16 - 17 May 2017 Dedicated to meeting our commitments Disclaimer - - PowerPoint PPT Presentation

16 17 may 2017 dedicated to meeting our commitments
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16 - 17 May 2017 Dedicated to meeting our commitments Disclaimer - - PowerPoint PPT Presentation

16 - 17 May 2017 Dedicated to meeting our commitments 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


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16 - 17 May 2017 Dedicated to meeting our commitments

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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”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward- looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include, but are not limited to, statements regarding the Fresnillo Group’s intentions, beliefs or current expectations concerning, among other things, the Fresnillo Group’s results of operations, financial position, liquidity, prospects, growth, strategies and the silver and gold industries. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of the Fresnillo Group’s operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates, may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. In addition, even if the results of operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates are consistent with the forward-looking statements contained in this document, those results

  • r developments may not be indicative of results or developments in subsequent periods. A number of factors could cause

results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations (including the US dollar and Mexican Peso exchange rates), the Fresnillo Group’s ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, changes in its business strategy, political and economic uncertainty. Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this document speak only as of the date of this document, reflect the Fresnillo Group’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Fresnillo Group’s

  • perations, results of operations, growth strategy and liquidity. Investors should specifically consider the factors identified in this

document which could cause actual results to differ before making an investment decision. Subject to the requirements of the Prospectus Rules, the Disclosure and Transparency Rules and the Listing Rules or applicable law, the Fresnillo Group explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that may occur due to any change in the Company’s expectations or to reflect events or circumstances after the date

  • f this document.

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Location Key Highlights

World’s largest silver producer (50.3 moz in 2016) and Mexico’s largest gold producer (935.5 koz in 2016) Total assets of US$4.3 billion1 and market cap of US14.4 billion2 Silver resources of 2.2 billion ounces and gold resources of 38.4 million are the foundation for creating long term value Growth potential supported by mining concessions of 1.8m hectares in Mexico and 350 thousand hectares in Peru Margins sustained by cash costs and AISC amongst the lowest in the industry Production target of 65 moz of silver and 750 koz of gold by 2018 Substantial, high quality project pipeline and strong commitment to disciplined and sustainable growth Focus on greenfield and brownfield projects that can be developed into low-cost, world-class mines

1 As of 31 Dec 2016 2 As at 12 May 2017 3 Operations at Soledad-Dipolos are currently suspended

Fresnillo plc mines (7 and a satellite mine)3 Development projects (3) Advanced exploration projects (4) Prospects in drilling Prospects at an early stage

SOUTH PERU HERRADURA DISTRICT CIÉNEGA DISTRICT FRESNILLO DISTRICT ORISYVO SAN JULIÁN

Fresnillo at a Glance – Value and Volume

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Our Business Model and Strategy

Our Business Model…

  • 1. Maximise potential of existing operations
  • Operate at 100% capacity
  • Low-cost producer
  • Optimise mining method and metallurgy to maintain high

recovery rates

  • 2. Deliver growth through development projects
  • Track record of delivery on time and on budget
  • Focus on CAPEX control
  • Specialised Engineering and Construction team
  • 3. Extend the growth pipeline
  • Evaluate early-state acquisitions
  • Maintain reserves for 10 years
  • Ensure organic growth and assess key acquisition
  • pportunities
  • 4. Advance sustainable development
  • Improve general health
  • Reinforce safety
  • Minimise our environmental impact
  • Maintain sound relations with our communities

…supported by four strategic pillars to create value

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2016 Highlights

  • Silver production of 50.3 moz, up 7.1% vs. 2015
  • Gold production of 935.5 koz, up 22.8% vs. 2015
  • C1 and AISC lowered at all mines vs. 2015
  • Operating profit US$676.5 million, up 237.5% on 2015
  • EBITDA US$1,032.0 million, up 88.5% on 2015
  • Net operating cash flow of US$898.0 million, up 65.4%
  • Cash and Investments: US$912 million
  • San Julián phase I commissioned (average annual production of 10.5m silver eq. ounces)

