Fresnillo Plc · LSE:FRES
Fresnillo — Citi Milan Symposium 2011
36 slides from Fresnillo's conference presentation, Mar 29, 2011
Slide 1: Citi Milan Symposium
Citi Milan Symposium Arturo Espínola Investor Relations Fresnillo plc Tuesday, 29 March, 2011
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: 2010 Operational Highlights
2010 Operational Highlights • Record attributable silver production of 38.6 million oz (up 1.7%) • Record attributable gold production of 368,995 oz (up 33.4%) • First year of operations at Soledad-Dipolos exceeded expectations • Substantial increase in total resources: 1.5 billion oz of silver (up
Slide 4: 2010 Financial Highlights
2010 Financial Highlights • Adjusted revenue1 up 56.1% to US$1,473.9 million • EBITDA2 up 90.3% to US$945.0 million, EBITDA margin increases to 67.0%, from 58.4% in 2009 • Cost controls and efficiency measures enabled Fresnillo to remain in the lowest quartile of the cost curve • Operating profit3 u
Slide 5: Operations Review
Operations Review Tuesday, 29 March, 2011
Slide 6: Operation Review - Fresnillo
Operation Review - Fresnillo • Ownership: 100% Fresnillo plc • Location: Zacatecas • Facilities: Underground mine, flotation plant • 2010 Milling capacity: 8,000 tpd Financial highlights 2010 2009 % • In operation since: 1554 US$m change • Workforce: 896 employees, 635 Adjusted revenues 783.5 557.3
Slide 7: Operation Review - Ciénega
Operation Review - Ciénega • Ownership: 100% Fresnillo plc • Location: Durango • Facilities: Underground mine, flotation and leaching plants • 2010 Milling capacity: 2,500 tpd Financial highlights 2010 2009 % US$m change • In operation since: 1992 • Workforce: 439 employees, 329 Adjusted revenues 18
Slide 8: Operation Review - Herradura
Operation Review - Herradura • Ownership: 56% Fresnillo plc • Location: Sonora • Facilities: Open pit mine, heap leach / Merrill-Crowe plant • In operation since: 1997 Financial highlights 2010 2009 % • Workforce: 619 employees, 128 US$m change contractors Adjusted revenues 366.8 246.5 48.8 • Ore gr
Slide 9: Operation Review – Soledad & Dipolos
Operation Review – Soledad & Dipolos • Ownership: 56% Fresnillo plc • Location: Sonora • Facilities: Open pit mine, Merrill- Crowe plant • In operation since: 2010 Financial highlights 2010 2009 % US$m change • Workforce: 323 employees, 99 contractors Adjusted revenues 137.2 - N/A • Ore grade in res
Slide 10: Exploration
Exploration Tuesday, 29 March, 2011
Slide 11: Audited Resources and Reserves
Audited Resources and Reserves Metal contained in Total Resources • Substantial increase in Total 1,800 Resources (Measured, Indicated 1,500 and Inferred): Silver (Moz) 1,200 – Silver 1,473 Moz, up 14% 900 – Gold 20.1 Moz, up 44% 600 300 • Total Reserves replenished and 2008 2009 2010 increased: – S
Slide 12: Exploration
Exploration • New extensions of the ore bodies at Saucito, Orisyvo and Centauro Fresnillo Deep Mine Operations Herradura Ciénega Soledad-Dipolos • Largest land position for precious Saucito Development Projects metals exploration and mining in Nochebuena Mexico and we continued to Advanced San Ramón
Slide 13: Minera Saucito Project
Minera Saucito Project • On track and on budget to start commercial operations in 1H 2011 • First year production of 4.7 Moz of Ag and 22.5 koz of Au • Ramping up to more than 9.0 Moz of silver and 45 koz of gold per year by 2013 Citi Milan Symposium Tuesday, 29 March, 2011 13
Slide 14: Exploration at Saucito and Juanicipio projects
