Fresnillo Plc · LSE:FRES
Fresnillo — H1 2021 Earnings Presentation
51 slides from Fresnillo's earnings presentation, Aug 3, 2021
Slide 1: Half Year Interim Results
H A LF Y E A R I NT E R I M R E S U LT S 03 AUGUST 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 1H21 highlights 03 HSECR 04 Operational performance & development projects 05 Exploration update 06 Financial performance 07 2021 outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION OCTAVIO ALVÍDREZ
Slide 5: Key competitive advantages position us to meet commitments
2 0 2 1 H A L F Y E A R 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 SHEET A
Slide 6: 1H21 Highlights
1H21 HIGHLIGHTS OCTAVIO ALVÍDREZ
Slide 7: Operational Performance Highlights
2 0 2 1 H A L F Y E A R 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 HALF YEAR SILVER JUANICIPIO COMMISSIONING OPERATIONAL HIGHLIGHTS PRODUCTION EXPECTED IN 27.5MOZ 4Q 2021 • Attributable silver production of 27.5 moz (including Silverstream), up 2.7%
Slide 8: Financial Performance Highlights
2 0 2 1 H A L F Y E A R 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 606.8M 41.4US¢ per share • Adjusted Revenues of US$1,543.1m, up 37.2%, mainly • Cash generated from operations, before chang
Slide 9: HSECR
HSECR OCTAVIO ALVIDREZ —v— FRESNILLO.
Slide 10: HSECR: Health & Safety, Environment, Community Relations
2 0 2 1 H A L F Y E A R R E S U LT S – H S E C R 10 W E B E L I E V E T H AT R E S P O N S I B L E M I N I N G I S C O M PAT I B L E W I T H H I G H S TA K E H O L D E R E X P E C TAT I O N S I N T E R M S O F E T H I C A L , S O C I A L A N D E N V I R O N M E N TA L P E R F O R M A N C E , A N D R
Slide 11: Operational & Projects Performance
O P E R AT I O N A L & PROJECTS PERFORMANCE TOMÁS ITURRIAGA
Slide 12: HSECR: Safety Statistics
2 0 2 1 H A L F Y E A R R E S U LT S – H S E C R 12 Total Injury Frequency Rate and Lost Time Fatalities 2018 - 2021 Frequency Rate (2019-2021) 2 300 22.1 25 249 250 Accidents*1000000/HH 20 Fatal injuries 200 15.4 Accidents 149 15 1 150 9.9 115 8.6 10 100 6.1 5.0 50 5 0 2019 2020 2021 0 0 2019 2020
Slide 13: Operations: Fresnillo
2 0 2 1 H A L F Y E A R R E S U LT S – O P E R AT I O N S 13 FRESNILLO Production Grade 1H21 SUMMARY 2H21 PRIORITIES KEY OPERATING HIGHLIGHTS 1H 21 1H 20 • LTIFR improved half on half, from 12.6 to • Maintain strict safety protocols. 7.5. Silver production – moz 6.6 6.8 • Development rate averaged 3
Slide 14: Operations: Saucito
2 0 2 1 H A L F Y E A R R E S U LT S – O P E R AT I O N S 14 SAUCITO Production Grade 1H21 SUMMARY 2H21 PRIORITIES KEY OPERATING HIGHLIGHTS 1H21 1H20 • LTIFR improved half on half, from 5.4 • Maintain strict safety protocols. Silver production* – moz 6.6 8.1 to 4.4. • Increase the development rate t
Slide 15: Operations: San Julián
