Fresnillo Plc · LSE:FRES
Fresnillo — BofAML Global Metals, Mining & Steel Conference 2019
43 slides from Fresnillo's conference presentation, May 15, 2019
Slide 1: BofAML: Global Metals, Mining & Steel Conference
“Consolidating our growth Advancing our pipeline” BofAML: Global Metals, Mining & Steel Conference Wednesday May 15, 2019 Octavio Alvídrez, CEO 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 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 3 • Overview • Fresnillo at a Glance • The Fresnillo Proposition: • Commitment to sustainable business practices • High quality assets • Low cost and flexible operations • Disciplined approach to development • Strong balance sheet • Outlook
Slide 4: Fresnillo at a Glance
FRESNILLO AT A GLANCE 4 • World’s largest silver producer (61.8 moz in 2018) and Mexico’s largest gold producer (922.5 koz in 2018) • Total assets of US$ 4.8 billion1 and market cap of US$7.0 billion 2 • Silver resources of 2.2 billion ounces and gold resources of 39.1 million are the foundation for
Slide 5: Investment Proposition
INVESTMENT PROPOSITION 5 OUR KEY COMPETITIVE ADVANTAGES POSITION US TO MEET NEAR-TERM COMMITMENTS AND DRIVE LONG-TERM VALUE HIGH QUALITY ASSETS LOW COST AND FLEXIBLE DISCIPLINED APPROACH TO COMMITMENT TO SUSTAINABLE STRONG BALANCE SHEET OPERATIONS DEVELOPMENT BUSINESS PRACTICES 2.2 BNOZ OF SILVER RE
Slide 6: Commitment to Sustainable Business Practices
COMMITMENT TO SUSTAINABLE BUSINESS PRACTICES 6 We believe that responsible mining is compatible with high stakeholder expectations in terms of ethical, social and environmental performance, and recognise that our social licence to operate is dependent upon being trusted by our stakeholders. HEALTH S
Slide 7: Tailing Safety Management
TAILING SAFETY MANAGEMENT 7 Tailing Dams in Programme in Peer reviewed by our Portfolio Place international specialists Fresnillo plc has a mix of upstream and Fresnillo plc has a programme in In 2016, all dams were independently downstream dams, all of which comply place to review all its tailings
Slide 8: High Quality Assets
HIGH QUALITY ASSETS 8 • District consolidation strategy enables us to leverage local knowledge and shared infrastructure • Portfolio contains over 2,204 moz of attributable silver resources and 39.1 moz of gold resources • 2019 production guidance maintained: 58-61 moz silver and 910-930 koz gold GO
Slide 9: Low Cost and Flexible Operations
LOW COST AND FLEXIBLE OPERATIONS 9 • Asset quality enables us to extract mineral profitably across metal price cycles • Maximise the potential of each operation by customising mine plans, leveraging technology and sharing personnel, expertise and plant capacity across districts • Continual quest for
