21 Upper Brook Street
London W1K 7PY
17 May 2022
Fresnillo plc - AGM Statement
Fresnillo plc (the "Company") will hold its Annual General Meeting today. Chairman Mr Alejandro Baillères will make the following statement:
It is a privilege to be presenting to you today in my first AGM as Fresnillo, plc's Chairman.
I would like to begin by paying tribute to our former Chairman, and my father, Alberto Baillères. Don Alberto was a remarkable man who achieved many milestones in his life, but never forgot what was most important. He led Fresnillo with distinction for many years. As a Board, we continue to miss his leadership, and as a son, I continue to miss my father. I am absolutely committed to building on his legacy to create a stronger and more resilient company, while remaining faithful to his values.
Our Purpose is to contribute to the wellbeing of people through the sustainable mining of silver and gold. I am proud to tell you that in 2021, we remained committed to this purpose which continues to be at the heart of how we think and act. Our purpose has supported our people and their communities through what were, at times, difficult and demanding days.
As we anticipated, the pandemic again disrupted our activities in 2021, although not to the same extent as the previous year. The introduction of new labour legislation added to the challenges we faced and caused additional disruption, primarily at our underground mines.
A fourth wave of Covid-19 reached Mexico at the end of the year. Though we are thankful this variant presented a lesser health risk, it still impacted us due to higher rates of covid-related staff absenteeism. The safety and well-being of our people is our priority and our covid protocols were effective in limiting the spread. Nonetheless, this did have an impact on production, though I am pleased to say this has now lessened.
A second major challenge to the business was presented by the labour reform in Mexico restricting the ability to subcontract labour, which came into effect from 1st September 2021. This resulted in the requirement to internalise a high proportion of our contractor workforce. Historically, a trained and motivated contractor workforce has been a key aspect of our way of working and the reform has necessitated significant work. Ultimately, we believe that although the move away from outsourcing will be a challenge in the short term, in the medium and long term it will lead to a more cohesive and resilient workforce.
Despite these, we delivered a creditable performance. Silver production of 53.1 moz (including Silverstream), was marginally below guidance, but flat versus 2020. Gold production of 751.2 koz, was ahead of guidance, down 2.4% versus the previous year. We have started 2022 in line with our expectations and our guidance is unchanged.
We reported US$2,847.9 million in adjusted revenue, an increase of 9.2%, primarily due to better precious metals prices. Gross profit rose year-on-year by 6.5% to US$936.9 million. Generating returns for our shareholders is key and a priority - we declared an interim dividend of 9.90 US cents per share, with a final dividend of 24.0 US cents per share, bringing the total for the year to 33.9 US cents per share, in line with our consistent dividend policy.
We made good progress on our development projects in the year. The new Juanicipio mine was completed at the end of 2021 as planned. However, approval to complete the tie-in to the national power grid was not granted by Comisión Federal de Electricidad (CFE) -a government company- before year end as expected. The mill commissioning timeline was therefore extended to midyear. Similar delays also affected the start-up of the new Pyrites Plant at the Fresnillo mine.
Our long term growth pipeline remains strong. We continue to invest heavily in our exploration efforts and we are making steady progress with our next development projects at Rodeo and Orisyvo, which will contribute to gold production in the following years.
In April 2021, we announced a number of Board changes that took effect at the AGM in June, including my appointment as Chairman. We were delighted to welcome two new Directors to the Board, Héctor Rangel and Eduardo Cepeda who have already brought valuable insights to our meetings. Your Board continues to function extremely well, providing leadership, insight and challenge to the executive team, not least a focus on our culture and remaining faithful to our purpose and values. This includes promoting the participation of women in our workforce, with the total percentage of women increasing to 11.0% in 2021 from 9.7% in the previous year. Our Board composition during 2021 meant that we were one of the most gender progressive companies in Mexico according to both the 50/50 Women on Boards Gender Diversity Index and the Women Corporate Directors Foundation.
We are committed to playing our part in fighting climate change by mitigating our environmental impact wherever possible. We have completed our project in Herradura to install dual fuel engines that run on both Liquid Natural Gas (LNG) and diesel as planned and anticipate seeing the first environmental and cost benefits in 2022, as both our diesel consumption and CO2 footprint decrease. We are focused on achieving our target of using wind power to provide 75% of our electricity by 2030 and continue to analyse our Energy Strategy in order to pursue a decarbonisation pathway that will be operationally and technologically viable.
The Board has also continued to monitor management's efforts to ensure that the working environment is a healthy and safe one; both through the ongoing Covid-19 related measures in place at our sites as well as reinforcing the implementation of the 'I Care, We Care' safety programme throughout our operations.
Though we remain cautious, we face the future with confidence. Challenges do remain - in common with other industry sectors, the labour market remains tight, with considerable competition for talent in addition to increased cost pressures and disruption on supply chains. However, I am pleased to say we have built up our resilience in 2021 and equipped Fresnillo with the strength and attributes to continue delivering long-term value to all our stakeholders.
As always, I would like to close by thanking all our people for their commitment and hard work during the year and our shareholders for their support.
For further information, please visit our website www.fresnilloplc.com or contact:
Gabriela Mayor, Head of Investor Relations
Tel: +44 (0)20 7399 2470
Mexico City Office
Ana Belem Zárate
Tel: +52 55 52 79 3206
Tel: +44 (0)7793 858 211
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 Las Casas Rosario & Cluster Cebollitas), Herradura, Soledad-Dipolos1, Noche Buena and San Julián (Veins and Disseminated Ore Body), two development projects - the Pyrites Plant at Fresnillo and Juanicipio, both of which have been completed but approvals to operate are pending, and three advanced exploration projects - Orisyvo, Rodeo and Guanajuato, 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.
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.