Ignacio Bustamante - Chief Executive Officer Eduardo Landin - Chief Operating Officer

Dominic O'Kane - JPMorgan Tyler Broda - RBC Capital Markets Nick Hatch - Canaccord Genuity Daniel Major - UBS Ian Rossouw - Barclays

Good morning, everyone, and thank you for joining us today for our results presentation. Unfortunately, Ramon Barua, our CFO couldn't come here, but we have with us our Chief Operating Officer, Eduardo Landin, who's sitting there. He is going to be with us for the three days of our presentation and road shows. So getting to the presentation. Okay, even though 2015 continued being a complex year in terms of a commodity price environment, we believe that it has also been a transformational year for the Company that has completely changed the position within the mining industry, getting into 2016 and onwards. The key milestones that were achieved in 2015. First of all is that we put into operation Inmaculada very successfully. Inmaculada is now operating 10% ahead of nameplate capacity, with better grades, better recoveries, significantly better all-in sustaining cash cost. So it's become the flagship operation for Hochschild and we have high expectations with Inmaculada going forward. We exceeded our production target; we post 27 million ounces of silver equivalent material compared to a target of around 26 million ounces. We reduced our all-in sustaining cash costs by 26%, to $12.9 per ounce. We discovered a new Pablo vein in Pallancata which is also very important, because, as you may recall Pallancata had limited resources that were profitable at current spot prices. So we put a lot of emphasis into exploration in Pallancata and we came across Pablo. That is going to allow us to, with only the parts of Pablo we know, to continue operating with a much better cost profile; and probably for 2.5 years or so with significant increase in production. More importantly than that is that with the discovery of Pablo, we open up many new geological hypotheses that we are going to be proving during 2016. So it's not only a reality but also a possibility for other areas that could be similar to Pablo and in the same conditions that we are going to be targeting going forward. And also, very importantly, we were able to obtain a significant reduction in our net debt going to $351 million, down from $455 million that we had in June of 2015. If you take a look at what the debt level, net debt to EBITDA level ratio was in June 2015, so only six months ago, you're going to see that the ratio was at around 5.8 times. By the end of the year we were able to take that ratio down to 2.5 times. So less than half of what it was in June. So a very positive development. With that we have set also very important targets for 2016. First of all is to continue operating Inmaculada in a very profitable and efficient manner. We're targeting to produce 14 million ounces in Inmaculada alone in 2016. We are giving the guidance of production of 32 million ounces for the full year, up from 27 million ounces in 2015. So it's also significant improvement in production. We are guiding further reductions in our all-in sustaining cash costs. We originally gave a guidance of $12 to $13; now we are giving a better guidance of $12 to $12.5 per ounce, which is going to be most achieved by the good results of work in Inmaculada and the improvements in Argentina. I will talk about a little bit about that later. We're also targeting to put Pablo in Pallancata into production by the end of the year. And, depending on the spot prices that you consider, we are targeting to continue reducing our net debt to EBITDA level. We are giving a guidance that is going to be between two times and one times. But the most likely scenario is the spot prices is - is that the spot prices that we have now continue for the rest of the year. The ratio is going to be looking much closer to one times than to two times. Continuing to the financials. And getting to an analysis of the variations in our cash flow, we believe that this is a very important chart that shows how our cash has evolved during 2015. We started the year with a balance of $116 million and then you can see here the cash flow generation from all our operations. All of them very important; all of them generated positive cash flow. Obviously the most important one was Inmaculada, which only operated for half of the year. But you can see also the Arcata, Pallancata, San Jose also continued generating positive cash flows. We also had the help of the hedges that we put in place in 2015; that allowed us to generate an additional $19 million in cash. And we have the corporate overheads and geological expenses. But even with the corporate overheads and geological expenses, the net cash regeneration from all our operations was positive. So that allowed us to take our cash balance from $116 million to $181 million. After that we issued some short-term debt. We also completed the payments for Inmaculada project. We did our rights issue, net proceeds of $95 million. And we have paid $105 million in debt. Plus the interest payments and others, we ended up the year with a cash balance of $84 million. A very healthy cash balance. Getting to the P&L, the most important point to highlight here is that first of all our revenue level was at almost $470 million, and the key point here to take into account is that even though our production was significantly higher, our sales were higher, there was an important decline in average prices. The average price of silver for 2014 was $19 per ounce; while the average price of silver for 2015 was $15.70. So that explains why even with higher production and higher sales, the revenue figures were slightly lower than in 2014. But even with the high production and higher sales, you can see also that our cost of sales was slightly lower, in total numbers, than in 2014, which speaks really about the - all the reduction in all-in sustaining cash cost that we just mentioned. Another important point to take into account when you take a look at our P&L is that - is the depreciation. Depreciation has gone up from $128 million to $135 million. But if you take a look at this chart here in the bottom right, you can see how depreciation and CapEx are starting to decouple significantly; and that gets more accentuated during 2016. Here you can see that the depreciation was $128 million in 2014, while CapEx were $113 million. In 2015, the depreciation was $136 million, while actual CapEx were only $84 million. And in 2016 with Inmaculada into operation, the depreciation is going to be around $200 million, while our CapEx are going to be around $100 million. And that's mostly the result of Inmaculada getting into operation and starting to get depreciated. So it has stopped being a good proxy of what the cash flow generation is going to be, because the actual CapEx expense is becoming much lower than the actual depreciation expense. Another important point to notice here is how all administrative, selling, exploration, and others expenses have decreased significantly compared to 2014. Administrative expenses are down $5 million; selling expenses down $7 million; exploration expenses down $8 million; others down $6 million. Another important point to notice here is also on the tax front: that even thought we had a loss, profit before tax, mostly as a result of the higher depreciation, we still have a negative number in tax. And that's mostly a result of the devaluation that we have seen in Peru and Argentina. That devaluation has done a lot to grow our cost profile. What is also that is when you translate the financial statements of Peru and Argentina that are in local currencies, soles and pesos, into dollars, those tax credits become significantly lower as well, and that increases the deferred tax account. And that's what is generating this high figure here. And