First Half 2018 Interim Results July,

Transcription

1 First Half 2018 Interim Results July,

2 Disclaimer This document includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking 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 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 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 Agenda Overview Octavio Alvídrez, CEO Operations, Development Projects & Exploration Octavio Alvídrez, CEO Financial Review Mario Arreguín, CFO Strategy & Outlook Octavio Alvídrez, CEO Q&A 3

4 Overview

5 Investment Case High quality, low-cost, flexible operations Disciplined approach to development Dedicated and experienced management and workforce Strong balance sheet Commitment to sustainable business practices 5

6 Health, Safety, Environment & Community Relations Health Safety Environment Community Relations Occupational Health programme ongoing Health weeks across our mining districts benefitting 11,000 people annually I care, we care programme being implemented across all of our operations 60% of electricity consumption comes from wind power, aim to get to 75% by 2H19 Herradura and Saucito obtained the Environmental Excellence Award Centre for Technical Studies (CETEF) trains mining technicians. Ethical behaviours continue to be embedded throughout the group Our Environment, Social and Governance (ESG) performance was recognised by the inclusion of Fresnillo in the FTSE4 GOOD UK 50 ranking 6

7 1H18 results Financial Highlights Adjusted revenues of US$1,189.9m, up 11.3% Gross profit and EBITDA 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) Cash generated from operations, before changes in working capital of US$575.9m, up 6.6% Strong balance sheet with cash and other liquid assets as at 30 June 2018 of US$708.6m Interim dividend of US$78.8m (10.7 US cents per share) US$ million US$ million Gross Profit 1H15 1H16 1H17 1H18 EBITDA 1H15 1H16 1H17 1H18 7

8 1H18 results Operational Highlights Gold production of 234 koz, up 4.6% vs. 2Q17 Half year Gold Production Gold guidance marginally increased to koz for FY 1H18 silver production of 30.8 moz (including Silverstream), up 9.7% vs. 1H17 Silver guidance marginally reduced to moz silver for FY Pyrites plant has been completed on budget and with minor delays and is now ramping up production Dynamic Leaching Plant complete, currently undergoing final testing Commercial production expected in 3Q18 Ongoing tests at the Herradura leaching pads have resulted in an increase of 98.9 thousand ounces of gold in the inventory as of 1 January guidance in equivalent ounces remains the same Production (moz) Production (koz) H15 1H16 1H17 1H18 Half year Silver Production 1H15 1H16 1H17 1H18 8

9 Consolidated Production Profile Silver Equivalent Ounces Production (eq Ag moz) Consistent strategy of investing in exploration through the cycles Continues to result in increases in resources In turn, providing the Group with a solid foundation from where to continue to grow the quality ounces produced e Silver : Gold 74 : 1 9

10 Operations & Development Projects

11 Operations FRESNILLO Key operating statistics 1H 18 1H 17 Silver production moz Gold production koz Cost per tonne US$/t Cash cost - US$/oz of Ag Reserves 2017 * Resources 2017 * moz Ag, 0.6 moz Au moz Ag, 1.9 moz Au 1H18 Summary 1H18 silver grade of 222 g/t. Full year 2018 silver grade expected to be: g/t US$44.8 million invested in development, infrastructure and sustaining capex Development rate of 3,130 m/m Continued deepening of the San Carlos shaft Reduced costs as a result of vertical conveyor belt 2H18 Priorities Hire a new contractor company Continue investing in infrastructure Tunnel boring machine Million Ounces Increase in annual silver production e *As of December

12 Operations Cont. SAUCITO Key operating statistics 1H 18 1H 17 Silver production moz Gold production koz Cost per tonne US$/t Cash cost - US$/oz of Ag Reserves 2017 * Resources 2017 * moz Ag, 0.7 moz Au moz Ag, 2.1 moz Au 1H18 Summary 1H18 silver grade of 262 g/t. Full year 2018 silver grade expected to be: g/t US$59.2 million invested in development, infrastructure and sustaining capex Additional contractor to increase development rates successfully hired Purchase of smaller equipment to better control dilution Production from Natalias veins continued to ramp up 2H18 Priorities Further reduce dilution Development of the Huizache veins Ramp up Pyrites plant Initiate the deepening of the Jarillas shaft Million Ounces Annual silver production e *As of December

