Fresnillo Plc · LSE:FRES
Fresnillo — Denver Gold Forum 2013
25 slides from Fresnillo's conference presentation, Sep 24, 2013
Slide 1: Advancing our strategy in precious metals
Advancing our strategy in precious metals Denver Gold Forum September 24, 2013 Octavio Alvídrez, CEO Fresnillo plc LSE: FRES BMV:FRES www.fresnilloplc.com
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: Our strategy & four pillars to create value
Our strategy & four pillars to create value 1 2 Maximise the potential of existing operations Deliver growth through • Operate at 100% capacity development projects • Low-cost producer • Focus on delivery timeline • Optimise mining method • Disciplined CAPEX control and metallurgy to maintain • Spec
Slide 4: What differentiates us
What differentiates us Operational excellence World class assets Strong organic growth pipeline Competitive cash cost performance Financial strength and flexibility Strong community support 24/09/2013 4
Slide 5: Fresnillo plc at a glance
Fresnillo plc at a glance • Six operating mines and one Silverstream 2012 PRODUCTION SILVER GOLD (Koz) (Oz) Fresnillo mine Silver underground mine 26,383 29,573 Saucito mine Silver underground mine 7,054 45,246 Ciénega unit: Ciénega mine Gold-Silver underground 3,329 125,275 San Ramón satellite mine
Slide 6: Fresnillo plc at a glance
Fresnillo plc at a glance 2012 Highlights • Revenues: US$2.2 billion • Operating profit: US$1.0 billion • Total assets: US$3.3 billion • Risk capital invested in exploration US$318.9 million • Market cap @ 19/Sep/13: US$11.8 billion • Total workforce: 6,545 (50.4% unionised employees and 49.6% contr
Slide 7: H1 2013 Operational Highlights
H1 2013 Operational Highlights Production: • Silver production, including Silverstream, up 4.5% to 21.0 Moz • Attributable gold production, down 5.2% to 235,827 ounces • 2013 guidance on track: 41moz of silver and 465,000oz gold • Cost reduction and efficiency initiatives continue to be a focus Proj
Slide 8: H1 2013 Financial Highlights
H1 2013 Financial Highlights • Average realised silver price of US$24.67 per oz, and gold of US$1,471.67 per oz, down 20.3% and 10.6% respectively • Adjusted Revenue of US$982.3m, down 14.0% • Estimated weighted average cost inflation was 7.1% • Gross profit of US$518.9m, down 27.0% • EBITDA decreas
Slide 9: Cash Cost
Cash Cost Cash Cost within the lowest in the industry Traditional * All-in Sustaining Costs ** COST PER TONNE * CASH COST MINE UNIT Fresnillo PER OZ. SILVER 5.46 9.45 Saucito PER OZ. SILVER 2.19 6.83 Ciénega PER OZ. GOLD -86.29 463.50 Co-Product Cash Cost PER OZ. GOLD 475.61 Co-Product Cash Cost PER
Slide 10: Improving costs and efficiencies
Improving costs and efficiencies • Targeting cost savings of US$40 million for 2013, which is a 4-5% decrease in operating costs for the Group • Fresnillo District (Fresnillo and Saucito mines) Higher efficiency from contractors Operating materials: optimise drill patterns, training in blasting tech
Slide 11: Exploration Projects
Exploration Projects Fresnillo Saucito Mine Operations Herradura Soledad-Dipolos Nochebuena Ciénega - San Ramón Dynamic Leaching Saucito II 2018 Development Projects San Julián Pyrites Plant CentauroDeep Juanicipio Advanced Exploration Cluster Cebollitas Orisyvo Guachichil Fresnillo District Gran Ce
Slide 12: Exploration Strategy
Exploration Strategy Where we explore: • In countries which have mineral endowment, cultural affinity and stability Mexico Peru Chile Colombia • In mining districts where we have operations or projects under construction Fresnillo District Herradura District Ciénega District San Julián District • In
Slide 13: Exploration Strategy (cont’d)
Exploration Strategy (cont’d) How we do it: People • Keep a strong and motivated exploration team Assets • Current operations: • Maintain 10 years reserves • New prospects: • Minimum 100m oz silver and 2m oz gold potential • Focus on high quality, low cost assets: metals grade, mine & metallurgical
Slide 14: Growth Projects
Growth Projects Project Development Chart Investment Expected YEAR 2013 2014 2015 2016 2017 2018 (US$ million) Production PROJECT 10 mill Oz Ag & 500 SAN JULIÁN CONSTRUCTION PRODUCTION 44 thds Oz Au 20 thds Oz Au CIENEGA 5,000 TPD DETAILED CONSTRUCTION PRODUCTION 45 & 1.3 mill Oz ENGINEERING Ag (Opt
Slide 15: Silver Production Forecast
Silver Production Forecast Million Oz 80 Juanicipio 70 3 San Julián 60 11 Pyrites Plant 4 50 Saucito II 9 40 Saucito 8 7 30 4 Fresnillo Expansion Fresnillo 20 21 26 Ciénega Expansion 10 2 Ciénega 6 3 2012 2013 2014 2015 2016 2017 2018 Note: Attributable silver production. Silver Stream not included.
