Fresnillo Plc · LSE:FRES
Fresnillo — FY2021 Earnings Presentation
49 slides from Fresnillo's earnings presentation, Mar 8, 2022
Slide 1: Full Year Preliminary Results
FULL YEAR P R E L I M I N ARY RE S U LT S 08 MARCH 2022 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 HSECR 03 2021 highlights 04 Operational performance & development projects 05 Reserves, resources & exploration update 06 Financial performance 07 2022 outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION OCTAVIO ALVÍDREZ
Slide 5: Investment Proposition: Key Competitive Advantages
2 0 2 1 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: HSECR
HSECR OCTAVIO ALVIDREZ —v— FRESNILLO.
Slide 7: HSECR: Sustainability at the Core of Our Purpose
2 0 2 1 P R E L I M I N A R Y R E S U LT S – H S E C R 7 S U S TA I N A B I L I T Y - AT T H E C O R E O F O U R P U R P O S E HEALTH ENVIRONMENT COMMUNITY & SAFETY RELATIONS SAFETY CULTURE BASED ON CARING FOR OUR OPTIMISING OUR USE OF RESOURCES AND BEING OUR COMMUNITIES ARE OUR STRATEGIC PEOPLE TRA
Slide 8: 2021 Highlights
2021 HIGHLIGHTS OCTAVIO ALVÍDREZ
Slide 9: Operational Performance Highlights
2 0 2 1 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 9 ATTRIBUTABLE FULL YEAR SILVER JUANICIPIO MECHANICAL OPERATIONAL HIGHLIGHTS PRODUCTION COMPLETION CONCLUDED IN 53.1MOZ 4Q 2021 • Attributable silver production of 53.1 moz (including Silverst
Slide 10: Financial Performance Highlights
2 0 2 1 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 10 GROSS PROFIT (US$) ADJUSTED EPS* (US CENTS PER SHARE) FINANCIAL HIGHLIGHTS 936.9M 57.2US¢ per share • Adjusted revenue of US$2,847.9m, up 9.2% over • Cash generated from operations, before cha
Slide 11: Operational & Projects Performance
O P E R AT I O N A L & PROJECTS PERFORMANCE TOMÁS ITURRIAGA
Slide 12: Labour Shortage: Covid-19 and Vacancies
2 0 2 1 P R E L I M I N A R Y R E S U LT S – L A B O U R S H O R TA G E 12 COVID-19 VACANCIES • Fourth wave of Covid-19 reached Mexico • New labour reform in Mexico came into effect from 1st September 2021, restricting our ability to subcontract labour, impacting the availability of mining personnel
Slide 13: Operations: Fresnillo
2 0 2 1 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 13 FRESNILLO Production guidance range Production Grade KEY ACTIONS KEY OPERATING HIGHLIGHTS 2021 2020 • New pumping station now operating Silver production – moz 12.0 13.1 • San Carlos shaft deepening concluded, final infrastructure an
Slide 14: Operations: Saucito
2 0 2 1 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 14 SAUCITO Production guidance range Production Grade KEY ACTIONS KEY OPERATING HIGHLIGHTS 2021 2020 • Continue the installation of geomechanical monitoring equipment in areas of Silver production* – moz 13.0 16.5 increased seismicity G
Slide 15: Other Operations
2 0 2 1 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 O T H E R O P E R AT I O N S SAN JULIÁN • Strong operational performance • Higher than expected ore grade at the DOB • Operational continuity of the DOB mine was maintained, with no geotechnical issues detected • Lower volume of ore
Slide 16: Projects: Juanicipio
2 0 2 1 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 16 JUANICIPIO (JV WITH MAG SILVER. FRESNILLO: 56%) • The construction of the Juanicipio plant was delivered on schedule during 4Q21 • Now focusing on complying with the new requirements from the state owned electricity company and the ener
Slide 17: Reserves, Resources & Exploration Update
RESERVES, RESOURCES & E X P L O R AT I O N U P D AT E GUILLERMO GASTÉLUM
Slide 18: Strong Silver Resource & Reserve Bases
RESERVES & RESOURCES 18 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 2,320Moz Total silver resources 2020 2,292,509 2021** 2,319,687 Koz 27,179 % +1.2% • Total of 2,320 moz silver resources (23.6 years of equivalent production*) 2,000,000 79,72
Slide 19: Strong Gold Resource & Reserve Bases