13 Operations Cont. SAN JULIÁN PHASE I SAN JULIÁN PHASE II Key operating statistics 1H 18 1H 17 Gold production koz Silver production moz Reserves 2017 * 30.3 moz Ag, 0.4 moz Au Resources 2017 * moz Ag, 1.3 moz Au Key operating statistics 1H 18 1H 17 Gold production koz 1.2 NA Silver production moz 4.4 NA Reserves 2017 * moz Ag, 0.1 moz Au Resources 2017 * moz Ag, 0.1 moz Au 1H18 Summary Nameplate capacity of 3,000 tpd Currently operating at c. 3,600 tpd Expected lower ore grade due to less availability of the higher silver grade areas Lower volume of ore processed as a result of the low water availability 1H18 Summary Nameplate capacity of 6,000 tpd Currently operating at 6,400 tpd Extraction of ore from lower grade areas & processing ore from the development stockpile due to low water availability Resulted in temporarily deviating from original production plan 2H18 Priorities Initiatives in place to collect process water now ensure the plant will run at full capacity in 2H18 and going forward Construction of wells for water collection while continuing the process to obtain permits for the construction of the water reservoir Continue preparation and development of the mine Identify, explore and evaluate the District's geological potential *As of December

14 Operations Cont. CIÉNEGA Key operating statistics 1H 18 1H 17 Gold production koz Silver production moz Cost per tonne US$/t Cash cost - US$/oz of Au Reserves 2017 * 54.1 moz Ag, 0.6 moz Au Resources 2017 * moz Ag, 1.7 moz Au 1H18 Summary Lower than expected ore grade following the depletion of higher grade veins Reduced dilution by around 20% Increased availability of equipment One more contractor company hired to develop new areas Increased contribution from Taspana (28,000 tonnes per month) to the overall mine production Total development of 14,700 mts increased 16.5% half on half 2H18 Priorities Continue development at Taspana and Las Casas Continue construction of third tailings dam Further evaluate a 2,000 tpd expansion of milling capacity at the main Ciénega mine *As of December

15 Operations Cont. HERRADURA Key operating statistics 1H 18 1H 17 Gold production koz Silver production koz Cost per tonne* US$/t Cash cost - US$/oz of Au Reserves 2017 ** Resources 2017 ** 1H18 Summary 7.7 moz Au 10.3 moz Au Consistently higher observed resources on the leaching pads lead to inventory re-statement due to higher recovery rates Higher speed of recovery due to an intensive targeted irrigation programme and better dilution 2H18 Priorities Continue inventory analysis with an aim to conclude the process by year end Complete the installation of vibrating screens to increase gold recovery by 3-4% Drilling and exploration to continue at Centauro Deep and areas of influence *Cost per tonne excluding unproductive costs ** As of December

16 Operations Cont. NOCHE BUENA Cash Costs 1,000 Key operating statistics 1H 18 1H 17 Gold production koz Silver production koz Cost per tonne* US$/t Cash cost - US$/oz of Au US$ /OZ. GOLD Reserves 2017 ** Resources 2017 ** 0.8 moz Au 0.8 moz Au H H18 Summary Contained costs Continued to explore areas of influence, which continued to show limited upside Detailed engineering for a Carbon in Column facility initiated and is expected to be concluded by year end H18 Priorities Maintain comparative low cash cost profile Maximise production At time of acquisition in 2008, the project was estimated to produce 376,450 Au ounces over the 5 year life of mine To date, Noche Buena has produced 904,273 Au ounces As of YE17, Measures & Indicated resources of 818,506 Au ounces remain *Cost per tonne excluding unproductive costs ** As of December