2 0 2 1 H A L F Y E A R R E S U LT S – O P E R AT I O N S 15 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 1H21 1H20 KEY OPERATING HIGHLIGHTS 1H21 1H20 Gold production – koz 27.2 30.2 Gold production – koz 1.3 1.3 Silver production – moz
Slide 16: Operations: Ciénega
2 0 2 1 H A L F Y E A R R E S U LT S – O P E R AT I O N S 16 CIÉNEGA 1H21 SUMMARY 2H21 PRIORITIES • LTIFR improved half on half, from 3.9 to • Maintain strict safety protocols. KEY OPERATING HIGHLIGHTS 1H21 1H20 3.3. • Continue strict cost control. Silver production – moz 2.7 3.0 • Cost per tonne hi
Slide 17: Operations: Herradura
2 0 2 1 H A L F Y E A R R E S U LT S – O P E R AT I O N S 17 HERRADURA 1H21 SUMMARY 2H21 PRIORITIES KEY OPERATING HIGHLIGHTS 1H21 1H20 • LTIFR improved half on half, from 3.1 to • Maintain strict safety protocols. 2.8. • Continue to improve dust suppression at Silver production – moz 0.5 0.8 the loa
Slide 18: Operations: Noche Buena
2 0 2 1 H A L F Y E A R R E S U LT S – O P E R AT I O N S 18 NOCHE BUENA 1H21 SUMMARY 2H21 PRIORITIES KEY OPERATING HIGHLIGHTS 1H21 1H20 • LTIFR improved half on half, from • Maintain strict safety protocols. Silver production – moz 0.0 0.0 4.3 to 2.0. • Lower AISC profile. • AISC increased driven b
Slide 19: Projects: Pyrites Plant and Fresnillo Beneficiation Plant
2 0 2 1 H A L F Y E A R R E S U LT S – P R O J E C T S 19 PYRITES PLANT 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 FRESNILLO MINE • The project will improve overall recoveries of gold and silver by processing Three project phases: historical and ongoing tailings from the
Slide 20: Projects: Juanicipio
2 0 2 1 H A L F Y E A R R E S U LT S – P R O J E C T S 20 JUANICIPIO (JV WITH MAG SILVER. FRESNILLO: 56%) OVERVIEW KEY METRIC ESTIMATES (100% BASIS) • Mine development continued to advance. • Commissioning of the plant remains on track to be commissioned in 4Q CAPEX FROM 1ST JANUARY 2018 US$ 440 M 2
Slide 21: Exploration Update
E X P L O R AT I O N U P D AT E GUILLERMO GASTÉLUM
Slide 22: Exploration Update
2 0 2 1 H A L F Y E A R R E S U LT S – E X P L O R AT I O N U P D AT E 22 2021 Budget: US$162m US$60.9m invested YTD Fresnillo Saucito 40 % ▪ Exploration objective: 2 Moz gold or 150 Herradura Moz silver, satellite orebodies 1 Moz gold Mine Operations Nochebuena (or silver equivalent). Soledad & Dip
Slide 23: PEA-Feasibility Projects: Orisyvo, Rodeo & Guanajuato
2 0 2 1 H A L F Y E A R R E S U LT S – P R O J E C T S 23 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 RODEO (GOLD) ORISYVO (GOLD) GUANAJUATO (SILVER / GOLD) • This project is in close proximity to infrastructure, which • Assessing a 8,000 TPD mine w
Slide 24: Financial Performance
FINANCIAL PERFORMANCE MARIO ARREGUÍN
Slide 25: Income Statement (IFRS)
2 0 2 1 H A L F Y E A R R E S U LT S – I N C O M E S TAT E M E N T ( I F R S ) 25 ACCUM JUNE CHANGE ( M I L L I O N U S D) CO NCEPT 2021 % 2020 % $ % ADJUSTED REVENUES 1,543.1 1,125.1 418.0 37.1 HEDGING (METALS) 0.0 1.5 (1.5) N/A TREATMENT AND REFINING CHARGES (76.2) (72.4) (3.8) (5.3) REVENUES 1,46