finally, and very importantly, is the fact that we were able to achieve an adjusted EBITDA of almost $139 million. And when you compare what the figure was in the interim results in June, we have been able to go from $39 million to $139 million from the half year to the full year, which is a significant improvement, and a clear proof of the significant impact that Inmaculada is having in our operations. Also in line with the declining analyst consensus of forecasted prices, we evaluated the free cash flow generation, and did a - implemented this for all our assets. And we have come up with impairments, most importantly in the case of Arcata, Pallancata and Volcan, for a post-tax combined amount of $170 million. It's also important to mention that as part of this review we also evaluated our performing [indiscernible] in Inmaculada and in San Jose. And even with lower prices based on the fantastic result of our opening Inmaculada, and on the improvements that we have seen in Argentina from a macroeconomic standpoint, there was no need to impair any of those assets. Talking about our all-in sustaining cash flows, you can see the strategy in action here, in which we have been able to take the all-in sustaining cash flows in 2012 from around $22 per ounce to $12.9 in 2015; and the guidance of $12 to $12.5 in 2016. There has been a significant improvement, and when you focus particularly in the big reduction between 2014 and 2015, we would like to highlight the key driver for that. First of all has been the - of the total $4.5 per ounce of difference, $1.6 have come from Inmaculada getting into operation; about $1.2 has come from a better grade, as a result of our exploration programs and operational efficiencies, productivity measures, etc., in all our operations, and that constitutes $1.2 per ounce; lower mine CapEx in all our operations at around $0.8 per ounce; local currency devaluation in Peru and Argentina for $0.5 per ounce. And others such as supplier renegotiation, headcount savings and others for around $0.4 per ounce. So I would say if you took into account the first three of them, which are mostly things that are controlled by us in terms of CapEx, [indiscernible] better grades, Inmaculada, et cetera, that represents around 80% of the total savings that we were able to achieve it in 2014 and 2015. And we're going to continue pushing for those initiatives going forward. Getting to our financial position, talking about our debt level, you are going to see that our debt level has been reduced significantly. You can see here the debt that we currently have: $295 million what remains on the bonds; $50 million medium-term loan; $75 million in short-term lines of credit; and some supplier debt for the construction of Inmaculada, for $20 million. You can also see here the debt amortization profile. You're going to see that we have $75 million in short-term debt [indiscernible] in 2016; the reality is that those could be rolled over, and we are obtaining those on very favorable terms with Peruvian banks, and the relationship with local Peruvian banks is as good as it gets. So we believe that those could be very well amortized over time. We also have the payment of a supplier, $10 million and $10 million in 2017 and 2018, which have also the repayment of a medium-term loan; and we have the payment of the bond coming up into 2021. And also what I mention at the beginning is that we started the second half of the year with a net debt to EBITDA ratio of 5.8 times. We were able to take it down to 2.5 times, and we're guiding 1 to 2 times, depending on the prices that you assume for 2016. As I said, if the price, the current spot prices are maintained over the year 2016, that figure should be closer to one times than to two times. Talking about hedges, we have a hedging strategy that is reviewed and approved by the Board. In general we don't define ourselves as long-term hedgers. We consider that for the long term the best thing that we can do is remain hedge free, because we remain very positive with the long-term perspective of gold and silver. But because of financing that we put in place to build Inmaculada, the Company assumed a high amount of debt that we believe it was important to repay as soon as possible. And in this uncertain price, commodity price environment, we believed it was important to generate some predictability and stability in our cash flows. So we decided to put in place hedges in 2015 and 2016, with the goal of obtaining that predictability. In 2015, as you have seen, those hedges were very favorable: $90 million of net cash flow generation, driven by those hedges that were above spot prices. For 2016 we have hedged around 55% of our total production. Most of the hedges have already been announced to the market and I will not get into the detail, but the most recent ones are the ones that we have been put in place in the past couple of weeks, one for silver which we did at zero-cost collar for 3 million ounces, setting a floor at $14 and a cap at $17.6; and the latest one in gold at $1,244 for 15,000 ounces of gold. So finishing with the financials, and moving more into the strategic and operational front. When the prices started going down we devised a strategy for the Company that basically had three pillars. The first one was to continue driving our costs down. The second one was to strengthen our financial position. And the third one was to focus on organic growth and delivering on our Brownfield potential. We are very happy with the results which we have obtained by applying this strategy. When you take a look at the first one, driving cost reduction, as you have seen we have gone from almost $22 per ounce in 2012 to a guidance of $12 to $12.5 for 2016, which is a significant reduction. We have obtained more than $300 million in cash savings and also we have particularly three assets that are completely changing our cost profile, which are Inmaculada, Pablo, that is going to have effect as of the end of the year, and Argentina with the new macroeconomic conditions. On the strengthening financial position pillar, we have significantly reduced our debt, mostly through the cash generation with Inmaculada and the rights issue that we did at the end of last year. We are targeting a net debt to EBITDA ratio of 1 to 2 times by year-end, as we mentioned, and we have our hedging program that continues providing further underpin to this strategy. And finally on the Brownfield potential, we believe that we have been able to achieve also very positive results and we are very excited about all the prospective things that we are looking at all our operations. A clear result of that is the discovery of the Pablo vein, that is going to allow us, as I mentioned, to increase significantly the amount of profit [results] in Pallancata at a very low cost profile; the strong geological potential at all our operations, as we have seen with the recent discoveries in Arcata as well; and we want to be targeting also further exploration work in Arcata, Pallancata, San Jose and the proximities of Inmaculada for 2016. We like this chart very much because it is the strategy in action. You can see the significant decline in our cost; 2012 doesn't show up there but it was at $22 as we have seen, all the way to $12 to $12.5 which is the guidance. And the production increased from 20 million to 32 million ounces. But, when you take a look at 2017 you can see that this strategy continues going beyond 2016. With a - put in production of Pablo, you can see that we are estimating that our production in 2017 could go up all the way to 35 million ounces, and our all-in sustaining cash flows can continue going down, all the way down to $11 to $12 per ounce. And that's our aim, to continue driving that production growth and those declines in all-in sustaining cash flows. Also something very