Fresnillo Plc · LSE:FRES
Fresnillo — FY2020 Earnings Presentation
52 slides from Fresnillo's earnings presentation, Mar 2, 2021
Slide 1: Full Year Preliminary Results
FULL YEAR P R E L I M I N ARY RE S U LT S 02 MARCH 2021 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 01 Investment proposition 02 2020 highlights 03 Covid-19 response & HSECR 04 Operational performance & development projects 05 Reserves, resources & exploration update 06 Financial performance 07 2021 outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION OCTAVIO ALVÍDREZ
Slide 5: Investment Proposition
2 0 2 0 P R E L I M I N A R Y 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 HIGH QUALITY HEALTHY MARGINS DISCIPLINED COMMITMENT STRONG ASSETS SUPPORTED BY APPROACH TO SUSTAINABLE BALANCE S
Slide 6: 2020 Highlights
2020 HIGHLIGHTS OCTAVIO ALVÍDREZ
Slide 7: Operational Performance Highlights
2 0 2 0 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 7 ATTRIBUTABLE FULL YEAR SILVER JUANICIPIO COMMISSIONING OPERATIONAL HIGHLIGHTS PRODUCTION EXPECTED BY 53.1MOZ 4Q 2021 • Attributable silver production of 53.1 moz (including Silverstream), do
Slide 8: Financial Performance Highlights
2 0 2 0 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 8 GROSS PROFIT (US$) ADJUSTED EPS* (US CENTS PER SHARE) FINANCIAL HIGHLIGHTS 879.4M 44.0US¢ per share • Adjusted revenue of US$2,608.1m, up 14.9% over • Strengthened the stability and financial h
Slide 9: Covid Response & HSECR
COVID RESPONSE & HSECR OCTAVIO ALVÍDREZ
Slide 10: Covid-19 Response
2 0 2 0 P R E L I M I N A R Y R E S U LT S – C O V I D - 1 9 R E S P O N S E 10 Rapid and united response to the threat of Covid- 19 at all our facilities, recognised by the Mexican regulator (IMSS). Further actions included: Actions included: • Working closely with the Mining Ministry of Mexico to
Slide 11: Our Approach to Sustainability
2 0 2 0 P R E L I M I N A R Y R E S U LT S – H S E C R 11 O U R A P P R O A C H T O S U S TA I N A B I L I T Y WE BELIEVE THAT RESPONSIBLE MINING IS COMPATIBLE WITH HIGH STAKEHOLDER EXPECTATIONS IN TERMS OF ETHICAL, SOCIAL AND ENVIRONMENTAL PERFORMANCE, AND RECOGNISE THAT OUR SOCIAL LICENCE TO OPERA
Slide 12: Operational & Projects Performance
O P E R AT I O N A L & PROJECTS PERFORMANCE TOMÁS ITURRIAGA
Slide 13: Health & Safety Performance
2 0 2 0 P R E L I M I N A R Y R E S U LT S – H E A LT H & S A F E T Y P E R F O R M A N C E 13 Total Injury Frequency Rate and Lost Time Injury Fatal Injuries 2018-2020 Frequency Rate (2018-2020) 6 0.14 900 25 FFR: fatal injuries*1000000/HH 800 5 0.12 20 injuries*1000000/HH 700 Fatal injuries 0.10 4
Slide 14: Fresnillo District Action Plan Update
2 0 2 0 P R E L I M I N A R Y R E S U LT S – F R E S N I L L O D I S T R I C T A C T I O N P L A N U P D AT E 14 FRESNILLO PROJECT PURPOSE PROGRESS Deepening of the shaft completed, infrastructure mining San Carlos shaft deepening Access to deeper reserves works ongoing Tunnel boring machine Increas
Slide 15: Operations: Fresnillo
2 0 2 0 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 S 15 FRESNILLO Production Grade 2020 SUMMARY 2021 PRIORITIES KEY OPERATING HIGHLIGHTS FY 20 FY 19 • COVID-19 measures implemented. • Maintain strict safety protocols. • Silver production and ore grade both stabalised. • Increase the devel
Slide 16: Operations: Saucito
