Fresnillo Plc · LSE:FRES
Fresnillo — FY2019 Earnings Presentation
56 slides from Fresnillo's earnings presentation, Mar 3, 2020
Slide 1: Fresnillo
FRESNILLO. Tuesday 3 March 2020
Slide 2: Disclaimer
DISCLAIMER 2 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”, “in
Slide 3: Agenda
AGENDA Investment proposition 2019 Highlights HSECR Operational performance & Development projects Reserves, Resources & Exploration Financials 2020 Outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION 4 2 &® © © @ 2.3 BNOZ OF SILVER CONSOLIDATED SILVER SOLID PROJECT DEDICATED TEAMS NET DEBT TO EBITDA OF RESOURCES CASH COST OF US$8.25 PIPELINE FOCUSED ON PROMOTING 0.69X PER 02. AND SUPPORTING LOCAL 39.0 MOZ OF GOLD COMMUNITIES RESOURCES. | CARE WE CARE PROGRAMME
Slide 5: 2019 Full Year Results - Highlights (Operational)
2019 FULL YEAR RESULTS - HIGHLIGHTS Operational Highlights + Annual silver production of 54.6 moz (including Silverstream) down 11.6% vs. 2018 * Annual gold production of 875.9 koz, down 5.1% vs. 2018 + Mine development at Juanicipio reached over 25 km, with ore from these activities as well as from
Slide 6: 2019 Full Year Results - Highlights (Financial)
2019 FULL YEAR RESULTS - HIGHLIGHTS Financial Highlights * Gross profit and EBITDA of US$461.7 million and US$674.0 million, down 40.9% and 26.3% respectively * Higher Adjusted Production costs driven by higher development costs, maintenance and operating materials, in addition to the higher strippi
Slide 7: Commitment to Sustainable Business Practices
COMMITMENT TO SUSTAINABLE BUSINESS PRACTICES Our Purpose: “Contribute to the wellbeing of people through the sustainable mining of silver and gold” Embedding a safe and ethical culture, implementing responsible mining practices and sharing the benefits of mining to wider society, while recognising t
Slide 8: Operations & Development Projects
OPERATIONS & DEVELOPMENT PROJECTS Operating performance & Development projects
Slide 9: 23.2 20.5 18.7 2017 2018 2019
14 12 10 8 6 4 23.2 2 20.5 18.7 0 2017 2018 2019
Slide 10: Operations
OPERATIONS FRESNILLO PLC - GROUP LEVEL OPERATIONAL PRIORITIES GOLD PRODUCTION (KOZ) 761.7 SILVER PRODUCTION (MOZ) 47.0 2015A KEY OBJECTIVES 875.9 1. Increase personnel safety 2. Operate the seven mines at full capacity and as efficiently as possible 3. Focus on costs and increasing productivity 4. I
Slide 11: Grams/Tonne
• • • • • 20 250 • 15 200 Million Ounces Grams/Tonne • • 10 150 • • • • 5 100 • • 0 50 2017 2018 2019 2020e**
Slide 12: Grams/Tonne
• • • • 25 300 • • 20 250 Million Ounces Grams/Tonne 15 200 • • 10 150 • • 5 100 • 0 50 2017 2018 2019 2020e*
Slide 13: Operations - San Julian
OPERATIONS SAN JULIAN (VEIN SYSTEM) SAN JULIAN (DISSEMINATED ORE BODY) KEY OPERATING STATISTICS FY19 FY 18 old production - koz 62.2 79.2 Silver production- moz 4.3 54 Cost per tonne - US$/t 72.0 57.4 Cash cost - US$/oz of Ag 08 (3.6) AISC - US$/0z of Ag 14.8 5.05 Reserves 2019 ** 22.4 moz Ag, 0.2 m
Slide 14: Operations - Cienega
OPERATIONS CIENEGA KEY OPERATING STATISTICS FY19 FY 18 Gold production -koz 65.6 66.9 Silver production - moz 5.8 6.0 Cost per tonne - US$/t 78.3 70.8 Cash cost - US$/oz of Au (0.2) 25.9 AISC - US$/0z of Au 1,212.1 1,413.9 Reserves 2019 * 38.6 moz Ag, 0.4 moz Au Resources 2019 * 129.0 moz Ag, 1.5 mo
