Fresnillo Plc · LSE:FRES
Fresnillo — FY2009 Earnings Presentation
32 slides from Fresnillo's earnings presentation, Mar 2, 2010
Slide 1: Year-end Results 2009
Fresnillo plc Year-end Results 2009 March 2, 2010
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”, “inte
Slide 3: Agenda
Agenda 2009 Highlights - Jaime Lomelin CEO Operations and Growth Strategy - Jaime Lomelin CEO Exploration - David Giles VP Exploration Financial Review - Mario Arreguin CFO Conclusions - Jaime Lomelin CEO Q&A 2
Slide 4: 2009 Highlights – A Strong Platform for Growth
2009 Highlights – A Strong Platform for Growth Operations Record attributable silver production of 38m oz, up 9% Gold production of 277k oz, up 5% Lowest quartile cost producer Financials Adjusted Revenue1 of US$944m, up 12% Gross Profit of US$528m, up 26% EBITDA of US$497m, up 47% Attributable prof
Slide 5: 2009 Highlights – A Strong Platform for Growth
2009 Highlights – A Strong Platform for Growth Development Projects Soledad-Dipolos project completed ahead of schedule and within budget Saucito development project construction on track, with planned start up in 2011 Investments in productivity and cost reduction completed Exploration 15% increase
Slide 6: Operations
Operations Fresnillo - Underground Ciénega - Underground Herradura – Open pit 2009 Attributable production Silver: 35.4m oz 4.9% 1.6m oz 67.3% 0.2m oz 38.5% Gold: 24.7k oz 2.8% 103.5k oz 11.5% 145.5k oz 18.6% Production Costs1 2009 US$36.49/t 11.4% US$59.21/t 6.8% US$5.44/t 9.8% 2008 US$41.19/t US$6
Slide 7: Aim to bring one new mine or expansion on stream per year until 2014
Aim to bring one new mine or expansion on stream per year until 2014 Silver Gold m oz k oz Project 2010 2011 2012 2013 2014 60 1,200 Soledad - Production Expansion Expanded Production Dipolos 50 1,000 Ciénega Expansion Expanded Production 40 800 Reserve Expanded Saucito Production Expansion 30 600 D
Slide 8: Audited Resources and Reserves
Audited Resources and Reserves Substantial increase in Total Resources Metal contained in Total Resources (Measured, Indicated and Inferred): 1,500 Gold 13.907m oz, up 15.8% Silver (Moz) 1,200 Silver 1,289m oz, up 15.6% 900 Mixed results in Total Reserves: 600 Gold 4.257m oz, up 3.5% 300 Silver 374m
Slide 9: Exploration and Development
Exploration and Development Minera Saucito Indicated Resources of 123.2m oz of silver (+80%) and 0.562m oz of gold (+30%). Inferred Resources maintained at 162.5m oz of silver and 0.652m oz of gold Jarillas, Mezquite and Santa Natalia veins in drilling Exploration and development ramp advance 16 km
Slide 10: Brownfield Exploration
Brownfield Exploration Nochebuena Located 23km SE of the Herradura mine Reverse circulation drilling to identify areas for leach pads and water supply Diamond drill program for reserve calculation (10,600 m in 2009, total program 19,500 m) Core drilling and sampling of shaft to collect samples for m
Slide 11: Exploration Prospects
Exploration Prospects Orisyvo Porphyry-related gold system, now drill tested over 1,300 m by 1,100 m with widely spaced holes Oxide zone open to the north and west, sulphide zone core with good grade partially explored Scoping study to be prepared in 1H 2010 San Julián Mining district with dissemina
Slide 12: Consolidated Income Statement
