Fresnillo Plc · LSE:FRES
Fresnillo — H1 2012 Earnings Presentation
45 slides from Fresnillo's earnings presentation, Jul 31, 2012
Slide 1: Interim Results for period ending 30 June 2012
Interim Results For period ending 30 June 2012 July 31, 2012
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: Agenda
Agenda • 2012 Highlights Jaime Lomelín CEO • Operations Review Manuel Luévanos COO • Exploration Jaime Lomelín CEO • Financial Review Mario Arreguín CFO • Conclusions Jaime Lomelín CEO • Q&A 31/07/2012 3
Slide 4: H1 2012 Operational Highlights
H1 2012 Operational Highlights • Record attributable gold production of 248,795 ounces, up 20.5% • Gold production profile strengthened due to the start-up of Noche Buena • Silver production, including Silverstream, decreased by 6.5% as a result of the expected lower ore grade at Fresnillo • On trac
Slide 5: H1 2012 Financial Highlights
H1 2012 Financial Highlights Profit and Loss: • Average realised silver price US$30.97 per oz, down 13.3% • Average realised gold price US$1,645.50 per oz, up 12.5% • Adjusted Revenue of US$1,141.7m, up 2.5% • Gross Profit of US$705.4m, down 8.9% • EBITDA decreased by 9.2% to US$684.4m with strong E
Slide 6: H1 2012 Financial Highlights
H1 2012 Financial Highlights Cash Flow: • Cash generated by operations before changes in working capital US$715.8 million • US$140.5 million capital invested in exploration (including US$36.5 million which were capitalised) • US$239.6 million invested in CAPEX • US$312.6 million paid in dividends •
Slide 7: Operations Review
Operations Review For period ending 30 June 2012 July 31, 2012
Slide 8: Operation Review – Fresnillo District
Operation Review – Fresnillo District FRESNILLO SAUCITO H1 2012 H1 2011 Change % H1 2012 H1 2011 Change % Attributable production Silver m oz 13.4 16.9 -3.5 -20.7 3.2 1.9 1.3 68.1 Gold k oz 15.9 12.5 3.4 27.2 21.7 9.1 12.6 137.9 Lead kt 8.7 6.7 2.0 29.1 1.1 0.6 0.6 105.0 Zinc kt 8.3 6.6 1.7 26.3 0.7
Slide 9: Operation Review – Ciénega District
Operation Review – Ciénega District CIÉNEGA H1 2012 H1 2011 Change % Attributable production Gold k oz 65.3 53.4 12.0 22.4 Silver m oz 1.2 0.6 0.6 106.6 1 Adjusted Revenue Adj Revenue US$ m 148.4 108.0 40.4 37.5 Contribution % 13.0 9.7 Costs Cost per tonne US$/t 74.1 70.1 4.1 5.8 Cost per AU oz US$/
Slide 10: Operation Review – Herradura District
Operation Review – Herradura District HERRADURA SOLEDAD-DIPOLOS NOCHE BUENA H1 2012 H1 2011 Change % H1 2012 H1 2011 Change % H1 2012 H1 2011 Attributable production Gold k oz 94.4 88.2 6.2 7.0 38.9 43.3 -4.4 -10.2 12.6 0.0 Adjusted Revenue 1 Adj Revenue US$ m 278.8 231.6 47.1 20.3 113.8 111.4 2.4 2
Slide 11: Focus on Improving Safety
Focus on Improving Safety • Regrettably during the period we suffered two contractors’ fatal accidents in the Fresnillo District, one in January and the second one in July. • Action Plan to fully integrate the Health, Safety, Environment and Community Relations System across Fresnillo plc is underwa
Slide 12: Exploration
Exploration For period ending 30 June 2012 July 31, 2012
Slide 13: Exploration