Exploration at Saucito and Juanicipio projects • Minera Saucito expansion – A new ore-shoot was discovered west of the Jarillas shaft, adding over 76 Moz of Ag and 300 koz of Au to the resources – Indicated & inferred resources: 362 Moz of Ag and 1.5 Moz of Au • Minera Juanicipio (56% Fresnillo plc)
Slide 15: Ciénega district projects
Ciénega district projects • San Ramón – Indicated & inferred resources: 21.8 Moz of Ag and 132 koz of Au – 23,681 metres of drilling, converted 46% of resources to indicated – Decreasing grade and block reclassification led to a 67% reduction in total resources – Exploration continues along the San
Slide 16: Herradura district projects
Herradura district projects • Noche Buena – 470,000oz gold resources – Pre feasibility completed 2H 2010 – Construction commences 2Q 2011 – Expected annual production 75kozpa – Start up expected 1H 2012 • Centauro Deep – Indicated & inferred resources (attributable) 1.3 Moz of gold – Gold grades cou
Slide 17: Projects in new mining districts
Projects in new mining districts • Orisyvo – Indicated & inferred resources: 2.7 oz of Au in oxides and 6.51 MOz in sulphides – Disseminated gold values have been delineated over a 1 by 1.5km area, and through 400 metres vertical extent, with grades ranging 0.5 to 2.5g/t Au – The site for an explora
Slide 18: Projects in new mining districts
Projects in new mining districts • San Julian – Indicated & inferred resources: 144 Moz of Ag and 488 koz of Au – 61,163 metres of drilling in 181 holes. • Infill drilling on the JM disseminated ore body with silver-lead-zinc values converted 101 Moz of Ag to indicated • Silver-gold resources were a
Slide 19: Conclusions
Conclusions Tuesday, 29 March, 2011
Slide 20: Conclusions
Conclusions • Volatile metal prices set to continue • Focus on increasing productivity, containing costs, expanding the resource and reserve base, and strengthening our growth pipeline • Looking ahead to 2011: – Improved safety performance – Commissioning of Saucito – Commissioning of expanded milli
Slide 21: Financial Review
Financial Review Tuesday, 29 March, 2011
Slide 22: Contribution by Mine and Metal to the Adjusted Revenues
Contribution by Mine and Metal to the Adjusted Revenues Adj. Revenues2: US$1,473.92 m By mine By metal 3% 2% 9% 13% 51% 53% 44% 25% Fresnillo Herradura Silver Gold Ciénega Sol & Dip (New Mine) Zinc Lead Fresnillo Ciénega Herradura Sol & Dip Consol Gold 25.23 3.2% 133.34 71.5% 358.67 97.8% 136.06 99.
Slide 23: Cost per Tonne and Cash-Cost (IFRS)
Cost per Tonne and Cash-Cost (IFRS) COST PER TONNE MINE UNIT 2010 2009 % CHG. Fresnillo US$/TON 41.73 37.24 12.1% Ciénega US$/TON 65.86 61.45 7.2% Herradura US$/TON 5.64 5.17 9.1% Soledad & Dipolos US$/TON 5.71 - N/A CASH COST Fresnillo PER OZ. SILVER 3.34 3.37 (1.1%) Ciénega PER OZ. GOLD 193.86 190
Slide 24: Contribution by Concept to the Adjusted Production Cost
Contribution by Concept to the Adjusted Production Cost Adj Prod Cost: US$312.0 m 3% 6% 22% 15% Op Mat Mainten Energy & Diesel Contrac Person Others Freights 17% 19% 18% Fresnillo Ciénega Herradura Sol & Dip Consol Personnel 20.04 18.8% 9.44 16.6% 11.17 11.9% 4.61 8.4% 45.25 14.5% Maintenance and re
Slide 25: Contribution by mine to the Gross Profit
Contribution by mine to the Gross Profit (US$ millions) CHANGE 2010 2009 Amount % Fresnillo 574.80 59.2% 366.17 65.4% 208.62 50.8% 57.0% Ciénega 94.13 9.7% 65.30 11.7% 28.82 7.0% 44.1% Herradura 217.29 22.4% 128.38 22.9% 88.91 21.7% 69.3% Soledad & Dipolos 84.09 8.7% - N/A 84.09 20.5% N/A Total for
