Hochschild Mining Plc · LSE:HOC
Hochschild Mining — Investor Day (November 2018)
97 slides from Hochschild Mining's investor day presentation, Nov 7, 2018
Slide 1: Capital Markets Day
Capital Markets Day 7 November 2018
Slide 2: Disclaimer
DISCLAIMER Some statements contained in this presentation or in documents referred to in it are or may be forward-looking statements. Any forward- looking information contained in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. Accordingly
Slide 3: Presenters
PRESENTERS ` ` ` ` ` ISAC BURSTEIN IGNACIO BUSTAMANTE EDUARDO LANDIN OSCAR GARCIA Vice President of Business EDUARDO NORIEGA Chief Executive Officer Chief Operating Officer Head of Brownfield Exploration Head of Finance Development and Exploration
Slide 4: Agenda
AGENDA Introduction and Strategy 10.30-10.45 Ignacio Bustamante Operations and Brownfield Exploration 10.45-11.30 Eduardo Landin / Oscar Garcia Greenfield and Business Development 11.30-11.40 Isac Burstein Innovation 11.40-11.55 Eduardo Landin Finance 11.55-12.05 Eduardo Noriega Final Remarks 12.05-
Slide 5: Introduction and Strategy
Introduction and Strategy Ignacio Bustamante
Slide 6: Key Messages from This Morning's Presentation
KEY MESSAGES FROM THIS MORNING’S PRESENTATION Inmaculada 10 year+ life-of-mine (95.1moz Ag Eq added ytd) 1st quartile of the cost curve 74% of HOC attributable cash flow Constant search for valuable optionality Highly prospective properties provide ‒ Dynamic greenfield strategy platform for long ter
Slide 7: Hochschild at a Glance
HOCHSCHILD AT A GLANCE Peru Argentina Chile Operational Experience A leading Latin American precious metal producer +100yrs of history and +50yrs of mining Volcan Strong portfolio Key Inmaculada flagship asset Low cost competitive position Inmaculada San Jose Growth potential Pallancata Sele
Slide 8: A History of Operational Success
A HISTORY OF OPERATIONAL SUCCESS Attributable production IMPROVED (m oz Ag Eq*) 2018 GUIDANCE Silver Gold 35.5 38.0 38.5 27.0 20.3 20.5 22.2 2012 2013 2014 2015 2016 2017 2018e All-in sustaining costs ($/oz Ag Eq) 21.7 IMPROVED 18.6 17.4 2018 GUIDANCE 12.9 12.7-13.1 11.2 12.3 2012 2013 2014 2015 201
Slide 9: Growth Strategy
GROWTH STRATEGY • LOM increases 1 BROWNFIELD • Improve quality of resources • Spare capacity available Enhance current • Staking properties portfolio 2 GREENFIELD • Streamlining portfolio • Progressing drill-ready projects Develop growth options ` Create valuable • Optimising early-stage projects op
Slide 10: Inmaculada Exploration 2018
INMACULADA EXPLORATION 2018 Inferred Resources Jan-Oct* (unaudited) 3D map of new structures Tonnes Avg. width Ag Au Ag Eq Ag Eq Vein (t) (m) (g/t) (g/t) (g/t) (moz) Millet 3,086,046 8.7 89 3.2 323 32.0 Divina 2,127,424 7.5 94 2.9 306 21.0 Veronica 602,678 5.7 75 3.6 338 6.5 Lady 400,370 1.3 135 3.4
