01 August Dedicated to meeting our commitments 1

Transcription

1 01 August 2017 Dedicated to meeting our commitments 1

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 forwardlooking 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

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5 Introduction Strategic objectives remain unchanged Strict operational and financial discipline Investment decisions continue to be evaluated against key criteria Focus on maximising margins and profitability Continue to take a long-term view Balance profitable growth with returns whilst maintaining strong financial position Conservative approach leaves us well-placed to create value throughout price cycles High quality assets Low-cost and flexible operations Disciplined approach to exploration and development Commitment to sustainable business practices Strong balance sheet 5

6 1H 2017 results - Highlights Operational Highlights 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 positive signs as volume of ore processed increased for the fourth consecutive quarter On track to achieve 2017 production target of moz silver (including Silverstream) and koz gold Financial Highlights Gross profit of US$460.0m, up 16.6%; Profit from continuing operations of US$377.9m, up 24.2% EBITDA of US$522.5m, up 10.2% Profit for the period of US$310.1m, up 87.2% Basic and diluted EPS US$41.9 cents per share, up 84.6% Cash generated from operations before changes in working capital of US$540.3m, up 13.7% Strong balance sheet with cash, cash equivalents and short-term investments as at 30 June 2017 of US$884.9m Interim dividend of US$78.1m (10.6 US cents per share) 6

7 Health, Safety, Environment, Community Relations Health & Safety 1 Fatal accident at the beginning of 2017 We continue to reinforce our safety measures in order to fulfil our zero fatalities commitment on an ongoing basis We are currently implementing an enhanced safety approach in Saucito that will strenghten our current safety system by emphasising risk awareness No new cases of Occupational Diseases Environment, Community Relations and Awards Health week was organised in the Fresnillo District in partnership with the UNAM foundation. In the second semester, health weeks will be organised at: Ciénega, San Julián and Penmont Our reading programme has been launched benefiting 6,200 children across the Fresnillo, Penmont, Ciénega, San Julián and Guanajuato districts Saucito and Fresnillo obtained the Clean Industry certificate of the Mexican Environmental Authorities Human development Index and Human Rights have been integrated in our methodology for baseline and perception studies Benchmark and reporting: Our carbon and water performance was reported to the CDP (Carbon disclosure Project). The Company responded to the Dow Jones Sustainability Index (DJSI) Questionnaire and Ethisphere s Institute Ethics Quotient (EQ) benchmark 7

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9 Operations Fresnillo Saucito Key operating statistics 1H 2017 vs 1H 2016 Silver production moz Gold production koz Cost per tonne US$/t Cash cost - US$/oz of Ag Reserves 2016 * Resources 2016 * moz Ag, 0.6 moz Au moz Ag, 1.72 moz Au 1H17 Achievements Continued signs of progress 4th consecutive quarter of increased ore processed 2H17 targets Continue towards our 4,800m a month of development target On track to reach 7-10% increase in Ag Prod. Expected Ag ore grade of 230g/t for the full year Key operating statistics 1H 2017 vs 1H 2016 Silver production moz Gold production koz Cost per tonne US$/t Cash cost - US$/oz of Ag Reserves 2016 * Resources 2016 * 1H17 Achievements 4.3% increase in ore processed vs. 1H moz Ag, 0.9 moz Au moz Ag, 2.1 moz Au 2H17 targets Advance the Jarillas Shaft extension & deepening of 6 development ramps Continue to increase development rates towards 4,000m a month * As of December

10 Operations Cont. Herradura Noche Buena Key operating statistics 1H 2017 vs 1H 2016 Gold production koz Silver production koz Cost per tonne* US$/t Cash cost - US$/oz of Au Reserves 2016 ** Resources 2016 ** 1H17 Achievements Inventories at pads further decreased 2nd line of the DLP progressing as expected 5.2 moz Au 10.8 moz Au 2H17 targets Continue to advance construction of the 2nd line of the DLP ready for commissioning next year Key operating statistics 1H 2017 vs 1H 2016 Gold production koz Silver production koz Cost per tonne* US$/t Cash cost - US$/oz of Au Reserves 2016 ** Resources 2016 ** 1H17 Achievements Increased ore throughput vs 1H16 2H17 targets Continue to focus on efficiencies Continue exploration in surrounding area Advance the construction of Pad number moz Au 0.9 moz Au *Cost per tonne excluding unproductive costs ** As of December

