Mining Industry Fair Value Head of Research Senior Analyst … · 2020-03-31 · 1. Expansion...

Alberto Arispe Maria Belen Vega

Head of Research Senior Analyst

(511) 630 7500 (511) 630 7500

[email protected] [email protected]

Volcan Cia Minera

Equity's Fair Value (PEN million)

Share's Fair Value (PEN)

Recommendation Neutral

Market Capitalization (PEN million)

Share's Market Value (PEN)

VOLCAAC1 i. Revenue diversification:VOLCABC1

Shares Outstanding (million)

Potential Appraisal

Range 52 weeks 2.11 - 3.45

YTD Change

Trading LSE, Madrid Stock Exch.

Santiago Stock Exchange

ADTV - L6M (PEN million)

ADTV: Average daily traded volume

L6M: Last Six Months

ii. World – class mining producer:

Table 1. Volcan's production in the Peruvian ranking (2010 - 2011)

Financial Ratios

P / E

P / BV

P / EBITDA

Debt / EBITDA

ROE

ROA

Source: SMV, Kallpa SAB

iii.

Chart 1. VOLCABC1 vs Zinc Spot

iv.

Source: Bloomberg

A mining and energy & power project portfolio supports the

company’s future growth.

In addition, the capacity of energy & power generation for its own

necessities is one of Volcan’s main advantages. Currently, it

generates 17% of its energy & power requirements; however, in

2012 it would generate approximately 50% and in 2016 it is

expected to approach 100%, reducing significantly the operative

costs.

The implementation of mining projects (expansions in current

operations, metallurgical projects and new projects) will generate a

significant production growth. In 2014, we expect Volcan to

increase its silver production in 55%; and in 2015, with Rondoni’s

project implementation it will increase its copper production in

900%.

0.02 1.05 0.68

27% 19% 23%

18% 10% 13%

Note: The exchange rate is PEN 2.6 per USD.

1 The fall in 2011's production was related to a lower mineral treatment in Cerro de Pasco UEA, as

a consequence of the operating optimization program.

A competitive cost structure (sub – products) enables the

company to confront metal price volatility.

September 28th 2012

Mining Industry Fair Value

PEN 3.32Neutral

(LSE: VOLCABC1)

11,826

3.32

EQUITY RESEARCH | Update

Volcan Compañía

Minera

Kallpa SAB updates Volcan Cia Minera (Volcan)’s valuation

recommending to maintain its shares within a benchmark portfolio for

the Peruvian market. Our PEN 3.32 fair value per VOLCABC1 share

is 14.51% higher than its PEN 2.90 market price as of closing of

September 27th 2012.

13.92 17.05 11.85

2011 2012e 2013e

Poly – metallic mining company: zinc, lead, silver and copper.

Silver and zinc represented 48% and 42% of the company’s

revenue in 2011, respectively.

3.70 3.25 2.67

9.38 7.51 8.78

11,903

4.40

2.90

14.51%

2,038

5.73%

3.90

Investment thesis: Neutral

It operates through three mining units (UEA): Yauli, Cerro de

Pasco and Chungar. Within its 3 UEAs, it has 8 operative mines

and 6 concentration plants. Yauli, main UEA, represents

approximately 50% of the company’s income.

Volcan contributed with 27% and 29% of zinc and lead domestic

production, respectively. In addition, it is the world’s sixth zinc &

silver producer and the ninth lead producer.

1,000

1,300

1,600

1,900

2,200

2,500

2,800

1.5

1.8

2.1

2.4

2.7

3.0

3.3

3.6

Jan

-11

Feb

-11

Mar

-11

Ap

r-1

1

May

-11

Jun

-11

Au

g-1

1

Sep

-11

Oct

-11

No

v-1

1

Dec

-11

Feb

-12

Mar

-12

Ap

r-1

2

May

-12

Jun

-12

Jul-

12

Sep

-12

USDPEN VOLCABC1 Zinc

2010 2011 Metal Production Rank Production Rank ∆ YoY

Zinc FMT 349,643 2° 318,435 1° -8.93% Lead FMT 66,516 1° 62,011 1° -6.77% Silver Oz 20,080,000 1° 21,136,000 1° +5.26%

mailto:[email protected]


