Fresnillo Plc · LSE:FRES
Fresnillo — Investor Presentation (April 2012)
38 slides from Fresnillo's investor presentation, Apr 2, 2012
Slide 1: Strengthening our Precious Metals Position
Sales presentation Numis April 2, 2012 Strengthening our Precious Metals Position
Slide 2: Disclaimer
April 2, 2012 Sales Presentation to Numis 2 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”,
Slide 3: Agenda
April 2, 2012 Sales Presentation to Numis 3 Agenda • 2011 Highlights • Operations Review • Exploration • Conclusions • Q&A
Slide 4: 2011 Operational Highlights
April 2, 2012 Sales Presentation to Numis 4 2011 Operational Highlights • Record attributable gold production of 448.9 k oz (up 21.6%) due to ramp-up at Soledad-Dipolos and higher throughput at Herradura • Stable silver production (41.8 m oz) benefited from the start-up of Saucito • Noche Buena star
Slide 5: 2011 Financial Highlights
April 2, 2012 Sales Presentation to Numis 5 2011 Financial Highlights • Profit and Loss: • Adjusted revenue1 of US$2,307.4 million, up 57% • Operating Profit of US$1,360.9 million, up 63% • EBITDA2 of US$1,538 million, up 63% (EBITDA margin of 70%) • Profit for the year of US$1,038.6 million, up 39%
Slide 6: 2011 Financial Highlights
April 2, 2012 Sales Presentation to Numis 6 2011 Financial Highlights • Cash Flow • Net Cash from operations activities US$1,249.2 million, up 78% • US$179 million capital invested in exploration (including US$45 million which were capitalized) • US$423 million invested in CAPEX (not including capit
Slide 7: Operations Review
April 2, 2012 Sales Presentation to Numis 7 Operations Review
Slide 8: Silver - Fresnillo District
April 2, 2012 Sales Presentation to Numis 8 Silver - Fresnillo District FRESNILLO SAUCITO 2011 2010 Change % 2011 2010* Change % Attributable production Silver m oz 30.3 35.9 (5.6) (15.6) 5.9 1.2 4.7 N/M Gold k oz 26.2 25.0 1.3 5.0 33.5 6.3 27.2 N/M Lead kt 13.4 12.2 1.1 9.4 1.7 0.3 1.5 N/M Zinc kt
Slide 9: Gold - Herradura District
April 2, 2012 Sales Presentation to Numis 9 Gold - Herradura District HERRADURA SOLEDAD-DIPOLOS 2011 2010 Change % 2011 2010 Change % Attributable production Gold k oz 183.5 163.0 20.5 12.6 88.8 61.4 27.4 44.7 Silver m oz 0.2 0.2 0.0 5.1 0.1 0.0 0.0 72.4 Adjusted Revenue Adj Revenue US$ m 521.9 366.
Slide 10: Gold - Ciénega District
April 2, 2012 Sales Presentation to Numis 10 Gold - Ciénega District CIÉNEGA 2011 2010 Change % Attributable production Gold k oz 116.8 113.4 3.5 3.1 Silver m oz 1.5 1.2 0.3 23.0 Lead kt 6.3 6.5 (0.2) (2.4) Zinc kt 9.3 10.1 (0.8) (7.9) Adjusted Revenue Adj Revenue US$ m 250.1 186.4 63.7 34.2 Contrib
Slide 11: Exploration
April 2, 2012 Sales Presentation to Numis 11 Exploration
Slide 12: Resources and Reserves
April 2, 2012 Sales Presentation to Numis 12 Resources and Reserves • Substantial increase in Total Resources (Measured, Indicated and Inferred): • Silver 1,811 Moz, up 23% • Gold 23.5 Moz, up 17% MOz • Ten year Reserve Life: • Silver 403 Moz, down 8% • Gold 4.6 Moz, up 2% • Our exploration programm
Slide 13: Exploration
April 2, 2012 Sales Presentation to Numis 13 Exploration • Fresnillo District: • Drilling of new geophysical-geochemical targets was initiated in two areas and totalled 10,434 metres in 15 holes. • Infill drilling continued to upgrade Fresnillo resources on Juanicipio Mine Operations Saucito Herradu
Slide 14: Exploration
April 2, 2012 Sales Presentation to Numis 14 Exploration • San Julián • Silver and gold resources both increased from the previous year and three gold-silver veins were discovered. The San Julián ramp was extended to 13,389 metres and 237 metres were constructed on the new Todos Santos adit. • Orisy
Slide 15: Estimated project delivery