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  • After two consecutive years of operating challenges, the Fresnillo mine is now showing positive

signs of the turnaround plan

  • San Julián phase II currently undergoing initial tests – commissioning expected on schedule, in

2Q17 (average annual production of 14.8m silver eq. ounces)

  • On track to achieve our 2017 production guidance of 58-61 moz silver (including 4.0 moz from

silverstream) and 870-900 koz gold

2017 Updates

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  • Reach a development rate of 4,800m/m by year end
  • 7-10% increase in Ag production and a stable ore grade
  • S.Carlos Shaft extension & vertical conveyor installation
  • Improve infrastructure inc. maintenance areas & ventilation

Operations

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Fresnillo

2017 targets to consolidate turnaround plan 2016 Achievements

  • After two years of operational challenges, the mine was

stabilised

  • Number of production stopes to allow for greater
  • perational flexibility was increased

Key operating statistics 2016 Silver production – moz 15.9 Gold production – koz 42.4 Cost per tonne – US$/t 43.9 Cash cost - US$/oz of Ag 2.09 Reserves 2016

205.5 moz Ag, 0.6 moz Au

Resources 2016

798.2 moz Ag, 1.72 moz Au

Saucito

Key operating statistics 2016 Silver production – moz 21.9 Gold production – koz 86.2 Cost per tonne – US$/t 36.8 Cash cost - US$/oz of Ag

  • 0.39

Reserves 2016

123.2 moz Ag, 0.9 moz Au

Resources 2016

421.5 moz Ag, 2.1 moz Au

  • Jarillas Shaft extension & deepening of six development

ramps to sustain production in the future

  • Increase development rates to 4,000m per month
  • Plant running 30% above Nom. Capacity @ 7,800 tpd
  • Increased Ag & Au resources 12.8% & 16.7% respectively

2016 Achievements 2017 targets to sustain production in the future

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Operations Cont.

San Julián cost per tonne and cash cost figures are not represented as it started up in August (5 months) and most ore processed came from the development stockpile

Ciénega

Key operating statistics 2016 Silver production – moz 5.1 Gold production – koz 72.9 Cost per tonne – US$/t 55.5 Cash cost - US$/oz of Ag

  • 217.2

Reserves 2016

66.3 moz Ag, 0.8 moz Au

Resources 2016

159.2 moz Ag, 1.6 moz Au

2016 Achievements 2017 Priorities

  • Continue development of Rosario & Las Casas
  • Ciénega expansion evaluation progressing
  • Development & Preparation of two Satellite mines for
  • perational flexibility – Taspana Mine & Tajos Mine

San Julián (Phase I & II)

Key operating statistics Aug-Dec 2016 Gold production – koz 31.4 Silver production – moz 2.1 Reserves 2016

135.3 moz Ag, 0.4 moz Au

Resources 2016

187.0 moz Ag, 0.8 moz Au

2016 Achievements

  • Start up of Phase I in August (average annual production
  • f 10.5m silver eq. ounces)
  • Plant running 20% above Nom. capacity @ 3,600 tpd
  • Commissioning of Phase II in 2Q17 (average annual

production of 14.8m silver eq. ounces)

  • Phase I plant ramp-up to 4,000 tpd target

2017 targets

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Herradura

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Key operating statistics 2016 Gold production – koz 520.4 Silver production – koz 638 Cost per tonne* – US$/t 7.7 Cash cost - US$/oz of Au 470.7 Reserves 2016

5.2 moz Au

Resources 2016

10.8 moz Au

Operations Cont.