Mining | Volcan Compañía Minera

The valuation’s main assumptions are the following:

i. Mining production

Chart 2. Revenues by metal - Q2 2012 Table 2. Fine concentrates - Historical production

Source: Volcan, Kallpa SAB

i.i Unidades Empresas Administradoras (UEA) - Mining Units

Picture 1. UEAs - Locations Table 3. UEAs - Description

Source: Volcan, Kallpa SAB1

Currently, Chungar's concentration plant operates 4,500 tons per day.

www.kallpasab.com 2

Main metals (silver and zinc) represented 90% and 87% of the company’s revenue in 2011 and Q2 2012,

respectively. In addition, copper and gold production represented 3% and 0% of the company’s income in

2011 and 3% and 0% in Q2 2012, respectively.

Actually, the production is carried out through its three Mining Units. However, Volcan has mining projects in progress

that will enter into production in the next 3 - 4 years.

Three expansion projects in mining units currently into production are being executed in order to expand the mineral

treatment capacity: Victoria & Andaychagua (Yauli) and Animon (Chungar). These projects will start up operations in late

2012 and involve a USD 15 million investment. Since 2011, an operating optimization process is being carried out in

Cerro de Pasco UEA, that conducted to an increase in treated mineral. The process target is to reinforce the

underground mine’s operations and the mining unit’s reorientation, turning it into Volcan’s main silver contributor with

the implementation of metallurgical projects. Currently, Cerro de Pasco UEA operates at 50% of its installed capacity, we

expect it to gradually reach 100% of its installed capacity by 2014.

Volcan’s Valuation

We value Volcan using the Discounted Cash Flow to the Firm methodology @ 9.0%. The valuation’s analysis period is

between 2012 and 2016, and then we assume a perpetual flow with a 2.5% constant growth rate. We value each single

UEA and mining project, without including exploration projects (blue sky ).

Volcan has a limited amount of reserves/resources (more than 37 years LOM in measured & indicated resources). We

assume a perpetuity since 2017 AS we believe Volcan has a high exploration potential in its UEAs, projects and

unexplored concessions. From a total of 315,000 hectares, Volcan only produces/explores in 75,000 hectares (24%). In

order to justify this potential, we include, within the perpetual flow, an exploration investment that will ensure the

production continuity.

Volcan is a poly – metallic mining company that produces the following metals: zinc, silver, lead, copper and gold in

minority. The fine concentrate production’s evolution in the last years is the following:

Update

2% 3%

8%

39%

48%

Gold

Copper

Lead

Zinc

Silver

Colquijirca

UEA Chungar

Toromocho

AtacochaMilpo

Huaron

Uchucchacua UEA Cerro de Pasco

UEA Yauli

LegendMines

Proyects/Explor.

UEA Mines Concentrator Plants Projects in UEA

Yauli Underground Mines

San Cristobal

Carahuacra

Andaychagua

TIclio Tajo Gavilán

Victoria (4,000 TPD) Mahr Tunel (2,750 TPD) Andaychagua (2,850 TPD) Total (9,600 TPD)

Plant Expansion

Victoria (4,250 TPD)

Andaychagua (3,200 TPD)

Cerro de Pasco

Cerro de Pasco Tajo Raul Rojas

Paragsha (6,500 TPD) San Expedito (1,800 TPD) Total (8,000 TPD)

Restructuring:

Undergorund Mine Metallurgical:

Silver Oxides

Stockpiles of Pyrite

Chungar Animón Islay/Vinchos

Animón (4,200 TPD) 1

Total (4,500 TPD) Plant Expansion:

Chungar (5,200 TPD)

Historical Production Metals 2008 2009 2010 2011

Zinc K FMT 356.53 352.97 349.64 318.43 Lead K FMT 108.53 80.34 66.52 62.01 Copper K FMT 1.16 2.99 4.26 3.10 Silver M Oz 22.73 20.99 20.08 21.14

http://www.kallpasab.com/


i.ii Mining projects

Investment: USD 90 million.

