25 September 2017 Dedicated to meeting our commitments 1 - - PowerPoint PPT Presentation

25 september 2017 dedicated to meeting our commitments 1
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25 September 2017 Dedicated to meeting our commitments 1 - - PowerPoint PPT Presentation

25 September 2017 Dedicated to meeting our commitments 1 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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1 25 September 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$4.5 billion1 and market cap of US14.6 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 June 2017 2 As at 22 September 2017 3 Operations at Soledad-Dipolos are currently suspended

Fresnillo plc mines (7 and a satellite mine)3 Development projects (2) 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

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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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Highlights

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2016 1H17 Silver production moz 50 28 Gold production koz 936 446 Revenues US$ million 1,906 996 Gross profit US$ million 882 460 Operating profit US$ million 677 378 EBITDA US$ million 1,032 523 EBITDA margin % 54 53 Total CAPEX US$ million 434 264 Exploration expenses US$ million 121 64 Workforce (employees + contractors) 11,380 13,630 Total Assets US$ million 4,290 4,512 Cash and investments US$ million 912 885

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Operations

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Fresnillo

Key operating statistics 1H 2017 Silver production – moz 8.9 Gold production – koz 20.7 Cost per tonne – US$/t 44.1 Cash cost - US$/oz of Ag 1.25 Reserves 2016 *

205.5 moz Ag, 0.6 moz Au

Resources 2016 *

798.2 moz Ag, 1.72 moz Au

Saucito

Key operating statistics 1H 2017 Silver production – moz 10.8 Gold production – koz 33.9 Cost per tonne – US$/t 45.2 Cash cost - US$/oz of Ag 1.64 Reserves 2016 *

123.2 moz Ag, 0.9 moz Au

Resources 2016 *

421.5 moz Ag, 2.1 moz Au

2H17 targets

  • Continue towards our 4,800m a month of development target
  • On track to reach 7-10% increase in Ag Prod.
  • Expected Ag ore grade of 230g/t for the full year

1H17 Achievements

  • Continued signs of progress
  • 4th consecutive quarter of increased ore processed

1H17 Achievements

  • 4.3% increase in ore processed vs. 1H16

2H17 targets

  • Advance the Jarillas Shaft extension & deepening of 6

development ramps

  • Continue to increase development rates towards 4,000m a

month * As of December 2016

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Herradura

Key operating statistics 1H 2017 Gold production – koz 224.0 Silver production – koz 222 Cost per tonne* – US$/t 7.1 Cash cost - US$/oz of Au 483.9 Reserves 2016 **

5.2 moz Au

Resources 2016 **

10.8 moz Au

Noche Buena

Key operating statistics 1H 2017 Gold production – koz 89.8 Silver production – koz 14 Cost per tonne* – US$/t 7.0 Cash cost - US$/oz of Au 804.1 Reserves 2016 **

0.9 moz Au

Resources 2016 **

0.9 moz Au

Operations Cont.

2H17 targets

  • Continue to advance construction of the 2nd line of the DLP

ready for commissioning next year

1H17 Achievements

  • Inventories at pads further decreased
  • 2nd line of the DLP progressing as expected

2H17 targets

  • Continue to focus on efficiencies
  • Continue exploration in surrounding area
  • Advance the construction of Pad number 7

1H17 Achievements

  • Increased ore throughput vs 1H16

*Cost per tonne excluding unproductive costs ** As of December 2016

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Ciénega

Key operating statistics 1H 2017 Gold production – koz 36.4 Silver production – moz 2.8 Cost per tonne – US$/t 64.4 Cash cost - US$/oz of Au

  • 242.8

Reserves 2016 *

66.3 moz Ag, 0.8 moz Au

Resources 2016 *

159.2 moz Ag, 1.6 moz Au

San Julián Phase I

Key operating statistics 1H 2017 Gold production – koz 41.0 Silver production – moz 3.0 Cost per tonne – US$/t ** 49.0 Cash cost - US$/oz of Au **

  • 4.73

Reserves 2016 *

135.3 moz Ag, 0.4 moz Au

Resources 2016 *

187.0 moz Ag, 0.8 moz Au

Operations Cont.

2H17 targets

  • Continue development of Rosario & Las Casas
  • Advance the Ciénega expansion evaluation

1H17 Achievements

  • Development & preparation of 2 satellite mines for operational

flexibility – Taspana mine & Tajos mine

2H17 targets

  • On track to reach 4,000 tpd target

1H17 Achievements

  • Continuing to ramp up capacity, currently processing at over

3,700 tpd

** San Julián cost per tonne and cash cost figures are not representative as it started up in August 2016 and continues to process ore that came from the development stockpile

* As of December 2016

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Operations Cont.

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San Julián Phase II commissioned

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San Julián phase II was commissioned on time and on budget Commercial production commenced mid-July Ramp up was achieved reaching nameplate capacity, ‘6,000 TPD’ 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

*Cash Cost by product of volume sold

Operations Cont.

