Fresnillo plc

Thank you for joining us, this Fresnillo PLC Centering Results. I'm joined by Mario Arreguin, our CFO, and also by our COOs on the Central Region, Tomasi Turriaga, on the Northern Region, Daniel Diaz. and also by our team of the London office. This morning you will hear an update how we are doing up to this half year on the operations, but also on the prospects and projects and how we are going. First of all, the disclaimer. This is the agenda that we will discuss this morning, investment proposition, HSECR, the highlights on the operational side and the financial side, operational performance at each one of the mines, the financial performance addressed by Mario Arreguin, and to finalize with the outlook before we go to Q&A. We continue to be the world's largest silver producer and also leading producer of gold in Mexico. Underpinned by the portfolio of quality assets, 2.2 billion ounces of silver resources and close to 38 million ounces of gold. We've been working to improve the margins At each one of the mines, working twofold, very much on productivity, but also to contain and mitigate the costs caused by inflation and the effects at our mines. But also, I can say that, of course, these prices are helping us in that regard. We have good cash flows coming from our operations, attractive returns, so that we have cash on hand very healthy. The strong balance sheet as well, and we are on full year production guidance on track to hit it on the gold side and also on the silver side. A few words on the markets. We cannot disregard that the silver, with its duality in terms of industrial demand, has a very good support, growing at a nice pace, but also on the gold side, regarded for the store of value. But the good thing about these two markets is that scarcity of resources. I mean, it's been long since we haven't really had a discovery, a good discovery on the silver side, but also trending down on the gold side. So with this demand, the deficits in the market that support for the coming years, we believe this level of prices. On HSECR, safety is at the heart of all we do. As you can see, we have a very positive trend since 2017 to now. We continue to instill the culture iCareWeCare across all of our operations and across all levels in our organization. On the environment side, a few highlights. We're coming also to increase The demand, energy demand from eolic sources coming from the low 50s at the end of last year to 70% of all demands coming from green energy sources, closing the gap to 75 by 2030. Community relations is very important across all of our operations. It's a partnership since the time that we get there for exploration, but through the different stages as we develop the operations. Of course, a good, educated community is one that we can discuss things and issues. but also we support very well health in our communities. We bring every year through Fundación UNAM, the program for a week, in addition to what we have in terms of health infrastructure in our operations. And that program is very well regarded. Also, I mean, we work with them in order to strengthen their entrepreneurial skills and abilities so that they benefit from the economic growth that we have in the regions. and also in sports and, as I mentioned, in education. Twenty-four half-year highlights on the operational side, 28.2 million ounces of silver and just off 271,000 ounces of gold. We are working in the short term, but also in the medium and long term. In the short term, we reaffirm our guidance, silver production in between 55 and 62 million ounces of silver. On the gold side, 580 to 630,000 ounces of gold. We've had a soft first half, but Daniel Diaz will address what we are expecting for the second half in terms of gold production. But as I mentioned, it's a reassurance of the guidance that we will achieve according to what we described for this year. In the medium term, you will recognize that we have a stable production for the following two to three years. And what we are doing in order to address that is bringing some other brownfield production increases across our operations. More clearly on the Herradura district, but also in some synergies in the Fresnillo district as well. And you will start hearing more and more how we are thinking about those brownfield production increases in these two areas. A few words on the financial performance highlights. As I mentioned, healthy cash flows coming from our operations. EBITDA by half year 544. Mario Arreguin will tell us all the details about the financial performance. But just to say as a highlight as well that to half year we've been net cash positive and cash on hand of $690 million. A few words also on the projects. Odisebo continues to advance to pre-feasibility. Nonetheless, it's a challenging project, but more and more we are strengthening this case, this business case on the metallurgical side, but also on the return side. There are a few years until we bring this project on stream. Rodeo, nice to report that we finally have a deal with the agrarian community We struck a deal in order to go for three years. This three years period, I mean, will help us to start the exploration, convert those info resources into indicators, indicated, and continue with the pre-feasibility and feasibility stages there. Tajitos, we can regard that as a satellite operation in the Herradura district. That is advancing very well. We have reported before, I mean, the land is, we have title of the land, and also we continue exploring and making that resource growth. But the start of this project is Guanajuato. You will see how the resources grew from one year to the other. And that continues to be the case. It is an underground vein system. Good grades, what we are discovering there, and certainly an operation for the future in the Fresnillo portfolio. This to say that there are so many other projects in our portfolio. And that's something that we will do as well. Some of them are in advanced exploration, but with some metallurgical problems. I should point out to Lucerito, a nice resource in terms of silver, but also gold and also zinc. With the metallurgical... Different metallurgical processes that we are testing across all of our operations, we believe that we have possibility to unlock this project and make it somehow possibility for the future in our portfolio as well. And that's something that we are doing as well. San Juan is a nice project also in the vicinity of Durango and Torreon, good infrastructure there, and that's something that we will take in the following periods. And with that, I would like to pass the microphone to Tomasi Torreira on the Fresnillo District, and then followed up by Daniel Diaz as well.

