Fresnillo Plc · LSE:FRES
Fresnillo — H1 2019 Earnings Presentation
45 slides from Fresnillo's earnings presentation, Jul 30, 2019
Slide 1: Half Year 2019 Interim Results
—v FRESNILLO. Half Year 2019 Interim results Tuesday 30* July 2019 {| LSE: FRES BMV: FRES www.fresnilloplc.com
Slide 2: Disclaimer
DISCLAIMER 2 This document includes statements that are, or may be deemed to be, “forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", “estimates”, “plans’, "projects", “anticipates, "expects", "int
Slide 3: Agenda
AGENDA Strategic Performance HSECR 1H19 Highlights Operational Performance Exploration Update 1H19 Financials Outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION 4 2.2 BNOZ OF SILVER DEDICATED TEAMS RESOURCES 1ST QUARTILE ON THE WORLD CLASS PROJECT FOCUSED ON PROMOTING TRAILING 12 MONTH NET 391Moz oF GOLD SILVER COST CURVE PIPELINE ‘AND SUPPORTING LOCAL DEBT TO EBITDA OF 0.67x RESOURCES. COMMUNITIES
Slide 5: Commitment to Sustainable Business Practices
COMMITMENT TO SUSTAINABLE BUSINESS PRACTICES We believe that responsible mining is compatible with high stakeholder expectations in terms of ethical, social and environmental performance, and recognise that our social licence to operate is dependent upon being trusted by our stakeholders. HEALTH Con
Slide 6: 1H19 Results - Highlights
1H19 RESULTS - HIGHLIGHTS 6 SILVER PRODUCTION Half Year Operational Highlights 2 30 * Silver production of 27.6 moz (including Silverstream) down 10.4% vs. 1H18. 520 3 210 * Gold production of 432.4 koz, down 7.1% vs. 1H18. é 4 1HI6 HIT 1H18 1HI9 + Approval of Juanicipio project in April- constructi
Slide 7: Operating Performance
OPERATING PERFORMANCE Operating Performance
Slide 8: Operations - Fresnillo
OPERATIONS FRESNILLO Silver production- moz Gold production -koz Cost per tonne- US$/t Cash cost - US$/oz of Ag AISC - US$/oz of Ag Reserves 2018 * 1H19 SUMMARY Resources 2018 * Silver grade of 187 g/t. ANI + Infill drilling programme advanced -update with full year results. * Development rate impro
Slide 9: Operations - Saucito
OPERATIONS 9 SAUCITO Prevorsnarnosransros Dw) Silver production- moz 8.8 10.0 Gold production - koz 367 39.6 Cost per tonne - US$/t 66.0 53.6 Cash cost - US$/oz of Ag 24 13 AISC -US$/o0z of Ag 10.0 19 Reserves 2018 * 130.3 moz Ag, 0.7 moz Au Resources 2018 * 428.2 moz Ag, 1.9 moz Au 1H19 SUMMARY Sil
Slide 10: Operations - San Julian (Vein System)
OPERATIONS SAN JULIAN (VEIN SYSTEM) Gold production -koz 35.3 387 Silver production- moz 23 27 Cost per tonne-US$/t 66.5 58.2 Cash cost - US$/oz of Ag 0.6 45 AISC - US$/0z of Ag 10.9 49 Reserves 2018 ** 18.0 moz Ag, 0.2 moz Au Resources 2018 ** 1H19 SUMMARY * Both processing plants working above nam
Slide 11: Operations - Ciénega
OPERATIONS 11 CIENEGA Gold production -koz 29.8 33.1 Silver production- moz 29 28 Cost per tonne-US$/t 79.5 68.4 Cash cost - US$/oz of Au 176.9 10.6 AISC - US$/0z of Au 1,533.8 1,198.2 Reserves 2018 * 56.9 moz Ag, 0.6 moz Au Resources 2018 * 133.9 moz Ag, 1.3 moz Au 1H19 SUMMARY 2H19 PRIORITIES * Wi
Slide 12: Operations - Herradura
OPERATIONS 12 HERRADURA KEY OPERATING STATISTICS a Gold production -koz 236.9 243.1 Silver production- moz 0.6 0.6 Cost per tonne*- US$/t 18.0 10.3 Cash cost - US$/oz of Au 770.3 364.9 AISC - US$/0z of Au 925.4 715.9 Reserves 2018 ** 7.4 moz Au Resources 2018 ** 10.2 moz Au 1H19 SUMMARY Construction
Slide 13: Operations - Noche Buena
OPERATIONS 13 NOCHE BUENA KEY OPERATING STATISTICS a Gold production -koz 65.4 88.0 Silver production- moz 0.03 0.04 Cost per tonne*- US$/t 9.3 67 Cash cost - US$/oz of Au 821.9 772.8 _ At time of acquisition (2008), projectwas estimated to produce 376,450 Au ounces over the 5 year life of mine AISC
Slide 14: Disciplined Approach to Development - Projects Cont.
