.8bn Inmaculada Total Resources: 150m oz Ag Eq resources •Northern Chile: •$10/oz cost
Slide 23: Summary
Summary ... Hochschild is in a stronger position than ever before.... • Annual production target once again achieved • Strong and stable production base • 20m oz target maintained for 2013 • Near-term growth prospects • 50% increase by end 2014 • Medium term optionality • Andina acquisition complete
Slide 24: Contact us
Hochschild Mining plc Contact us Charles Gordon Marianna Adams +44 207 907 2934 +44 207 907 2933 charles.gordon@hocplc.com marianna.adams@hocplc.com 23