Performance

Production Report - 2Q19

Octavio Alvídrez, Chief Executive Officer, said: “Production has continued to recover towards target levels since the first quarter as we begin to see the positive impact of operational measures and investments we have made into infrastructure, equipment and infill drilling, in particular at our Fresnillo and Saucito mines. The improvement and growth initiatives at all our operations, combined with the impact of the change to the accounting treatment of stripping costs at Herradura, have resulted in higher costs for the period. 
I was pleased to have confirmed Board approval for our next major growth project; the Juanicipio mine. Since then, progress on Juanicipio has been rapid with multiple engineering milestones delivered, and construction on track for our 2020 year-end commissioning target. As previously guided, we expected 2019 to be challenging and we remain cautious. We have therefore decided to reduce our full year production guidance, driven by lower-than-expected ore grades and ore throughput at the Fresnillo mine, a delay in the construction of a leaching pad at Herradura and the lower ore throughput at the dynamic leaching plant. However, we will continue to work hard to ensure the improvements we have seen this quarter are maintained in the second half of the year.”

2Q19 Highlights

  • Quarterly silver production of 14.4 moz (including Silverstream) up 9.7% vs. 1Q19 driven by higher ore grades and volume of ore processed at both Fresnillo and San Julián Disseminated Ore Body (DOB), and higher recovery rates at Saucito.

  • Quarterly silver production (including Silverstream) down 6.0% vs. 2Q18 due to expected lower ore grade and volume of ore processed at Saucito, and lower ore grade at Fresnillo

  • First half silver production (including Silverstream) down 10.4% vs. 1H18 due to lower volumes of ore processed and lower ore grades at both Fresnillo and Saucito

  • Quarterly gold production of 221.3 koz, up 4.8% vs. 1Q19 mainly due to a higher volume of ore processed and higher grade at Noche Buena and Fresnillo, and an increased ore grade and higher recovery rate at Herradura.

  • Quarterly gold production down 5.4% vs. 2Q18 as a result of a lower volume of ore processed at Noche Buena and lower ore grade and ore processed at Saucito.

  • First half gold production down 7.1% vs. 1H18 primarily driven by a lower volume of ore processed at Noche Buena and lower speed of recovery and ore processed at Herradura.

  • Quarterly by-product lead production increased 7.5% vs. 1Q19 due to a higher volume of ore processed and higher ore grade at Fresnillo. Quarterly and first half lead production remained at similar levels vs. 2Q18 and 1H18.

  • Quarterly by-product zinc production decreased 5.0% vs. 1Q19 driven by lower grades at Saucito, mitigated by a higher ore grade at Fresnillo and Ciénega. Quarterly by-product zinc production decreased 6.2% vs. 2Q18 due to a lower ore grade and volume of ore processed at Saucito and lower ore grade and recovery rate at Fresnillo. First half by-product zinc production increased 3.3% vs. 1H18 due to higher grades and recovery rates at both Saucito and Ciénega, offset by a lower ore grade and rate of recovery at Fresnillo.

 

FY18 Full Year Gold Silver Production                 FY18 Cash Flow Dividends

Total Production

 

2Q19

1Q19

% change

2Q18

1H19

1H18

% change

Silver (koz)

13,636

12,372

10.2

14,459

26,009

28,694

-9.4

Silverstream (koz)

782

766

2.1

884

1,548

2,070

-25.2

Total Silver (koz)

14,418

13,138

9.7

15,343

27,557

30,764

-10.4

Gold (oz)

221,307

211,110

4.8

233,841

432,417

465,299

-7.1

Lead (t)

13,039

12,125

7.5

13,223

25,164

24,853

1.3

Zinc (t)

20,654

21,752

-5.0

22,014

42,406

41,054

3.3


Financial Performance

 

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Total attributable silver production incl. Silverstream (Moz)

61.8

58.7

53.0

47.0

45.0

43.0

41.0

41.9

42.1

41.3

34.8

Attributable Gold Production (koz)

922.5

911.1

935.5

761.7

596.0

425.8

473.0

448.9

369.0

276.6

263.6

EBITDA (millions of US$)

915.1

1,060.1

1,032.0

547.5

567.3

729.8

1,315.3

1,538.5

945.0

496.6

337.4

Cash flow from operating activities before changes in working capital (millions of US$)

930.7

1,073.7

1,023.3

537.3

568.5

750.2

1,356.7

1,612.1

983.6

548.8

405.8


Decade of progress and achievement

Prelims 27FEB17 Decade Of Progress And Achievement

Key Commitments and Targets

1. Explore » Ensure business continuity and growth by replenishing depleted reserves and maintaining a robust growth pipeline
Deploy US$140 million in exploration investment; evaluate early-state acquisitions and maintain reserves for 10 years. Ensure organic growth and assess key acquisition opportunities.
2. Develop » Deliver growth through development projects 
Deliver profitable growth by advancing new projects towards commissioning, whist optimising cash flow and returns. Maintain track record of delivery on time and on budget and focus on CAPEX control as well as specialised engineering and construction teams. 
3. Operate » Maximise the potential of exisiting operations 
Maximise our potential of exisiting operations whilst maintaing our position as leading low cost producer. Operate at 100% capacity and remain a low-cost producer whilst optimising mining methods and metallurgy to maintain high recovery rates. 
4. Sustain » Advance and enhance the sustainability of our business and uphold our licence to operate 
Strengthen our safety performance with zero tolerance for non-compliance, and increase investment and support for training and oversight. Improve general health and minimise environmental impact whilst maintaining sound relations within our communities.