RESERVES & RESOURCES 19 STRONG GOLD RESOURCE & RESERVE BASES GOLD RESOURCES RESOURCES CHANGE 39.0Moz Total gold resources 2020 38,926 2021** 38,975 Koz 51 % +0.1% • Total of 39.0 moz silver resources (37 years of equivalent production*) 45,000 551 85 • Resources remained stable year-on-year 38,925 1
Slide 20: Strong Projects for the Future: Orisyvo, Rodeo & Guanajuato
2 0 2 1 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 20 S T R O N G P R O J E C T S F O R T H E F U T U R E - 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) • In 2021, we concluded a detailed metallurgical • In 2021, we refined the preli
Slide 21: Exploration Update
2 0 2 1 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 21 2022 Budget: US$ 180m 2021 Highlights: ▪ Invested US$140.1 million in risk capital in exploration during the year ▪ Drilled a total of 835,396 metres, 91% of which was focused on brownfield ▪ Proven reserves reported at
Slide 22: Financial Performance
FINANCIAL PERFORMANCE MARIO ARREGUÍN
Slide 23: Income Statement (IFRS)
2 0 2 1 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 ) 23 ( M I L L I O N U S D)
Slide 24: Consolidated Cost Inflation
2 0 2 1 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 1 24 (USD BASED) Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel 12.9% 6.4% 0.8% Employees 10.2% 3.2% 0.3% Weighted 12.0% Operating Materials 6.4% 17.6% 1.1% E
Slide 25: Adjusted Product Cost Analysis
2 0 2 1 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 25 ( C O N S O L I D ATE D )
Slide 26: Gross Profit Analysis
2 0 2 1 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 26 ( C O N S O L I D ATE D )
Slide 27: Income Statement (IFRS)
2 0 2 1 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 ) 27 ( M I L L I O N U S D)
Slide 28: Cash Flow (IFRS)
2 0 2 1 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 ) 28 ( M I L L I O N U S D) CASH FLOW ACCUM DECEMBER CHG. YTD 2020 (USD MILLION) 2021 2020 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,208.3 1,168.7 39.5 3.4 WORKING CAPITAL 58.0 (129.8) 187.8 N/A INCOME
Slide 29: Cash Flow (IFRS)
2 0 2 1 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 ) 29 ( M I L L I O N U S D) CASH FLOW ACCUM DECEMBER CHG. YTD 2020 (USD MILLION) 2021 2020 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,208.3 1,168.7 39.5 3.4 WORKING CAPITAL 58.0 (129.8) 187.8 N/A INCOME
Slide 30: Balance Sheet (IFRS)
2 0 2 1 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 ) 30 Change Concept 31-DEC-21 31-DEC-20 % Assets Cash and Investments 1,235.3 1,070.4 15.4 Trade and Other Receivables 401.4 512.9 (21.7) Inventories 487.8 443.2 10.1 Prepaid Expenses 20.3 18.2 11.4 Silverstream 529.5 576
Slide 31: 2022 Outlook
2022 OUTLOOK OCTAVIO ALVÍDREZ
Slide 32: Expected Attributable Product Profile
2 0 2 1 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 32 Production guidance range +/- 5% Million Oz Silver * Thousand Oz Gold 70 800 60 700 50 600 40 500 400 30 4 300 20 200 10 100 0 0 2021 2022 2023 2024 2021 2022 2023 2024 Thousand To
Slide 33: Capex Spend Expectations
2 0 2 1 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 33 Increase in sustaining capex seen in 2022 driven by a one off purchase of equipment to substitute for loss of contractor equipment following labour reform. Expected to be offset through lower contractors costs
Slide 34: Consolidated Outlook
2 0 2 1 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 34 1 2 Expected Avg. Investm ent YEAR (US$ m illion) Annual 2021 2022 2023 2024 2025 2026 Production PROJECT 3.5 m oz Ag & PYRITES PLANT 155 PRODUCTION 13 koz Au (Optimization project) ENERGY SUPPLY 3 11.7 m oz Ag & MI
Slide 35: Concluding Remarks
2 0 2 1 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 35 WORLD-CLASS ASSETS JUANICIPIO PRIMED TO SAFETY, A CLEAR PLAN TO STRONG EXPLORATION ADD SIGNIFICANT ENVIRONMENTAL CARE RESOLVE POTENTIAL, BACKED SIZEABLE RESOURCES SILVER PRODUCTION, AND COMMITMENT TO OPERATIONAL BY PRO
Slide 36: Appendix
APPENDIX —v— FRESNILLO.