Slide 11: Significance of Inmaculada
SIGNIFICANCE OF INMACULADA Attributable Inmaculada Pallancata San Jose Arcata PRODUCTION 47% 47% 23% 15% 12% EBITDA 65% 65% 21% 14% FREE CASHFLOW 74% 74% 16% 10% 2018 estimated results 11
Slide 12: Inmaculada versus Other Gold Mines
INMACULADA VERSUS OTHER GOLD MINES AISC 2018 Production Ranked on All-in Sustaining Cost ($/oz Au) ($/oz AISC) 2,750 2,500 2,250 Sukari (Centamin, Egypt) 2,000 Noche Buena Luolo Fresnillo, Mexico Morila 1,750 (Randgold, Mali) Randgold, Mali Herradura (Fresnillo, Mexico) Kibali 1,500 (Randgold, DRC)
Slide 13: Brownfields Track Record
BROWNFIELDS TRACK RECORD Resources: Ounces found since 2007 Operation Ag Eq (moz) Au Eq (moz) Recent successes Arcata 134 1.8 Tunel 4 zone, Quadrant 4 Pallancata 126 1.7 Pablo zone San Jose 235 3.2 Molle vein Inmaculada 275 3.7 East zone (Millet, Divina) TOTAL 770 10.4 • Highly successful brownfield
Slide 14: Brownfield Inferred Resources Plan
BROWNFIELD INFERRED RESOURCES PLAN Achieved Brownfield plan: 2016 - 2021 2016-18 Brownfield plan: 2019-2021 Targets (moz) Conservative Base case Optimistic Actual Conservative Base case Optimistic Pallancata 56 98 141 27 60 90 130 San Jose 67 118 168 45 41 73 123 Inmaculada 100 175 250 108 110 160 2
Slide 15: Operations & Brownfield Exploration
Operations & Brownfield Exploration Eduardo Landin/Oscar Garcia
Slide 16: Southern Peru Cluster: Competitive Advantage
SOUTHERN PERU CLUSTER: COMPETITIVE ADVANTAGE Peru Western Cluster Eastern Cluster Hochschild focuses on geological districts 16
Slide 17: Inmaculada
INMACULADA Ownership 100% Location Ayacucho, Peru Altitude (masl) 4,400m Operation Underground Plant Capacity 3,850 tpd Annual Production 230,000oz Au Eq Product 70%: Au/30%: Ag dore AISC $700-750/oz Au Eq P&P Reserves (2017) 1.0m oz Au Eq M&I Resources (2017) 1.2moz Au Eq Production History Inferre
Slide 18: Inmaculada Resource Life-of-Mine
INMACULADA RESOURCE LIFE-OF-MINE Life-of-Mine (Years) Delivered in 2018 8.9 18.0 (3.0) 12.1 7.1 (1.0) 6.0 Dec-17 2018 additions Production Dec 18e Brownfield plan Production Dec 21e to date 2019-21 (Potential) Significant 2018 additions followed by further geological upside 18
Slide 19: Inmaculada Exploration 2018
INMACULADA EXPLORATION 2018 Strong geological potential to add further resources in the coming years 19
Slide 20: Inmaculada Exploration 2018
INMACULADA EXPLORATION 2018 Cross Section A-A´ (north-east view) NNW SSE 20
Slide 21: Millet Vein
MILLET VEIN Longitudinal Section (north-west view) Cross Section Millet and Divina are veins with a breccia texture, both open to the north-east 21
Slide 22: Keyla Vein
KEYLA VEIN Longitudinal Section (north-west view) Cross Section Keyla and Barbara are quartz veins with banded texture, both open to the north-east 22
