November 08, 2006
Hochschild Gives A South American Boost To Londons Mining Sector


Quite a feather in Londons cap to have Hochschild Mining taking a full listing. At first glance Toronto or New York might have seemed a more logical destination, but the Sabanes-Oxley Act has meant that compliance requirements in North America have reached stratospheric levels and London looked more attractive, though a full listing on the LSE is certainly no walkover. Geographically, also, it has advantages as both JP Morgan Cazenove and Goldman Sachs International, the joint sponsors, joint global co-ordinators and joint bookrunners for the IPO are both based in London, as are Canaccord Adams the co-lead manager and Nomura International, the co-manager. The shares were placed at 350 p each to raise around 270 million from institutional investors in the UK, Europe, the US and Canada. On this basis its market capitalisation is just over 1 billion which takes it straight to 99th position in the FTSE 250 Index and makes it worthy of consideration by all types of investors.

The history of this Peruvian mining company is fascinating as it comprises the mining operations of the Hochschild Group which was founded in Chile in 1911 by Mauricio Hochschild. After World War 1 it expanded into Bolivia where the target was tin and it did not start its Peruvian operations until 1925. Even then it stuck to metal trading and beneficiation until the 1940s and during the 2nd World War the Group was a key supplier of tin and other metals to the allied forces. The next major advance came in the 1960s when the Arcata mine was developed in Peru and it is still in production today. Over the next ten years or so more mines were opened in Brazil, Peru and Chile such as the well known Mantos Blancos copper mine in Chile.

It is here that the history gets a bit complicated as in November 1984 Anglo American bought the South African mining operations of Hochschild Group and immediately sold the Peruvian operations to Luis Hochschild who is clearly a descendant of the founder, though the exact relationship is not clear. Anyway it is his son Eduardo who is now executive chairman of the company, having started as a safety assistant at Arcata in 1987 and working his way up to be boss of the company 12 years later. At the executive level he is supported by Roberto Danino as deputy chairman and Alberto Beeck which is director of strategy and corporate development.

The operations sold back to Luis became the basis of Hochschild Mining which then launched an aggressive expansion campaign in Peru as well as in Mexico, Argentina and Chile. In order to spread the financial risk joint ventures were agreed with other local and overseas mining partners to develop the San Jose, Pallacanta, Mina Moris and San Felipe projects. Hochschild Mining is now the fourth largest silver producer in the world with an output of around 10.5 million ounces plus just under 250,000 ounces of gold in 2005. In that year its cash costs of production amounted to US$2.65/oz for silver and US$169/oz for gold which puts it in the first quartile of the 2005 global cost curve for both metals.

Its specialisation is in epithermal vein deposits and it currently has three underground mines Arcata, Ares and Salene - in production in southern Peru. Next up are two advanced and two early stage development projects in Argentina, Mexico and Peru and then a swathe of prospects at various stages. The overall strategy is to bring a sequence of these projects into production and the aim is to push towards annual production of 50 million silver equivalent ounces, or 830,000 gold equivalent ounces if preferred, by 2011. This is quite an uplift from the 2005 figures, but Hochschild is not the sort of company which would risk undershooting a declared target, so it may err on the conservative side.





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Quite a Sterling performance over the past few months if you'll pardon the pun!

Entered again long on weakness late morning 259p.

Still think in the medium term 300p and above is on the cards

Feb 23 2009 10:08AM

Silver Is Again Outperforming Gold

http://www.kitco.com/ind/Turk/turk_feb232009.html

Suprised its been so negative today, Investec gave it a Buy late yesterday..

Hochschild Mining PLC

FORECASTS
2008 2009
Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Investec Securities
23-02-09 BUY 126.55 20.66 5.06 76.26 11.44 5.06

I expect the fact that the price has done nothing but rise from 160 must be the main reason for 10% fall

yep the slope on the chart is rather extreme.

Looks like buyers coming back in though in strength.

Still expect it to go through 300p medium term.

DOW dropping like a lead weight silver sp rising fast.

25/2/2009
Broker Snaps

Mining

Hochschild Mining UBS increased its target price from 195p to 270p.

Fresnillo UBS has - increased its target price from 395p to 480p.

