Fresnillo Plc · LSE:FRES
Fresnillo — FY2022 Earnings Presentation
45 slides from Fresnillo's earnings presentation, Mar 7, 2023
Slide 1: Full Year Preliminary Results
FULL YEAR P R E L I M I N ARY RE S U LT S 07 MARCH 2023 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 A number of factors could cause results and developments to differ materially from those statements”. These forward-looking statements can be identified by the use of forward- expressed or implied by th
Slide 3: Agenda
AGENDA 3 3 01 Investment proposition 02 HSECR 03 2022 highlights 04 Operational & projects performance 05 Reserves, resources & exploration update 06 Financial performance 07 2023 outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION OCTAVIO ALVÍDREZ
Slide 5: Investment Proposition
2 0 2 2 P R E L I M I N A RY R E S U LT S – I N V E S T M E N T P R O P O S I T I O N 5 OUR KEY COMPETITIVE ADVANTAGES POSITION US TO MEET NEAR-TERM COMMITMENTS AND DRIVE LONG-TERM VALUE WORLD’S #1 SILVER HIGH QUALITY PRODUCER MINING ASSETS 53.7 Moz 2.2 Boz 39.1Moz of silver in 2022 Silver Resources
Slide 6: HSECR
HSECR OCTAVIO ALVÍDREZ
Slide 7: Health & Safety, Environment, Community Relations
2 0 2 2 P R E L I M I N A RY R E S U LT S – H S E C R 7 S U S TA I N A B I L I T Y I S C O R E T O O U R P U R P O S E : “ T O C O N T R I B U T E T O T H E W E L L B E I N G O F P E O P L E T H R O U G H T H E S U S TA I N A B L E M I N I N G O F S I LV E R A N D G O L D ” HEALTH ENVIRONMENT COMMUN
Slide 8: 2022 Highlights
2022 HIGHLIGHTS OCTAVIO ALVÍDREZ
Slide 9: Operational Performance Highlights
2 0 2 2 P R E L I M I N A R Y R E S U LT S – O P E R AT I O N A L P E R F O R M A N C E H I G H L I G H T S 9 ATTRIBUTABLE FULL YEAR SILVER TIE IN OF JUANICIPIO TO THE PRODUCTION NATIONAL GRID COMPLETED IN 53.7MOZ 4Q 2022 +1.2% WITH COMMISSIONING UNDERWAY WITH CONTINUED PROGESS IN ADVANCED EXPLORATI
Slide 10: Financial Performance Highlights
2 0 2 2 P R E L I M I N A R Y R E S U LT S – F I N A N C I A L P E R F O R M A N C E H I G H L I G H T S 10 TOTAL REVENUE (US$) ADJUSTED EPS* (US CENTS PER SHARE) 2,433.0M 0.35US¢ per share OPERATING PROFIT (US$) EBITDA MARGIN 283.6M 31% EBITDA (US$) CASH ON HAND AT 31 DEC 2022 (US$) 751.1M 969.1M P
Slide 11: Operational & Projects Performance
O P E R AT I O N A L & PROJECTS PERFORMANCE TOMÁS ITURRIAGA
Slide 12: Operations: Fresnillo
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 12 FRESNILLO Production Grade KEY ACTIONS • Silver production increased 13% year on year • Recruitment and training campaigns continued with the mine well staffed; new equipment being delivered • Deepening of the San Carlos shaft progres
Slide 13: Operations: Saucito
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 13 SAUCITO Production Grade KEY ACTIONS • Recruitment and training progressed with the mine well staffed by year end; KEY OPERATING HIGHLIGHTS FY22 FY21 invested in new equipment Silver production – moz 12.5 13.0 • Development rates stab
Slide 14: Operations: Juanicipio
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 14 J U A N I C I P I O ( J V W I T H M A G S I LV E R . F R E S N I L L O : 5 6 % ) KEY ACTIONS • Completed the tie in of the flotation plant to the national grid • Despite the delay, mineralised material from development and initial pro
