TIDMFRES
RNS Number : 6039P
Fresnillo PLC
30 May 2018
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
30 May 2018
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:
"Although we have a history stretching back to the year 1910,
Fresnillo only became a listed company on the London Stock Exchange
in 2008. Today, as we stand on the brink of our second decade, we
can look back on our achievements with justifiable pride, and look
forward with confidence.
Despite a changing market environment and pressures affecting
the mining industry, we are delivering on our long-term commitments
and continuing to create value through growth and returns for our
stakeholders. Over the last decade, we have paid US$2.5 billion in
dividends, invested over US$6 billion to sustain and expand our
operations, develop new projects, undertake strategic acquisitions
and increase silver equivalent resources by 158%.
At the time of the IPO, we set ourselves two demanding targets
for our first decade of operations. Our gold production target of
750 thousand ounces was reached in 2015, three years ahead of plan,
while our 65 million ounces objective for silver is on track to be
achieved in 2018.
2017 has again proved the importance of our consistent,
conservative long-term strategy based primarily on organic growth.
This provided the foundation for another year of record silver
production and stable gold production. We produced 58.7 million
ounces of silver (including Silverstream), and while gold
production was marginally down, we exceeded guidance.
Against a backdrop of relatively stable precious metals prices
and an upward trend of by-product base metal prices, we also have
delivered sound financial results. The Group reported over US$2,230
million in adjusted revenue in 2017, a rise of 9.2% over the prior
year, with a 32.0% increase in profit for the period. Fresnillo
plc's dividend policy is closely aligned with our focus on creating
value through growth and returns. We declared an interim dividend
of 10.6 US cents per share, with a final dividend of 29.8 US cents
per share, bringing the total for the year to US$297.7 million.
There were a number of key operational developments during the
year, in particular the completion of the second phase of our
silver-gold San Julián project. This is a real milestone for
Fresnillo. San Julián Phase II was commissioned on budget, and the
project reached nameplate capacity as expected in the third
quarter. This new mine is a cornerstone of our future prospects and
opens a promising district to further growth.
Both the Pyrites plant in the Fresnillo district and the second
Dynamic Leaching Plant at Herradura, have advanced on time and on
budget. We expect to commission both projects during the second
quarter and for them to make a positive contribution to full year
production in 2018.
We continue to take a disciplined investment approach to future
growth, focusing on projects with the potential to be developed
into world class, low-cost mines. The Board expects to approve the
development of the Juanicipio project in the coming months, and we
anticipate the start-up of production in mid-2020.
Fresnillo has started the year well and delivered a solid
operating performance in the first quarter of 2018. First quarter
silver production rose to 14.2 million ounces, driven by the
positive contribution from the second phase of the new San Julián
mine. We also achieved a solid gold production performance, up 4.1%
versus the same quarter last year, driven by strong results at the
Herradura mine.
As a result, our outlook for the year is unchanged. We are on
track to achieve 2018 production guidance of 67 to 70 million
ounces of silver, (including Silverstream) and 870 to 900 thousand
ounces of gold.
Exploration is a key pillar of our Company. We have a
well-established record of replenishing reserves and resources, and
2017 again saw good progress in this respect. Overall, our resource
base has continued to grow. Silver resources have grown from 2.2
billion ounces in 2016 to 2.3 billion ounces in 2017, while gold
resources remained stable at 38.5 million ounces. Gold reserves
increased by 22.7%, while silver reserves showed a decrease of
5.4%.
I regret to report one fatal accident that occurred in early
2017. Any fatality is unacceptable. We will never sacrifice the
health and safety of our people - or the long-term sustainability
of our business - for short-term gain, and strive to implement
best-in-class systems and practices throughout the Company.
However, it is clear that there remains more work to do,
particularly in ensuring contractors meet our stringent safety
measures. During the year we took decisive steps to re-engage all
our contactors in our health and safety culture and we will
continue to roll this out throughout 2018.
