Fresnillo Plc · LSE:FRES
Fresnillo — HSBC Vienna Conference 2011
32 slides from Fresnillo's conference presentation, Sep 7, 2011
Slide 1: HSBC Vienna Conference
HSBC Vienna Conference Arturo Espínola, Fresnillo IR Fresnillo plc 7 September, 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: H1 2011 Operational Highlights
H1 2011 Operational Highlights • Record half year silver production of 21.5 million ounces, (including the Silverstream), up 2.6% • Record attributable gold production of 206,477 ounces, up 17.1% • On track to achieve full year production targets of 44moz of silver (including 3.0 million ounces from
Slide 4: H1 2011 Financial Highlights
H1 2011 Financial Highlights • Average realised silver price US$35.74 per oz, up 99.3% • Average realised gold price US$1,462.31 per oz, up 24.8% • Adjusted Revenue[1] of US$1,114.1m, up 75.1% • Gross Profit of US$774.6m, up 91.8% • EBITDA[2] up 92.0% to US$757.0m, margins increased to 71.6% from 65
Slide 5: Operations Review
Operations Review HSBC Vienna Conference
Slide 6: Operation Review – Fresnillo District
Operation Review – Fresnillo District FRESNILLO SAUCITO H1 2011 H1 2010 Change % H1 2011 H1 2010* Change % Attributable production Silver m oz 16.9 17.8 (1.0) (5.4) 1.9 0.5 1.5 N/M Gold k oz 12.5 11.5 1.0 8.7 9.1 2.0 7.1 N/M Lead kt 6.7 5.8 0.9 15.5 0.6 0.1 0.5 N/M Zinc kt 6.6 6.0 0.6 9.4 0.3 0.0 0.
Slide 7: Operation Review – Ciénega District
Operation Review – Ciénega District CIÉNEGA H1 2011 H1 2010 Change % Attributable production Gold k oz 53.4 55.8 (2.4) (4.3) Silver m oz 0.6 0.7 (0.1) (14.8) Adjusted Revenue Adj Revenue US$ m 108.0 84.6 23.4 27.6 Contribution % 9.7 13.3 Costs Cost per tonne US$/t 70.1 60.8 9.3 15.2 Cost per AU oz U
Slide 8: Operation Review – Herradura District
Operation Review – Herradura District HERRADURA SOLEDAD-DIPOLOS H1 2011 H1 2010 Change % H1 2011 H1 2010 Change % Attributable production Gold k oz 88.2 79.6 8.7 10.9 43.3 27.5 15.7 57.2 Silver m oz 0.1 0.1 0.0 16.4 0.0 0.0 0.0 N/M Adjusted Revenue Adj Revenue US$ m 231.6 167.6 64.0 38.2 111.4 57.5
Slide 9: Estimated project delivery programme
Estimated project delivery programme On track to produce 65m oz of silver and over 400k oz of gold by 2018 Project 2011 2012 2013 2014 2015 2016 Nochebuena Construction Production Herradura Feasibility Construction Production Leaching Pre - San Julián Feasibility Construction Production Feasibility
Slide 10: Exploration
Exploration HSBC Vienna Conference
Slide 11: Exploration
Exploration • Exploration expenses US$ 83.9 million • 44 drill rigs advanced 226,500 m • Good drilling results: – Herradura District: Centauro Deep and Noche Buena – Fresnillo District: Infill drilling at Minera Juanicipio – Ciénega District: San Ramón veins – San Julián Project: Shalom and Todos Sa
Slide 12: Exploration
Exploration Fresnillo plc mines HERRADURA DISTRICT Development projects Advanced exploration projects Prospects in drilling 1H11 SAN JULIAN Prospects at an early stage PROJECT CIENEGA DISTRICT FRESNILLO DISTRICT GUANAJUATO PROJECT PERU HSBC Vienna Conference 7 September, 2011 12
