Fresnillo Plc · LSE:FRES
Fresnillo — Non-Deal Roadshow (May 2014)
34 slides from Fresnillo's roadshow presentation, May 6, 2014
Slide 1: Metals and Mining Sector Trip
UBS Metals and Mining Sector Trip May 6, 2014 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: About Fresnillo
About Fresnillo • World’s largest silver producer & one of Mexico’s largest gold producers Who we are • Total workforce of 6,412 people • Mining concessions of 2.1m hectares in Mexico & 78,800 ha in Peru • Headquartered in Mexico City; listed in London and Mexico • Exploration, development, construc
Slide 4: Our strategy & four pillars to create value
Our strategy & four pillars to create value 1 2 Maximise the potential of existing operations Deliver growth through • Operate at 100% capacity development projects • Low-cost producer • Focus on delivery timeline • Optimise mining method • Disciplined CAPEX control and metallurgy to maintain • Spec
Slide 5: Where we operate
Where we operate Three operating mining districts and two regions with potential to become districts in the future ORISYVO HERRADURA Fresnillo plc mines (6 and a satellite mine) SAN JULIÁN DISTRICT Development projects (2) Advanced exploration projects (4) Prospects in drilling Prospects at an early
Slide 6: Mining Districts
Mining Districts HERRADURA DISTRICT • Mines: Herradura, Soledad and Noche Buena • 2013 production: 235.5k oz gold • Resources: 6.52 Moz gold • New facilities: Dynamic Leaching Plant • Exploration: Centauro Deep, Tajitos, Choya, San Javier, Las Norias, El Nudo, Carina, Cerritos, El Dorado CIÉNEGA DIS
Slide 7: Districts of the Future
Districts of the Future SAN JULIÁN • Under construction • Silver-gold veins and disseminated ore body • Resources: 200.8 Moz silver, 893 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 productio
Slide 8: 2013 Business Review
2013 Business Review 2013 PRODUCTION 2012 PRODUCTION SILVER GOLD SILVER GOLD (Koz) (Oz) (Koz) (Oz) Fresnillo mine Silver underground mine 22,764 33,079 26,383 29,573 Saucito mine Silver underground mine 11,581 45,177 7,054 45,246 Ciénega mine Gold-Silver underground mines 4,240 112,053 3,329 125,275
Slide 9: 2013 Business Review
2013 Business Review Cash Cost within the lowest in the industry CASH COST Traditional* All-in sustaining costs** MINE UNIT Fresnillo PER OZ. SILVER 5.87 9.06 Saucito PER OZ. SILVER 3.61 6.66 Ciénega PER OZ. GOLD 37.68 547.95 Herradura PER OZ. GOLD 651.23 1,029.25 Soledad-Dipolos PER OZ. GOLD 820.28
Slide 10: High quality portfolio feeds pipeline
High quality portfolio feeds pipeline 2014 Exploration Budget: US$225.0m* Fresnillo Saucito Mine Operations Herradura Soledad-Dipolos Nochebuena Ciénega - San Ramón 2018 Development Projects Saucito II San Julián Centauro Deep Juanicipio Advanced Exploration Las Casas (Ciénega) Orisyvo Guachichil Fr
Slide 11: 2013 Business Review
2013 Business Review Continuous growth in resources resulted from our investment in exploration Attributable silver resources Attributable gold resources (M oz) (M oz) In 2013, the US$233.3m capital invested in exploration resulted in: a) Increases in silver resources +5.0% and gold resources +5.2%
Slide 12: 2013 Business Review (continued)