Slide 15: Other Operations
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 15 O T H E R O P E R AT I O N S SAN JULIÁN HERRADURA • Silver production at San Julián veins saw a higher ore grade due to • As the scope of the Carbon in Column project was increased to the prioritisation of extraction from wider veins
Slide 16: Costs: Focus on Cost Control and Mitigation
2 0 2 2 P R E L I M I N A RY R E S U LT S – C O S T S 16 A F O C U S O N C O S T C O N T R O L A N D M I T I G AT I O N S FULL SCALE APPRAISAL OF COSTS RESULTING IN DOZENS OF ONGOING INITIATIVES TO REDUCE NON-ESSENTIAL COSTS, INCLUDING: • Optimisation of staffing plans, including rationalisation of
Slide 17: Reserves, Resources & Exploration Update
RESERVES, RESOURCES & E X P L O R AT I O N U P D AT E GUILLERMO GASTÉLUM
Slide 18: Strong Silver Resource & Reserve Bases
RESERVES & RESOURCES 18 S T R O N G S I LV E R R E S O U R C E & R E S E R V E B A S E S SILVER RESOURCES RESOURCES CHANGE 2,204Moz Total silver resources 2022** 2,203,872 2021 2,319,687 Koz -115,814 % -5.0% • Resources decreased 5% vs. 2021, primarily due to depletion and higher costs and cut-off g
Slide 19: Strong Gold Resource & Reserve Bases
RESERVES & RESOURCES 19 STRONG GOLD RESOURCE & RESERVE BASES RESOURCES GOLD RESOURCES CHANGE 39.1Moz Total gold resources 2022** 39,109 2021 38,975 Koz +133.2 % +0.3% • Resources remained stable year on year • Increase at Guanajuato exploration project and 45,000 upgrade to indicated resources at Ce
Slide 20: Projects: Orisyvo, Rodeo, Guanajuato & Tajitos
2 0 2 2 P R E L I M I N A RY R E S U LT S – P R O J E C T S 20 S T R O N G P R O J E C T S F O R T H E F U T U R E - O R I S Y V O , R O D E O & G U A N A J U AT O ORISYVO (GOLD) RODEO (GOLD) GUANAJUATO (SILVER / GOLD) TAJITOS (GOLD) • Good progress towards pre-feasibility • We have strengthened a r
Slide 21: Exploration Update
2 0 2 2 P R E L I M I N A RY R E S U LT S – E X P L O R AT I O N U P D AT E 21 Fresnillo Saucito 2023 Budget: US$175m Herradura Nochebuena 2022 Highlights: Soledad & Dipolos* 51% San Julián ▪ Invested US$167.6 million, up 19.6%, in exploration during FY22 Ciénega Mine Operations ▪ Drilled a total of
Slide 22: Financial Performance
FINANCIAL PERFORMANCE MARIO ARREGUÍN
Slide 23: Income Statement (IFRS)
2 0 2 2 P R E L I M I N A R Y R E S U LT S – I N C O M E S TAT E M E N T ( I F R S ) 23 ( M I L L I O N U S D) ACCUM DECEMBER CHANGE CONCEPT 2022 % 2021 % $ % ADJUSTED REVENUES 2,597.2 2,847.9 (250.7) (8.8) HEDGING (METALS) (3.8) (1.4) (2.4) (179.0) TREATMENT AND REFINING CHARGES (160.5) (143.5) (17
Slide 24: Consolidated Cost Inflation 2022
2 0 2 2 P R E L I M I N A R Y R E S U LT S – C O N S O L I D AT E D C O S T I N F L AT I O N 2 0 2 2 24 (USD BASED) Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel 8.5% 7.7% 0.7% Employees 6.8% 3.7% 0.3% Weighted 7.9% Operating Materials 19.8% 18.6% 3.7% Ene
Slide 25: Adjusted Production Cost Analysis
2 0 2 2 P R E L I M I N A R Y R E S U LT S – A D J U S T E D P R O D U C T I O N C O S T A N A LY S I S 25 ( C O N S O L I D ATE D ) CHANGE YTD 22 YTD 21 $ % Adjusted Production Cost 1,445.8 1,255.1 +190.7* +15.2 Change in inventories and others -59.0 -28.9 -30.2 -104.6 Depreciation 500.6 528.2 -27.