11 Operations Cont. Ciénega San Julián Phase I Key operating statistics 1H 2017 vs 1H 2016 Gold production koz Silver production moz Cost per tonne US$/t Cash cost - US$/oz of Au Key operating statistics 1H 2017 vs 1H 2016 Gold production koz 41.0 NA Silver production moz 3.0 NA Cost per tonne US$/t ** 49.0 NA Cash cost - US$/oz of Au ** NA Reserves 2016 * 66.3 moz Ag, 0.8 moz Au Reserves 2016 * moz Ag, 0.4 moz Au Resources 2016 * moz Ag, 1.6 moz Au Resources 2016 * moz Ag, 0.8 moz Au 1H17 Achievements Development & Preparation of 2 Satellite mines for operational flexibility Taspana Mine & Tajos Mine 2H17 targets Continue development of Rosario & Las Casas Advance the Ciénega expansion evaluation 1H17 Achievements Continuing to ramp up capacity, currently processing at over 3,700 tpd 2H17 targets On track to reach 4,000 tpd target ** San Julián cost per tonne and cash cost figures are not representative as it started up in August 2016 and continues to process ore that came from the development stockpile * As of December

12 Operations Cont. San Julián Phase II commissioned 12

13 Operations Cont. San Julián (Phase I & II) Expected 2017 silver production Expected 2017 gold production Expected Cash cost 2017* Expected Cost per tonne 2017 Expected All-in sustaining costs 2017* Phase II capacity (flotation plant to process ore from disseminated ore body) Pre-operative capex for Phase I & II Life of mine 11.6 moz 63.7 koz $0.9/oz $46.4/tonne $4.9/oz 6,000 TPD $515 m 12 years San Julián phase II was commissioned on time and on budget Commercial production commenced mid-july Phase II ramp up to full capacity over next 2 months Identify, explore and evaluate the District s potential *Cash Cost by product of volume sold 13

14 Projects Pyrites Plant Project in the Fresnillo District 2nd Line of Dynamic Leaching Plant Project at Herradura Key operating statistics 1H 2017 vs 1H 2016 Avg. annual silver production Avg. annual gold production Pre-operative capex Cash cost (average LoM) 3.5 moz 13.0 koz $155 m $2.51 /oz Expected commissioning 2018 Improve overall recoveries of Au & Ag by processing historical and ongoing tailings from the Fresnillo & Saucito mines 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 By 1H17, over 60% of the progress had been complete Key operating statistics 1H 2017 vs 1H 2016 Plant capacity Pre-operative capex Increase in gold production per year 8,000TPD US$110m 36koz Expected commissioning 2018 Detailed engineering continued Milling area advanced The project will enable sulphides occurring deeper in the pit to be processed more efficiently As a result of the project, the LOM at Herradura will be extended to 12 years with an annual gold production of 390 koz 14

15 Projects Cont. 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 Indicated & inferred resources 10moz silver 30koz gold 248 moz silver 1.4 moz gold First production 1H % and 9.9% increase in gold and silver resources respectively 20,000 metre drilling programme in

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17 Strong Organic Growth Pipeline Mine Operations Development Projects PEA - Feasibility 2017/ Budget: US$ 160 m Fresnillo Saucito Herradura 36 % Nochebuena Ciénega - San Ramón Soledad & Dipolos* San Julián Pyrites Plant Cebollitas Cluster Centauro Extension Juanicipio Centauro Deep Orisyvo 16 % Pipeline allows us to focus on projects that have the potential to be developed into low cost, world-class mines 3 % Advanced Exploration Guanajuato Rodeo 5 % Prospects in drilling Early stage Exploration Fresnillo District Tajitos Candameña Guachichil Pilarica (Perú) San Nicolás Guazapares Olivos Coneto Lucerito San Juan San Agustin Minitas Cebadillas La Yesca Dátil Norias Argentum Sonora and Sinaloa : Nudo Lejano Carina Cerritos Rosario Sierra Pinta Elena San Manuel Santo Niño Chihuahua: Rosetillas SJ Pinal Lucero Tempisque Uruachi Durango: Frida Canelas-VTopia El Carmen El Hundido Zacatecas: Urite Atotonilco Corredor Concha-Nieves Villa García Perú: Sto. Domingo La Pampa Supaypacha Alto Dorado 40 % Systematic Project Generation * Operations at Soledad & Dipolos are currently suspended. 17

