HSBC 6th Annual LATAM Conference

Transcription

1 Driving Long-Term Value from Solid Foundations HSBC 6th Annual LATAM Conference June, 2016, New York, U.S. Gabriela Mayor, Head of IR LSE:Fres BMV:Fres

2 Disclaimer This document includes statements that are, or may be deemed to be, forward-looking statements. These forwardlooking statements can be identified by the use of forward-looking terminology, including the terms believes, estimates, plans, projects, anticipates, expects, intends, may, will, or should or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include, but are not limited to, statements regarding the Fresnillo Group s intentions, beliefs or current expectations concerning, among other things, the Fresnillo Group s results of operations, financial position, liquidity, prospects, growth, strategies and the silver and gold industries. By their nature, 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 forwardlooking 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 exchange 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, political and economic uncertainty. Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in this document speak only as of the date of this document, reflect the Fresnillo Group s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Fresnillo Group s operations, results of operations, growth strategy and liquidity. Investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment decision. Subject to the requirements of the Prospectus Rules, the Disclosure and Transparency Rules and the Listing Rules or applicable law, the Fresnillo Group explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this document that may occur due to any change in the Company s expectations or to reflect events or circumstances after the date of this document. 2

3 Fresnillo at a Glance Location HERRADURA DISTRICT Key Highlights World s largest silver producer (47 moz in 2015) and Mexico s second largest gold producer (762 koz in 2015) ORISYVO Market cap of US$12.5 billion* CIÉNEGA DISTRICT Fresnillo plc mines (6 and a satellite mine)** Development projects (2) Advanced exploration projects (4) Exploration prospects SAN JULIÁN FRESNILLO DISTRICT Silver resources of 2 billion ounces and gold resources of 36 million ounces Mining concessions of 2 million hectares in Mexico Cash costs and AISC amongst the lowest in the industry Substantial, high quality project pipeline and strong commitment to disciplined and sustainable growth Focus on projects that can be developed into low-cost, worldclass mines * As at 15 June 2016 ** Operations at Soledad-Dipolos are currently suspended 3

4 Our Business Model and Strategy Our Business Model supported by four strategic pillars to create value 1. Maximise potential of existing operations Operate at 100% capacity Low-cost producer Optimise mining method and metallurgy to maintain high recovery rates 2. Deliver growth through development projects Track record of delivery on time and on budget Focus on CAPEX control Specialised Engineering and Construction team 3. Extend the growth pipeline Evaluate early-state acquisitions Maintain reserves for 10 years Ensure organic growth and assess key acquisition opportunities 4. Advance sustainable development Improve general health Reinforce safety Minimise the environmental impact Maintain sound relations with communities 4

5 2015 Highlights Silver production of 47 moz and gold production of 762 koz Revenues: US$1.4 billion Continued focus on cost control Operating profit: US$200 million EBITDA: US$548 million; EBITDA margin of 38% Capex of US$475 million and exploration expenses of US$140 million Total workforce: 8,034 (52% unionised employees and 48% contractors) Total assets: US$3.9 billion Cash and investments: US$500 million 5

6 Operations Review Fresnillo mine Key operating statistics 2015 Ore processed - mt 2.4 Gold ore grade - g/t 0.57 Silver production moz 15.6 Cost per tonne US$/t 48.2 Gold production koz 34.1 Cash cost - US$/oz 5.6 Silver ore grade - g/t 220 AISC - US$/oz 11.5 Main issues: Veins narrowing faster than expected Natural decline in grade Adverse changes in rock quality Secondary effects: Higher dilution Additional development required Difficulties in planning (inconsistencies) Measures put in place: Infill drilling with closer grid Improved infrastructure planning Adaptation to new mining conditions Turnaround progressing: 3 rd consecutive quarter of improvements in both grade and production (to 236 g/t 1Q16) Development reached 4,500 m/month in 1Q16: increase operational flexibility & continue to improve production levels Move gradually towards operating Fresnillo plant at full capacity once again 6