Slide 15: Operations - Herradura
OPERATIONS 15 HERRADURA KEY OPERATING STATISTICS FY19 FY 18 Gold production - koz 482.7 474.2 Silver production - koz 1,563 1,523 Cost per tonne* - US$/t 18.1 13.2 Cash cost - US$/oz of Au 818.6 504.0 AISC - US$/0z of Au 963 806.7 Reserves 2019 ** 6.7 moz Au Resources 2019 ** 9.8 moz Au 2019 SUMMARY
Slide 16: Gold price US$/oz
1,000 US$ /OZ. GOLD 900 800 700 600 2015 2016 2017 2018 2019 • • • • • • • • • •
Slide 17: Operations - Geological Model Update
OPERATIONS GEOLOGICAL MODEL - UPDATE 7 During 2019, four teams worked on the reserve (geological) model, identifying areas of opportunity by focusing on the following processes: 1: The extent of dilution Conclusion: Higher than forecast & industry standards Actions: Adjust blasting patterns Reduce s
Slide 18: Development Projects - Pyrites Plant
DEVELOPMENT PROJECTS PYRITES PLANT PROJECT IN THE FRESNILLO DISTRICT produce a pyrites concentrate. This will be sent to a filtration plant and then on 18 OVERVIEW Expected avg. annual silver production 3.5 moz Expected avg. annual gold production 13.0 koz Expected cash cost at full capacity (averag
Slide 19: Development Projects - Optimisation of Beneficiation Plant at Fresnillo
DEVELOPMENT PROJECTS 19 OPTIMISATION OF BENEFICIATION PLANT AT THE FRESNILLO MINE OVERVIEW Three phases: Main requirements to increase capacity (Phase Ill): 1. Zinc thickener installed in 2017 + Robbins equipment MDM 5000 for W San Alberto 2. Increase flotation cells (Ongoing), with completion * San
Slide 20: Development Projects - Juanicipio
DEVELOPMENT PROJECTS 20 JUANICIPIO (iv with MAG SILVER. FRESNILLO: 56%) OVERVIEW Detailed engineering almost completed Realised several changes to the original approved plan, changes seen below: Increase i in Pre-operative Capex change: KEY METRIC ESTIMATES (100% BASIS) Underground development/groun
Slide 21: Development Projects - Orisyvo, Guanajuato & Rodeo
DEVELOPMENT PROJECTS 21 OTHER PROJECT & POTENTIAL PROJECTS - ORISYVO, GUANAJUATO & RODEO OVERVIEW - ORISYVO - 2,950m of test drilling at the Orisyvo project in 2019 - Following improved metallurgy recovery results in 2019, full-scale metallurgical test work is to be undertaken over the entirety of t
Slide 22: Reserves, Resources & Exploration
RESERVES, RESOURCES & EXPLORATION Reserves, Resources & Exploration 22
Slide 23: Reserves & Resources - Key Changes & Conclusions
RESERVES & RESOURCES KEY CHANGES & CONCLUSIONS Earlier cut-off date for R&R audit, as of 31st May 2019 More stringent criteria used for calculation Additional studies for geotechnical, hydrological, financial models are required All reserves are classified as probable A combined team of engineers an
Slide 24: Reserves & Resources - Silver Resources
RESERVES & RESOURCES STRONG RESOURCE BASE Metal prices used for 2019 resource estimation: Gold 1.250 USS/oz, Silver 17.0 US8/0z, 0.90 US/pound Lead and 1.15 US/pound Zinc. SILVER RESOURCES 2,257 moz + 52,844 koz, +2.4% vs 2018 CHANGE 2078 2019" hoz % Total Silver Resources 2,203,976 2,256,817 52,864
