Fresnillo Plc · LSE:FRES
Fresnillo — Bank of America Merrill Lynch Global Metals, Mining & Steel Conference 2013
33 slides from Fresnillo's conference presentation, May 15, 2013
Slide 1: Advancing our strategy in precious metals
“Advancing our strategy in precious metals” Bank of America Merrill Lynch Global Metals, Mining & Steel Conference 2013 May 15, 2013 Octavio Alvídrez, CEO Fresnillo plc 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”, “int
Slide 3: About Fresnillo
About Fresnillo • World’s largest silver producer & Mexico’s second largest gold producer Who we are • Total workforce of 6,545 people • Mining concessions of 2.1m hectares in Mexico & 78,800 ha in Peru • Headquartered in Mexico City; listed in London and Mexico • Exploration, development, construct
Slide 4: 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 5: High quality portfolio feeds pipeline
High quality portfolio feeds pipeline Mines in operation • Fresnillo • Saucito Development projects • Ciénega & San Ramón • Soledad-Dipolos Operate • Dynamic leaching plant • Herradura assets • San Julián • Noche Buena • Saucito II (at Saucito) Advanced exploration projects Develop Prospects in dril
Slide 6: Where we operate
Where we operate Three operating mining districts and two regions with potential to become districts in the future ORISYVO HERRADURA Fresnillo plc mines (6 and a satellite mine) SAN JULIÁN DISTRICT Development projects (3) Advanced exploration projects (5) Prospects in drilling (45 approx) Prospects
Slide 7: Mining Districts
Mining Districts HERRADURA DISTRICT • Mines: Herradura, Soledad-Dipolos and Noche Buena • 2012 production: 272.9k oz gold • Resources: 5.37 Moz gold • Projects: Dynamic Leaching Plant • Exploration: Centauro Deep, Tajitos, Choya, San Javier, Las Norias, El Nudo, Carina, Cerritos, El Dorado CIÉNEGA D
Slide 8: Districts of the Future
Districts of the Future SAN JULIÁN • Under construction • Silver-gold veins and disseminated ore body • Resources: 157.5 Moz silver, 845 koz gold • Approved CAPEX: US$500m • Flotation plant with 6,000 tpd capacity • Dynamic leaching plant with 3,000 tpd capacity • Average expected level of productio
Slide 9: 2012 Business Review
iN FRESNILLO. 2012 Business Review
Slide 10: 2012 Business Review
2012 Business Review Four pillars of the strategy supports 2012 operational results: 1. Maximise the potential of existing operations • Record attributable gold production of 473,034 ounces, up 5.4% • Silver production of 41m oz (including 4 m oz from the Silverstream) in line with guidance • Silver
Slide 11: 2012 Business Review (continued)
2012 Business Review (continued) 3 Expand the growth pipeline • Silver resources increased to 2 bn oz, up 12.2%, and gold resources to 27moz, up 15.0% • San Julián (silver project) construction commenced • Converted resources to reserves at Saucito • Aggressive exploration at Herradura District 4. A
Slide 12: 2012 Business Review
2012 Business Review 2012 PRODUCTION 2011 PRODUCTION SILVER GOLD SILVER GOLD (Koz) (Oz) (Koz) (Oz) Fresnillo mine Silver underground mine 26,383 29,573 30,295 26,237 Saucito mine Silver underground mine 7,054 45,246 5,904 33,493 Ciénega mine Gold-Silver underground mines 3,329 125,275 1,474 116,841
Slide 13: 2012 Business Review
2012 Business Review Our disciplined investment in exploration resulted in continuous growth in reserves and resources Attributable silver resources Attributable gold resources (M oz) (M oz) 2,200.0 2,033.1 30.0 27.0 1,811.1 23.5 1,760.0 24.0 1,472.7 +82% +125% 1,289.0 20.1 1,320.0 18.0 1,115.9 13.9
Slide 14: 2012 Business Review (continued)
2012 Business Review (continued) Financial Highlights FY 2012 FY 2011 Average silver price US$/Oz 31.4 34.8 Average gold price US$/Oz 1,674.1 1,585.3 Revenues US$ million 2,157.4 2,192.7 Gross Profit US$ million 1.350.7 1.563.5 EBITDA US$ million 1,311.5 1,538.5 EBITDA margin 60.8% 70.2% Profit attr
Slide 15: 2012 Business Review (continued)
2012 Business Review (continued) Our mines remained in the lowest quartile of the silver and gold cash cost curves Silver cash cost curve Gold cash cost curve *Note: Data are based on extrapolated 2011 costs, but adjusted to reflect 2012's production estimates, prices, smelter charges and exchange r
Slide 16: Projects for the future
iN FRESNILLO. Projects for the future
Slide 17: Expected growth delivery
Expected growth delivery Investment Expected YEAR (US$ million) 2013 2014 2015 2016 2017 2018 Production PROJECT (1) (2) 50 thds Oz DYNAMIC LEACHING CONSTRUC- PRODUCTION 120 (Optimization project) TION Au 10 mill Oz Ag & 500 SAN JULIÁN CONSTRUCTION PRODUCTION 45 thds Oz Au 10 mill Oz Ag & 235 SAUCIT
Slide 18: Achieving 65moz silver by 2018
