Fresnillo plc Capital Markets Day

RNS Number : 2441V

Fresnillo PLC

02 December 2019

 

                                                                                                        Fresnillo plc

21 Upper Brook Street

London W1K 7PY

United Kingdom

www.fresnilloplc.com

2 December 2019

FRESNILLO PLC CAPITAL MARKETS DAY

Focus on stabilising production, improving operational performance and project delivery

At a Capital Markets Day in London today, Fresnillo plc's ("Fresnillo" or "the Group") CEO Octavio Alvídrez and members of his senior management team including CFO Mario Arreguín, VP Exploration David Giles and COO Andre Sougarret, will provide an update on the Group's current operational performance and set out key management priorities for 2020. The presentation will include detail on the extensive measures to stabilise and improve production at Fresnillo's mines, as well as on the geological models, exploration, development projects, capex and costs.

Octavio Alvídrez, Chief Executive said:

"Our priorities for 2020 are to stabilise production, and to unlock the full potential of our current mines and projects. We will focus on operational improvement and efficiency, while de-risking and advancing our development pipeline, most notably the new Juanicipio mine. We are confident that with the proactive measures put in place at our mines, together with our consistent, focused strategy, we will deliver on these priorities and that we will continue to create sustained value for stakeholders in the long-term, balancing growth with returns and maintaining a solid financial position."

Fresnillo will also set out its broader ESG strategy in full, including its enhanced approach to safety, an update on its tailings dam management, how it works with the indigenous groups and local communities, its commitment to reducing its carbon footprint through efficiencies and the greater use of wind power, and an extensive water stewardship strategy.

Key points from the presentation include:

Overall production outlook

The figures below represent management's best estimate of likely production, based on the current geological models and anticipated production improvements.

·   Fresnillo has narrowed its 2019 outlook to c. 885koz ±1% of gold and c. 55moz ±1% of silver, both within stated guidance.

·    In 2020, Fresnillo expects to produce c. 54moz ±5% of silver and c. 857koz ±5% of gold.

·    In 2021, Fresnillo expects to produce c. 66moz ±5% of silver and c. 785koz ±5% of gold.   

·    In 2022, Fresnillo expects to produce c. 71moz ±5% of silver and c. 665koz ±5% of gold.

The increase in silver production is explained by operation improvements at the Fresnillo mine, the Pyrites plant, Juanicipio and San Julián. 

The decrease in gold production is driven by the planned Noche Buena closure and lower production from Herradura.

Detailed mine by mine outlook:

SILVER OUTLOOK*	Production (Moz)		Grade (g/t)
	2019 ±1%	2022 ±5%	2019 ±1%	2022 ±5%
Fresnillo (inc. pyrite plant)	13.2	21.0	190	215
Saucito (inc. pyrite plant)	18.4	18.0	227	211
San Julián (Veins)	4.3	4.7	115	145
San Julián (Disseminated Ore Body)	8.6	11.4	139	197
Ciénega	5.9	6.2	162	181

*excludes contributions from Herradura and Juanicipio

GOLD OUTLOOK**	Production (Koz)		Grade (g/t)
	2019  ±1%	2022 ±5%	2019 ±1%		2022 ±5%
San Julián (Veins)	62.1	39.0	1.6		1.4
San Julián (Disseminated Ore Body)	2.4	2.5	0.1		0.1
Ciénega	63.8	67.5	1.6		1.8
Herradura	474.0	343.0	0.51	1.52	0.71	1.12
Noche Buena	141.0	34.0	0.56		0.53
1  Heap Leach 2  Dynamic Leaching Plant

**excludes contributions from Fresnillo, Saucito, Juanicipio and Pyrites

Capex

The following figures only include sustaining capex from current operations and growth capex of projects approved by the Board.

·    Total capital expenditure in 2019 is expected to be US$585 million with around US$65 million from Juanicipio being rescheduled into 2020.

·    Sustaining and new project capex in 2020 is expected to be around US$670 million, due to further investment across our current operations, offset by the deferral of projects for approval (Orisyvo and Ciénega Expansion) as we focus on current operations.

·    Sustaining and new project capex forecast for 2021 is expected to be around US$475 million.

·    A forecast for 2022 is included for the first time at around US$415 million.

Presentation and Webcast

The presentation and webcast for the Capital Markets Day will be available at www.fresnilloplc.com.

-Ends-

For further information, please visit our website www.fresnilloplc.com or contact:

FRESNILLO PLC      London Office                         Gabriela Mayor, Head of Investor Relations Patrick Chambers	Tel: [phone]
Mexico City Office Ana Belem Zárate	Tel: [phone]
POWERSCOURT Peter Ogden	Tel: [phone]

ABOUT FRESNILLO PLC

Fresnillo plc is the world's largest primary silver producer and Mexico's largest gold producer, listed on the London and Mexican Stock Exchanges under the symbol FRES. Fresnillo plc has seven operating mines, all of them in Mexico - Fresnillo, Saucito, Ciénega (including the San Ramón satellite mine), Herradura, Soledad-Dipolos¹, Noche Buena and San Julián (Phase I and II), two development projects - the Pyrites Plant at Fresnillo and Juanicipio, and three advanced exploration projects - Orisyvo, Las Casas Rosario & Cluster Cebollitas and Centauro Deep, as well as a number of other long term exploration prospects.  Fresnillo plc has mining concessions and exploration projects in Mexico, Peru and Chile. Fresnillo plc has a strong and long tradition of exploring, mining, a proven track record of mine development, reserve replacement, and production costs in the lowest quartile of the cost curve for silver. Fresnillo plc's goal is to maintain the Group's position as the world's largest primary silver company and Mexico's largest gold producer.

¹ Operations at Soledad-Dipolos are currently suspended.

FORWARD LOOKING STATEMENTS

Information contained in this announcement may include 'forward-looking statements'. All statements other than statements of historical facts included herein, including, without limitation, those regarding the Fresnillo Group's intentions, beliefs or current expectations concerning, amongst other things, the Fresnillo Group's results of operations, financial position, liquidity, prospects, growth, strategies and the silver and gold industries are forward-looking statements. Such forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of the Fresnillo Group's operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates, may differ materially from those described in, or suggested by, the forward-looking statements contained in this document. In addition, even if the results of operations, financial position and liquidity, and the development of the markets and the industry in which the Fresnillo Group operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations (including the US dollar and Mexican Peso exchanges rates), the Fresnillo Group's ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, changes in its business strategy and political and economic uncertainty.

LEI: 549300JXWH1UV5J0XV81

 

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