2 0 2 0 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 S 16 SAUCITO Production Grade 2020 SUMMARY 2021 PRIORITIES KEY OPERATING HIGHLIGHTS 2020 2019 • COVID-19 measures implemented. • Maintain strict safety protocols. Silver production* – moz 16.5 18.3 • 126km drilling campaign completed. • I
Slide 17: Operations: San Julián
2 0 2 0 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 S 17 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 2020 2019 KEY OPERATING HIGHLIGHTS 2020 2019 Gold production – koz 61.8 62.2 Gold production – koz 3.1 2.4 Silver production
Slide 18: Operations: Ciénega
2 0 2 0 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 S 18 CIÉNEGA 2020 SUMMARY 2021 PRIORITIES • COVID-19 measures implemented. • Maintain strict safety protocols. KEY OPERATING HIGHLIGHTS 2020 2019 • Sustaining capex reduced against last year, • Continue strict cost control. in line with o
Slide 19: Operations: Herradura
2 0 2 0 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 S 19 HERRADURA 2020 SUMMARY 2021 PRIORITIES KEY OPERATING HIGHLIGHTS 2020 2019 • COVID-19 measures implemented. • Maintain strict safety protocols. • 6-week operational shutdown in 2Q20 • Conclude the Carbon in Column project. Silver prod
Slide 20: Operations: Noche Buena
2 0 2 0 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 S 20 NOCHE BUENA 2020 SUMMARY 2021 PRIORITIES KEY OPERATING HIGHLIGHTS 2020 2019 • Covid-19 measures implemented. • Maintain strict safety protocols. • Lower AISC profile. Silver production – moz 0.0 0.1 • 6-week operational shutdown in 2
Slide 21: Projects: Pyrites Plant
2 0 2 0 P R E L I M I N A R Y R E S U LT S – P R O J E C T S 21 PYRITES PLANT HIGHLIGHTS EXPECTED AVG. ANNUAL SILVER EXPECTED IRR AT US$20/OZ AG PRODUCTION & US$1,200/OZ AU • The project will improve overall • The start of operations has been 3.5MOZ 29.3% recoveries of gold and silver by processing
Slide 22: Optimisation of Beneficiation Plant at Fresnillo Mine
2 0 2 0 P R E L I M I N A R Y R E S U LT S – P R O J E C T S 22 O P T I M I S AT I O N O F B E N E F I C I AT I O N P L A N T AT T H E F R E S N I L L O M I N E THREE PHASES: MAIN REQUIREMENTS TO INCREASE CAPACITY (PHASE III): 1. Zinc thickener installed in 2017. • San Carlos shaft deepening. 2. Add
Slide 23: Projects: Juanicipio
2 0 2 0 P R E L I M I N A R Y R E S U LT S – P R O J E C T S 23 JUANICIPIO (JV WITH MAG SILVER. FRESNILLO: 56%) OVERVIEW KEY METRIC ESTIMATES (100% BASIS) • Mine development continued to advance, despite progress being slowed due to Covid-19 restrictions. • Concluded the preparation of the project's
Slide 24: Juanicipio Construction Photos
2 0 2 0 P R E L I M I N A R Y R E S U LT S – P R O J E C T S 24 JUANICIPIO (JV WITH MAG SILVER. FRESNILLO: 56%) Conveyor belt for ore production Milling building in the foreground and flotation cell Flotation cell lines – Lead and Zinc lines in the background Filtration area Thickeners area Reagents
Slide 25: Reserves, Resources & Exploration Update
RESERVES, RESOURCES & E X P L O R AT I O N U P D AT E GUILLERMO GASTÉLUM
Slide 26: Strong Silver Resource & Reserve Bases
RESERVES & RESOURCES 26 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 S B A S E S SILVER RESOURCES RESOURCES CHANGE 2,293Moz Total silver resources 2019 2,256,817 2020** 2,292,509 Koz 35,692 % +1.6% • Total of 2,293 Moz silver resources (22 yrs of equivalent production*). 160,000 • Cut-off
Slide 27: Strong Gold Resource & Reserve Bases
