Slide 1: Hochschild Mining plc 2009 Interim Results
Hochschild Mining plc 2009 Interim Results Miguel Aramburú, CEO Ignacio Rosado, CFO Raymond Jannas, VP Exploration Isabel Lutgendorf, Head of IR 0
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: Company Overview
Company Overview CANADA • A leading mining company specialising Lake Shore Gold Corp. (40%) in high margin, precious metal deposits x MEXICO • 40 years operating experience x Moris* (100%) GRC (El Aguila) (24%) • FTSE 250 company listed on the London Stock Exchange PERU x Arcata* (100%) Pallancata*
Slide 4: 3rd largest primary silver producer
3rd largest primary silver producer No. Company 2008 production (moz Ag) 1 BHP Billiton 42 2 KGHM Polska Miedz 38 Primary silver producers 3 Fresnillo 35 Fresnillo 35 4 Volcan 23 5 Pan American Silver 19 Pan American 19 6 Hochschild Mining 17 Hochschild 17 7 Kazakhmys 17 Polymetal 17 8 Polymetal 17
Slide 5: A developing producer of gold
A developing producer of gold Select mid‐cap gold producers 2008 production (koz Au) % of global Randgold d 428 0.6% Peter Hambro o 394 0.5% Agnico Eagle 300 0.4% 0.4% Polymetal 285 0.3% Oceana 264 0.3% Fresnillo 264 0.2% Aurizon n 159 0.2% Hochschild Mining 153 0.2% Alamos Gold d 151 0.1% Western
Slide 6: H109 Operational highlights
H109 Operational highlights • Record first half production up 17% year‐on‐year at 13.9 million silver equivalent ounces • On track to achieve 2009 production target of 28 million attributable silver equivalent ounces • Continued progress on cost reduction • Delivered on M&A strategy with over $57 mi
Slide 7: H109 Financial highlights
H109 Financial highlights • Revenue of $230.6 million flat y‐on‐y despite 22% fall in realised silver prices • Administrative expenses down 34% y‐on‐y to $23.5 million • Unit cost per tonne down 10%* y‐on‐y • Pre‐exceptional EPS of $0.06 after forward sales losses of $18 million • $5.9 million in ex
Slide 8: H109 P&L Summary – Pre Exceptionals
H109 P&L Summary – Pre Exceptionals Delivering on our commitments US$ millions H109 H108 Revenue 231 232 • 17% increase in production • Production (attrib. Ag eq. oz) 13.9 11.9 +17% following successful completion Cost of sales (125) (101) of capacity expansions • Unit costs ($/t)1 73.9 82.1 ‐10%1 •
Slide 9: Robust underlying business
Robust underlying business Gross Prices* Silver ($/ounce) $ million H109 H108 % H109 @ H108 prices1 % 18.0 13.8 Revenue 231 232 (1%) 276 19% EBITDA 100 108 (7%) 144 33% Net profit 27 53 (49%) 55 4% H108 H109 EPS (cents) 6.1 12.6 (52%) 12.9 2% Gold ($/ounce) 922 919 Focusing on the variables we can c
Slide 10: Strong cash flow generation
Strong cash flow generation US$ millions Cash and cash equivalents (31 Dec 2008) 116 • $98 million generated in H109 compared to $59 million in Cash flow from operations 98 H208 Less: Gold Resources Corp.1 (18) • Cash flow being used to fund Southwestern (19) M&A, our exploration Lake Shore (18) pro
Slide 11: Our growth strategy
Our growth strategy • All planned expansions completed Current Operations • Brownfield exploration – maximising LOM • Lake Shore Gold M&A • Gold Resource Corporation • Southwestern Resources • Solid project portfolio Greenfield exploration • Also targeting new deposit types and new clusters Operatio
Slide 12: Current Operations – Arcata
Current Operations – Arcata Operations • H109 production: 5.8 million attributable silver equivalent ounces • Conversion to doré ‐ $25‐30m investment to convert Arcata’s concentrate to doré, 2 years pay‐back Brownfield Production split* Two structures identified north of Mariana: ‐ 400m N: 0.7m at 4
Slide 13: Current operations – San José