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CHANGE CASH COST 2017 2016 % CHG. PER OZ SILVER EQ. As a Silver Company 6.26 6.41

  • 2.4%

Silver Eq. Oz (Moz) Sales Volume 54.88 53.40 2.8% PER OZ GOLD EQ. As a Gold Company 448.59 481.59

  • 6.9%

Gold Eq. Oz (Koz) Sales Volume 765.54 710.56 7.7% ALL IN SUSTAIN IN G COST PER OZ SILVER EQ. As a Silver Company 10.53 9.60 9.7% Silver Eq. Oz (Moz) Sales Volume 54.88 53.40 2.8% PER OZ GOLD EQ. As a Gold Company 754.98 721.14 4.7% Gold Eq. Oz (Koz) Sales Volume 765.54 710.56 7.7% ACCUM JUNE

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.

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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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Pyrites Plant Project in the Fresnillo District

Key operating statistics

  • 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

2nd Line of Dynamic Leaching Plant Project at Herradura

Key operating statistics Plant capacity 8,000TPD Pre-operative capex US$110m Increase in gold production per year 36koz Expected commissioning 2018

Projects

Improve overall recoveries of Au & Ag by processing historical and ongoing tailings from the Fresnillo & 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

  • Detailed engineering continued
  • Milling area advanced
  • The project will enable sulphides occurring deeper in the

pit to be processed more efficiently

  • As a result of the project, the LOM at Herradura will be

extended to 12 years with an annual gold production of 390 koz

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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 First production 1H 2020

8km from the Fresnillo mine; Juanicipio’s mineral zones are located in silver-gold rich sulphide shoots of the veins. This project will be developed on a stand-alone basis 33.7% and 9.9% increase in gold and silver resources respectively 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 % 3 % 40 % 16 % 5 % 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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YEAR

PROJECT

PRODUCTION DEVELOPMENT & CONSTRUCTION PRODUCTION DEVELOPMENT & CONSTRUCTION PRODUCTION DEVELOPMENT & CONSTRUCTION PRODUCTION

2021

515

10.3 moz oz Ag & 44 koz Au

SAN JULIÁN

CONSTRUCTION LEACHING PLANT

FLOTATION PLANT CONSTRUCTION Investment (US$ million) Expected Avg. Annual Production PRODUCTION

2016 2017 2018 2019 2020 2022

CONSTRUCTION TAILINGS FLOTATION

155

3.5 moz Ag & 13 koz Au

PYRITES PLANT (Optimization project) 30

3 moz Ag

FRESNILLO 9,000 TPD (Optimization project)

DETAILED ENGINEERING LEACHING PLANT CONSTRUCTION

110

Extended LoM

  • f 390 koz Au

CENTAURO EXTENSION

DEVELOPMENT PRODUCTION 2ND DYNAMIC LEACHING PLANT CONSTRUCTION PRODUCTION

305*

10 moz Ag & 30 koz Au

JUANICIPIO 55

15 koz Au & 1.3 moz Ag

CIENEGA 5,000 TPD (Optimization project) 350

136 koz Au

ORISYVO 130

65 koz Au

CENTAURO DEEP

DEVELOPMENT & CONSTRUCTION DEVELOPMENT & CONSTRUCTION PRODUCTION

Expected Delivery of Growth

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

(1) (2) (1) Estimated (2) Total average annual production (3) Total investment (of which 56% Fresnillo plc; 44% MAG Silver) according to PFS dated June 2012 (4) On hold (3) (4)

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Expected Silver Production Profile

21 Target of 65 moz silver by 2018

Million Oz

10 20 30 40 50 60 70 80 2017 2018 2019 2020

Attributable

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Thousand Oz

Expected Gold Production Profile

22 Target of 750 koz gold by 2018 100 200 300 400 500 600 700 800 900 1,000 1,100 2017 2018 2019 2020

Attributable

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CAPEX Spend Expectations

434 700 860 740 520

100 200 300 400 500 600 700 800 900 1,000 2016 2017 2018 2019 2020 Million Usd

Sustaining CAPEX New Projects - Preoperative CAPEX

2017

US$ Million Sustaining (Operations) Fresnillo 109 M Saucito 119 M Herradura 96 M Ciénega 61 M Noche Buena 20 M San Julián 79 M Others 5 M Projects Approved San Julián 35 M Pyrites Plant 58 M Centauro Extension 53 M Projects for Approval Others 65 M

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Outlook

  • Introduction of an enhanced safety system at all our mines which was

initiated at Saucito in March 2017

Safety and support of the workforce

  • Ramp up was achieved at San Julián Phase II reaching nameplate capacity,

‘6,000 tpd’

  • Maintain Fresnillo mine at full capacity
  • Advance the Pyrites Plant
  • Continue construction of the 2nd Line of DLP at Herradura

Disciplined growth through exploration and development

  • Produce 58–61 moz silver & 870–900 koz gold in 2017
  • Continue developing the infrastructure and preparing the mine at Fresnillo for the

future expansion

  • Increase milling capacity further at the San Julián leaching plant through
  • ptimisation projects

Advancing towards our 2018 production goals

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Proven strategy delivering results

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Investment case

Strong balance sheet High quality assets Low-cost and flexible

  • perations

Disciplined & consistent approach to growth and returns Commitment to sustainable business practices

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