1c annual results final

HOCHSCHILD MINING Annual Results 2013

12 March 2014

DISCLAIMER

2

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 on as a guide to future performance.

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, and accordingly, actual results may vary.

This presentation does not constitute, or form part of or contain any invitation or offer to any person to underwrite, subscribe for, otherwise acquire, or dispose of any shares in Hochschild Mining plc or advise persons to do so in any jurisdiction, nor shall it, or any part of it, form the basis of or be relied on in any connection with or act as an inducement to enter into any contract or commitment therefore. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this document or on its completeness and no liability whatsoever is accepted for any loss howsoever arising from any use of this document or its contents otherwise in connection therewith. Nothing in this presentation is to be construed as a profit forecast.

This presentation has been prepared in compliance with English law and English courts will have exclusive jurisdiction over any disputes arising from or connected with this presentation.

HOCHSCHILD MINING: MOVING AHEAD, GAINING MOMENTUM

3

Acquisition of minorities in our lowest cost mine and flagship growth project

What have we accomplished in the last year?

Rapidly initiated major cashflow optimisation

programme

Corporate refinancing swiftly completed

Focus for 2014

Delivery of high value 100% owned

Inmaculada project

+ + Target further savings

in administration, operations & exploration

Manage conservative balance sheet +

Target further brownfield

exploration upside

4

Swiftly taken measures already delivered $145m of cost savings

ANNUAL RESULTS 2013

• Revenue of $622m • Adjusted EBITDA of $195m • EPS of ($0.15) • Final dividend suspended

Financial highlights

Cashflow optimisation programme

• Production costs reduced by $48m vs guidance • Admin costs reduced by $19m versus 2012 • Sustaining capex reduced by $33m vs guidance • Exploration costs reduced by $25m vs guidance

Financial position

• Cash balance of $291m* • Short term borrowings reduced to $18m* • 7 year 7.75% $350m Senior Notes issued

*As at 28 Feb 2014. Short terms borrowings do not include Hochschild’s convertible bond.

HOCHSCHILD MINING Ramon Barua, CFO

12 March 2014

6

P&L

$m (pre-exceptional) 2013 2012 variance

Revenue 622.2 818.0 (195.8)

Cost of sales (466.8) (420.3) 46.5

Gross profit 155.4 397.6 (242.2)

Administrative exp. (54.4) (73.0) (18.6)

Selling exp. (28.8) (39.5) (10.7)

Exploration exp. (42.9) (64.6) (21.7)

Others net (11.6) (0.8) 10.8

Finance net (1.0) (10.9) (9.9)

FX loss (19.8) (1.2) 18.6

Tax (45.0) (85.5) (40.5)

Net (loss)/profit (42.1) 128.6 (170.7)

Attrib. net profit (50.3) 64.8 (115.1)

EPS (0.15) 0.19 (0.34)

128.6

(42.1)

9.0

(158.5)

(16.1)

12.1

21.7

(18.6)

(20.3)

2012 Net profit

Volumes Prices Depreciation &

Amortization

Admin Exploration FX Others 2013 Net profit

2013 vs 2012 net profit reconciliation

$m (pre-excep post tax)

7

EXCEPTIONAL ITEMS

Main positive items ($m) Pre-tax Tax Post-tax Comment

Gain on reclassification of GRC shares

107.9 - 107.9 GRC reclassification from investment to available-for-sale financial asset

Reversal of impairment 14.4 - 14.4 Reversal of San Felipe impairment

TOTAL (122.5) 35.9 (86.6)

Main negative items ($m) Pre-tax Tax Post-tax Comment

Impairment of investments (124.9) - (124.9) GRC ($105.3m), IMZ (US$12.9m), Other ($6.7m)

Asset Impairments (104.1) 33.3 (70.8) Impairment of San Jose ($40.9m), Azuca ($30.3m), Crespo ($29.1) & Ares ($3.8m)

Employee redundancy expenses (8.3) 2.0 (6.3) Redundancy benefits paid resulting from cash optimisation programme

8

ALL-IN SUSTAINING COSTS REDUCED BY 14% AT MAIN OPERATIONS

Main operation AISC reconciliation (pre-exceptional)