Exploration Fresnillo District: • 60moz resource identified deep near Investment in exploration US$140.5 m San Carlos shaft • New vein drilled south of mine area Herradura District • Drilling continued at Centauro pit with good intersections to over 1400 m below pit 17% • Reserves increased at Noche
Slide 14: Estimated project delivery programme
Estimated project delivery programme On track to produce 65moz of silver and 500,000 oz of gold by 2018 (HERRADURA) FRESNILLO DISTRICT 10,000 TPD FRESNILLO DISTRICT PYRITES PLANT 31/07/2012 14
Slide 15: Financial Review
Financial Review For period ending 30 June 2012 July 31, 2012
Slide 16: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 1H 2012 % 1H 2011 % $ % ADJUSTED REVENUES 1,141.7 1,114.1 27.6 2.5 TREATMENT AND REFINING CHARGES (56.5) (57.2) 0.7 (1.2) REVENUES 1,085.2 100.0 1,056.9 100.0 28.2 2.7 ADJUSTED PRODUCTION COST (263.1) (24.2) (191.6) (18.1) (71.6)
Slide 17: Adjusted Revenues (IFRS)
ADJUSTED REVENUES (IFRS) ACCUM JUNE CHANGE BY: P R O D U C T (Million USD) 1H 2012 1H 2011 VOLUME PRICE TOTAL GOLD 580.8 431.6 89.9 59.4 149.2 SILVER 516.8 638.6 (39.5) (82.3) (121.8) LEAD 21.9 22.7 4.4 (5.1) (0.8) ZINC 22.2 21.3 4.3 (3.4) 0.9 ADJUSTED REVENUES 1,141.7 1,114.1 59.0 (31.4) 27.6 31/07
Slide 18: Contribution by mine and by metal to the Adjusted Revenues
Contribution by mine and by metal to the Adjusted Revenues 1 2012 Adjusted Revenues : US$1,141.7m By mine By metal Fresnillo Herradura Ciénega Silver Gold Saucito Sol & Dip Noche Buena Lead Zinc Fresnillo Ciénega Herradura Sol & Dip Saucito Noche Buena Consol Gold 21.74 5.0% 103.30 69.6% 274.16 98.4
Slide 19: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 1H 2012 % 1H 2011 % $ % ADJUSTED REVENUES 1,141.7 1,114.1 27.6 2.5 TREATMENT AND REFINING CHARGES (56.5) (57.2) 0.7 (1.2) REVENUES 1,085.2 100.0 1,056.9 100.0 28.2 2.7 ADJUSTED PRODUCTION COST (263.1) (24.2) (191.6) (18.1) (71.6)
Slide 20: Consolidated Gross Profit Analysis
Consolidated Gross Profit Analysis CHANGE 1H12 1H11 $ % Gross Profit 705.4 774.6 -69.2* -8.9. USD MILLION * EXPECTED 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 20
Slide 21: Consolidated Gross Profit Analysis
Consolidated Gross Profit Analysis CHANGE Lead and Zinc prices (USc/Lb) 1H12 1H11 1H12 1H11 $ Chg % Average spot MXP/USD 705.4 Pb 89.5 112.5 (20.4%) Gross Profit 774.6 -69.2* -8.9. 1H12 1H11 Chg Zn 89.5 104.4 (14.3%) • Prop., Plant and Equip.MUS$ USD MILLION 13.26 11.91 +11.4% 1H12 1H11 Chg 214.4 20
Slide 22: Contribution by mine to the Gross Profit
Contribution by mine to the Gross Profit CHANGE 1H12 1H11 US$ % Fresnillo 305.5 43.8% 451.7 58.6% (146.3) (32.4) Herradura 161.2 23.1% 150.9 19.6% 10.3 6.8 Ciénega 80.5 11.5% 54.0 7.0% 26.5 49.1 Saucito 67.9 9.7% 46.2 6.0% 21.7 47.0 Sol & Dipolos 62.6 9.0% 68.2 8.8% (5.6) (8.2) Noche Buena 20.0 2.9%
Slide 23: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 1H 2012 % 1H 2011 % $ % ADJUSTED REVENUES 1,141.7 1,114.1 27.6 2.5 TREATMENT AND REFINING CHARGES (56.5) (57.2) 0.7 (1.2) REVENUES 1,085.2 100.0 1,056.9 100.0 28.2 2.7 ADJUSTED PRODUCTION COST (263.1) (24.2) (191.6) (18.1) (71.6)