DISCLIPINED APPROACH TO DEVELOPMENT - PROJECTS Cont. 14 JUANICIPIO (iv with MAG SILVER, FRESNILLO: 56%) OVERVIEW 8km from the Fresnillo mine This project is being developed on a stand-alone basis KEY METRIC ESTIMATES (100% BASIS)* Fresnillo plc will develop, construct and operate Juanicipio. Expecte
Slide 15: 2019 Exploration Budget
2019 Budget: US$ 160 M (inc. USS10 M Capitalised) 2018 Expense: US$ 172.8 M 42% Mine Operations 30% 33% Advanced Exploration Prospects in drilling a 10% Early stage Explora Underlain by 1.8M hectares of concessions in Mexico, 650k hectares in Peru and 10k hectares in Chile t t Systematic Project Gen
Slide 16: Financial Performance
FINANCIAL PERFORMANCE Financial Performance 16
Slide 17: Income Statement (IFRS)
INCOME STATEMENT (IFRS) 17 CONCEPT (MILLION USD) ACCUM JUNE CHANGE 1H19 % 1HI8 % $ % ‘ADJUSTED REVENUES, 1,069.0 1189.9 (1209) (10.2) HEDGING (METALS) 04 00 01 NA ‘TREATMENT AND REFINING CHARGES (67) (748) 78 (10.4) ‘ADJUSTED PRODUCTION COST (566.4) (665) (429.9) (38.6) (1365) 37 PROFITSHARING (43)
Slide 18: Adjusted Revenues (IFRS)
ADJUSTED REVENUES (IFRS) 18 MILLION USD ACCUM JUNE CHANGE BY 1H19 1H18 VOLUME PRICE TOTAL Gold 556.8 593.0 (39.7) 3.5 (36.2) Silver 366.1 432.1 (35.2) (30.8) (66.0) Lead 45.3 55.5 13 (11.6) (10.3) Zinc 100.8 109.2 71 (15.5) (8.4) ADJUSTED REVENUES 1,069.0 1,189.8 (66.5) (54.4) (120.9)
Slide 19: Contribution by Mine and by Metal to Adjusted Revenues
CONTRIBUTION BY MINE AND BY METAL TO THE ADJUSTED REVENUES 1H19 “H19 ADJUSTED REVENUES : US$1,069.0 M BY MINE SIN Veins, 8% Ms Herradura SIN DOB, 8% GM Saucito HERR, 30% Fresnillo Ciénega NB, 8% Noche Buena San Julian DOB San Julian Veins CIEN, 9% AG,34% FRES, 15% SAUC, 23% FRESNILLO CIENEGA HERRADU
Slide 20: Consolidated Cost Inflation 1H19
CONSOLIDATED COST INFLATION 1H19 (USD BASED) 20 ISOLIDATED Unit price increase % Weight (*) | Weighted average LABOUR: UNIONIZED 5 5 PERSONNEL 6.7% 5.8% 0.4% EMPLOYEES 471% 27% 0.1% WEIGHTED 6.0% OPERATING MATERIALS 2.0% 20.9% 0.4% ENERGY: ELECTRIC ENERGY 3.3% 6.3% 0.2% DIESEL 113% 115% 13% GASOLINE
Slide 21: Adjusted Production Cost - 1H 2019
ADJUSTED PRODUCTION COST - 1H 2019 21 US$ 566.4 Million Operating Materials 27% Costs from Contractors = 27% Own 21% Ctrt. 6% Maintenance & repairs 18% Own 16% Energy 21% Own 19% Ctrt. 2% Ctrt. 2% Others 10% Own 9% Ctrt. 1% Equipment cert. Personnel 15% 9% Own 8% Ctrt. 7% * Includes: Freights, Taxes
Slide 22: Adjusted Production Cost Analysis
