Hochschild Mining PLC
Full Year 2023 Results
13 March 2024
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, actual results may vary or differ from those expressed in such statements, depending on a variety of factors. Forward-looking statements speak only as of the date on which they are made. Hochschild Mining plc undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Past performance of the Company or its shares cannot be relied on as a guide to future performance. Nothing in this
presentation is to be construed as a profit forecast.
This presentation has been prepared solely for informational purposes and 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 securities issued by Hochschild Mining plc (or any subsidiary thereof) 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. The information herein is only a summary, does not purport to be complete and has not been independently verified. No representation or warranty, either express or implied, is made as to, and no reliance may be placed for any
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A Year of Delivery
ESG
- Strong 2023 ESG performance
Resilient operational and financial performance
- Revenue: $694m
- Adj. EBITDA: $274m
- EPS $0.02
- AISC: $1,454/oz below revised guidance
Growth
- Mara Rosa (Brazil): ramping up on time and on budget
- Low-cost,high-grade Royropata project progressing permitting
- Option secured for Monte Do Carmo project, Brazil
- Inmaculada permit secured for 20 years
Capital discipline
- Cash: $89m
- Net debt: $258m
- Focused on debt repayment, growth, and capital return
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*Gold equivalent ounces
ESG: Driving responsibility and respect
- Record safety results
- Lost Time Injury Frequency Rate : 0.99
- Accident Severity Index: 37
- Best environmental performance since KPI inception
- ECO score: 5.76 out of 6
- Mara Rosa 5m+ hours injury free
- Increased total local workforce to 59%
- Strong support to communities
- $8.2m invested
- $156m value of goods & services procured from local providers
LTIFR
1.38 | 1.26 | 1.37 |
1.05 | 0.99 |
Accident Severity Index
676
474
ECO score
5.74 | 5.29 | 5.27 | 5.76 | |
4.82 | ||||
54 | 93 | 37 | ||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2019 | 2020 | 2021 | 2022 | 2023 |
2019 | 2020 | 2021 | 2022 | 2023 |
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Hochschild Mining PLC
2023 Financials
Eduardo Noriega, CFO
P&L
$m (pre-excep) | 2023 | 2022 | variation |
Revenue | 693.7 | 735.6 | (41.9) |
- Revenue 6% lower than 2023:
- MEIA delay, scheduled lower production at Inmaculada/Pallancata, lower San Jose grades
- Partially offset by higher prices
Cost of sales | (508.2) | (527.6) | 19.4 |
Gross profit | 185.5 | 208.0 | (22.5) |
Administrative exp. | (47.2) | (54.2) | 7.0 |
Selling exp. | (14.9) | (14.0) | (0.9) |
Exploration exp. | (21.3) | (56.8) | 35.5 |
Others net | (20.0) | (37.8) | 17.8 |
Sales volumes
- 9% | (000z) | - 15% | |
242.9 | 13.5 | ||
221.4 | 11.5 | ||
Gold | Silver |
Realised prices
+ 10% | ($/oz) |
+1%
1,791 | 1,974 | |
23.3 | 23.6 | |
Gold | Silver |
Operating income | 82.1 | 45.2 | 37.0 |
Share in associate | (2.3) | (1.7) | (0.6) |
Net interest | (10.7) | (16.6) | 5.9 |
FX loss | (15.6) | (2.6) | (13.0) |
PBT | 53.5 | 24.3 | 29.2 |
Tax | (44.0) | (17.6) | (26.4) |
Net profit | 9.5 | 6.7 | 2.8 |
Attrib. net profit | 9.0 | 4.9 | 4.1 |
EPS | 0.02 | 0.01 | 0.01 |
Adjusted EBITDA | 274.4 | 249.6 | 24.8 |
• Cost of sales fell 4%:
- Lower production
- Partially offset by higher % of conventional mining & higher depreciation
• Exploration lower: termination of Snip option & deferrals from Inmaculada MEIA delay
• Net interest lower:
- Capitalisation of interest expenses from Mara Rosa construction (+$15.7m)
- Partially offset by higher net debt and increase in interest rates (-$13.6m)
• FX Loss: impact of Argentinian currency devaluation on monetary assets (-$15.5m)
• Income tax includes:
- FX impact on deferred income tax in Argentina (-$7.1m)
- Special Mining Tax/Royalties in Peru (-$6.8m)
• Exceptional items: (-$69.5m)