Current operations – San José Operations • H109 production: 2.4 million attributable silver equivalent ounces • Reached full capacity during H109 • Costs savings ‐ Constructed new power line linking San José to the national grid Brownfield New mineralised structure, 845m from Production split* Huevo
Slide 14: Current Operations – Pallancata/Selene's plant
Current Operations – Pallancata/Selene’s plant Operations • H109 combined production: 3.2 million attributable silver equivalent ounces • Following closure of Selene mine in H109, 100% of ore processed at Selene’s plant is from Pallancata Brownfield Near mine exploration Production split* Drill inte
Slide 15: Current Operations – Ares and Moris
Current Operations – Ares and Moris Ares • H109 production: 1.9 million attributable silver equivalent ounces • Ageing mine: as anticipated since the IPO, grades and tonnage are declining • Synergies with Arcata ‐ 10% of Arcata’s production is converted to doré at Ares, 100% by mid 2010 Moris • H109
Slide 16: Lake Shore Gold – Building a mid‐tier gold company
Lake Shore Gold – Building a mid‐tier gold company • Lake Shore Gold is a TSX listed, emerging gold mining company positioned to become a mid tier producer in Canada HOC’s total investment in Lake Shore Gold to date: $182 million Lake Shore Gold market cap: over $620million* (HOC owns 40%) Jan 2008
Slide 17: Gold Resource Corporation – close to production
Gold Resource Corporation – close to production • Emerging precious metal producer in southern Mexico HOC’s total investment in GRC to date: $38million GRC market cap: over $200million* (HOC owns 24%) • Continued outstanding exploration results • Expansion of the Arista vein system at El Aguila • Su
Slide 18: Southwestern Resources Package
Southwestern Resources Package • Remaining 50% of the Liam package, consolidating full ownership • Additional 50% interest in Pacapausa, bringing ownership to 80% • 50% of Millo, an advanced project adjacent to HOC´s 100% owned Azuca project. • 48% in Zincore, a TSX listed zinc company with a $9m ma
Slide 19: Exploration update
Exploration update y Ares Existing Mines log Arcata Geo San José ne Pallancata Mi Moris El Aguila Lake Shore Project Development eld Azuca Quellopata Resource Delineation fi wn Bro Crespo Josnitoro Drill Targets Encrucijada Victoria ld fie en La Flora Los Pinos Astana‐Farallón Huacullo e Prospect Gr
Slide 20: Greenfield Exploration – Azuca, Peru
Greenfield Exploration – Azuca, Peru • Azuca has an initial inferred resource of 1.8 million tonnes with 327 g/t silver and 1.34 g/t gold, as at December 2008 • Hochschild aims to increase this Yanamayo vein resource and progress the project towards an initial economic assessment by year 2.9 g/t Au
Slide 21: Greenfield Exploration – Encrucijada, Chile
Greenfield Exploration – Encrucijada, Chile • A 10 hole (3,362m) fence revealed multiple concealed vein structures • Along same structural corridor and equivalent geological context as Yamana's El Peñon, located 100km north mine (endowment approx. 9.0 moz Au eq) • Follow‐up on the north target Octob
Slide 22: Greenfield Exploration – El Mosquito, Argentina
Greenfield Exploration – El Mosquito, Argentina •Cerro Moro is an Exeter Resource Corp. discovery of a EXETER San Jose type high grade Au‐Ag vein mineralization system . 100% HOC •HOC claim block along structural corridor immediately NW of main vein systems. •Agreement with surface owner secured; ex
Slide 23: Conclusion
Conclusion • Focused in the Americas • Underground mining expertise • Diversified asset base; growing project pipeline • Proven track record of reserve replacement • On track to achieve 2009 production target of 28 moz Ag eq, an increase of 7% on 2008 • Focusing on profitable ounces Attractive growt
Slide 24: Questions and answers
Questions and answers 23 HOCHSCHILD MINING