Last checked at 18 May 2012 10:30
Fresnillo Plc
28 Grosvenor Street
London W1K 4QR
United Kingdom
www.fresnilloplc.com
18 May 2012
Annual General Meeting Statement
Fresnillo PLC will hold its Annual General Meeting today at 11am in London, and Mr Alberto Baillères, Chairman, will make the following statement:
"2011 was an exceptional year for precious metals miners. Gold and silver prices increased significantly over the 2010 figures as a result of strong investment demand for both metals, as well as growing industrial use for silver.
The latter part of the year saw greater volatility and concern about the fundamentals supporting these prices. This has continued into the early months of 2012 and the forecast of metals prices for the rest of the year is subject to significant uncertainties.
In the context of a favourable price environment, Fresnillo plc achieved adjusted revenue of US$2,307.4 million, up 56.6% over 2010, and EBITDA of US$1,538.5 million, up 62.8%. Attributable net profit, excluding the Silverstream revaluation effects, was US$787.3 million, up 48.3%. This enabled us to significantly increase the dividends paid out during the year.
This was achieved as our Company continued to strengthen its operations and deliver on development projects, resulting in increased gold and stable silver production.
This included the start-up of the Saucito mine, which was delivered on schedule and under budget. In July 2011, the President of Mexico, Felipe Calderón, joined in the dedication of this new mine, which will become an important contributor to the growth of Fresnillo plc.
More recently, in March of this year our newest mine at Noche Buena was commissioned. Again this was completed on time and within budget and it is already performing strongly, giving us the confidence to increase our targets.
Having already exceeded our original goal for attributable gold production set at the time of the IPO at 400,000 ounces by 2018, our aim now is to grow this level of production to 500,000 attributable ounces of gold by 2018, as well as 65 million attributable ounces of silver, with reserves of 5.0 million ounces of gold and 650 million ounces of silver. So far in 2012, we continue to make progress towards these goals.
Although metals prices will remain volatile until global macroeconomic imbalances are properly addressed, the approach of our Board is to take the long view, with a value creation strategy that does not change with unpredictable short-term shifts in the market. Thus investing in exploration across price cycles will continue to be a hallmark of our strategy, as will the disciplined development of new, value-creating projects. Fundamental to this strategy is the social license to operate, which is earned by a profound and unwavering commitment to sustainable development and to the wellbeing of our personnel.
Our Board has focused on a number of these issues but none more important than in the areas of safety and risk management. Safety issues continue to receive Board priority and we consider it of critical importance that the entire organisation reinforces its commitment to safety as its first concept. The Company's Health, Safety, Environment and Community Relations Committee is monitoring the implementation of new practices. While progress is clearly being made, one fatality has been reported in 2012 and we must continue to work diligently to improve our performance.
Partly in response to the new requirements of the UK Corporate Governance Code and also in order to reinforce the Company's approach and management of risk, we undertook an extensive review to explicitly define our risk appetite and tolerance in achieving the Group's strategic objectives. I am pleased to see broad support for this process across the organisation as I believe it strengthens our controls and risk-awareness culture.
In 2011 the Board also commissioned an independent review of Board effectiveness. The report was positive in general and, in the spirit of continuous improvement, we have implemented the recommendations coming out of this exercise.
Looking ahead to 2012, despite uncertainty in the financial and commodity markets, we anticipate that Fresnillo plc will continue to strengthen its precious metals position. While our ore resource inventory is strong, reserve replenishment and exploration of new projects will continue to underpin our long-term growth strategy.
The Board has authorised a risk capital investment in exploration budget of US$360.4 million for 2012, which is more than double the 2011 expenditure, reflecting our confidence that such investments today are vital to the long-term growth of the Group.
I would like to thank my fellow Board members for their service and contribution in the year. And I am particularly pleased that last month we were able to announce the appointment of two new non-executive directors - Ms. María Asunción Aramburuzabala and Mr. Alejandro Baillères - both of whom bring invaluable experience and expertise to the Board.
Finally, on behalf of the Board I extend my deepest gratitude to all our people for their hard work and commitment to delivering results year after year."
For further information on Fresnillo, please visit our website: www.fresnilloplc.com or contact:
Fresnillo plc
London Office
Arturo Espinola
Head of Investor Relations Tel: +44(0)20 7339 2470
Mexico City Office
Gabriela Mayor Tel: +52 55 52 79 3203
Brunswick Group
Carole Cable Tel: +44(0)20 7404 5959
David Litterick
About Fresnillo plc
Fresnillo is the world's largest primary silver producer and Mexico's second largest gold producer, listed on the London and Mexican Stock Exchanges under the symbol FRES.
Fresnillo has seven operating mines, all of them in Mexico - Fresnillo, Saucito, Cienega, San Ramón (a satellite of the Ciénega gold mine), Herradura, Soledad-Dipolos and Noche Buena (new gold mine at Herradura District); two development projects - Saucito II, and Dynamic leaching to treat high grade gold ore from Herradura and Soledad-Dipolos mine; and five advanced exploration prospects - San Julián, Centauro Deep, Juanicipio, Orysivo and Las Casas as well as a number of other long term exploration prospects. In total, has mining concessions covering approximately 2.1 million hectares in Mexico.
Fresnillo 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 both silver and gold.
Fresnillo's goal is to maintain the Group's position as the world's largest primary silver company, producing 65 million ounces of silver and 500,000 ounces of gold by 2018.