Fresnillo Plc · LSE:FRES
Fresnillo — Bank of America Merrill Lynch Global Metals, Mining & Steel Conference 2014
30 slides from Fresnillo's conference presentation, May 14, 2014
Slide 1: Looking beyond the cycle
“Looking beyond the cycle” Bank of America Merrill Lynch Global Metals, Mining & Steel Conference 2014 May 14, 2014 Octavio Alvídrez, CEO Fresnillo plc www.fresnilloplc.com
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: About Fresnillo
About Fresnillo • World’s largest silver producer & one of Mexico’s largest gold producers Who we are • Total workforce of 6,412 people • Mining concessions of 2.1m hectares in Mexico & 78,800 ha in Peru • Headquartered in Mexico City; listed in London and Mexico • Exploration, development, construc
Slide 4: Our business model and strategy to create value
Our business model and strategy to create value 1 2 Maximise the potential of existing operations Deliver growth through • Operate at 100% capacity development projects • Low-cost producer • Focus on delivery timeline • Optimise mining method • Disciplined CAPEX control and metallurgy to maintain •
Slide 5: Where we operate
Where we operate Three operating mining districts and two regions with potential to become districts in the future ORISYVO HERRADURA Fresnillo plc mines (6 and a satellite mine) SAN JULIÁN DISTRICT Development projects (2) Advanced exploration projects (4) Prospects in drilling Prospects at an early
Slide 6: Mining Districts
Mining Districts HERRADURA DISTRICT • Mines: Herradura, Soledad and Noche Buena • 2013 production: 235.5k oz gold • Resources: 6.52 Moz gold • New facilities: Dynamic Leaching Plant • Exploration: Centauro Deep, Tajitos, Choya, San Javier, Las Norias, El Nudo, Carina, Cerritos, El Dorado CIÉNEGA DIS
Slide 7: Districts of the Future
Districts of the Future SAN JULIÁN • Under construction • Silver-gold veins and disseminated ore body • Resources: 200.8 Moz silver, 893 koz gold • Approved CAPEX: US$515m • Flotation plant with 6,000 tpd capacity • Dynamic leaching plant with 3,000 tpd capacity • Average expected level of productio
Slide 8: 2013 Business Review
“Looking beyond the cycle” 2013 Business Review
Slide 9: 2013 Business Review
2013 Business Review 1. Existing operations • Silver production, including the silverstream, of 42.7moz increased 4.3 per cent reflecting continued ramp up of Saucito and increased production at Ciénega • Attributable gold production decreased by 10.0% to 425,831 as a result of disrupted operations
Slide 10: 2013 Business Review (continued)
2013 Business Review (continued) 3 Investment in exploration • Investment in exploration totaled US$233.3 million resulting in 5.0 and 5.2 per cent increase in total silver and gold resources mainly at San Julián, Centauro Deep, Noche Buena and in the Ciénega District. • Silver and gold reserves dec
Slide 11: 2013 Business Review
2013 Business Review 2013 PRODUCTION 2012 PRODUCTION SILVER GOLD SILVER GOLD (Koz) (Oz) (Koz) (Oz) Fresnillo mine Silver underground mine 22,764 33,079 26,383 29,573 Saucito mine Silver underground mine 11,581 45,177 7,054 45,246 Ciénega mine Gold-Silver underground mines 4,240 112,053 3,329 125,275
Slide 12: 2013 Business Review: Cash cost within the lowest in the industry
2013 Business Review Cash Cost within the lowest in the industry ESTIMATED LIFE OF MINE CASH COST Traditional* All-in sustaining costs** WEIGHTED AVERAGE MINE UNIT Fresnillo PER OZ. SILVER 5.87 9.06 7.9 (2024) Saucito PER OZ. SILVER 3.61 6.66 6.6 (2023) Ciénega PER OZ. GOLD 37.68 547.95 560 (2025) H
Slide 13: High quality portfolio feeds pipeline
High quality portfolio feeds pipeline Fresnillo Saucito Mine Operations Herradura Soledad-Dipolos Nochebuena Ciénega - San Ramón Development Projects Saucito II San Julián Centauro Deep Juanicipio Advanced Exploration Las Casas (Ciénega) Orisyvo Guachichil Fresnillo District Gran Centauro Lucerito T
Slide 14: 2013 Business Review: Continuous growth in resources
2013 Business Review Continuous growth in resources resulted from our investment in exploration Attributable silver resources Attributable gold resources (M oz) (M oz) Resources Reserves Resources Reserves In 2013, the US$233.3m capital invested in exploration resulted in: a) Increases in silver res