Consolidated Income Statement (US$ MILLIONS) ACCUM DECEMBER CHANGE 2009 % 2008 % AMOUNT % REVENUES 849.9 100.0 720.5 100.0 129.5 18.0 COST OF SALES (321.6) (37.8) (299.9) (41.6) (21.8) 7.3 GROSS PROFIT 528.3 62.2 420.6 58.4 107.7 25.6 ADMINISTRATIVE EXPENSES (49.9) (5.9) (81.7) (11.3) 31.8 (38.9) EX
Slide 13: Consolidated Income Statement Revenues
Consolidated Income Statement Revenues ACCUM DECEMBER CHANGE (US$ MILLIONS) 2009 2008 AMOUNT % ADJUSTED REVENUE 1 944.0 839.6 104.4 12.4 TREATMENT AND REFINING CHARGES (69.2) (73.5) 4.3 (5.8) HEDGING LOSSES (Pre - IPO) 2 (25.0) (45.6) 20.6 (45.1) HEDGING GAINS 0.2 (0.0) 0.2 N/A REVENUES 849.9 720.5
Slide 14: Consolidated Income Statement
Consolidated Income Statement (US$ MILLIONS) ACCUM DECEMBER CHANGE 2009 % 2008 % AMOUNT % REVENUES 849.9 100.0 720.5 100.0 129.5 18.0 COST OF SALES (321.6) (37.8) (299.9) (41.6) (21.8) 7.3 GROSS PROFIT 528.3 62.2 420.6 58.4 107.7 25.6 ADMINISTRATIVE EXPENSES (49.9) (5.9) (81.7) (11.3) 31.8 (38.9) EX
Slide 15: Adjusted production cost analysis (consolidated)
CHANGE 2009 2008 AMOUNT % Adjusted Production Cost 209.79 223.49 (13.70)* (6.13) USD MILLION Change in work in progress 12.94 3.47 +9.47 272.91 Depreciation 67.23 51.91 +15.32 +29.51 Profit Sharing 24.58 21.00 +3.58 +17.05 Hedging losses 7.08 - +7.08 N/A Cost of Sales 321.63 299.87 +21.76 +7.25 17.0
Slide 16: Consolidated Income Statement
Consolidated Income Statement (US$ MILLIONS) ACCUM DECEMBER CHANGE 2009 % 2008 % AMOUNT % REVENUES 849.9 100.0 720.5 100.0 129.5 18.0 COST OF SALES (321.6) (37.8) (299.9) (41.6) (21.8) 7.3 GROSS PROFIT 528.3 62.2 420.6 58.4 107.7 25.6 ADMINISTRATIVE EXPENSES (49.9) (5.9) (81.7) (11.3) 31.8 (38.9) EX
Slide 17: Consolidated gross profit analysis
Statement profit analysis USD MILLION Consolidated gross 0.0 18.0 36.0 54.0 72.0 90.0 Consolidated Income 108.0 126.0 144.0 162.0 180.0 1 Increase in gold price 39.0 Gross Profit Higher prod at 2 30.4 Herradura MXP/USD 3 Devaluation effect 25.5 on pdn costs 4 Higher Prod. at 23.7 Fresnillo Lower hed
Slide 18: Consolidated Income Statement
Consolidated Income Statement (US$ MILLIONS) ACCUM DECEMBER CHANGE 2009 % 2008 % AMOUNT % REVENUES 849.9 100.0 720.5 100.0 129.5 18.0 COST OF SALES (321.6) (37.8) (299.9) (41.6) (21.8) 7.3 GROSS PROFIT 528.3 62.2 420.6 58.4 107.7 25.6 ADMINISTRATIVE EXPENSES (49.9) (5.9) (81.7) (11.3) 31.8 (38.9) EX
Slide 19: Consolidated EBITDA
Consolidated EBITDA YEAR ENDED 31 DECEMBER US$ millions % 2009 2008 change Gross Profit 528.32 420.61 25.6% + Depreciation 67.23 51.91 29.5% - Administrative Expenses (49.87) (81.68) (38.9%) - Exploration Expenses (49.06) (53.48) (8.3%) EBITDA 496.61 337.36 47.2% EBITDA MARGIN 58.4% 46.8% 18
Slide 20: Cash Cost (US$/Oz)
Cash Cost (US$/Oz)1 ACCUM DECEMBER MINE CONCEPT 2009 2008 % change Fresnillo Silver Cash Cost 3.37 3.77 (10.6%) Ciénega Gold Cash Cost 190.61 264.98 (28.1%) Herradura Gold Cash Cost 361.08 397.49 (9.2%) Consol Silver Cash Cost - 2.83 - 1.20 (135.8%) 11Cash Cash Cost Cost isis calculated calculated a
Slide 21: Consolidated Cash Flow Statement
Consolidated Cash Flow Statement CONCEPT (US $ millions) ACCUM DEC-09 CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 548.8 WORKING CAPITAL (37.8) INCOME TAX AND EMPLOYEE PROFIT SHARING PAID (120.2) NET CASH FROM OPERATING ACTIVITIES 390.7 OTHER PROCEEDS SILVERSTREAM CONTRACT 39.0 NET
Slide 22: Consolidated Balance Sheet (at Dec 30)