Slide 13: Exploration
Exploration Exploration Fresnillo Budget Herradura Mine Operations Ciénega 17% Soledad-Dipolos Saucito I Nochebuena Development Projects 16% San Ramón Saucito II San Julián Centauro Deep Juanicipio Advanced Exploration Orisyvo Las Casas 48% Corredor Fresnillo Guanajuato Manzanillas Lucerito Prospect
Slide 14: Conclusion
Conclusion HSBC Vienna Conference
Slide 15: Outlook
Outlook • Volatile metal prices set to continue • Focus on safety, increasing productivity, containing costs, expanding the resource and reserve base, and strengthening our growth pipeline • Looking ahead in 2011: – Silver production to grow by 5% to 44moz per year – Gold production to grow by 8% to
Slide 16: Annex
aa FRESNILLO. 7 September, 2011
Slide 17: Contribution by mine and by metal to the Adjusted Revenues
Contribution by mine and by metal to the Adjusted Revenues 1 Adj Revenues : US$1,114.1m By mine By metal 2% 6% 2% 10% 10% 39% 53% 57% 21% Saucito Fresnillo Herradura Silver Gold Ciénega Sol & Dip Zinc Lead Fresnillo Ciénega Herradura Sol & Dip Saucito Consol Gold 14.67 2.5% 72.90 67.5% 222.96 96.3%
Slide 18: Cost Per Tonne / Cash Cost
Cost Per Tonne / Cash Cost COST PER TONNE* MINE UNIT 1H2011 1H2010 % CHG. Fresnillo US$/TON 42.27 39.97 5.7% Ciénega US$/TON 70.06 60.81 15.2% Herradura US$/TON 5.52 5.03 9.8% Soledad & Dipolos US$/TON 6.14 4.64 32.3% CASH COST* MINE UNIT 1H2011 1H2010 % CHG. Fresnillo PER OZ. SILVER 5.53 3.86 43.2%
Slide 19: Breakdown of the Adjusted Production Costs
Breakdown of the Adjusted Production Costs Adj Prod Cost: US$191.6m 7% 1% 23% 13% Op Mat Mainten Energy & Diesel Contrac* Person Others Freights 20%* 18% 18% Fresnillo Ciénega Herradura Sol & Dip Saucito Consol Personnel 10.81 19.7% 5.27 17.1% 5.81 10.0% 2.80 8.3% 0.60 4.4% 25.28 Maintenance and rep
Slide 20: Increase in unit costs (USD)
Increase in unit costs (USD) INPUTS 1H 11 VS 1H10 Electricity 11.2% Energy Diesel 21.6% Wages 13.0% Labour Fringe benefits 7.7% Steel balls for milling 20.8% Steel for drilling 9.6% Explosives 12.7% Operating Tyres 9.6% Materials Sodium cyanide 26.7% Other reagents 23.3% Oils and other lubricants 22
Slide 21: Contribution by mine to the Gross Profit
Contribution by mine to the Gross Profit CHANGE 1H 11 1H 10 US$ % Fresnillo 451.7 58.6% 224.2 55.9% 227.5 101.5 Herradura 150.9 19.6% 96.0 24.0% 54.9 57.2 Ciénega 54.0 7.0% 43.4 10.8% 10.6 24.4 Sol & Dipolos 68.2 8.8% 37.3 9.3% 30.9 82.8 Saucito 46.2 6.0% - 0.0% 46.2 N/A Total for operating mines 77
Slide 22: Consolidated Income Statement (IFRS)
Consolidated Income Statement (IFRS) ACCUM JUNE CHANGE CONCEPT (US$ MILLIONS) 1H2011 % 1H2010 % $ % ADJUSTED REVENUES 1,114.1 636.3 477.9 75.1 TREATMENT AND REFINING CHARGES (57.2) (30.6) (26.6) 86.9 REVENUES 1,056.9 100.0 605.7 100.0 451.3 74.5 ADJUSTED PRODUCTION COST (191.6) (18.1) (140.5) (23.2)
Slide 23: Consolidated Income Statement without Silverstream Effect (IFRS)
Consolidated Income Statement without Silverstream Effect (IFRS) ACCUM JUNE CHANGE CONCEPT (US$ MILLIONS) 1H2011 % 1H2010 % $ % ADJUSTED REVENUES 1,114.1 636.3 477.9 75.1 TREATMENT AND REFINING CHARGES (57.2) (30.6) (26.6) 86.9 REVENUES 1,056.9 100.0 605.7 100.0 451.3 74.5 ADJUSTED PRODUCTION COST (