Slide 10: Disciplined Approach to Development - Projects
DISCLIPINED APPROACH TO DEVELOPMENT - PROJECTS 10 PYRITES PLANT PROJECT IN THE FRESNILLO DISTRICT OVERVIEW Expected avg. annual silver production 3.5 moz Expected avg. annual gold production 13.0 koz Expected cash cost (average LoM) $2.51 /oz Expected IRR at US$20/oz Ag & US$1,200/oz Au 29.3% Leachi
Slide 11: Disciplined Approach to Development - Juanicipio
DISCLIPINED APPROACH TO DEVELOPMENT - PROJECTS Cont. 11 JUANICIPIO (JV WITH MAG SILVER. FRESNILLO: 56%) OVERVIEW 8km from the Fresnillo mine This project is being developed on a stand-alone basis KEY METRIC ESTIMATES (100% BASIS)* • Fresnillo plc will develop, construct and operate Juanicipio. 11.7
Slide 12: Other Projects: Orisyvo, Guanajuato and Rodeo
DISCLIPINED APPROACH TO DEVELOPMENT - PROJECTS Cont. 12 OTHER PROJECT & POTENTIAL PROJECTS – ORISYVO, GUANAJUATO & RODEO OVERVIEW - ORISYVO • Improved recoveries following metallurgy testing leading to a stronger project. • Assessing a 8,000 TPD mine with a DLP processing facility; focusing on highe
Slide 13: Exploration
EXPLORATION 13 STRONG ORGANIC GROWTH PIPELINE Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines
Slide 14: Strong Balance Sheet (IFRS)
STRONG BALANCE SHEET (IFRS) 14 31 DECEMBER 2018 US$ Million KEY CONCEPTS CASH AND INVESTMENTS 560.8 SENIOR NOTES 800.0 NET DEBT TO EBITDA 0.26x
Slide 15: Outlook 2019
OUTLOOK 15 Outlook 2019
Slide 16: Expected Delivery of Growth
EXPECTED DELIVERY OF GROWTH 16 1 2 Expected Avg. Investment (US$ YEAR million) Annual 2018 2019 2020 2021 2022 2023 2024 Production PROJECT LEACHING 3.5 moz Ag & 13 PYRITES PLANT PLANT 155 koz Au PRODUCTION (Optimization project) CONSTRUCTION TAILINGS FLOTATION FRESNILLO 9,000 TPD 30 3 moz Ag DEVELO
Slide 17: Expected Attributable Production Profile
EXPECTED ATTRIBUTABLE PRODUCTION PROFILE 17 Million Oz Thousand Oz ATTRIBUTABLE SILVER* ATTRIBUTABLE GOLD 80 1,000 70 900 60 800 700 50 600 40 500 30 400 20 300 200 10 100 0 0 2018 2019 2020 2021 2018 2019 2020 2021 *Including Silverstream Thousand Tons Thousand Tons ATTRIBUTABLE BY-PRODUCT LEAD ATT
Slide 18: Capex Spend Expectations
CAPEX SPEND EXPECTATIONS 18 2019 US$ Million MILLION USD 900 SUSTAINING (OPERATIONS) 800 730 FRESNILLO 134.4M 710 700 670 SAUCITO 114.5M HERRADURA 52.8M 600 540 CIÉNEGA 71.0M 500 NOCHE BUENA 13.0M 400 SAN JULIÁN 70.1M OTHERS 11.5M 300 PROJECTS APPROVED 200 SAN JULIÁN 12.3M PYRITES PLANT 47.7M 100 CE
Slide 19: Outlook: Production
