DENVER GOLD FORUM Tuesday 25 th Sept 2018 Octavio Alvídrez, CEO
DISCLAIMER 2 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 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 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.
AGENDA 3 • Overview • 10 years as a listed business • Performance Update • The Fresnillo Proposition: • High quality assets • Low cost and flexible operations • Disciplined approach to development • Commitment to sustainable business practices • Strong balance sheet • Outlook
FRESNILLO AT A GLANCE 4 A DECADE OF PROGRESS AND ACHIEVEMENT KEY HIGHLIGHTS • 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 billion 1 and market cap of US$8.2 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 700 thousand hectares in Peru, the largest in both countries • Margins sustained by cash costs and AISC amongst the lowest in the industry • Production target of 65 moz of silver by 2018, having already surpassed the gold target of 750 koz • Substantial, high quality project pipeline and strong commitment to disciplined and sustainable growth • Dedicated and experienced management team supported by an international high caliber Board with a commitment to strong governance • 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 21 September 2018
A CONSISTENT, CONSERVATIVE STRATEGY 5 OPERATE DEVELOP EXPLORE SUSTAIN By optimising capacity and Consistently invested over US$4 billion Maintained a strategic commitment We work hard to ensure the health recoveries, generating continuous in both existing operations and to continuous exploration across all and safety of our people and that improvements in productivity and growing our portfolio of quality assets. precious metals price cycles. their communities see a return on cost controls while leveraging their investment of time, skills and expansion opportunities, we have: commitments. • Silver production up 69% • Over US$ 32 million directly invested 4 new mines developed & commissioned: • US$ 1.6 billion invested in • Gold production up 225% • in local communities Saucito exploration • Majority of operations running • San Julián • Silver Resources grown 177% to • Close to US$ 130 million invested in consistently above nameplate • health, safety and environmental Noche Buena 2.3 billion ounces capacity • Soledad & Dipolos • Silver Reserves up 23% initiatives • Two expansion projects • Inclusion into the FTSE4Good UK 50 • Gold Resources grown 305% to successfully implemented, 1 st Commissioned 2 projects in 2018: 39 million ounces scheme, amongst others Dynamic leaching Plant at • Pyrites Plant at Saucito • Gold Reserves up 225% Herradura and Ciénega • • ~95% Organic Growth 2nd Dynamic Leaching Plant at • Improved recovery rates at Herradura • Strong pipeline of projects Herradura including Juanicipio , due to be commissioned mid 2020 Figures stated relate from IPO to year end 2017
BALANCING GROWTH WITH RETURNS 6 INVESTING IN GROWTH GROWTH OUTCOME RETURNS Total Exploration Expenses from the Increase in silver equivalent EBITDA last decade (2008 to 2017) resources (2007-2017) (2008 to 2017) US$ 1,570.0 million 4,458.5 million ounces* Total EBITDA – US$ 8,570m Average EBITDA – US$ 857m (Increase of 158%) Average EBITDA margin – 53% Total CAPEX from the last decade Production growth Total Dividends Paid since IPO (2008 to 2017) (2007 to 2017) (2008 to 2017) US$ 2,492.2 million Silver – 69% US$ 4,281.8 million Gold – 225% *Measured, Indicated and Inferred resources, considering a Gold/Silver ratio of 74. Includes resources mined and processed.
FRESNILLO AT A GLANCE 7 A DECADE OF PRODUCTION AND RESOURCE GROWTH PER SHARE 140 180 Production (Eq Ag oz) per thousand shares 160 PRODUCTION (EQ AG MOZ) Production (Eq Ag oz) per 120 PRODUCTION 140 thousand shares 100 120 80 100 80 60 60 40 40 20 20 - - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 6,000 8 Resources (Eq Ag oz) per share 7 Resources (Eq Ag oz) per share 5,000 RESOURCES (EQ AG MOZ) 6 RESOURCES 4,000 5 3,000 4 3 2,000 2 1,000 1 - - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Silver : Gold 74 : 1
2017 FULL YEAR & 1H18 RESULTS - HIGHLIGHTS 8 1000 1,200 1,200 70 PRODUCTION (MOZ) 800 60 PRODUCTION (KOZ) 900 US$ MILLION 900 50 US$ MILLION 600 40 600 600 30 400 20 300 300 200 10 0 - 0 - 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 SILVER PRODUCTION GOLD PRODUCTION EBITDA CASH FLOW FROM OPERATIONS 500 33 600 600 PRODUCTION (MOZ) 30 PRODUCTION (KOZ) 450 480 US$ MILLION 480 US$ MILLION 27 400 360 360 24 350 240 240 21 300 120 120 18 15 0 0 250 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 1H15 1H16 1H17 1H18 HALF YEAR SILVER PRODUCTION HALF YEAR GOLD PRODUCTION HALF YEAR EBITDA HALF YEAR GROSS PROFIT
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