BofAML: Global Metals, Mining & Steel Conference
May 16, 2018
BofAML: Global Metals, Mining & Steel Conference May 16, 2018 - - PowerPoint PPT Presentation
BofAML: Global Metals, Mining & Steel Conference May 16, 2018 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
May 16, 2018
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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 or developments may not be indicative of results or developments in subsequent
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 operations, 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 of this document.
World’s largest silver producer (58.7 moz in 2017) and Mexico’s largest gold producer (911.1 koz in 2017) Total assets of US$4.7 billion1 and market cap of US$12.9 billion 2 Silver resources of 2.3 billion ounces and gold resources of 38.5 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 at IPO 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 2017 2 As at 11 May 2018 3 Operations at Soledad-Dipolos are currently suspended
Location Key Highlights
Fresnillo plc mines (7 principal mines and 2 satellite mines)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
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Silver Production Gold Production Silver Reserves Gold Reserves Dividends Paid
US$4 billion in both existing
portfolio of quality assets.
commissioned: Saucito San Julián Noche Buena Soledad & Dipolos
in 2018: Pyrites Plant at Saucito 2nd Dynamic Leaching Plant at Herradura Up 69% since IPO Up 225% since IPO Up 23% since IPO Up 216% since IPO Paid US$2.5 Billion
Maintained a strategic commitment to continuous exploration across all precious metals price cycles.
exploration since IPO
to 2.3 Billion ounces since IPO
to 39 Million ounces since IPO
including Juanicipio, due to be commissioned in 2020 By optimising capacity and recoveries, generating continuous improvements in productivity and cost controls while leveraging expansion opportunities, we have:
We work hard to ensure the health and safety of our people and that their communities see a return on their investment of time, skills and commitments.
local communities since IPO
invested in health, safety and environmental initiatives since IPO
UK 50 scheme, amongst
5 Silver: Gold 74 : 1
2 3 4 5 6 7 8
2,000 3,000 4,000 5,000 6,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Resources (Eq Ag oz) per share Resources (Eq Ag moz) Resources (Eq Ag oz) per share
Production Resources
40 60 80 100 120 140 160 180
40 60 80 100 120 140 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Production (Eq Ag oz) per thousand shares Production (Eq Ag moz) Production (Eq Ag oz) per thousand shares
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*Measured, Indicated and Inferred resources, considering a Gold/Silver ratio of 74. Includes resources mined and processed.
Total Exploration Expenses from the last decade (2008 to 2017) US$ 1,570.0 million Increase in silver equivalent resources (2007-2017) 4,458.5 million ounces* (Increase of 158%) Production growth (2007 to 2017) Silver – 69% Gold – 225% Total Dividends Paid since IPO (2008 to 2017) US$ 2,492.2 million Total CAPEX from the last decade (2008 to 2017) US$ 4,281.8 million EBITDA (2008 to 2017) Total EBITDA – US$ 8,570m Average EBITDA p.a. – US$ 857m Average EBITDA margin – 53%
Investing in Growth Growth Outcome Returns
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Health & Safety
across our other operations, emphasising risk awareness and encouraging reporting
Environment, Community Relations and Awards
industry figures to share best practises on ethics and compliance programmes
six capitals approach of the IIRC
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2017 Highlights
koz, down 2.6% though above guidance
million
2018 Update
10 20 30 40 50 60 70 2014 2015 2016 2017 Production (moz) 200 400 600 800 1000 2014 2015 2016 2017 Production (koz)
Gold Production Silver Production
600 900 1,200 2014 2015 2016 2017
US$ million
EBITDA
600 900 1,200 2014 2015 2016 2017
US$ million
Cash flow from
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Fresnillo