Slide 25: Reserves & Resources - Gold Resources
RESERVES & RESOURCES 25 STRONG RESOURCE BASE GOLD RESOURCES 39.0 moz -132 koz, -0.3% vs 2018 HIGHLIGHTS CHANGE 2018 2019"" Koz % Total Gold Resources 99,105.2 389736 1316 -0.3% Total of 39.0 moz silver resources (34 yrs of production*) 1,000 4710 7 736 gg Earlier cut-off date for R&R audit, as of 31
Slide 26: Silver Reserves
RESERVES & RESOURCES SEEKING FURTHER RESOURCE CONVERSION TO EXPAND RESERVE BASE SILVER RESERVES 483,997 moz + 8,006 koz, +1.7% vs 2018 26 HIGHLIGHTS Reserves increased 1.7% vs. 2018 CHANGE 2018 2019°" Koz % . . Total Silver Reserves 475,991.0 483,997.2, 8,006.1 17% Total of 484 moz silver reserves (
Slide 27: Gold Reserves
RESERVES & RESOURCES 27 SEEKING FURTHER RESOURCE CONVERSION TO EXPAND RESERVE BASE 12,000 1,009 10,000 8,000 6,000 4,000 2,000 Reserves 2018 GOLD RESERVES 9,248 koz - 1,761 koz, -16% vs 2018 Total Gold Reserves +438 ° “Bh SC=83 “179 wana Sanlulsn— Noche uene Fresno Saveko HIGHLIGHTS Reserves decreas
Slide 28: Exploration - Strong Organic Growth Pipeline
EXPLORATION STRONG ORGANIC GROWTH PIPELINE Fresnillo 2020 Budget: US$ 135 m Saucito Herradura Nochebuena 60% Cienega - San Ramon - . Cebollitas Cluster Mine Operations San Julian Soledad & Dipolos* Pyrites Plant Juanicipio 20% Centauro Great Potential Orisyvo Guanaj Rodeo Tajito Guachichil Candamefa
Slide 29: Financial Performance
FINANCIAL PERFORMANCE Financial performance 29
Slide 30: Income Statement
ACCUM DECEMBER CHANGE C O N C EP T 2019 % 2018 % $ % ADJUSTED REVENUES 2,270.2 2,243.4 26.8 1.2 HEDGING (METALS) (6.0) 1.6 (7.6) N/A TREATMENT AND REFINING CHARGES (144.6) (141.2) (3.4) (2.4) REVENUES 2,119.6 100.0 2,103.8 100.0 15.9 0.8 ADJUSTED PRODUCTION COST (1,173.0) (55.3) (952.0) (45.2) (221.
Slide 31: Contribution by Mine and by Metal to Adjusted Revenues
CONTRIBUTION BY MINE AND BY METAL TO THE ADJUSTED REVENUES 2019 31 12019 ADJUSTED REVENUES : US$2,270.2M BY MINE BY METAL 8% 4% MM Herradura % HM Gold ll Saucito Silver Fresnillo Zine ‘6 Lead Ciénega 8% = MM Noche Buena MN San Julian DOB HE Son Julian Veins 53% % 34% ILLO CIENEGA HERRADURA. ITO NOCH
Slide 32: Cost Inflation Expectations
Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel 7.2% 5.9% 0.4% Employees 5.0% 2.8% 0.1% Weighted 6.5% Operating Materials 1.6% 19.9% 0.3% Energy Electric Energy 4.1% 6.1% 0.3% Diesel 6.7% 11.2% 0.8% Gasoline 5.6% 1.4% 0.1% Weighted 5.8% Contractors 4.7% 31.1
Slide 33: Adjusted Production Cost Analysis (Consolidated)
ADJUSTED PRODUCTION COST ANALYSIS (CONSOLIDATED) % YTD 18 YTD 19 CHANGE IN INVENTORIES AND OTHERS DEPRECIATION PTU USD MILLION ICOST OF SALES 221.1 3.1 33.4 35.4 461 461 56.9 270.0 240.0 210.0 180.0 150.0 120.0 90.0 60.0 30.0 0.0 309 uononpodd peysnipy ul aseesoul © sino © ja 'B YUe}d Saya) suoNesed
Slide 34: Adjusted Production Cost
ADJUSTED PRODUCTION COST Adjusted Production Cost Million USD Expected +5% Real Va — os 2020 2019 FRESNILLO 157.9 154.4 3.5 2.2 Pyrites Plant 10.4 - 10.4 N/A SAUCITO 183.4 179.1 43 2.4 Pyrites Plant 14.1 18.8 (4.7) (24.9) CIENEGA 109.0 104.0 49 47 SAN JULIAN 188.5 178.3 10.2 5.7 HERRADURA 430.3 415.