Hochschild Mining PLC

FORECASTS
2008 2009

Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Investec Securities
23-02-09 BUY 126.55 20.66 5.06 76.26 11.44 5.06

Canaccord Adams
19-12-08 BUY 19.60 5.41 31.09 6.08

2008 2009

Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Consensus 126.55 20.21 5.21 76.26 19.72 5.49
1 Month Change 0.00 0.01 -0.00 0.00 -0.25 -0.01
3 Month Change 28.02 0.06 -0.30 27.54 4.53 -0.14


GROWTH
2007 (A) 2008 (E) 2009 (E)

Norm. EPS 37.35% 47.99% -2.43%
DPS % 277.25% 5.47%

INVESTMENT RATIOS

2007 (A) 2008 (E) 2009 (E)

EBITDA 65.75m 173.65m 147.85m
EBIT 53.19m m m
Dividend Yield 0.55% 2.08% 2.20%
Dividend Cover 9.90x 3.88x 3.59x
PER 18.30x 12.37x 12.68x
PEG 0.49f 0.26f -5.21f
Net Asset Value PS 91.26p p p

you left out a bit .... HOC downgraded by UBS though target price increased .... good political statement from them!

Dont agree see this cynic...

UBS: Will Silver Outperform Gold?

by: FP Trading Desk February 25, 2009

http://seekingalpha.com/article/122511-ubs-will-silver-outperform-gold

i wasn't guessing .... UBS have downgraded HOC to neutral from buy

Gf, for every article you post, there is a contrary article somewhere else.
Ironically a 'Contra Gold' article appears on the same website:
http://seekingalpha.com/article/122537-gold-correction-now-more-likely-than-not?source=article_lb_articles
Tricky one to call at the moment (Gold/silver), but beware of being steamrollered by your own enthusiasm.

Thanks for the cautionary word Harry.

Got a hedge in Banks in place so risk is limited...... well hopefully.

You cant talk down what you see before your very own eyes though.

Dow was tanking fast this afternoon, silver and gold pulled off lows and started to really accelerate and I mean accelerate upwards.

I had both life charts up along with the DOW.

God knows where we are going from here.

regards.

Hi Harry again,

after the heat of the day and now having had time to digest your post above.. 118.

Do you not feel it would have been far better for you to post a life link???????????.

Im all for both Bull and Bear persuations (and free speech) but your response gives the impression of half - heartedness, in fact some would say its robbing them of the whole picture re- Bull/Bear debate on the future price of Silver and the related direction of the markets going forward.

Im sure this is not due to idleness on your part but a fuller contra view posted by your goodself would be much appreciated Im sure In future by myself and other posters.

regards

GF.

GF For what it is worth,what you say makes good sense to me at any rate.After all,the price of silver was worth $20. an ounce a year ago.Surely the criteria for the price being higher is rather stronger now!

Gf, my intention was to just moderate your stance on Gold, which you have been promoting on nearly all of the gold miner BBs. You seem to regularly post articles which support your bull stance, but rarely any articles which express a contrary view. Of course you are entitled to your view, but I felt you were becoming a victim of your own hype (i.e you wanted it to happen so much that you may have become blinkered to other factors). My link above was merely an example of a contrary view from the same page as the one you posted.
As for posting hyperlinks, I am sure you are capable of copying & pasting, which you should really always do, as a hyperlink can take you absolutley anywhere regardless of what it says in the text.

Harry...." moderate my stance on gold" !!!!!!!!!!!!!!!!!!!!!!!!

Hadnt realised you were a Money AM board moderator.

And why on earth should I post contra views to my own, surely thats up to other posters like your goodself if one disagrees.

Well that is when you can be assed to post a life link.

Surely the individual poster here on this board can DYOR. Remember this Im not here to hold ones hand.

Ive been in this business for 28 years thankyou and am quite capable of looking after myself. I make mistakes we all do.

During a day when Im intra day trading do you really expect me to go into great depth on a subject and give every angle?????, stop talking bloody silly.

Stop being a 'jobsworth' or I might just turn the tables and track you and then put my pro accountancy experience to work on your posts as you post them.

what's up "shitty digit"? .... sense of humour failure? ..... surely not made a bad call somewhere?

can't wait to return to the cold and gloom of UK this evening!

he he, thought you might love this situ and was waiting.

No sorry cynic enoughs enough, if Harrys got a problem with me then he can put if forward here in the open on the board and Ill take on his views.

I wouldnt mind but the bloke goes on about links but cant even be bothered to post a live link, now what does that say for his respect for fellow board members????????.

It says to me the man as his head in the clouds and is playing silly devils
and is self interested.