Slide 23: Keyla and Thalia Vein
KEYLA AND THALIA VEIN Drill Hole - BEL18-004 3.20m@15.19 g/t Au / 1531.06g/t Ag GAL 8804 SW Level 4300: 4.20m@6.96g/t Au/ 499.70g/t Ag Keyla and Thalia veins show impressive mineralisation 23
Slide 24: Thalia Vein
THALIA VEIN Longitudinal Section (north-west view) Cross Section Thalia is a fault vein open to the east 24
Slide 25: Defining Targets for the Exploration Plan 2019-2021
DEFINING TARGETS FOR THE EXPLORATION PLAN 2019-2021 North of Angela • Drilling to the east and west of Angela to find potential • Drilling in the north area to test Angela continuity 25
Slide 26: Inmaculada Region: Long-Term Exploration Plan
INMACULADA REGION: LONG-TERM EXPLORATION PLAN INMACULADA INMACULADA EXT. ESTE EXT. ESTE INMACULADA SUR Potential of regional exploration plan 26
Slide 27: Production Schedule for New Resources
PRODUCTION SCHEDULE FOR NEW RESOURCES 2017 2018 2019 2020 2021 2022 2023 Effect on Inmaculada AISC to add reserves ($/oz Au Eq) East of Angela Exploration permits Permitting Operation permits Incremental Inferred AISC to add Resources conversion M&I Reserves 800 Reserves 725 75 Operation Production
Slide 28: Pallancata
PALLANCATA Ownership 100% Location Ayacucho, Peru Altitude (masl) 4,600m Operation Underground Plant Capacity 2,800 - 3,000 tpd Annual Production 9.5moz Ag Eq Product 70%: Ag/30%: Au conc AISC (2018e) $13-13.5/oz Ag Eq P&P Reserves (2017) 18.4m oz Ag Eq M&I Resources (2017) 32.9moz Ag Eq Production
Slide 29: Pallancata Resource Life-of-Mine
PALLANCATA RESOURCE LIFE-OF-MINE Life-of-Mine (Years) 9.0 8.7 (3.0) Pablo Zone delivering 2,800tpd 0.7 2.7 2.7 (0.7) Dic-17 Dec 17 (Pablo 2018 additions to Production Dec 18e Brownfield plan Production Dec 21e Resources) resources) date 2019-21 (Potential) Throughput: 2,800 tpd Exciting geological o
Slide 30: Pablo Update
PABLO UPDATE R&R report as of June 2018 (unaudited) Reserves Avg. Vein Tonnes Ag Au Ag Eq Ag Eq (t) width (g/t) (g/t) (g/t) (moz) (m) Pablo 1,087,674 11.12 274 1.02 349 12.2 Pablo Piso 442,617 12.73 346 1.16 431 6.1 Other 36,251 2.31 396 1.26 489 0.6 TOTAL 1,566,542 11.37 297 1.06 376 18.9 Pablo Vei
Slide 31: Pallancata Exploration 2018
PALLANCATA EXPLORATION 2018 • Drilling deeper for potential resources at Farallon • Pablo Sur: 1,100m long hole drilling to recognise possible extension of original Pallancata vein On track for an exciting 2019 drilling campaign 31
Slide 32: Pablo – Yurika
PABLO – YURIKA Longitudinal Section A-A´ (north view) W E Yurika 600 m. Anticlavo 500 m. Explorador Pablo 800 m. Anticlavo 500 m. Pablo W 1000 m. 32
Slide 33: Pallancata / Inmaculada District 2019-2021
PALLANCATA / INMACULADA DISTRICT 2019-2021 108,314Ha ≈ $0.5bn vein ` ≈ $1.0bn vein ` NEXT $1.0bn VEINS? ` Angela ≈ $1.0bn vein District potential underpins LOM increase 33