Slide 35: Adjusted Production Cost - FY 2019
ADJUSTED PRODUCTION COST - FY 2019 Maintenance & repairs 18% Own 16% Ctrt. 2% USS 1,173.0 Million Operating Materials 28% Own 21% Ctrt. 7% Energy 20% Own 18% Ctrt. 2% Others 9% Own 8% Ctrt. 1% Equipment Ctrt. 10% Personnel 15% Own 8% Ctrt. 7% * Includes: Freights, Taxes & Licenses, Insurance Costs,
Slide 36: Consolidated Gross Profit Analysis
36 (319.00) (96.12) (62.24) (77.76) (80.07) (56.92) = YTD 19 (46.14) (46.09) (35.38) USD MILLION 280.0 5 70.0 | 0.0 (70.0) (140.0) + (210.0) + (280.0) + CONSOLIDATED GROSS PROFIT ANALYSIS Wold SS019 6LALA anpesiey ye sped BuIyoee) eu} Ul uayUo9 prob yo juauisessee! gLoz ‘ayy Woy BuNINsed 6102 UI 349
Slide 37: Operating Units Income Statement
Operating Units Fresnillo 14.0 ACCUM DECEMBER 2019 VS. 2018 (Million USD) Saucito 14.9 CONCEP T 2019 2018 $ % Ciénega 13.7 ADJUSTED REVENUES 2,270.2 2,243.4 San Julián 26.8 1.2 17.6 HEDGING (METALS) (6.0) 1.6 (7.6) N/A Noche Buena 0.4 TREATMENT AND REFINING CHARGES (144.6) (141.2) (3.4) (2.
Slide 38: Cash Flow YTD 2019
CASH FLOW YTD 2019 CHG. YTD 2018 (USD MILLION) REAL 2018 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 685.5 930.7 (245.2) (26.3) WORKING CAPITAL (56.6) (127.9) 71.3 55.7 INCOME TAX AND PROFIT SHARING PAID (193.0) (214.4) 21.4 10.0 NET CASH FROM OPERATING ACTIVITIES 435.9 588.4
Slide 39: Cash Flow - Commentary
• Decrease in accounts receivables (-US$39.3 million): • Met- Mex +US$3.6 million, VAT -US$46.0 million and • other receivables +US$3.1 million • Increase in trade and other payables +US$14.6 million • Increase in inventories -US$28.6 million CASH FLOW YTD 2019 CHG. • Increase in prepayments andYTD
Slide 40: Statement of Financial Position
Change Concept 31-DECEMBER-19 31-DEC-18 % Assets Cash and Investments 336.6 560.8 (40.0) Trade and Other Receivables 517.8 462.0 12.1 Inventories 363.7 335.0 8.6 Prepaid Expenses 18.3 15.5 18.4 Silverstream 541.3 519.1 4.3 Derivative Financial Instruments 2.6 0.3 734.4 Property, Plant and Equipment
Slide 41: Outlook 2020
OUTLOOK Outlook 2020 4]
Slide 42: Capex Outlook
1 2 4 3 APPROVED BY THE BOARD SUBJECT TO ONGOING INTERNAL REVIEW (SUBJECT TO BOARD APPROVAL) Silver) as of 1st January 2018.
Slide 43: Consolidated Outlook
CONSOLIDATED OUTLOOK 43 EXPECTED ATTRIBUTABLE PRODUCTION PROFILE Million Oz Thousand 02 . 1 % Silver 1000 Gold 800 600 400 200 aad 2020 2021 2072 ° 2019 2020 2021 2022 Thousand Tons Lead Thousand Tons Zinc 70 100 60 50 80 i | 40 60 | 30 20 40 1 | 10 2 | | 6 Se 2 2019 2020 2021 2022 0 2019 2020 2021
Slide 44: Sustaining (Operations) New Projects Approved
Sustaining (Operations) New Projects Approved
Slide 45: Concluding Remarks
CONCLUDING REMARKS STRONG COMMITMENT TO OPERATIONAL DELIVERY, MAXIMISING POTENTIAL OF OUR EXISTING MINES FOCUS ON REDUCING COST AND CAPTURING EFFICIENCIES SAFETY TO REMAIN AT THE HEART OF EVERYTHING WE DO PURPOSEFUL ENGAGEMENT WITH STAKEHOLDERS 45 CREATE VALUE THROUGH DISCIPLINED GROWTH, EXPLORATION
Slide 46: Appendix
APPENDIX FRESNI =f Appendix 46
Slide 47: Grade Expectations for 2020
