At a Capital Markets Day in London today, Fresnillo (LON:FRES) CEO Octavio Alvídrez and members of his senior management team including CFO Mario Arreguín, VP Exploration David Giles and COO Andre Sougarret, will provide an update on the Group’s current operational performance and set out key management priorities for 2020. The presentation will include detail on the extensive measures to stabilise and improve production at Fresnillo’s mines, as well as on the geological models, exploration, development projects, capex and costs.
Fresnillo will also set out its broader ESG strategy in full, including its enhanced approach to safety, an update on its tailings dam management, how it works with the indigenous groups and local communities, its commitment to reducing its carbon footprint through efficiencies and the greater use of wind power, and an extensive water stewardship strategy.
Key points from the presentation include:
Overall production outlook
The figures below represent management’s best estimate of likely production, based on the current geological models and anticipated production improvements.
· Fresnillo has narrowed its 2019 outlook to c. 885koz ±1% of gold and c. 55moz ±1% of silver, both within stated guidance.
· In 2020, Fresnillo expects to produce c. 54moz ±5% of silver and c. 857koz ±5% of gold.
· In 2021, Fresnillo expects to produce c. 66moz ±5% of silver and c. 785koz ±5% of gold.
· In 2022, Fresnillo expects to produce c. 71moz ±5% of silver and c. 665koz ±5% of gold.
The increase in silver production is explained by operation improvements at the Fresnillo mine, the Pyrites plant, Juanicipio and San Julián.
The decrease in gold production is driven by the planned Noche Buena closure and lower production from Herradura.
The following figures only include sustaining capex from current operations and growth capex of projects approved by the Board.
· Total capital expenditure in 2019 is expected to be US$585 million with around US$65 million from Juanicipio being rescheduled into 2020.
· Sustaining and new project capex in 2020 is expected to be around US$670 million, due to further investment across our current operations, offset by the deferral of projects for approval (Orisyvo and Ciénega Expansion) as we focus on current operations.
· Sustaining and new project capex forecast for 2021 is expected to be around US$475 million.
· A forecast for 2022 is included for the first time at around US$415 million.
Presentation and Webcast
The presentation and webcast for the Capital Markets Day will be available at www.fresnilloplc.com.
Octavio Alvídrez, Fresnillo Chief Executive said:
“Our priorities for 2020 are to stabilise production, and to unlock the full potential of our current mines and projects. We will focus on operational improvement and efficiency, while de-risking and advancing our development pipeline, most notably the new Juanicipio mine. We are confident that with the proactive measures put in place at our mines, together with our consistent, focused strategy, we will deliver on these priorities and that we will continue to create sustained value for stakeholders in the long-term, balancing growth with returns and maintaining a solid financial position.”