OUTLOOK 19 PRIORITISE SAFETY, CONTINUED CREATE VALUE SUPPORT OF THE OPERATIONAL FOCUS TO THROUGH DISCIPLINED WORKFORCE AND MAXIMISE POTENTIAL OF GROWTH, EXPLORATION ENVIRONMENT OUR EXISTING MINES & DEVELOPMENT PRODUCTION (Eq Ag oz) 140 200 PRODUCTION (EQ AG OZ) PER THOUSAND SHARES 180 PRODUCTION EQ
Slide 20: Appendix
APPENDIX
Slide 21: Grade Expectations for 2019
GRADE EXPECTATIONS FOR 2019 21 GOLD (OZ) MINE MINE TYPE 2018 2019E FRESNILLO UNDERGROUND SILVER 0.70 0.60-0.65 SAUCITO UNDERGROUND SILVER 1.25 ~1.30 CIÉNEGA UNDERGROUND GOLD & SILVER 1.60 1.60-1.70 HERRADURA OPEN PIT GOLD 0.76 0.70-0.75 NOCHE BUENA OPEN PIT GOLD 0.52 ~0.55 SAN JULIÁN (VEINS) UNDERGR
Slide 22: Operations: Fresnillo
OPERATIONS 22 FRESNILLO KEY OPERATING STATISTICS FY 18 FY 17 Silver production – moz 15.1 16.5 Gold production – koz 42.3 38.8 Cost per tonne – US$/t 49.4 47.5 Cash cost - US$/oz of Ag 0.5 0.7 AISC – US$/oz of Ag 8.9 8.2 Reserves 2018 * 176.7 moz Ag, 0.6 moz Au Resources 2018 * 811.9 moz Ag, 1.8 moz
Slide 23: Operations: Saucito
OPERATIONS 23 SAUCITO KEY OPERATING STATISTICS FY 18 FY 17 Silver production – moz 19.8 21.2 Gold production – koz 86.1 69.9 Cost per tonne – US$/t 60.1 47.6 Cash cost - US$/oz of Ag 1.0 1.5 AISC – US$/oz of Ag 8.6 7.1 Reserves 2018 * 130.3 moz Ag, 0.7 moz Au Resources 2018 * 428.2 moz Ag, 1.9 moz A
Slide 24: Operations: San Julián
OPERATIONS 24 SAN JULIÁN (VEIN SYSTEM) SAN JULIÁN (DISSEMINATED ORE BODY) KEY OPERATING STATISTICS FY 18 FY 17 KEY OPERATING STATISTICS FY 18 FY 17 Gold production – koz 79.2 82.8 Gold production – koz 3.1 1.8 Silver production – moz 5.4 5.9 Silver production – moz 9.2 4.6 Cost per tonne – US$/t 57.
Slide 25: Operations: Ciénega
OPERATIONS 25 CIÉNEGA KEY OPERATING STATISTICS FY 18 FY 17 Gold production – koz 66.9 71.9 Silver production – moz 6.0 5.4 Cost per tonne – US$/t 70.8 66.5 Cash cost - US$/oz of Au 25.9 -163.7 AISC – US$/oz of Au 1,413.9 691.4 Reserves 2018 * 56.9 moz Ag, 0.6 moz Au Resources 2018 * 133.9 moz Ag, 1.
Slide 26: Operations: Herradura
OPERATIONS 26 HERRADURA KEY OPERATING STATISTICS FY 18 FY 17 Gold production – koz 474.2 473.6 Silver production – koz 1,523 551 Cost per tonne* – US$/t 13.2 8.0 Cash cost - US$/oz of Au 504.0 492.9 AISC – US$/oz of Au 806.7 807.7 Reserves 2018 ** 7.4 moz Au Resources 2018 ** 10.2 moz Au 2018 SUMMAR
Slide 27: Operations: Noche Buena
OPERATIONS 27 NOCHE BUENA CASH COST 1,000 US$ /OZ. GOLD 900 KEY OPERATING STATISTICS FY 18 FY 17 800 Gold production – koz 167.2 172.3 700 Silver production – koz 52 31 600 Cost per tonne* – US$/t 6.8 7.5 2014 2015 2016 2017 2018 Cash cost - US$/oz of Au 735.4 793.5 • At time of acquisition in 2008,
Slide 28: Exploration: Strong Resource Base