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19 Metal prices, average exchange rate, energy & inflation ACCUM JUNE CONCEPT 1H17 1H16 % CHG GOLD (US$/OZ) 1, , SILVER (US$/OZ) LEAD (USC$/LB) ZINC (USC$/LB) EXCHANGE RATE AT THE BEGINNING OF THE YEAR ($/USD) EXCHANGE RATE AT 30 JUNE ($/USD) (5.4) DEVALUATION (REVALUATION) (MXP/USD) FOR THE PERIOD (%) (13.39) 9.91 N/A AVERAGE SPOT EXCHANGE RATE ($/USD) (KWH) WEIGHTED AVERAGE COST (USC$) DIESEL AVERAGE COST (USC$/LT) COST INFLATION (DEFLATION) (%) 4.28 (9.34) N/A 19

20 Income Statement (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 2017 % 2016 % $ % ADJUSTED REVENUES 1, HEDGING (METALS) (1.5) N/A TREATMENT AND REFINING CHARGES (73.6) (74.1) 0.4 (0.6) REVENUES ADJUSTED PRODUCTION COST (343.0) (34.4) (299.7) (33.8) (43.3) 14.4 PROFIT SHARING (8.9) (0.9) (9.9) (1.1) 1.0 (10.3) DEPRECIATION (168.0) (16.9) (165.3) (18.6) (2.6) 1.6 HEDGING (MXP/USD EXCHANGE RATE) (2.6) (0.3) 2.6 N/A CHANGE IN INVENTORIES (16.0) (1.6) (15.0) (1.7) (1.0) 6.8 COST OF SALES (535.8) (53.8) (492.5) (55.5) (43.3) 8.8 GROSS PROFIT ADMINISTRATIVE EXPENSES (18.6) (1.9) (14.0) (1.6) (4.6) 32.6 CORPORATE EXPENSES (14.5) (1.5) (12.5) (1.4) (2.1) 16.5 EXPLORATION EXPENSES (64.2) (6.5) (52.1) (5.9) (12.2) 23.4 OTHER INCOME (EXPENSE) (4.4) (0.5) 27.8 N/A SELLING EXPENSES (8.2) (0.8) (7.2) (0.8) (1.0) 13.7 PROFIT FROM CONTINUING OPERATIONS SILVERSTREAM AMORTIZATION EFFECT FOR THE PERIOD SILVERSTREAM REVALUATION (56.2) (63.6) GOLD HEDGING PROFIT/ (LOSS) (35.2) (3.5) (136.6) (15.4) (74.2) FINANCE INCOME / (EXPENSE) (13.9) (1.4) (13.9) (1.6) (0.1) 0.5 FOREIGN EXCHANGE GAIN / (LOSS) (8.6) (1.0) 12.5 (144.6) PROFIT BEFORE INCOME TAX MINING RIGHT (15.1) (1.5) (15.8) (1.8) 0.7 (4.2) INCOME TAX EXPENSE (62.2) (6.2) (73.7) (8.3) 11.6 (15.7) PROFIT FOR THE PERIOD ATTRIBUTABLE TO: EQUITY SHAREHOLDERS OF THE GROUP MINORITY INTEREST (1.4) (0.2) 2.8 (198.7) EBITDA

21 ADJUSTED REVENUES (IFRS) ACCUM JUNE CHANGE BY: P R O D U C T (Million USD) VOLUME PRICE TOTAL GOLD (0.3) SILVER LEAD ZINC ADJUSTED REVENUES 1, % 46.7% 21