- Azuca & Crespo impairments: market conditions and inflation (-$63.3m)
- San Jose impairment: inflation and increased country risk (-$17.4m)
- | Pallancata: restructuring charges due to C&M decision (-$9.0m) | 6 |
- | Aclara impairment: higher risk from permitting (-$7.2m) | |
- Tax effect (+$27.4m)
Balance sheet: evolution of 2023 cash balance
30 | Mara Rosa | 2023 | ||||||||||||
Construction capex | 121.1 | |||||||||||||
(4) | ||||||||||||||
145 | Exploration & Admin | 4.0 | ||||||||||||
(17) | ||||||||||||||
FX effect | 3.5 | |||||||||||||
260 | Aggregates project | 2.5 | ||||||||||||
(47) | (10) | 226 | ||||||||||||
25 | ||||||||||||||
(23) | ||||||||||||||
(18) | (5) | |||||||||||||
144 | ||||||||||||||
89 | ||||||||||||||
(131) | ||||||||||||||
Dec-22 | Inmaculada | San Jose | Pallancata | Brownfield | Admin | Cash | Taxes paid | C&M/ | Net | WK & | Net loans & | Cash | Mara Rosa | Dec-23 |
exploration | Closure | interest | others | Borrowings | ||||||||||
7 |
Costs
All-in sustaining costs*
($/oz)
HOC operations
(Au Eq)
Inmaculada
(Au Eq)
San Jose
(Ag Eq)
Pallancata
(Ag Eq)
AISC moderately higher than 2022 but lower than 2023 revised guidance:
- Inmaculada: Higher costs - higher proportion of semi-mechanised mining (vs mechanised) and delay in MEIA approval, partially offset by savings/grades
- San Jose: Lower vs 2022 & revised guidance - mainly FX partially offset by lower grades
- Pallancata: Lower vs 2022 - lower capex, exploration expenses & production costs
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Capital Expenditure
Sustaining and development capex
($m)
HOC operations
137 | 131-140 | 129 |
2022 | 2023 rev. guidance | 2023 |
Inmaculada
77 | 87-93 | 86 |
2022 | 2023 rev. guidance | 2023 |
San Jose*
48 | 42-44 | 41 |
2022 | 2023 rev. guidance | 2023 |
Pallancata**
12 | 2-3 | 2 |
2022 | 2023 rev. guidance | 2023 |
Project capex
($m)
Mara Rosa***
121 | ||
100-110 | ||
67 | ||
2022 | 2023 rev. guidance | 2023 |
Capex lower than guidance:
- Inmaculada: MEIA delay causing delays to mine projects and development
- San Jose: FX devaluation and sustaining capex savings
Mara Rosa capex higher than guidance:
- Accelerated construction capex ($121m)
- Remains on budget with cumulative capex at $189m (as of 31 Dec 2023)
- On track to meet $200m budget despite recent severe rainy season
*Not included: $3.0m of capitalized depreciation & $3.8m of deferred capital leases (mine equipment) | 9 |
**Not included: $4.1m of work at Royropata
***Not included: $18.7m of capitalised interest; $3.5m of FX variations; and $2.5m of construction aggregates project
Financial flexibility to fund investment and capital returns
• Cash: $89m | Net debt/EBITDA |
• | Net debt: $258m | (x) | ||||||||||||
Investment phase | Return phase | Investment phase | ||||||||||||
• | Net debt/EBITDA: 0.9x | (Inmaculada) | (Mara Rosa) | |||||||||||
2.6x | ||||||||||||||
- Targeting 0.5-1.5x through the cycle | 2.5x | 0.7x Peer | ||||||||||||
• Hedge programme to protect cashflows: | median* | |||||||||||||
1.5x | ||||||||||||||
0.9x | ||||||||||||||
KozAu/yr | Price($/oz) | Yr | Country | 0.7x | ||||||||||
0.6x | 0.3x | 0.3x | ||||||||||||
100 | 2,000-2,252** | 2024 | Peru | 0.5x | 0.1x | |||||||||
(0.1x) | (0.2x) | |||||||||||||
60 | 2,000-2,417** | 2025 | Peru | |||||||||||
27.6 | 2,100 | 2024 | Brazil | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
50 | 2,117 | 2025 | Brazil | Net Debt / EBITDA | Upper target | Lower target | ||||||||
50 | 2,167 | 2026 | Brazil | |||||||||||
50 | 2,206 | 2027 | Brazil |
- Aim to distribute value generated from investment cycle
- Reconsidering capital return following Mara Rosa production start
Dividends paid
($m)
20 20 21 22 22
14
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
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*Peers include Coeur, Buenaventura, Aura, Newgold, Aris Mining, Anglogold, Fortuna, Fresnillo, Pan American, Centamin, Endeavour ** Zero Cost Collars
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Hochschild Mining plc published this content on 13 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 March 2024 07:17:12 UTC.