Slide 26: Gross Profit Analysis
USD MILLION 84.0 0.0 168.0 252.0 336.0 420.0 ( C O N S O L I D ATE D ) (84.0) (420.0) (336.0) (252.0) (168.0) 1 New Juanicipio Operation 98.8 Gross Profit 2 Lower stripping to cost effect (-38%) at Herradura 53.5 3 Others 37.6 536.0 YTD 22 4 Higher Metal Prices (Zn +9.5% and Au +0.2%) 27.8 936.9 Hig
Slide 27: Income Statement (IFRS) by Operating Unit
2 0 2 2 P R E L I M I N A R Y R E S U LT S – I N C O M E S TAT E M E N T ( I F R S ) 27 ( M I L L I O N U S D) ACCUM DECEMBER ACCUM CHANGE DIC 2022 C O N C E P T (Million USD) 2022 % 2021 % $ % Operating Units ADJUSTED REVENUES 2,597.2 2,847.9 Fresnillo (250.7) 12.3 (8.8) HEDGING (METALS) (3.8) (1.
Slide 28: Cash Flow (IFRS)
2 0 2 2 P R E L I M I N A R Y R E S U LT S – C A S H F L O W ( I F R S ) 28 ( M I L L I O N U S D) CHANGE CONCEPT 2022 2021 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 743.1 1,208.3 (465.2) (38.5) WORKING CAPITAL (66.1) 58.0 (124.1) N/A INCOME TAX AND PROFIT SHARING PAID (174.
Slide 29: Cash Flow (IFRS) Details
2 0 2 2 P R E L I M I N A R Y R E S U LT S – C A S H F L O W ( I F R S ) 29 • Increase in inventories -US$99.6 million ( M I L L I O N U S D) • Increase in prepayments and other assets -US$14.1 million • Increase in trade and other payable +US$40.3 million CHANGE • Decrease in trade and other accoun
Slide 30: Balance Sheet (IFRS)
2 0 2 2 P R E L I M I N A R Y R E S U LT S – B A L A N C E S H E E T ( I F R S ) 30 ( M I L L I O N U S D) Change Concept 31-DEC-22 31-DEC-21 % Assets Cash and Investments 969.1 1,235.3 (21.6) Trade and Other Receivables 404.5 401.4 0.8 Inventories 587.4 487.8 20.4 Prepaid Expenses 34.4 20.3 69.8 Si
Slide 31: 2023 Outlook
2023 OUTLOOK OCTAVIO ALVÍDREZ
Slide 32: Expected Attributable Production Profile
2 0 2 2 P R E L I M I N A R Y R E S U LT S – E X P E C T E D AT T R I B U TA B L E P R O D U C T I O N 32 PROFILE Production guidance range +/- 5% Potential additional production related to initiatives under development Million Oz Silver* Thousand Oz Gold 80 700 70 600 60 500 50 400 40 4 300 30 20 2
Slide 33: Capex Spend Expectations
2 0 2 2 P R E L I M I N A RY R E S U LT S – C A P E X S P E N D E X P E C TAT I O N S 33 Million Usd 900 800 • Total sustaining capex for 20234 for all of the 700 mines, along with a small part for new 630 592 600 projects approved, is expected to be 530 505 500 US$630m 400 • Part of the expected ca
Slide 34: Consolidated Outlook
2 0 2 2 P R E L I M I N A R Y R E S U LT S – C O N S O L I D AT E D O U T L O O K 34 1 2 Expected Avg. Investment YEAR (US$ million) Annual 2021 2022 2023 2024 2025 2026 2027 Production PROJECT PYRITES PLANT 3.5 moz Ag & 155 13 koz Au (Optimization PRODUCTION project) ENERGY SUPPLY MINE 11.7 moz Ag
Slide 35: Concluding Remarks