Investment: USD 90 - 105 million.

Picture 2. Chungar plant's expansion Picture 3. Silver Oxides project - Overview

Source: Volcan Source: Volcan

www.kallpasab.com 3

Status: Up to date, simultaneous metallurgical tests have been carried out in floatation/lixiviation plants with silver

recovery results of 60%; however, Volcan keeps on optimizing its metallurgical process then to continue with the

engineering that is necessary for the construction of a 4,000 TPD treatment plant. The start up of operations is

expected between 2014 – 2015.

c.1) Rondoni: It is a Volcan’s single copper project. It is located in the region of Huanuco and it has a mining site

with resources of 60MT @ 0.6% Cu, 0.14% Zn and 0.19 g/t Ag. It should be noted that Acejar project is located

2km from Rondoni, and it has shown similar geophysical anomalies.

b) Metallurgical projects which aim the recovering of metallic content (silver and gold) with mineral treatment through

floatation/leaching processes. The Silver Oxides and Silver Pyrites projects belong to Cerro de Pasco UEA.

b.1) Silver Oxides: Cerro de Pasco UEA has 8.9MT oxidized mineral with silver and gold content in stockpiles

(3.5MT @ 7.7 g/t Ag and 0.1 g/t Au) and, additionally, 5.4MT @ 4.4 g/t Ag and 1.40 g/t Au in southern of Raul Rojas

open pit. These minerals would be processed in a leaching plant (cyanide) with a 2,500 TPD treatment capacity,

expandable to 4,000 TPD in order to obtain silver and gold fine concentrates.

Status: It has an approved Environmental Impact Assessment (EIA). Volcan expects the granting of final permits in

order to start up its construction and subsequent start up of operations in Q2 2013.

b.2) Silver Pyrites: Explotation works in Raul Rojas mine caused the accumulation of pyrite – silica stockpiles with a

high silver content associated with the mine stripping. The stockpiles represent 20.4MT @ 5.4 g/t Ag in resources.

Chungar plant’s expansion will increase the treatment capacity in 25% from 4,200 to 5,200 TPD with a start up of

operations expected in November 2012. Volcan estimates that this will contribute to increase the silver annual production

by 1.5 – 2.0M Oz. Ag, contributing with 10% of the total production and decreasing the UEA’s operating cost in 15%.

a) Expansion projects in current operations, that aim to increase plant treatment capacity (Victoria, Andaychagua and

Chungar), projects that were previously explained.

Update

Currently, Volcan has four kinds of projects:

Expected production: 3 - 5M Oz Ag (10 years LOM) + gold content.

Expected production: 4 - 6M Oz Ag.

c) New mining projects: Rondoni and Alpamarca/Pallanga River



Investment: USD 350 million, only for the project’s construction.

Investment: USD 90 million.

Chart 3. Project development - Timetable Chart 4. Presence of projects with different metals


i.iii Consolidated production

Table 4. UEAs - Installed capacity

UEA

Yauli 1

Cerro de Pasco2

Óxidos

Piritas

Chungar1

Alpamarca

Rondoni

1. Expansion projects of treatment capacity in Yauli UEA (Victoria and Andaychagua) and Chungar UEA (Animon) will start up operations in 2013.

2. Operating optimization process in Cerro de Pasco UEA. Reinstallation of 100% of installed capacity towards 2014.

Source: Volcan

www.kallpasab.com 4

TPD

TPD 14,300 14,300 8,000 11,440 14,300 14,300

TPD - - - - 2,500 2,500

- -

5,200 5,200 5,200 4,500 4,200 4,200

Status: Currently, Volcan is in the process of defining the resources (drilling campaigns) necessary to determine the

mineralization continuity for which it has estimated a USD 27 million investment in 2012. In addition, it is developing

the project’s pre – feasibility study with AMEC and subsequently submitting the EIA to Ministerio de Energia y Minas

(Ministry of Energy & Mining). Volcan expects Rondoni’s start up of operations in 2015.

c.2) Alpamarca / Rio Pallanga: The mining site is composed by poly – metallic veins (lead, zinc, silver and copper)

which together represent 2.6MT @ 0.11% Cu, 1.44% Pb, 1.8% Zn and 3.75 g/t Ag in measured & indicated resources.

