Fresnillo Regulatory News (FRES)

Fresnillo plc

28 Grosvenor Street

London W1K 4QR

United Kingdom

www.fresnilloplc.com

6 August 2013

Fresnillo plc interim results

for the six months to 30 June 2013

Financial highlights (H1 2013/H1 2012 comparisons)

·; Average realised silver price US$24.67 per oz, down 20.3%

·; Average realised gold price US$1,471.67 per oz, down 10.6%

·; Adjusted Revenue1 of US$982.3m, down 14.0%

·; Gross Profit of US$518.9m, down 27.0%

·; EBITDA2 decreased by 29.1% to US$486.3m in line with the EBITDA margin which decreased to 52.5% from 63.2%

·; Profit attributable to equity shareholders of the Company, excluding Silverstream revaluation effects, decreased by 34.2% to US$225.6m (post-tax Silverstream revaluation effects: US$80.8m loss)

·; Cash generated by operations before changes in working capital US$496.4m, down 30.7%

·; Strong balance sheet with cash position as at 30 June 2013 of US$570.8m and no debt

·; Basic and diluted EPS decreased by 61.1% to US$0.200 per share

·; Interim dividend 4.90 US cents per share

Operational highlights

·; Attributable silver production of 20,980kOz (including Silverstream), up 4.5% due to the continuous ramp-up of Saucito and higher ore grade and volume of ore processed from San Ramón.

·; Attributable gold production decreased by 5.2% as a result of a slower recovery rate and lower ore deposited at Soledad-Dipolos and the anticipated decline in Cienega's ore grade.

·; The construction of the dynamic leaching plant at Herradura continues to be on track to start up in the fourth quarter of 2013.

·; The construction of San Julián continued on track while the detailed engineering for the processing plant progressed ahead of schedule at the Saucito II project.

·; Encouraging exploration results were achieved at the Ciénega, Fresnillo and Herradura Districts. Good gold and silver mineralisation was obtained at Guanajuato District.

·; Drilling programmes were concluded at Orisyvo and Lucerito, where the resource model will be developed in 2H13, as well as at the Coneto and Cebadillas prospects.

·; As a result of the strategy review considering current market conditions:

§ we will continue to focus on reducing costs and improving efficiencies

§ the Group's capex remains largely unchanged

§ the exploration budget US$242.8m was reduced from US$279.8m

·; On track to achieve full year production target of 41moz of silver (including Silverstream) and revised target of 465,000oz of attributable gold in 2013.

Highlights for 1H13

* Silver production includes volumes realised under the Silverstream Contract.

1 Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges.

2 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as gross profit plus depreciation less administrative, selling and exploration expenses.

3 The weighted average number of shares was 724,615 in the first half of 2013 (717,160 in 1H12) . See Note 7 in the Consolidated Financial Statements.

Octavio Alvídrez, Chief Executive Officer of Fresnillo plc, said:

"Fresnillo enjoyed a strong operational performance in the first half, with attributable silver production up 6.9% (excluding the Silverstream). As Saucito continues to ramp up and the grades at Fresnillo move higher to more normal levels, we are on track to meet our 41 million ounces of silver target this year. Our gold production target is 465,000 ounces for the year.

"I am sad to report that we had two fatalities - one from our Saucito mine in June and one in July at the Dynamic Leaching Plant under the supervision of an outsourced engineering and construction team. We continue to focus on our "No More Accidents" programme and will not be satisfied until we achieve that goal.

"The dramatic decline in gold and silver prices since mid April had a significant impact on revenues over the half year. This coupled with higher production costs associated with higher volumes from the expanded business and higher electricity and diesel prices pushed EBITDA and profit lower. In light of this backdrop Fresnillo plc's continued focus on cost cutting and operational efficiency remains more relevant than ever and we remain confident that our assets will continue to be amongst the lowest cost precious metals producers.

"Our project pipeline and investment in exploration is critical to our success as a sustainable long term producer that generates free cash, creates value and can grow profitably in any metal price environment. Fresnillo has the assets, the discipline to control costs and the strong balance sheet to achieve that goal for the benefit of all stakeholders."

Commentary on the Group's results

During the first half of 2013, the Group's financial results were impacted by the decline in precious metals prices resulting from the economic volatility that has been driven in large part by the speculation about central bank sales, ETF liquidations and the potential end of quantitative easing.

As a result, our average realised silver price decreased by 20.3% when compared to the first half of 2012. Similarly, the average realised gold price fell by 10.6% when compared to the same period in 2012. This affected the Group's adjusted revenues which decreased by 14.0% over the first half of 2012.