7 Operations Review(Cont d) Saucito Ciénega Key operating statistics 2015 Ore processed - mt 2.3 Silver production moz 22.0 Gold production koz 84.9 Silver ore grade - g/t 327 Gold ore grade - g/t 1.4 Cost per tonne US$/t 42.5 Cash cost - US$/oz 1.2 AISC - US$/oz 7.1 Key operating statistics 2015 Ore processed - mt 1.3 Gold production koz 85.7 Silver production moz 4.8 Gold ore grade - g/t 2.1 Silver ore grade - g/t 129 Cost per tonne US$/t 63.0 Cash cost - US$/oz 245 AISC - US$/oz 710 Capacity increase to 7,500TPD achieved 1Q16 (installation of vibrating screens) Continue exploration in areas of influence to extend district s mine life 7

8 Operations Review(Cont d) Herradura Noche Buena Key operating statistics 2015 Gold production koz Gold ore grade g/t 0.73 Ore processed mt 22.9 Total volume hauled mt Cost per tonne US$/t 8.7 Cash cost US$/oz 473 AISC - US$/oz 888 Key operating statistics 2015 Gold production koz Gold ore grade - g/t 0.50 Ore processed mt 17.4 Total volume hauled mt 82.4 Cost per tonne US$/t 7.9 Cash cost - US$/oz 973 AISC - US$/oz 1,015 Continue to optimise productivity now steady state reached Continue efforts to increase efficiency and control costs 8

9 Expected Delivery of Growth (1) (2) Expected Avg. Investment Annual (US$m) Production PROJECT YEAR moz Ag & 44 koz Au SAN JULIÁN A CONSTRUCTION LEACHING PLANT CONSTRUCTION FLOTATION PLANT PRODUCTION 30 3 moz Ag FRESNILLO 9,000 TPD (Optimisation project) DETAILED ENGINEERING MINE DEVELOPMENT PLANT ADEQUATION PRODUCTION moz Ag & 13 koz Au A PYRITES PLANT (Optimisation project) DETAILED ENGINEERING LEACHING PLANT CONSTRUCTION CONSTRUCTION TAILINGS FLOTATION PRODUCTION 110 Extended LoM of 390 koz Au CENTAURO EXTENSION A DEVELOPMENT 2ND LINE OF DYNAMIC LEACHING PLANT CONSTRUCTION PRODUCTION 305 (3) 10 moz Ag & 30 koz Au JUANICIPIO BASIC ENGINEERING MINE DEVELOPMENT DETAILED ENGINEERING PLANT CONSTRUCTION PRODUCTION koz Au & 1.3 moz Ag CIENEGA 5,000 TPD (Optimisation project) DETAILED ENGINEERING MINE DEVELOPMENT PLANT CONSTRUCTION PRODUCTION koz Au CENTAURO DEEP DEVELOPMENT PRODUCTION koz Au (4) ORISYVO BASIC ENGINEERING DETAILED ENGINEERING MINE DEVELOPMENT PLANT CONSTRUCTION PRODUCTION (1) Estimated (2) Total average annual production (3) Total investment(of which 56% Fresnillo plc; 44% MAG Silver) (4) On hold A: Approved by theboard 9

10 Approved Projects San Julián Key metric estimates Avg. annual silver production Avg. annual gold production Pre-operative capex Cash cost (average LoM) All-in sustaining costs (average LoM) Phase 1 capacity (DLP to treat ore from veins) Phase 2 capacity (flotation plant to process ore from disseminated ore body) Life of mine 10.3 moz 43.9 koz $515 m $7.77 /oz $9.33 /oz 3,000TPD 6,000TPD 13 years Mining works at vein field concluded Leaching plant (phase 1): further infrastructure progress; testing ongoing at crusher and cell areas and with control system connections, instrumentation and electricity Flotation plant (phase 2): works continue Phase 1 expected to be commissioned 2Q16; phase 2 on track for 4Q16 10

11 Approved Projects San Julián: Commissioning 2Q16 Phase 1 Phase 2 11

12 Approved Projects Pyrites Plant Key metric estimates Avg. annual silver production 3.5 moz Avg. annual gold production Pre-operative capex 12.8 koz $155 m Fresnillo Plant Saucito I Saucito II Cash cost (average LoM) $2.51 /oz Old Tailings Tailings Plant Fe Plant Given improved market conditions approval to place equipment orders and commence construction Filtration Plant Hauling (Truck) Leaching Plant 12