Slide 34: Palca and Cochaloma: Geochemistry
PALCA AND COCHALOMA: GEOCHEMISTRY Gold Silver Cochaloma Cochaloma Palca Palca Escandalosa Escandalosa Escondida Escondida Kimberly Kimberly Outcropping structures indicate high potential 34
Slide 35: Production Schedule for New Resources
PRODUCTION SCHEDULE FOR NEW RESOURCES 2018 2019 2020 2021 2022 2023 Effect on Pallancata AISC to add reserves ($/oz Ag Eq) Palca Budget to add new Exploration permits Reserves Permitting Operation permits 2.5 Inferred Exploration Budget Resources conversion M&I 14.0 Reserves 13.0 1.0 (2.5) 1.0 Opera
Slide 36: San Jose
SAN JOSE Ownership 51% (McEwen 49%) Location Santa Cruz, Argentina Operation Underground Plant Capacity 1,650 tpd Annual Production 14moz Ag Eq Product 50%: Ag/50%: Au AISC (2018e) $14.5-15.0/oz Ag Eq P&P Reserves (2017) 43.8m oz Ag Eq M&I Resources (2017) 110.4moz Ag Eq Inferred Resources (2017) 24
Slide 37: San Jose Resource Life-of-Mine
SAN JOSE RESOURCE LIFE-OF-MINE Life-of-Mine Effect on San Jose AISC to add reserves (Years) ($/oz Ag Eq) New Inferred 5.2 resources 9.7 (3.0) 14.1 14.0 7.5 1.9 7.5 1.0 2.7 (1.0) Throughput: 1,650 tpd 12.2 11.3 Dec-17 2018 additions to Production Dec 18e Brownfield plan Production Dec 21e San Jose AI
Slide 38: San Jose Discovery Track Record
SAN JOSE DISCOVERY TRACK RECORD From 5 veins to 191 veins in 9 years 38
Slide 39: San Jose Exploration 2018
SAN JOSE EXPLORATION 2018 2018 Exploration • Significant high grade intercepts expected to add high quality mine resources • Inferred resource development at Ayelen Sur, Maia Vein, Guadalupe • Resources are close to existing mining infrastructure Cross Section A-A´ Exciting 2018 results boost short-
Slide 40: Molle / Luli Vein
MOLLE / LULI VEIN Longitudinal Section 40
Slide 41: San Jose: Defining Targets for the Exploration Plan 2019-2021
SAN JOSE: DEFINING TARGETS FOR THE EXPLORATION PLAN 2019-2021 B A • 2019 exploration plan will be focused on 2 areas: San Jose South and Aguas Vivas • San Jose South (A): Underground long-hole drilling campaign underway to identify major structures • Aguas Vivas (B): Potential polymetallic sulphide
Slide 42: San Jose South Exploration 2018-2019
SAN JOSE SOUTH EXPLORATION 2018-2019 (A) San Jose mine projected to the south 42
Slide 43: Aguas Vivas Exploration 2019
AGUAS VIVAS EXPLORATION 2019 (B) Potential polymetallic sulphide deposit with gold, silver, lead, zinc and copper 43
Slide 44: Aguas Vivas
AGUAS VIVAS Cross Section A-A´ Flow 44
Slide 45: Arcata
ARCATA Ownership 100% Location Arequipa, Peru Altitude (masl) 4,600m Operation Underground 2,500 tpd Plant Capacity 1,000 tpd (2018) Annual Production 4.0moz Ag Eq Product 80%: Ag/20%: Au conc Production History (moz Ag Eq) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1
Slide 46: What Would It Mean to Put Arcata on C&M?