2 0 2 2 P R E L I M I N A RY R E S U LT S – C O N C L U D I N G R E M A R K S 35 RESILIENT OPERATING FOCUS ON COSTS CONTINUING TO DELIVERING GROWTH CONFIDENCE IN THE PERFORMANCE IN THROUGH COST ADVANCE AND THROUGH LONG-TERM FUTURE LINE WITH GUIDANCE SAVING INITIATIVES, ENHANCE THE DEVELOPMENT OF THE
Slide 36: Appendix
APPENDIX
Slide 37: Grade Expectations
G R A D E E X P E C TAT I O N S F O R 2 0 2 3 37 GOLD (G/T) MINE MINE TYPE FY 2023e FY 2022 Fresnillo Underground silver 0.50-0.70 0.61 Saucito Underground silver 1.20-1.40 1.40 San Julián (veins) Underground silver & gold 1.20-1.30 1.21 San Julián (disseminated) Underground silver - 0.08 Ciénega Un
Slide 38: Operations: San Julián
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 38 SAN JULIÁN (VEIN SYSTEM) S A N J U L I Á N ( D I S S E M I N AT E D O R E B O D Y ) KEY OPERATING HIGHLIGHTS 2022 2021 KEY OPERATING HIGHLIGHTS 2022 2021 Gold production – koz 43.4 51.8 Gold production – koz 3.3 4.0 Silver production
Slide 39: Operations: Ciénega
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 39 CIÉNEGA KEY ACTIONS • Decrease personnel rotation • Increase productivity and implement efficiency and cost reduction initiatives • Advance exploration programmes to generate resources KEY OPERATING HIGHLIGHTS 2022 2021 Silver product
Slide 40: Operations: Herradura
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 40 HERRADURA KEY ACTIONS • Develop pit slope optimisation pilot programme • Initiate the construction of the 15th leaching pad KEY OPERATING HIGHLIGHTS 2022 2021 Silver production – moz 0.8 0.9 Gold production – oz 349.7 421.5 Cost per t
Slide 41: Operations: Noche Buena
2 0 2 2 P R E L I M I N A RY R E S U LT S – O P E R AT I O N S 41 NOCHE BUENA KEY ACTIONS • Close the open pit operation once reserves have been fully depleted • Continue to extract gold from the leaching pads • Expenditure in 2023 will again primarily be for sustaining capex KEY OPERATING HIGHLIGHT
Slide 42: Contribution to Adjusted Revenues by Metal
2 0 2 2 P R E L I M I N A R Y R E S U LT S – C O N T R I B U T I O N B Y M I N E A N D B Y M E TA L 42 TO ADJUSTED REVENUES 2022 2022 ADJUST ED REVENUES : US$2, 597.2M ACCUM DECEMBER CHANGE BY: PRODUCT (Million USD) 2022 2021 VOLUME PRICE TOTAL GOLD 1,114.2 1,305.3 (194.0) 2.9 (191.1) SILVER 1,089.2
Slide 43: Contribution to Adjusted Revenues by Mine and Metal
2 0 2 2 P R E L I M I N A R Y R E S U LT S – C O N T R I B U T I O N B Y M I N E A N D B Y M E TA L 43 TO ADJUSTED REVENUES 2022 2022 ADJUST ED REVENUES 1 : US$2, 597.2M By mine By metal 10% 4% 18% 11% 7% 9% 43% 19% 6% 42% 7% 24% Fresnillo Saucito Ciénega Herradura Silver Gold Noche Buena San Julián
Slide 44: Adjusted Production Cost 2022
2 0 2 2 P R E L I M I N A R Y R E S U LT S – A D J U S T E D P R O D U C T I O N C O S T - 2 0 2 2 44 2022 ADJUST ED P RODUCTI ON COST : US$1,445. 8M Costs from Contractors = 25% = US$362.8 M Operating Materials 25% Own 19% Ctrt. 6% Energy 17% Own 16% Maintenance Ctrt. 1% & repairs 19% Own 17 % Ctrt
Slide 45: Notes
NOTES 45 4