Fresnillo Plc · LSE:FRES
Fresnillo — H1 2010 Earnings Presentation
30 slides from Fresnillo's earnings presentation, Aug 3, 2010
Slide 1: Fresnillo plc Interim Results to 30 June 2010
Fresnillo plc Interim Results to 30 June 2010 August 3, 2010
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”, “inte
Slide 3: Agenda
Agenda H1 2010 Highlights - Jaime Lomelín CEO Operations and Development Projects - Manuel Luévanos COO Exploration - David Giles VP Exploration Financial Review - Mario Arreguín CFO Conclusions - Jaime Lomelín CEO Q&A 2
Slide 4: H1 2010 Highlights – A sterling performance
H1 2010 Highlights – A sterling performance Operations Record attributable silver and gold production of 19.1 million ounces and 176,351 ounces respectively Soledad-Dipolos at full capacity Financial Outstanding metal prices average realized silver price US$17.93 per oz, up 28.8 average realized gol
Slide 5: H1 2010 Highlights – Investing in our future
H1 2010 Highlights – Investing in our future Projects Saucito construction on track; start up in 1H11 Ciénega expansion advancing according to plan San Julián and Orisyvo scoping studies and Nochebuena and Juanicipio prefeasibility studies all to be concluded before the end of 2010 Exploration A bud
Slide 6: Operations - Maximising the potential of existing operations
Operations - Maximising the potential of existing operations Fresnillo–Underground Ciénega–Underground Herradura–Open pit Soledad & Dipolos–Open pit H1 2010 Attributable production Vs. H1 2009 Silver: 17.8 m oz 1.6% 0.7 m oz -10.0% 0.1 m oz 40.2% 0.0 m oz Gold: 11.5 k oz -8.7% 55.8 k oz 17.1% 79.6 k
Slide 7: On track to produce 65m oz of silver and over 400k oz of gold by 2018
On track to produce 65m oz of silver and over 400k oz of gold by 2018 Estimated project delivery programme Soledad & Dipolos Commencement of commercial production in January 2010 Project 2010 2011 2012 2013 2014 Contributing 15.6% of the attributable gold production Soledad - Production Expansion Ex
Slide 8: Fresnillo District - Deliver growth through development projects and expansions
Fresnillo District - Deliver growth through development projects and expansions Minera Saucito Positive drilling results on the Jarillas West and Santa Natalia Southeast veins Saucito shaft commissioned and fully operational Jarillas shaft at 208 m depth of 630 m All equipment for the mill has been
Slide 9: Ciénega Expansion
Ciénega Expansion 8
Slide 10: Saucito Project
aw FRESNILLO. Saucito Project san nnsnTiTily, - poms nentliny FRESNILLO plc LEADERSHIP. QUALITY. SUSTAINABLE GROWTH. 9
Slide 11: Exploration – Extending the growth pipeline
Exploration – Extending the growth pipeline SOLEDAD CENTAURO DEEP HERRADURA NOCHEBUENA ALTAR Budget increased to US$ 119.2 LEONES million, up 39% ORISYVO SAN JULIAN CIÉNEGA 75% Brownfields LAS CASAS LUCERITO 25% Greenfields MAZANILLAS SAN JUAN SAN RAMON FRESNILLO SOMBRERETE SAUCITO 70% Exploration J
Slide 12: Herradura and Ciénega Districts
Herradura and Ciénega Districts Noche Buena Located 24 km from Herradura mine In-house resource calculation 627,000 oz gold with grade 0.45 g/t and low stripping ratio Drilling and engineering studies continue Prefeasibility study will be concluded in 2010 All the surface land required has been secu
Slide 13: Advanced Exploration Prospects
Advanced Exploration Prospects Orisyvo Large porphyry related gold system Drilling extended the upper north and west oxide gold deposits and the deeper central sulphide zone Exploration potential is open to the north and east Construction of a 1.5 km exploration adit was approved to obtain samples a
Slide 14: Consolidated Income Statement
Consolidated Income Statement ACUM JUNE CHANGE C O N C E P T (US $ MILLIONS) 1H10 % 1H09 % $ % ADJUSTED REVENUES 636.3 426.0 210.3 49.4 HEDGING - (12.0) 12.0 (100.0) TREATMENT AND REFINING CHARGES (30.6) (35.1) 4.5 (12.8) REVENUES 605.7 100.0 378.9 100.0 226.8 59.8 ADJUSTED PRODUCTION COST (142.8) (
Slide 15: Contribution By Mine to the Adjusted Revenues
Contribution By Mine to the Adjusted Revenues Adj. Revenues: US$636.3 m By mine By metal 9% 3% 2% 13% 49% 52% 46% 26% Fresnillo Herradura Silver Gold Ciénega Sol & Dip Zinc Lead Fresnillo Ciénega Herradura Sol & Dip Consol Gold 10.33 3.2% 60.13 71.1% 163.77 97.7% 57.13 99.4% 291.37 45.8% Silver 296.