April 2, 2012 Sales Presentation to Numis 15 Estimated project delivery On track to produce 65m oz of silver and new target of 500k oz of gold by 2018 Project 2011 2012 2013 2014 2015 2016 Nochebuena Construction Production Herradura Feasibility Construction Production Dynamic Leaching Pre - San Jul
Slide 16: Conclusions
April 2, 2012 Sales Presentation to Numis 16 Conclusions
Slide 17: Conclusions
April 2, 2012 Sales Presentation to Numis 17 Conclusions • Production • Maintained silver production and exceeded gold production targets • Successful expansions at Ciénega and Soledad-Dipolos • Safety • Implemented Safety Action Plan • Costs • Cost pressures from equipment and consumable shortages
Slide 18: Conclusions
April 2, 2012 Sales Presentation to Numis 18 Conclusions • In 2012 we will: • Reinforce safety procedures • Maintain silver production at 41 million ounces • Increase attributable gold production to 460,000 ounces • Continue cost control initiatives • Expand our resource base with record US$360 mill
Slide 19: Appendix
April 2, 2012 Sales Presentation to Numis 19 Appendix
Slide 20: Contribution by mine and by metal to the Adjusted Revenues
April 2, 2012 Sales Presentation to Numis 20 Contribution by mine and by metal to the Adjusted Revenues 1 2 2011 Adjusted Revenues: US$2,307.5m By mine By metal 10% 2% 2% 11% 46% 11% 44% 52% 22% Saucito Fresnillo Herradura Silver Gold Ciénega Sol & Dip Lead Zinc Fresnillo Ciénega Herradura Sol & Dip
Slide 21: Increases in unit costs
April 2, 2012 Sales Presentation to Numis 21 Increases in unit costs (USD) INPUTS 2011 VS 2010 Electricity 15.4% Energy Diesel 15.2% Labour Wages 3 8.3% Steel balls for milling 14.1% Explosives 18.7% Tyres 4.8% Operating Sodium cyanide 29.0% Materials Other reagents 8.9% Anchors 8.1% Oils and other
Slide 22: Cost per tonne and Cash Cost
April 2, 2012 Sales Presentation to Numis 22 Cost per tonne and Cash Cost COST PER TONNE OF ORE PROCESSED DECEMBER MINE UNIT 2011 2010 % CHG Fresnillo US$/TON 43.03 40.93 5.1% Ciénega US$/TON 73.36 63.18 16.1% Herradura US$/TON 5.96 5.61 6.2% Soledad & Dipolos US$/TON 5.81 5.70 2.0% CASH COST PER OZ
Slide 23: Fresnillo – Cash Cost (US/Oz)
April 2, 2012 Sales Presentation to Numis 23 Fresnillo – Cash Cost (US/Oz) Change 2011 2010 US $ % DIRECT MINING COST 3.95 3.13 0.82 26.2 BY-PRODUCT CREDITS (2.94) (2.06) (0.88) 42.7 NET DIRECT MINING COST 1.01 19% 1.07 33% (0.06) (5.6) TREATMENT & REFINING CHARGES 3.03 58% 1.50 46% 1.53 102.0 PROFI
Slide 24: Fresnillo – Cash Cost Analysis
April 2, 2012 Sales Presentation to Numis 24 Fresnillo – Cash Cost Analysis CHANGE 2011 2010 $ % Cash Cost 5.24 3.27 +1.97* +60.2 USD Profit base increased by 30% * Higher cost per tonne +5.14% Gold Lead Zinc Prod 5.0% 9.4% 3.4% Price 24.0% 8.7% 0.2% 2011 2010 Chg Ag Ore Grade 395.9 474.4 (16.5) 201
Slide 25: Breakdown of the Adjusted Production Costs
April 2, 2012 Sales Presentation to Numis 25 Breakdown of the Adjusted Production Costs Adj Prod Cost: US$419.4m 2% 7% 23% 13% 1 Contrac Op Mat Energy & Diesel Mainten Person Others Freights 16% 1 Contractors are hired to execute specific tasks. Fees 22% paid include labour, operating materials, equ
Slide 26: Adjusted Production Cost Analysis (Consolidated)
April 2, 2012 Sales Presentation to Numis 26 Adjusted Production Cost Analysis (Consolidated) CHANGE 2011 2010 $ % Adjusted Production Cost 419.4 307.1 112.3* +36.6 Change in inventories -25.5 -16.8 -8.7 +52.0 Depreciation 172.1 105.2 +66.9 +63.5 PTU 69.1 37.7 +31.4 +83.3 Hedging (mxp/usd exchange r
Slide 27: Adjusted Production Cost Analysis (Consolidated)
April 2, 2012 Sales Presentation to Numis 27 Adjusted Production Cost Analysis (Consolidated) CHANGE 2011 2010 $ % AdjustedinProduction Change inventories Cost 419.4 307.1 112.3* +36.6 • 6.5% increase in wages in mxp. -25.5 -16.8 -8.7 +52.0 Depreciation 172.1 • Higher production volumes (additional