13 Centauro Extension Project Approved 2 nd Line of Dynamic Leaching Plant Key metric estimates Plant capacity Pre-operative capex Overview Centauro Extension project, the natural evolution of the main Centauro pit, approved by the board Encompasses second line of dynamic leaching plant Will enable more efficient processing of sulphides which occur deeper in the pit Cut off grade for sulphides: 0.6g/t (vs. 1.2 g/t for oxides) Economic to process ore in DLP rather than at heap leach above these grades Approx. recovery rate for sulphides: 90% in DLP / 45% heap leach (vs. 90% in DLP / 65% heap leach for oxides) Pit design and LoM material moved unchanged Increase in gold production per year 8,000TPD US$110m 36koz Expected commissioning 2018 Ore type Oxides Mixture Sulphides Board approval granted for Centauro Extension: 2 nd line at DLP to improve processing efficiency as move deeper in pit 13

14 Centauro Extension - 2 nd Line of DLP Cut off grade for Sulphides 14

15 15 Centauro Extension - 2 nd Line of DLP Gold Production Differential Thousand Oz 50 Difference in Gold Production

16 Potential Brownfield Expansions Pyrites Plant Ciénega Optimisation Fresnillo Optimisation Centauro Extension Centauro Deep Description Tailings processing from Fresnillo & Saucito Optimisation project to increase capacity Optimisation project to increase capacity Natural evolution of the Centauro pit at Herradura Potential underground mine beneath the Centauro pit at Herradura Expected avg. annual production Estimated preoperative capex 3.5 moz silver 12.8 koz gold 15 koz gold 1.3 moz silver* 3 moz silver Extended LoM of 390 koz gold 65 koz gold $155 m $55 m* $30 m $110 m $130 m Status Given improved market conditions project to resume: approval to place equipment orders and commence construction Continue to evaluate district s capacity requirements as exploration continues Deliver optimisation once development rates and ore grades warrant Board approval granted, encompassing second line of dynamic leaching plant Additional exploration activities ongoing to accurately delineate the ore bodies Expected commissioning * Assuming a 5,000TPD expansion 16

17 Advanced Exploration Projects Juanicipio (JV with MAG Silver. Fresnillo: 56%) 8km from the Fresnillo mine; Juanicipio s mineral zones are located in silver-gold rich sulphide shoots of the veins. This project will be developed on a stand-alone basis Key metric estimates (100% basis) Avg. annual production 10moz silver 30koz gold Pre-operative capex $305m Indicated & inferred resources First production moz silver 578koz gold Orisyvo Assessing a 8,000TPD mine with a DLP processing facility; focusing on higher grade zones of the gold resource base Key metric estimates Avg. annual production 136koz gold Pre-operative capex $350m Indicated & inferred resources First production moz gold 13moz silver 10% increase in silver resources Conduct detailed engineering PEA complete; however development deferred as part of contingency plan 17

18 Strong Organic Growth Pipeline Mine Operations 2016 Budget: c.us$ m Fresnillo Saucito 27% Herradura Nochebuena Ciénega - San Ramón Soledad &Dipolos* Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines Development Projects San Julián Pyrites Plant 2% Advanced Exploration Orisyvo Juanicipio Cluster Cebollitas Centauro Deep 25% Prospects in drilling Early stage Exploration Fresnillo District Rodeo Guanajuato Tajitos Candameña Guachichil Pilarica (Perú) San Nicolás Guazapares Coneto Lucerito Cebadillas La Yesca Cairo Dátil Norias Sonora and Sinaloa : San Javier Nudo Carina Cerritos Dorado Olivos Chihuahua: S. Brígida Rosetillas SJPinal Lucero Tempisque Uruachic Durango: Pereñita La Huerta El Carmen 46% Zacatecas: Urite Atotonilco Corredor Concha-Nieves Argentum Villa García Perú: Huacravilca Sto. Domingo La Pampa Supaypacha Projects in blue are being prioritised * Operations at Soledad & Dipolos are currently suspended. Systematic Project Generation 18

19 Proven Track Record of Delivering on Time and on Budget Saucito I commissioning ($273m / 9 moz Ag) San Ramón satellite at Ciénega ($20m/ 25 koz Au; 2.5 moz Ag) Commissioning of DLP ($116m / 50 koz Au) Commercial production at Soledad-Dipolos began ($68m / 100 koz Au) Commercial production at Noche Buena began ($63m / 75 koz Au) (Total invested / expected average annual production) Milling capacity expansion at Ciénega ($25m / increase of 180 ktpy) Saucito II commissioning ($235m / 8 moz Ag) 19

