TIDMFRES
RNS Number : 2953O
Fresnillo PLC
29 May 2020
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
29 May 2020
Fresnillo plc - Annual General Meeting Statement
Fresnillo plc (the "Company") will hold its Annual General
Meeting today and the following Company update will be made.
"We are living in difficult and challenging times, with the
spread of COVID-19 globally, and the resulting unprecedented social
and economic impact. Our thoughts are with those who have been
affected by this virus, in particular the friends, families and
colleagues of those who have sadly passed away as a result.
We regret we are unable to host our typical annual general
meeting (AGM) this year and meet our shareholders face-to-face, but
in observance of the UK Government's introduction of social
distancing rules, this has made it impossible for shareholders to
attend in person. The Board would like to thank shareholders for
their understanding and support at this time - their health and
safety must come first.
Our response to the COVID-19 crisis has been the key focus for
the past three months, so while my statement would normally focus
on a review of the previous year's activities, I would also like to
provide an update on our COVID-19 response.
Our priority is the well-being of our workforce and the
communities in which we operate. We closely monitored the spread of
the outbreak and implemented a range of safety measures across our
business, following guidelines in accordance with the World Health
Organisation and Mexican authorities. This included stringent
monitoring & hygiene, temperature screening, social distancing,
and greater working from home for all office-based colleagues, as
well as supporting education campaigns across our local
communities.
I was hugely impressed with the rigour with which our teams
embraced this new way of working. They adapted quickly and with
diligence. Up to this point, we have had no officially confirmed
COVID-19 cases originating from inside our operations. Where we
have identified any suspected cases, those individuals have been
immediately isolated and monitored. Three colleagues were
officially diagnosed from exposure outside our premises and I am
pleased to say they are making a speedy recovery.
In light of the challenges we face as a country, and in
solidarity with the millions of workers in Mexico whose livelihoods
have been threatened by the outbreak, I can confirm the Board and
senior management are taking voluntary and temporary pay cuts while
we get through this unprecedented situation.
Fresnillo's operations are critical to the economies in which we
operate and central to the fabric of the local community. We take
this role extremely seriously and the well-being of our teams will
always come first. In particular, we are very sensitive to the
threat to mental health that COVID-19 presents. We have invested
significantly in mental health support for our people and their
families. We have also become a distributor of medical supplies,
donated ventilators to local hospitals and facilitated land to
support the extension of a hospital in the city of Fresnillo. We
have done all we can to support the Government's efforts to prevent
the spread of the virus and look after the sick including
supporting local food pantries.
Being a responsible operator is central to our ethos and the way
we do business. Our purpose is "to contribute to the wellbeing of
people, through the sustainable mining of silver and gold". Our
actions during this COVID-19 crisis illustrate that.
We believe the mining industry plays a vital role in the Mexican
economy, supporting thousands of jobs, generating considerable tax
revenues and supporting local communities. We remained in constant
dialogue with the Mexican Government and I am pleased to say mining
is now confirmed as an essential activity in Mexico. Our operations
are in the process of adapting to this "new normal".
Regarding our ongoing operations, attention to safety is our
priority. We have made strides in 2019 with the implementation of
our "I Care, We Care" programme, and I expect this effort to
continue into the future. However, this is an area that still
requires more focus, cultural change and investment. We regret that
two people lost their lives while working at our facilities during
2019. Our thoughts and prayers are with the families and friends
who lost loved ones. These tragedies show we must continue to
prioritise safety over everything else.
Strong environmental stewardship is a crucial element of
sustainable mining and helps us to retain our social licence to
operate. One fact of which I am very proud is our approach to
energy consumption and emissions. We are making progress in terms
of sourcing our electricity from renewable means, with 56% of our
electricity coming from wind energy and the Company looking set to
hit our 75% target by the end of this year. This fact is also
financially compelling, as it provides us with greater stability in
terms of pricing for this cost.
Operationally, 2019 was a more challenging year, as expected.
Both silver and gold production fell from 2018 levels, and this was
mainly due to lower than anticipated grades in our key mines. This
also impacted our financial performance. Though revenue was up in
2019 thanks to higher gold and silver prices, profits were down due
to higher costs caused by our operational challenges. Our dividend
policy has remained unchanged and we declared an interim dividend
of 2.6 US cents per share, with a final dividend of 11.9 US cents
per share, bringing the total for the year to 14.5 US cents per
share.
In the face of these operational challenges, our response has
been to increase the pace and scale of investments in a series of
projects and take corrective actions to bring production back to
acceptable levels in the short-term, and to achieve steady growth
in future years.
We were pleased to host a Capital Markets Day in London in
December 2019 where we gave a detailed presentation on the actions
we are taking to address the underperformance at our mines. We have
implemented a range of measures, including an intensive infill
drilling programme to improve the certainty of the geological
model, dilution control and raising development rates, as well as
actions to address contractor productivity and equipment
availability.
We are investing in infrastructure, plant and machinery
including a state-of-the-art tunnel boring machine which is now
being ramped up at Fresnillo - one of the first of its kind. We
have also begun to define a new programme to control costs and
increase productivity. Those measures will not result in an
immediate turnaround. But I am confident that we are making good
progress, and we should really start to see these measures take
effect in the second half of this year and beyond.