$/oz Ag Eq

Cashflow optimisation programme reducing all-in sustaining costs

21.7 1.57 0.33 0.31

0.32 0.20 0.36

18.6

AISC 2012 Arcata dore Commercial discounts Selling expenses Capex Exploration Admin AISC 2013

-14%

Exploration costs reduced by $25m to $52m in 2013

Exploration budget reduced to approx. $30m for 2014

Majority to be spent on brownfield exploration

Focus on most promising greenfield projects

Admin expenses reduced by $19m in 2013

Reduced headcount + Revised compensation schemes

Professional & other admin fees minimised

Reduction in Board size/Directors’ fees/exec remuneration

Approx. $200m of annualised savings targeted Ongoing targets

CASHFLOW OPTIMISATION PROGRAMME ON TRACK

9

Focus on high value Inmaculada

Crespo project delayed - $80m of capex delayed

Volcan & Azuca project exploration suspended

Sustaining capex reduced by 18% to $147m in 2013

2014 sustaining capex budget of $130m

Production costs reduced by $48m in 2013

Main operation AISC forecast to fall by 0-5% in 2014

$145m already delivered

2014e

$30m

2013

$52m

2014e

≈$50m

2013

$54m

2014e

$130m

2013

$147m

2014e

$200m

2013

$120m

359

291

72

350

39 17

(271)

( 133 )

(71) (20) (19) (18) (14)

31 Dec 2012 Cash balance

Equity Bond GRC San Felipe IMZ Project capex Working capital &

others

FX Transaction fees

Dividends Andina 28 Feb 2014 Cash balance

10

Growth strategy financed

BALANCE SHEET ANALYSIS

Movement in cash balance

$m

Robust financial position

11

Growth strategy financed

CORPORATE REFINANCING COMPLETED

* Market value (as at 31 January 2014) of investments accounted for as available for sale financial assets **As at 28 Feb 2014. Does not include Hochschild’s convertible bond.

• Strong cash position: $291m

• Minority investments valued at $52.4m

• Inmaculada project fully funded

• $115m convertible bond (due Oct 14) fully funded

• Re-financing process completed

• $350m 7.75% Senior Notes issued due 2021

• Short term debt reduced to $17.8m**

• Forward sale of 4moz Ag Eq oz for 2014 ―2m Ag oz @ $22/oz ―33,000 Au oz @ 1,338/oz

HOCHSCHILD MINING Ignacio Bustamante, CEO

12 March 2014

13

Long-term strategy model

WE MAINTAIN OUR CONSISTENT STRATEGY THROUGH THE CYCLE

ACQUISITIONS

EXPLORATION

CORE ASSETS

OPERATING RESPONSIBLY

• Early stage

• Geological potential

• Highly accretive

• Control

• Arcata, Pallancata, San Jose

• 2014 target: 21.0moz (Ag Eq)

• Productivity/Resource quality strategy

• Advanced Project: Inmaculada

• Growth project: Crespo

• Growth project: Volcan & Azuca

• Focused exploration budget

Keeping to our core principles

CORE ASSETS: STRONG PRODUCTION BASE

• Consistent 2013 production performance at

core assets ― 2013 production target achieved: 20.5moz (Ag Eq)

― Main operation AISC reduced by 14% in 2013

• 2014 production target set at 21.0moz (Ag Eq)

― Further reductions in AISC expected in 2014

• Strong brownfield results ― Life-of-Mine increased to 10 yrs - 11% increase at Pallancata

― Geological potential at main operations still very promising

• Focus of brownfield programme for 2014 on

potential resource drilling improving LOM

quality

• Conservative cut-off and prices maintained (US$/Oz Au 1,200 and US$/Oz Ag 20)2

14

Current production Resource Life-of-Mine1

1Main operations were audited by P&E Consulting. 2Inmaculada reserves as published in the Feasibility Study released on 11 January 2012. Prices used for reserves calculation: Au: $1,100/oz and Ag: $18/oz.