22 Contribution by mine and by metal to the Adjusted Revenues 1H Adjusted Revenues : US$1,069.5m By mine By metal 10% 4% 21% 6% 10% 51% 26% 24% 39% Fresnillo Saucito Ciénega Herradura 10% Noche Buena San Julián Fresnillo Ciénega Herradura Saucito Noche Buena San Julián Consol Gold % % % % % % % Silver % % % % % % % Lead % % % % Zinc % % % % TOTAL % % % % % % 1, % Silver 1 Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges. Lead Gold Zinc 22

23 Consolidated Cost Inflation YTD 2017 (USD Based) Consolidated Unit Price Weighted Increase % Weight (*) Average Labour Unionized Personnel -3.0% 6.7% -0.2% Employees -3.3% 2.8% -0.1% Weighted -3.1% Operating Materials -3.7% 20.2% -0.7% Energy Electric Energy 37.2% 7.9% 2.9% Diesel 20.3% 10.4% 2.1% Gasoline 12.9% 1.2% 0.2% Weighted 26.7% Contractors 1.7% 29.6% 0.5% Maintenance -2.3% 15.0% -0.3% Freights 5.6% 1.2% 0.1% Insurance -13.4% 0.7% -0.1% Others -0.8% 4.4% 0.0% -2.4% TOTAL % (*) Not including Depreciation and Profit Sharing Important Note: Excluding the devaluation effect cost inflation would have been 8.03% 23

24 Adjusted Production Cost Analysis (Consolidated) USD MILLION CHANGE YTD 17 YTD 16 $ % Adjusted Production Cost * * 14.4 Change in inventories and others Depreciation PTU Hedging (mxp/usd exchange rate) (Loss) -2.6 N/A Cost of Sales % (8.94) (11.37) * Production 1 Cost Inflation Others 2 3 MXP/USD Devaluation effect Incr. in Adj. Prod.Cost

25 25 Adjusted Production Cost (US$343M) Real Accumulated 1H 2017 PERSONNEL 16% Own 9% Ctrt. 7% EQUIPMENT Ctrt. 11% MAINTENANCE & REPAIRS 17% Own 15% Ctrt. 2% OPERATING MATERIALS 27% Own 20% Ctrt. 7% OTHERS 7% Own 6% Ctrt. 1% Costs from Contractors 30% ENERGY 22% Own 20% Ctrt. 2% * Includes: Freights, Taxes & Licenses, Insurance Costs, Computeer Leasing, Fees and Others. 25

26 Consolidated Gross Profit Analysis USD MILLION CHANGE YTD17 YTD16 $ % Gross Profit % (5.8) 49.7 (21.9) (33.7) (65.6) Higher Production Higher Metal Prices MXP/USD Devaluation effect Others Cost Inflation Lower ore grade YTD17 Gross Profit *

27 Contribution by mine to the Gross Profit 1H17 & 1H16 9.4% 6.5% 5.8% 1H % 0.0% 5.5% 7.2% 1H % 17.0% 22.7% 26.4% 31.0% US$460.0 M US$394.4 M 27