Slide 26: Consolidated Cost Inflation 1H21 vs 1H20
2 0 2 1 H A L F Y E A R 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 1 H 2 0 2 1 V S . 1 H 2 0 2 0 26 (USD BASED) Consolidated 1H2021 1H2020 Unit Price Weighted Weighted Increase % Weight (*) Average Average Labour Unionized Personnel 14.1% 5.9% 0.8% -0.5% Employees 11.4% 3.2% 0.4%
Slide 27: Adjusted Production Cost Analysis
2 0 2 1 H A L F Y E A R 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 27 ( C O N S O L I D ATE D ) CHANGE YTD 21 YTD 20 $ % Adjusted Production Cost 611.1 506.6 +104.5* +20.6 Change in inventories and others -24.9 -33.1 +8.1 +24.6 Depreciation 265.4 251.7 +13.7 +5.4 PTU 1
Slide 28: Gross Profit Analysis
110.0 165.0 220.0 275.0 330.0 385.0 440.0 495.0 550.0 55.0 0.0 USD MILLION ( C O N S O L I D ATE D ) 1 Higher Metal Prices 316.9 2 Net effect of higher ore grade 91.5 New Juanicipio Operation 3 16.4 ER 4 Net effect of higher ore vol. 6.3 processed Gross Profit 5 Others (6.9 ) Change in inventories a
Slide 29: Cash Flow (IFRS)
2 0 2 1 H A L F Y E A R 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 YTD CHG. YTD 2020 (USD MILLION) 2021 2020 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 750.4 456.2 294.2 64.5 WORKING CAPITAL 15.1 37.3 (22.2) (59.5) INCOME TAX AND PROFIT SHA
Slide 30: Balance Sheet (IFRS)
2 0 2 1 H A L F Y E A R R E S U LT S – B A L A N C E S H E E T ( I F R S ) 30 ( M I L L I O N U S D) Change Concept 30-JUNE-21 31-DEC-20 % Assets Cash and Investments 1,202.9 1,070.4 12.4 Trade and Other Receivables 504.3 512.9 (1.7) Inventories 467.7 443.2 5.5 Prepaid Expenses 16.1 18.2 (11.3) Silv
Slide 31: 2021 Outlook
2021 OUTLOOK OCTAVIO ALVÍDREZ
Slide 32: Expected Attributable Production Profile
2 0 2 1 H A L F Y E A R 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% 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 Tons L
Slide 33: Capex Spend Expectations
2 0 2 1 H A L F Y E A R 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 Forecast 6+6 2021 US$ Million Million Usd 580 600 Sustaining (Operations) 515 Fresnillo 77 M 500 Saucito 90 M4 465 Ciénega 42 M 415 San Julián 50 M 400 Herradura 86 M Noche Buena 2 M Others 13 M 300 Projects Approv
Slide 34: Consolidated Outlook
2 0 2 1 H A L F Y E A R 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 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 FLOTATI
Slide 35: Concluding Remarks
2 0 2 1 H A L F Y E A R R E S U LT S – C O N C L U D I N G R E M A R K S 35 COMMITMENT TO MAINTAIN PURPOSEFUL CREATE VALUE GUIDANCE FOR 2021 OPERATIONAL COMMITMENT TO ENGAGEMENT WITH THROUGH DISCIPLINED AND BEYOND DELIVERY, MAXIMISING SAFETY & WELLBEING ALL OUR GROWTH, UNCHANGED POTENTIAL OF OUR OF
Slide 36: LSE: FRES BMV: FRES
LSE: FRES BMV: FRES www.fresnilloplc.com
Slide 37: Appendix
APPENDIX —v— FRESNILLO.