Slide 26: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE 2010 2009 $ % Adjusted Production Cost 311.97 209.70 102.27* +48.77 Change in inventories -16.77 12.94 -29.71 N/A Depreciation 105.22 67.32 37.90 +56.29 PTU 37.68 24.58 13.10 +53.27 Hedging (mxp/usd exchange rate) -3.02 (Profit) 7.08 (Loss) -10
Slide 27: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE • Maintenance and repairs of locomotives at the Fresnillo mine. 2010 2009 • Maintenance $ of equipment resulting % from increased volumes of ore Adjusted Production Cost and waste material hauled. 311.97 209.70 102.27* +48.77 Change in inventor
Slide 28: Consolidated Gross Profit Analysis
0.0 57.0 114.0 171.0 228.0 285.0 342.0 399.0 456.0 513.0 570.0 Increase in silver price 212.7 Increase in gold USD MILLION price 103.0 Citi Milan Symposium Soledad & Dipolos Gross Profit 84.1 Higher prod at Herradura 47.8 Gross Profit Hedging Losses 24.8 Cost hedging and change in 23.8 inventories I
Slide 29: Consolidated Gross Profit Analysis
Consolidated Gross Profit Analysis CHANGE • Prop., Plant and Equip.MUS$ 2010 2010 2009 Chg 2009 Gold $ production at Ciénega (Oz): % 2010 2009 Chg Hed. -3.0 +7.1 N/A 1,222.2 1,011.7 +20.8% 2010 2009 +446.2* Chg Gross Profit Chg. Inv. -16.8974.5 +12.9 N/A 528.3 113,351 103,510 +9.5% +84.5 • Increased
Slide 30: Consolidated Income Statement
Consolidated Income Statement ACUM DECEMBER CHANGE C O N C E P T (US$ MILLIONS) 2010 % 2009 % $ % ADJUSTED REVENUES 1,473.9 944.0 530.0 56.1 HEDGING (METALS) - (24.8) 24.8 N/A TREATMENT AND REFINING CHARGES (64.4) (69.2) 4.9 (7.0) REVENUES 1,409.6 100.0 849.9 100.0 559.6 65.8 ADJUSTED PRODUCTION COS
Slide 31: Consolidated Income Statement without Silverstream Effect
Consolidated Income Statement without Silverstream Effect ACUM DECEMBER CHANGE C O N C E P T (US$ MILLIONS) 2010 % 2009 % $ % ADJUSTED REVENUES 1,473.9 944.0 530.0 56.1 HEDGING (METALS) - (24.8) 24.8 N/A TREATMENT AND REFINING CHARGES (64.4) (69.2) 4.9 (7.0) REVENUES 1,409.6 100.0 849.9 100.0 559.6
Slide 32: Consolidated Income Statement
Consolidated Income Statement ACUM DECEMBER CHANGE C O N C E P T (US$ MILLIONS) 2010 % 2009 % $ % ADJUSTED REVENUES 1,473.9 944.0 530.0 56.1 HEDGING (METALS) - (24.8) 24.8 N/A TREATMENT AND REFINING CHARGES (64.4) (69.2) 4.9 (7.0) REVENUES 1,409.6 100.0 849.9 100.0 559.6 65.8 ADJUSTED PRODUCTION COS
Slide 33: Consolidated Income Statement
Consolidated Income Statement Additional services provided by ACUM DECEMBER CHANGE C O N C E P T (US$ MILLIONS) Peñoles 2010 related %to: (i) the start 2009 up%of $ % ADJUSTED REVENUES comercial 1,473.9 operations at Soledad- 944.0 530.0 56.1 HEDGING (METALS) Dipolos, and - (ii) the construction (24
Slide 34: Consolidated Cash Flow
Consolidated Cash Flow CHANGE CONCEPT (US $ millions) 2010 2009 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 983.6 548.8 434.9 79.2 WORKING CAPITAL (165.9) (37.8) (128.1) 338.6 INCOME TAX AND PROFIT SHARING PAID (117.0) (120.2) 3.3 (2.7) NET CASH FROM OPERATING ACTIVITIES 700.7
Slide 35: Consolidated Cash Flow
Consolidated • TradeCash Flow and other receivables rose due to the increase in accounts receivables (increase in price and sales volumes). • Inventories increased as a CHANGE result of the higher volumes of CONCEPT (US $ millions) 2010 ore deposited at the Soledad- % 2009 $ CASH GENERATED BY OPERAT
Slide 36: Balance Sheet
Balance Sheet CHANGE Concept USD millions Dic-10 Dic-09 % Assets Cash and Investments 559.5 312.2 79.2 Trade and Other Receivables 236.7 128.4 84.3 Inventories 63.1 33.8 86.8 Prepaid Expenses 2.5 1.9 32.4 Silverstream (Long Term) 76.2 256.1 (70.3) Silverstream (Short Term) 351.5 42.6 725.2 Derivativ