Fresnillo plc

everyone. I'm Octavio Alvidrez, CEO of Fresnillo PLC. And thank you for being here with us to hear about the full year. Preliminary results 2024 in our company. Here with me, we have Mario Arreguin, our CFO. Also, Tomasi Turriaga, our Chief Operating Officer from the Central Region. And Daniel Diaz, our Chief Operating Officer from the Northern Region, as well as our people from our region. London office, and some core members, Charlie, Jacobs, thank you for being here. And first, let's point out to our disclaimer this morning, just quickly to set out the agenda for the day. I will go with 2024 highlights just to give you also a brief update on our initiatives on HSECR. Then Daniel and Tomas will let us know about some audit on the operations. I will continue giving you some brief comments about resource and reserve and exploration update. Mario will come with our financial performance for the year, and I will close with an outlook comments just to take your questions after that. You all recognize the investment proposition of Fresnillo. I believe it continues to be compelling. But let me first go over some preliminary key messages. Where are we are now? After some years of operational challenges, The aim and the main objective was to stabilize production across all of our operations. There were some factors due to our operations, the maturity of some of the mine sites, but also some external factors. Among some of those that I can mention briefly, Some narrower veins going to the west in the Fresnillo district made some difficulties on the operational side, increasing dilution, lowering the ore grade. Also, let's remember that in Herradura, We transitioned from the oxides portion of the ore body into more of the sulfites zone. Also, we added some two dynamic leaching plants, adding cost to the operation at Herradura, while we had some lower grades there. In Cienega and San Julian, also some difficulties occurred. on the operation, especially in Cienaga, in which the mine life was shortening and also lowering or changing the mix of the ore, going from more gold into more silver. And therefore, some of the external factors, of course, we went through an inflationary period in these last three, four years. And especially in Mexico, the labor reform affected some of our business model in which we were relying with a lot of contractors. And we needed to include in our headcount some of those workers from the contractor companies. So all in all, played a part in more difficulties in our operations to deliver our resorts and brought some instability in the expectations of productions. I'm glad to report that this period in which we, our main objective was to stabilize the production has been achieved and therefore we have a couple of years hitting our guidance which is very important. Now, the aim is, as it's been, to control and even reduce costs through a set of initiatives across all of our operations. I'm glad to report, and we will see the details that have been achieved as well. that has given us the possibility the ounces out there in the production side and the cost is more efficient and uh... as well as the operations in our mines strong cash flows and a robust balance sheet as a result of all of this, and the high metal prices specifically for gold and silver, giving us a possibility to give significant returns to shareholders. We are glad to announce today a one-off special dividend has been declared. Another aim in our portfolio of mines and projects is to maintain resources and continue converting these resources into reserves. This, in the case of silver, is still a pending issue, as we will see the details. But we will continue to have exploration as one of our pillars. Invest in exploration through the cycles is one of the pillars in Fresnillo. And that has given us a possibility to create value for our shareholders. Also, I'm glad to report that we have a more positive and constructive approach towards mining by the new administration in Mexico, an openness for dialogue to really understand the issues of the mining industry, and in particular some cases in the Fresnillo portfolio. Glad to report that some of the long-awaited permits have now been granted for some of the infrastructure pieces around our operations. So we look forward to continue this constructive dialogue with the new administration in Mexico. Of course, we have a portfolio of projects, prospects that we will continue to advance and the risk as we progress. over the years. So some of the highlights. We continue to be the world's number one silver producer, achieving 56.3 million ounces of silver. We are also the leading gold producer in Mexico. This is backed by a quality large resource base of just 2.2 billion ounces of silver and close to 39 million ounces of gold. As I mentioned, the aim in this 2024, as we reported at the start of last year and also at midterm, was to widen the margins through the initiative that we can put in place and control, which is basically the cost basis in our operations. As you can see, I mean, that gave us the possibility with the high prices and the ounces being there of giving attractive returns. In total for 2024, close to $550 million composed of the interim and final dividend of 2024 and the one-off special dividend as well. I think this slide... financial highlights, and Mario will let us know more details about this, reflects also what I mentioned before. The aim of controlling cost, the set of initiatives put in place across all of our operations, and giving us very good results, very good cash flow generation, and a strong balance sheet. More details on the kind of initiatives that we can report today. Glad to say that during the half interim report, we were expecting approximately $40 million in grants. in initiatives going through our results. Glad to report that we achieved this. Part of that was after, as I mentioned, the labor reform in which we increased our headcount, rationalized the contractor base, being more efficient in the coordination of all these resources, along with our own workers in each one of the mines, Also, some investment that I will say will still be seen, the kind of advantages in the operation that we will achieve, specifically the San Carlos shaft at Fresnillo. We finished that. Now it's operational. And we will see the cost advantages that will bring to Fresnillo mine. We continue investing in deepening the Jarias shaft at Saucito. expected to be completed in 2027. So this kind of infrastructure investment are the ones that compensate the usual trend in an underground mine of increasing cost as we continue to go deeper and also developing along the veins in each one of these mines. Another initiative, specifically in San Julian, we were not achieving the nameplate capacity of the veins system process. And after a careful design process, mining plan, we were