Fresnillo Plc · LSE:FRES
Fresnillo — H1 2022 Earnings Presentation
47 slides from Fresnillo's earnings presentation, Aug 2, 2022
Slide 1: Half Year Interim Results
H A LF Y E A R I NT E R I M R E S U LT S 02 AUGUST 2022 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 A number of factors could cause results and developments to differ materially from those statements”. These forward-looking statements can be identified by the use of forward- expressed or implied by th
Slide 3: Agenda
AGENDA 3 01 Investment proposition 02 HSECR 03 1H22 highlights 04 Exploration update 05 Operational performance & development projects 06 Financial performance 07 2022 outlook
Slide 4: Investment Proposition
INVESTMENT PROPOSITION OCTAVIO ALVÍDREZ
Slide 5: Investment Proposition: key competitive advantages
1 H 2 2 I N T E R I M R E S U LT S – I N V E S T M E N T P R O P O S I T I O N 5 OUR KEY COMPETITIVE ADVANTAGES POSITION US TO MEET NEAR-TERM COMMITMENTS AND DRIVE LONG-TERM VALUE #1 SILVER HIGH QUALITY HEALTHY MARGINS, PRODUCER MINING ASSETS FOCUS ON COST ~ 113Moz 2.3 Boz ~ 37% Silver Equivalent ou
Slide 6: HSECR
HSECR OCTAVIO ALVIDREZ —v— FRESNILLO.
Slide 7: HSECR: Sustainability is core to our purpose
1 H 2 2 I N T E R I M R E S U LT S – H S E C R 7 S U S TA I N A B I L I T Y I S C O R E T O O U R P U R P O S E : “ T O C O N T R I B U T E T O T H E W E L L B E I N G O F P E O P L E T H R O U G H T H E S U S TA I N A B L E M I N I N G O F S I LV E R A N D G O L D ” HEALTH ENVIRONMENT COMMUNITY & S
Slide 8: 1H22 Highlights
1H22 HIGHLIGHTS OCTAVIO ALVÍDREZ
Slide 9: Operational Performance Highlights
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N A L P E R F O R M A N C E H I G H L I G H T S 9 ATTRIBUTABLE HALF YEAR SILVER ATTRIBUTABLE HALF YEAR GOLD PRODUCTION PRODUCTION 27.6MOZ 308.8KOZ • Remain on track to meet our 2022 full year guidance of: 50.5 to 56.5 moz of attributable silver (in
Slide 10: Financial Performance Highlights
1 H 2 2 I N T E R I M R E S U LT S – F I N A N C I A L P E R F O R M A N C E H I G H L I G H T S 10 GROSS PROFIT (US$) ADJUSTED EPS* (US CENTS PER SHARE) 365.9M 19.4US¢ per share OPERATING PROFIT (US$) POSITIVE FREE CASH FLOW (US$) 218.2M 93.5M EBITDA (US$) CASH ON HAND AT 30 JUNE 2022 (US$) 459.1M
Slide 11: Exploration Update
EXPLORATION UPDATE —v— FRESNILLO.
Slide 12: Exploration Update
1 H 2 2 I N T E R I M R E S U LT S – E X P L O R AT I O N U P D AT E 12 2022 Budget: US$ 180m 1H22 Highlights: ▪ Invested US$77.7 million in exploration during 1H22 ▪ Drilled a total of 475,592m metres, 71% of which was focused on improving the confidence of the grade distribution in the reserves, c
Slide 13: Operational & Projects Performance
O P E R AT I O N A L & PROJECTS PERFORMANCE TOMÁS ITURRIAGA
Slide 14: Labour Shortage
1 H 2 2 I N T E R I M R E S U LT S – L A B O U R S H O R TA G E 14 COVID-19 VACANCIES • Starting to see an increase in positive cases in the • New labour reform in Mexico came into effect from 1st September 2021, restricting our ability to subcontract Country and at our operations. Should this trend
Slide 15: Operations: Fresnillo
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 15 FRESNILLO Production guidance range Production Grade KEY ACTIONS • San Carlos shaft deepening concluded, expected to be commissioned by the end of 3Q22 • Implementing intensive recruitment campaigns, increasing our focus on training & launch
Slide 16: Leveraging Opportunities
1 H 2 2 I N T E R I M R E S U LT S – L E V E R A G I N G O P P O R T U N I T I E S 16 Deepening of the San Carlos shaft at Fresnillo remains on track for completion by the end of September Main benefits include: Significant reduction of haulage costs from ~ US$3.4 / tonne to US$1.7 / tonne Greater s
Slide 17: Operations: Saucito
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 17 SAUCITO Production guidance range Production Grade KEY OPERATING HIGHLIGHTS 1H22 1H21 KEY ACTIONS Silver production* – moz 5.8 6.6 • Continue the geomechanical monitoring in areas of increased seismicity Gold production* – koz 33.2 51.6 • In