17 Projects PYRITES PLANT PROJECT IN THE FRESNILLO DISTRICT Overview Avg. annual silver production Avg. annual gold production Expected cash cost (average LoM) Leaching plant at Saucito commissioned Fresnillo tailings flotation plant expected commissioning 3.5 moz 13.0 koz $2.51 /oz 2Q The plant will froth float pyrite concentrates that will be leached in a 2,000 tpd dynamic leaching plant and Merrill Crowe plant to produce precipitates. First stage completed: commission of the leaching plant at Saucito on time, following a US$50.3 million investment. Second stage continued: Construction of the flotation plant at Fresnillo on track with a US$7.3 million investment to date. US$46.5 million remain to be invested. This project will improve overall recoveries of gold and silver by processing historical and ongoing tailings from the Fresnillo and Saucito mines. 17

18 Projects Cont. 2ND LINE OF DYNAMIC LEACHING PLANT PROJECT AT HERRADURA Overview Ore type Final testing is underway and commercial production is expected in 3Q18 The project will enable sulphides occurring deeper in the pit to be processed more efficiently At the time of analysis, this project was expected to extend the LOM at Herradura to 12 years with an average annual gold production of 390 koz With current reserves and the above production rate, the LOM is just over 20 yrs Oxide Mixed Sulphide Key metric estimates Plant capacity 8,000TPD Pre-operative capex US$110m Increase in gold production per year *As of December koz At Herradura, gold reserves have increased 48% vs. 2016, to 7.7moz * 18

19 Projects Cont. JUANICIPIO (JV WITH MAG SILVER. FRESNILLO: 56%) Overview 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 Indicated & inferred resources 10moz silver 30koz gold 248 moz silver 1.4 moz gold First production Mid 2020 Feasibility study has been concluded by AMC Draft being reviewed by the technical committee Approval process to follow Discussions with suppliers of long term delivery equipment as well as construction contractors has been initiated. Exploration & development works continue as planned * According to PFS dated June

20 Exploration STRONG ORGANIC GROWTH PIPELINE Mine Operations Development Projects PEA - Feasibility Advanced Exploration Fresnillo 2018 Budget: Saucito US$ 180 m Herradura Nochebuena 42% Ciénega - San Ramón Soledad &Dipolos* San Julián Pyrites Plant Cebollitas Cluster Centauro Extension Juanicipio Centauro Deep Orisyvo Guanajuato Rodeo 33% Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines Prospects in drilling Early stage Exploration Fresnillo District Tajitos Candameña Guachichil Pilarica (Perú) San Juan Guazapares Olivos Lucerito Minitas Cebadillas La Yesca Dátil Norias Argentum Sonora and Sinaloa : Nudo Lejano Carina Cerritos Rosario Elena San Manuel Santo Niño Chihuahua: Rosetillas SJ Pinal Lucero Tempisque Uruachi Durango: Canelas-VTopia El Carmen Zacatecas: Urite Atotonilco Corredor Concha-Nieves Villa García Perú: Sto. Domingo La Pampa Supaypacha Alto Dorado 25% Underlain by 1.8m hectares of concessions in Mexico and 700k hectares in Peru Systematic Project Generation * Operations at Soledad & Dipolos are currently suspended. 20

21 Financial Review

22 Income Statement (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 2018 % 2017 % $ % ADJUSTED REVENUES 1, , TREATMENT AND REFINING CHARGES (74.8) (73.6) (1.2) 1.6 REVENUES 1, ADJUSTED PRODUCTION COST (429.9) (38.6) (343.0) (34.4) (87.0) 25.4 PROFIT SHARING (11.8) (1.1) (8.9) (0.9) (2.9) 32.0 DEPRECIATION (192.8) (17.3) (168.0) (16.9) (24.9) 14.8 HEDGING (MXP/USD EXCHANGE RATE) N/A CHANGE IN INVENTORIES (16.0) (1.6) 37.7 N/A COST OF SALES (612.9) (55.0) (535.8) (53.8) (77.1) 14.4 GROSS PROFIT ADMINISTRATIVE & CORPORATE EXPENSES (38.4) (3.4) (33.1) (3.3) (5.3) 16.1 EXPLORATION EXPENSES (78.3) (7.0) (64.2) (6.5) (14.1) 21.9 OTHER INCOME (EXPENSE) (2.3) (0.2) (25.7) N/A SELLING EXPENSES (11.4) (1.0) (8.2) (0.8) (3.2) 39.0 PROFIT FROM CONTINUING OPERATIONS (6.1) (1.6) SILVERSTREAM AMORTIZATION EFFECT FOR THE PERIOD SILVERSTREAM REVALUATION (45.1) (4.0) (77.2) N/A GOLD HEDGING PROFIT/LOSS - - (35.2) (3.5) 35.2 N/A FINANCE INCOME / (EXPENSE) (15.1) (1.4) (13.9) (1.4) (1.2) 8.5 FOREIGN EXCHANGE GAIN / (LOSS) (11.8) (1.1) (15.7) N/A PROFIT BEFORE INCOME TAX (64.4) (16.6) MINING RIGHT (10.9) (1.0) (15.1) (1.5) 4.3 (28.1) INCOME TAX EXPENSE (82.8) (7.4) (62.2) (6.2) (20.7) 33.3 PROFIT FOR THE PERIOD (80.8) (26.1) ATTRIBUTABLE TO: EQUITY SHAREHOLDERS OF THE GROUP (78.7) (25.5) MINORITY INTEREST (0.7) (0.1) (2.1) N/A (80.8) (26.1) EBITDA