Slide 16: Consolidated Income Statement
Consolidated Income Statement ACUM JUNE CHANGE C O N C E P T (US$ MILLION) 1H10 % 1H09 % $ % ADJUSTED REVENUES 636.3 426.0 210.3 49.4 HEDGING - (12.0) 12.0 (100.0) TREATMENT AND REFINING CHARGES (30.6) (35.1) 4.5 (12.8) REVENUES 605.7 100.0 378.9 100.0 226.8 59.8 ADJUSTED PRODUCTION COST (142.8) (23
Slide 17: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE 1H10 1H09 $ % Adjusted Production Cost 142.76 100.43 42.34* +42.16 • Discount applied by suppliers to the • Increase in insurance premiums. acquisition of some spare parts. • Maintenance to administrative • offices & workers houses. USD MILLION
Slide 18: Contribution By Mine to the Adjusted Production Cost
Contribution By Mine to the Adjusted Production Cost Adj Prod Cost: US$142.8 m 8% 1% 16% 22% 15% 36% 19% 19% 17% 29% 18% * Fresnillo Herradura Op Mat Mainten Energy & Diesel Ciénega Sol & Dip Contrac* Person Others Freights Fresnillo Ciénega Herradura Sol & Dip Consol Personnel 9.79 18.9% 4.58 17.3%
Slide 19: Cost Per Tonne and Cash Cost
Cost Per Tonne and Cash Cost COST PER TONNE MINE UNIT 1H10 1H09 % CHG. Fresnillo US$/TON 40.76 35.68 14.2% Ciénega US$/TON 63.32 59.49 6.4% Herradura US$/TON 5.05 5.03 0.4% Soledad & Dipolos US$/TON 4.65 - N/A CASH COST Fresnillo PER OZ. SILVER 3.58 3.70 (3.3%) Ciénega PER OZ. GOLD 184.49 284.16 (35
Slide 20: Consolidated Income Statement
Consolidated Income Statement ACUM JUNE CHANGE C O N C E P T (US$ MILLIONS) 1H10 % 1H09 % $ % ADJUSTED REVENUES 636.3 426.0 210.3 49.4 HEDGING - (12.0) 12.0 (100.0) TREATMENT AND REFINING CHARGES (30.6) (35.1) 4.5 (12.8) REVENUES 605.7 100.0 378.9 100.0 226.8 59.8 ADJUSTED PRODUCTION COST (142.8) (2
Slide 21: Higher depreciation Revaluation effect
Consolidated Gross Profit Analysis CHANGE 1H10 1H09 $ % Gross Profit 401.5 220.2 +181.3* +82.4 1H10 1H09 Chg Prop., Plant and Equip. M US$ Hedging -2.6 +3.7 -6.24 1H2010 1H2009 Chg USD MILLION 1,067.2 862.4 +23.7% 235.0 Chg. Inv. +2.2 + 5.5 -3.29 Gold Production at Herradura (Oz): 5.5 4.7 (1.2) (2.3
Slide 22: Contribution By Mine to the Gross Profit
Contribution By Mine to the Gross Profit CHANGE 1H10 1H09 US$ % Fresnillo 223.23 154.44 68.79 44.5 Herradura 95.83 59.75 36.08 60.4 Ciénega 42.31 21.94 20.37 92.8 Sol & Dipolos 37.24 - 37.24 N/A GROSS PROFIT FROM OP UNITS 398.61 236.13 162.48 68.8 Others 2.87 (15.98) 18.85 N/A TOTAL GROSS PROFIT 401
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Slide 24: Consolidated Income Statement
Consolidated Income Statement ACUM JUNE CHANGE C O N C E P T ( US$ MILLIONS) 1H10 % 1H09 % $ % ADJUSTED REVENUES 636.3 426.0 210.3 49.4 HEDGING - (12.0) 12.0 (100.0) TREATMENT AND REFINING CHARGES (30.6) (35.1) 4.5 (12.8) REVENUES 605.7 100.0 378.9 100.0 226.8 59.8 ADJUSTED PRODUCTION COST (142.8) (
Slide 25: Consolidated Income Statement
Consolidated Income Statement ACUM JUNE CHANGE CONCEPT 1H10 % 1H09 % $ % ADJUSTED REVENUES 636.3 426.0 210.3 49.4 HEDGING - (12.0) 12.0 (100.0) TREATMENT AND REFINING CHARGES (30.6) (35.1) 4.5 (12.8) REVENUES 605.7 100.0 378.9 100.0 226.8 59.8 ADJUSTED PRODUCTION COST (142.8) (23.6) (100.4) (26.5) (
Slide 26: Consolidated Cash Flow
Consolidated Cash Flow (US $ millions) CHANGE CONCEPT 1H 2010 1H 2009 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 419.9 234.3 185.6 79.2 INCREASE IN WORKING CAPITAL (53.3) (57.3) 4.0 (7.0) INCOME TAX AND PROFIT SHARING PAID (61.0) (82.8) 21.9 (26.4) NET CASH FROM OPERATING ACT
Slide 27: Consolidated Cash Flow (IFRS)
Consolidated Cash Flow (IFRS) (US $ millions) CHANGE CONCEPT 1H 2010 1H 2009 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 419.9 234.3 Increase in trade 185.6 79.2 WORKING CAPITAL (53.3) receivables (57.3)resulting from 4.0 (7.0) higher prices and volumes INCOME TAX AND PROFIT S
Slide 28: Balance Sheet (IFRS)
Balance Sheet (IFRS) Change Concept (US$ millions) Jun-10 Dic-09 % Assets Cash and Investments 389.8 312.2 24.9 Accounts Receivable 146.2 128.4 13.9 Inventories 42.3 33.8 25.3 Prepaid Expenses 4.0 1.9 107.6 Silverstream 291.0 298.7 (2.6) Derivative Financial Instruments - 1.4 N/A Property, Plant and
Slide 29: Creating value through leadership, quality and sustainable growth
Creating value through leadership, quality and sustainable growth Zero fatalities and focus on health and safety performance Maintaining positive and productive relations with the labour force and communities where we operate Commitment to growth and the development of further world-class assets We
Slide 30: 2010 Outlook
2010 Outlook Silver production expected to be in line with 2009 Gold production expected to be 340,00 oz reflecting Soledad-Dipolos start-up Saucito construction and Ciénega’s expansion on track, with planned start up in H1 2011 Record Fresnillo’s exploration budget, US$119.2 million with 40 drill r