2013 Business Review (continued) Financial Highlights 2013 2012 Average silver price US$/Oz 22.8 31.4 Average gold price US$/Oz 1,401.3 1,674.1 Revenues US$ million 1,615.2 2,157.4 Gross Profit US$ million 767.4 1.364.6 EBITDA US$ million 729.8 1,315.3 EBITDA margin 45.2% 61.0% Profit attributable t
Slide 13: Growth Projects
Growth Projects Project Development Chart Investment Expected YEAR Risk 2014 2015 2016 2017 2018 (US$ m illion) Production PROJECT (1) (2) 8.4 m ill Oz Ag Medium CONSTRUCTIO 235 & 35 thds Oz SAUCITO II PRODUCTION Low N Au 10.3 m ill Oz Medium 515 Ag & 44 thds SAN JULIÁN CONSTRUCTION PRODUCTION Oz Au
Slide 14: Achieving 65moz silver by 2018
Achieving 65moz silver by 2018 Million Oz Note: Attributable silver production. Silver Stream not included. 06/05/2014 14
Slide 15: Achieving over 500koz gold by 2018
Achieving over 500koz gold by 2018 Million Oz Note: Attributable gold production. 06/05/2014 15
Slide 16: Fresnillo district Saucito II
Fresnillo district Saucito II Project construction commenced in 1Q 2013 We have pro-actively advanced this project as a result of skilled execution, infrastructure synergies and ongoing capital evaluation Completion date brought forward from mid 2015 to 4Q 2014 21,680 metres developed in 2013, guara
Slide 17: San Julián Project
San Julián Project Ownership 100% Fresnillo plc Underground mine, dynamic leaching plant for epithermal silver-gold veins (to start first) and a flotation plant for disseminated silver-lead-zinc system. Project delivery deferred to mid 2015 and CAPEX increased slightly due to preference of capital a
Slide 18: Conclusion and Outlook
ai FRESNMILLO. Conclusion and Outlook
Slide 19: Outlook: balancing growth & returns
Outlook: balancing growth & returns Conclusions • In 2013, conditions for precious metals miners were challenging due to lower silver and gold prices. However Fresnillo plc continued to deliver healthy margins • Unchanged strategy which balances growth and returns Looking ahead to 2014 and beyond: •
Slide 20: Appendix
ai FRESNMILLO. Appendix
Slide 21: Operation Review – Fresnillo District
Operation Review – Fresnillo District FRESNILLO SAUCITO 2013 2012 Change % 2013 2012 Change % Attributable production Silver m oz 22.8 26.4 -3.6 -13.7 11.6 7.1 4.5 64.2 Gold k oz 33.1 29.6 3.5 11.9 45.2 45.2 -0.1 -0.2 Lead kt 15.6 16.2 -0.6 -3.9 5.6 2.8 2.8 102.1 Zinc kt 14.9 15.0 -0.1 -0.3 4.5 1.8
Slide 22: Operation Review – Ciénega District
Operation Review – Ciénega District CIÉNEGA 2013 2012 Change % Attributable production Gold k oz 112.1 125.3 -13.2 -10.6 Silver m oz 4.2 3.3 0.9 27.4 Ore processed kt 1,242.2 1,112.8 129.4 11.6 Ore grades Gold g/t 2.9 3.6 -0.7 -19.4 Silver g/t 121.6 105.2 16.4 15.6 06/05/2014 22
Slide 23: Operation Review – Herradura District
Operation Review – Herradura District HERRADURA SOLEDAD-DIPOLOS NOCHE BUENA 2013 2012 Change % 2013 2012 Change % 2013 2012 Attributable production Gold k oz 148.2 176.1 -28.0 -15.9 26.5 60.1 -33.6 -55.9 60.9 36.7 Ore processed kt 14,363.3 24,641.1 -10,277.8 -41.7 6,701.8 15,317.9 -8,616.1 -56.2 12,
Slide 24: Fresnillo district
Fresnillo district Fresnillo District • Fresnillo: silver production of 22.8moz, down 13.7% due to lower ore grades (328g/t to 285g/t) • World class mine with almost 12 years of mine life and continuing low cost operation • Temporarily limited access to high ore grade areas that delayed development