Our development pipeline is a constant and vital part of our
strategy to drive long term sustainable value for our shareholders.
I am pleased to report in 2019 we made good progress. The Pyrites
Plant project in the Fresnillo district is on track for completion
in the second half, as is the second phase of the beneficiation
plant optimisation project at Fresnillo.
Our next flagship project is the Juanicipio mine which we are
developing in partnership with MAG Silver. In February this year we
announced a change to the delivery of the project. In mid-2020, the
underground mine will start to process 16,000 tonnes a month of
development ore through the Fresnillo beneficiation plant, with no
impact to the Fresnillo mine. This will contribute to realising
commercial and operational opportunities for the joint venture,
including improving cash flow metrics and de-risking the
metallurgical process. The construction of the Juanicipio
beneficiation plant was extended by six months and is now expected
to be commissioned mid-2021. We remain very excited about this
mine's potential.
2019 was another busy year for the Board. We have invested
considerable time and expertise in understanding and responding to
new regulatory requirements including the 2018 UK Corporate
Governance Code and the Companies Miscellaneous (Reporting)
Regulations which came into effect on 1 January 2019. We are also
very focused on stakeholder engagement, in particular workforce
engagement, in line with the new Corporate Governance Code. During
the year, the Board assigned the responsibility for overseeing our
workforce engagement to Arturo Fernández, Chairman of the Health,
Safety, Environment and Community Relations Committee and I would
like to thank him for the advances he has already made. Looking
ahead, the Board has also committed to placing even greater focus
on our culture. The aim is for our culture to foster the necessary
mindset and behaviours to deliver on our commitment to the
sustainable mining of silver and gold. This culture must embrace
ethics and safety, while also driving innovation and operational
excellence to enhance productivity, reduce costs and decrease our
environmental footprint.
Following Jaime Serra Puche's resignation in February 2019, we
were pleased to welcome Luis Robles to the Board, as an Independent
Non-executive Director. A former chairman of Mexico's largest bank,
BBVA Bancomer, Luis brings valuable experience and expertise to his
role and he has already made a meaningful contribution as a member
of both our Audit and Remuneration Committees.
In February 2020, the Board approved a recommendation by the
Nominations Committee that Ms. Georgina Kessel be appointed as a
member of the Health, Safety, Environment and Community Relations
Committee, following Mr. Jaime Lomelín's retirement.
The Nominations Committee also recommended Ms. Myriam Guadalupe
de la Vega be proposed for election as an independent non-executive
director of the Company at today's meeting with her appointment to
take effect immediately after the conclusion of the AGM. Ms. de la
Vega serves on the board of Citibanamex and is Vice-president of
COPARMEX (the National Mexican Employers Confederation), amongst
other positions.
Improving diversity, in particular the representation of women
in the workforce, remains a key focus for the Board. In 2019 we
collaborated with leading educational institutions in Mexico to
encourage more women to participate in the mining sector. We
successfully increased the recruitment of women into our
internships and Engineers in Training programmes from 27% in 2018
to 35% in 2019. We also conducted a broad survey to understand and
identify how we can further enhance diversity. With these results,
the Board and management have identified several initiatives to
roll out throughout 2020 and 2021. These include workshops to raise
awareness on inclusiveness and unconscious bias, changes to
established recruitment practices, leadership development,
mentoring and sponsorship programmes for women. We will also begin
more detailed monitoring of our progress, with improved diversity
data collection and analytics.
In closing, I would like to re-emphasise the Board's
determination to oversee an improved operational performance after
a challenging period for the Company. During the last six months of
the year we saw a gradual upturn in production, as the projects and
initiatives I have outlined began to feed through into results. The
full impact of COVID-19 on the global economy is still not clear,
though consensus is for a steep fall in GDP. It is therefore too
early to determine exactly what impact this will have on Fresnillo
operationally or financially, so we are planning cautiously.
Despite these challenges, I have confidence in the Group's
underlying strengths, in our strategy and teams, in our culture and
behaviour, and in our ability to make valuable contributions to the
wellbeing of all our stakeholders.
I would like to place on record my appreciation to the Board
members for their support, and also to pay tribute to the senior
management team and all our colleagues, who have worked so hard to
address this year's challenges.
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)7793 858 211
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, Las Casas Rosario & Cluster Cebollitas), Herradura,
Soledad-Dipolos(1) , Noche Buena and San Julián (Veins and
Disseminated Ore Body), three development projects - the Pyrites
Plant at Fresnillo, the optimisation of the beneficiation plant
also at Fresnillo and Juanicipio, and six advanced exploration
projects - Orisyvo, Centauro great potential, Centauro Deep,
Guanajuato, Rodeo and Tajitos, as well as a number of other long
term exploration prospects.
Fresnillo plc has mining concessions and exploration projects in
Mexico, Peru and Chile.
Fresnillo plc has a strong and long tradition of exploring,
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 and Mexico's largest gold
producer.
(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.
LEI: 549300JXWH1UV5J0XV81
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END
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