28 Income Statement (IFRS) ACCUM JUNE CHANGE C O N C E P T (Million USD) 2017 % 2016 % $ % ADJUSTED REVENUES 1, HEDGING (METALS) (1.5) N/A TREATMENT AND REFINING CHARGES (73.6) (74.1) 0.4 (0.6) REVENUES ADJUSTED PRODUCTION COST (343.0) (34.4) (299.7) (33.8) (43.3) 14.4 PROFIT SHARING (8.9) (0.9) (9.9) Projects (1.1) 1.0 (10.3) DEPRECIATION (168.0) (16.9) (165.3) (18.6) (2.6) 1.6 HEDGING (MXP/USD EXCHANGE RATE) (2.6) (0.3) 2.6 N/A CHANGE IN INVENTORIES (16.0) (1.6) (15.0) (1.7) (1.0) 6.8 COST OF SALES (535.8) (53.8) (492.5) (55.5) (43.3) 8.8 GROSS PROFIT ADMINISTRATIVE EXPENSES (18.6) (1.9) (14.0) (1.6) (4.6) 32.6 CORPORATE EXPENSES (14.5) (1.5) (12.5) (1.4) (2.1) 16.5 EXPLORATION EXPENSES (64.2) (6.5) (52.1) (5.9) (12.2) 23.4 OTHER INCOME (EXPENSE) (4.4) (0.5) 27.8 N/A SELLING EXPENSES (8.2) (0.8) (7.2) (0.8) (1.0) 13.7 PROFIT FROM CONTINUING OPERATIONS SILVERSTREAM AMORTIZATION EFFECT FOR THE PERIO SILVERSTREAM REVALUATION (56.2) (63.6) GOLD HEDGING PROFIT/ (LOSS) (35.2) (3.5) (136.6) (15.4) (74.2) FINANCE INCOME / (EXPENSE) (13.9) (1.4) (13.9) (1.6) (0.1) 0.5 FOREIGN EXCHANGE GAIN / (LOSS) (8.6) (1.0) 12.5 (144.6) PROFIT BEFORE INCOME TAX MINING RIGHT (15.1) (1.5) (15.8) (1.8) 0.7 (4.2) INCOME TAX EXPENSE (62.2) (6.2) (73.7) (8.3) 11.6 (15.7) PROFIT FOR THE PERIOD ATTRIBUTABLE TO: ACCUM JUNE 2017 Operating Units Fresnillo 8.1 Ciénega 4.4 Saucito 5.5 Herradura 3.1 Noche Buena 2.5 San Ramón 2.1 Manzanillas Centauro Deep 1.0 Valles 5.3 San Julián 3.7 Orisyvo 0.9 Guanajuato 2.2 Juanicipio Prospects Sonora 1.5 Durango 2.1 Chihuahua 7.0 Zacatecas 0.4 Guanajuato 1.1 Perú Regional Prospecting 5.4 Mining Rights 6.2 Total Risk Cap. Inv. Exp Capitalized Exp. (1.7) EQUITY SHAREHOLDERS OF THE GROUP MINORITY INTEREST (1.4) (0.2) 2.8 (198.7) Total Exploration Exp EBITDA

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30 Cash Flow (IFRS) CASH FLOW ACCUM JUNE CHG. YTD 2016 (USD MILLION) 1H17 1H16 $ % CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL WORKING CAPITAL N/A INCOME TAX AND PROFIT SHARING PAID (211.9) (67.9) (144.1) NET CASH FROM OPERATING ACTIVITIES (53.7) (13.2) OTHER PROCEEDS SILVERSTREAM CONTRACT PROCEEDS FROM THE SALE OF PROPERTY, PLANT AND EQUIPMENT ,880.7 CAPITAL CONTRIBUTION OTHERS (0.9) (69.0) TOTAL OTHER PROCEEDS PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (264.3) (198.8) (65.5) 33.0 DIVIDENDS PAID (158.4) (24.8) (133.7) FINANCIAL EXPENSES AND FOREIGN EXCHANGE EFFECTS (5.4) (10.0) 4.6 (46.0) USES OF CASH (428.2) (233.6) (194.6) 83.3 NET INCREASE / (DECREASE) IN CASH DURING THE PERIOD (27.1) (228.1) N/A CASH AND CASH EQUIVALENTS AT 01 JANUARY CASH AND CASH EQUIVALENTS AT 30 JUNE