WHAT WOULD IT MEAN TO PUT ARCATA ON C&M? HOC Metrics* C&M ($m) With Arcata Without Arcata C&M (per annum) Lay-offs (One-off) HOC Attributable Production (moz Ag. Eq.) 3.5 17.8 38.5 34.5 HOC Gold/Silver Revenue (%) Mine closure ($m) Au - 50% / Ag - 50% Au - 53% / Ag - 47% Provision Components 2018 AI
Slide 47: Arcata Optionality
ARCATA OPTIONALITY Exploration • Encouraging results at Arcata currently being assessed against medium-term operational Azuca viability Project Condor • HOC will invest $5.0m in exploration over next 5 years 93km • Mineral could potentially be processed at Arcata plant Azuca Condor • Testing new geo
Slide 48: Arcata Exploration 2018
ARCATA EXPLORATION 2018 Quadrant IV • 2018: drilling in NW has recognised 8 new veins with 3.5km of extensions • H2 drilling focused on Carolina (NE), Joselyn- Pamela (E-W), Pamela New/C. Pamela N(NNE), Ruby 2 (NE) and Amparo (N-S) veins Aiming to improve resource quality and lower long-term cost po
Slide 49: Quadrant IV
QUADRANT IV Cross Section A-A´ (north-west view) 49
Slide 50: Azuca Exploration 2019
AZUCA EXPLORATION 2019 Azuca: 108.2moz Ag Eq in resources • Drilling campaign planned for Azuca & Huacullo • Re-engaging with communities • Evaluating ore sorting and mineral transportation to Arcata plant Longitudinal Section A-A´ 50
Slide 51: Ares Exploration Plan 2018-2019
ARES EXPLORATION PLAN 2018-2019 HISTORIC PRODUCTION ZONE Production History (moz Au Eq) (K oz Au Eq) 27.7 27.6 Au eq grade (g/t) 300 24.1 24.8 25.7 26.3 Contained Au 30.0 23.4 23.5 Contained Ag (Au eq.) 21.6 216 220 230 238 Contained Au Eq Grade 193 198 18.3 200 180 192 20.0 186 8.2 91 100 5.5 4.8 1
Slide 52: Crespo Exploration
CRESPO EXPLORATION • Profitable project: updated feasibility using spot prices Operational Metrics Unit LOM yrs 9 • Within our Southern Peru cluster Ore production Mt 20.5 • Geological potential Au grade g/t 0.5 Ag grade g/t 39 Au recovery % 80% Ag recovery % 35% Au Eq Koz 356 Au Eq. per year (avg.)
Slide 53: Volcan Long-Term Optionality
VOLCAN LONG-TERM OPTIONALITY • Large gold deposit in the Maricunga region in Northern Chile Mantoverde (Audley Capital, Orion Resource) Chile • 9.5moz of gold resources • Goldcorp/Barrick/Teck advancing Nueva La Coipa (Kinross) Union and Norte Abierto JVs nearby Cerro Maricunga (Atacama Pacific) • H
Slide 54: Greenfield & Business Development
Greenfield & Business Development Isac Burstein
Slide 55: Acquisitions: Opportunities in the Americas
ACQUISITIONS: OPPORTUNITIES IN THE AMERICAS • Geological potential: Find more resources than those we are paying for • Early stage: Add value by bringing deposit into production • Control: Acquisitions/Joint Ventures M&A • Value accretive: 12-15% minimum return on investment STRATEGY GEOGRAPHIES DEP
Slide 56: Greenfield Exploration Strategy
GREENFIELD EXPLORATION STRATEGY MAINTAIN A BALANCED PORTFOLIO OF 1 ADVANCED/EARLY STAGE OPPORTUNITIES 2 MAXIMISE CHANCE OF SUCCESS WHILE ENSURING EFFICIENT PROJECT EXECUTION 3 PLAY TO OUR COMPETITIVE ADVANTAGE USE COMBINATION OF JVS AND PRIVATE 4 PLACEMENTS TO LOCK IN PROJECT OPTIONS 56
Slide 57: Exploration Activity in Peru (Precious Metals)
EXPLORATION ACTIVITY IN PERU (PRECIOUS METALS) Condor Peru • Option on 200-300 tpd producing mine located 93km from Arcata • Over 30km of veins identified in area • Drilling to begin in 2019 Corina • Located 20km north of Selene plant Cueva Blanca • 3km vein with 100m wide zone of breccias • Project
Slide 58: Condor