important to point here is that in 2013/2014 we were pretty much 70% or so silver, 30% gold. You can see our production profile in 2016 and 2017 and we are roughly 50%/50% gold and silver. And in this market of uncertainty and in which the gold to silver ratio has increased significantly, that's something that is very positive for the Company as well. This chart is also something new, something that we have not done in the past, which is to give individual guidance in terms of production and cost. I think it is something that is very positive in terms of disclosure and to facilitate analysis. Of the 32 million ounces that we are going to be producing for the year, we are guiding that Inmaculada is going to be our largest contributor with 14 million ounces; San Jose, our 51% in San Jose, is going to contribute with 7 million ounces; Arcata, which is 7 million to 7.5 million ounces; and Pallancata 3.5 million to 4 million ounces. You can also see how we are estimating that our production is going to be performing during the year: about 20% of the total production is going to come in Q1, about 25% each in Q2 and Q3 and about 30% of the production in Q4 2016. Also very interestingly, we have this chart here with all the all-in sustaining cash flows that we are guiding for 2016. And you can see how Inmaculada continues performing very well, $9 to $10 per ounce; San Jose, the original guidance was at $13 per ounce but with all the improvements that we are seeing from a macro standpoint that we will talk a little bit about in an upcoming slide, goes down from $13 to $11.5 per ounce. Arcata is at $14.5 and for the year, Pallancata is also $14.5; obviously we are going to try to continue targeting for those values to go down even more. But very interestingly here is the fact that once Pablo gets into operation, it's going to allow us to go from $14.5 to $10.6 dollars per ounce, going into 2017. That is basically what is going to help us to continue improving production and reducing our costs getting into 2017. Also we are giving the guidance for CapEx at $35 million for Inmaculada; $30 million San Jose and Arcata; and about $10 million in Pallancata, mostly related to put into production Pablo. Talking a little bit about Inmaculada, Inmaculada as you know is an outstanding asset that is working better than expected. You can see here in the chart where Inmaculada sits in the cash cost curve of all gold producers in the world, and it's sitting in a very comfortable position in that cash cost curve. It is 70% gold, 30% silver. We guided the market that 2015 production was going to be between 6 million and 7 million ounces and we are able to significantly exceed that by producing 8.3 million ounces. We are targeting 14 million ounces for 2016. The all-in sustaining cash costs in 2015 were also standing at $7.3 but part of that was helped by the fact that it used minerals that came with no cost because it was mineral coming from our mining development. So it was free mineral. That is not going to be repeated in that magnitude in 2016 and that's why we are guiding the market $9 to $10 per ounce, which is very positive and significantly better than our initial expectations. Also, very importantly, we are very excited about the growth potential in Inmaculada. As you can see in this slide, all the material that was into our initial feasibility studies is coming from this area in the middle, which is the darker gray area. But the vein is still open to the west and to the east. Now the Angela vein here is this vein here in blue. We have all these other ancillary structures that we have identified in Inmaculada that will continue helping to add resources with the role of both increasing the life of mine and also increasing the capacity of Inmaculada in the medium term. This system here, the Quellopata system, is this system here, which is one out of many systems that have been discovered currently in Inmaculada that we haven't even starting exploring. So we see Inmaculada as a district with huge potential to grow not only in terms of a life of mine but also in terms of production capacity in the medium term. San Jose, San Jose is looking very positive, much more positive now after the new measures taken by the Argentinean Government. We obtained record production in 2015, almost 14 million ounces. Our all-in sustaining cash flows as we mentioned have gone from forecasting for the year $13 to $11.5 per ounce with these measures. We believe that there is significant exploration potential. We already have many resources that we could turn into reserves. But what we are seeing is we have identified - if you take a look here, this is where all our current operations are and this area here is the Cerro Negro area owned by Goldcorp, which as you know is a fantastic deposit. So we are targeting all these structures that are the general current operation and Goldcorp's Cerro Negro operation that are part of our property, 100% owned by San Jose and that are offering very interesting potential. So we are going to be targeting those and based on the results, we are going to compare that to the other resources that we have and we're going to decide what to turn into reserves, getting into 2017. So very encouraging geological prospectives in San Jose. In the case of Pallancata, clearly the highlight is the discovery of Pablo. Pablo is a wide vein, it has an average of 12.6 meters. It is going to allow us to put into production at very low all-in sustaining cash costs, very low CapEx requirements since it is less than 1 kilometer away from Yurika. We're actually in the process of developing the ramp and we expect to get there by somewhere around June of this year. We've started the development of a vein with the role of putting into production by year-end. At prices below current spot levels, the NAV gives us at around $40.5 million so it's a very profitable project. And it's going to become the most important part of Pallancata production in the short term, together with the Yurika vein. Getting to Arcata, Arcata you can see here how we have been able on the reserve front to, in a sustained manner, increase the average grade of further reserves as a result of our geological discoveries, particularly Tunnel 4 area Soledad, Lucero and the Paralelas structures. Same with the resources, we have been able to increase significantly the resources by having fairly stable rates as well. You can see also the main production that even though we have had a reduction in our production profile, the grade has gone up as a result of these new discoveries; so fairly encouraging news from Arcata. We are going to continue targeting these new discoveries with the goal of continue improving our production profile and our all-in sustaining cash flows. Also something very important is when you take a look at our regional geological properties, you can see here how we have Inmaculada, we have the Pallancata mine, we have the Selene plant and we have a new property that is called Corina. We have done a lot of work in this area and we believe that there are many areas that are offering significant geological potential. The most important ones that we have discovered so far are these Puquiopata and Palca zone that are right between Inmaculada and Pallancata and our goal is to try to explore them and drill them as soon as possible with the goal of either coming up with additional feed for Pallancata or for Inmaculada or even the potential of having a new operation surrounding those areas. Something very important for you to be aware is that when we put the new mine plan for the year 2015 with very low price assumptions, we optimized our production plans by making sure that we only produced profitable ounces. So as a result of that we focus on less tonnage with better grades and the goal was to sustain those over time which we are in the