Status: In 2011, Management decided to retake operations in the UEA with the implementation of Alpamarca project.

Its development involves the construction of a 2,000 – 3,000 TPD concentration plant to be fed by Rio Pallanga

underground mine (500 TPD) and Alpamarca open pit (1,500 TPD). The project counts with a feasibility study, and

approved EIA and agreements with the communities. Volcan expects the start up of operations in mid 2013.

d) Exploration projects: San Sebastian, Palma, Zoraida, Vinchos, Shalca, Carhuacayan, Ticlio Norte, El Muqui, among

others, which represent a potential blue – sky in our valuation.

2010 2011 2012e 2013e 2014e 2015e

Expected production: 40 - 50K MT Cu. Our estimation for Rondoni’s production is more conservative and it ranges

between 30 - 35K MT Cu. We assume a 5,000 TPD concentration plant.

Update

- - - - TPD

TPD 9,650 9,600 9,600 10,200 10,200

Expected production: 1.5 - 3.5M Oz Ag.

10,200

TPD - - - - - 5,500

- - 2,000 2,000

TPD

4,000 -

Search of new mining opportunities

Expansions in current operations

Short - term and mid - term mining projects

Regional explorations

Short - term

Long - term

Expansions:Chungar, Victoria and Andaychagua

Silver OxidesSilver PyritesAlpamarca/PullangaRondoni

San SebastianPalmaZoraidaEl Muqui

Greenfield explorations & New businesses

Río Pallanga

Poly - metallic

(Zn-Pb-Ag)

Zn-Pb-Ag

Resourcedelineation

Prospecting

Río Pallanga

San Sebastian Palma

Zoraida

CarhuacayánBello GestoPullcaTiclio NorteShalca

XimenaVinchosJogochuccho

MukiCarchuacayanPuy PuyMucchchaRica Cerreña

Exploration of other metals (Diversification)

Ag Cu-Au

Drilling



Table 5. Treated mineral by UEA

UEA

Yauli

Cerro de Pasco

Oxidos Oxides

PiritasPyrites

Chungar

Alpamarca

Rondoni

Source: Volcan and Kallpa SAB

Tabla 6. Fine concentrate production

UEA

Zinc

Lead

Copper

Silver


ii.Vector of prices

The vector of prices used in our valuation is the following:

Table 7. Vector of prices used in the valuation horizon

Metal

Zinc USD/FMT

Lead USD/FMT

Copper USD/FMT

Silver USD/OZ

Source: Volcan, Bloomberg and Kallpa SAB

iii. Operating costs

Table 8. Operative costs by UEA

UEA

Yauli

Cerro de Pasco

Oxides / Pyrites

Chungar

Alapamarca

Rondoni

1 As of Q2 2012, the costs in Yauli UEA, Cerro de Pasco UEA and Chungar UEA were USD/MT 62.1, USD/MT 41.7 and USD/MT 56.3, respectively.

2 The Silver Oxides and Stockpiles Pyrites project's developments belong to Cerro de Pasco UEA.


www.kallpasab.com 5Update

- -28

-46

FMT 349,643 318,435

Volcan’s production costs differ in accordance to each UEA. As of Q2 2012, the consolidated cost reached USD/MT 55.4

(+12.7% YoY) versus the USD/MT 52.8 reached in 2011 (+4.92%).

