Slide 1: Hochschild Mining plc Preliminary Annual Results Presentation
Hochschild Mining plc Preliminary Annual Results Presentation Year ended 31 December 2006
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 o
Slide 3: Agenda
Agenda 1. Introduction: 2. Financial update: 3. Operational update: 2
Slide 4: Highlights of 2006
Highlights of 2006 Successfully listed on the London Stock Exchange Strong financial results Revenue of $211 million, up 31% EBITDA of $108 million, up 52% with margin expansion Cash flow from operations of $126 million, up over 300% Despite industry wide cost pressure, weighted average
Slide 5: Our corporate strategy
Our corporate strategy Maintain low cost profile and improve profitability Consolidation in underground Focus on high mining grade deposits Maintain our Increase reserve strong focus on and resource corporate social base responsibility Deliver on organic growth 4
Slide 6: Our outlook for 2007
Our outlook for 2007 2007 production target over 26 moz Ag eq Complete expansions at existing operations and commence production at three projects on schedule Operating capacity at 2007 year end of 2,780 ktpa, +184% increase Maintain rigorous approach to cost control Continue expansion of
Slide 7: Agenda
Agenda 1. Introduction: 2. Financial update: 3. Operational update: 6
Slide 8: A substantial increase in revenue
A substantial increase in revenue Revenue (US$ thousands) Revenue increase driven by higher realisable commodity prices $211,246 +31% Timing difference between production and $161,235 sale of concentrate created a significant build up of inventory 1.3 moz silver 5.3 koz gold 2005 2006 Will
Slide 9: Profitability margins driven by commodity prices and cost control
Profitability margins driven by commodity prices and cost control Gross profit (US$ thousands) EBITDA (US$ thousands) $135,699 $107,617 +53% +52% $88,706 $70,650 64% 51% 44% 55% 2005 2006 2005 2006 Co-product cash cost Despite industry wide cost pressure, 2% Silver Gold decrease in weighted averag
Slide 10: Significant increase in the bottom-line
Significant increase in the bottom-line Attributable profit after tax (US$ thousands) Stated on a pre-exceptional basis $3.0 million asset impairment at Sipan $46,646 +89% $2.2 million loss on sale of investment $24,719 Items exceptional when non-recurring in nature and outside normal course
Slide 11: Strong cash flow generation
Strong cash flow generation Key line items (US$ thousands) FY 2006 FY 2005 Cash generated from operating activities 126,231 30,464 Net cash generated from operating activities 88,208 7,990 Net cash used in investing activities (62,723) (2,678) Proceeds from issue of share 515,245 — Net cash flows ge
Slide 12: Agenda
Agenda 1. Introduction: 2. Financial update: 3. Operational update: 11
Slide 13: Capital expenditure to fund our growth
Capital expenditure to fund our growth Operation 2006 Capex ($m) 2007 Capex ($m) Sustaining capex is increasing by 163% Replace obsolete equipment in Sustaining operating mines 8.6 22.6 Expansion capex is increasing by 125% Capacity expansion and Expansion 45.6 incremental doré processing at
Slide 14: Transformational expansion in capacity during 2007
Transformational expansion in capacity during 2007 Operation 2006 YE run rate 2007 YE run rate % change Timing 2007 will be an 420ktpa +20% 2Q07 exciting year Arcata 350ktpa Expanding capacity Ares 280ktpa 325ktpa +16% Completed at three operations Bringing three new Selene 350ktpa 525ktpa +50
Slide 15: Increasing reserve and resource base
Increasing reserve and resource base Attributable reserves (moz Ag eq.) Have budgeted $35 million for exploration in 2007 Approximately $20 million will be spent on 104 83 +25% three existing operations and three new operations Leaves approximately $15 million for further exploration throughou
Slide 16: Exploring the region
Exploring the region Country Exploration Offices Argentina Existing Ares mining Chile operations Arcata Mexico Selene Peru Advanced San José Development 50mm oz Ag eq Projects Pallancata target production Mina Moris Feasibility completed San Felipe Early stage development projects Azuca San Luís del
Slide 17: Looking for acquisitions with a specific profile
Looking for acquisitions with a specific profile High grade underground properties >50% EBITDA margin Value accretive Mainly precious metals deposits Prioritising countries where we operate / the Americas Aim to continue to be partner of choice for joint ventures 16
Slide 18: Summary
Summary Delivering on IPO commitments: On track for 50 moz Ag eq. by 2011 More than doubling production capacity in 2007 Maintaining low cash costs Extending reserve base Financial resources to significantly enhance our growth 17
Slide 19: Hochschild Mining plc Preliminary Annual Results Presentation
Hochschild Mining plc Preliminary Annual Results Presentation Year ended 31 December 2006