EXPLORATION 28 STRONG RESOURCE BASE SILVER RESOURCES GOLD RESOURCES 2,204.0 moz 39.1 moz - 116,566 koz, -5.0% vs 2017 +580 koz, 1.5% vs 2017 Metal prices used for 2018 resource estimation: Gold 1,250 US$/oz, Silver 17.0 US$/oz, 0.90 US/pound Lead and 1.1 US/pound Zinc. "Others" include decrease in m
Slide 29: Exploration: Resource Conversion to Reserves
EXPLORATION 29 SEEKING FURTHER RESOURCE CONVERSION TO EXPAND RESERVE BASE SILVER RESERVES GOLD RESERVES 475,991.5 moz 11,009.6 moz - 25,671 koz, -5.1% vs 2017 - 701 koz, -6% vs 2017 Metal prices used for 2018 resource estimation: Gold 1,250 US$/oz, Silver 17.0 US$/oz, 0.90 US/pound Lead and 1.1 US/p
Slide 30: Income Statement (IFRS)
INCOME STATEMENT (IFRS) 30 CONCEPT (MILLION USD) ACCUM DECEMBER CHANGE 2018 % 2017 % $ % ADJUSTED REVENUES 2,243.42 2,233.24 10.2 0.5% HEDGING (METALS) 1.6 0.0 1.6 N/A TREATMENT AND REFINING CHARGES (141.2) (139.9) (1.3) 0.9% REVENUES 2,103.8 100 2,093.3 100 10.5 0.5 ADJUSTED PRODUCTION COST (952.0)
Slide 31: Adjusted Revenues (IFRS)
ADJUSTED REVENUES (IFRS) 31 MILLION USD ACCUM DECEMBER CHANGE BY 2018 2017 VOLUME PRICE TOTAL PRODUCT Gold 1,118.5 1,125.3 (8.2) 1.4 (6.8) Silver 815.5 844.7 51.8 (81.0) (29.2) Lead 105.6 101.8 11.7 (7.9) 3.8 Zinc 203.9 161.4 53.1 (10.6) 42.5 ADJUSTED REVENUES 2,243.4 2,233.2 108.3 (98.2) 10.2
Slide 32: Contribution by Mine and by Metal to Adjusted Revenues 2018
CONTRIBUTION BY MINE AND BY METAL TO THE ADJUSTED REVENUES 2018 32 12018 ADJUSTED REVENUES : US$2,243.4M BY MINE BY METAL 8% 9% Herradura 8% 5% Gold Saucito 27% Silver Fresnillo Lead Noche Buena 8% Zinc Ciénega San Julián DOB 50% San Julián Veins 10% 36% 22% 17% FRESNILLO CIÉNEGA HERRADURA SAUCITO N
Slide 33: Consolidated Cost Inflation 2018
CONSOLIDATED COST INFLATION 2018 (USD BASED) 33 CONSOLIDATED Unit price increase % Weight (*) Weighted average LABOUR: UNIONIZED 4.80% 6.10% 0.30% PERSONNEL EMPLOYEES 3.60% 2.50% 0.10% WEIGHTED 4.50% OPERATING 2.30% 20.10% 0.50% MATERIALS ENERGY: ELECTRIC ENERGY -6.50% 6.50% -0.40% DIESEL 7.70% 10.8
Slide 34: Adjusted Production Cost – FY 2018
ADJUSTED PRODUCTION COST – FY 2018 34 US$ 952.0 Million Operating Materials 27% Costs from Contractors = 31% Own 20% Ctrt. 7% Maintenance & repairs 18% Energy 20% Own 16% Own 18% Ctrt. 2% Ctrt. 2% Others 11% Own 7% Ctrt. 4% Equipment Ctrt. Personnel 15% 9% Own 8% Ctrt. 7% * Includes: Freights, Taxes
Slide 35: Adjusted Production Cost Analysis
ADJUSTED PRODUCTION COST ANALYSIS (CONSOLIDATED) 35 CHANGE YTD 18 YTD 17 $ % ADJUSTED PRODUCTION COST 952.0 769.2 182.8 23.8 CHANGE IN INVENTORIES AND OTHERS -53.2 14.6 -67.8 N/A DEPRECIATION 411.8 367.6 44.2 12.0 PTU 12.5 16.5 -4.1 -24.1 COST OF SALES 1,323.1 1,167.9 155.2 +13.3% USD MILLION 230.0
Slide 36: Consolidated Gross Profit Analysis