Consolidated Balance Sheet (at Dec 30) ACCUM DECEMBER CHANGE CONCEPT (US$ MILLION) 2009 2008 % Assets Cash and cash equivalents 312.2 212.0 47.3 Trade and other receivables 128.4 81.5 57.6 Inventories 33.8 38.6 (12.6) Prepayments 1.9 1.9 1.0 Derivative Financial Instruments 1.4 2.4 (43) Silverstream
Slide 23: Segmental Income Statement
Segmental Income Statement CONCEPT HERRADURA CIENEGA FRESNILLO OTHER TOTAL SEGMENT ADJUSTED REVENUES 1 Third party 246.5 140.2 557.3 944.0 SEGMENT ADJUSTED REVENUES: 246.5 140.2 557.3 - 944.0 COST OF SALES: Adjusted Production Cost (73.4) (46.2) (90.2) 0.4 (209.4) Freights (0.3) (1.7) (1.9) 3.9 - Ch
Slide 24: 2010 Outlook
2010 Outlook Silver production expected to be in line with 2009 Gold production expected to be higher reflecting Soledad-Dipolos contribution Saucito construction on track, with planned start up in 2011 Ciénega expansion to be completed Larger exploration budget Pre-feasibility study for Nochebuena
Slide 25: On track to bring one new mine or expansion on stream per year until 2014
On track to bring one new mine or expansion on stream per year until 2014 Operations Financials Growth Near term Long term … to produce 65m oz of silver and over 400k oz of gold by 2018 24
Slide 26: Appendix
APPENDIX aw FRESNILLO.
Slide 27: Exploration, Audited Attributable Reserves Statement
Exploration, Audited Attributable Reserves Statement Proven & Probable Silver Gold Lead Zinc Silver Gold Lead Zinc Reserve Category (Mt) (gpt) (gpt) (%) (%) (Moz) (Moz) t(000s) t(000s) Minera Fresnillo Proven 7.56 494 0.47 0.46 0.78 120.10 0.1 34.8 59.0 Probable 23.97 288 0.56 1.63 3.22 221.90 0.4 3
Slide 28: Exploration, Audited Attributable Resources Statement
Exploration, Audited Attributable Resources Statement Resource Category Cut-Off Grade Meas & Ind. Inferred Silver Gold Lead Zinc Silver Gold Lead Zinc (Mt) (Mt) (gpt) (gpt) (%) (%) (Moz) (Moz) t(000s) t(000s) Minera Fresnillo Fresnillo Measured 88 gpt Ag-Eq 9.32 742 0.73 0.70 1.24 222.3 0.219 65 116
Slide 29: Exploration, Audited Attributable Resources Statement (cont.)
Exploration, Audited Attributable Resources Statement (cont.) Resource Category Cut-Off Grade Meas & Ind. Inferred Silver Gold Lead Zinc Silver Gold Lead Zinc (Mt) (Mt) (gpt) (gpt) (%) (%) (Moz) (Moz) t(000s) t(000s) Minera Penmont Herradura (Disseminated) Measured 0.20 gpt Au 40.29 0.25 0.65 0.3 0.
Slide 30: Fresnillo cost per tonne analysis
CHANGE USD MILLION 2009 2008 AMOUNT % Adjusted Production Cost 90.18 95.75 -5.56* -5.81 Ore milled (K tonnes) 2,471.6 2,324.6 147.0* +6.32 Cost per tonne 36.49 41.19 -4.70* -11.42 Insurance fees and mining concessions 4.0 0.24 (0.15) 0.51 (0.63) 3.1 0.99 (2.16) 2.1 Fresnillo cost per tonne 1.46 anal
Slide 31: Ciénega cost per tonne analysis
CHANGE USD MILLION 2009 2008 AMOUNT % Adjusted Production Cost 46.24 47.72 -1.48* -3.11 Ore milled (K tonnes) 780.9 751.1 29.8* +3.96 Cost per tonne 59.21 63.53 -4.32* -6.80 Ore milled increased by +4.0% Maintenance to employees’ houses, mining 6.0 concession, higher cost of insurance. 0.19 (2.14) 0
Slide 32: Herradura cost per tonne analysis
CHANGE USD MILLION 2009 2008 AMOUNT % Adjusted Production Cost 73.36 79.12 -5.76* -7.28 Ore deposited (M tonnes) 13.5 13.1 +0.4* +3.05 Cost per tonne 5.44 6.03 -0.59* -9.78 0.3 0.03 (0.01) (0.02) 0.2 0.05 (0.14) 0.05 0.1 0.06 0.06 (0.67) Herradura cost per tonne 0.0 Puchase of spare parts and increa