ADJUSTED PRODUCTION COST ANALYSIS (CONSOLIDATED) 22 ACCUM JUNE CHANGE 1H19 1H18 $ % CHANGE IN INVENTORIES AND OTHERS. “47 -217 7.0 (32.3) DEPRECIATION 2405 1928 247 PTu 43 118 (49.7) cost OF SALES 7965 6128 30.0 USD MILLION 160.0 1.08 164.0 17.23 ut a va | 12.0 25.58 96.0 33.75 80.0 sua | abos | | 4
Slide 23: Consolidated Gross Profit Analysis
CONSOLIDATED GROSS PROFIT ANALYSIS 23 ACCUM JUNE CHANGE 1HI9 1HI8 $ ms USD MILLION ~_—— | 70.0 13600 7.75 4.78 =—= — ° (17.23) (25.58) [i (70.0) — = (140.0) (46.09) (46.1) (210.0) (47.64) | | (49.78) (280.0) = (54.41) (296.67) (350.0) a Ey 8 & g F : : : 4 : ° : : $ 3 = é i i i i 5S £ z Fy 3 2 = i :
Slide 24: Income Statement (IFRS)
INCOME STATEMENT (IFRS) CONCEPT (MILLION USD) ACCUM JUNE CHANGE 1H9 % 1H18 % $ % ‘ADJUSTED REVENUES 1069.0 11899 (1209) (102) HEDGING (METALS) a1 00 1 NIA ‘TREATMENT AND REFINING CHARGES (673) (748) 78 (104) ‘ADJUSTED PRODUCTION COST (566.4) (565) (4299) (38.6) (1365) PROFITSHARING (43) (a) (8) aa)
Slide 25: Cash Flow (IFRS)
CASH FLOW (IFRS) YTD CHANGE USD MILLION: 1H19 1H18 $ % WORKING CAPITAL (7.6) (63.9) 56.3 (88.2) INCOME TAX AND PROFIT SHARING PAID (140.8) (145.3) 45 (34) OTHER PROCEEDS SILVERSTREAM CONTRACT 129 223 (9.4) (422) PROCEEDS FROM THE SALE OF PROPERTY, PLANT AND EQUIPMENT 02 01 01 168.9 CAPITAL CONTRIBUT
Slide 26: Cash Flow (IFRS)
CASH FLOW (IFRS) 26 YTD IHI9 IH18 CHANGE USD MILLION) * Decrease in accounts receivables Met- Mex +US$18.7 million + VAT-US$3.1 million * Increase in trade and other payables +US$10.4 million + Decrease in inventories -US$25.9 million * Decrease in prepayments and other assets -US$7.7 million WORKIN
Slide 27: Balance Sheet (IFRS)
BALANCE SHEET (IFRS) CONCEPT 30-Jun-19 31-Dec-18 CHANGE % CHG. Cash and Investments 362.1 560.8 (35.4) Trade and Other Receivables 4143 462.0 27 Inventories 360.9 335.0 77 Prepaid Expenses 23.1 155 49.0 Silverstream 517.3 519.1 (0.3) Derivative Financial instruments 28 03 786.9 Property, Plant and E
Slide 28: Cost per Tonne (IFRS)
COST PER TONNE (IFRS) 28 ACCUM JUNE CHANGE 1H19 1H18 % CHG. COST PER TONNE* Fresnillo US$/TON 58.87 46.92 25.5% Saucito US$/TON 65.96 53.56 23.2% Ciénega US$/TON 79.46 68.39 16.2% San Julian Veins US$/TON 66.54 58.24 14.3% San Julian DOB US$/TON 38.98 34.50 13.0% Herradura US$/TON 18.02** 10.25** 75
Slide 29: Cash Cost (IFRS)
CASH COST (IFRS) 29 ACCUM JUNE CHANGE 1H19 1H18 % CHG. CASH COST* Fresnillo PER OZ. SILVER 3.12 -0.82 N/A Saucito PER OZ. SILVER 2.36 1.25 88.8% Ciénega PER OZ. GOLD (by-prod.) 176.85 -10.60 N/A PER OZ. GOLD (Co-prod.) 771.02 645.46 19.5% PER OZ. SILVER (Co-prod.) 8.87 8.11 9.4% PER OZ. GOLD (Equiv.
