Slide 1: Hochschild Mining plc 2008 Interim Results presentation
Hochschild Mining plc 2008 Interim Results presentation 21 August 2008 Miguel Aramburú, CEO Ignacio Rosado, CFO
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: H1 2008 Financial Highlights
H1 2008 Financial Highlights • 92% increase in revenue to $231.8 million driven by increased volume and prices • 86% increase in adjusted EBITDA¹ to $104.0 million • 30% increase in pre-exceptional EPS to $0.132 • Contained unit cost per tonne inflation below industry levels at 5.7%3 (H108 – H207) •
Slide 4: H1 2008 Operational Highlights
H1 2008 Operational Highlights • 7% increase in attributable silver equivalent production • On track to achieve 2008 production target of 26 million attributable Ag eq. oz • Capacity expansions at Arcata, San José and Selene on schedule for completion in H2 2008 • 16% increase in reserves; average m
Slide 5: Strong increase in revenue
Strong increase in revenue Gold Silver Sales (Koz) 110 9,770 90 5,700 +12% +71% H108 H107 H108 H107 928 18.1 Prices (US$/oz) 13.2 518 +79% +37% H108 H107 H108 H107 Higher treatment Commercial charge of discounts (% of gross 8.1% sales) 2.7% 4.4% concentrate; to 1.1% +152% +82% be reverted in H108 H1
Slide 6: Unit cost containment / Low cash cost
Unit cost containment / Low cash cost Cash costs per ounce1 $ millions (except unit cost) H108 H207 Silver by-product Revenue 231.8 184.0 H108 H207 2.4 Production costs (80.7) (69.4) Unit Costs1 82.1 77.7 5.7% (2.6) Depreciation (17.9) (15.7) Gold by-product H108 H207 Gross Margin 57% 65% • Decrease
Slide 7: Cash balance
Cash balance $ millions Cash and cash equivalents (Dec. 2007) 301 Cash flow from operations 83 Less: Lake Shore investment1 (164) San Felipe purchase (30%) (52) Other investments2 (16) 2007 final dividend paid (22) Capital expenditure (additions of PP&E) (89) Change in working capital3 (48) Plus: Fi
Slide 8: Strategy for growth
Strategy for growth 7
Slide 9: Our strategy for growth
Our strategy for growth • Maximise the potential of our existing operations through expanding life of mine and increasing capacity • Bring into production new, profitable precious metal projects throughout the Americas 3 Exploration pipeline: 2 M&A Growth: 1. Azuca 2. Gachi 1 Organic growth: + 1. Sa
Slide 10: Increasing reserve & resource base
Increasing reserve & resource base Attributable reserves (moz Ag eq.) Average reserve Life of Mine1 69% 5.8 140 107% 119 121 2 4.6 104 83 3 3.1 2.8 Jun-06 Dic-06 Jun-07 Dic-07 Jun-08 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Attributable resources (moz Ag eq.) Average resource Life of Mine1 39% 248 93%3 8.
Slide 11: Consolidating production platform
Consolidating production platform Throughput capacity (tonnes per day) 157%1 2008 Expansions on track: 7,190 4,890 Arcata (+46%) 2,800 Selene /Pallancata (+50%) 2006 2007 2008E San José (+100%) tpd 2006 2007 2008E Ares 800 940 940 Arcata 1,000 1,200 1,750 Selene 1,000 2,000 3,000 San José - 750 1,50
Slide 12: Expansion Projects – Arcata
Expansion Projects – Arcata Project complete, awaiting operating permit 11
Slide 13: Expansion projects – Selene / Pallancata
Expansion projects – Selene / Pallancata • Project advancing as expected • All civil work completed and equipment on site Expected to start in Q4 2008 12
Slide 14: Expansion projects - San José
Expansion projects - San José Expected to start in Q4 2008 13
Slide 15: San Felipe
San Felipe • Environmental permits for ramp have been secured • Ramp construction at La Ventana underway • Exploration program ongoing • Power line design approved by the Mexican energy regulator Feasibility Study to be completed by the end of 2008 14
Slide 16: Capital expenditure (100% basis)
Capital expenditure (100% basis) (US$ million) 2008 expected H1081 H208 Arcata 38.3 19.2 27.5 - 30.9 Ares 8.9 5.8 4.8 - 5.4 US$47 – US$67 million Capex Selene 37.3 9.3 43.3 - 48.7 increase is mainly explained by new Pallancata 7.9 7.7 7.2 - 8.0 project investments San José 55.8 29.7 52.0 - 58.4 (Dor
Slide 17: Benefits of doré
Benefits of doré • Approx. 95% of revenue received upfront • Reduced working capital requirement • Stable commercial market conditions Doré • Fewer discounts • 85%-90% of revenue received upon arrival (30-45 days) • Increased working capital requirement • Volatile market conditions • Higher discount
Slide 18: Lake Shore Gold Corp.
Lake Shore Gold Corp. • Low acquisition cost: US$ 180 /Oz. Au including CAPEX • Increased investment to 40% • Advancing towards production in 09 & ramp up to 200k oz Au by 2011 • Fully funded to production • Strong project pipeline: • Timmins West development projects • Quality early-stage projects
Slide 19: Liam JV
Liam JV • Acquired 50% interest in the Liam JV for $33.3 million (282,000 hectares) • Liam JV constitutes one of the largest single claim blocks available in Peru • In close proximity to our existing operations; Arcata, Ares, Selene and Pallancata • 38 exploration prospects identified and evaluated
Slide 20: Delivering on our commitments
Delivering on our commitments Operations Explorations Bus. Develop. 9Capacity expansions 9Increasing reserve and 9Acquired Lake completed on schedule resource base Shore Gold (40%) 9San José, Moris and 939% increase in 9Acquired San Pallancata in production resources, 69% Felipe (30%) on time increa
Slide 21: Conclusion & Outlook
Conclusion & Outlook • Production on track • Focus on costs • Stronger than ever project pipeline • Positive fundamentals for Precious Metals 20
Slide 22: Hochschild Mining plc Q&A's
Hochschild Mining plc ee HOCHSCHILD MINING