RESERVES & RESOURCES 27 STRONG GOLD RESOURCE & RESERVE BASES GOLD RESOURCES RESOURCES CHANGE • Total of 38.9 moz silver resources (38 yrs of 38.9Moz Total gold resources 2019 38,974 2020** 38,925 Koz -49 % -0.1% equivalent production*). • Cut-off date for R&R audit as of 31st May 2020. 3,500 3,000 8
Slide 28: Exploration Update
2 0 2 0 P R E L I M I N A R Y R E S U LT S – E X P L O R AT I O N U P D AT E 28 2021 Budget: US$ 162m Fresnillo Saucito 35 % ▪ Exploration objective: 2 Moz gold or 150 Herradura Moz silver, satellite orebodies 1 Moz gold Mine Operations Nochebuena (or silver equivalent). Soledad & Dipolos* San Juliá
Slide 29: PEA-Feasibility Projects: Orisyvo, Rodeo & Guanajuato
2 0 2 0 P R E L I M I N A R Y R E S U LT S – P R O J E C T S 29 P E A – F E A S I B I L I T Y P R O J E C T S – 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) • Multi-purpose underground drill programme • This project is in close proximity to in
Slide 30: Financial Performance
FINANCIAL PERFORMANCE MARIO ARREGUÍN
Slide 31: Income Statement (IFRS)
2 0 2 0 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 ) 31 ( M I L L I O N U S D) CONCEPT ACCUM DECEMBER 2020 % 2019 % $ CHANGE % ADJUSTED REVENUES 2,608.1 2,270.2 337.9 14.9 HEDGING (METALS) 2.4 (6.0) 8.3 N/A TREATMENT AND REFINING CHARGES (180.4) (144.6) (35.8) (24.8)
Slide 32: Adjusted Production Cost Analysis
2 0 2 0 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 32 ( C O N S O L I D ATE D )
Slide 33: Gross Profit Analysis
2 0 2 0 P R E L I M I N A R Y R E S U LT S – G R O S S P R O F I T A N A LY S I S 33 ( C O N S O L I D ATE D )
Slide 34: Cash Flow (IFRS)
2 0 2 0 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 ) 34 ( M I L L I O N U S D) CASH FLOW CHANGE (USD MILLION) YTD 2020 YTD 2019 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,168.7 685.5 483.2 70.5 WORKING CAPITAL (129.8) (56.6) (73.1) (129.2) INCOME TAX AND
Slide 35: Balance Sheet (IFRS)
2 0 2 0 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 ) 35 ( M I L L I O N U S D) Change Concept 31-DEC-20 31-DEC-19 % Assets Cash and Investments 1,070.4 336.6 218.0 Trade and Other Receivables 512.9 517.8 (0.9) Inventories 443.2 363.7 21.8 Prepaid Expenses 18.2 18.3 (0.7)
Slide 36: 2021 Outlook
2021 OUTLOOK OCTAVIO ALVÍDREZ
Slide 37: Expected Attributable Production Profile
2 0 2 0 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 P R O F I L E 37 Production guidance range +/- 5% Silver* Million Oz Thousand Oz Gold 80 800 70 700 60 600 50 500 40 4 400 30 300 20 200 10 100 0 0 2020 2021 2022 2023 2020 2021 2022 2023 Thousand
Slide 38: Capex Spend Expectations
2 0 2 0 P R E L I M I N A R Y 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 38 Million Usd 2021 Forecast US$ Million 700 680 Sustaining (Operations) 600 Fresnillo 96 M 4 Saucito 113 M 500 485 Ciénega 52 M 445 415 San Julián 63 M 400 Herradura 108 M Noche Buena 3 M Others 15 M 300 Projects
Slide 39: Consolidated Outlook
2 0 2 0 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 39 1 2 Expected Avg. Investm ent YEAR (US$ m illion) Annual 2019 2020 2021 2022 2023 2024 2025 2026 Production PROJECT 3.5 m oz Ag & PYRITES PLANT 155 PRODUCTION 13 koz Au (Optimization project) CONSTRUCTION TAILINGS F
Slide 40: Concluding Remarks
2 0 2 0 P R E L I M I N A R Y R E S U LT S – C O N C L U D I N G R E M A R K S 40 STRONG FOCUS ON PRIORITISING THE PURPOSEFUL CREATE COMMITMENT TO REDUCING COSTS HEALTH OF OUR ENGAGEMENT WITH VALUE THROUGH OPERATIONAL AND CAPTURING WORKFORCE DURING STAKEHOLDERS DISCIPLINED GROWTH, DELIVERY, EFFICIEN
Slide 41: Appendix
APPENDIX —v— FRESNILLO.