Our cost of sales increased by 8.7% compared to the first half of 2012, mainly as a result of higher adjusted production costs (+29.4%) which stemmed from: i) the additional two months of operation at Noche Buena in 2013; ii) the 5.3% revaluation of the Mexican peso against the US dollar; iii) higher unit prices of electricity (+9.9%) and diesel (+24.4%); iv) the 2.9 % increase in the weighted average cost of operating materials; v) the 6.0% rise in wages in Mexican pesos; and vi) higher stripping ratio at the Soledad-Dipolos and Noche Buena mines, longer distances as the pits are deepened and increased rock bolting, shotcreting and scaling activities.

During the first half of 2013, costs per tonne increased in all our operating mines for the reasons mentioned above, except at Saucito and Ciénega which benefited from the economies of scale from the increase in the volume of ore processed.

Total gross profit decreased 27.0% when compared to the first half of 2012 from US$710.9 million to US$518.9 million as a result of the lower average realised metal prices, lower production from the Fresnillo mine and slower recovery rates at Soledad-Dipolos. Furthermore, the increase of 29.4% in the adjusted production costs also contributed to the decline in the consolidated gross profit. However, these negative effects were partially mitigated by higher production at Saucito, Ciénega and Noche Buena.

We continue to pursue our strategy to strengthen the Group's project pipeline and achieve sustainable growth through investing across the cycle to expand our resource base. In the first half, the Group spent US$57.4 million at our exploration projects. This figure is in line with the authorised annual budget of US$115 million (not including in-mine exploration and new development).

In the first half 2013, encouraging results were obtained at Herradura, Fresnillo and Ciénega Districts as well as in the Guanajuato District. In addition, the 2013 drilling programme was concluded at Orisyvo and Lucerito where the new resource model will be developed. We will continue with our intensive exploration programme throughout the rest of the year.

As a result of the lower gross profit and higher exploration expenses, EBITDA decreased by 29.1% when compared to the first half of 2012. Similarly, EBITDA margins decreased to 52.5% from 63.2% in the same period in 2012 but remain strong.

The downward revaluation of the Silverstream also affected the financial results in the first half mainly due to the decrease in silver prices as we are required to calculate the fair value of the Silverstream contract every six months. During this period, the Silverstream was revalued downwards by US$112.5 million, compared with an upward revaluation of US$36.4 million in the first half of 2012.

Income tax expense declined by 57.1% to US$73.0 million, reflecting the lower profits obtained during this period. The effective tax rate was 29.2%.

Net profit for the period was US$176.8 million, a 59.7% decrease when compared to the first half 2012. Profit attributable to equity shareholders of the group totalled US$144.8 million a decrease of 60.7% when compared to the same period in 2012.

During the first half of 2013, cash flow generated by operations, before changes in working capital of US$496.4 million, decreased by 30.7% over the same period of 2012 as a result of the lower profits. In addition, working capital increased by 25.4% mainly as a result of higher gold inventories at Soledad-Dipolos and Noche Buena.

The Group continues to have a very strong balance sheet with no bank debt and US$570 million in cash and cash equivalents as at 30 June.

In order to comply with the changes to the Ground Rules of the FTSE UK Index Series which requires constituents to maintain a minimum free float of 25% or more, the Group issued 19,733,430 new ordinary shares which represent 2.74% of the number of the existing shares. This resulted in proceeds of US$346.1 million, which are being used for general corporate purposes and working capital requirements.

During the first half of 2013, the 2012 final dividend which totalled US$304.1 million was paid to shareholders. Directors have recommended an interim dividend of 4.90 US cents per share amounting to US$36.11 million which will be paid on 10 September 2013 in accordance with the Company's stated dividend policy.

Capital expenditure totalled US$324.1 million, an increase of 34.8% when compared to the first six months of 2012. Investments included the continuous mining works mainly at the San Julián project, Fresnillo and Ciénega, purchase of in-mine equipment and construction of the dynamic leaching plant as well as the leaching pads at Herradura, Soledad-Dipolos and Noche Buena. Further information is provided in note 3 to the Consolidated Financial Statements.