23 Adjusted revenues (IFRS) ACCUM JUNE CHANGE BY: P R O D U C T VOLUME PRICE TOTAL GOLD SILVER (23.9) 18.9 LEAD ZINC ADJUSTED REVENUES 1, , % 17.3% 100.0% 23

24 Contribution by mine and by metal to the Adjusted Revenues % 2018 Adjusted Revenues : US$1,189.9m By mine By metal 8% 5% 18% 9% 1 10% 50% 21% 36% 28% 8% Herradura Fresnillo Saucito Ciénega Noche Buena San Julián JM San Julián Veins Fresnillo Ciénega Herradura Saucito Noche Buena San Julián JM San Julián Veins Consol Gold % % % % % % % % Silver % % % % % % % % Lead % % % % % Zinc % % % % % TOTAL % % % % % % % 1, % Silver Lead Gold Zinc 1 Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges. 24

25 Consolidated Cost Inflation YTD 2018 (USD Based) Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel 8.4% 6.3% 0.5% Employees 7.3% 2.6% 0.2% Weighted 8.1% Operating Materials 3.4% 20.2% 0.7% Energy Electric Energy -7.0% 7.0% -0.5% Diesel 5.2% 9.4% 0.5% Gasoline 13.8% 1.1% 0.2% Weighted 0.9% Contractors 4.8% 31.7% 1.5% Maintenance 1.8% 15.2% 0.3% Freights 11.4% 1.0% 0.1% Insurance -6.2% 0.6% 0.0% Others 1.9% 4.9% 0.1% 1.1% TOTAL % (*) Not including Depreciation and Profit Sharing Important Note: Excluding the revaluation effect, cost inflation would have been 2.4% 25

26 Adjusted Production Cost Analysis (Consolidated) CHANGE YTD 18 YTD 17 $ % Adjusted Production Cost Change in inventories and others N/A Depreciation PTU USD MILLION Cost of Sales % * 26 Increase in stripping to cost, maintenance,consumables, services,etc Higher Production Lower volume of ore processed from development at Saucito Cost Inflation MXP/USD Revaluation effect Incr. in Adj. Prod.Cost

27 Consolidated Gross Profit Analysis CHANGE YTD18 YTD17 $ % USD MILLION Gross Profit % (4.01) (7.68) (9.85) (29.16) (31.43) Increase in inventories at Herradura Higher ore grade Higher Production Higher Metal Prices MXP/USD Revaluation effect Cost Inflation Lower volume of ore processed from development at Saucito Higher Depreciation Higher Stripping at Herradura YTD17 Gross Profit *