Slide 16: Conclusion and Outlook
Conclusion and Outlook 24/09/2013
Slide 17: Conclusion and Outlook
Conclusion and Outlook • Strong operational performance • On track to produce 41moz silver and 465,000oz gold in 2013 • Growth projects on track • Dynamic leaching plant at Herradura on track to start in 4Q13 • San Julián on track to start production 2H14 • Saucito II processing plant ahead of sched
Slide 18: Appendix
Appendix 24/09/2013
Slide 19: Fresnillo District
Fresnillo District FRESNILLO SAUCITO H1 2013 H1 2012 Change % H1 2013 H1 2012 Change % Attributable production Silver m oz 11.2 13.4 -2.2 -16.2 5.6 3.2 2.4 73.3 Gold k oz 13.6 15.9 -2.2 -14.1 22.0 21.7 0.3 1.5 Lead kt 7.2 8.7 -1.5 -17.7 2.6 1.1 1.4 125.2 Zinc kt 6.9 8.3 -1.4 -17.1 2.2 0.7 1.4 202.5
Slide 20: Ciénega District
Ciénega District CIÉNEGA H1 2013 H1 2012 Change % Attributable production Gold k oz 59.6 65.3 -5.7 -8.7 Silver m oz 2.2 1.2 1.0 83.9 1 Adjusted Revenue Adj Revenue US$ m 141.5 148.4 -6.9 -4.7 Contribution % 14.4 13.0 Costs Cost per tonne US$/t 73.6 74.1 -0.6 -0.8 Cost per AU oz US$/oz -86.3 60.8 -14
Slide 21: Herradura District
Herradura District HERRADURA SOLEDAD-DIPOLOS NOCHE BUENA H1 2013 H1 2012 Change % H1 2013 H1 2012 Change % H1 2013 H1 2012 Attributable production Gold k oz 91.2 94.4 -3.2 -3.3 22.2 38.9 -16.6 -42.8 27.0 12.6 Adjusted Revenue 1 Adj Revenue US$ m 244.0 278.8 -34.8 -12.5 58.6 113.8 -55.2 -48.5 70.4 36
Slide 22: Ore Grades
Ore Grades FRESNILLO (Gms/Ton) SAUCITO 350 325 300 275-285 275 265 250 300-310 250 225 2011 2012 2013E 2014E 2015 E 2016 E 2017 E 2018 E Ore grade in reserves: 281g/t Ore grade in reserves: 357g/t CIENEGA GOLD CIENEGA SILVER 105-115 2.8-3.3 Ore grade in reserves: 1.38g/t Ore grade in reserves: 111g/
Slide 23: Margins by mine (Metal price – Cash Cost 2013 vs 2012)
Margins by mine (Metal price – Cash Cost 2013 vs 2012) (USD/Oz) Fresnillo Saucito Ciénega Herradura SD NB 12.4Moz. 10.5Moz. 3.1Moz. 5.3Moz. 62.7Koz. 57.9Koz. 166.6Koz. 161.5Koz. 68.1Koz. 39.1Koz. 22.3Koz. 47.3Koz. Chg. + -14.8% Chg. +71.1% Chg. -7.7% Chg. -3.1% Chg. -42.6% Chg. +111.8%* Ounces Sold
Slide 24: Income Statement (IFRS)
Income Statement (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 1H 2013 % 1H 2012 % $ % ADJUSTED REVENUES 982.3 1,141.7 (159.4) (14.0) HEDGING (METALS) 0.1 0.0 0.1 N/A TREATMENT AND REFINING CHARGES (56.5) (56.5) 0.0 (0.1) REVENUES 925.9 100.0 1,085.2 100.0 (159.3) (14.7) ADJUSTED PRODUCTION C
Slide 25: Consolidated Cashflow
Consolidated Cashflow CHANGE CONCEPT (Million USD) YTD 2013 YTD 2012 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 496.4 716.7 (220.3) (30.7) WORKING CAPITAL (53.0) (71.1) 18.1 (25.4) INCOME TAX AND PROFIT SHARING PAID (254.5) (352.8) 98.3 (27.9) NET CASH FROM OPERATING ACTIVITI