20 Expected Silver Production Profile Million Oz 90.0 Attributable Juanicipio - 56% Pyrites Plant San Julián Noche Buena Centauro extension Dynamic Leaching Plant S&D Herradura Ciénega optimisation Ciénega Saucito Fresnillo optimisation Fresnillo Yr Target of 65 moz silver by

21 Expected Gold Production Profile Thousand Oz 1, Attributable Centauro Deep Orisyvo Pyrites Plant Juanicipio - 56% San Julián Saucito Ciénega Optiimisation Ciénega Fresnillo Optimisation Fresnillo Soledad&Dipolos Noche Buena Centauro extension Dynamic Leaching Herradura Yr Target of 750 koz gold by

22 CAPEX Spend Expectations Capital expenditure US$ Million 2016 Sustaining(operations) Fresnillo 102m Saucito 101m Herradura 96m Ciénega 50m Noche Buena 13m Others 3m Sustaining (projects approved) Projects Approved 35m Million Usd San Julián 127m Pyrites Plant 25m Centauro Extension 8m Projects for Approval Juanicipio 26m Fresnillo Optimisation 10m Others 5m Sustaining CAPEX New Projects Approved - Sustaining CAPEX New Projects for Approval - Sustaining CAPEX New Projects Approved - Preoperative CAPEX New Projects for Approval - Preoperative CAPEX 22

23 Well placed to address cyclical uncertainties Conclusions & Outlook

24 Conclusions and Outlook Precious metal prices continue to be volatile However, we are well-placed to withstand this volatility and to reap the benefits of higher prices, supported by our strong foundations Near-term priorities Turnaround at Fresnillo (low double-digit percentage increase expected in 2016 silver production vs. 2015) San Julián commissioning on time and budget (Phase 1: 2Q16, Phase 2: 4Q16) Reinstatement of Pyrites plant project (equipment orders and construction work to resume given improved market conditions) Approval of Centauro Extension project including 2 nd line at DLP (increased gold ore grade in sulphides) Renewed focus on safety (work towards achieving our zero fatalities target) Strategy unchanged; value creation driven by sustainable growth through disciplined development of new projects and ongoing investment in exploration across price cycles Focus remains on controlling expenditures, optimising performance and delivering returns across our mines and projects Remain on track to reach our 2016 production targets: moz of silver (incl. 4 moz from Silverstream) and koz of gold and our long-term strategic goal of 65 moz of silver in

25 Investment Case Strong balance sheet High quality assets Low-cost and flexible operations Disciplined approach to development Commitment to sustainable business practices 25

