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Hochschild Mining plc

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September 16, 2024 at 11:20 AM (MDT)|Broadmoor Hotel & Resort

Eduardo Landin

CEO

Eduardo Landin became CEO of Hochschild Mining PLC in August 2023. Prior to that, he served as COO of the Company from March 2013. He joined the Company in January 2008 as General Manager of Argentinian operations. In 2011, he became General Manager of Projects with direct responsibility for the development of the Inmaculada and Crespo Advanced Projects. Before joining the Company, Mr. Landin held the position of Corporate Development Manager at Cementos Pacasmayo, an associate company of the Hochschild Group and prior to that, served in the Government of Peru's Ministry of Energy and Mines and worked for Repsol S.A. in England, Spain and Peru for over 10 years. Mr. Landin is a British Chartered Mechanical Engineer and holds a B.Eng (Honours) in Mechanical Engineering from Imperial College, London and an Executive MBA from the Universidad de Piura, Peru. He is also a Fellow of the British Institution of Mechanical Engineers.

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Yeah. Is it much? Ok, good morning, everyone and welcome to the Host Shield Mining presentation. I mean, today, I'm going to give an update of, of social mining operations and projects based on our H one results. the key takeaways for this h one result is that we have had a very strong esg performance, revenues went up 25% to $392 million. Evita went up 79% to 100 and $78 million and our rolling is 1510 which is better than our expected guidance. The growth projects are in place. Today, we have the new Mar Rosa mine in Brazilian production. We have a new option by $50 million. A again in Brazil called Monte do Carmo and the option is secure. We are doing some work to see if we exercise the option. And we have rural Pata in Peru in the same place where we used to have our Payan Cata mine that we are progressing with the permits in terms of capital discipline. we have $89 million at 30th of June. our net debt is 271 and we are focused on debt repayment growth and capital return before going into the next. Well, you know that Jo mine is a, is a a gold and silver producer on the ESG front. We have had a very, very good performance. Our lost time accident rate has been one, 1.09. the accident rate severity 62. And we have been performing extremely well well on ESG to give you some samples. we have increased the local workforce up to 61% and also the local procurement has been increased from 17 to 23%. So in summary, ESG is extremely important for us. We need to continue improvement in all the in all the areas going to the next. We define a very simple strategy back in October last year. Basically, we believe that we can create a lot of value through brown fields. Brown field. We have demonstrate that we are able to bring new resources in all our sites. We'll be able to extend our life of mind. And the idea is to have more than 10 years in each site. And of course, we are focused on manageable resources that mean that I mean, it's not worth it to do a lot of brown field drilling. If the resources are not going to be converted in reserves, the operational efficiency. We have established Salim philosophy across the company process optimization. And of course, we have demonstrate I Mara Rosa that we are a company that, that we know how to develop a project on time and on budget. I have already said that ESC is extremely important for us. And that's the reason we have a world class safety performance and we have set all the KPIS for 2030 in all the aspects of ESE and the fourth pillar is the discipline capital allocation where we believe that with our balance sheet, we can fund the organic growth, we can debt, I mean, we can pay the debt also, we can establish some capital return. And of course, as we have demonstrate in Mara Rosa and we will demonstrate in Monte do Carmo, we can create value through M and A. This is the projections on production and cost all in sustaining gas costs that we presented in October. We believe that we will be able to maintain this for 2025. As you can see, Hoi will produce around 350,000 ounces of gold. And the idea is to lower down cost during 2025 and reach the level of 302,400. On top of this production from 2028 onwards or maybe earlier in Monte, Do Carmo, we will bring 100,000 ounces of gold with a very good O in Susan in Cascos. And also we have Royo Pata which is this project that I will mention later during the presentation inmaculada, as you know, we got last year in August our permit, environmental permit for 20 years. And so that means that now today we have the possibility to continue exploring. And the idea with immaculate is to maintain 200,000 ounces with a holding of around 1300. Last year, we designed a project to increase the throughput of the mine. So together with the consultant, we have make many improvements especially on ventilation better mine support, incorporating marginal cut of grades, shift change optimization with the unions or control and blasting lengths production. This year is going to be above guidance. So we are doing extremely well. And the, the reason why the cost is a little bit higher than past years is because see, we didn't have the, the, the environmental permit on 2022 and 2023. This year, we have to incorporate $45 million on those aspects. TSS expansion, waste rock fa facility, reverse osmosis plan and mine development. But everything is going on today and everything is is in place. The good news about the immaculate is that we have a huge brown potential brownfield potential. This year, we believe that we will be able to bring 0.7 to 0.85 million ounces of gold equivalent in the area of Tesoro Nicolas and Carri. That's the blue dot up there. But also we believe that the potential of brown fields is for the next four years is that as a minimum will bring 0.5 million ounces of gold for next year with a grade of 500 g of silver equivalent per year. In Brazil, we feel very comfortable as a country. We have a very good experience in Brazil. as you know, Marar Rosa is located in Goa. It's a very friendly jurisdiction is our open pit operation now in commercial production and the the project was complete on time on budget Maar Rosa. We have to recognize that we had a very ambitious budget timeline or originally implemented. But at the end, we were able to reach commercial production on May 2024 after 90 days of normal ramp up with the typical mechanical challenges that they are totally resolved. Today, we are running a 7000 tons per per day producing 7000 ounces minimum 7000 ounces per month of gold. And we will give to the market on Q three, a new guidance on production. At the end of Q three, you have some pictures there of how we, we are managing the dry stack, which is in very good, in very good shape. Also in Marna Rosa, we have a great brownfield potential as you can see on the sheer song of Jose, which is the actual open pit. We have many possible brownfield resources