5.8 7.1

8.7 9.7 9.8 10.0

2008 2009 2010 2011 2012 2013

(Yrs)

INMACULADA/PALLANCATA MINORITIES ACQUISITION COMPLETED

• Low risk, high potential return

• Transaction monitored since 2010

• Consolidation of assets already controlled and operated by Hochschild

• 100% ownership of largest cashflow generator & flagship project

• Set to lower Hochschild’s AISC

• Delivers production at no additional admin cost to Hochschild

• Strong geological potential in both assets

15

1

2

3

4

5

6

7

8

9

2011 2012 2013

IMZ share price C$

Transaction announcement

21.7 22.3

18.6 18.3 17.1

10

15

20

25

30

2012 2013 original assumptions

2013 2014 (e) Inmaculada full production(e)

$/oz Ag Eq Main operation All-in sustaining cost (attributable)

Strategic acquisition completed with no integration risk

Adding more lower cost production

Cash optimisation programme

Inmaculada

ADVANCED PROJECT: INMACULADA PROGRESSING WELL

• Gold-silver project located in Southern Peru Cluster

• 112 km from Pallancata

• Expected avg annual production: 64% Gold/36% Silver

• On track to begin commissioning in Q4 2014

• Environmental Impact Statement (EIS) and construction permit already approved

Overview Many more years of production potential

16

Production Data Total

Initial reserve Life of-Mine 6.3 yrs

Initial resource Life-of-Mine 11.3 yrs

Average Annual Gold/Silver Eq Production 194k oz/11.6m oz

Operating Costs and Capex

Direct Production Cost per Tonne $74/t

Cash Cost (Au, co-product) $527/oz

Cash Cost (Ag, co-product) $8.3/oz

Pre-Production Capex $373m

Feasibility Study Jan 2012: Operating Summary

Quellopata system

Angela vein

Selected key intercepts

[email protected] g/t Au & 1,851 g/t Ag [email protected] g/t Au & 531 g/t Ag

[email protected] g/t Au & 188 g/t Ag

[email protected] g/t Au & 81 g/t Ag [email protected] g/t Au & 81 g/t Ag

3.50m@ 7.12g/t Au & 369g/t Ag 1.50m@ 6.34g/t Au & 180g/t Ag

3.12m@ 31.55g/t Au & 199g/t Ag



Upside outside current Angela resource base

Plant progress: Main Equipment

51%

89%

100%

100%

88%

80%

87%

75%

49%

98%

11%

12%

20%

13%

25%

Overall progress

Construction (Plant, Dumps & Tailings)

Contracts & Procurement

EIS approval

Permitting (water, land, licenses)

Engineering

Mine Development (tunnels)

Electricity transmission line

Infrastructure & Access

Completed Remaining

17

17

Commissioning on track for Q4 2014

Overall project progress

INMACULADA ADVANCED PROJECT

Wet Vibrating Screen: Delivered May 2013

Oxygen Plant: Delivered July 2013

Slurry Samplers: Delivered Oct 2013

Primary Crusher: Delivered Oct 2013

Cyclone Cluster: Delivered Nov 2013

Agitators: Delivered Nov 2013

Flocculant Mixing System: Delivered Nov 2013

Clarifier & Thickeners: Delivered Nov 2013

Merrill Crowe Plant: Delivered Dec 2013

SAG Mill: Delivered Jan 2014

Ball Mill: Delivered Jan 2014

• Lime Slaker System: Due March 2014

INMACULADA MINE DEVELOPMENT: OVER 10KM OF TUNNELS ALREADY DEVELOPED

18

INMACULADA INFRASTRUCTURE AND ENERGY REQUIREMENTS ON TRACK

19

PRODUCTION IMPACT

Production uplift

20

*2017 production forecast includes an indicative contribution from the delayed Crespo growth project

Commencing 4 years of growth

0

10

20

30

40

2013 2014 2015 2016 2017

Expected attributable production capacity

20.5 21.0

M Ag eq oz

28.0

32.0

34.7

Crespo Inmaculada Ageing operations Core operations

GROWTH PROJECTS PIPELINE

21

Strong portfolio of projects across the Americas Volcan (100% owned)

• Acquired as future strategic resource

• Large Chilean gold deposit

• Water rights purchased by Andina

• 9.6m oz of gold resources

• Open pit project in S.Peru Cluster

• Expected 2.7m Ag Eq p.a.