Slide 18: Operations: Juanicipio
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 18 J U A N I C I P I O ( J V W I T H M A G S I LV E R . F R E S N I L L O : 5 6 % ) • Tie-in of the plant to the national electricity grid is expected in the coming weeks • Commissioning of the plant and ramp-up of operations will follow soon a
Slide 19: Other Operations
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 19 O T H E R O P E R AT I O N S SAN JULIÁN • Operational decision taken to adjust the mine plan at the Veins, prioritising wider veins with higher silver grade but lower gold ore grade • Following a modified mining sequence at the DOB, 1H22 saw
Slide 20: Financial Performance
FINANCIAL PERFORMANCE MARIO ARREGUÍN
Slide 21: Income Statement (IFRS)
1 H 2 2 I N T E R I M R E S U LT S – I N C O M E S TAT E M E N T ( I F R S ) 21 ( M I L L I O N U S D) ACCUM JUNE CHANGE CO NCEPT 2022 % 2021 % $ % ADJUSTED REVENUES 1,349.0 1,543.1 (194.0) (12.6) HEDGING (METALS) (3.8) 0.0 (3.8) N/A TREATMENT AND REFINING CHARGES (86.2) (76.2) (10.0) (13.1) REVENUE
Slide 22: Consolidated Cost Inflation
1 H 2 2 I N T E R I M R E S U LT S – C O N S O L I D AT E D C O S T I N F L AT I O N 1 H 2 2 22 (USD BASED) Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel 6.8% 7.3% 0.5% Employees 5.5% 3.8% 0.2% Weighted 6.3% Operating Materials 18.9% 18.8% 3.6% Energy Elec
Slide 23: Adjusted Production Cost Analysis
1 H 2 2 I N T E R I M R E S U LT S – A D J U S T E D P R O D U C T I O N C O S T A N A LY S I S 23 ( C O N S O L I D ATE D )
Slide 24: Gross Profit Analysis
1 H 2 2 I N T E R I M R E S U LT S – G R O S S P R O F I T A N A LY S I S 24 ( C O N S O L I D ATE D )
Slide 25: Income Statement (IFRS)
1 H 2 2 I N T E R I M R E S U LT S – I N C O M E S TAT E M E N T ( I F R S ) 25 ( M I L L I O N U S D)
Slide 26: Cash Flow (IFRS)
1 H 2 2 I N T E R I M R E S U LT S – C A S H F L O W ( I F R S ) 26 ( M I L L I O N U S D) CASH FLOW ACCUM JUNE CHG. YTD 2021 (USD MILLION) 2022 2021 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 459.5 750.4 (290.9) (38.8) WORKING CAPITAL 76.8 15.1 61.7 407.7 INCOME TAX AND PROF
Slide 27: Cash Flow (IFRS)
1 H 2 2 I N T E R I M R E S U LT S – C A S H F L O W ( I F R S ) 27 ( M I L L I O N U S D)
Slide 28: Balance Sheet (IFRS)
1 H 2 2 I N T E R I M R E S U LT S – B A L A N C E S H E E T ( I F R S ) 28 ( M I L L I O N U S D) Change Concept 30-JUNE-22 31-DEC-21 % Assets Cash and Investments 1,151.9 1,235.3 (6.8) Trade and Other Receivables 332.6 401.4 (17.1) Inventories 500.2 487.8 2.5 Prepaid Expenses 28.3 20.3 39.7 Silver
Slide 29: 2H22 Outlook
2H22 OUTLOOK OCTAVIO ALVÍDREZ
Slide 30: Expected Attributable Production Profile
1 H 2 2 I N T E R I M R E S U LT S – E X P E C T E D AT T R I B U TA B L E P R O D U C T I O N P R O F I L E 30 Production guidance range +/- 5% Million Oz Silver * Thousand Oz Gold 70 800 60 700 50 600 40 500 400 30 4 300 20 200 10 100 0 0 2021 2022 2023 2024 2021 2022 2023 2024 Thousand Tons Lead
Slide 31: Capex Spend Expectations
1 H 2 2 I N T E R I M R E S U LT S – C A P E X S P E N D E X P E C TAT I O N S 31 Increase in sustaining capex seen in 2022 driven by a one off purchase of equipment to substitute for loss of contractor equipment following labour reform. Expected to be offset through lower contractors costs in the m
Slide 32: Consolidated Outlook
1 H 2 2 I N T E R I M R E S U LT S – C O N S O L I D AT E D O U T L O O K 32 1 Expected Avg.2 Investm ent YEAR (US$ m illion) Annual 2021 2022 2023 2024 2025 2026 2027 Production PROJECT 3.5 m oz Ag & PYRITES PLANT 155 PRODUCTION 13 koz Au (Optimization project) ENERGY SUPPLY 3 11.7 m oz Ag & MINE D
Slide 33: Concluding Remarks
1 H 2 2 I N T E R I M R E S U LT S – C O N C L U D I N G R E M A R K S 33 ROBUST PROACTIVE JUANICIPIO GRID MAINTAIN CLOSE COST SHORT AND MEDIUM OPERATIONAL AND MANAGEMENT OF CONNECTION CONTROLS TERM PRODUCTION FINANCIAL LABOUR AND OTHER SHORTLY, RAPID RAMP OUTLOOK PERFORMANCE OPERATIONAL UP EXPECTED
Slide 34: Appendix
APPENDIX —v— FRESNILLO.