Slide 30: Margins by Mine
MARGINS BY MINE (METAL PRICE - CASH COST)(1H19 VS 1H18) 30 eS voce Be 150 | oo) |__| EH 100 0 ggg BO [nd annnn Mo ennneennnadpeneenneeeggennenenna-- of MMI MERI SIN) 5.0460 | -—-} ---------- a0 0.82 50 HIB THID THs THI? 1HIB THY HIB THD -230 HIB JHI9- HIS. JH19. HIB AHI? OUNCES SOLD OUNCES SOLD 1DOB
Slide 31: All In Sustaining Cost (US$/oz)
ALL IN SUSTAINING COST (US$/0Z) 31 ACCUM JUNE CHANGE WEIGHTED AVERAGE LIFE 1H19 1H18 % CHG. OF MINE Fresnillo PER OZ. SILVER 12.46 6.79 83.5% 47 Saucito PER OZ. SILVER 10.02 7.88 27.2% 97 San Julian Veins PER OZ. SILVER 10.85 4.89 121.9% + 8.8 San Julian DOB PER OZ. SILVER 949 9.50* -0.1% : Ciénega
Slide 32: Margins by Mine
MARGINS BY MINE 30 (METAL PRICE - ALL IN SUSTAINING COST) (1H19 VS 1H18) (usD/oz) siner ash Price Cost 24.0 1,900 roo 1629 wo 88 4,086 120 80 oe _ Margin Margin “843 bes en 40 271 00 0 THIS HIP HIB THI? THIS THI HIB THI? 1H18 1HI9 HIB THI? 1HI8 1HI9 OUNCES SOLD OUNCES SOLD DOB. isseminated OreBy
Slide 33: Outlook 2019
OUTLOOK Outlook 2019 33
Slide 34: Approved by the Board, Subject to Ongoing Internal Review
1 2 3 APPROVED BY THE BOARD SUBJECT TO ONGOING INTERNAL REVIEW (SUBJECT TO BOARD APPROVAL)
Slide 35: Expected Attributable Production Profile
EXPECTED ATTRIBUTABLE PRODUCTION PROFILE Million Oz ATTRIBUTABLE SILVER 2018 2019 2020 2021 “Including Silverstream Thousand Tons ATTRIBUTABLE LEAD 2018 2019 2020 2021 35 Thousand 0z 1000 ATTRIBUTABLE GOLD 800 600 400 200 0 2018 2019 2020 2021 Thousand Tons 120 ATTRIBUTABLE ZINC 100 80 60 40 20 0 20
Slide 36: Capex Spend Expectations
CAPEX SPEND EXPECTATIONS FRESNILLO 126M SAUCITO 126M CIENEGA 58M SAN JULIAN 55M HERRADURA 49M NOCHE BUENA 12M OTHERS 10M PROJECTS APPROVED JUANICIPIO 126M PYRITES PLANT 46M SAN JULIAN 12M CENTAURO EXTENSION 7™M PROJECTS FOR APPROVAL FRESNILLO OPTIMISATION 25M OTHERS 2M MILLION USD 900 800 700 600 50
Slide 37: Outlook
OUTLOOK PRIORITISE SAFETY, SUPPORT OF THE WORKFORCE AND ENVIRONMENT CONTINUED OPERATIONAL FOCUS TO MAXIMISE POTENTIAL OF OUR EXISTING MINES 37 CREATE VALUE THROUGH DISCIPLINED GROWTH, EXPLORATION & DEVELOPMENT
Slide 38: Appendix
APPENDIX
Slide 39: Key Grade Expectations for 2019