31 Cash Flow (IFRS) Decrease in trade and other receivables due to VAT recovered US$6.0 million Decrease in gold ore inventories at Herradura CASH FLOW ACCUM and JUNENoche Buena CHG. US$14.1 YTD million 2016 (USD MILLION) 1H17 Increase 1H16 in payable$ accounts% US$4.9 million CASH GENERATED BY OPERATIONS BEFORE CHANGES IN WORKING CAPITAL WORKING CAPITAL N/A INCOME TAX AND PROFIT SHARING PAID (211.9) 1,933,142 (67.9) MOz (144.1) proceeds212.2 from the NET CASH FROM OPERATING ACTIVITIES silverstream contract (53.7) (13.2) OTHER PROCEEDS SILVERSTREAM CONTRACT Herradura US$64.7 million PROCEEDS FROM THE SALE OF PROPERTY, PLANT AND EQUIPMENT 13.1 Stripping 0.2 activities 12.9 and construction 5,880.7 of CAPITAL CONTRIBUTION 10.5 leaching pads Saucito 5.1 US$ million OTHERS 0.4 Mining 1.3 works (0.9) (69.0) Construction of the Jarillas shaft TOTAL OTHER PROCEEDS 47.0 Purchase 26.7 of in-mine 20.2 equipment 75.7 PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (264.3) (198.8) Pyrites Plant Project (65.5) US$ million San Julián US$54.6 million DIVIDENDS PAID (158.4) Phase (24.8) 2 completion (133.7) FINANCIAL EXPENSES AND FOREIGN EXCHANGE EFFECTS (5.4) Purchase (10.0) of in-mine 4.6 equipment (46.0) Construction of ramps and mining works USES OF CASH (428.2) (233.6) Fresnillo US$45.8 (194.6) million 83.3 Mine development and mining works NET INCREASE / (DECREASE) IN CASH DURING THE PERIOD (27.1) Tailings dam construction (228.1) N/A CASH AND CASH EQUIVALENTS AT 01 JANUARY Deepening of San Carlos shaft Ciénega US$ million 82.3 CASH AND CASH EQUIVALENTS AT 30 JUNE Mine 701.2development 183.7and mining 26.2 works Juanicipio US$17.7 million Ramp development 31

32 Balance Sheet (IFRS) Change Concept (Million USD) 30-JUN DEC-16 % Assets Cash and Investments (3.0) Trade and Other Receivables Inventories (5.1) Prepaid Expenses Silverstream Derivative Financial Instruments (98.3) Property, Plant and Equipment 2, , Other Assets (Long term) Total Assets 4, , Liabilities Profit Sharing (43.3) Other Liabilities (Short term) (10.1) Retirement and Pension Plan Reserves Deferred Taxes Senior Notes Other Liabilities ( Long term) Total Liabilities 1, , Share Capital and Share Premium 1, ,153.8 N/A Share Capital Subscribed N/A Retained earnings 1, , Other Accounts (466.9) (479.3) (2.6) Stockholder's Equity 2, , Minority Interest Total Stockholder s Equity 2, , Total Liabilities and Stockholder's Equity 4, ,

33 Cost Per Tonne (IFRS) ACCUM JUNE CHANGE COST PER TONNE * % CHG. MINE UNIT A A A Fresnillo US$/TON % Saucito US$/TON % Ciénega US$/TON % San Julián US$/TON *** - N/A B C Herradura US$/TON 7.10 ** 7.61 ** -6.6% Total Vol. Hauled Charged to Costs US$/TON % B C Noche Buena US$/TON 7.00 ** 7.80 ** -10.2% Total Vol. Hauled Charged to Costs US$/TON % * 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. *** 1) Start up period 2) Short operating period 3) Significant volume of ore processed from the stock pile A: Per tonne milled B: Per tonne deposited C: Per tonne hauled 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.) N/A PER OZ. GOLD (Co-prod.) % PER OZ. SILVER (Co-prod.) % PER OZ. GOLD (Equiv.) % San Julián PER OZ. SILVER ** - N/A 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. 1) Start up period 2) Short operating period 3) Significant volume of ore processed from the stock pile 34

35 Margins by mine (Metal price Cash Cost) (YTD17 vs YTD16) (USD/Oz) (USD/Oz) Fresnillo Saucito Ciénega Herradura Noche Buena 7.7Moz. 8.2Moz. 10.4Moz. 9.9Moz. 34.0Koz. 33.9Koz Koz Koz. 99.6Koz. 89.0Koz. Chg % Chg. -5.3% Chg. -0.3% Chg. -9.6% Chg % Ounces Sold Note I: San Julián is not represented as it started up in August (5 months) and most ore processed came from the development stock pile 35