process of doing with the new discoveries in Arcata and Pablo. So that part of the strategy is working well. But what that has created is that we reduce the tonnage, we reduced the throughput in Arcata and Pallancata so we have significant spare capacity in both facilities, even after Pablo gets into operation. Once Pablo gets into operation we are going to be operating Pallancata at around 2,200 tonnes per day where the total capacity is 3,000 tonnes per day. Arcata, we are operating it at about 1,800 tonnes per day, when the total capacity is 2,500 tonnes per day. And we have also the Ares plant that is completely idle and has a capacity of 1,000 tonnes per day. So we believe that there's significant potential, geological potential, [in those] operations to focus on that, and try to come up with profitable material that we could put into production immediately. So at times when if you are going to do something new, you're going to have to deal with social permits, environmental issues, with a legal permit, with investment, with time to put into production and all of a sudden we have this, all this spare capacity that is already permitted from a social and legal standpoint, it's already built, it's ready to produce. So we believe that that should be the focus of growth going forward, to focus on trying to bring that capacity into production, by focusing on the [geological surrounding area]. And this is going to provide a great source of probability of finding something that could be a potential source for those - for that idle capacity. In addition to that, we have our advanced projects, which are Volcan in Chile; Crespo and Azuca in Peru; all of them 100% owned by Hochschild. In the case of Volcan, we - it was acquired as a future strategic asset. We don't see that as something to be put into production in the short term, but something more in the long term for the next five to 10-years. But it's a very interesting asset with almost 10 million ounces of gold contained. And also, very importantly, in an area which water is scarce, and we have the water rights already secured as part of the acquisition of this asset. So it's an asset that, again, is for the future, but it's looking very promising going forward. We also have Crespo in Peru, which is an open pit project. It's fully permitted. It's expected to produce around 3 million ounces of silver equivalent material per year. And we have already invested about 30% of the total CapEx, and it remains to be spent about $80 million or so to put it into production. Also we have Azuca, which is 100% owned. Several veins delineated, it's a very complex geological system, very similar to Arcata. So we believe that there's a lot more to be understood there. So with a relatively low budget, we're planning on further deepening our knowledge of the deposit with a goal of seeing if it could be turned into a project in the medium term for the Company. So these are our advanced projects. All of them, we see them, I would say, more in the medium to long term, because we believe that, as I mentioned in the previous slide, that there's a lot of potential that should be the first focus of attention in what we already have. And once we have captured the potential, look at these other opportunities. Talking a little bit about Argentina and Peru. First, Argentina. Argentina. The macroeconomic perspectives have changed significantly in the past three months. It's a completely different business environment. First of all, the peso devaluation. As you may know, about 70% of our costs are denominated in pesos. And for the past five years, we have been seeing devaluation being significantly lower than inflation. And that has cost us a big impact, negative impact on our cost position. For the first time in a long period of time, we're seeing that devaluation is being higher than inflation. And that will have a very positive impact in our cost profile going forward. The second point is the port rebate. The government has reinstated an incentive to export using Patagonian ports. And that basically consists that they're going to reimburse 9% of the FOB value of the total exports. So that benefit alone can represent around $15 million per annum for Hochschild. And finally, the tax eliminations. In the past, there used to be a tax - export taxes for [indiscernible] at a rate of 5%; and for concentrate at a rate of 10%. They have already eliminated those export taxes, as they have done in many other sectors of the Argentinean economy. And the impact of that is also very positive for the Company, I would say somewhere between $12 million to $15 million per year. So all those conditions combined is what is allowing us to significantly improve our all-in sustaining cash cost profile, and our expectations of our operation going forward. And also, we're positive about the country, which, as you know, is one of the countries that has the best geological potential in the region where we're focused. To give you an idea, San Jose has twice the grade that we have in our other deposits in Peru. So the conditions were not there in the past, so the cost profile was significantly higher. But with this improvement, we believe that Argentina's competitive position in the mining sector is going to improve significantly. In the Peruvian environment, Peru continues one - being one of the key mining jurisdictions in the Americas. We have also had very positive effects from the sol devaluation, which you have seen in our cost - cash cost guidance. The Peruvian Government continues being a strong supporter of the mining activity. Also, very importantly, we have elections in a month. The most likely candidates to be elected are candidates that are also showing to be pro-business candidates. So for the first time in many years, we are getting into an election with fairly low prices in the [indiscernible]. Finally, we believe that there are many valued catalysts for the Company that position the Company to capture significant value in the short term. The first one is Inmaculada. As we mentioned, we continue producing more, and with a lower cost than we expected; and showing significant potential for growth in the medium term. So that should be a very important value driver going forward. We have significant excess plant capacity, as we mentioned, in Arcata, Selene and Ares, which are ready to generate swift value uplift. The Brownfield program that we mentioned in our Southern Peru cluster, with a strong potential to deliver further grade and tonnages - tonnage increases, for the productions of Arcata, Selene and Ares. The changes in Argentina, which position San Jose to deliver material cash flow increases. The debt reduction, which has - we mentioned, at current spot prices could be getting closer to the bottom part of the 1 to 2 times range for EBITDA. And the medium-term growth with all the portfolio opportunities that we have through the Americas. So that's pretty much it on the presentation. And I would like to open up to any questions that you may have. Q - Unidentified Analyst: Three questions on - initially on your net debt to EBITDA. What would you say is a comfortable level for the Company long term? And if you're going to target the higher-cost debt, where can we see the interest cost coming down to? Secondly, on Inmaculada. You're 10% above nameplate now. Do you see that as sustainable long term? And could you see further debottlenecking there to get that throughput up further? And I guess, linked to that, sustaining CapEx. Again, it's slightly higher this year, I think, because you're doing more development. What level can we expect in 2017? And then, finally, just on Arcata. Obviously, it's the only operation where you haven't got that transformation of costs. Is $14, $15 the lowest you can go this year? Do you see anywhere we could get those costs back down further?