Slide 42: Grade Expectations
G R A D E E X P E C TAT I O N S F O R 2 0 2 1 42 GOLD (G/T) MINE MINE TYPE FY 2021e 2020 Fresnillo Underground silver 0.55 - 0.70 0.73 Saucito Underground silver ~ 1.10 1.24 San Julián (veins) Underground silver & gold 1.30 – 1.50 1.61 San Julián (disseminated) Underground silver & gold - 0.09 Ciéne
Slide 43: Contribution by Mine and by Metal to Adjusted Revenues
2 0 2 0 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 2020 2 0 2 0 A DJ U S T E D RE V E N U E S 1 : US $ 2 , 6 0 8 . 1 M 1 Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refinin
Slide 44: Consolidated Cost Inflation 2020
2 0 2 0 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 0 44 (USD BASED) Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel -4.4% 5.8% -0.3% Employees -9.3% 3.0% -0.3% Weighted -6.0% Operating Materials -2.4% 18.2% -0.
Slide 45: Adjusted Production Cost 2020
2 0 2 0 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 0 45 (USD BASED) US$ 1,079.1 M Operating Materials 27% Costs from Contractors = 31% Own 19% Ctrt. 8% Maintenance & repairs 18% Own 16% Energy 19% Ctrt. 2% Own 17% Ctrt. 2% Others 9% Own 8% Ctrt. 1% Equip
Slide 46: Exploration Expenses
2 0 2 0 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 ) 46 ( M I L L I O N U S D) ACCUM DEC 2020 Operating Units Fresnillo 6.4 Saucito 11.0 Ciénega 5.6 San Julián 16.5 Herradura 11.5 Noche Buena 0.9 52.0 Projects Centauro Deep 3.4 Juanicipio 4.8 Gua
Slide 47: 2020 Preliminary Cash Flow (IFRS)
2020 PRELIMINARY – CASH FLOW (IFRS) 47 • Increase in inventories -US$79.5 million ( M I L L I O N U S D) • Increase in trade and other payables +US$10.9 million • Increase in accounts receivables (-US$61.6M): Trade receivables from related parties -US$117.7million, CASH FLOW CHANGE VAT +US$60.3 mill
Slide 48: Cost per Tonne (IFRS)
2 0 2 0 P R E L I M I N A R Y R E S U LT S – C O S T P E R T O N N E ( I F R S ) 48 ACCUM DECEMBER CHANGE 2020 2019 % CHG. COST PER TONNE * MINE UNIT Fresnillo US$/TON 69.87 62.73 11.4% Saucito US$/TON 71.99 67.76 6.2% Ciénega US$/TON 76.74 78.26 -1.9% San Julián Veins US$/TON 71.83 72.03 -0.3% San
Slide 49: Cash Cost (IFRS)
2 0 2 0 P R E L I M I N A R Y R E S U LT S – C A S H C O S T ( I F R S ) 49 ACCUM DECEMBER CHANGE 2020 2019 % CHG. CASH COST * MINE UNIT Fresnillo PER OZ. SILVER 5.94 2.25 164.1% Saucito PER OZ. SILVER 0.76 2.30 -66.9% Ciénega PER OZ. GOLD (By-prod.) -276.20 -0.23 N/A PER OZ. GOLD (Co-prod.) 780.35
Slide 50: All In Sustaining Cost
2 0 2 0 P R E L I M I N A R Y R E S U LT S – A L L I N S U S TA I N I N G C O S T ( U S $ / O Z ) 50 ACCUM DECEMBER 2020 2019 % CHG. CASH COST * MINE UNIT Fresnillo PER OZ. SILVER 12.92 13.54 -4.6% Saucito PER OZ. SILVER 6.94 10.97 -36.8% Ciénega PER OZ. GOLD 618.32 1,212.14 -49.0% PER OZ. GOLD (Co-
Slide 51: Consolidated Cash Cost & All In Sustaining Cost
2 0 2 0 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 A S H C O S T & A L L I N 51 S U S TA I N I N G C O S T (US$/OZ) ACCUM DECEMBER UNIT 2020 2019 % CHG. CONSOLIDATED CASH COST PER OZ. GOLD EQ. 746.82 708.21 5.5% Gold Eq.Oz (Koz) 1,271.52 1,400.42 -9.2% PER OZ. SILVER EQ. 8.87 8.25
Slide 52: Notes
NOTES 52 4