Slide 35: Grade Expectations
G R A D E E X P E C TAT I O N S F O R 2 0 2 2 35 GOLD (G/T) MINE MINE TYPE 1H 2022 FY 2022e Fresnillo Underground silver 0.67 0.50-0.70 Saucito Underground silver 1.30 1.10-1.20 San Julián (veins) Underground silver & gold 1.22 1.35-1.55 San Julián (disseminated) Underground silver - - Ciénega Under
Slide 36: Operations: San Julián
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 36 SAN JULIÁN (VEIN SYSTEM) S A N J U L I Á N ( D I S S E M I N AT E D O R E B O D Y ) KEY OPERATING HIGHLIGHTS 1H22 1H21 KEY OPERATING HIGHLIGHTS 1H22 1H21 Gold production – koz 21.7 27.2 Gold production – koz 1.7 2.2 Silver production – moz 2
Slide 37: Operations: Ciénega
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 37 CIÉNEGA KEY OPERATING HIGHLIGHTS 1H22 1H21 KEY ACTIONS • Maintain strict safety and Covid-19 protocols Silver production – moz 2.5 2.7 • Conclude the required mine infrastructure in order to incorporate stopes Gold production – koz 18.9 26.7
Slide 38: Operations: Herradura
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 38 HERRADURA KEY ACTIONS • Maintain strict safety and Covid-19 protocols • As the scope of the Carbon in Column project increased, construction will now be finished by the end of 2022 • Conclude the pit optimisation study KEY OPERATING HIGHLIGH
Slide 39: Operations: Noche Buena
1 H 2 2 I N T E R I M R E S U LT S – O P E R AT I O N S 39 NOCHE BUENA KEY ACTIONS • Maintain strict safety and Covid-19 protocols • Conclude condemnation drilling campaign KEY OPERATING HIGHLIGHTS 1H22 1H21 Silver production – moz 0.0 0.0 Gold production – koz 47.1 43.2 Cash cost - US$/oz of Au 1,0
Slide 40: Strong Projects for the Future
1 H 2 2 I N T E R I M R E S U LT S – P R O J E C T S 40 S T R O N G P R O J E C T S F O R T H E F U T U R E - O R I S Y V O , R O D E O & G U A N A J U AT O ORISYVO (GOLD) RODEO (GOLD) GUANAJUATO (SILVER / GOLD) • Preliminary stage of the metallurgical research was • Negotiations to acquire the righ
Slide 41: Strong Silver Resource & Reserves Bases
RESERVES & RESOURCES 41 S T R O N G S I LV E R R E S O U R C E & R E S E R V E S B A S E S SILVER RESOURCES RESOURCES CHANGE 2,320Moz Total silver resources 2020 2,292,509 2021** 2,319,687 Koz 27,179 % +1.2% • Total of 2,320 moz silver resources (23.6 years of equivalent production*) 2,000,000 79,72
Slide 42: Strong Gold Resource & Reserve Bases
RESERVES & RESOURCES 42 STRONG GOLD RESOURCE & RESERVE BASES GOLD RESOURCES RESOURCES CHANGE 39.0Moz Total gold resources 2020 38,926 2021** 38,975 Koz 51 % +0.1% • Total of 39.0 moz silver resources (37 years of equivalent production*) 45,000 551 85 • Resources remained stable year-on-year 38,925 1
Slide 43: Adjusted Revenues
1 H 2 2 I N T E R I M R E S U LT S – A D J U S T E D R E V E N U E S 1 H 2 2 43 1H22 ADJUST ED REVENUES: US$1,349.0M ACCUM JUNE CHANGE BY: PRODUCT 2022 2021 VOLUME PRICE TOTAL GOLD 555.9 720.0 (192.8) 28.6 (164.1) SILVER 576.8 629.1 37.4 (89.7) (52.3) LEAD 54.2 62.1 (9.5) 1.6 (7.9) ZINC 162.1 131.8
Slide 44: Contribution by Mine and by Metal
1 H 2 2 I N T E R I M R E S U LT S – C O N T R I B U T I O N B Y M I N E A N D B Y M E TA L 44 TO ADJUSTED REVENUES 1H22 1H22 ADJUSTED REVENUES 1 : US$1, 349.0M
Slide 45: Adjusted Production Cost
1 H 2 2 I N T E R I M R E S U LT S – A D J U S T E D P R O D U C T I O N C O S T 1 H 2 2 45 1H22 ADJUST ED PRODUCTI ON CO ST : US$659. 3M *
Slide 46: Costs Summary (IFRS)
1 H 2 2 I N T E R I M R E S U LT S – C O S T S S U M M A RY ( I F R S ) 46 Cost per Tonne Cash Cost AISC US$/Tonne Change US$/ Silver Ounce Change US$/ Silver Ounce Change Mine 1H22 1H21 % 1H22 1H21 % 1H22 1H21 % Fresnillo 87.23 79.95 9.1% 3.53 6.41 -45.0% 12.52 14.45 -13.4% Saucito 116.22 76.27 52.
Slide 47: Notes
NOTES 47 4