Fresnillo Plc · LSE:FRES
Fresnillo — Bank of America Merrill Lynch Global Metals & Mining Conference 2009
21 slides from Fresnillo's conference presentation, May 2009
Slide 1: Global Metals & Mining Conference
Global Metals & Mining Conference Bank of America Merrill Lynch 12 – 14 May Barcelona Fresnillo plc
Slide 2: Disclaimer
This document includes statements that are, or may be deemed to be, “forward-looking statements”. These DISCLAIMER 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 1. Introduction and Highlights 2. Operations, Development Projects and Exploration 3. Financial Highlights 4. Silver Market 5. Conclusion 6. Q and A
Slide 4: Delivery & growth
Fresnillo, the world’s largest primary silver producer and Mexico’s second 1. INTRODUCTION largest gold producer AND HIGHLIGHTS Highly experienced management team with proven track record in exploration, development, construction and operation Three operating mines – Fresnillo: 34.8 million ounces o
Slide 5: Committed to double production by 2018
1. INTRODUCTION Mexico offers attractive framework for the mining industry AND HIGHLIGHTS – Geological potential - world’s 2nd largest silver producing country – Flexible and well-structured mining and environmental legislation – Infrastructure – Skilled workforce, long mining tradition Integrates s
Slide 6: Largest primary silver producer in the world
Primary 1 Primary silver silver producers producers (Moz) (Moz)1 Attributable Attributable silver silver production production by by company company in in 2008 2008 (Moz) (Moz) 1. INTRODUCTION Production in 2008 Company 2008 production (Moz) % of global production2 AND HIGHLIGHTS 0 10 20 30 40 0 10
Slide 7: Mexico mines and projects map
Herradura 2. OPERATIONS, Soledad Dipolos DEVELOPMENT Santa Eulalia PROJECTS AND EXPLORATION Parral San Julian Orisyvo Ci é nega Saucito Mining concessions San Juan Fresnillo Guanajuato cover approx. 1.75m Tayoltita Pachuca hectares Zacatecas Headquarters Fresnillo mines Development projects Taxco Ad
Slide 8: Production has more than doubled over the last 10 years
Fresnillo Fresnillo - Underground Ciénega Ciénega - Underground Herradura Herradura – 1 Open pit 2. OPERATIONS Attributable production Attributable production Attributable production 33.8M ounces silver 1.0M ounces silver 0.1M ounces silver 24 .0k ounces gold 117 .0k ounces gold 123 .0k ounces gold
Slide 9: Reserves and Resources
Reserves Volume Silver Gold 1200 1,115.9 +33.3% (Proven & Probable) mt g/t moz g/t moz 2. OPERATIONS, 1000 DEVELOPMENT Fresnillo 28.6 405.0 372.0 0.59 0.5 836.9 PROJECTS & 800 Ciénega 9.8 118.0 36.9 3.80 1.2 EXPLORATION Herradura1 87.0 0.4 1.1 0.85 2.4 600 Totals 410.0 4.1 400 200 Resources2 Volume
Slide 10: Fresnillo district: Saucito silver & gold project
2. DEVELOPMENT PROJECTS Minera Fresnillo Resources: 589 Moz silver 0.8 Moz gold San Carlos vein extension Sto. Niño Sn. Carl os San Carlos V. Sta. N Project shaft ata Fresnillo district: Vald eca ñ lia Jarillas shaft VS . ta . C as ruz Saucito silver & gold project Juan icipi o Jaril la s Minera Jua
Slide 11: On target to commence production in 2011
2. DEVELOPMENT PROJECTS Saucito shaft (concluded to 587m) Fresnillo district: Saucito silver & gold project Jarillas shaft (in development) Exploration and development mining works in excess of 4,500 metres Prefeasibility study to be delivered in 1H 09 On target to commence production in 2011