26 Well placed to address cyclical uncertainties Appendix

27 Income Statement (IFRS) ACCUM DECEMBER CHANGE C O N C E P T (Million USD) 2015 % 2014 % $ % ADJUSTED REVENUES 1, , HEDGING (METALS) ,732.1 TREATMENT AND REFINING CHARGES (142.8) (131.4) (11.4) 8.7 REVENUES 1, , ADJUSTED PRODUCTION COST (634.5) (43.9) (678.0) (48.0) 43.5 (6.4) PROFIT SHARING (12.8) (0.9) (12.6) (0.9) (0.2) 1.4 DEPRECIATION (331.2) (22.9) (296.2) (21.0) (35.0) 11.8 HEDGING (MXP/USD EXCHANGE RATE) (28.6) (2.0) (1.1) (0.1) (27.5) 2,457.9 CHANGE IN INVENTORIES (6.3) (0.4) (111.0) (106.0) OTHERS (9.5) (0.7) 11.5 (121.8) COST OF SALES (1,011.3) (70.0) (892.6) (63.1) (118.7) 13.3 GROSS PROFIT (88.0) (16.9) ADMINISTRATIVE EXPENSES (34.1) (2.4) (34.7) (2.5) 0.5 (1.5) CORPORATE EXPENSES (28.7) (2.0) (32.9) (2.3) 4.2 (12.7) EXPLORATION EXPENSES (140.2) (9.7) (168.8) (11.9) 28.5 (16.9) OTHER INCOME (EXPENSE) (15.9) (1.1) (25.5) (1.8) 9.7 (37.9) SELLING EXPENSES (13.7) (0.9) (13.6) (1.0) (0.1) 0.6 PROFIT FROM CONTINUING OPERATIONS (45.1) (18.4) GOLD HEDGING INCOME / (EXPENSE) N/A SILVERSTREAM AMORTIZATION EFFECTS FOR THE PERIOD (15.3) (41.4) SILVERSTREAM REVALUATION (34.0) (84.8) FINANCE INCOME / (EXPENSE) (39.4) (2.7) (47.2) (3.3) 7.8 (16.5) FOREIGN EXCHANGE GAIN / (LOSS) (36.2) (2.5) (24.4) (1.7) (11.8) 48.2 PROFIT BEFORE INCOME TAX (38.7) (15.4) INCOME TAX EXPENSE (129.0) (8.9) (118.3) (8.4) (10.7) 9.1 MINING RIGHT (14.0) (1.0) (15.7) (1.1) 1.7 (11.1) PROFIT FOR THE PERIOD (47.7) (40.7) ATTRIBUTABLE TO: EQUITY SHAREHOLDERS OF THE GROUP (37.9) (35.0) MINORITY INTEREST (1.1) (0.1) (9.8) N/A (47.7) (40.7) EBITDA (19.8) (3.5) 27

28 Cash Flow (IFRS) CHANGE C O N C E P T (Million USD) YTD 2015 YTD 2014 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL (38.0) (6.6) WORKING CAPITAL 51.3 (260.3) (119.7) INCOME TAX AND PROFIT SHARING PAID (45.8) (183.2) (75.0) NET CASH FROM OPERATING ACTIVITIES OTHER PROCEEDS SILVERSTREAM CONTRACT (19.3) (32.9) PROCEEDS FROM THE SALE OF PROPERTY, PLANT AND EQUIPMENT (8.1) (57.2) CAPITAL CONTRIBUTION OTHERS 1.6 (6.1) 7.7 N/A TOTAL OTHER PROCEEDS (19.4) (27.2) PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (474.7) (425.6) (49.1) 11.5 DIVIDENDS PAID (37.5) (87.0) 49.4 (56.8) NET INTEREST RECEIVED (PAID) (30.5) (38.3) 7.8 (20.3) PURCHASE OF MINORITY SHARES 0.0 (450.5) N/A USES OF CASH (542.8) (1,001.4) (45.8) NET INCREASE / (DECREASE) IN CASH DURING THE PERIOD 52.0 (798.2) (106.5) EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS (1.2) (4.0) 2.8 (70.0) CASH AND CASH EQUIVALENTS AT 01 JANUARY ,251.7 (802.4) (64.1) CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS AT 31 DECEMBER

29 Balance Sheet (IFRS) Change Concept (Million USD) 31-DIC DIC-14 % Assets Cash and Investments Trade and Other Receivables (33.0) Inventories (1.6) Prepaid Expenses (11.6) Silverstream (1.9) Derivative Financial Instruments Property, Plant and Equipment 2, , Other Assets (Long term) (28.8) Total Assets 3, , Liabilities Profit Sharing Other Liabilities (Short term) (29.0) Retirement and Pension Plan Reserves Deferred Taxes Senior Notes N/A Other Liabilities ( Long term) Total Liabilities 1, , Share Capital and Share Premium 1, ,522.4 (24.2) Share Capital Subscribed N/A Retained earnings 1, , Other Accounts (474.4) (512.9) (7.5) Stockholder's Equity 2, , Minority Interest Total Stockholder s Equity 2, , Total Liabilities and Stockholder's Equity 3, ,

30 Cost Per Tonne (IFRS) ACCUM DEC CHANGE COST PER TONNE * % CHG. MINE UNIT Fresnillo US$/TON % Saucito US$/TON % Ciénega US$/TON % Herradura US$/TON 8.68** 9.29** -6.6% Noche Buena US$/TON 7.93** 9.98** -20.5% * Cost per tonne is calculated as total production costs less depreciation, profit sharing and the exchange rate hedging effects. ** Cost per tonne excluding unproductive costs 30