28 Income Statement (IFRS) ACCUM JUNE CHANGE (Million USD) C O N C E P T 2018 % 2017 % $ % ADJUSTED REVENUES 1, , TREATMENT AND REFINING CHARGES (74.8) (73.6) (1.2) 1.6 REVENUES 1, Projects ADJUSTED PRODUCTION COST (429.9) (38.6) (343.0) (34.4) (87.0) 25.4 PROFIT SHARING (11.8) (1.1) (8.9) (0.9) (2.9) 32.0 DEPRECIATION (192.8) (17.3) (168.0) (16.9) (24.9) 14.8 HEDGING (MXP/USD EXCHANGE RATE) N/A CHANGE IN INVENTORIES (16.0) (1.6) 37.7 N/A COST OF SALES (612.9) (55.0) (535.8) (53.8) (77.1) 14.4 GROSS PROFIT ADMINISTRATIVE & CORPORATE EXPENSES (38.4) (3.4) (33.1) (3.3) (5.3) 16.1 EXPLORATION EXPENSES (78.3) (7.0) (64.2) (6.5) (14.1) 21.9 OTHER INCOME (EXPENSE) (2.3) (0.2) (25.7) N/A SELLING EXPENSES (11.4) (1.0) (8.2) (0.8) (3.2) 39.0 PROFIT FROM CONTINUING OPERATIONS (6.1) (1.6) SILVERSTREAM AMORTIZATION EFFECT FOR THE PERIOD SILVERSTREAM REVALUATION (45.1) (4.0) (77.2) N/A GOLD HEDGING PROFIT/LOSS - - (35.2) (3.5) 35.2 N/A FINANCE INCOME / (EXPENSE) (15.1) (1.4) (13.9) (1.4) (1.2) 8.5 FOREIGN EXCHANGE GAIN / (LOSS) (11.8) (1.1) (15.7) N/A PROFIT BEFORE INCOME TAX (64.4) (16.6) MINING RIGHT (10.9) (1.0) (15.1) (1.5) 4.3 (28.1) INCOME TAX EXPENSE (82.8) (7.4) (62.2) (6.2) (20.7) 33.3 PROFIT FOR THE PERIOD (80.8) (26.1) ATTRIBUTABLE TO: Operating Units Fresnillo 7.7 Saucito 8.1 Ciénega 7.9 San Julián 4.0 Herradura 6.8 Noche Buena 1.4 San Ramón Valles 0.0 Centauro Deep 3.3 Juanicipio 2.3 Guanajuato 3.7 Orisyvo 2.1 San Javier 0.3 Carina 1.8 Canelas 1.5 Rosario Prospects Sonora 2.2 Durango 3.1 Chihuahua 3.5 Zacatecas 0.1 Nayarit 0.1 Guerrero 0.0 Perú Regional Prospecting 7.8 Mining Rights 9.5 Fixed Assets Parreña 0.2 EQUITY SHAREHOLDERS OF THE GROUP (78.7) (25.5) (Capitalised) Total Risk Cap. Inv. Exp Capitalised Exp. (3.0) MINORITY INTEREST (0.7) (0.1) (2.1) N/A (80.8) (26.1) EBITDA Total Exploration Exp

29 [ LEFT BLANK ON PURPOSE] 29

30 Cash flow (IFRS) 30

31 Cash flow (IFRS) Provisional Tax Payments: US$77.9m 2017 Income Tax Payment: US$33.3m Special Mining Right: US$19.8m 2017 Profit Sharing: US$14.3m Increase in accounts receivables (VAT) -US$49.6 million Decrease in accounts receivables from Met- Mex US$16.2 million Increase in inventories mainly at Herradura -US$23.7 million Decrease in payable accounts -US$2.6 million Increase in prepaid payments and other accounts -US$4.2 million 1,978,057.9 MOz proceeds from the silverstream contract, which do not go through the Income Statement Herradura US$103.3 million Stripping activities and construction of leaching pads Construction of the Second Dynamic Leaching Plant Saucito US$65.1 million Mining works Fe concentrates leaching and flotation plant (Pyrites Plant Project) Construction of the Jarillas shaft Purchase of in-mine equipment Fresnillo US$49.6 million Mine development and mining works Tailings dam construction Purchase of in-mine equipment San Julián US$23.0 million Purchase of in-mine equipment Construction of ramps and mining works Construction of tailings dam Ciénega US$35.1 million Mine development and mining works Purchase of long drilling equipment Purchase of in-mine equipment Noche Buena US$24.6 million Purchase of in-mine equipment Others US$51.5million 31

