Fresnillo plc

Good morning, everyone. Thank you for joining us today. My name is Octavio Alvidrez, CEO of Fresnillo. And here with me in London, we have Mario Araguin, who is CFO, Tomasi Turriaga, who is COO from the Central Operations, and Daniel Diaz, Chief Operating Officer of the Northern Region. Welcome to our half-year results presentation. As always, I would like to point out to all the explainer before I move quickly to see the agenda we have for the day. I will take you through the key highlights and address some of our key recent HSCCR initiatives. Tomas and Daniel will then provide some of the operational updates on their respective regions. And also, they will let us know some update about the development project they coordinate. Mario will provide a financial update and some more detail into the decision to agree a buyback of the silver string contract with Peñales. And finally, I will then conclude and provide some comments on the . We then look forward to a Q&A session. Investment proposition, you will be familiar with our investment case, and I believe it remains compelling and consistent. But first, let me make a few introductory remarks about the results. I'm pleased with the performance of our operations. We have now delivered consistently for over two years after a period of challenge. and dealt with a number of factors that have impacted our business before. I believe this shows how we have stabilized our operations and are now in a strong position to capitalize on further growth opportunities with the legacy operations all in a much better place. Further, we're also making progress on our development pipeline. Of course, these major projects take time and its title with the risk stem and ensure we have very detailed plan in place, as well as strong relations with all local communities. I would make the point that we are very focused on costs, and you will see this is reflected in our numbers. This, in turn, has driven a truly outstanding financial performance with lower costs and solid production, well-timed to benefit from highest prices of silver and gold mainly. Both gross profit and EBITDA have exceeded $1 billion in the period. I would also like to highlight the constructive dialogue we have been having with the new administration in Mexico, with the sector in general making positive steps forward. We achieved and were able to obtain some of the permits that were very pressing in some of the current operations, specifically in Fresnillo, with the permits of Fatima Norti being released some months ago. On the investment proposition, we are still the largest producer of silver in the world and Mexico's leading gold producer. We benefit from a large portfolio of high-quality assets with over 2.2 billion ounces of silver resources and 38.5 million ounces of gold resources. We have strong EBITDA margins, significantly improved versus the prior year, and low costs, and remain very focused on running our operations efficiently. This approach has seen us generate significant free cash flow of over $1 billion, alongside very strong earnings per share, which has enabled us to reward our shareholders with strong returns in the form of dividends. A couple of words on the silver and gold markets. We have all seen increased demand, not just from the traditional markets, drivers such as jewelry, but silver in particular is used in various industries, including electronics, and very importantly, solar panels, which have very much made this demand grown in the last years. The other part also in both metals is the supply constraint. I mean, we have not seen a large supply nor in silver nor in gold in the last 8 to 10 years. And in silver specifically, the market running a deficit for five, the last five years. In short, we are confident of the outlook for silver and gold metal prices being supported by these factors. For safety, safety is the heart of everything we do. Overall, our safety performance has improved largely in part due to our I Care, We Care campaign and philosophy, which is rolled out across our portfolio and focused on installing a safety culture throughout the organization. The overall safety performance is trending in the right direction, as you can see. We are sad to report we have experienced two fatalities over the last few months on an employee in Exxon tractor worker. And this is a reminder that we need to do more and redo our efforts across all of our operations. On the environment, our work on improving our carbon emission performance is also ongoing as we work towards or decarbonization operations, improving water recycling rates, and upgrading our mining fleets. We achieved 80% renewable energy consumption in the period, a new record for the business. Let's remind that 75% remains our objective, and with this 87%, Whenever we bring our projects or development projects and operations, we will go back to those 75% as an objective to renewable energy consumption. I was also pleased to open the pro-annual water stabilization plan in the Zacatecas region in February to improve water supply in Fresnillo and complement what we've done as we have three sewage water treatment plants, but this will benefit approximately 32,000 residents in the Fresnillo area with potable drinkable water. This project was a collaboration with the Zacatecas State Government and Minera Salcito, highlighting a public-private partnership to address water scarcity in the area. Our community relations efforts have really progressed. These initiatives are particularly important. We move forward on our new development projects where considerable, very positive work is being done with the local communities. In particular, I would highlight local health campaigns we have developed in conjunction UNAM, which is the National University in Mexico Foundation, and the continued success of our scholarship program. As I have highlighted before, our relationship with our communities is central to our license to operate, and we continue to make a huge contribution to our communities, both in terms of investments, employment, and the tax we pay. Finally, I should also add here we are developing a constructive and positive relationship with the new administration on this well for the future and the development of our projects. Some of the operating highlights for the period. We have already disclosed silver and gold production were in line with guidance, with very strong gold performance driven by . and silver impacted mainly by the cessation of mining activities and San Julian disseminated our body and also the buyback of the Silver Stream Agreement from Peñales. We remain very focused on costs and this reflected in our operating margins. As you will see, those have increased from past periods. In today's announcement, we have also confirmed the decision to agree a buyback of the Silver Stream contract with Peñoles. And Mario Reina, our CFO, will provide a detailed review of the strategic and financial rationale for this. But overall, we are confident it is the right outcome for our shareholders. Given the Silver Stream buyback and the continued performance of Herradura, we are today making some adjustment to our full-year guidance. Attributes of silver production guidance for 2025 have been adjusted lower for the silver stream buyback with no further silver stream contribution from second half 2025 onwards. However, on a silver equivalent in ounces basis, there has been no change to the guidance because of the stronger production of gold in the case of Herradura. Some of the financial highlights. As I said in my introduction, this is a very strong set of numbers, where we have capitalized on higher metal prices, but also kept a strict control over costs, as you can see from our margin performance. As a result, both EBITDA and gross profit have exceeded $1 billion. We are generating significant cash, which also translates to another strong dividend in line with our policy of over 150 million. I will now turn to hand over the microphone to Tomas and Daniel to provide some operating, and as I mentioned, some update on the development projects as well. Thank you, Octavio, and good morning, everyone. Good to see you again here. Let's start with some comments on Fresnillo. So, good results overall. We continue working in our operational discipline and geological controls trying to improve the silver grade, and we have made some good progress there. Our grade is up to 170 grams per ton. compared to 150 grams per ton in the same period of last year. So that's a 12% increase on the grade. And we'll continue working towards that improvement, but we have been showing good progress. The challenge now at Presidium moves to the tons of the volume process. where we saw a substantial decrease compared to the same period or the Q1 this year. And mainly, the main factor there is unstable access to one of the areas that we had in the sequence for this year, the San Rafael area.

So we needed to take out completely out of the mine plan, those tons.

some 60,000 tons in that area alone. So that's the main impact, along with lower volumes from the cotton field stoves and having to do with the geometry of the veins, narrower veins or shorter stoves or a combination of both. We are starting already a new access to the San Rafael area, and we are doing different things to improve our cycle times. That way, we can increase the volumes coming out of our current field stoves. None of these measures will have an immediate impact, so we expect a similar second half of the year in terms of volumes. Maybe a bit better, but not substantially better. However, for next year, we should be okay with the back-end sequence, and we should have recovered that area in your mind.