31 Cash Cost (IFRS) ACCUM DEC CHANGE CASH COST * % CHG. MINE UNIT Fresnillo PER OZ. SILVER % Saucito PER OZ. SILVER % Ciénega PER OZ. GOLD (By-prod.) % ** PER OZ. GOLD (Co-prod.) % ** PER OZ. SILVER (Co-prod.) % PER OZ. GOLD (Equiv.) ** % Herradura PER OZ. GOLD % Noche Buena PER OZ. GOLD % * Cash cost per ounce is calculated as total cash cost (cost of sales plus treatment and refining charges less depreciation) less revenues from by-products divided by the silver or gold ounces sold. ** For Ciénega we have also shown the calculation on a co-product basis, and an equivalent ounces basis. The two coproduct lines should be considered together. 31

32 All In Sustaining Cost (US$/Oz)* CASH COST * % CHG. MINE UNIT Fresnillo PER OZ. SILVER % Saucito PER OZ. SILVER % Ciénega PER OZ. GOLD % Herradura PER OZ. GOLD % Noche Buena PER OZ. GOLD 1, , % * All in sustaining cost is calculated as traditional cash cost plus on-site general, corporate and administrative costs, community costs related to current operations, capitalised stripping & underground mine development, sustaining capital expenditures and remediation expenses 32

33 Consolidated Cost Inflation 2015 (USD Based) 33

34 Contribution by Mine and by Metal to the Adjusted Revenues 2015 By mine Adjusted Revenues : US$1,583.3m By metal 11% 20% 5% 4% 28% 39% 52% 30% 11% Fresnillo Saucito Ciénega Herradura Noche Buena Lead Zinc Fresnillo Ciénega Herradura Saucito Noche Buena Consol Gold % % % % % % Silver % % % % % % Lead % % % % Zinc % % % % TOTAL % % % % % 1, % 1 Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges and gold, lead and zinc hendging. Silver Gold 34

35 Breakdown of Adjusted Production Costs Adj Prod Cost: US$634.5m 1 Contractors Operating Materials Energy & Diesel Maintenance Personnel Others Freights Charge for use of contractor s equipment 1 Contractors are hired to execute specific tasks. Fees paid include labour, operating materials, equipment, diesel and any other items required to fulfill such tasks. 35

36 Breakdown of Adjusted Production Costs Adj Prod Cost: US$634.5m Contractors Operating Materials Energy & Diesel Maintenance Personnel Others Freights Charge for use of contractor s equipment 36

37 Breakdown of Adjusted Production Costs 10.68% 5.23% 1.55% 27.72% Adj Prod Cost: US$634.5m 14.95% Contrac Mainten 1 Op Mat Person Energy & Diesel Others Freights % 22.75% 1 Contractors are hired to execute specific tasks. Fees paid include labour, operating materials, equipment, diesel and any other items required to fulfill such tasks. Fresnillo Ciénega Herradura Sol & Dip Saucito Noche Buena Other Consol Personnel % % % % % % % Maintenance and repairs % % % % % % % Operating materials % % % % % % % Diesel % % % % % % (0.27) % Electricity % % % % % % % Total Energy % % % % % % % Contractors % % % % % % (0.34) % Freight % % % % % % % Others % % % (5.01) 0.0% % % % Production Costs % % % (5.09) 0.0% % % % 37

38 Margins by mine (Metal price AISC*) (2015 vs. 2014) (USD/Oz) Cash Cost Fresnillo Saucito Cash Silver Ciénega Herradura Noche Buena Price Cost 1,900 1,629 1,357 1, , , , , , , Gold Price 1,900 1,629 1,357 1, Moz. 14.6Moz. 14.7Moz. 20.3Moz. 97.0Koz. 76.6Koz Koz Koz Koz Koz. Chg % Chg % Chg % Chg % Chg % Ounces Sold Stoppage of operations continued at Soledad-Dipolos *All in sustaining cost 38

39 Operations Fresnillo Mine 2015 Summary Lower silver production Lower grades Lower volumes Improvements in silver grade and production in H2 Lead and zinc production increased 17% and 25% respectively Expected higher ore grades as we go deeper into the mine 2015 Performance % Ore processed k t 2,410 2,625 (8.2) Looking Forward Increase average development rates to over 4,500 m/month Expect double-digit percentage increase in ore milled in 2016 Production Silver m oz (22.3) Gold k oz (4.4) Ore grade Silver g/t (14.9) Gold g/t Cash cost $/ silver oz Silver (g/t) Grade Expectations E average: 240g/t LT average: 260 g/t AISC $/ silver oz