Slide 24: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE 1H11 1H10 $ % Adjusted Production Cost 191.6 140.5 51.1* +36.4 Change in inventories -15.6 -7.6 -8.0 +105.3 Depreciation 69.8 48.8 +21.0 +43.0 PTU 41.3 22.7 +18.6 +81.9 Hedging (mxp/usd exchange rate) -4.7 (Profit) -2.5 (Profit) -2.2 +88.0 USD
Slide 25: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE 1H11 1H10 $ % Adjusted Production Cost 191.6 140.5 51.1* +36.4 Change in inventories -15.6 -7.6 -8.0 +105.3 Depreciation 69.8 48.8 +21.0 +43.0 PTU 41.3 22.7 +18.6 +81.9 Hedging (mxp/usd exchange rate) -4.7 (Profit) -2.5 (Profit) -2.2 +88.0 USD
Slide 26: 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 1 Increase in silver price 298.8 Increase in gold 2 price 77.3 Higher ore USD MILLION HSBC Vienna Conference 3 milled/deposited at 50.0 Cien, Fres & Herr Saucito Gross Profit 4 (new mine) 46.2 Gross Profit Increased prod at 5 36.1 S&D In
Slide 27: Consolidated Gross Profit Analysis
Consolidated Gross Profit Analysis CHANGE 1H11 1H10 $ % Gross Profit 774.6 403.8 +370.8* +91.8 Higher TRC’s due to: • 77,249 gold oz produced • Increase in volumes shipped to Met-Mex. • with the expanded capacity. • Effect of higher metal prices on price escalator. Increase in ore vol. processed: •
Slide 28: Consolidated Income Statement (IFRS)
Consolidated Income Statement (IFRS) ACCUM JUNE CHANGE CONCEPT (US$ MILLIONS) 1H2011 % 1H2010 % $ % ADJUSTED REVENUES 1,114.1 636.3 477.9 75.1 TREATMENT AND REFINING CHARGES (57.2) (30.6) (26.6) 86.9 REVENUES 1,056.9 100.0 605.7 100.0 451.3 74.5 ADJUSTED PRODUCTION COST (191.6) (18.1) (140.5) (23.2)
Slide 29: Consolidated Income Statement (IFRS)
Consolidated Income Statement (IFRS) • Increased number of administrativeACCUM JUNE CHANGE CONCEPT (US$ MILLIONS) • personnel hired to service a larger 1H2011number % 1H2010 % $ % ADJUSTED REVENUES • of mines and projects. 1,114.1 636.3 477.9 75.1 TREATMENT AND REFINING CHARGES • Legal and advisory
Slide 30: Consolidated Cash Flow (IFRS)
Consolidated Cash Flow (IFRS) CHANGE CONCEPT (US $ millions) 1H2011 1H2010 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 798.2 419.9 378.3 90.1 WORKING CAPITAL (42.6) (53.3) 10.7 (20.0) INCOME TAX AND PROFIT SHARING PAID (166.2) (61.0) (105.2) 172.5 NET CASH FROM OPERATING ACTIV
Slide 31: Consolidated Cash Flow (IFRS)
Consolidated Cash Flow (IFRS) • Increase in working capital resulted • mainly from higher prices and volumes • sold to Met-Mex Peñoles (smelting & CHANGE CONCEPT (US $ millions) • 1H2011refining). 1H2010 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 798.2 419.9 378.3 90.1 WORKIN
Slide 32: Consolidated Balance Sheet (IFRS)
Consolidated Balance Sheet (IFRS) Change Concept 30-JUNE-11 31-DEC-10 % Asset Cash and Investments 717.9 559.5 28.3 Trade and Other Receivables 239.5 236.7 1.2 Inventories 79.1 63.1 25.4 Prepaid Expenses 1.4 2.5 (43.6) Silverstream 462.2 427.7 8.1 Derivative Financial Instruments 6.8 4.1 67.6 Proper