Achieving 65moz silver by 2018 Million Oz 80 Juanicipio 70 San Julián 60 Pyrites Plant 50 Saucito II 40 30 Saucito 20 Fresnillo Expansion 10 Fresnillo 0 2012 2013 2014 2015 2016 2017 2018 Ciénega Note: Attributable silver production. Silver Stream not included. 15/05/2013 18
Slide 19: Dynamic Leaching Plant
Dynamic Leaching Plant ¾ Ownership 56% Fresnillo plc ¾ Processing of high grade ore from Herradura and Soledad & Dipolos open pit mines; increasing the gold recovery rate from 70% (currently obtained by the heap leaching process) to 95%. ¾ Construction activities progressed after relocation due to t
Slide 20: San Julián Project
San Julián Project ¾ Ownership 100% Fresnillo plc ¾ Underground mine, flotation plant for disseminated silver-lead-zinc system and a dynamic leaching plant for epithermal silver-gold veins. ¾ Detailed engineering for the plant continued and construction activities progressed, including a landing str
Slide 21: Saucito II Project
Saucito II Project ¾ Ownership 100% Fresnillo plc ¾ Underground mine. ¾ Recently approved by the Board. ¾ The project is located in a well-known district, which has the required infrastructure available for the development. Saucito II ¾ The project has the advantage of being able to start production
Slide 22: Conclusion and Outlook
iN FRESNILLO. Conclusion and Outlook
Slide 23: Outlook: balancing growth & returns
Outlook: balancing growth & returns Amidst volatile prices in 2012 and a higher cost environment, Fresnillo delivered on growth and returns: • EBITDA margins remain amongst the highest in the industry (60.8% in 2012) • Dividends: US$423.8m paid in 2012 Looking ahead to 2013 and beyond: • Unchanged s
Slide 24: Conclusion and Outlook
Conclusion and Outlook We will continue to build upon our competitive differentiators: Operational excellence World class assets Operational excellence requires experienced We operate the largest primary silver mine personnel, efficient mining methods, in the world and a portfolio of low cost mines,
Slide 25: Appendix
FRESNILLO. Appendix
Slide 26: Operation Review – Fresnillo District
Operation Review – Fresnillo District FRESNILLO SAUCITO 2012 2011 Change % 2012 2011 Change % Attributable production Silver m oz 26.4 30.3 -3.9 -12.9 7.1 5.9 1.2 19.5 Gold k oz 29.6 26.2 3.3 12.7 45.2 33.5 11.8 35.1 Lead kt 16.2 13.4 2.8 21.0 2.8 1.7 1.0 59.2 Zinc kt 15.0 12.6 2.3 18.6 1.8 1.2 0.6
Slide 27: Operation Review – Ciénega District
Operation Review – Ciénega District CIÉNEGA 2012 2011 Change % Attributable production Gold k oz 125.3 116.8 8.4 7.2 Silver m oz 3.3 1.5 1.9 125.8 Ore processed kt 1,112.8 966.8 146.0 15.1 Ore grades Gold g/t 3.6 3.9 -0.3 -7.7 Silver g/t 105.2 53.3 51.9 97.4 Key developments • Commercial production
Slide 28: Operation Review – Herradura District
Operation Review – Herradura District HERRADURA SOLEDAD-DIPOLOS NOCHE BUENA 2012 2011 Change % 2012 2011 Change % 2012 2011 Attributable production Gold k oz 176.1 183.5 -7.4 -4.0 60.1 88.8 -28.7 -32.3 36.7 0.0 Ore processed kt 24,641.1 21,020.4 3,620.7 17.2 15,317.9 12,264.9 3,053.0 24.9 8,447.3 0.
Slide 29: Increase in resources
Increase in resources The US$318.9m capital invested in exploration resulted in double digit increases in both resources and reserves: a) Silver resources +12.2% and gold resources +15.0% Metal Content Increase vs Resources 2011 Gold Silver Lead Zinc Gold Silver Lead Zinc (koz) (koz) (kt) (kt) (koz)
Slide 30: Increase in reserves
Increase in reserves b) Silver reserves +23.6% and gold reserves +19.0% Metal Content Increase vs Reserves 2011 Gold Silver Lead Zinc Gold Silver Lead Zinc (koz) (koz) (kt) (kt) (koz) (koz) (kt) (kt) Fresnillo 733 308,467 524 1,068 2 ‐16,280 ‐17 10 Saucito 569 118,879 166 257 395 94,236 156 243 Cién
Slide 31: Income Statement (IFRS)
INCOME STATEMENT (IFRS) ACCUM DECEMBER CHANGE C O N C E P T (Million USD) 2012 % 2011 % $ % ADJUSTED REVENUES 2,287.2 2,307.5 (20.2) (0.9) TREATMENT AND REFINING CHARGES (129.8) (114.8) (15.0) 13.1 REVENUES 2,157.4 100.0 2,192.7 100.0 (35.3) (1.6) ADJUSTED PRODUCTION COST (576.2) (26.7) (419.4) (19.
Slide 32: Consolidated Cashflow
Consolidated Cashflow CHANGE C O N C E P T (Million USD) 2012 2011 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL 1,364.5 1,612.1 (247.6) (15.4) WORKING CAPITAL (107.6) (36.1) (71.5) N/A INCOME TAX AND PROFIT SHARING PAID (513.3) (326.8) (186.4) 57.0 NET CASH FROM OPERATING ACTIV
Slide 33: Consolidated Balance Sheet (IFRS)
Consolidated Balance Sheet (IFRS) Change Concept 31-DEC-12 31-DEC-11 % Assets Cash and Investments 613.8 684.9 (10.4) Trade and Other Receivables 263.6 249.3 5.8 Inventories 198.0 99.8 98.3 Prepaid Expenses 3.1 3.2 (3.8) Silverstream 487.8 478.1 2.0 Derivative Financial Instruments 2.8 - N/A Propert
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