• EIS already approved

• Remaining capex of $80m

Crespo (100% owned)

MEXICO

CHILE

ARGENTINA

PERU

Long term growth optionality

• Several veins delineated

• Over 100m oz of silver Eq resources

• Geological potential in district

• Large overall land package

Azuca (100% owned)

Current valuation

Current mkt cap: $1.2bn

Upside in current Hochschild valuation

22

$0.62bn

$1.2bn

Cash and minority

investments

Current producing assets

THE HOCHSCHILD PROPOSITION

$350m

$850m

Near-term upside

70% production growth

Inmaculada Total Resources: 150m oz

Ag Eq

Crespo Total Resources: 50m oz

Ag Eq

Long-term upside

Peru & N.Chile

Azuca Total Resources: 103m oz

Ag Eq

Volcan Total Resources: 9.5m oz

Au

Exploration optionality

Extensive project pipeline

Investment in Latin American exploration potential

SUMMARY: POSITIONED FOR GROWTH

23

CASH OPTIMSATION PROGRAMME DELIVERING

Strong operational flexibility to adapt to diverse market conditions

LOCAL ADVANTAGE Cluster in rich, mining friendly southern Peru region

SOLID RESOURCE BASE Proven ability to replace resources through brownfield exploration

CONSERVATIVE FINANCIAL POLICIES

Corporate refinancing swiftly completed

STRONG GROWTH POTENTIAL

Low risk acquisition and project development expected to bolster cashflow generation and lower average costs

COMPANY HISTORY Leading Peruvian mining house with +100 years of mining experience & 50 years of successful mining operations

EXPLORATION OPTIONALITY

Pipeline of opportunities spread across the Americas

46 Albemarle Street, London, W1S 4JL, United Kingdom – Tel: + 44 207 907 2930 www.hocplc.com

Charlie Gordon +44 207 907 2934 [email protected]

mailto:[email protected]

CORE ASSETS

• Located in Southern Peru Cluster - 4,600 MASL

• Underground operation - commenced in 1964

• Conventional and mechanised (trackless) cut-and-fill mining

• 2013 LOM: 11.6yrs

• 2013 All-in sustaining costs: $20.9/oz

• Current plant capacity: 2,500 t/day

Arcata

25

100% owned Pallancata 100% owned

• Located in Southern Peru Cluster

• Underground operation – commenced in 2007

• Mined using cut and fill

• 2013 LOM: 8.2yrs



San Jose 51% owned

• Located in Argentina, in Santa Cruz province

• Underground operation – commenced in 2007

• Low sulphidation type with quartz sulphide veins with economic silver and gold values

• 2013 LOM: 11.8yrs



2013 2012 % change

Ore production (tonnes) 900,861 773,498 16

Average silver grade (g/t) 217 271 (20)

Average gold grade (g/t) 0.74 0.83 (11)

Silver produced (koz) 4,984 5,526 (10)

Gold produced (koz) 16.83 17.27 (3)

Silver equivalent produced (koz) 5,994 6,562 (9)

Unit cost ($/t) 81.3 86.3 (6)

Total cash cost ($/oz Ag co-product) 12.7 14.5 (12)

All-in sustaining cost ($/oz) 20.9 23.9 (13)

2013 2012 % change

Ore production (tonnes) 1,088,712 1,094,250 (1)

Average silver grade (g/t) 264 256 3

Average gold grade (g/t) 1.13 1.09 4

Silver produced (koz) 7,628 7,441 3

Gold produced (koz) 27.83 26.23 6

Silver equivalent produced (koz) 9,298 9,014 3

Unit cost ($/t) 68.3 67.2 2



2013 2012 % change

Ore production (tonnes) 536,937 509,851 5

Average silver grade (g/t) 425 417 2

Average gold grade (g/t) 6.42 5.79 11

Silver produced (koz) 6,357 5,953 7

Gold produced (koz) 98.83 85.77 15

Silver equivalent produced (koz) 12,286 11,099 11

Unit cost ($/t) 210.0 202.2 4



1c annual results final

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