and we are drilling that and the idea is to bring 1 million ounces to basically double the resources at Mar A Rosa for now and until 2030 that means that on 2030 we could have something like 15 years life of mine going to the second project in Brazil called Monte Caro. This is an option that we sign with feral gold. I've been there three weeks ago. It's a fantastic place we were received by the authorities. They are like goa is a fantastic jurisdiction to develop a new project. It has, it is pretty close to Mara Rosa. Tocantins is north of Goyas and this project has a feasibility study and also they have the environmental permits. So basically today, what we have is 700,000 ounces with 1.6 g. What we want is to bring 100,000 ounces with similar grades. And if that is the case that we will execute the option and we will have our second project in Brazil. going to the next this is the second project growth project in, in Peru. That's Royo Pata. And that's a project that is in the same place as used to be the mine of Payan Cata. Payan Cata. Mine was operated from 2007 till 2019 where we put it on car maintenance because basically the area where we were operated, it has a environmental permit. The new resource called Roo Pata is next virtually next door. So all the infrastructure of mine of the Payan Cata mine is going to be used on this resource. to give you an idea. Today, we have 50 million ounces of silver equivalent with a 500 g of silver with a mineralization of 5 m. So it seems like a very profitable place. And in terms of exponential potential this year, we believe that we will be able to bring another between 3035 additional resources. And of course, the Royo Baa Belt is open. So I mean Royo Pata is the next Peruvian host mining operation is a mine that could produce 100,000 ounces with a very good oil in sustaining c cost. And we believe that we can get the permit between now and 2027. All the lesson learned from inmaculada permit were were implemented in Royo Pata. But the issue at the moment is that we negotiate, we are negotiated the easement with the communities. And as you probably know, we can start the permits until this ments are finalized. So we invest in that process. We believe that we will be able to do so in November and from November until 2020 say will be the normal process to get the new permit. So production from Royal Pada could be from 2028 onwards. San Jose is a, is a an operation in Argentina that we have been operating for many years since 2008. Today, we have a new project of expanding capacity for $9 million to reach 2000 tons per day and basically is to be more competitive in terms of cost. But I would say that San Jose has been producing between 100 and 20 100 and 40,000 ounces of gold. It has very, very good grades. We believe that we are exposed to the new macroeconomic situation of Argentina from 2025 onwards. I mean, if it's true that Argentina make an important evaluation of 30% on 2025 that would mean that our cost would go down 20 25%. But I have to say that this year, we are making a lot of money with, with actual prices, we are making money in Argentina, something like we have a, I mean cash of $40 million. And that's only for the H one results also in Argentina. In line with our strategy, we have a lot of potential on brownfield. And this year, we have been able to replace our production of 2024. So 2025 has will have a new year of life of mind. But also we have a great opportunity called Tel and Tel is right behind the Negro property. We believe that in that mining property, it will have the continuation of the fro negro veins. So it's something that we are going to drill from now until the end of the year and probably will present results at the end of the year. As you can see, we have been able to improve our margins. H One results 2024 has show a 45% Evita margin and it's something that it will, I mean if the price stay as, as current level, I mean, this margin will stay in time and of course, it will improve once Mara Rosa is in full production during H 1 2024. In this slide, you can see our financial flexibility and this graph is pretty pretty, pretty good because it shows how the company increase the debt ratio when we have to invest and once we have invested, then we reduce it today, our debt ratio is around 0.8. So we believe that, I mean, we have the balance sheet to continue investment without getting into more debt. And of course, if prices stay at current level, we will be able to repay debt. We believe that we are still in a price out performance situation. But we have to recognize that we have a great performance in our share in our share during this year. But I mean, there is still a space, I mean, we are able to reduce cost. of course, develop the growth opportunities that we have. I mean, the price of the share of whole share could go up a lot. So it's an incredible opportunity for the investors. Basically, as a conclusion, I would say that we continue focus on core business, increasing production and lowering cost. We have a company that will produce 350,000 ounces of gold with a very all in sustaining cash cost with two opportunities to go up to 500,000 ounces with very good all in sustaining cash cost. We have a world class ESG performance. We have this new low Brazil as set in production. I Maada is performing extremely well. The option is secure in Brazil for a new project. We have very strong h one brownfield progress. We will present our new resources at the end of the year, Roy O Pada to deliver 100,000 ounces of gold. But it will be a silver mine with an extremely good mineralization. And of course, all that with a very strict discipline, capital allocation strategy. Thank you very much. And if there is a question, I will be very happy to answer. Thank you. We do have a couple of minutes for questions. If you have a question, please raise your hand so that a microphone can be brought forward. Maybe while you guys c overcome your shyness. quick question for me, I noticed that there's AAA bit of hedging involved and presumably that was part of the debt package or is that a conscious choice that you made as you were going through a capital deployment period? Sorry, your, your hedging program, was that a requirement of the debt or is that something that you put in place to moderate your cash flows as you were going through a capital deployment period? Well, let me say that we don't have a a hedge strategy. I mean, it's a opportunistic thing that we do. We did these hedges because we were building Mara Rosa and we believe that it was a very good opportunity at that time. But the truth is that today, we have 30% hedge on 2025 and we have 70% of the production. I mean, exposed to new prices. So, I mean, in conclusion is that we don't like to hedge, but we take some opportunities to hedge if we are putting some Capex, you know, developing, developing a project that's basically the, the, the idea and that does take us to conclude to the end of time. So please join me in. Thanking Eduardo. Thank you.


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