Fresnillo Plc · LSE:FRES
Fresnillo — BofAML Global Metals, Mining & Steel Conference 2015
31 slides from Fresnillo's conference presentation, May 13, 2015
Slide 1: BofAML Global Metals, Mining & Steel Conference 2015
“Well placed to address cyclical uncertainties” BofAML Global Metals, Mining & Steel Conference 2015 13 May 2015 Octavio Alvídrez, CEO Fresnillo plc LSE: FRES BMV: FRES www.fresnilloplc.com
Slide 2: Disclaimer
Disclaimer 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: Fresnillo at a Glance
Fresnillo at a Glance Location Key Highlights World’s largest silver producer and Mexico’s second largest HERRADURA gold producer DISTRICT Market cap of US$8 billion* ORISYVO Mining concessions of 2m hectares in Mexico and 370 SAN JULIÁN thousand hectares in Peru Cash costs and AISC amongst the lowe
Slide 4: Our Business Model and Strategy
Our Business Model and Strategy Our Business Model+ +supported by four strategic pillars to create value 1. Maximise potential of existing operations • Operate at 100% capacity • Low-cost producer • Optimise mining method and metallurgy to maintain high recovery rates 2. Deliver growth through devel
Slide 5: Mining Districts
Mining Districts HERRADURA DISTRICT Mines: Herradura, Soledad and Noche Buena 2014 production: 394.8k oz gold Resources: 8.95 Moz gold New facilities: Dynamic Leaching Plant Exploration: Centauro Deep, Tajitos, Choya, San Javier, Las Norias, El Nudo, Carina, Cerritos, El Dorado CIÉNEGA DISTRICT Mine
Slide 6: Districts of the Future
Districts of the Future SAN JULIÁN Under construction Silver-gold veins and disseminated ore body Resources: 190 Moz silver, 860 koz gold Approved CAPEX: US$515m Flotation plant with 6,000 tpd capacity Dynamic leaching plant with 3,000 tpd capacity Average expected level of production: 10.3 Moz silv
Slide 7: 2014 Operational Highlights
2014 Operational Highlights • Maximise the potential of existing operations – Annual silver production (including Silverstream) up 4.9% to 45.0 moz – Optimised milling capacity to 4,000 tpd at Ciénega – Reached full capacity at Noche Buena following plant expansion • Deliver growth through developme
Slide 8: 2014 Operational Highlights
2014 Operational Highlights • Extend the growth pipeline – Despite lower price assumptions1, total gold and silver reserves rose 45% and 21% respectively; gold resources rose 2% – Gold reserves and resources at Centauro pit grew 96% and 32% respectively; evaluated Mega Centauro expansion as natural
Slide 9: 2014 Production Overview
2014 Production Overview 2014 PRODUCTION* 2013 PRODUCTION* SILVER GOLD SILVER GOLD (Koz) (Oz) (Koz) (Oz) Fresnillo mine Silver underground mine 20,098 35,676 22,764 33,079 Saucito mine Silver underground mine 15,397 57,227 11,581 45,177 Ciénega mine Gold-Silver underground mines 4,075 108,211 4,240
Slide 10: Cash Costs
Cash Costs Cash Costs among the lowest in the industry ESTIMATED LIFE OF MINE CASH COST Traditional* All-in sustaining costs** WEIGHTED AVERAGE MINE UNIT Fresnillo PER OZ. SILVER 5.29 9.84 6.20 (2023) Saucito PER OZ. SILVER 2.48 5.43 6.00 (2021) Ciénega PER OZ. GOLD 288.00 786.40 803.12 (2026) Herra
Slide 11: 2014 Financial Highlights