achieving consistently this higher capacity, and that gave the possibility in San Julian to also give us good results. A specific mention to Cienega. And Daniel will tell us more about the result we achieved there. But Cienega in 2023 was one of those operations that was giving us – well, it was not producing enough cash flow to cover their investments, and it was burning cash on the other side. It's been one of the mines in our portfolio that has given us more results and glad to report that we will continue to see Cienega as we are also having some preliminary exploration results promising in the Cienega mine. A word on silver and gold markets. We all know that these two metals play a role in the storage of value, of course. In high inflationary environment, of course, also play a role, specifically gold, as it is now. global geopolitics as we, the ones that we live now, tensions in the trade front across countries. So all in all, and especially silver with its growing applications on the industrial side, on the appliances, electronics, et cetera, but also on the green energy transition, is ever growing, specifically with the photovoltaic possibilities of silver and the solar panels. That with the other part of the function, which is for the last five, six years, no more silver being produced, very much flat, and therefore contributing to a deficit over the last five to six years. Therefore, of course, we will see good arguments to support these higher gold and silver prices. A few words and a few comments in our HSCCR initiatives. Health and safety, the most important for our people to guarantee the integrity of all the workers that collaborate in our operations. As you can see, a positive trend going back from 2017 to now. through our eye care, we care philosophy and initiatives, also strengthened by the high potential methodology as well. On the environment front, we continue to make advances. We have achieved plus or north of 80% of our demand of energy coming from eolic sources, surpassing even our objective of 75% by 2030. This we will maintain as we bring some of the projects, the greenfield projects that turn into operations in the following years. That may change and that growing demand for energy will might result in fewer percentage coming from these eolic sources. Community relations is very important, specifically nowadays, in order to bring the social license in all of the projects that we are advancing. Specifically in Orizibo, this project will be subject to indigenous consultation. We bring from early days at each one of the projects, each one of the initiatives in terms of community relations that have given good results on the mine sites as well. But this is also the case for Rodeo. Tajitos, and also for Guanajuato, in which we are having very good exploration results. And with this, I turn your presentation to Tomasi Turriaga in this case.

Thanks, Octavio, and good morning, everyone. It's a pleasure to be here to give you a review for operational performance during the year. I think, as Octavio was saying, that overall we had a strong year in the three mines of the central region in terms of production. And also, our cost control and operational efficiency programs granted good results, as you will see in our financials. And a little bit of detail on the Fresnillo mine. During 2024, we continue working on our operational discipline to improve dilution control. And also on the reduction of the sections of the mine to adjust to the narrower veins that we are encountering at depth, for which we received six pieces of new smaller mine equipment. And we also rehabilitated another six, and these are basically jumbo scuturums and smaller underground trucks. And although we made good progress on these efforts, it didn't reflect yet in the 2024 results. So therefore, we were not able to achieve the silver grades that we guided at the beginning of the year. However, The gold, lead, and zinc production at Fresnillo was substantial. So on a silver equivalent ounces basis, the performance was very strong in 2024, as you can see. This strong production, along with our focus on cost reduction and efficiency, and our disciplined approach to sustaining CAPEX deployment, enable us to capture the increased margins driven by the stronger metal prices year-on-year. During the last Q of 2024, we finished commissioning the deepened section of the San Carlos shaft, and the MD 5000 tunneling machine was relocated and is operational again. So we expect the benefit of these key infrastructure elements, along with an increased silver grade, and tons mine out for a stronger 2025 at the Fresnillo mine. In Saucito, I want to convey to all of you that we are very pleased with the turnaround that we have achieved in this mine. As you know, we were coming from a very difficult 2021, 2022. Even in 2023, we still had some issues where Saucito was highly impacted by the labor reform at one point. and then by our own safety and operational issues and challenges. But I'm very pleased to share with you that our team outside has done a remarkable job getting things under control at the mine. So this operation is now safe and producing at expected levels again, as seen in the strong production of gold and silver in 2024. The deepening of the Jarillas shaft is progressing well at Saucito, and we'll keep focused on maintaining the good safety and operational performance to secure another strong gear at Saucito. Finally, on to Juanicipio, which continues to be a good success story. Very sound production results. The mine continues operating with good results and positive rate reconciliations, which allowed us to exceed the silver grade guided for 2024. The better than expected grades at Juan Ecipio compensated in full the shortfall at Fresnillo, which speaks very positively of the strength of our portfolio of mines. The first full year of operations at the mill went well. We didn't encounter any unexpected issues, so during the year we were able to refine or fine-tune the metal routine and other process variables. As grade are expected to decrease going forward in Juan Ecipio, we are nowadays exploring additional veins, new veins, new system veins that could potentially improve the life of mine grade profile at the mine. After receiving pending environmental permits last year, our tailings dam expansion project is advancing as planned. And also, our underground conveyor belt project is underway at Juan Ezequiel. So in general, sound year in the central region in terms of production, and as we deliver tons and ounces, and as we focus during the year in cost control and margins, we were able to capitalize on metal prices. This focus will continue in 2025, as well as a deliberated effort to locate and develop brownfield opportunities to improve the production profile in the following years. Thank you, and I'll pass it now to Daniel Diaz.