Okay. Let me see if I remember the questions. Let's start with Arcata. $14.5, yes, we believe that there is additional potential to take that number down. But the reality is that, [from an opportunity standpoint] there are things that we can do. We can continue improving dilution; we can continue working on some other productivity measures. To give you an example, for instance, we're in the middle of renegotiating our electricity contract. And that alone should give us additional savings. We continue looking at productivity measures. In the case of Arcata, it's contrary to what you may think. It's not a question of automating it more, it's a question of making it more manual. Because the more manual you make it, the more control you have on dilution. So we're also in the process of evaluating what it is we can do from that [front]. So we believe that there is upside but by far the biggest upside is going to come with completion of our exploration plan. If we come up across other extractions that are similar to Tunnel 4, and we have certain targets with a goal of trying to come up with similar structures that is going to have the biggest impact because it will allow us to have veins that are richer and that are thicker that will allow us for much better production cost. So even absent that we see potential, but the biggest impact could come from geological results. In terms of debt, the level in which we would feel comfortable, I would say since - you need to take into account the EBITDA, plus also the CapEx that is required for the operation, the sustaining CapEx. So I would say that somewhere between, one to 1.5 times is the number in which we would feel comfortable. Then it's going to depend a lot on what other alternative investments you have for the cash. I would say for instance if we were able to secure additional resources for Inmaculada, and justify a capacity increase, it could be at 1.5 times and be comfortable to get into an extension of Inmaculada. If there is something that is, there are not other investment that might be that attractive, we might just have to take it down to 1 times. So it's going to be obviously less than 1.5 times, and getting more is going to depend on what other resources for the cash do we have. Sorry, the other…