Mining industry has registered a cost inflation as a consequence of the increase in labor costs, supplies/provisions

(energy), social and security costs, among others. Particularly, the Peruvian mining industry has suffered the effect of the

revaluation of PEN versus USD, since most of the costs are expressed in local currency. According to Volcan, in 2011

the mining industry inflation regionally reached 18% to 23%. The operating costs by UEA are the following:

-46

-44 - - - -44

2010 2011 2012e 2013e 2014e 2015e

-51 -56 -65 -69 -73 -77

-30 -46 -44 -45

4,118,400 5,148,000 5,148,000

USD/MT

-55 -59 -56 -58 -61

-47 -48

-29

900,000

USD/MT 3,326,897 2,493,656

- - -

USD/MT - -

2,880,000

1,872,000

2012e 2013e 2014e 2015e

USD/MT 3,433,000 3,456,000 3,490,560 3,637,155 3,369,194 3,369,194

2010 2011

USD/MT - - - - 720,000 720,000

USD/MT 1,512,000 1,503,181

38,890,947

319,818 409,879 437,229 439,308

FMT 66,516 62,011 69,072 83,295 94,566 94,566

FMT 4,259 3,103 2,928 3,846 3,419 30,149

- - - 1,440,000

2010 2011 2012 2013 2014 2015

- - - 1,980,000

1,539,000 1,872,000 1,872,000

US$/MT

US$/MT

-50

- - - - -

Oz 20,080,000 21,136,000 21,841,442 25,390,744 32,259,747

USD/MT - -

- - - - 900,000

2,100 2,400

2009 2010 2011 2012 2013 2014-2016

2,300 2,500

1,655 2,168 2,193 2,000

1,720 2,141 2,402 2,200

US$/MT

US$/MT

US$/MT

US$/MT

5,147 7,535 8,821 8,000 8,020 7,800

15 20 35 33 33 34

15%

2,125

6,630

29

15%

15%

15%

Kallpa SAB

LP Dcto

Historic - Volcan Consensus - Bloomberg

2,040

For the first five years within the valuation horizon (2012 – 2016), we use Bloomberg’s consensus prices; however, for

the next years (long – term or perpetual flow) we incorporate an additional 15% discount, applied over metal quotations in

the last year within the analysis period previously mentioned.



iv. Investments (CAPEX)

Table 9. Investment Module (CAPEX)

Investments (USD K)

Investment properties

Plant, Equipment & Intangible assets

Mining projects1

Energy projects2

Maintenance CAPEX

Mining concessions & Explorations

Total

Table 10. Energy & power projects

Picture 4. Huanchor hydroelectric station Picture 5. Baños V hydroelectric station


www.kallpasab.com 6

The following table shows our investment estimations (CAPEX) for the next years that include: a) mining projects and b)

energy & power projects. It should be noted that, within our valuation, we include a long – term investment component

(perpetuity) that will support future production and a 2.5% perpetual flow growth.

In line with the above, we estimate a 10% average cost inflation for 2012 – 2016; however, we believe that this will be

partially offset with the cost decrease as a consequence of the concentration plant’s expansions (specially in Chungar)

and, basically, with the energy & power projects’ implementation (hydroelectric stations). As of Q2 2012, 17% of its

energy & power needs is auto generated by Volcan; however, the implementation of Baños V, Chancay and Belo

Horizonte will generate 50% of the energy in late 2012 and 100% towards 2016, being this an important saving for the

UEAs. It should be noted that 8% of the operating costs are related to energy & power consumption.

-60,139 - - -

Update

17,086

-99,909

-215,558

1 Expansion investments in Chungar UEA, metallurgical projects such as Rio Alpamarca/ Rio Pallanga and most notable Rondoni.

2. Investments in energy projects such as Baños V, Chancay, and most notable Belo Horizonte.

- -6,600 -28,800 -188,800 -132,000

-135,919 -140,287 -159,929 -182,376

-327,388 -320,251

-124,977 -171,192

2011 2012e 2013e 2014e 2015e2010

-208,037

-

-131,330 -179,964 -441,905 -544,152 -303,192

-132,735

- -101,095 -325,750 -230,375 -

- -72,269 -87,355

-601,834 -726,528 -511,229

Mining and energyinvestments for approximately USD 980 million will be financed using the company’s own capital

(including operating cash flows generated by mining operations) and funds from a USD 600 million @ 5.375% debt

issuance carried out in February 2012.