We continue to seek to improve energy efficiency and
progressively integrate renewables and clean technologies into our
energy mix. I am pleased to report 60% of our electricity
consumption comes from wind power and our aim is to get to 75% by
the second half of 2019.
One of the most important functions of the Board is to ensure
strong and effective corporate governance. We have continued to
identify and, where appropriate, implement best practice in line
with the UK Corporate Governance Code and evolving stakeholder
expectations in both the UK and Mexico. This includes new
anti-bribery and corruption legislation in Mexico; continued
support for greater gender diversity at Board level; and evolution
of the independent representation on the Board.
To this effect, we have seen a number of changes to our Board.
After 9 years serving as an independent non-executive director, Guy
Wilson will be stepping down from his role at today's meeting. The
Board has, therefore, approved a recommendation from the
Nominations Committee that Alberto Tiburcio be appointed as
Chairman of the Audit Committee and Mr Charles Jacobs be appointed
as a member to the Audit Committee. In addition, the Board has
approved a recommendation from the Nominations Committee that Dame
Judith Macgregor be appointed as an additional member of the
Health, Safety, Environment and Community Relations Committee, all
of which are to take effect at today's meeting.
As announced in February, the Nominations Committee has
recommended to the Board of Directors, and the Board has agreed,
that Ms Georgina Kessel be proposed for election as an independent
non-executive director of the Company at today's meeting, with her
appointment to take effect from the conclusion of the AGM. Ms
Kessel worked in the Mexican government where she served as
Secretary of State in the Ministry of Energy from 2006 to 2011. She
also chaired the Governing Board of the Federal Electricity
Commission and has been President and a member of the Board of
Directors of Petróleos Mexicanos (PEMEX).
The Board has further approved the appointment of Mr Alejandro
Baillères as Deputy Chairman of the Company.
I should like to take this opportunity to thank Mr Wilson for
his outstanding contribution to the Board and the Audit Committee
during the past nine years. His significant efforts in overseeing
the sound financial and internal controls environment of the
Company since the IPO will be greatly missed. I am though delighted
that Ms Kessel has agreed to join the Board. Her significant
political experience and knowledge of the energy sector will
greatly support the Company and the Board. I look forward to
welcoming her to the Board following today's meeting.
As we approach the tenth anniversary of our listing on the
London Stock Exchange, I am pleased to report that, while our
business model has remained consistent, we are also continuing to
learn and evolve - particularly in the areas of sustainability, the
application of IT and corporate governance. Corporate culture is
also a key agenda item for every Board meeting, with updates on the
cultural programme provided as part of the CEO's report. These
regular bulletins are supported by an annual presentation by the
Head of Sustainability.
Looking forward, we will continue to maintain our disciplined
approach to investment in order to support the key 'Explore,
Develop, Operate and Sustain' elements of the business model. Our
focus will once again be on efficiency and cost control to underpin
projects, ongoing performance improvements at Fresnillo, increased
production at San Julián, development of Juanicipio and the
continued evaluation of our other growth projects.
The Board and I reiterate our confidence in our established and
proven strategy and in the capacity of the Executive Committee to
execute it. While volatility in exchange rates or precious metals
prices may present short-term challenges, we anticipate further
growth and returns over the longer term.
Finally, on behalf of the Board and shareholders I want to
express my gratitude to our employees for their efforts.
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
(phase I and II), two development projects - the Pyrites plant, and
second line of DLP at Herradura, and four advanced exploration
projects - Orisyvo, Juanicipio, Las Casas Rosario & Cluster
Cebollitas and Centauro Deep, as well as a number of other long
term exploration prospects. In total, Fresnillo plc has mining
concessions covering approximately 1.8 million hectares in
Mexico.
Fresnillo plc has a strong and long tradition of 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, producing 65 million ounces
of silver per year by 2018, having already surpassed the gold
target of 750,000 ounces.
(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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
AGMLKLLLVEFEBBD
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