EY GRADE EXPECTATIONS FOR 2019 39 GOLD (0Z) MINE MINE TYPE 1HI9 FYI9E FRESNILLO UNDERGROUND SILVER 0.86 ~ 0.85 SAUCITO. UNDERGROUND SILVER 114 ~ 110 CIENEGA UNDERGROUND GOLD8& SILVER 1.55 1.60-1.70 HERRADURA OPEN PIT GOLD 0.82 0.70-0.75 NOCHE BUENA OPEN PIT GOLD 0.53 ~ 0.55 SAN JULIAN (VEINS) UNDERG
Slide 40: Exploration - Strong Resource Base
EXPLORATION 40 STRONG RESOURCE BASE SILVER RESOURCES GOLD RESOURCES 2,204.0 moz 39.1 moz - 116,566 koz, -5.0% vs 2017 +580 koz, 1.5% vs 2017 CHANGE 3108017 31218 ag ate 17 31000 18 jag SHANGE 2,320,495 2.204.973 50% ‘Thousandsounces thousands ounces 38.525 39105 [S80 —] 1.5% 60,000 2.000 vee ‘we pet
Slide 41: Exploration - Seeking Further Resource Conversion
EXPLORATION SEEKING FURTHER RESOURCE CONVERSION TO EXPAND RESERVE BASE SILVER RESERVES 475,991.5 moz - 25,671 koz, -5.1% vs 2017 3Dec 7 31Dec 18 CHANGE | tnousonésouncee 5016620 475,991 “5.4 e000 000 ‘as 4000 “1800, 30.000 Cienega Saucito Fresnillo Decr. in Silver Reserves Metal prices used for 2018
Slide 42: Pyrites Plant Project in the Fresnillo District
DISCLIPINED APPROACH TO DEVELOPMENT - PROJECTS 42 PYRITES PLANT PROJECT IN THE FRESNILLO DISTRICT OVERVIEW Expected avg. annual silver production 3.5 moz Expected avg. annual gold production 13.0 koz Expected cash cost (average LoM) $2.51 /oz Expected IRR at US$20/oz Ag & US$1,200/0z Au 29.3% Leachi
Slide 43: Other Project & Potential Projects - Orisyvo, Guanajuato & Rodeo
DISCLIPINED APPROACH TO DEVELOPMENT - PROJECTS 43 OTHER PROJECT & POTENTIAL PROJECTS - ORISYVO, GUANAJUATO & RODEO OVERVIEW - ORISY' Improved recoveries following metallurgy testing leading to a stronger project. Assessing a 8,000 TPD mine with a DLP processing facility; focusing on higher grade zon
Slide 44: Exploration
EXPLORATION MEXICO Drilling at the San Julian district increased resources on the South veins. Mapping, geochemical and airborne Versatem studies were carried out over the district to prioritise new drill targets. Drilling was also carried out at the Herradura, Ciénega and Fresnillo districts, as we
Slide 45: Tailing Safety Management
TAILING SAFETY MANAGEMENT 45 Tailing Dams in our Portfolio Fresnillo ple has 11 tailings dams, all located in Mexico and all of which comply with both Mexican & Canadian standards. 5 are operational, 5 are non-operational and lis under construction. Of these 11 dams, 5 are constructed using the down