*Cost per tonne excluding unproductive costs

2016 Achievements

  • Reduced gold inventories at pads
  • Production of 436 koz of gold excluding inventory

reduction

  • Decreased AISC by 17.6% vs 2015

2017 Priorities

  • Advance construction of the 2nd line of the DLP

(average increase in annual gold production of 36 koz)

  • Increase exploration at Centauro

Noche Buena

Key operating statistics 2016 Gold production – koz 182.3 Silver production – koz 33 Cost per tonne* – US$/t 7.5 Cash cost - US$/oz of Au 765.9 Reserves 2016

0.9 moz Au

Resources 2016

0.9 moz Au

  • Reduction in cash cost (-21.3%) and AISC (-18.9%)
  • Certification of the Cyanide code

2016 Achievements

  • Conclude construction of Pad number 7 to maintain

production 2017 Priorities

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CHANGE CASH COST 2016 2015 % CHG. PER OZ SILVER EQ. As a Silver Company 5.98 7.01

  • 14.7%

Silver Eq. Oz (Moz) Sales Volume 108 93 16.1% PER OZ GOLD EQ. As a Gold Company 433.48 507.71

  • 14.6%

Gold Eq. Oz (Koz) Sales Volume 1,488 1283 16.0% ALL IN SUSTAIN IN G COST PER OZ SILVER EQ. As a Silver Company 9.45 11.52

  • 17.6%

Silver Eq. Oz (Moz) Sales Volume 108 93 16.1% PER OZ GOLD EQ. As a Gold Company 687.45 834.19

  • 17.6%

Gold Eq. Oz (Koz) Sales Volume 1,488 1,283 16.0% ACCUM DECEMBER

Group Consolidated Cash Cost* & All In Sustaining Cost** (US$/Oz)

**: All In sustaining cost is calculated as traditional cash cost plus on-site general, corporate and administrative costs, community costs related to current operations, capitalised stripping & underground mine development, sustaining capital expenditures and remediation expenses. Note II: San Julián is not represented as it started up in August (5 months) and most ore processed came from the development stockpile

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* Cash cost per ounce is calculated as total cash cost (cost of sales plus treatment and refinning charges less depreciation) less revenues from by-products divided by the silver or gold ounces sold.

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Expected Delivery of Growth

13 Approved by the Board Subject to ongoing internal review (Subject to Board approval)

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San Julián phase II, which will process mineral from the disseminated ore body, to be commissioned in 2Q17 Identify, explore and evaluate the District’s potential San Julián (Phase I & II) Expected 2017 silver production 11.6 moz Expected 2017 gold production 63.7 koz Expected Cash cost 2017* $0.9/oz Expected Cost per tonne 2017 $46.4/tonne Expected All-in sustaining costs 2017* $4.9/oz Phase II capacity (flotation plant to process

  • re from disseminated ore body)

6,000 TPD Pre-operative capex for Phase I & II $515 m Life of mine 12 years IRR @ US$20/oz of Ag & US$1,200/oz of Au 13.6%

*Cash Cost by product of volume sold

Projects

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San Julián District Potential

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Increase overall recoveries of gold and silver by processing historical and ongoing tailings from the Fresnillo and Saucito mines. The plant will froth float pyrite concentrates that will be leached in a 2,000 tpd dynamic leaching plant and Merrill Crowe plant to produce precipitates.

  • In 2016, detailed engineering works were completed,

environmental permits were obtained, preparation of the site commenced and orders were placed for major equipment.

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Pyrites Plant Project in the Fresnillo District

  • Avg. annual silver production

3.5 moz

  • Avg. annual gold production

13.0 koz Pre-operative capex $155 m Cash cost (average LoM) $2.51 /oz Expected commissioning 2018 IRR @ US$20/oz of Ag & US$1,200/oz of Au 29.3%

Overview

Projects Cont.

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Key metric estimates Plant capacity 8,000TPD Pre-operative capex US$110m Increase in gold production per year 36koz Expected commissioning 2018 IRR @ US$1,200/oz of Au 14.7%

Ore type

Oxides Mixture Sulphides

  • Detailed engineering continued
  • The project will enable high grade sulphides occurring deeper in

the pit to be processed more efficiently

  • LOM at Herradura will be extended to 12 years with an annual

gold production of 390 koz.