2014 Financial Highlights (variations vs 2013) • Adjusted revenue of US$1,545m, down 12.3% as a result of lower prices (Au -10.2%; Ag -18.4%) and the stoppage of operations at Soledad-Dipolos • Cost inflation in US$ terms remained subdued (+1.6%) • Cost per tonne in the underground mines remained br
Slide 12: Strong Pipeline
Strong Pipeline Despite lower price Fresnillo assumptions, total gold Saucito I & II and silver reserves rose Mine Operations Herradura (DLP) 45% and 21% Nochebuena respectively; gold Ciénega - San Ramón resources rose 2%; silver Soledad &Dipolos* resources declined 6% Development Projects San Juliá
Slide 13: Expected Delivery of Growth
Expected Delivery of Growth Expected Investm ent YEAR (US$ million) Avg. Annual 2015 2016 2017 2018 2019 2020 Production (1) (2) PROJECT CONSTRUCTION 10.3 m oz Ag LEA CHING P LA NT 515 & 44 koz Au SAN JULIÁN PRODUCTION CONSTRUCTION FLOTATION PLANT LEACHING PLANT CONSTRUCTION PRODUCTION 3.5 m oz Ag &
Slide 14: Achieving 65moz Silver by 2018
Achieving 65moz Silver by 2018 Thousand Oz 100,000 Juanicipio - 56% 90,000 Pyrites Plant 80,000 San Julián 70,000 Saucito II 60,000 Saucito I 50,000 40,000 Ciénega Expansion 30,000 Ciénega 20,000 10,000 TPD Fres Expansion 10,000 Fresnillo - 2014 2015 2016 2017 2018 Yr 14
Slide 15: Achieving 750koz Gold by 2018
Achieving 750koz Gold by 2018 Thousand Oz 1,000 Orisyvo 900 Juanicipio - 56% 800 San Julián Pyrites Plant 700 Saucito II 600 Saucito I - - 500 - - Ciénega Expansion Ciénega 400 - - - - - Fresnillo 300 - Nochebuena - - 200 - - Dynamic Leaching - 100 Mega Centauro Herradura - 2014 2015 2016 2017 2018
Slide 16: CAPEX & Exploration Spend
CAPEX & Exploration Spend CAPEX 2015 US$ Million US$ Million Sustaining 1,000 • Sustaining $185 900 • Mining Works (Underground) $87 800 • Mining Works (Stripping) $89 700 US$ 600 New Projects Million 500 • San Julián $133 400 • Pyrites Plant $60 300 • Saucito II $53 200 100 • Merrill Crowe at DLP $
Slide 17: San Julián Project
San Julián Project The project encompasses an underground mine and the construction of two plants: i) a flotation plant with 6,000 TPD capacity to process ore from the disseminated body ii) a Dynamic Leaching Plant (DLP) to treat 3,000 TPD of ore from the veins Construction progressing with the DLP
Slide 18: Pyrites Project
Pyrites Project This facility is expected to increase silver and gold recovery by processing on-going tailings from the Fresnillo and Saucito mines, as well as historical tailings from Fresnillo The plant will froth float pyrite concentrates that will be leached in a 2,000TPD DLP and Merrill-Crowe p
Slide 19: Conclusions and Outlook
Conclusions and Outlook Outlook • We have had a strong start to 2015, with operations performing well and providing a good platform for growth • Financial and operational flexibility maintained • Defined strategic plan to address cyclical uncertainties • We will maintain focus on stringent cost cont
Slide 20: Appendix
“Looking beyond the cycle” Appendix
Slide 21: Fresnillo Mine: Summary
Fresnillo Mine: Summary 2014 2013 Change % Ore processed kt 2,625.0 2,703.4 -78.4 -2.9 Ore grade Silver g/t 258.5 285.3 -26.8 -9.4 Gold g/t 0.5 0.5 0.0 6.1 Lead % 0.6 0.6 0.0 -6.4 Zinc % 1.0 0.9 0.0 4.0 Total production Silver m oz 20.1 22.8 -2.7 -11.7 Gold k oz 35.7 33.1 2.6 7.9 Lead kt 13.9 15.6 -
Slide 22: Saucito Mine: Summary