36 All In Sustaining Cost (US$/Oz) ACCUM JUNE % CHG. CASH COST * MINE UNIT Fresnillo PER OZ. SILVER % Saucito PER OZ. SILVER % Ciénega PER OZ. GOLD % San Julián PER OZ. SILVER N/A Herradura PER OZ. GOLD % * Noche Buena PER OZ. GOLD % CONSOLIDATED PER OZ. GOLD EQ % Gold Eq.Oz (Koz) % * 1) Start up period 2) Short operating period 3) Significant volume of ore processed from the stock pile 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) (YTD17 vs YTD16) (USD/Oz) (USD/Oz) Fresnillo Saucito Ciénega Herradura Noche Buena 7.7Moz. 8.2Moz. 10.4Moz. 9.9Moz. 34.0Koz. 33.9Koz Koz Koz. 99.6Koz. 89.0Koz. Chg % Chg. -5.3% Chg. -0.3% Chg. -9.6% Chg % Ounces Sold Note I: San Julián is not represented as it started up in August (5 months) and most ore processed came from the development stock pile 37

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39 Expected Delivery of Growth (1) (2) Investment (US$ million) Expected Avg. Annual Production PROJECT YEAR moz oz Ag & 44 koz Au SAN JULIÁN CONSTRUCTION LEACHING PLANT FLOTATION PLANT CONSTRUCTION PRODUCTION moz Ag & 13 koz Au PYRITES PLANT (Optimization project) DETAILED ENGINEERING LEACHING PLANT CONSTRUCTION CONSTRUCTION TAILINGS FLOTATION PRODUCTION 110 Extended LoM of 390 koz Au CENTAURO EXTENSION DEVELOPMENT 2ND DYNAMIC LEACHING PLANT CONSTRUCTION PRODUCTION koz Au & 1.3 moz Ag CIENEGA 5,000 TPD (Optimization project) DEVELOPMENT & CONSTRUCTION PRODUCTION 30 3 moz Ag FRESNILLO 9,000 TPD (Optimization project) DEVELOPMENT & CONSTRUCTION PRODUCTION (3) 305* 10 moz Ag & 30 koz Au JUANICIPIO DEVELOPMENT & CONSTRUCTION PRODUCTION koz Au CENTAURO DEEP DEVELOPMENT & CONSTRUCTION PRODUCTION (4) koz Au ORISYVO DEVELOPMENT & CONSTRUCTION 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 Approved by the Board Subject to ongoing internal review (Subject to Board approval) 39

40 Expected Silver Production Profile Million Oz 80 Attributable Target of 65 moz silver by

41 Expected Gold Production Profile Thousand Oz 1,100 Attributable 1, Target of 750 koz gold by

42 CAPEX Spend Expectations 2017 US$ Million Sustaining (Operations) Million Usd 1,000 Fresnillo Saucito Herradura Ciénega Noche Buena San Julián Others Projects Approved 109 M 119 M 96 M 61 M 20 M 79 M 5 M San Julián Pyrites Plant Centauro Extension Projects for Approval 35 M 58 M 53 M Others 65 M Sustaining CAPEX New Projects - Preoperative CAPEX 42

43 Outlook Safety and support of the workforce Introduce an enhanced safety system at all our mines starting at Saucito in March 2017 Disciplined growth through exploration and development Ramp San Julián Phase II up to full capacity in 3Q17 Maintain Fresnillo mine at full capacity Advance the Pyrites Plant Continue construction of the 2 nd Line of DLP at Herradura Revised CAPEX to US$700m Advancing towards our 2018 production goals Produce 58 61moz silver & koz gold in 2017 Continue developing the infrastructure and preparing the mine at Fresnillo for the future expansion Increase milling capacity further at the San Julián leaching plant through optimisation projects Proven strategy delivering results 43

44 Investment case Strong balance sheet Commitment to sustainable business practices High quality assets Disciplined & consistent approach to growth and returns Low-cost and flexible operations 44

45 2 nd Line of the DLP at Herradura 45

46 Pyrites Plant in the Fresnillo District 46