Key operating statistics FY 2017 Silver production – moz 16.5 Gold production – koz 38.8 Cost per tonne – US$/t 47.5 Cash cost - US$/oz of Ag 0.71 Reserves 2017 *
179.7 moz Ag, 0.6 moz Au
Resources 2017 *
812.8 moz Ag, 1.9 moz Au
Saucito
Key operating statistics FY 2017 Silver production – moz 21.2 Gold production – koz 69.9 Cost per tonne – US$/t 47.6 Cash cost - US$/oz of Ag 1.50 Reserves 2017 *
133.2 moz Ag, 0.7 moz Au
Resources 2017 *
513.6 moz Ag, 2.1 moz Au
2018 targets
them in the long term
FY17 Achievements
FY17 Achievements
shaft
increasing our resource base (reserves up 8.1% & resources up 21.9%)
2018 targets
* As of December 2017
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San Julián Phase II
Key operating statistics FY 2017 Silver production – moz 4.6 Gold production – koz 1.8 Cost per tonne – US$/t * 31.9 Cash cost - US$/oz of Ag * 3.9 Reserves 2017 **
104.5 moz Ag, 0.1 moz Au
Resources 2017 **
121.8 moz Ag, 0.1 moz Au
2018 targets
* San Julián Phase II cost per tonne and cash cost figures are not representative as it started up in July 2017 and continues to process ore from the stockpile that originated during the construction period **As of December 2017
San Julián Phase I
Key operating statistics FY 2017 Silver production – moz 5.9 Gold production – koz 82.8 Cost per tonne – US$/t 52.1 Cash cost - US$/oz of Ag
Reserves 2017 **
30.3 moz Ag, 0.4 moz Au
Resources 2017 **
103.2 moz Ag, 1.3 moz Au
FY17 Achievements
2018 targets
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Ciénega
Key operating statistics FY 2017 Gold production – koz 71.9 Silver production – moz 5.4 Cost per tonne – US$/t 66.5 Cash cost - US$/oz of Au
Reserves 2017 *
54.1 moz Ag, 0.6 moz Au
Resources 2017 *
167.3 moz Ag, 1.7 moz Au
2018 targets
ramp
tpd at Ciénega
FY17 Achievements
* As of December 2017
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Herradura
Key operating statistics FY 2017 Gold production – koz 473.6 Silver production – koz 551 Cost per tonne* – US$/t 8.0 Cash cost - US$/oz of Au 492.9 Reserves 2017 **
7.7 moz Au
Resources 2017 **
10.3 moz Au
Noche Buena
Key operating statistics FY 2017 Gold production – koz 172.3 Silver production – koz 31 Cost per tonne* – US$/t 7.5 Cash cost - US$/oz of Au 793.5 Reserves 2017 **
0.8 moz Au
Resources 2017 **
0.8 moz Au
2018 targets
project
FY17 Achievements
2018 targets
FY17 Achievements
potential despite some positive results *Cost per tonne excluding unproductive costs ** As of December 2017
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Improve 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. The leaching plant at Saucito advanced as expected. Construction of the flotation plant at Fresnillo began. Pyrites Plant Project in the Fresnillo District
3.5 moz
13.0 koz Cash cost – US$/oz Ag (average LoM) $2.51 /oz Leaching plant at Saucito expected commissioning 2Q18 Fresnillo tailings flotation plant expected commissioning 2019
Overview
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Key metric estimates Plant capacity 8,000TPD Pre-operative capex US$110m Increase in gold production per year 36koz Expected commissioning 2Q18
Ore type
Oxides Mixture Sulphides
The project will enable sulphides occurring deeper in the pit to be processed more efficiently At the time of analysis, this project was expected to extend the LOM at Herradura from 6 to 12 years with an average annual gold production of 390 koz With current reserves and the above production rate, the LOM has been revised to just over 20 years
2nd Line of Dynamic Leaching Plant Project at Herradura
At Herradura, gold reserves have increased 48% vs. 2016, to 7.7moz
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Juanicipio (JV with MAG Silver. Fresnillo: 56%)
Key metric estimates (100% basis)
10moz silver 30koz gold Indicated & inferred resources 248 moz silver 1.4 moz gold First production 1H 2020
8km from the Fresnillo mine; Juanicipio’s mineral zones are located in silver-gold rich sulphide shoots of the veins. This project will be developed on a stand-alone basis Exploration in 2017 was focused on the depth extension
Feasibility study in the process of being concluded
Feasibility Study is due to be concluded in the coming weeks.