The energy projects are the following:

Hidroelectric station

Power (MW) Prod. (GWh) Year Invesment Description

Baños V 9.2 58 2012 US$ 22 MM (completed) Chancay II,III 60 412 2014-2015 US$ 110 MM Two stages: Chancay II 20MW &Chancay III 60MW Belo Horizonte 180 1,220 2016 US$ 330 MM bought in 2011

Biggestenergetic Project of Volcan.



v. Weighted average cost ofcapital (WACC)

Source: Kallpa SAB

vi. Equity

vii. Sensitivity Analysis

Source: Kallpa SAB


15.0% 20.0% 25.0%

Table 11. Our fair value's sensitivity analysis

10.0%

3.80 3.32 2.84 2.36

9.99% 3.20 2.81 2.41 2.02

We sensitize this 15% discount applied to long – term metal prices (zinc, lead, copper and silver) in order to reflect the

potential effect of variations in long – term prices in our fair value per VOLCAB1 share. This discount applies to all metal

prices equally.

10.99% 2.75 2.42 2.08 1.75

Discount in long - term prices

Chart 5. WACC calculation

WA

CC

7.99% 4.62 4.03 3.43 2.84

8.99%

For the calculation of VOLCABC1 and VOLCAAC1’s fair value per share, we calculate the weighting of each share class

in the equity without taking into account shares in treasury. Currently, the equity attributable to class A and class B

represent 37.2% and 62.8%, respectively. We assume an additional 15% premium in class A’s nominal value by effect of

the voting rights and we recalculate the weighting of Volcan’s equity: class A (42.78%) and class B (57.22%). Thus, after

redistributing the equity’s fair value when following the new weightings, class A and class B share’s fair value are PEN

4.19 and PEN 3.32, respectively.

Volcan’s equity is represented by class A common shares (1.36 million) and class B common shares (2.04 million), both

with a nominal value of PEN 1.0. Class A shares have voting rights; while class B shares have only dividends rights.

In addition, approximately 155.30 million class A shares belong to Empresa Minera Paragsha SAC, Empresa

Administradora Chungar SAC and Compañia Minera Alpamarca SAC subsidiaries.

In the following analysis, we carry out our fair value’s sensitivity analysis taking into account changes in long – term

metal prices and in the discount rate (WACC).

As previously mentioned, our vector of prices uses Bloomberg consensus prices during the first five years of the

valuation horizon (2012 – 2016); however, for the following years (long – term or perpetual flow) we incorporate a 15%

additional discount applied over price estimations in the last year within the analysis period previously mentioned.

WACC 9%

COK 11.08%

Rf 3.31%

Beta

0.9

Risk premium 6.50%

Country risk 2.00%

E/(D+E) 71%

Rd 5.4%

D/(D+E) 29%

(1-T) 70%



iv. Analysis of Multiples

Volcán Cia Minera Peru

El Brocal Peru

Milpo Peru

Atacocha Peru

Trevali Mining Corp Canada

Glencore Suiza

Xstrata PLC Suiza

Teck Resources Canada

Polymetal Inter. Rusia

Hecla Mining Co USA

Fortuna Silver Mines Canada

Fresnillo PLC Mexico

Baja Mining Corp Canada

www.kallpasab.com 8

35%

n.d. 0.24n.d.n.d. 2%4%

5%

8%

8%

10%

11%

8%

10.55

17%

14%

16%

19%

14%

9%

50%

1.24

1.02

0.95

26.88

683.41

20,704.61

3.95

1.71

2.79

11.07

17.40

6.16

4.36

n.d.

11.06

9.38

14.01

15.77

5.17

4.65

12.57

7.32

5.54

15%

17%

10%

ROA

36.25 0.71

11.64

9.53

7.53

21.83

30.91

24.80

38,578.28

46,786.46

17,447.70

6,586.69

1,941.31

26.55

10.47

12.53

10.55

12.00

44.44

18.18

n.d.1.20 n.d.

