Fresnillo Plc · LSE:FRES
Fresnillo — Silver Investment Conference 2010
14 slides from Fresnillo's conference presentation, Jun 9, 2010
Slide 1: Silver mine supply – Strategy for growth
Silver mine supply – Strategy for growth Silver Investment Conference London Stock Exchange – 9th June 2010 Jaime Lomelin, CEO Fresnillo plc
Slide 2: Agenda
Agenda Silver mine production 2000 - 2009 Primary production World supply Production forecast Growth strategies The Fresnillo experience Conclusion 1
Slide 3: Growth in production illustrates silver’s adaptability
Growth in production illustrates silver’s adaptability 710 710 2005/2009: 3.0% CAGR 690 670 2000/2009: 2.5% CAGR m 650 o 630 2000/2005: 1.5% CAGR z 610 590 570 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: GFMS, Silver Survey 1999-2010. 2
Slide 4: Where is all the silver coming from?
Where is all the silver coming from? 140 120 100 m 80 o 60 z 40 20 0 ia SA ia n nd o na ia le ru er ta ic al us hi iv th Pe hi la U ex hs tr ol C R O C Po us M B ak A az 2005 2007 2009 K Source: GFMS, Silver Survey 1999-2010. 3
Slide 5: Companies producing from primary and secondary sources
Companies producing from primary and secondary sources 60 BHP Billiton 50 KGHM Fresnillo plc m 40 Pan American Silver Minera Volcan 30 o Hochschild z 20 Coeur d' Alene Sumitomo Corp 10 Polymetal Kazakhmys 0 2005 2007 2009 Source: GFMS, Silver Survey 1999-2010 and Companies Reports 4
Slide 6: Primary producers have greater scope to increase production
Primary producers have greater scope to increase production Annual growth 2009 rate Other 700 1% 4.8% 12% 600 30% 500 1.4% Gold Primary m 400 o 0.4% 300 z 2.2% 23% Copper 200 Lead 4.6% 100 Zinc 0 2005 2006 2007 2008 2009 34% Source: GFMS, Silver Survey 1999-2010. 5
Slide 7: Latin America is the home to most of the world’s primary silver
Latin America is the home to most of the world’s primary silver 214 200 Other m 150 Australia o 100 z Peru 50 Mexico 0 2005 2006 2007 2008 2009 Source: GFMS, Silver Survey 1999-2010. 6
Slide 8: … And these are the producers…
… And these are the producers… 40 35 Fresnillo plc 30 Pan American Silver m 25 Hochschild Mining Polymetal 20 o Coeur d´Alene Mines z 15 Buenaventura 10 Hecla Mining 5 Managem 0 Silvercorp Metals 2005 2007 2009 Source: GFMS, Silver Survey 1999-2010 and Company Reports 7
Slide 9: Mine production is an increasingly important source of supply
Mine production is an increasingly important source of supply Mine production Government sales Scrap Other 1,000 919 889 800 m 710 600 590 o 400 z 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: GFMS, Silver Survey 1999-2010 8
Slide 10: Mine capacity expected to increase between 2009-2014
Mine capacity expected to increase between 2009-2014 New mines 82 Expansions 45 m oz Reductions 42 Closures 22 Net 63 -60 -40 -20 0 20 40 60 80 100 Source: GFMS, Brook Hunt, CRU, Company estimates. 9
Slide 11: Most new silver production will come from Latin America
Most new silver production will come from Latin America Existing New 800 773 AGR: 1.7% 750 710 700 AGR: 3.0% 127 m 650 646 600 o 550 z 500 450 400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: GFMS, Brook Hun, CRU, Company estimates. 10
Slide 12: Strategies for production growth
Strategies for production growth Invest in exploration through cycles Existing mines Replenishment and growth of reserves and resources through exploration Regional exploration and district consolidation Optimize production and de-bottlenecking Greenfield projects Countries and areas with geological
Slide 13: The Fresnillo strategy
The Fresnillo strategy Silver Gold m oz k oz Project 2010 2011 2012 2013 2014 60 1,200 Soledad - Production Expansion Expanded Production Dipolos 50 1,000 Ciénega Expansion Expanded Production 40 800 Reserve Expanded Saucito Production Expansion 30 600 Definition Production M&I Pre - Nochebuena Prod
Slide 14: Conclusion
Conclusion Silver is one of the most versatile metals with a wide variety of industrial applications and investment appeal Latin America is at the centre of production growth Primary producers are increasingly important and are better able to respond to market conditions Supply is growing at 1.7% pe