Slide 24: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE 1H12 1H11 $ % Adjusted Production Cost 263.1 191.6 71.6* +37.3 Change in inventories -23.9 -15.6 -8.3 +52.7 Depreciation 113.3 69.8 43.6 +62.4 PTU 25.5 41.3 -15.8 -38.3 Hedging (mxp/usd exchange rate) 1.8 (Loss) -4.7 (Profit) 6.4 N/A USD MILLIO
Slide 25: Adjusted Production Cost Analysis (Consolidated)
Adjusted Production Cost Analysis (Consolidated) CHANGE • Higher consumption1H12 of diesel and 1H11 $ % • electricity associated with higher • Maintenance provided to in-mine Adjusted Production Cost 263.1 191.6 • equipment71.6* and pumps at+37.3 Saucito, • production volumes. • 6.5% increaseChange
Slide 26: Cost Per Tonne (IFRS)
Cost Per Tonne (IFRS) 1H2012 1H2011 % CHG. COST PER TONNE * MINE UNIT Fresnillo US$/TON 43.51 42.27 2.9% Saucito US$/TON 60.92 N/A N/A Ciénega US$/TON 74.15 70.06 5.8% Herradura US$/TON 6.33 5.52 14.6% Soledad & Dipolos US$/TON 5.90 6.14 (3.9%) Noche Buena US$/TON 4.65 N/A N/A * Cost per tonne is ca
Slide 27: Cash Cost (IFRS)
Cash Cost (IFRS) 1H2012 1H2011 % CHG. CASH COST * MINE UNIT Fresnillo PER OZ. SILVER 5.09 5.53 (8.0%) Saucito PER OZ. SILVER 0.48 N/A N/A Ciénega PER OZ. GOLD 60.75 91.27 (33.4%) Herradura PER OZ. GOLD 448.45 306.75 46.2% Soledad & Dipolos PER OZ. GOLD 557.57 447.03 24.7% Noche Buena PER OZ. GOLD 30
Slide 28: Fresnillo – Cost per tonne analysis
Fresnillo – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 59.29 54.96 +4.33 +7.87 Ore milled (K tonnes) 1,362.72 1,300.40 +62.31 +4.79 USD Cost per tonne 43.51 42.27 +1.24* +2.94 * 28
Slide 29: Fresnillo – Cost per tonne analysis
Fresnillo – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 59.29 54.96 +4.33 +7.87 Ore milled (K tonnes) 1,362.72 1,300.40 +62.31 +4.79 • Increase in unit fees charged by contractors • 6.5% increase in wages. • which USDincluded the annual Costrise perintonne labour cost, 43.5
Slide 30: Fresnillo – Cash Cost Analysis
Fresnillo – Cash Cost Analysis CHANGE 1H 2012 1H 2011 $ % Cash Cost 5.09 5.53 -0.44 -8.0 USD MILLION 31/07/2012 30
Slide 31: Margins by mine (Metal price – Cash Cost)
Margins by mine (Metal price – Cash Cost) (2012 vs 2011) (USD/Oz) Cash Silver Cash Cost Gold Price Cost Fresnillo Saucito Ciénega Herradura S&D NB Price 44.9 44.9 1,900 1,900 1,645.50 1,645.50 1,645.50 1,645.50 35.74 38.5 38.5 1,629 1,462.31 1,462.31 1,462.31 1,629 30.97 30.97 32.1 32.1 1,357 Margin
Slide 32: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 1H 2012 % 1H 2011 % $ % ADJUSTED REVENUES 1,141.7 1,114.1 27.6 2.5 TREATMENT AND REFINING CHARGES (56.5) (57.2) 0.7 (1.2) REVENUES 1,085.2 100.0 1,056.9 100.0 28.2 2.7 ADJUSTED PRODUCTION COST (263.1) (24.2) (191.6) (18.1) (71.6)
Slide 33: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM JUNE CHANGE C O N C E P T(Million USD) 1H 2012 % 1H 2011 % $ % ADJUSTED REVENUES 1,141.7 1,114.1 27.6 2.5 TREATMENT AND REFINING CHARGES • Additional personnel hired (56.5) to service a larger (57.2) 0.7 (1.2) REVENUES • number of mines and projects. 1,085.2 100.0 1,056
Slide 34: Consolidated Cashflow