5.89 1.52 13%173.74 12.13 n.d. 5.28 6%

n.d.n.d.n.d.n.d.230.38

19%

30%1,600.86 27.62 14.37 n.d. n.d. 3.39

4.08 22%1,663.12 21.76 53.12 9.48 19.89

4,584.39 14.54

Company CountryMarket Cap.

(USD million)

P/E Trailing

12M

3.25

Update

17.05 7.87 9.42

P/BV ROEP/E 2012EV/EBIDTA

Trailing 12M

EV/EBITDA

2012

El Brocal

Teck

Polymetal

Hecla

Fresnillo

Volcan

Atacocha

0

5

10

15

20

25

0 20 40 60 80

EV/E

BIT

DA

P/E

Chart N° 6: EV/EBITDA vs P/E - Peer companies

El Brocal

Teck

Polymetal

Hecla

Fresnillo

Volcan

Atacocha

-2

0

2

4

6

8

10

12

14

0 10 20 30 40 50 60 70

P/B

V

P/E

Chart N° 7: P/BV vs P/E - Peer companies



Financial Summary

Estimated production Revenues breakdown by metals

Zinc

Lead

Copper

Silver KOz

Prices

Zinc

Lead

Copper

Silver

Income was calculated using metal quotations in 2012 and 2015.

Gold sales represent 2% in Q2 2012 as well as in 2015.

P & L - USD MM Balance Sheet - USD MM

Net revenues Cash and cash equivalents

Cost of sales Accounts receivable

Gross income Invetories

Sales expenses Other current assets

Admin. Expenses Fixed assets, net

Other revenues, net Other non current assets

Operating income Total Assets

Net interest expenses Accounts payable

Taxes Other current liabilities

Net income Financial liabilities

Other non current liabilities

Dep. & Amort. Equity

EBITDA Total Liabilities & Equity

Margins Cash flow - USD MM

Gross margin Operating CF

Operating margin CF - Investments

Net margin CF - Financing

EBITDA margin Results - Cash

www.kallpasab.com 9

2,300

7,535 8,821 8,000 8,020

4,259 3,103 2,928 3,846

20,080 21,136 21,841 25,391

319,818 409,879

66,516 62,011 69,072 83,295

Update

2010 2011 2012e 2013e

2,168 2,193 2,000 2,100

2012e

2,141 2,402 2,200

2011

2010 2011 2012e 2013e

349,643 318,435

2012e 2013e 2010 2011 2013e

981 1,212 1,139 1,424 135

20 35 33 33

177 240

477 598 501 676 71 98 114 133

-504 -614 -638 -748 165 127

154 678 464

2010

166 166

-57 -61 -62 -78 982 1,140 1,350 1,813

-28 -26 -29 -36 108 166

104 148 171 199 3 -15 -28 -17

99 99

381 510 411 569 1,502 1,783 2,583 2,915

-11 -1 1 6 40 99

271 335

5 15 548 482 253 329 268 386

224 196 -130 -167 -115 -166

184 184

488 609 522 707

1,021 1,239 1,409 1,715 -106.83 -99.06 -110.14 -138.17

147 184

2,583 2,915

2010 2011 2012e 2013e 2013e

1,502 1,783

2010 2011 2012e

50% 50% 46% 50% -214.0 10.9 18.7 524.2

-116.1 -123.8 456.7

49% 49% 44% 47%

26% 27% 24% 27%

534.4

6%

-146.6

4% 5% 5% -601.8

342.5 469.9 387.8

-215.6 -327.4 -320.3

USD/Oz

FMT

FMT

FMT

USD/MT

USD/MT

USD/MT

For the long - term we incorporate an additional 15% discount, applied over 2016's prices.

48% 45%

39%36%

8%8%

3% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2012 2015

Silver Zinc Lead Copper Gold



www.kallpasab.com 10

Overweight +

The analyst that prepared this report hereby certifies that: i) the opinions and views expressed in this valuation report, in regard with

the issuer and with the company’s overview, reflected his/her personal opinion and ii) No part of his/her salary compensation was, is

or will be related directly or indirectly to the recommendations expressed in this report.