Thanks, Octavio. Good morning, everyone. So let me start with some comments on Fresnillo. So as we reported in our production report days ago, we faced some challenges in our mine operations during the first half of the year, such as poor ground conditions requiring extra ground support, these delaying mining cycles and impacting volumes produced, and diluting silver grates also. We also found narrower than expected veins impacting volumes mined and also increasing dilution of the ore extracted from those specific areas. All these impacts coincidentally happen in the east section of the mine, which is where higher silver grains are expected. So that's why you see an impact to our silver grains in the first half of the year. Results, we're already addressing all these conditions by adding additional bolting equipment already at the mine site. So to deal with the conditions, to the ground conditions faster and those expediting mine cycles. And also by placing orders for smaller mine equipment to adjust to the mining sections, to the narrower veins. We are reviewing in detail our short versus long-term reconciliation models to be able to better manage grade and tons variations in our production planning. And we are also very focused on improving our operational discipline and day-to-day controls in order to secure optimal performance of the mine. With all these actions, we expect an improved performance in the second half of the year at Orofresnillo Mine. Challenges with the silver grade, as I described. I wanted to highlight that the gold, zinc, and lead grades at Fresnillo are all above plan. So in a silver equivalent ounces basis, the production has been solid during the first half of the year. And also our cost reduction programs are granting good results in total dollar terms despite still strong Mexican peso and some persistent inflation. Moving into Saucito. I wanted to share with you that we are pleased with the turnaround of the operation after a very complicated 2023 that we faced. And although we don't take anything for granted, we continue very focused in all aspects of the operations. We can say now that the safety of the mine has improved noticeably. Their grades are consistently according to plan, and the mine output is also achieved consistently at the mine. Our new management team appointed early this year is having the leadership and making the impact that we expected out of them, while our young workforce has stabilized and started to show improved productivity after the turmoil caused by the labor reform a couple of years ago, particularly having an impact on Saucito. Coastal is still an area of opportunity at Saucito, so we will further reinforce our ongoing efforts there to complement the good operational performance. Moving on to Juanicipio where we had a very strong performance and results during the first half of the year. The mine operations are steadily delivering the output according or better than planned. We commissioned and ramped up mill operations seamlessly and have continued operating steady without any relevant issues. And the silver grays are reconciling very positively versus geological model. All this making for a very good and encouraging first full year of operations at Juanicipio. We will continue focusing on securing a sustained performance at Juanicipio. and also advancing the design, construction, and installation of our underground belt conveyor as the next infrastructure component adding to the productivity of the Juan Ecipio mine. So I already described the main focus for each one of the mines of the central operational region, but I want to also comment that, as Octavio mentioned, we are focusing in advancing some brownfield opportunities. For example, we are focusing over within defense exploration. So we have that brownfield potential to our existing mines. And we have the early stage development of a potential integrated slash interconnected Fresno District operations concept to unlock synergies and take full advantage of the installed capacity that we already have in the district. So with that, I'll pass it along to Daniel Diaz for the northern operations. Thank you.

Good morning, everybody. Moving forward to our Northern District operations, let's start with Cienega. As you probably know, Cienega is one of our legacy operations, has been there actually this year. It's getting 30 years old. So despite the complexity of this operation, given its age, I'm happy to report that we have developed a successful turnaround of this operation. The net result is a 35% reduction year-on-year basis on an all-in-sustaining cost basis, which is a fantastic outcome with a 9% reduction in cost per ton, 30% of all production in silver, and 19% of all production in gold. So we're very happy with the results we're getting in Senegal. The key drivers for this upgraded production is an improved mine plan, delivering higher grades. We changed the sequence and we also have a tighter dilution control that is driving these results. On exploration, Given its age, it's not easy to find new areas. However, we have been successful on delivering positive results at depth and on new areas on Cienega. So we expect to come with good news extending the mine life one or two years from what we have right now. So all in all, very positive results on Cienega. Moving into Herradura, in Herradura, despite a strong first quarter that we had this year, we had a softer second quarter. This is driven mainly by strong weather events that triggered a geotechnical failure in one of our key operating areas. Outcome of that was the inability to access higher-grade oxides. So this is not the lower production on second quarter. This is not a problem on the grades or the amount of ore. It's about getting the oxides for the heap leach, as you probably read. on our reports. It's about the recovery and what we're triggering on the heap ledge. However, the good news is that we already accessed that ore. It's available and we expect to catch up during the second semester and finalize the year within our guidance for the company with stronger results in Radura. What you see as a result on cash cost and only in sustaining cost, it's not an increase in expenditure. It's actually the lower production is triggering up the cost. But on the second half, we're expecting to come back to the $1,500 to $1,600 only in sustaining cost basis. The relevant news on Herradura are around the Herradura district that we briefly mentioned earlier this year about the potential that we're seeing there. And we continue to progress on a strong pace on geotechnical work and conceptual engineering for two of the potential underground operations that we expect in there. We expect to share some news on the results on upcoming presentations. We are still advancing the exploration program in Tajitos and other prospective targets within the district that, as you know, we see strong potential for exploration beyond what we already have in Arrauda in our own land that has already intervened, so high hopes on what we have in there. And in terms of cost reduction, we have a program very strong with key measures for the second half of the year. We are reviewing our key contracts right now, and we expect to start capturing some of the savings during the third quarter of the year. And finally, moving to San Julian, as we reported before, the issue that we had on the disseminated ore body that triggered the necessity of shortened mine life and end the operations in October this year has been – well compensated and overcompensated in production by the vein system. We're happy to report that we have a 19% higher production in gold and a 60% higher production in veins in the vein system on silver. So we have very strong results both on the operational side. push together a very strong operational excellence program that we're already capturing the results right now by higher throughput. We already delivered 3% to 4% higher throughput. However, on a run rate basis, we expect a 9% on the long run. And we also are having higher rates than expected on the mine, so the results are good. the ones that you can see, with an overall outcome of a 34% reduction on an oil in sustaining cost basis for the vein system. What is the net result of this? It's the sustainability of the long-term view of the vein system. That is what is going to keep operating during the upcoming years. And also the successful exploration results that we have seen on San Julian right now makes us very confident about the future of San Julian. Beyond 2030, that is where we have our current life of mind plan. Thank you. Handing over to Mario.