Slide 25: Ciénega district
Ciénega district Cienega District • Annual gold production down 10.6% due to the expected depletion of high ore grade bodies • Partially mitigated by increased volumes of ore throughput • Milling capacity increased from 2,800 to 3,600 tpd • Silver production up 27.4% from higher throughput from the
Slide 26: Herradura district
Herradura district • Herradura: Attributable gold production was down 15.9% due to • Noche Buena: Successful ramp-up of production, despite lower ore deposited resulting from explosives permit suspension, temporary suspension of explosives permits somewhat mitigated by material already in inventory:
Slide 27: Resources
Resources Contained Metal Increase vs 2012 Resources Gold Silver Lead Zinc Gold Silver Lead Zinc (koz) (koz) (kt) (kt) (koz) (koz) (kt) (kt) Fresnillo 1,688 800,155 1,006 1,961 8 1,415 -141 -423 Saucito 2,054 517,986 611 1,060 14 -9,514 13 80 Ciénega 1,609 144,042 171 303 -61 7,272 -15 -24 Herradura
Slide 28: Reserves
Reserves Contained Metal Increase vs 2012 Reserves Gold Silver Lead Zinc Gold Silver Lead Zinc (koz) (koz) (kt) (kt) (koz) (koz) (kt) (kt) Fresnillo 668 277,550 467 875 -62 -30,910 -58 -193 Saucito 604 128,528 182 304 34 9,658 16 47 Ciénega 809 67,376 81 129 -21 1,236 6 5 Herradura (56%) 1,517 1,907
Slide 29: Conversion inferred to indicated resources
Conversion inferred to indicated resources Contained Metal in M & I resources Increase vs 2012 M & I Resources Gold Silver Lead Zinc Gold Silver Lead Zinc (koz) (koz) (kt) (kt) (koz) (koz) (kt) (kt) Fresnillo 921 463,120 591 1,102 -39 -19,300 -38 -156 Saucito 772 155,104 216 364 72 13,794 24 64 Cién
Slide 30: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM DECEMBER CHANGE CONCEPT (Million USD) 2013 % 2012 % $ % ADJUSTED REVENUES 1,761.9 2,287.2 (525.3) (23.0) BY-PRODUCT HEDGING 0.3 0.0 0.3 N/A TREATMENT AND REFINING CHARGES (147.0) (129.8) (17.2) 13.2 REVENUES 1,615.2 100.0 2,157.4 100.0 (542.2) (25.1) ADJUSTED PRODUCTION
Slide 31: Consolidated Cost Inflation 2013 (USD Based)
Consolidated Cost Inflation 2013 (USD Based) Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel 9.3% 8.4% 0.78% Employees 8.4% 2.8% 0.24% Weighted Average 9.1% Operating Materials 1.5% 20.0% 0.30% Energy Electric Energy 7.2% 7.8% 0.56% Diesel 19.5% 7.8% 1.53% Fuel 15.2% 1.6
Slide 32: Cost Per Tonne (IFRS)
Cost Per Tonne (IFRS) ACCUM DECEMBER CHANGE 2013 2012 % CHG. COST PER TONNE * MINE UNIT Fresnillo US$/TON 45.60 44.52 2.4% Saucito US$/TON 61.00 60.93 0.1% Ciénega US$/TON 70.81 77.05 -8.1% Herradura US$/TON 8.38 ** 6.23 34.6% Soledad & Dipolos US$/TON 9.90 ** 6.32 56.6% Noche Buena US$/TON 7.84 **
Slide 33: Cash Flow (IFRS)
CASH FLOW (IFRS) YEAR TO DATE CHANGE CONCEPT (Million USD) 2013 2012 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 750.2 1,356.7 (606.6) (44.7) WORKING CAPITAL 34.5 (99.8) 134.3 N/A INCOME TAX AND PROFIT SHARING PAID (338.6) (513.3) 174.6 (34.0) NET CASH FROM OPERATING ACTIVITIE
Slide 34: Balance Sheet (IFRS)
BALANCE SHEET (IFRS) Change Concept (Million USD) 31-DIC-13 31-DIC-12 % Assets Cash and Investments 1,251.7 613.8 N/A Trade and Other Receivables 267.5 263.6 1.4 Inventories 208.1 194.6 7.0 Prepaid Expenses 5.3 3.1 71.7 Silverstream 372.8 487.8 (23.6) Derivative Financial Instruments 2.1 2.8 (27.6)