It was just Inmaculada's throughput and CapEx. [indiscernible].

Inmaculada? It will continue at this level, it's not a one-off. I would say 3,850 tonnes, 3,900 tonnes should be a sustainable level over time. It's very well balanced right now between - if we increased it a little bit more then you see declines in recoveries. So we believe that have reached a good balance. I also believe that with a relatively minor investment, we could take that production to about 4,200 tonnes per day. We're going to need to do some investment, build some time, some other stuff to de-lever the current bottlenecks. But going further than 4,200 tonnes per day is going to require a major investment, significantly lower proportion indeed than the original one, but I would say with a minor investment probably 10% more, but good at this current capacity.

First follow-up question on your - on the balance sheet, you obviously talked about the net debt target. Given your greater visibility on, I suppose, CapEx spending this year, are you comfortable with the current cash balance, or would you look to reduce that level of cash balance and bring down your short-term debt through 2016? The second question, what gold and silver price assumptions did you use for your impairment testing? And the third question I guess on your projects medium term, they're all 100% owned, would it be a strategy to potentially bring in a partner to share the CapEx commitment as you bring those forward?

On the last one, no, ideally where we see opportunities, we like to have them 100% for our own. And if we just can't, or we get into debt levels that we cannot handle, but we want to try to do the best to capture those opportunities 100% for us. In terms of the prices used for the impairment tests it's basically analyst consensus prices, which are roughly in the neighborhood of around $17 dollar for silver, and around $1,150 for gold or so. And the third question was?

Your targeted cash balance.

The targeted cash balance, yes. I would say we feel comfortable with the level that we have now in terms of cash. We have, as you have seen, $75 million of short-term debt. But the reality is that that short-term debt in terms of net financial cost is very low; it is less than 1%. So this time we prefer to keep the flexibility of having the cash rather than repay those debts now. Actually if we can also postpone those short-term debts for a year or so, we want to try to do that. We don't see any need in doing any repayment of our short-term debt at this point. Particularly with those very low financial expenses, financial costs.

Thanks, thank you.

Two questions. Firstly just on Pallancata, you've got 12.5 million ounces of silver in Pablo at the moment. Based on the work you have done since the beginning of the year, how big do you think Pablo could be, how much further out could you push production there? And just in terms of the hedging, looking into 2017, if metal prices are at this level, or higher, would you put in place hedges, or would you go un-hedged from 2017 onwards?

Sure, in the case of Pablo what we have done is, we have drilled pretty much all of the body of Pablo, and we finished that, I would, say somewhere in September of last year, and we haven't done any more drilling. So we don't have any more information - recent information there. Pablo I would say to the east is still - it's already closed because there is a fault. We have tested on the other side of the fault and there is no continuation. But on the west, what we are seeing is that is a narrowing, there is still a possibility that it could open up later on. But since we have already been able to justify a very profitable project, and it's not really that efficient to continue mining from - drilling from the surface. So we are happy with that and once we get into Pablo we're going to start drilling to deepen our knowledge of Pablo. So it's still open. What are the chances of finding more? I would say they are still there, but what I can tell you is that there's a narrowing. So from what we can see there is some potential, but the biggest potential will come if later on we see that opening again, which we have not seen yet. But as I mentioned, it's very important, the geological hypothesis on Pablo because in the past we have been drilling and we will reach a fault level, and not underneath that fault, and mineralization was on top of that. With Pablo the mineralization was underneath the fault, so many other areas that look very promising in which we have stopped at the fault could present similar situations as in Pablo. So in this year among our [decisions around these projects] are also taking a look at those areas in which we stopped at the fault, to see if it continues underneath. So that's important. So it has opened up many other geological alternatives to drilling 2016. In terms of hedges, as I mentioned we're not long-term hedgers, and the reason why we hedge is for a particular reason, which it was to generate cash flow stability to repay debt. Once we reached that comfortable level which hopefully is going to be by the end of this year, there's not going to be any need to hedge going forward. Dominic O’Kane: Dominic O'Kane, JPMorgan. Just pushing on Pablo. Could you maybe help us understand some of the operating metrics that you're thinking of for 2017 and 2018? So tonnage, tonnage milled, unit costs, grade, and what's the sustaining CapEx you think for - in dollars for Pablo?

Roughly what we're anticipating is $10 million CapEx this year, and $10 million CapEx next year; that's it. In terms of tonnage, we're expecting that is going to be producing between 2,000 tonnes to 2,200 tonnes per day and we're expecting that is going to be giving us around 6 million ounces or so per year. Those are the key metrics for Pablo. And that's roughly between two to 2.5 years, and then also whatever comes, or whatever is found during that time with the extension to the west that I mentioned, there could be additional upside to that.

