Hochschild Mining Plc · LSE:HOC
Hochschild Mining — BMO Global Metals & Mining Conference 2011
24 slides from Hochschild Mining's conference presentation, Mar 1, 2011
Slide 1: Ignacio Bustamante, CEO - BMO Global Metals & Mining Conference
Ignacio Bustamante, CEO BMO Global Metals & Mining Conference 1 March 2011
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: Hochschild's advantageous positioning
Hochschild’s advantageous positioning Mexico • A leading precious metals producer in the Americas Moris – 3 of the 12 largest primary silver mines in the world – Operations in Peru, Argentina and Mexico – Long term core asset production:20‐23m oz Ag Eq • FTSE 250 with market cap of US$3.0bn Peru – T
Slide 4: Continued strategic and operational delivery
Continued strategic and operational delivery… 2010: A historic year for Hochschild 9 2010 production targets achieved 35 9 Strong progress at our 3 Advanced Projects 9 Significant improvement in LOM at all operations 30 9 Disposal of 35% stake in Lake Shore Gold 9 Cash of about US$500m Attributable
Slide 5: Strategy
Strategy M&A Arcata Optimise LOM 1 Improve productivity Pallancata San Jose Exploration Land package 3 Advanced Projects Core People Assets 2 Incentives 8 Company Makers Solid pipeline Budget Project pipeline Early stage Strong geological potential 3 Highly accretive Bolt‐on M&A Control M&A 4 Strong
Slide 6: Core Assets: maximising LOM
1 Core Assets: maximising LOM Arcata LOM 8.3 7.4 6.4 Main Operations LOM • Resource life of mine 44% FY08 FY09 FY10 8.5 at main operations is 7.1 now approx 8.5 years* Pallancata LOM 6.2 7.0 5.9 (core assets) 5.2 • Reserve cut‐off grades applied to resources FY08 FY09 H110 • High conversion rate San
Slide 7: Core Assets: Arcata
1 Core Assets: Arcata • Located in Arequipa, Southern Peru • 100% owned Peru LIMA • Production commenced in 1964 • Produces silver & gold concentrate and doré Arcata • World class district +447moz Ag eq endowment • New high grade veins continue to be found Units 2010 PRODUCTION Total moz. Ag eq. 9.7
Slide 8: Core Assets: Pallancata
1 Core Assets: Pallancata • Located in Ayacucho, Southern Peru • 60% Hochschild/40% International Minerals Corp. (IMZ) Peru LIMA • Production commenced in Q307 Pallancata • 100% concentrate • 2010 Ag eq production up 19% on 2009 • Significant brownfield expansion potential Units 2010 PRODUCTION Tota
Slide 9: Core Assets: San Jose
1 Core Assets: San Jose • Located in Santa Cruz, Southern Argentina • 51% Hochschild/49% Minera Andes (MAI) • Production commenced in Q307; capacity doubled to 1,500tpd in 2008 San Jose • 50% concentrate / 50% doré • High grade mineral district Units 2010 PRODUCTION Total moz. Ag eq 10.4 AVG. GRADE*
Slide 10: San Jose: more value through exploration
1 San Jose: more value through exploration • Recent exploration success announced in Oct 2010 significantly increased resources • Comparable transaction supports strong valuation Cerro Negro: high grade district Maximising LOM at San Jose San Jose* 3.1 moz Au eq at 12.8 g/t Au eq New veins & 1.84mt
Slide 11: Advanced Projects: Southern Peru cluster
2 Advanced Projects: Southern Peru cluster JUNIN • Strong presence in Southern Peru MADRE Peru DE DIOS • Competitive advantage: LIMA – 40+ years of experience in precious metals mining HUANCAVELICA – Unrivalled regional knowledge of operating/political CUSCO landscape CUSCO – Extensive land package
Slide 12: Advanced Projects: Key stages
2 Advanced Projects: Key stages Production based on Project Scoping Feasibility Construction Production current resources 6.6 moz Ag Eq Inmaculada 9 Q4 2011 2012/2013 Q4 2013 (Avg p.a.attributable production) 2.3 moz Ag Eq Crespo 9 Q4 2011 2012/2013 Q4 2013 (Avg p.a. production) 3.5 moz Ag Eq Azuca
Slide 13: Advanced Projects: Inmaculada (Peru)