JUANICIPIO RAMP
Total Development in 2017 5,634 M Development from 2013-2016 5,307 M
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* Operations at Soledad & Dipolos are currently suspended.
Systematic Project Generation 2018 Budget: US$ 180 m
Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines 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 Juan Guazapares
Olivos Lucerito Minitas Cebadillas La Yesca Dátil Norias Argentum Sonora and Sinaloa : Nudo Lejano Carina Cerritos Rosario Elena San Manuel Santo Niño Chihuahua: Rosetillas SJ Pinal Lucero Tempisque Uruachi Durango: Canelas-VTopia El Carmen Zacatecas: Urite Atotonilco Corredor Concha-Nieves Villa García Perú: Sto. Domingo La Pampa Supaypacha Alto Dorado
Mine Operations Development Projects Prospects in drilling Early stage Exploration Advanced Exploration PEA - Feasibility
Centauro Deep Orisyvo 42% 33% 25%
Underlain by 1.8m hectares of concessions in Mexico and 350k hectares in Peru
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Revenue
US$m
2,093.3
EBITDA
US$m
1,060.1
Adjusted production cost
US$m
769.2
Gross profit
US$m
925.4
Exploration expenses
US$m
141.1
Operating profit
US$m
709.3
Basic EPS
US cents
0.76
Cash generated by operations before changes in working capital
US$m
1,073.7
Income tax and profit sharing
US$m
309.3
Silverstream contract
US$m
43.3
Purchase of property, plant & equipment
US$m
604.8
Cash and other liquid funds at 31 December
US$m
896.1
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CHANGE 2017 2016 % CHG. CASH COST PER OZ. SILVER EQ. As a Silver Company 6.13 5.98 2.4% Silver Eq. Oz (Moz) sales volume 115 108 6.8% PER OZ. GOLD EQ. As a Gold Company 453.77 433.48 4.7% Gold Eq. Oz (koz) Sales Volume 1,554 1,488 4.5% ALL IN SUSTAININ G COST PER OZ. SILVER EQ. As a Silver Company 10.34 9.49 9.0% Silver Eq. Oz (Moz) Sales Volume 115 108 6.8% PER OZ. GOLD EQ. As a Gold Company 765.88 687.45 11.4% Gold Eq. Oz (koz) Sales Volume 1,554.2 1,487.8 4.5% ACCUM DECEMBER
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(1) Estimated (2) Total average annual production (3) Total investment (of which 56% Fresnillo plc; 44% MAG Silver) according to PFS dated June 2012 (4) On hold
Approved by the Board Subject to ongoing internal review (Subject to Board approval)
(1) (2) (3) (4)
10 20 30 40 50 60 70 80 2018 2019 2020
Attributable
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Target of 65 moz silver by 2018
Million Oz
100 200 300 400 500 600 700 800 900 1,000 1,100 2018 2019 2020
Attributable
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Thousand Oz
Target of 750 koz gold by 2018
605 755 725 590
100 200 300 400 500 600 700 800 900 2017 2018 2019 2020 Million Usd
Sustaining CAPEX New Projects - Preoperative CAPEX
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US$ Million
2018
Sustaining (Operations) Fresnillo 90 M Saucito 100 M Herradura 136 M Ciénega 70 M Noche Buena 35 M San Julián 90 M Others 9 M Projects Approved San Julián 17 M Pyrites Plant 47 M Centauro Extension 35 M Projects for Approval Others 123 M
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Proven Strategy Delivering Value through Growth and Returns
Safety and support of the workforce
and material to the business
Disciplined growth through exploration and development
Continue to create value through growth and returns
Geopolitical events
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