Consolidated Cashflow CHANGE C O N C E P T (Million USD) YTD 2012 YTD 2011 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 715.8 798.2 (82.4) (10.3) WORKING CAPITAL (70.5) (42.6) (27.9) 65.5 INCOME TAX AND PROFIT SHARING PAID (352.8) (166.2) (186.6) 112.3 NET CASH FROM OPERATING A
Slide 35: Consolidated Cashflow
Consolidated Cashflow •Increase in ore inventories at Noche Buena, Herradura and Soledad-Dipolos. •Increase in receivables as result of higher CHANGE ore volumes sold to Met-Mex Peñoles C O N C E P T (Million USD) YTD 2012 YTD 2011 $ % (smelting & refining) and gold prices. CASH GENERATED BY OPERATI
Slide 36: Consolidated Balance Sheet (IFRS)
Consolidated Balance Sheet (IFRS) Change Concept 30-JUNE-12 31-DEC-11 % Assets Cash and Investments 490.8 684.9 (28.3) Trade and Other Receivables 279.2 249.3 12.0 Inventories 136.8 99.8 37.0 Prepaid Expenses 8.1 3.2 150.2 Silverstream 463.8 478.1 (3.0) Derivative Financial Instruments 1.3 - N/A Pro
Slide 37: Conclusion and Outlook
av FRESNILLO. Conclusion and Outlook
Slide 38: Conclusion and Outlook
Conclusion and Outlook • Amidst the uncertain global economic climate, Fresnillo delivered on all fronts as expected • Cost inflation was controlled, strong EBITDA margins maintained, and Fresnillo remains a lowest quartile cash cost precious metals producer • We remain committed to delivering on th
Slide 39: Appendix
| a4 FRESNILLO. Appendix
Slide 40: Ciénega – Cost per tonne analysis
Ciénega – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 39.39 30.83 +8.56 +27.76 Ore milled (k tonnes) 531.27 440.12 +91.15 +20.71 Cost per tonne 74.15 70.06 +4.09* +5.84 USD * 31/07/2012 40
Slide 41: Ciénega – Cost per tonne analysis
Ciénega – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 39.39 30.83 +8.56 +27.76 Ore milled • 6.5% increase (k tonnes) in wages. 531.27 440.12 +91.15 +20.71 •TrainingCost of new perengineers tonne and higher Average spot MXP/USD 74.15 70.06 +4.09* +5.84 USD • investment in co
Slide 42: Herradura – Cost per tonne analysis
Herradura – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 74.19 58.40 +15.79 +27.04 Ore deposited (M tonnes) 11.72 10.58 +1.14 +10.82 USD Cost per tonne 6.33 5.52 +0.81* +14.64 * 31/07/2012 42
Slide 43: Herradura – Cost per tonne analysis
Herradura – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 74.19 58.40 +15.79 +27.04 Ore deposited (M tonnes) 11.72 10.58 +1.14 +10.82 • USD6.5% increase in wages. Cost per tonne Average spot MXP/USD 6.33 5.52 +0.81* +14.64 • Increased volumes of ore processed. 2012 2011 Chg 1
Slide 44: Soledad & Dipolos – Cost per tonne analysis
Soledad & Dipolos – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 44.59 33.78 +10.80 +31.98 Ore deposited (M tonnes) 7.56 5.50 +2.06 +37.36 Cost per tonne 5.90 6.14 -0.24* -3.92 USD * 31/07/2012 44
Slide 45: Soledad & Dipolos – Cost per tonne analysis
Soledad & Dipolos – Cost per tonne analysis CHANGE 1H12 1H11 $ % Adjusted Production Cost 44.59 33.78 +10.80 +31.98 Ore deposited (M tonnes) 7.56 5.50 +2.06 • Increased diesel consumption as a result of longer distances +37.36 Average spot MXP/USD USD Cost per tonne • as the pit is deepened. 5.90 6.