CONDOR • Condor project is currently small private mine producing 4.5-5.0kt per month with 6g/t Au, 150g/t Ag, 2% Zn & 1% Pb • Located in Arequipa, close to our Arcata operation (93km) • Underexplored concession with strong potential (40km of veins already identified) Option Agreement • HOC secured
Slide 59: Exploration Activity in the Americas (Precious Metals)
EXPLORATION ACTIVITY IN THE AMERICAS (PRECIOUS METALS) Loro (Chile) Snip Project(BC, Canada) • Located 20km from El Peñon showing 500m long sub-cropping narrow vein • Intercepted very wide series of structures (over 30m at 300m depth with no economic values) • Assessing next steps Cobalt Silver Dist
Slide 60: Indra-Agni
INDRA-AGNI • Earn in JV (up to 75%) from Mirasol by investing $6m in exploration and taking project to feasibility • Early stage large land package 20km from El Guanaco Mine (>2moz Au). • Currently being mapped and sampled Indra – General Epithermal Model – August 2018 Altered Rhyolite flow dome Cur
Slide 61: Skeena: Snip Mine
SKEENA: SNIP MINE • Alliance established with Skeena Resources via private placement • Option to earn-in 60% interest in Snip project by investing up to 2x Skeena´s investment (≈$15m) • Option can be triggered anytime in next 3yrs depending on results of current exploration programme • Snip is past
Slide 62: Innovation
Innovation Eduardo Landin HOCHSCHILD MIN ge
Slide 63: The Hochschild Innovation Framework
THE HOCHSCHILD INNOVATION FRAMEWORK HOCHSCHILD VALUE CHAIN Exploration Mine Planning Mining Mineral Processing • Goldspot Discoveries: • Deswik: Mine planning • IoT Mining environment: • Ore Sorting: Ore and waste Machine learning in software platform Real time data inside the classification prior t
Slide 64: Goldspot: Machine Learning to Add New Exploration Ideas
GOLDSPOT: MACHINE LEARNING TO ADD NEW EXPLORATION IDEAS San Jose target generation • Canadian start-up using machine learning technology that consolidates different geological data to build predictive models • Technology is likely to work better in data-rich environments such as HOC operations • Hoc
Slide 65: Long Drills for Underground Exploration
LONG DRILLS FOR UNDERGROUND EXPLORATION Drilling progress in Ares • Underground drilling is highly effective method for identifying vertical veins 2018-2019 • New technology improves length from traditional 50-200m drills to 1-2km drills • Allows us to potentially cross several structures with a sin
Slide 66: Deswik: Software Platform to Optimise Mine Planning
DESWIK: SOFTWARE PLATFORM TO OPTIMISE MINE PLANNING • Technology designs process for cutting veins in a way that maximises economic return • Calculations involve geometry, ounces, grade, dilution and other data points - significantly improving on more traditional methods • Full implementation in all
Slide 67: IoT Mining Environment
IoT MINING ENVIRONMENT Improve mine Increase people safety Mine more effectively productivity Equipment Control People tracking Geolocation and Control Optimise operations by Install fibre optics and WiFi ` Improve people ` tracking ` Inmaculada installing telemetry in mining coverage inside through
Slide 68: Ore Sorting
ORE SORTING • Technology used in other industries is now being applied to complex minerals • Sorters use optical, XRT and density sensors to distinguish ore from waste • Waste material is discarded prior to plant processing - reducing costs, increasing plant capacity and improving treatment grades H
Slide 69: Ore Sorting: Inmaculada
ORE SORTING: INMACULADA • New resources in Inmaculada could be materially Millet Structure New Resources improved using the Ore Sorting (OS) process Resources (Mt) 9.3 • Wide structures e.g.Millet will be very productive Au Eq g/t 4.3 and OS will allow separation of not only mining dilution but also
