Performance

Half Year Interim Results - 1H19

Octavio Alvídrez, Chief Executive Officer, said: “As we previously disclosed in our second quarter production report, continued challenges at our Fresnillo, Saucito and Herradura mines, combined with higher costs, have impacted profitability for the period. Following the measures put in place, we have seen some short term improvement in mine performance at both Fresnillo and Saucito and we expect to see a gradual improvement in the following quarters, albeit not at the rate we had anticipated. We have therefore adjusted our full year production forecasts in the second quarter production report. Performance of the business in the first half has not met our expectations. I am however encouraged that the steps we are taking, the targeted, albeit downsized compared to last year exploration programme and the progress on nearer term growth projects, give us greater confidence in the medium term outlook. A key strength of Fresnillo is our ability to invest through the economic cycle. Our exploration programme continues to produce good results and we are working hard to convert resources into reserves. The Orisyvo and Centauro projects alone have the potential to be significant contributors to the future value of the group and yet are only a small proportion of our overall pipeline. Meeting the challenge of improving our near term performance however is key. We are committed to working through these short term issues, returning the Fresnillo and Saucito mines to growth and increasing efficiencies, completing the Juanicipio construction on time and on budget and then delivering on the potential of our development pipeline.” Read full release »

Financial Highlights

  • Adjusted revenues1 of US$1,069.0m, down 10.2%; 55% of this due to lower volumes and 45% due to lower prices

  • Gross profit and EBITDA2 of US$205.5m and US$307.9m, down 59.1% and 45.7%, respectively

  • Profit for the period of US$70.9m, down 69.1%

  • Basic and diluted EPS from continuing operations of US$9.5 cents per share, adjusted EPS of US$8.4 cents per share, down 69.4% and 74.8% respectively

  • Cash generated from operations, before changes in working capital of US$316.1m, down 45.1%

  • Strong balance sheet with cash and other liquid funds3 as at 30 June 2019 of US$362.1m

  • 2019 capex has been revised and reduced to US$655m

  • Interim dividend of US$19.2m (2.6 US cents per share)

    1Adjusted revenues are the revenues shown in the income statement adjusted to add back treatment and refining costs and the effects of gold, lead and zinc hedging. The Company considers this is a useful additional measure to help understand underlying factors driving revenue in terms of volumes sold and realised prices. 2Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as gross profit plus depreciation less administrative, selling and exploration expenses.  3Cash and other liquid funds are disclosed in note 18(d) to the Financial Statements.

Operational Highlights

  • Silver production of 27.6 moz (including Silverstream), down 10.4%, and gold production of 432 koz, down 7.1%.

  • Construction of Juanicipio remains on track to be concluded by the end of 2020.

  • Construction of pyrites plant (phase II) at Fresnillo continued to progress, commissioning expected by end of 2020.

  • Optimisation of the Fresnillo flotation plant to cope with higher content of lead and zinc is progressing according to plan and is expected to be concluded by 2H20.

  • A programme to control costs and further operational measures to increase productivity will be deployed in 2H19.

 

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.