32 Balance sheet (IFRS) Concept 31-JUNE DEC-17 % Assets Cash and Investments (23.2) Trade and Other Receivables Inventories Prepaid Expenses Silverstream (8.1) Derivative Financial Instruments Property, Plant and Equipment 2, , Other Assets (Long term) Total Assets 4, ,745.1 (0.0) Liabilities Change Profit Sharing (15.5) Other Liabilities (Short term) (26.7) Retirement and Pension Plan Reserves Deferred Taxes Senior Notes Other Liabilities ( Long term) Total Liabilities 1, ,678.5 (1.5) Share Capital and Share Premium 1, ,153.8 N/A Share Capital Subscribed N/A Retained earnings 1, , Other Accounts (481.5) (473.8) 1.6 Stockholder's Equity 3, , Minority Interest Total Stockholder s Equity 3, , Total Liabilities and Stockholder's Equity 4, ,745.1 (0.0) 32

33 Cost Per Tonne (IFRS) ACCUM JUNE CHANGE COST PER TONNE * MINE UNIT % CHG. Fresnillo US$/TON % Saucito US$/TON % Ciénega US$/TON % Herradura US$/TON ** 7.10 ** 44.3% Total Vol. Hauled Charged to Costs US$/TON % Noche Buena US$/TON 6.74 ** 7.00 ** -3.8% Total Vol. Hauled Charged to Costs US$/TON % * Cost per tonne is calculated as total adjusted production costs divided by total volume of ore processed. ** Cost per tonne excluding unproductive costs. 33

34 Cash Cost (IFRS) ACCUM JUNE CHANGE CASH COST * % CHG. MINE UNIT Fresnillo PER OZ. SILVER % Saucito PER OZ. SILVER % Ciénega PER OZ. GOLD (By-prod.) Herradura PER OZ. GOLD % Noche Buena PER OZ. GOLD % CONSOLIDATED PER OZ. GOLD EQ % Gold Eq.Oz (Koz) % PER OZ. SILVER EQ % Silver Eq. Oz (Moz) % * Cash cost per ounce is calculated as total cash cost (cost of sales plus treatment and refinning charges less depreciation) less revenues from by-products divided by the silver or gold ounces sold. 34

35 Margins by mine (Metal price Cash Cost)(YTD18 vs YTD17) (USD/Oz) (USD/Oz) Fresnillo Saucito Ciénega Herradura Noche Buena 8.2Moz. 7.4Moz. 9.9Moz. 9.3Moz. 33.9Koz. 31.6Koz Koz Koz. 89.0Koz. 87.8Koz. Chg % Chg. -6.1% Chg. -6.8% Chg. 8.4% Chg. -1.3% Ounces Sold 35

36 All In Sustaining Cost (US$/Oz) CASH COST * ACCUM JUNE % CHG. MINE UNIT Fresnillo PER OZ. SILVER % Saucito PER OZ. SILVER % Ciénega PER OZ. GOLD 1, % Herradura PER OZ. GOLD % Noche Buena PER OZ. GOLD 1, % CONSOLIDATED PER OZ. GOLD EQ % Gold Eq.Oz (Koz) % PER OZ. SILVER EQ % Silver Eq. Oz (Moz) % Note: 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. 36

37 Margins by mine (Metal price All In Sustaining Cost) (YTD18 vs YTD17) (USD/Oz) (USD/Oz) Fresnillo Saucito Ciénega Herradura Noche Buena 8.2Moz. 7.4Moz. 9.9Moz. 9.3Moz Koz. 31.6Koz Koz Koz. 89.0Koz. 87.8Koz. Chg % Chg. -6.1% Chg. -6.8% Chg.+8.4% Chg. -1.3% Ounces Sold 37