DOB - Disseminated Ore Body 48.4 193.4 0.0 96.7 145.0 241.7 290.1 (145.0) (96.7) (48.3) USD MILLION 1 Reassessment of gold inventories at Herradura 94.40 2 Higher ore grade and speed of recovery at Herradura 68.42 3 Higher production at San Julián (DOB) GROSS PROFIT 67.09 CONSOLIDATED GROSS PROFIT A
Slide 37: Cash Flow (IFRS)
CASH FLOW (IFRS) 37 YTD CHANGE (USD MILLION) 2018 2017 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING 930.7 1,073.9 (143.3) (13.3) CAPITAL WORKING CAPITAL (127.9) (2.9) (125.0) 4282.59 INCOME TAX AND PROFIT SHARING PAID (214.4) (309.3) 94.9 (30.7) NET CASH FROM OPERATING ACTIVITIES 588.4
Slide 38: Balance Sheet (IFRS)
BALANCE SHEET (IFRS) 38 CONCEPT CHANGE 31-Dec-18 31-Dec-17 % CHG. ASSETS Cash and Investments 560.8 896.1 (37.4) Trade and Other Receivables 462.0 402.1 14.9 Inventories 335.0 271.1 23.6 Prepaid Expenses 15.5 3.5 337.2 Silverstream 519.1 538.9 (3.7) Derivative Financial Instruments 0.3 0.4 (17.7) Pr
Slide 39: Cost per Tonne (IFRS)
COST PER TONNE (IFRS) 39 ACCUM DECEMBER CHANGE 2018 2017 % CHG. COST PER TONNE* MINE UNIT Fresnillo US$/TON 49.41 47.48 4.1% Saucito US$/TON 60.05 47.60 26.1% Ciénega US$/TON 70.83 66.53 6.5% San Julián Veins US$/TON 57.37 52.09 10.1% San Julián DOB US$/TON 36.22 31.88 13.6% Herradura US$/TON 13.21*
Slide 40: Cash Cost (IFRS)
CASH COST (IFRS) 40 ACCUM DECEMBER CHANGE 2018 2017 % CHG. CASH COST* MINE UNIT Fresnillo PER OZ. SILVER 0.46 0.71 -35.2% Saucito PER OZ. SILVER 0.97 1.50 -35.6% Ciénega PER OZ. GOLD (by-prod.) 25.88 -163.74 115.8% PER OZ. GOLD (Co-prod.) 660.06 540.55 22.1% PER OZ. SILVER (Co-prod.) 8.06 7.28 10.6%
Slide 41: Margins by Mine (Cash Cost)
MARGINS BY MINE 41 (METAL PRICE – CASH COST)(FY18 VS FY17) OUNCES SOLD OUNCES SOLD 15.2 Moz. 13.9 Moz. 19.6 Moz. 18.6 Moz. 5.8 Moz. 5.3 Moz. 3.5 Moz. 7.8 Moz. 66.8 Koz. 62.7 Koz. 471.4 Koz. 459.8 Koz. 170.2 Koz. 166.7 Koz. Chg. -8.3 % Chg. -5.0 % Chg. -9.0 % Chg. -125.6 % Chg. -6.2% Chg. -2.4% Chg.
Slide 42: All In Sustaining Cost (US$/oz)
ALL IN SUSTAINING COST (US$/OZ) 42 ACCUM JUNE CHANGE 2018 2017 % CHG. MINE UNIT Fresnillo PER OZ. SILVER 8.92 8.20 8.7% Saucito PER OZ. SILVER 8.64 7.09 21.9% San Julián Veins PER OZ. SILVER 5.05 0.83 508.9% San Julián DOB PER OZ. SILVER 10.01 7.88* 26.9% Ciénega PER OZ. GOLD 1,413.87 691.43 104.5%
Slide 43: Margins by Mine (AISC)
MARGINS BY MINE 43 (METAL PRICE – ALL IN SUSTAINING COST) (FY18 VS FY17) OUNCES SOLD OUNCES SOLD 15.2 Moz. 13.9 Moz. 19.6 Moz. 18.6 Moz. 5.8 Moz. 5.3 Moz. 3.5 Moz. 7.8 Moz. 66.8 Koz. 62.7 Koz. 471.4 Koz. 459.8 Koz. 170.2 Koz. 166.7 Koz. Chg. -8.3 % Chg. -5.0 % Chg. -9.0 % Chg. 125.6 % Chg. -6.2% Chg
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