Performance

First Half Interim Results - 1H18

Octavio Alvídrez, Chief Executive Officer, said: “I am pleased to report a robust performance in the first half, with silver and gold production both up in the period, and our new San Julián (phase II) mine making a strong contribution to overall production, while gold production at Herradura continues to outperform. We have marginally adjusted full year production guidance to reflect a stronger performance in gold and short term challenges at our silver operations though consolidated guidance remains unchanged. In line with our strategy to actively manage and strengthen our asset portfolio, we are making good progress on the broader development pipeline which continues to provide a strong foundation for long term sustainable growth. The Pyrites Plant at Saucito has been commissioned and final testing at the Second Dynamic Leaching Plant is on track. Both projects will make a meaningful contribution to overall 2018 production. Once again we have maintained an extensive exploration programme during the first half and remain confident these proactive activities will provide a solid foundation on which our long term future growth will be built. We continue to believe the vast potential of our exploration pipeline is a core differentiators for Fresnillo. Looking ahead, we remain confident in our full year expectations. We will continue to maintain this disciplined approach to investment, to support our strategy and deliver shareholder returns. We are focused on efficiency and controlling costs to underpin projects, while driving performance improvements at our mines.”

Financial highlights (1H18/1H17 comparisons)

  • Adjusted revenues1 of US$1,189.9m, up 11.3%

  • Gross profit and EBITDA2 of US$502.2m and US$566.9m, up 9.2% and 8.5%, respectively

  • Silverstream valuation, a non-cash item, had an adverse effect on profit before income tax, which came down 16.6% to US$323.0m

  • In addition, profit for the period of US$229.3m, down 26.1%, was adversely impacted by changes in the MXP/USD exchange rate and inflation rate on deferred taxes (non-cash item)

  • Basic and diluted EPS from continuing operations of US$31.2 cents per share, adjusted EPS of US$33.3 cents per share, down 25.5% and 9.3%

  • Cash generated from operations, before changes in working capital of US$575.9m, up 6.6%

  • Net cash from operating activities of US$366.6m, up 3.5%

  • Strong balance sheet with cash and other liquid assets as at 30 June 2018 of US$708.6m

  • Interim dividend of US$78.8m (10.7 US cents per share)

Operational highlights (1H18/1H17 comparisons)

  • Silver production of 30.8 moz (including Silverstream), up 9.7%, and gold production of 465 koz, up 4.4%

  • Ongoing tests at Herradura leaching pads resulted in increase of 98.9 koz gold in inventory as of 1 January 2018

  • Full year consolidated production guidance marginally revised: total gold production 900 – 930 koz (previously 870 – 900 koz) and total silver production 64.5 – 67.5 moz (previously 67 – 70 moz) including Silverstream

  • Pyrites plant at Saucito commissioned with minimal delays and on budget

  • Final testing of second line dynamic leaching plant on track with commercial production expected 3Q18.

1H18 Half Year Gold Silver Production1H18 Gross Profit Ebitda

Total Production

 

2Q18

2Q17

% change

1Q18

1H18

1H17

% change

Silver (koz)

14,459

13,328

8.5

14,235

28,694

25,752

11.4

Silverstream (koz)

884

1,188

-25.6

1,186

2,070

2,292

-9.7

Total Silver (koz)

15,343

14,515

5.7

15,421

30,764

28,044

9.7

Gold (oz)

233,841

223,479

4.6

231,458

465,299

445,769

4.4

Lead (t)

13,223

11,385

16.1

11,629

24,853

22,846

8.8

Zinc (t)

22,014

14,919

47.6

19,040

41,054

28,725

42.9


Financial Performance

 

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Total attributable silver production incl. Silverstream (Moz)

58.7

53.0

47.0

45.0

43.0

41.0

41.9

42.1

41.3

34.8

Attributable Gold Production (koz)

911.1

935.5

761.7

596.0

425.8

473.0

448.9

369.0

276.6

263.6

EBITDA (millions of US$)

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$)

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$200 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.