Slide 70: Ore Sorting: Azuca
ORE SORTING: AZUCA • Azuca has large resource in Reported Resources term of tonnage and ounces Resources (Mt) 14.0 • Project is economically unviable Ag Eq g/t 240 due to low grades Ag Eq. M Oz 108.2 • OS technology could be good fit to increase grades materially • OS project initially focusing on A
Slide 71: Finance
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Slide 72: Strong Cash Flow Generation
STRONG CASH FLOW GENERATION H1 2018: 2016-2018e Net debt/EBITDA Hochschild Free Cash Flow ($m)* of 0.21x Debt repayment $240m 221 Interest Non- 2016-2018: $552m $78m recurring 174 Exploration 157 $72m Tax Paid ` $39m Dividends to Shareholders $41m Dividends to Average realised price 2016 2017 2018e
Slide 73: Outstanding Margins
OUTSTANDING MARGINS EBITDA & EBITDA - OP. CAPEX Margins (%) 60% 50% 47% Inmaculada 48% Start-up 42% 39% 40% 32% 30% 28% 29% 30% 24% 24% 20% 20% 16% 8% 10% 4% 0% 2012 2013 2014 2015 2016 2017 2018e EBITDA Margin % (EBITDA - OP. CAPEX) Margin % Au $/oz Realised Prices Ag $/oz 2,000 50 1,750 1,684 40 1
Slide 74: Evolution of AISC Incorporates LOM Increase
EVOLUTION OF AISC INCORPORATES LOM INCREASE AISC Evolution ($/oz Ag Eq.) 16.0 14.0 12.9 12.3 12.0 11.2 0.7 1.4 0.7 10.0 8.0 6.0 11.6 11.5 10.5 4.0 2.0 0.0 2016 2017 2018e Operating AISC Exploration + Developments for new resources Strong cost control at all operations 74
Slide 75: Capital Allocation Priority
CAPITAL ALLOCATION PRIORITY Top priorities Actions Priority Brownfield exploration investment Detailed plan already in place 1 M&A/JVs and early stage projects Pursue projects with high financial returns 2 Greenfield Invest in attractive optionality 3 Dividends Focus on capital return 4 Reduce Debt
Slide 76: Dividends
DIVIDENDS $m Net earnings vs Dividend paid 150 Net earnings attributable to shareholders Dividend paid 50 -50 -150 -250 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018 Dividend Yield (%) 0.9% 0.7% 0.8% - - - 1.2% 1.0% 1.9% • High volatility of Au/Ag prices directly affect our cash flows • HOC conser
Slide 77: Valuation Remains Compelling
VALUATION REMAINS COMPELLING P/E (x) 2018e 2019e 2020e 33.4 35.0 25.9 17.4 15.6 20.7 19.3 18.8 21.0 18.7 20.5 21.2 21.7 16.2 17.7 13.3 7.1 n/a n/a n/a n/a n/a n/a n/a Fortuna HOC HOC Fresnillo Coeur Pan American First Majestic SSR Hecla EV/EBITDA (x) 2018e 2019e 2020e 7.6 8.7 7.7 8.1 7.5 7.7 7.5 6.6
Slide 78: Final Remarks
Final Remarks Ignacio Bustamante
Slide 79: Safety
SAFETY Frequency Rate Index Cultural transformation plan 7.6 Industry Safety Frequency Index average is 5 for underground operations 1.7 2007 2018 YTD • Important reduction in the frequency rate index since IPO to world class levels • Cultural transformation plan has been launched in order to keep i
Slide 80: Environmental Management
ENVIRONMENTAL MANAGEMENT ENVIRONMENT ECO Score Year-to-date results • Committed to being leader in environmental Result Unit Corporate Result performance (max 6.00) • Robust Corporate Environmental Policy Arcata 5.50 • Diverse and highly professional team Inmaculada 5.63 5.44 • Best in class environ
Slide 81: Community Relations
COMMUNITY RELATIONS Main Objectives Initiatives Implemented • Build trust & develop long-term relationship with our • Suppliers and employment opportunities communities • Support education programmes • Ensure purposeful presence in the area • Provide access to technology • Ensure conditions for grow
Slide 82: Final Remarks