Slide 28: Consolidated Income Statement (IFRS)
April 2, 2012 Sales Presentation to Numis 28 Consolidated Income Statement (IFRS) ACCUM DECEMBER CHANGE C O N C E P T (US$ MILLION) 2011 % 2010 % $ % ADJUSTED REVENUES 2,307.5 1,473.9 833.5 56.6 HEDGING (METALS) 0.0 0.0 0.0 N/A TREATMENT AND REFINING CHARGES (114.8) (64.4) (50.4) 78.3 REVENUES 2,192
Slide 29: Consolidated Income Statement without Silverstream Effect (IFRS)
April 2, 2012 Sales Presentation to Numis 29 Consolidated Income Statement without Silverstream Effect (IFRS) ACCUM DECEMBER CHANGE C O N C E P T (US$ MILLION) 2011 % 2010 % $ % ADJUSTED REVENUES 2,307.5 1,473.9 833.5 56.6 HEDGING (METALS) 0.0 0.0 0.0 N/A TREATMENT AND REFINING CHARGES (114.8) (64.4
Slide 30: Consolidated Gross Profit Analysis
April 2, 2012 Sales Presentation to Numis 30 Consolidated Gross Profit Analysis CHANGE 2011 2010 $ % USD MILLION Gross Profit 1,563.5 979.4 +584.1* +59.6 * 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Slide 31: Consolidated Gross Profit Analysis
April 2, 2012 Sales Presentation to Numis 31 Consolidated Gross Profit Analysis CHANGE Average exchange rate Zinc and Lead price (USc/Lb) 2011 12.42 mxp/usd 2010 2011 $ • Prop., Plant and Equip.MUS$ % 2011 2010 Chg 12.64 mxp/usd 2010 2011 2010 Chg USD MILLION Zn 96.8 97.5 (0.7%) Gross Profit 1,563.5
Slide 32: Margins by mine (Metal price – Cash Cost)
April 2, 2012 Sales Presentation to Numis 32 Margins by mine (Metal price – Cash Cost) (2011 vs 2010) USD / Oz Fresnillo Ciénega Herradura Soledad & Dipolos Cash Silver Cash Gold Cost Price Cost Price 34.75 1,585.33 1,585.33 1,585.33 35.0 35.0 1,600 1,600 30.0 30.0 1,400 1,252.05 1,400 1,252.05 1,25
Slide 33: Contribution by mine to the Gross Profit
April 2, 2012 Sales Presentation to Numis 33 Contribution by mine to the Gross Profit CHANGE 2011 2010 US$ % Fresnillo 792.8 51.1% 576.8 59.2% 215.9 37.4 Herradura 338.5 21.8% 217.7 22.3% 120.7 55.5 Sol & Dipolos 153.2 9.9% 84.2 8.6% 69.0 81.9 Saucito 136.3 8.8% - 0.0% 136.3 N/A Ciénega 129.6 8.4% 9
Slide 34: Consolidated Income Statement (IFRS)
April 2, 2012 Sales Presentation to Numis 34 Consolidated Income Statement (IFRS) ACCUM DECEMBER CHANGE C O N C E P T (US$ MILLION) 2011 % 2010 % $ % ADJUSTED REVENUES 2,307.5 1,473.9 833.5 56.6 HEDGING (METALS) 0.0 0.0 0.0 N/A TREATMENT AND REFINING CHARGES (114.8) (64.4) (50.4) 78.3 REVENUES 2,192
Slide 35: Consolidated Income Statement (IFRS)
April 2, 2012 Sales Presentation to Numis 35 Consolidated Income Statement (IFRS) • Increase in salaries (+6.8% ACCUMinDECEMBER USD) CHANGE C O N C E P T (US$ MILLION) • Increased advisory fees2011 associated % with the 2010 % $ % new Bribery Act, Risk Management, Taxes, ADJUSTED REVENUES 2,307.5 1,
Slide 36: Consolidated Cash Flow (IFRS)
April 2, 2012 Sales Presentation to Numis 36 Consolidated Cash Flow (IFRS) CHANGE C ON CEPT (US $ millions) 2011 2010 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,612.1 983.6 628.5 63.9 WORKING CAPITAL (36.1) (166.0) 129.9 (78.3) INCOME TAX AND PROFIT SHARING PAID (326.8) (11
Slide 37: Consolidated Cash Flow (IFRS)
April 2, 2012 Sales Presentation to Numis 37 Consolidated Cash Flow (IFRS) • Increase in ore inventories in the leaching CHANGE C ON CEPT (US $ millions) 2011 pads at Herradura 2010 and Soledad-Dipolos. $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,612.1 983.6 628.5 63.9 • 2.9
Slide 38: Consolidated Balance Sheet (IFRS)
April 2, 2012 Sales Presentation to Numis 38 Consolidated Balance Sheet (IFRS) Change Concept 31-DEC-11 31-DEC-10 % Asset Cash and Investments 684.9 559.5 22.4 Trade and Other Receivables 249.3 236.7 5.3 Inventories 99.8 63.1 58.2 Prepaid Expenses 3.2 2.5 27.4 Silverstream 478.1 427.7 11.8 Derivativ