GRADE EXPECTATIONS FOR 2020 GOLD (G/T) MINE MINE TYPE 2020e 2019 FRESNILLO UNDERGROUND SILVER: 0.85-0.90 0.89 SAUCITO UNDERGROUND SILVER: 0.95 119 CIENEGA UNDERGROUND GOLD & SILVER 1.65-1.75 1.66 HERRADURA OPEN PIT GOLD 0.75-0.80 0.80 NOCHE BUENA OPEN PIT GOLD 0.55-0.60 0.55 SAN JULIAN (VEINS) UNDER
Slide 48: High Quality Assets
HIGH QUALITY ASSETS 48 * District consolidation strategy enables us to leverage local knowledge and shared infrastructure * Portfolio contains over 2,257 moz of attributable silver resources and 39.0 moz of gold resources Location GOLD (0z) anne MINE MINE TYPE 2019 2018 OIsTRICT FRESNILLO UNDERGROUN
Slide 49: Tailing Safety Management
TAILING SAFETY MANAGEMENT 49 TAILINGS DAMS - REVIEW UPDATE Fresnillo remains committed to ea ee (On operation updating TSF governance practices to —_MineraPenmont _Deposito Herradura Aseries of initiatives were launched in early 2019 to align governance . Minera San Julian Depésito 1 On operation @
Slide 50: Adjusted Revenues (IFRS)
ADJUSTED REVENUES (IFRS) 50 MILLION USD ACCUM DECEMBER CHANGE BY 2019 2018 VOLUME PRICE TOTAL Gold 1,202.8 1,118.5 (44.1) 128.8 84.7 Silver 7166.9 815.5 (81.1) 32.2 (48.9) Lead 102.1 105.6 6.6 (10.1) (3.5) Zinc 198.4 203.9 16.9 (22.4) (5.5) ADJUSTED REVENUES 2,270.2 2,243.4 (101.7) 1285 26.8
Slide 51: Cost per Tonne (IFRS)
COST PER TONNE (IFRS) 51 ACCUM DECEMBER CHANGE 2019 2018 % CHG. COST PER TONNE* 1 Fresnillo US$/TON 62.73 49.41 27.0% 2° Saucito US$/TON 67.76 60.05 12.8% 3 Ciénega US$/TON 78.26 70.83 10.5% 4 San Julian Veins US$/TON 72.03 57.37 25.6% 5 San Julian DOB US$/TON 39.14 36.22 8.0% 6 Herradura US$/TON 18
Slide 52: Cash Cost (IFRS)
CASH COST (IFRS) 52 ACCUM DECEMBER CHANGE 2019 2018 % CHG. CASH COST 1 Fresnillo PER OZ. SILVER 2.25 0.46 391.4% 2 Saucito PER OZ. SILVER 230 097 137.9% Cienega PER OZ. GOLD (by-prod) -0.23 25.88 -100.9% PER OZ. GOLD (Co-prod) 735.01 660.06 14% PER OZ. SILVER (Co-prod.) 8.50 8.06 5.5% PER OZ. GOLD (
Slide 53: Margins by Mine (Metal Price - Cash Cost)
MARGINS BY MINE 53 (METAL PRICE - CASH COST)(FY19 VS FY18) (usD/0z) (uspioz) Cash Fresnillo Saucito San Julian San Julian Silver Cash Ciénega Herradura Noche Buena Gold Cost Veins JM Price 22.4 224 1,418.08 4,418.08 185 [4563 1647 4663 16.17 4553 16.17 i663 14.6 + -- Ro - SET |] Margie. _| en | a |
Slide 54: All In Sustaining Cost (US$/oz)
ALL IN SUSTAINING COST (US$/0Z) Vo uswne ACCUM DECEMBER CHANGE 2019 2018 % CHG. Fresnitlo PER OZ. SILVER 13.54 8.92 51.8% Saucito PER OZ. SILVER 10.97 8.64 27.0% San Julian Veins PER OZ. SILVER 14.79 5.05 193.2% San Julién DOB. PER OZ. SILVER 10.79 10.01 7.8% Ciénega PER OZ. GOLD 1,212.16 1413.87 “1
Slide 55: Margins by Mine (Metal Price - AISC)
MARGINS BY MINE (METAL PRICE - ALL IN SUSTAINING COST) (FY19 VS FY18) (usD/oz) Cash Fresnillo Saucito San Julian San Julian Cost Vetas JM 24.0 20.0 Pann nn nnn nn ne en = =F 16.17 16.0 ae ae Margin q ™ 120 1.38_ 1 Mann Y 5, 8.5% 10.015 59 10.79.33 80 -- 35.6) 4 40 -- -- 0.0 - 2018 = 20192018 2019-20
Slide 56: Development Projects - Juanicipio
DEVELOPMENT PROJECTS 56 JUANICIPIO (iv with MAG SILVER. FRESNILLO: 56%) OVERVIEW * Mineralised material from development and initial production stopes to be processed at the Fresnillo beneficiation plant from June 2020 (batch process), until the Juanicipio beneficiation plant is commissioned mid-202