The economic compensation of the analyst that prepared this report is based in several factors, including but not limited to Kallpa

Securities SAB’s profitability and the profits generated by its different areas, including investment banking. In addition, the analyst

does not receive any kind of economic compensation from the companies he/she covers.

This valuation report was prepared by Kallpa Securities SAB’s employees that maintain the position of Analyst. Persons involved in

the elaboration of this report are authorized to maintain shares

Share prices in this report are based on market prices as of closing of the day prior to the publication of this report, unless it is strictly

stated.

General statement

This document is for informative purposes only. Under no circumstances it should be used / be considered as an offer of sale or an

application of purchase of shares or any other security mentioned in this document. The information herein has been obtained from

sources which are believed to be reliable, but Kallpa Securities SAB does not guarantee the trustfulness or accuracy of the content

of this report, or the future market values of shares or other securities mentioned in this document. The views and opinions

expressed in this document constitute our opinion at the time of this report and are subject to change without any notice. Kallpa

Securities SAB does not guarantee analysis updates before any change in the circumstances of the market. The products referred in

this document may not be available for purchase in some countries.

Appendix – Disclaimer

Analyst certification

The range assigned to each company covered by the analyst in these reports is based on the analysis/monitoring Kallpa Securities

SAB has been developing for the company. In some cases, the analyst can express his/her short-term points of view to traders,

vendors and some Kallpa Securities SAB’s clients but this point of view may differ in time by market volatility and other factors.

The fair value calculated by Kallpa SAB is based in one or more valuation methodologies commonly used by financial analysts,

including but not limited to discounted cash flows, In Situ valuations or any other applicable methodology. It should be noted that the

publication of a fair value does not imply any guarantee that the value will be achieved.

Update

Underweight -15% to -30% +15% to +30% Overweight

Neutral -15% to 0% +15% to 0% Neutral

Kallpa Securities SAB has reasonably designed policies to prevent or to control the exchange of non-public information used by

areas such Research and Investment, capital market, among others.

Definition of qualification ranges

Kallpa Securities SAB has 5 qualification ranges: Overweight +, Overweight, Neutral, Underweight and Underweight - . The analyst

will assign the coverage one of these ranges.

Underweight - < - 30% > + 30%



KALLPA SECURITIES SOCIEDAD AGENTE DE BOLSA

Management

Alberto Arispe

CEO

(511) 630 7500

[email protected]

Trading

Enrique Hernández Eduardo Fernandini Javier Frisancho Jorge Rodríguez

Manager Head Trader Trader Trader

(511) 630 7515 (511) 630 7516 (511) 630 7517 (511) 630 7518

[email protected] [email protected] [email protected] [email protected]

Corporate Finance

Ricardo Carrión

Manager

(511) 630 7500

[email protected]

Equity Research

María Belén Vega Marco Contreras Fátima Ramírez

Senior Analyst Analyst Assistant

(511) 630 7500 (511) 630 7528 (511) 630 7500

[email protected] [email protected] [email protected]

Operations

Elizabeth Cueva Alan Noa Mariano Bazán Armando Trujillo

Manager Analyst - Securities Analyst - Treasury IT

(511) 630 7521 (511) 630 7523 (511) 630 7522 (511) 630 7500

[email protected] [email protected] [email protected] [email protected]

Miraflores Office

Jose Antonio Avendaño Daniel Berger Victor Hugo Rossel

Representative Representative Representative

(511) 652 6452 (511) 652 6453 (511) 652 6400

[email protected] [email protected] [email protected]

Chacarilla Office

Hernando Pastor Gerardo del Águila

Representative Representative

(511) 626 8700 (511) 626 8700


El Polo Office

Ana María Castro Gissella Garate

Representative Investment Advisor

(511) 630 7532 (511) 630 7532





















Mining Industry Fair Value Head of Research Senior Analyst … · 2020-03-31 · 1. Expansion...

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