Saucito Mine: Summary 2014 2013 Change % Ore processed kt 1,534.6 1,181.7 352.8 29.9 Ore grade Silver g/t 338.9 329.6 9.4 2.8 Gold g/t 1.4 1.4 0.0 -0.4 Lead % 0.7 0.6 0.2 34.4 Zinc % 1.3 0.9 0.5 52.5 Total production Silver m oz 15.4 11.6 3.8 32.9 Gold k oz 57.2 45.2 12.1 26.7 Lead kt 10.0 5.6 4.4 7
Slide 23: Ciénega Mine: Summary
Ciénega Mine: Summary 2014 2013 Change % Ore processed kt 1,341.6 1,242.2 99.4 8.0 Ore grade Gold g/t 2.6 2.9 -0.3 -10.5 Silver g/t 108.5 121.6 -13.0 -10.7 Lead % 0.5 0.6 0.0 -5.3 Zinc % 0.7 0.8 0.0 -3.4 Total production Gold k oz 108.2 112.1 -3.8 -3.4 Silver m oz 4.1 4.2 -0.2 -3.9 Lead kt 4.7 4.8 -
Slide 24: Herradura Mine: Summary
Herradura Mine: Summary GOLD Ore Grade 2014 2013 Change % (Gms/T) 22,305.1 Total Ore processed kt 14,363.3 7,941.8 55.3 1.2 Ore grade 1.1 Gold g/t 0.7 0.6 0.1 18.9 1.0 Silver g/t 1.2 1.1 0.1 12.0 0.9 0.8 0.72 0.65 0.61 Total production 0.7 0.57 0.6 Gold k oz 265.6 264.6 1.0 0.4 0.5 Silver k oz 679.1
Slide 25: Noche Buena Mine: Summary
Noche Buena Mine: Summary 2014 2013 Change % Total Ore processed kt 15,607.2 12,283.7 3,323.5 27.1 Ore grade Gold g/t 0.5 0.5 0.0 -6.1 Silver g/t 0.4 0.2 0.1 50.5 Total production Gold k oz 129.2 108.7 20.5 18.9 Silver k oz 102.4 49.2 53.1 108.0 • 100% Fresnillo post acquisition of Newmont’s 44% sta
Slide 26: Income Statement (IFRS)
Income Statement (IFRS) ACCUM DECEMBER CHANGE CONCEP T 2014 % 2013 % $ % ADJUSTED REVENUES 1,545.0 1,761.9 (216.9) (12.3) HEDGING (METALS) 0.1 0.3 (0.2) (61.1) TREATMENT AND REFINING CHARGES (131.4) (147.0) 15.6 (10.6) REVENUES 1,413.7 100.0 1,615.2 100.0 (201.5) (12.5) ADJUSTED PRODUCTION COST (678
Slide 27: Cash Flow (IFRS)
Cash Flow (IFRS) CHANGE C O N C E P T (Million USD) YTD 2014 YTD 2013 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 568.5 750.2 (181.7) (24.2) WORKING CAPITAL (183.4) 34.5 (217.9) N/A INCOME TAX AND PROFIT SHARING PAID (263.5) (338.6) 75.2 (22.2) NET CASH FROM OPERATING ACTIVITI
Slide 28: Balance Sheet (IFRS)
Balance Sheet (IFRS) Change Concept (Million USD) 31-DIC-14 31-DIC-13 % Assets Cash and Investments 449.3 1,251.7 (64.1) Trade and Other Receivables 456.1 267.5 70.5 Inventories 305.6 208.1 46.8 Prepaid Expenses 3.4 5.3 (37.0) Silverstream 392.3 372.8 5.2 Derivative Financial Instruments 14.6 2.1 60
Slide 29: Reserves 2014
Reserves 2014 Tonnes and Grades Metal content Mine / project Tonnes Grades Au Ag Pb Zn Ag Eq. * Cut-off Mt Au gpt Ag gpt % Pb % Zn koz Moz kt kt Moz Fresnillo 2014 165 gpt Ag Eq. 26.79 0.64 266 1.46 2.96 552 229 392 793 402 2013 125 gpt Ag Eq 31.83 0.65 271 1.47 2.75 668 278 467 875 460 % Incr. 32.0
Slide 30: Mineral Resources 2014: Operating Mines & San Julian Project
Mineral Resources 2014: Operating Mines & San Julian Project Tonnes and Grades Metal content Mine / project Tonnes Grades Au Ag Pb Zn Ag Eq. * Cut-off Mt Au gpt Ag gpt % Pb % Zn koz Moz kt kt Moz Fresnillo 2014 103 gpt Ag Eq 66.20 0.73 354 1.41 2.80 1,563 753 931 1,851 1,176 2013 83 gpt Ag Eq 69.48
Slide 31: Mineral Resources 2014 (cont): Exploration Projects
Mineral Resources 2014 (cont): Exploration Projects Tonnes and Grades Metal content Mine / project Tonnes Grades Au Ag Pb Zn Ag Eq. * Cut-off Mt Au gpt Ag gpt % Pb % Zn koz Moz kt kt Moz Orisyvo 2014 Multi ple ** 279.42 0.97 1 8,718 11 568 2013 Multi ple ** 321.47 0.96 1 9,892 13 648 % Incr. 0.0% -1
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