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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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.

Looks like Hochschild is starting to show a downward trend...sell now at 230p.

I don't have a problem with anyone, on this board or anywhere else. Thankfully I left all that behind with my teen years.

Well thats good to see Harry.

Lets get on with making money.

Glad to see you guys are friends again.

Bailed out on the drop....!...would have made more 2 days ago !.

Spot gold price fell sub $935. This drop was predicted & RRS, FRES, CEY, HOC etc all suffered as a result. Shorters came out in force. I also took late profit. However gold price predicted by some to test the $1000 level again within a week or two.

but POG was well up on the day, for an interesting reason

Yes, I saw that. Something to do with the ORE RNS today?

go to ORE thread ... have just posted the relevant article from Reuters

News, click HERE

Gone back in HOC long again.

The sp of silver at the moment is booming upwards along with gold re the dollar and quantative easing.

Good report here..

Short Squeeze in Silver - How to Profit

by: Jason Hamlin March 19, 2009

http://seekingalpha.com/article/126743-short-squeeze-in-silver-how-to-profit

Gold SP moving up very strongly aswell.

HOC is the place to be tomorrow I reckon especially with there being a sell off on the DOW and the FTSE this afternoon...



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John Embry: Gold and Silver Are the Ultimate Insurance Policy

by: Andrew Mickey March 11, 2009

http://seekingalpha.com/article/125324-john-embry-gold-and-silver-are-the-ultimate-insurance-policy

The Mother of All Depressions (MOAD)

http://www.321gold.com/editorials/moria ... 1909a.html

Bob Moriarty
Archives
Mar 19, 2009

The US government lit the fuse to the $683 trillion dollar derivative's debt bomb on Wednesday March 18, 2009 with the announcement the Fed would purchase $300 billion dollars worth of US Treasury used toilet paper and an additional $750 billion dollars worth of mortgage backed used toilet paper. In total the commitment to counterfeit over a trillion dollars leaves only $682 trillion dollars worth of derivatives to sort out.

Economics is all about price discovery. No one knows what the real value is of the $683 trillion dollars in derivatives. No one knows who owns what. No one knows who owes what. If left to its own devices, the market would lower prices until all assets had a value to someone. The government in its infinite wisdom has just short-circuited this discovery mechanism.

This is the end of the dollar. Everyone with any sense on earth will be unloading both their treasuries and mortgage-backed cr?p on the Fed. The Fed has just p????d $1 trillion of counterfeit money into a $683 trillion dollar cesspit. It can't possibly fix the problem. When the world realizes the impact of the Fed monetizing all debt, there will be a total default. And then what happens?

The Mother of All Depressions.

The ability to publicly fund its debt has been what has kept the US government spending. Once that ability is dead, so is the government.

The meeting of the G20 in London on April 2, 2009 will be the most important financial meeting in history. If the delegates do not adopt a new gold standard of honest money, the dollar will totally default within a few months. The fuse has been lit. There is nothing the government can do beyond what they have already done. Nothing has worked. Nothing can work.

Bob Moriarty
President: 321gold