Slide 38: Grade Expectations
G R A D E E X P E C TAT I O N S F O R 2 0 2 1 38 GOLD (G/T) MINE MINE TYPE FY 2021e 1H21 Actual Fresnillo Underground silver 0.55 - 0.70 0.69 Saucito Underground silver 1.30 – 1.50 1.58 San Julián (veins) Underground silver & gold 1.30 – 1.50 1.52 San Julián (disseminated) Underground silver & gold
Slide 39: Fresnillo at a Glance
2 0 2 1 H A L F Y E A R R E S U LT S - F R E S N I L L O AT A G L A N C E 39 Our purpose is to contribute to the wellbeing of people through the sustainable mining of silver and gold. World’s largest silver producer (53.1 moz in 2020) and Mexico’s largest gold producer (769.6 koz in 2020). Total ass
Slide 40: Fresnillo at a Glance
2 0 2 1 H A L F Y E A R R E S U LT S - F R E S N I L L O AT A G L A N C E 40 1 As of 31 May 2020 2 Au:Ag ratio of 1:70
Slide 41: Strong Silver Resource & Reserves Bases
RESERVES & RESOURCES 41 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 42: Strong Gold Resource & Reserve Bases
RESERVES & RESOURCES 42 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 43: Reserves & Resources Update
2 0 2 1 H A L F Y E A R R E S U LT S – R E S E R V E S & R E S O U R C E S U P D AT E 43 R E S O U R C E A N D R E S E R V E U P D AT E MINERAL RESOURCES OPEN PIT RESERVES UNDERGROUND RESERVES • Information complete, details flowing as expected. • Open pit assumptions done & approved. • May mining s
Slide 44: Contribution to Adjusted Revenues by Mine and Metal
2 0 2 1 H A L F Y E A R 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 44 TO ADJUSTED REVENUES 1H 2021 1 H 2 1 AD J US T E D R E V E N UE S 1 : US $ 1 , 5 4 3 . 1 M
Slide 45: Adjusted Production Cost
2 0 2 1 H A L F Y E A R 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 – 1 H 2 1 45 (USD BASED) US$ 611.1 M Operating Materials 26% Own 19% Costs from Contractors = 31% Ctrt. 7% Energy 19% Own 18% Ctrt. 1% Maintenance & repairs 18% Own 16% Ctrt. 2% Others 9% Own 8% Ctrt. 1% Personnel 15%
Slide 46: Income Statement (IFRS)
2 0 2 1 H A L F Y E A R 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)
Slide 47: Cash Flow (IFRS)
2 0 2 1 H A L F Y E A R R E S U LT S – C A S H F L O W ( I F R S ) 47 ( M I L L I O N U S D)
Slide 48: Cost per Tonne (IFRS)
2 0 2 1 H A L F Y E A R R E S U LT S – C O S T P E R T O N N E ( I F R S ) 48 ACCUM JUNE CHANGE 2021 2020 % CHG. COST PER TONNE * MINE UNIT Fresnillo US$/TON 79.95 65.60 21.9% Saucito US$/TON 76.27 70.34 8.4% Ciénega US$/TON 83.52 72.98 14.4% San Julián Veins US$/TON 78.73 70.03 12.4% San Julián JM
Slide 49: Cash Cost (IFRS)
2 0 2 1 H A L F Y E A R R E S U LT S – C A S H C O S T ( I F R S ) 49 ACCUM JUNE CHANGE 2021 2020 % CHG. CASH COST * MINE UNIT Fresnillo PER OZ. SILVER 6.41 4.86 31.9% Saucito PER OZ. SILVER -4.37 1.19 N/A Ciénega PER OZ. GOLD (By-prod.) -606.99 -84.59 617.6% PER OZ. GOLD (Co-prod.) 818.36 736.46 11
Slide 50: All In Sustaining Cost (US$/oz)
2 0 2 1 H A L F Y E A R 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 JUNE 2021 2020 % CHG. CASH COST * MINE UNIT Fresnillo PER OZ. SILVER 14.45 11.14 29.7% Saucito PER OZ. SILVER 3.46 6.07 -43.0% Ciénega PER OZ. GOLD 405.67 613.93 -33.9% PER OZ. GOLD (Co-product) 1,22
Slide 51: Notes
NOTES 51 4