Slide 12: Soledad-Dipolos: production in Q1 2010
2. DEVELOPMENT Soledad-Dipolos PROJECTS Anticipated annual production: Dipolos Soledad 3.5Mt to 5Mt, producing an approx. peak rate of 100koz gold by end 2010 – Pre-stripping started Dec 2008 Tajo – Capex US$67.8m Centauro – Sustaining capex US$13.5m Herradura District: over six years Soledad-Dipolo
Slide 13: Exploration projects are advanced
San Julián Fresnillo Orisyvo Ciénega San Juán 1 Herradura 2. EXPLORATION in Ve l ian Ju n ed Sa at in em ld ss go Di ed at in em D iss Exploration projects Mineralisation: are advanced Silver and Gold Gold Silver and Gold Metal contained in Resources: 97.3 Moz Silver 2.8 Moz Gold 9.8 Moz Silver 0.4
Slide 14: Fresnillo performance vs. peers
3. FINANCIAL Fresnillo FTSE 350 Mining FTSE 100 UK Peers Silver Peers Gold Peers HIGHLIGHTS 600 +348% 550 500 450 400 350 Fresnillo 300 +132% +124% performance vs. 250 +89% peers 200 +40% 150 +10% 100 50 05-Dec-08 24-Dec-08 12-Jan-09 31-Jan-09 20-Feb-09 11-Mar -09 30-Mar-09 18-Apr-09 08-May-09 Sourc
Slide 15: 2008 Key Financial Items (US$millions)
2008 Financial Highlights 3. FINANCIAL (US$ millions) HIGHLIGHTS Adjusted Revenue * 839.6 Net Revenues 720.5 Cost of Sales 299.9 Gross Profit 420.6 Gross Margin 58.4% Exploration expenses 53.5 Operating Profit 283.6 2008 Key Financial Operating Margin 39.4% Items (US$millions) Profit for the year 15
Slide 16: 2008 Adjusted Revenue Breakdown
3. FINANCIAL HIGHLIGHTS Zn Pb 3% 4% Gold 36% Silver 2008 Adjusted 57% Revenue* Breakdown US$839.6 m* * Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude hedging effects and treatment and refining charges.
Slide 17: 2008 Cost of Sales Breakdown
3. FINANCIAL Freights Other Concepts 3% HIGHLIGHTS 8% Operating Materials 21% Diesel 6% Electricity 8% 2008 Cost of Sales Profit Sharing Maintenance 17% (excluding 8% depreciation Breakdown) Contractors 13% Personnel Cost 16% US$248.0 m
Slide 18: 2008 Contribution to Consolidated Gross Profit
3. FINANCIAL HIGHLIGHTS Ciénega 12% Herradura 19% 2008 Contribution to the Consolidated Gross Profit* Fresnillo 69% US$466.04 m *Not including hedging losses.
Slide 19: Factors driving higher production costs
3. FINANCIAL CHANGE HIGHLIGHTS 2008 2007 AMOUNT % Production Costs* 275.40 226.20 +49.20* +21.7 I. Higher prices of key inputs-Operating materials Year on year increases USD MILLION Steel balls for milling 40.3% 55.0 0.9 Steel for drilling 11.5% 1.4 49.2 Explosives 17.4% 49.5 2.0 9.1 Tyres 19.8% 44.
Slide 20: Silver market: fundamentals remain positive
Demand Demand Supply Supply Breakdown of silver Monthly Silver Price Breakdown of silver Monthly Silver Price fabrication demand in 2008 (US$/oz) Jan 05 – April 09 4. SILVER Total demand of 875 Moz in Mine production accounted for fabrication demand in 2008 (US$/oz) Jan 05 – April 09 MARKET 2008 77%
Slide 21: Why Fresnillo?
5. CONCLUSION Quality operating assets – The best silver producing mine in the world – Two highly efficient gold mines – strong production – Lowest quartile of cash cost curve for silver and gold Substantial and growing Reserve and Resource base Why Fresnillo? Extensive portfolio of projects – Devel
Fresnillo — Bank of America Merrill Lynch Global Metals & Mining Conference 2009 on 6ix