Quarterly Production Report  - 3Q17

Octavio Alvídrez, Chief Executive Officer, said: “I am pleased to report a good operating performance this quarter. 
In particular, the positive contribution from the new San Julián mine has driven the expected rise in silver production. 
San Julián Phase II was commissioned on time and on budget, and the project reached nameplate capacity as expected during the quarter, again highlighting our ability to bring new mining projects to fruition. We continue to implement our turnaround plan at the Fresnillo mine and now expect an increase in silver production for the year of between seven and eight per cent. The combination of a strong performance from San Julián and continued decrease in inventories at Herradura also drove a rise in gold production and more than offset lower recoveries and grades at Noche Buena and Ciénega respectively. We remain on track to meet our gold and silver production targets for 2017. Construction of our other near term growth projects, the pyrites plant in the Fresnillo district and the second dynamic leaching plant at Herradura are on schedule, on budget and in line to be commissioned next year as planned. Both will make a meaningful contribution to production growth in 2018.” 

  • Quarterly silver production of 14.6 moz (including Silverstream), up 24.1% vs. 3Q16 (11.8 moz) primarily due to the start of operations at San Julián phase II and ramp up of phase I
  • YTD silver production of 42.7 moz (including Silverstream), up 15.3% vs. YTD16 (37.0 moz), due to the contribution from the new San Julián mine (phase I and II), increased volume of ore processed at Fresnillo and higher ore grade at Ciénega
  • Quarterly gold production of 233 koz, up 6.1% vs. 3Q16 (220 koz) due to the contribution from San Julián, a reduction in gold inventories and increased volume of ore deposited at Herradura
  • YTD gold production of 679 koz, up 1.7% vs. YTD16 (667 koz) due to the contribution of San Julián partly offset by the lower speed of recovery at Noche Buena and lower ore grades at Herradura and Saucito
  • Ore processing nameplate capacity at San Julián phase II achieved during its first quarter of operations (3Q17)
  • Outlook unchanged: on track to achieve 2017 production guidance of 58-61 moz silver (including Silverstream) and 870-900 koz gold

Total Production

  3Q17 3Q16 % change 2Q17 YTD17 YTD16 % change
Silver (koz) 13,529 10,607 27.5 13,328 39,281 33,431 17.5
Silverstream (koz) 1,084 1,168 -7.2 1,188 3,376 3,556 -5.1
Total Silver (koz) 14,613 11,775 24.1 14,515 42,657 36,987 15.3
Gold (oz) 233,311 219,840 6.1 223,479  679,081 667,409 1.7
Lead (t) 12,472 12,473 -0.0 11,385 35,318 35,141 0.5
Zinc (t) 17,688 14,476 22.2 14,919 46,413 39,856 16.5

Operational Highlights

1H17/1H16 comparisons

  • Silver production of 28.0 moz (including Silverstream), up 11.2%, and gold production of 446 koz, broadly in line
  • Construction of San Julián (phase II) completed on time and on budget and commercial production began in mid-July
  • The turnaround plan at the Fresnillo mine continues to show good signs as volume of ore processed increased for the fourth consecutive quarter
  • On track to achieve 2017 production target of 58-61 moz silver (including Silverstream) and 870-900 koz gold
(US$ million unless stated)  1H17 1H16 % change
Silver Production (koz)* 28,044 25,212 11.2
Gold Production (oz) 445,769 447,569 -0.4
Total revenues 995.8 886.9 12.3
Adjusted revenues1
1,069.5 959.4 11.5
Exploration expenses 64.2 52.1 23.4
522.5 474.0 10.2
Profit for the period 310.1 165.6 87.2
Cash generated by operations before changes in working capital 540.3 475.2 13.7
Basic and Diluted EPS (US$)3
0.419 0.227 84.6
Dividend per ordinary share (US$) 0.106 0.086 23.3

*Silver production includes volumes realised under the Silverstream Contract. 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. 3The weighted average number of shares for H1 2017 and H1 2016 was 736.9m. See Note 8 in the Interim Consolidated Financial Statements.

Financial Performance

Total attributable silver production incl Silverstream (Moz) 53.0 47.0 45.0 43.0 41.0 41.9 42.1 41.3 34.8
Attributable Gold Production (koz) 935.5 761.7 596.0 425.8 473.0 448.9 369.0 276.6 263.6
EBITDA (in millions of US$) 1,032.0 547.5 567.3 729.8 1,315.3 1,538.5 945.0 496.6 337.4
Cash flow from operating activities before changes in working capital (millions of US$) 1,023.3 537.3 568.5 750.2 1,356.7 1,612.1 983.6  548.8 405.8

Key Commitments and Targets

    1. Operations » Maximise the potential of existing operations
      Operate at 100% capacity and remain a low-cost producer whilst optimising mining methods and metallurgy to maintain high recovery rates.
    2. Development » Deliver growth through development projects
      Maintain track record of delivery on time and on budget and focus on CAPEX control as well as specialised engineering and construction teams.
    3. Exploration » Extend the growth pipeline
      Deploy US$160 million in exploration investment; evaluate early-state acquisitions and maintain reserves for 10 years. Ensure organic growth and assess key acquisition opportunities.
    4. Sustainability » Advance and enhance the sustainability of our business
      Strengthen our safety performance with zero tolerance for non-compliance, and increased investment and support for training and oversight. Improve general health and minimise our environmental impact whilst maintaining sound relations within our communities.