FINAL REMARKS • Key Inmaculada asset delivering material LOM increase • On track to achieve 10 years of LOM by 2021 • Cost control remains top priority • Strong optionality in Greenfield, Early-stage projects, and M&A strategy • Innovation programme set to deliver operational and project upside • Ro
Slide 83: Hochschild Purpose
HOCHSCHILD PURPOSE “Responsible and innovative mining committed to a better world" Responsibility Innovation Managing our organisation whilst setting the Constantly generating better practices through the standards in: adoption of new technologies to improve our - Focusing on safety as a first prior
Slide 84: Appendix
HOCHSCHILD MINING
Slide 85: Inmaculada Incremental Resources: Cut-off Sensitivity
INMACULADA INCREMENTAL RESOURCES: CUT-OFF SENSITIVITY Cut-off Ag Eq. Tonnes Avg. width Ag Au Ag Eq Ag Eq (g/t) (t) (m) (g/t) (g/t) (g/t) (moz) 0 12,222,068 6.3 79 2.4 259 101.8 10 12,173,984 6.3 79 2.4 260 101.8 30 11,631,231 6.1 83 2.6 271 101.5 50 11,225,484 5.8 85 2.6 280 101.0 60 11,004,857 5.8
Slide 86: Inmaculada: Divina Vein
INMACULADA: DIVINA VEIN Longitudinal Section (north-west view) Cross Section 86
Slide 87: Pallancata: Pablo Cross Sections
PALLANCATA: PABLO CROSS SECTIONS Cross Section B-B´ (east view) Cross Section C-C´ (east view) 87
Slide 88: Pallancata: Pablo – Royropata
PALLANCATA: PABLO – ROYROPATA Drillhole Section NE SE 88
Slide 89: Arcata: Ruby Vein
ARCATA: RUBY VEIN Longitudinal Section 89
Slide 90: Arcata: Frida Vein
ARCATA: FRIDA VEIN Longitudinal Section 90
Slide 91: Arcata: Pamela New Vein
ARCATA: PAMELA NEW VEIN Longitudinal Section 91
Slide 92: Innovation: Micro Bubbles in Cavitation System
INNOVATION: MICRO BUBBLES IN CAVITATION SYSTEM • Reduce Ag particle losses by increasing bubbling in the cavitation process • Silver particles adhere to floating bubbles and feed into the Concentrate concentrate collector collector • Smaller bubbles yield greater contact area • August 2018 implement
Slide 93: Innovation: Real Time Cost System
INNOVATION: REAL TIME COST SYSTEM Week 26/08 Exploitation • Costs are updated on a daily basis September Week 1 Acum. 2018 • Interactive platform allows Area Absolut costs Unit Unit costs Actual Fcst. Actual Acum. Fcst. Acum. Budget management to focus on each part Geology Forecast of the mining pro
Slide 94: Innovation: Operations Dashboard
INNOVATION: OPERATIONS DASHBOARD • Interactive platform to control productivity in each part of the process • Standard KPI´s are displayed in panels and compared to monthly objectives • Improves management decisions at the right time • In-house platform is easy to program for future requirements at
Slide 95: Innovation: Mandu Community Relations Management Platform
INNOVATION: MANDU COMMUNITY RELATIONS MANAGEMENT PLATFORM • Mandu is a Peruvian start-up that specialises in human capital management • Tailoring a community relations management platform for HOC to allow more accurate community tracking, risk evaluation and project management • Pilot schemes in all
Slide 96: Innovation: SAP S4 HANA
INNOVATION: SAP S4 HANA • Early adopter of new SAP version • High impact on performance, security and support for business operations: ―Improved cybersecurity ―Better analytic tools for control and reporting ―Faster by 10 times approximately ―Broader connectivity ―More collaborative platform ―Better
Slide 97: Finance: Argentina Devaluation & Export Tax Reinstatement
FINANCE: ARGENTINA DEVALUATION & EXPORT TAX REINSTATEMENT • Argentinian peso devalued by 98% 2018 YTD resulting in these effects (net of inflation): ― Projected cost reductions of $17m ― FX loss of $8m from converting local currency net asset monetary accounts at a higher rate ― Negative income tax