Slide 37: Grade Expectations for Gold and Silver
G R A D E E X P E C TAT I O N S F O R 2 0 2 2 37 GOLD (G/T) MINE MINE TYPE FY 2022e 2021 Fresnillo Underground silver 0.50-0.70 0.68 Saucito Underground silver 1.10-1.20 1.46 San Julián (veins) Underground silver & gold 1.35-1.55 1.42 San Julián (disseminated) Underground silver - 0.10 Ciénega Under
Slide 38: Operations: Fresnillo
2 0 2 1 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 38 FRESNILLO Production guidance range Production Grade 2021 SUMMARY • The start-up of the pyrites plant was KEY OPERATING HIGHLIGHTS 2021 2020 delayed to mid 2022 due to new • Performance improved in 1H20, although requirements to comp
Slide 39: Operations: Saucito
2 0 2 1 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 39 SAUCITO Production guidance range Production Grade 2021 SUMMARY 2022 PRIORITIES KEY OPERATING HIGHLIGHTS 2021 2020 • Labour reform impacted development • Maintain strict safety protocols rates and equipment availability in 2H21 Silve
Slide 40: Operations: San Julián
2 0 2 1 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 40 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 2021 2020 KEY OPERATING HIGHLIGHTS 2021 2020 Gold production – koz 51.8 61.8 Gold production – koz 4.0 3.1 Silver production
Slide 41: Operations: Ciénega
2 0 2 1 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 41 CIÉNEGA KEY OPERATING HIGHLIGHTS 2021 2020 2021 SUMMARY 2022 PRIORITIES Silver production – moz 5.4 5.8 • Labour reform impacted development • Maintain strict safety protocols rates, equipment availability, tonnage • Mitigate the imp
Slide 42: Operations: Herradura
2 0 2 1 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 42 HERRADURA 2021 SUMMARY 2022 PRIORITIES KEY OPERATING HIGHLIGHTS 2021 2020 • As the scope of the Carbon in Column • Maintain strict safety protocols Silver production – moz 0.9 1.3 project increased, construction will be • Commission
Slide 43: Operations: Noche Buena
2 0 2 1 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 43 NOCHE BUENA 2021 SUMMARY 2022 PRIORITIES KEY OPERATING HIGHLIGHTS 2021 2020 • Cash cost decreased 11.1% • Maintain strict safety protocols Silver production – moz 0.0 0.0 • The mine closure plan commenced, • Close the open pit operat
Slide 44: Tailings Storage Facilities Update
2 0 2 1 P R E L I M I N A R Y R E S U LT S – TA I L I N G S S T O R A G E F A C I L I T I E S U P D AT E 44 We have completed a comprehensive upgrade of our approach to design, construction, operation and closure of our Tailings storage facilities (TSFs) Made up of internationally renowned experts,
Slide 45: Contribution to Adjusted Revenues by Mine and Metal
2 0 2 1 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 45 TO ADJUSTED REVENUES 2021 2021 ADJUST ED REVENUES 1 : US$2, 847.9M Fresnillo Ciénega Herradura Saucito Noche Buena San Julián (DOB) San Julián Veins Consol Gold 61.77 11.3% 81.21 35.6% 747.35 97.0%
Slide 46: Adjusted Production Cost
2 0 2 1 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 1 46 2021 ADJUST ED PRO DUCTIO N COST : US$1, 255.1M Operating Materials 25% Costs from Contractors = 29% = US$372.8 M Own 18% Ctrt. 7% Energy 20% Own 18% Ctrt. 2% Maintenance & repairs 18% Own 16 % Ctrt
Slide 47: Gross Profit
2 0 2 1 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 - 2 0 2 1 47 2021 G RO SS PRO FI T: US$936. 9M OTHERS 7.6% SAN JULIAN VEINS FRESNILLO 1.2% 14.6% SAN JULIAN DOB 17.3% SAUCITO 22.3% NOCHE BUENA 2.5% CIENEGA HERRADURA 30.0% 4.5%
Slide 48: Costs Summary (IFRS)
2 0 2 1 P R E L I M I N A R Y R E S U LT S – C O S T S S U M M A R Y ( I F R S ) 48 Cost per Tonne Cash Cost AISC US$/Tonne Change US$/ Silver Ounce Change US$/ Silver Ounce Change Mine 2021 2020 % 2021 2020 % 2021 2020 % Fresnillo 84.69 69.87 21.2% 5.44 5.94 -8.3% 16.34 12.92 26.5% Saucito 89.80 71
Slide 49: Notes
NOTES 49 4