Good morning, everyone. Thanks, Tomas. On the northern region, key highlights to begin with. Octavio mentioned that in the beginning of the presentation, what the purpose was for all of us during this year, and that was about maximizing returns from our assets. That required a disciplined strategy, asset by asset. So what we will discuss now is a little bit of what was the strategy put in place for each one of them. In the case of Herradura, it was about to begin with discipline, operational turnaround, and how to unlock value from this asset that is one of our main assets in the company, and prepare the foundations for growth. And You can see the results, and we're very pleased to report that this first stage, as we call it, of the operational turnaround has been very successful during the year. If you recall, the first half of the year was difficult in terms of production. We had weather events at the beginning. We had some delays in mine development, so the results were not very solid on the first half. However, the turnaround and the recovery during the second half allowed us to close what we think is a very successful year, beating the production levels of previous year, beating our internal guidance in terms of production, in line with our costs in the budget, slightly above the previous year. But when you analyze the trend of cost during the year, we had a reduction between 15% and 20% from the beginning of the year to the end. So in general, it's a successful story in Herradura. The productivity levels were increased. Cost control, again, in terms of capital allocation, discipline in operational, eliminating expenditures that were not required, has been very successful. And that triggers the results that you can see. We also progressed with the reassessment of the strategic mine plan for Herradura. We reassessed the future of the mine and implemented the first stage of the operational excellence plan. That is starting to deliver results now in 2024, and we are starting with the second phase in 2025. And I will comment a little bit more about this strategic plan for the Erraura district in a few minutes. The assessment has been validated in terms of the potential of the district, and that's very important. We have the main pit in Herradura that is the main source of production. However, we validated the potential of the underground mines, both in the relatively short term and in the long term, with two different deposits that will be part of an integral operation in the future, having underground and open pit at the same time. So we expect to announce some preliminary results in the second half of this year about the potential of the district. And also one of the key challenges for us during this year was the transition. Octavio mentioned is the transition between the oxides part of the deposit to the sulfites was a challenge. Recoveries were an issue. However, we started preliminary test work that validated the potential of another process for the sulfites. We are starting an industrial test work right now and we expect to have very positive results out of that that will translate into lower cost and higher productions during 2025 and the years onward. So all in all, very positive outcome from Herradura, and we think we are very well prepared for the next step for this asset that is the growth in the district. Let's remember that this asset has a life of mine until 2040, so a lot of potential there to keep improving and growing. In the case of Cienega... Octavio mentioned, it's a positive story about the turnaround in the operational discipline and cost control, basically, coming from a difficult year in 2023. In 2024... The delivery on cost reduction, efficiencies in contractors basically, allowed us to have a healthy year in terms of the economics. Again, productions above the previous year, both in gold and silver. The cost decreased significantly. You can see the cost per ton decreased to 120. That is the levels that we expect. But on a cash cost and only in sustaining cost basis, the decrease was significant, putting Cienega again into levels that allow us to have a profitable operation in a future until the end of the life of mine that is 2028 so far. Good news about it, we are having good exploration results during this year. That's a positive in Cienega. It's, as you know, it's an operation with 30 years of life so far. So we thought it was limited in terms of potential to find new sources of water to extend mine life. We're having good results, and we're very confident that we will be able to extend the life of mine beyond 2028. So a positive outcome for Cienega. And finally, in the case of San Julian, that was a different challenge because San Julian was about being able to make a successful transition between the operation with the two plants that we have in there, the DOV and the vein system, into just the vein system. That is what we have in terms of resources and reserves for the future. The results are very promising, very successful. You can see we had, if you remember, we announced that we had issues in the DOV that shortened the mine life. It was expected to finalize during 2024, but we needed to finalize before, and the amount of reserves minable were lower than expected. However, implementing something that Octavio previously Also, another operational excellence program specifically focused about optimizing the throughput in the plant allowed us to increase significantly the results and the production from the vein operation that, on a consolidated basis, allowed us to beat our internal production guidance in terms of production, gold and silver, cost below our expectations in all in-sustaining cost and cash cost basis. The more important outcome out of this is that we are confident now that with the operations of only the veins plant, we have a sustainable operation, profitable operation in the long run. Our current life of mine is until 2029. However, exploration in San Julian is giving us very promising results. So we're also confident about extending my life in the operation. So in general, in the northern region, I will summarize the focus on cost control, the focus on operational excellence across our operations has been delivering results, as you can see in the consolidated results for the company. Back to Octavio.