2nd Line of Dynamic Leaching Plant Project at Herradura

Projects Cont.

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Juanicipio (JV with MAG Silver. Fresnillo: 56%)

Key metric estimates (100% basis)

  • Avg. annual production

10moz silver 30koz gold Indicated & inferred resources 248 moz silver 1.4 moz gold Start-up 1H 2019

8km from the Fresnillo mine; Juanicipio’s mineral zones are located in silver-gold rich sulphide shoots of the veins. This will be the next major project for the Group Gold and silver resources up 33.7% and 9.9% vs 2015 20,000 metre drilling programme in 2017

Projects Cont.

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Strong Organic Growth Pipeline

* Operations at Soledad & Dipolos are currently suspended.

Fresnillo Saucito Herradura Nochebuena Ciénega - San Ramón Soledad &Dipolos* San Julián Pyrites Plant Cebollitas Cluster Centauro Extension Juanicipio

Guanajuato Rodeo Fresnillo District

Tajitos Candameña Guachichil

Pilarica (Perú) San Nicolás Guazapares

Olivos Coneto Lucerito San Juan San Agustin Minitas Cebadillas La Yesca Dátil Norias Argentum Sonora and Sinaloa : Nudo Lejano Carina Cerritos Rosario Sierra Pinta Elena San Manuel Santo Niño Chihuahua: Rosetillas SJ Pinal Lucero Tempisque Uruachi Durango: Frida Canelas-VTopia El Carmen El Hundido Zacatecas: Urite Atotonilco Corredor Concha-Nieves Villa García Perú: Sto. Domingo La Pampa Supaypacha Alto Dorado

Systematic Project Generation

Mine Operations Development Projects Prospects in drilling Early stage Exploration Advanced Exploration PEA - Feasibility

Centauro Deep Orisyvo

36 % 2 % 42 % 16 % 4 % 2017/ Budget: US$ 160 m

Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines

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Growth in Resources

Attributable silver resources (M oz) Attributable gold resources (M oz)

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Expected Silver Production Profile

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Target of 65 moz silver by 2018

  • 10.0

20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 2017 2018 2019 2020 Million Oz Yr

Attributable

Creating Value Through Growth

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Expected Gold Production Profile

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Target of 750 koz gold by 2018

  • 100.0

200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1,000.0 1,100.0 1,200.0 2017 2018 2019 2020 Thousand Oz Yr

Attributable

Creating Value Through Growth

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US$ Million

2017

Sustaining (Operations) Fresnillo 121 M Saucito 116 M Herradura 122 M Ciénega 66 M Noche Buena 24 M San Julián 77 M Others 6 M Projects Approved San Julián 40 M Pyrites Plant 74 M Centauro Extension 60 M Projects for Approval Others 93 M

CAPEX Spend Expectations

434 800 820 730 500

100 200 300 400 500 600 700 800 900 2016 2017 2018 2019 2020

Sustaining CAPEX New Projects - Preoperative CAPEX

Creating Value Through Growth

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Outlook

Proven Strategy Delivering Results

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Safety and support of the workforce

  • Continue to reinforce our safety procedures across all our mines to achieve our objective of zero

fatalities

Disciplined growth through exploration and development

  • Deliver San Julián Phase II in 2Q17 (average annual production of 14.8m silver eq. ounces)
  • Advance the Pyrites Plant (average annual production of 3.5moz Ag & 13 koz Au)
  • Continue construction of the 2nd Line of DLP (average increase in annual gold production of 36 koz)
  • Explore the further potential at Centauro

Advancing towards our 2018 production goals

  • On track to produce 58–61moz of silver and 870–900koz of gold in 2017
  • Continue to optimise performance at the Fresnillo mine through increasing development rates and

improving infrastructure

  • Increase milling capacity further at the San Julián leaching plant through optimisation projects
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Why you should buy Fresnillo

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High quality, low-cost, flexible operations Strong balance sheet, disciplined growth, robust project pipeline Commitment to sustainable business practices

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