TIDMFRES
RNS Number : 6258Z
Fresnillo PLC
21 May 2019
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
21 May 2019
Fresnillo plc - Annual General Meeting Statement
Fresnillo plc (the "Company") will hold its Annual General
Meeting today at 12pm (noon) in London, and the following Company
update will be made:
"2018 saw Fresnillo celebrate 10 years of being listed in the
London Stock Exchange, over this time we have recorded an excellent
set of achievements and built a track record of creating value
through both growth and returns.
This has included an 80% increase in silver production and a
230% increase in attributable gold production during that time, as
well as paying over US$2.8 billion in dividends to our
shareholders.
We have remained committed to our stated strategy: invest in our
business, grow production, increase reserves and resources, and
deliver returns to our shareholders in times of great volatility
for the mining sector.
We have also made significant contributions to the communities
in which we operate such as more than doubling the employment rate,
investing over US$135 million in health, safety and training, and
paying more than US$2.3 billion in taxes.
We are firmly established as the world's largest silver producer
and Mexico's largest gold producer. Now is the time to consolidate
our position and make sure we continue to fuel our pipeline in
order to deliver further growth in the coming years.
2018 was a more challenging year for our Company.
We achieved record annual silver production and a very strong
gold production. However, we were disappointed not to meet our
long-term silver target of 65 Moz.
Nevertheless, we are taking action to address this in a number
of ways.
The geology found in the deeper levels of the Fresnillo and
Saucito mines is distinct to that in the upper levels, in that with
depth, veins become thinner and less predictable. As a result, we
have been increasing infill drilling to achieve the same degree of
certainty that we have seen in the past.
We have also invested in innovative technology, additional
infrastructure (including a new vertical conveyor) and new
metallurgical processes to improve productivity. Additionally, we
have increased the number of contractors to meet our development
targets.
Despite a more challenging operating performance, we maintained
a very strong financial position.
The Group generated over US$2.2 billion in adjusted revenue for
the year, flat year on year. Profit during the year decreased,
while cash and other liquid funds were US$560.78 million at the
year end. Debt remained unchanged at US$800 million.
The Board has recommended a final dividend of 16.7 US cents per
Ordinary Share, bringing the total amount paid for the year to
US$201.9 million.
Looking ahead, we remain very confident in the long-term outlook
for Fresnillo.
This confidence is founded on our track record and our proven
consistent conservative strategy.
This translates into a focus on disciplined organic growth and
on our four strategic pillars: exploration, development, operations
and sustainability.
We have made excellent progress on our development pipeline.
The first stage of the new Pyrites plant has now been completed
and commissioned on budget. The plant will make an important
contribution to production by extracting additional quantities of
gold and silver from tailings at the Fresnillo and Saucito mines.
Stage two is underway and is expected to be concluded by the end of
next year.
We also commissioned the second line at the Dynamic Leaching
Plant at Herradura during the year.
Most significantly, we were pleased to announce the Board's
approval of the Juanicipio project, which has now moved from
Exploration into the Development phase.
Juanicipio will be a key project for Fresnillo. It is a
high-quality asset which we expect will make a meaningful
contribution to production in the first half of 2021, after
completion in late 2020, maintaining our long track record of high
growth and returns. US$395 million will be invested as
pre-operative capex during the Development phase, 56% of which
Fresnillo will invest and the remaining 44% will be invested by our
partner Mag Silver. Fresnillo will operate this new mine.
As we reported in April, first quarter production was down as
expected on the same period last year, though slightly weaker than
anticipated.
Full year guidance however remains unchanged as we expect to
realise the benefits from the investments we have made into the
operations.
As always, our approach towards exploration, and investing
throughout the mining cycle, is one of the strengths that
differentiates us from other mining companies.
We are also seeing positive results at a number of exploration
projects, both in our home market but also in our growing
international interests in Peru and, most recently, in Chile.
Given Fresnillo's disappointing safety results, Tomás Iturriaga
has been assigned to reinforce the Sustainability and Community
Relations area, regularly informing the Chairman and his staff on
measures taken and progress achieved.
Tomás is an Electrical Mechanical Engineer, with a Global MBA
from the Thunderbird School and a General Management Programme from
Harvard Business School. He has over 17 years of professional
experience in the mining sector working for companies such as
Goldcorp, Capstone Mining Corp and Endeavour Silver Corp.
I am pleased to report further progress on our environmental
sustainability agenda.
As announced at our AGM last year, over 60% of the electricity
we consume is now provided by wind power and we are on track to hit
our 75% target by the end of 2019.
We also retained our place in the FTSE4Good Index and joined the
STOXX Global ESG Leaders index for the first time.
Finally, I would like to close with a comment on the Management
team and our Board.
Our Chief Operating Officer, Roberto Díaz, retired at the
beginning of 2019, following eight years of committed service. On
behalf of the Board, I thank Roberto for his significant
contribution.
Now, I would like to welcome André Sougarret as Fresnillo's new
Chief Operating Officer. André brings great mining experience and
knowledge to Fresnillo following a notable career in the mining
industry, previously holding senior positions in Codelco and
Empresa Nacional de Minería in Chile.
We have also announced some changes to the Board.
Guy Wilson retired from the Board at the 2018 AGM, following ten
years of service and he has been replaced as Chairman of the Audit
Committee by Alberto Tiburcio.
During the year, the Board was strengthened by the appointment
of Georgina Kessel as an Independent Non-executive Director. Ms.
Kessel worked in the Mexican government where she served as
Secretary of State of the Ministry of Energy from 2006 to 2011. Ms.
Kessel's appointment brings the number of female Directors to
three, in line with our commitment to gender diversity.
Furthermore, Mr. Jamie Serra Puche resigned from the Board of
Directors after five years; we thank him for his counsel during
that time.
And finally, in April, the Nominations Committee recommended Mr.
Luis Robles to be proposed for election as an independent
non-executive director of the Company at today's meeting with his
appointment to take effect immediately after the conclusion of the
AGM.
Mr. Robles served as the Chairman of the Board of Directors of
BBVA Bancomer from 2012 until his retirement in September 2018,
having previously served as Vice-Chairman from 2007-2012 and as
Chairman of the Mexican Banks Association from 2014-2017.
The Board has also approved a recommendation from the
Nominations Committee that Mr. Robles be appointed as a member of
the Audit Committee and the Remuneration Committee, both with
effect from his appointment to the Board.
To conclude, we do expect 2019 to be a more challenging year
than 2018, with a number of industry variables potentially working
against us. Nevertheless, internal conditions in the long-term
remain sound.
We maintain our confidence in Mexico and will keep investing in
the projects under exploration.
Our model is proven, our people are skilled, experienced and
dedicated, and a track record of creating value through growth and
returns will continue to be our defining characteristic.
Thank you.
Mr Alberto Baillères
Chairman of the Board"
For further information, please visit our website
www.fresnilloplc.com or contact:
Fresnillo plc Tel: +44 (0)20 7399 2470
London Office
Gabriela Mayor, Head of Investor
Relations
Patrick Chambers
Mexico City Office Tel: +52 55 52 79 3206
Ana Belem Zárate
Powerscourt Tel: +44 (0)20 7250 1446
Peter Ogden
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-Dipolos(1) , Noche Buena and San Julián,
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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END
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