2 Advanced Projects: Inmaculada (Peru) • 60% owned project at feasibility stage • Acquisition cost of US$ 84 per Au oz • Estimated pre‐operating investment of US$168m • Initial scoping study showing strong resource base: – Approximately 50m oz Ag Eq (M&I) resources already – Approximately 70m oz Ag
Slide 14: Advanced Projects: Azuca (Peru)
2 Advanced Projects: Azuca (Peru) • 100% owned project • Estimated pre‐operating investment of US$75m • Significant geological potential: – 3 new veins discovered in 2010 – Total inferred resources: 60.8m oz (Ag Eq) – Arcata sized district system: +300m oz Ag Eq? SCOPING STUDY Au: $1,000/oz Au: $1,4
Slide 15: Advanced Projects: Crespo (Peru)
2 Advanced Projects: Crespo (Peru) Crespo pit design • 100% owned project • Total resources of 49.4m oz (Ag Eq)* – Scoping study only used 31.3m of M&I resources • Estimated pre‐operating investment of US$65m • Strong exploration potential SCOPING STUDY Au: $1,000/oz Au: $1,400/oz ECONOMICS Ag: $17/
Slide 16: Pipeline: Unique focus on the Americas
2 Pipeline: Unique focus on the Americas Mexico Mercurio • 2011: Extensive and targeted greenfield drill programme: Corazon de Tinieblas – 335,000 metres – 26 targets Josnitoro Apacheta – Four countries ‐ Peru, Argentina, Chile & Mexico Peru Pariguanas Sabina 2011 2011 Exploration budget: $70m Green
Slide 17: High quality project pipeline
2 High quality project pipeline Ares Medium scale Company Makers Arcata Peru Chile Pallancata San Jose Argentina Mexico CURRENT Moris OPERATIONS Inmaculada Azuca ADVANCED Crespo PROJECTS Victoria Encrucijada ke y MeScal M a pan Valeriano Mosquito rs Key targets DRILL TARGETS Key targets diu e Parihu
Slide 18: Victoria, Chile - Company Makers
2 Victoria, Chile ‐ Company Makers • Ownership: 60% Hochschild/40% Iron Creek Chile • Domekyo fault zone hosts majority of copper porphyries in northern Chile • Vida target: 8m@10.5 g/t Au, 29g/t Ag • Vaquillas target: 101.9m@0.91g/t Au , 57g/t Ag • Total drilling of 10,000m budgeted for 2011 Mine C
Slide 19: Valeriano, Chile - Company Makers
2 Valeriano, Chile ‐ Company Makers • Option agreement signed Nov 2010 • Acquisition cost of US$5.5m Chile • Right to increase stake to 100% • Historical drilling results (pre 1997): – 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 Mine Company Endowment
Slide 20: Mercurio, Mexico - Company Makers
2 Mercurio, Mexico ‐ Company Makers Mexico • 100% owned • 36,388 hectare prospect • DH5: –86m @20 g/t Ag, 0.22% Cu, 0.49% Pb, 1.40% Zn…. …includes: 3.5m@300 g/t Ag, 4.36% Cu, 1.18% Pb, 7.49% Cu • Located between two high grade mines: Mine Company Endowment Sombrerete Grupo Mexico +180Moz Ag Pan Amer
Slide 21: Copper projects
2 Copper projects • Copper projects acquired as part of Southwestern Resources Peru • Significant land package in southern Peru • Dedicated team/budget assigned to highly prospective copper properties • Strategic decision to be made following drill completion Mine Company Endowment +2Moz Au; Las Bam
Slide 22: Corporate development: realising value
3 Corporate development: realising value 9 Lake Shore Gold (Canada) 361* – Net proceeds of approx $454m ‐ 34% gain on average purchase price 9 Gold Resource Corp (Mexico) – Market value of US$361m – unrealised gain of 416% 9 Inmaculada (Peru) – Acquisition cost of US$84/oz (Au Eq) 9 Valeriano (Chile
Slide 23: High potential for value creation
High potential for value creation Growing resource base: 25% CAGR since IPO 500 • Excellent asset base 444 • Solid Advanced Projects 400 140% Million Attributable Ag Eq oz 342 • Promising exploration pipeline 300 • Clearly defined strategy 250 208 • Strong financial position 200 185 • Leverage to pr
Slide 24: Hochschild Mining plc - Contact us
Hochschild Mining plc CONTACT US Charles Gordon +44 207 907 2934 charles.gordon@hocplc.com 23
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