40 Operations Turnaround at the Fresnillo Mine Main issues Secondary effects Measures put in place Expected results/ Short-term targets Veins narrowing faster than expected Natural and expected lower ore grade typical of a mature mine Delays in infrastructure installation Required increase in rate of development proportional to decrease in vein width Higher dilution than expected Infill drilling with a closer grid Improved planning to ensure necessary infrastructure in place on time Increase in stoping area from 12,000 m 2 to 20,000m 2 Expect development rates to reach over 4,500 m / month on average in 2016 Expect double digit percentage increase in ore milled in 2016 Deeper operations & increased distances (longer hauling & hoisting) Adverse change in rock quality Inconsistency in ore body led to lower certainty in geological model, which caused difficulties in mine planning Customise planning process to new mine conditions Volume processed stabilised by 2017 and expansion to 9,000 tpd by 2018 Reach 22 moz/year by 2019 Fresnillo will continue to be a key asset with 65 million tonnes in resources (747 moz of silver), equivalent to a potential 24 years of mine life 40

41 Operations Saucito Mine 2015 Summary Ramp-up of Saucito II by 2Q15 Significantly ahead of plan On budget Silver production increased Start-up of Saucito II & ramp-up Milling efficiencies, higher grade areas, improved dilution Increased Saucito I milling capacity by 20% to 3,600TPD 2015 Performance % Ore processed k t 2,339 1, Looking Forward Increase capacity of Saucito II using vibrating screens in 1H16 Total nominal capacity up to 7,500TPD Production Silver m oz Gold k oz Grade Expectations Ore grade Silver g/t (3.3) Gold g/t Cash cost $/ silver oz (53.4) Silver (g/t) E average: 295g/t LT average: 300 g/t AISC $/ silver oz

42 Operations Ciénega Mine 2015 Summary Gold production decreased on expected lower grade Silver production increased Richer veins at San Ramón satellite High grade development ore from Taspana vein Looking Forward Continue exploration in areas of influence to extend district s mine life 2015 Performance % Ore processed k t 1,329 1,341 (0.9) Production Gold k oz (20.8) Silver m oz Ore grade Gold g/t (20.0) Silver g/t Cash cost $/ gold oz (14.8) AISC $/ gold oz (9.7) Silver (g/t) Gold (g/t) (Gms/T) Grade Expectations E average: 2.0g/t LT average: 2.0g/t 2016E average: 120g/t LT average: 120 g/t 42

43 Operations Herradura Mine 2015 Summary % Ore processed m t Total volume hauled 2015 Performance m t (9.8) Second Merrill Crowe plant commissioned 4Q15 as planned Reached steady state operations (4Q15) Gold production increased Mine & DLP operational for full period Higher overall speed of recovery Installation of second Merrill Crowe plant Increase in ore grade Stabilised gold inventory levels at 160koz (Gms/T) Looking Forward Continue to optimise productivity now steady state reached Grade Expectations Production Gold k oz Ore grade Gold g/t Cash cost $/ gold oz Gold (g/t) E average: 0.65g/t LT average: 0.72 g/t AISC $/ gold oz

44 Operations Noche Buena Mine Gold production increased 2015 Summary Higher rate of recovery (full year of leaching pads 4 & 5) Partly offset by lower ore grade (ore deposited from higher banks to control haulage costs) Further efforts to improve efficiency & control costs Optimisation of tyre consumption Waste dumps relocated to reduce haulage distances % Ore processed m t Total volume hauled Production 2015 Performance m t (11.0) Gold k oz (Gms/T) 0.7 Looking Forward Continue efforts to increase efficiency and control costs Obtain International Cyanide Code certification Grade Expectations Ore grade Gold g/t (3.0) Cash cost $/ gold oz AISC $/ gold oz 1,015 1,051 (3.4) Gold (g/t) E average: 0.47g/t LT average: 0.52 g/t E 2017 E 2018 E 2019 E 2020 E 2021 E 44