Just a couple of questions. You couldn't just give us guidance on what the exploration budgets are for each of the individual operations? And what's the dividend for - reinstating the dividend; what's the thought process behind that?

Our total exploration budget for the year is about $8 million. And the way it's split is I would say roughly between $1.2 million to $2.5 million for each of our mines. Okay? In the case of Pallancata and Arcata, it's going to be closer to $2.5 million range; in San Jose, and in Inmaculada, going to be closer to $1.5 million range. But something that we do not discard yet is that, since Argentina has improved so much, we were targeting to spend only $1.5 million, spread across the year. Okay? We already have the targets identified. So what we are planning on doing now is to accelerate that, because the targets are there, to accelerate that then within the first half of the year. And based on those results, we might consider if we obtain positive results, to increase the exploration by this for the second half of the year to try to continue deepening our knowledge of the resource for the first half of 2016. So this could increase, but that's a decision that we need to make based on the results that we get by half of the year. And dividend. Dividend is very important to us and, obviously, we want to - it's [indiscernible] and we want to try to reinstate it as soon as possible. I would say for 2016, the key focus is still going to continue to be repaying debt. Hopefully, going forward, we will get into a level that we feel comfortable in looking at our dividend policy again.

Tyler Broda, RBC. Just as a follow-on to that question, now that the net debt is down to a level that's much different than where it was before, how would you rank, from the Company's long-term perspective, where dividends would fit versus building more projects or versus M&A? And what's your view on M&A at this point specifically? And secondly, in terms of Argentinean costs right now, how comfortable are you in those forecasts with the volatility, all of these changes that have happened? Is there more upside in those costs this year - or downside, I should say?

In the case of the ranking of priorities, what I would say is, as we have mentioned in the past - first of all, our debt level is significantly down, but it is still not at the level where we want it to be. So the first priority is going to be to take that debt level down; as I mentioned, to a level in which we feel comfortable would be around 1.5 times, and going less than that is going to be highly dependent on the other alternatives that we may have. In terms of ranking of [uses], I would say that - and where dividend fits on that, I would say it fits fairly well because we believe that the highest source for growth should be organic growth and - our organic growth is going to be relatively low risk and low investment as well. We have the spare capacity available in Ares, in Arcata and in Pallancata, so we can [cause] something that is very low investment and huge impact in terms of production. Other things that we are contemplating, our other possibilities, of increasing in Inmaculada also is one of the - something that is going to require at the beginning low investment to prove the geological potential. And then, the big investment could come if we were able to find material to justify increasing capacity at Inmaculada. But if that was the case, that would be highly positive news and that would be the best investment that we can make. So I would say that that has the priority over M&A activities. So I would say being that the case, the dividends rank highly - relatively high in our list of priorities. In terms of Argentina, what I can say is that we still see upside. I believe that the government has come to realize that the sustainable economic model for Argentina is - well, not just come to realize. That's not the right expression because it was a little with that [indiscernible]. But it's a new government that has come with a fairly new economic model that is very aware that the main driver of work for the country going forward is going to be the private investment. And they are doing everything that they can to promote and attract as much private investment as possible. So being that the case, we believe that it's something where there's still significant upside of things to continue improving to attract investment in the country. I believe that probably the most important things, or the ones that could have the best impact on us, are already in place, which are devaluation and the export taxes. But we believe that over time, many more things could come in place that could continue to reinforce it. For instance, one of the problems that we had in the past was the problems that we had for importing parts or supplies because they were trying to promote the local industry. And sometimes they were not of the required specifications that we required or they were just not available. So we had to struggle a lot into bringing those imported parts or supplies into our operation. Those conditions are getting significantly more flexible than in the past, and that sort of thing, or things like that on the day-to-day basis are just going to make operating in Argentina much simpler, which in turn should be better for us and better for the country as well.

Nick Hatch, Canaccord Genuity. Just looking at your 2016 production and your quarterly ramp-up through the year, is that primarily Pablo and Inmaculada, or are we seeing much variation quarter on quarter at Arcata and San Jose?

The answer is not necessarily related to Pablo because Pablo for our budget plays a very minor role. Mostly Pablo - is mostly in 2017. I would say first of all it's because of the way we account for our production. January has six less days and the summer has six more days [indiscernible]. So you have a day - much more days in the fourth quarter than the first quarter. That plays one part of that. And the other part is because of mine planning, you have to access certain areas that, at the beginning of the year, just for mine planning or for nature's situations, are with lower grade that continue improving with grades over time during the rest of the year.

Would you ever consider hedging any of the currencies?

[indiscernible] We have evaluated the possibility, but we have concluded that it's in our best interest just also to be exposed to a currency, because right now, what we have seen is - or what we have been seeing so far is a strong US dollar and a weakening sol and peso. So since all our revenues are in dollars, that plays 100% to our advantage and we have a lot of the costs in dollars; about [50%], in the case of Argentina it's around 70%, which are in local currency. So that has benefited us significantly and we believe that that will continue to be the situation going forward. And we believe that the perspectives are for the dollar - so for the peso in Argentina to continue devaluating, and the same in Peru. We believe that - the original guidance for devaluation in Peru - right now it's at around 3.48/3.47. Some banks are talking about getting to 3.50 and 3.70. In the case of the peso, we're at around 15 or so, and it varies between 16 and 18, these figures. So we believe that [indiscernible].