Slide 15: 2013 Business Review (continued)
2013 Business Review (continued) Financial Highlights 2013 2012 Average silver price US$/Oz 22.8 31.4 Average gold price US$/Oz 1,401.3 1,674.1 Revenues US$ million 1,615.2 2,157.4 Gross Profit US$ million 767.4 1.364.6 EBITDA US$ million 729.8 1,315.3 EBITDA margin 45.2% 61.0% Profit attributable t
Slide 16: Projects for the future
“Looking beyond the cycle” Projects for the future
Slide 17: Growth Projects
Growth Projects Project Development Chart Investment Expected YEAR Risk 2014 2015 2016 2017 2018 (US$ m illion) Production PROJECT (1) (2) 8.4 m ill Oz Ag Medium CONSTRUCTIO 235 & 35 thds Oz SAUCITO II PRODUCTION Low N Au 10.3 m ill Oz Medium 515 Ag & 44 thds SAN JULIÁN CONSTRUCTION PRODUCTION Oz Au
Slide 18: Achieving 65moz silver by 2018
Achieving 65moz silver by 2018 Million Oz Note: Attributable silver production. Silver Stream not included. 14/05/2014 18
Slide 19: Achieving over 500koz gold by 2018
Achieving over 500koz gold by 2018 Million Oz Note: Attributable gold production. 14/05/2014 19
Slide 20: Fresnillo district Saucito II
Fresnillo district Saucito II Project construction commenced in 1Q 2013 We have pro-actively advanced this project as a result of skilled execution, infrastructure synergies and ongoing capital evaluation Completion date brought forward from mid 2015 to 4Q 2014 21,680 metres developed in 2013, guara
Slide 21: San Julián Project
San Julián Project Ownership 100% Fresnillo plc Underground mine, dynamic leaching plant for epithermal silver-gold veins (to start first) and a flotation plant for disseminated silver-lead- zinc system. Project delivery deferred to mid 2015 and CAPEX increased slightly due to preference of capital
Slide 22: Conclusion and Outlook
“Looking beyond the cycle” Conclusion and Outlook
Slide 23: Outlook: balancing growth & returns
Outlook: balancing growth & returns Conclusions • In 2013, conditions for precious metals miners were challenging due to lower silver and gold prices. However Fresnillo plc continued to deliver healthy margins • Unchanged strategy: we will continue to invest in growth while balancing it with returns
Slide 24: Appendix
“Looking beyond the cycle” Appendix
Slide 25: Operation Review – Fresnillo District
Operation Review – Fresnillo District FRESNILLO SAUCITO 2013 2012 Change % 2013 2012 Change % Attributable production Silver m oz 22.8 26.4 -3.6 -13.7 11.6 7.1 4.5 64.2 Gold k oz 33.1 29.6 3.5 11.9 45.2 45.2 -0.1 -0.2 Lead kt 15.6 16.2 -0.6 -3.9 5.6 2.8 2.8 102.1 Zinc kt 14.9 15.0 -0.1 -0.3 4.5 1.8
Slide 26: Operation Review – Ciénega District
Operation Review – Ciénega District CIÉNEGA 2013 2012 Change % Attributable production Gold k oz 112.1 125.3 -13.2 -10.6 Silver m oz 4.2 3.3 0.9 27.4 Ore processed kt 1,242.2 1,112.8 129.4 11.6 Ore grades Gold g/t 2.9 3.6 -0.7 -19.4 Silver g/t 121.6 105.2 16.4 15.6 14/05/2014 26
Slide 27: Operation Review – Herradura District
Operation Review – Herradura District HERRADURA SOLEDAD-DIPOLOS NOCHE BUENA 2013 2012 Change % 2013 2012 Change % 2013 2012 Attributable production Gold k oz 148.2 176.1 -28.0 -15.9 26.5 60.1 -33.6 -55.9 60.9 36.7 Ore processed kt 14,363.3 24,641.1 -10,277.8 -41.7 6,701.8 15,317.9 -8,616.1 -56.2 12,
Slide 28: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM DECEMBER CHANGE CONCEP T (Million USD) 2013 % 2012 % $ % ADJUSTED REVENUES 1,761.9 2,287.2 (525.3) (23.0) BY-PRODUCT HEDGING 0.3 0.0 0.3 N/A TREATMENT AND REFINING CHARGES (147.0) (129.8) (17.2) 13.2 REVENUES 1,615.2 100.0 2,157.4 100.0 (542.2) (25.1) ADJUSTED PRODUCTIO
Slide 29: Cash Flow (IFRS)
CASH FLOW (IFRS) YEAR TO DATE CHANGE CONCEPT (Million USD) 2013 2012 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 750.2 1,356.7 (606.6) (44.7) WORKING CAPITAL 34.5 (99.8) 134.3 N/A INCOME TAX AND PROFIT SHARING PAID (338.6) (513.3) 174.6 (34.0) NET CASH FROM OPERATING ACTIVITIE
Slide 30: Balance Sheet (IFRS)
BALANCE SHEET (IFRS) Change Concept (Million USD) 31-DIC-13 31-DIC-12 % Assets Cash and Investments 1,251.7 613.8 N/A Trade and Other Receivables 267.5 263.6 1.4 Inventories 208.1 194.6 7.0 Prepaid Expenses 5.3 3.1 71.7 Silverstream 372.8 487.8 (23.6) Derivative Financial Instruments 2.1 2.8 (27.6)
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