38 Strategy & Outlook

39 Expected Delivery of Growth (1) (2) Investment (US$ million) Expected Avg. Annual Production PROJECT YEAR moz Ag & 13 koz Au PYRITES PLANT (Optimization project) LEACHING PLANT CONSTRUCTION CONSTRUCTION TAILINGS FLOTATION PRODUCTION 110 Extended LoM of 390 koz Au CENTAURO EXTENSION DEVELOPMENT 2ND DYNAMIC LEACHING PLANT CONSTRUCTION PRODUCTION 30 3 moz Ag FRESNILLO 9,000 TPD (Optimization project) DEVELOPMENT & CONSTRUCTION PRODUCTION koz Au & 1.3 moz Ag CIENEGA 5,000 TPD (Optimization project) DEVELOPMENT & CONSTRUCTION PRODUCTION (3) moz Ag & 30 koz Au JUANICIPIO DEVELOPMENT & CONSTRUCTION PRODUCTION (4) koz Au ORISYVO OPTIMISATION - PRE FEASIBILITY STUDY - DEVELOPMENT & CONSTRUCTION PRODUCTION Extended Pit LoM of 470 koz Au & UG 65 Koz Au CENTAURO PIT EXPANSION / CENTAURO UNDERGROUND EXPLORATION PRE-STRIPPING & CONSTRUCTION CENTAURO UNDERGROUND DEVELOPMENT PRODUCTION (1) Estimated (2) Total average annual production (3) Total investment (of which 56% Fresnillo plc; 44% MAG Silver) according to PFS dated June 2012 (4) On hold 39

40 Expected attributable production profile Million Oz Silver* Gold Thousand Oz 1, *Including Silverstream Target of 65 moz silver by 2018 Target of 750 koz gold by 2018 Thousand Tons By-product Lead By-product Zinc Thousand Tons

41 CAPEX Spend Expectations 2018 US$ Million Sustaining (Operations) Fresnillo Saucito Herradura Ciénega Noche Buena San Julián Others 90 M 100 M 136 M 70 M 35 M 90 M 9 M Projects Approved San Julián Pyrites Plant Centauro Extension 17 M 47 M 35 M Projects for Approval Others 123 M 41

42 Outlook Safety and support of the workforce and environment Reinforce our safety measures throughout the Group Continue to implement the I care, we care programme across all of our operations Reach our goal of consuming 75% of our electricity needs from wind power by the second half of 2019 Continued operational focus to maximise the potential of our existing mines Fresnillo Mine Add a new contractor, continue investing in infrastructure and maintain the positive silver production trajectory Saucito Mine Increase development and continue to focus on reducing dilution San Julián Mine Initiatives in place to collect process water now ensure the plant will run at full capacity in 2H18 and going forward Continue to create value through disciplined growth, exploration and development Optimise production at the new Pyrites Plant at Saucito Continue works on the Flotation Plant at Fresnillo Begin commercial production at the 2nd Line of DLP in 3Q18 Approval process for Juanicipio to follow Continue to invest in exploration focusing on converting resources into reserves Produce moz of Silver (including Silverstream) and koz Gold in

43 Investment Case High quality, low-cost, flexible operations Disciplined approach to development Dedicated and experienced management and workforce Strong balance sheet Commitment to sustainable business practices 43

44 44

45 Volume and Ore grades Mine Volume Processed 1H18 Gold grade 1H18 Silver grade 1H18 Gold grade FY18e Silver grade FY18e Units (t) (g/t) (g/t) (g/t) (g/t) Fresnillo 1,258, Saucito 1,396, San Julián San Julián I 600, San Julián II 1,071, Ciénega 650, Herradura 11,590, NA 67,713,885* Noche Buena 8,965, NA 42,594,558* *Total Volume Hauled (t) 45

46 Metal prices, average exchange rate, energy & inflation ACCUM JUNE CONCEPT 1H18 1H17 % CHG GOLD (US$/OZ) 1, , SILVER (US$/OZ) (5.5) LEAD (USC$/LB) ZINC (USC$/LB) EXCHANGE RATE AT THE BEGINNING OF THE YEAR ($/USD) EXCHANGE RATE AT 30 JUNE ($/USD) DEVALUATION (REVALUATION) (MXP/USD) FOR THE PERIOD (%) 0.65 (13.39) AVERAGE SPOT EXCHANGE RATE ($/USD) (2.2) (KWH) WEIGHTED AVERAGE COST (USC$) (7.0) DIESEL AVERAGE COST (USC$/LT) COST INFLATION (DEFLATION) (%) (17.8) 46