Dan Major, UBS. A couple of follow-up questions. You obviously drew down inventory at Inmaculada this year. Can you give us any guidance on how you expect working capital to progress across the Group, through 2016? And then secondly, obviously you referred to inflation expectations to an extent, in Argentina; can you give us a sense on where domestic inflation is running in Peru, and your expectations for inflation through 2016?

Talking about inflation first. We believe that inflation in Peru, particularly on the most important one for us, which is for the wages of our hourly workers, is going to be somewhere around, I would say, 4% to 5%. Probably total inflation for the country is going to be running at about 3% or so. And that's what we are getting. And your first question was?

Working capital.

Working capital. Working capital, the way we finished the year was that we were not able to ship or to sell all the inventory that we had, just for timing differences. And also we had the [stockpile] (Ph) in Inmaculada. We have also some supplies and materials in spare parts that we - before Inmaculada, there are larger than the regular amount, that should be used. That should start to decline over time. Also those things should play to our favor, and we should have a very positive impact, taking that into account. We also have a lot of sales tax to collect from the local authorities in Peru, for investment in Inmaculada, that we should - actually we are already collecting. So that should also be an important improvement in working capital. Playing against that is that we finish the year with also a significant amount of accounts payable, as a result of the Inmaculada [indiscernible] to be paid during the year. So that's going to play against it. But I would say in the net effect, we should have a positive impact in terms of working capital; I would say somewhere around $10 million, or $15 million or so.

[Operator Instructions] our first question comes from Ian Rossouw. Please go ahead, your line is open.

Maybe just one on your reserve prices you use. I see you're still using $20 per ounce for the new reserves statement. Could you maybe just explain why that is still the case? And also just on your mine planning, I assume for mine planning purposes, you would be using much lower, I guess, metal prices. And whether that then creates some differences between your actual recovered grades and reserved grades, which you obviously try to achieve on the mine plans.

Yes, on the reserves original calculation, we have used the prices of $20 for silver, and $100 (sic) for gold. And we have done that mostly for consistency purposes. Now in the past, in cases where silver price was at $50, we have also been using analyst consensus prices. In the case of gold where you take into account current market conditions, gold seems to be even a little bit lower than a spot price, so I think in the case of gold, it looks good. In the case of silver, I believe that it looks high, compared to current spot prices, I agree. But the reality is that due to the nature of our deposits, it's not that you have a significant - it's not that you have a constant decline in value from the vein to the [walls] (Ph) of the deposit. You have a big drop in grades, from the actual vein to the walls. So that makes the case that we are very little sensitive to price variations. We run an exercise using lower prices, and what you can see for instance, in the reserves side, is that if we were to use prices of $17 and $1,200, you have that our total ounces would decline by 4% only. And if you were to use prices of $15 for silver, the total ounces would fall by 6%. And in the resources it's even less sensitive. In the case of the resources, if you use prices of silver at $17, the total amount of ounces on general reserves goes down by 1%, and if you use price of silver at $15, it goes down by 2% only. So there are very little sensitive to current price variations, so we believe that this $20 to $1,200 still represents fairly good, even at very low - significantly lower prices, the situation of our resources and our reserves. For our decisions, we use a spot decision, so yes, for instance, right now, we are contemplating, if silver prices - sorry, first of all, the budget was then with much lower prices than that. Our budget was then with prices of around $1,050 for gold and $14 for silver. So that is very conservative for us, and actual spot prices are better than that. Now for - we do our mining plan based on budgeted prices. So if - which is basically using 2014 and 2015. But for instance, comes January, and January prices are higher than that, we might change our mine plans to reflect those higher prices. And since we have significant capacity in Arcata and Pallancata, that plays to our favor and that could be further upside. Because if we go into an area that may not be profitable at $14 but is profitable $15.50, or may not be profitable at $1,050 for gold, but it's profitable at $1,240 or $1,250, that is [indiscernible]. So that could be additional production that we could put into our plans. So we tend to be on the conservative front, and we see that these increasing prices could be an upside from a production standpoint.

Thanks, and maybe just one more, while we're on assumptions. Could you just say what sol and peso FX assumptions you've used in the guidance for this year?

What, sorry?

The currency assumptions for this year, in your all-in sustaining cost guidance.

Sure, in the case of the peso, we have assumed that it's going to be moving from 14 to 16 by the end of the year, okay, which is looking conservative right now. Because right now we are already at more than 15 and it's just March. And in the case of the sol, we have used [3.60] for the end of the year.

All right, thanks, that's all from me.

There are no further questions at this time. I'd like to turn the call back to your host for any additional or closing remarks.

Okay, thank you very much for your time and for all your questions. And should you have any more, please feel free to contact Charlie or me directly, and happy to talk more. Thank you.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen, you may now disconnect.