Performance

Production Report - 1H22

Octavio Alvídrez, Chief Executive Officer, said: “We have remained committed to our purpose during the year, with the safety and wellbeing of our people the key priority in every decision we make as a company. Though the impact of the pandemic has reduced over time, the recent fifth wave in Mexico highlights how we must continue to support our people and our communities, in particular as we face new uncertainties in these challenging times. “We have proactively addressed these challenges and I am pleased to report a good financial performance in the first half. The actions we have taken to implement the Mexican labour reform have been effective. We are on track to complete the staffing process at Fresnillo and San Julián by the end of 3Q22, and at Ciénega and Saucito by year end, despite a tight labour market. The global supply chain bottlenecks that so many industries are facing, together with cost inflation will have some impact in the second half. However, we are confident in our ability to weather these short term challenges, without limiting our ambitious longer term growth plans. We look forward to achieving connection to the electricity grid at Juanicipio in the coming weeks, and rapidly ramping up production, while also continuing to develop the Rodeo and Orisyvo mining projects. “We benefit from a consistent strategy, exceptional assets, an exciting growth pipeline and a very strong balance sheet. We are well placed to deliver on our objectives this year. We look forward with determination and confidence."  Read full release »


Financial Highlights (1H22 vs 1H21)

  • Adjusted Revenues1 of US$1,349.0m, down 12.6%; 91% of this mainly due to lower gold volumes and 9% due to lower silver prices.
  • Revenues of US$1,259.1m, down 14.2%.
  • Gross profit and EBITDA2 of US$365.9m and US$459.1m, down 39.7% and 38.5%, respectively.
  • Profit from continuing operations before net finance costs and income tax and profit before income tax of US$218.2m and US$155.2m, down 53.8% and 65.1%, respectively.
  • Profit for the period of US$141.0m, down 54.3%.
  • Basic and diluted EPS from continuing operations of US$15.9 cents per share, down 61.2%.
  • Adjusted EPS3 of US$19.4 cents per share, down 53.1%.
  • Cash generated from operations, before changes in working capital, of US$459.5m, down 38.8%.
  • Free cash flow4 of US$93.5m in 1H22 (US$305.1m in 1H21).
  • Strong balance sheet with cash and other liquid funds5 as at 30 June 2022 of US$1,151.9m (31 December 2021: $1,235.3m); net debt/EBITDA of 0.02x6 (31 December 2021: -0.06x).
  • Interim dividend of 3.40 US cents per share, totaling US$25.1m (1H21: 73.0m).

1Adjusted revenues are revenues shown in the income statement adjusted to add back treatment and refining charges and the effects of metals prices 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 profit for the year from continuing operations before income tax, less finance income, plus finance costs, less foreign exchange gain/(loss), less revaluation effects of the Silverstream contract and other operating income plus other operating expenses and depreciation. 3Prior to Silverstream valuation effects. 4Free cash flow calculated as net cash flow after effect of foreign exchange on cash, less dividend payments. 5Cash and other liquid funds disclosed in note 18(d) to the Financial Statements 6Net Debt is calculated as debt at 30 June 2020 less Cash and other liquid funds at 30 June 2020 divided by the EBITDA generated in last 12 months.

Operational Highlights (1H22 vs 1H21)

  • First half attributable silver production of 27.6 moz (including Silverstream), up 0.4% vs. 1H21.
  • First half attributable gold production of 308.8 koz, down 27.9% vs. 1H21.
  • We expect to complete the tie-in of the Juanicipio plant and Pyrites Plant at Fresnillo to the national electricity grid in the coming weeks. Commissioning of the Juanicipio plant will follow soon after with the ramp up of the plant beginning towards the end of the third quarter.
  • Ongoing focus on costs control and productivity.

Covid-19 update

We saw a drop in Covid-related absenteeism across our operations from March onwards following the arrival of the fourth wave of Covid towards the end of 2021, and have seen a more limited impact on our operations during 2Q22. Despite continuing to implement strict protocols to limit the spread of the virus, a fifth wave has now reached Mexico and we are seeing a rise in positive cases in the country. Should this trend continue, we will see an increase in Covid-related absenteeism in the second half. The safety and well-being of our people is our priority, and we continue to closely monitor the spread of the virus and implement a range of safety measures across our business.

2022 outlook

We remain on track to meet our 2022 full year guidance of 50.5 to 56.5 moz of attributable silver (including Silverstream) and 600 to 650 koz of attributable gold production.

Total Production

 

2Q22

1Q22

% change

2Q21

% change

1H22

1H21

% change

Silver (koz)

13,664

12,528

9.1

14,092

(3.0)

26,192

25,931

1.0

Silverstream (koz)

692

748

(7.5)

803

(13.8)

1,440

1,599

(9.9)

Total Silver (koz)

14,356

13,276

8.1

14,895

(3.6)

27,632

27,530

0.4

Gold (oz)

158,960

149,792

6.1

200,163

(20.6)

308,752

428,356

(27.9)

Lead (t)

14,535

12,244

18.7

16,386

(11.3)

26,779

31,726

(15.6)

Zinc (t)

26,808

23,726

13.0

27,687

(3.2)

50,533

53,568

(5.7)


Financial Performance

 

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

Total attributable silver
production incl. Silverstream (Moz)

53.1

53.1

54.6

61.8

58.7

53.0

47.0

45.0

43.0

41.0

Attributable Gold Production (koz)

751.2

769.6

875.9

922.5

911.1

935.5

761.7

596.0

425.8

473.0

EBITDA (millions of US$)

1,206.3

1,169.1

674.0

915.1

1,060.1

1,032.0

547.5

567.3

729.8

1,315.3

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

1,208.3

1,168.7

685.5

930.7

1,073.7

1,023.3

537.3

568.5

750.2

1,356.7


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
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.