Growth

Sustainable and profitable growth for all stakeholders is the key to Fresnillo plc's future success. As a result we continue to strengthen our project pipeline and during the first half of 2013 significant progress was achieved in the construction of the dynamic leaching plant at Herradura. Further adjustments to the mills' components were carried out and the assembly of the remainder of the structure of the milling building continued. Similarly, several components of the crushing station were also installed. In addition, the construction of the tailings dam at Herradura continued with further progress in the installation of liners whilst civil works for the pumping station started. This project will be concluded in the third quarter of 2013 and will start up operation in the fourth quarter 2013. This project will increase gold production by a total of 412,000 ounces over the 2013-2020 period.

The construction of the Saucito II project continued with further progress in engineering and equipment delivery as well as the preparation of the site for the tailings dam construction.

During the first half of 2013 further progress was reached in the engineering of both the flotation and leaching plants at the San Julián project, with the conclusion of the layout for the leaching plant and the crushing facilities location defined, whilst in the flotation plant, engineering for the auxiliary buildings continued.

Outlook

At Fresnillo, we have a long experience in mining and have operated throughout a number of economic cycles. We understand the need to look beyond short term economic volatility and market uncertainty and focus on building a sustainable and profitable business for the long term.

We will continue to focus on our strong operational performance, while reducing costs and improving efficiencies, and always with the utmost attention to safety. We will continue to invest through the cycle, bringing on profitable growth projects and exploring to keep our pipeline strong. We will always be prudent with the way in which we allocate capital, whether that is returning cash to shareholders or investing in the business.

Therefore, even under the current challenging environment, we remain confident of achieving our long-term goals for the benefit of all stakeholders.

Presentation for Analysts

Octavio Alvídrez, Chief Executive Officer, and Mario Arreguín, Chief Financial Officer, will host a presentation for analysts on Tuesday 6th August at 9am (BST) at Bank of America Merrill Lynch, 2 King Edward St, London EC1A 1HQ

For analysts unable to attend dial in details are:

Dial-in number: +44 (0)1452 555 566

Conference ID: 25367848

A replay of the conference call will be available for 7 days after the call at:

Dial in number: +44 (0)1452 550 000

Conference ID: 25367848

For further information, please visit our website: www.fresnilloplc.com or contact:

Fresnillo plc

London Office Tel: +44 (0)20 7399 2470

Gabriela Mayor, Head of Investor Relations

Mexico City Office Tel: +52 55 52 79 3206

Ana Belem Zárate

Brunswick Tel: +44 (0)20 7404 5959

Carole Cable

David Litterick

About Fresnillo plc

Fresnillo plc is the world's largest primary silver producer and Mexico's second largest gold producer, listed on the London Stock Exchange under the symbol FRES.

Fresnillo has six operating mines, all of them in Mexico - Fresnillo, Saucito, Ciénega (including the San Ramón satellite mine), Herradura, Soledad-Dipolos and Noche Buena; three development projects - a dynamic leaching plant to treat high grade gold ore from the Herradura and Soledad-Dipolos mine; San Julián and Saucito II and four advanced exploration prospects - Centauro Deep, Juanicipio, Orysivo and Las Casas Rosario 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.

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 areforward-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 theforward-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 itsbusiness strategy and political and economic uncertainty.

Operational Review

Attributable silver production, including the Silverstream, increased by 4.5% over the first half of 2012 due to the successful ramp-up at Saucito and increased volumes of ore processed from the San Ramón satellite mine at Cienega. Based on these results, management reiterates its confidence towards achieving the Group's full-year production target of 41 million ounces of silver.

 Attributable gold production decreased by 5.2% when compared to the first half of 2012 due to the slower recovery rate at Soledad-Dipolos and Herradura, as well as the anticipated lower ore grade at Ciénega. However, this was partially mitigated by the ramp-up of production at Noche Buena, and to a lesser extent, the slightly higher production at Saucito. For the first time, the Group has lowered its gold production guidance to 465,000 ounces (-5.1%) as a result of the court ruling against Fresnillo plc with regard to the Soledad-Dipolos mine explained in more detail on page 11.

Our growth pipeline continued to be strengthened with significant progress made in the construction of the dynamic leaching plant, Saucito II and San Julián projects. Furthermore, encouraging exploration results were obtained at the Fresnillo and Herradura Districts, whilst drilling activities continued at several prospects with good potential, including the Guanajuato District.

Notwithstanding, the prevailing challenging conditions within the mining industry, the Group remains confident of achieving its long-term targets by extracting the best from its high-quality assets, experienced management team and low cost profile.

Production

Attributable silver production (including the Silverstream) increased to 20.9 million ounces when compared to the same period of 2012 mainly due to the increased volume of ore processed and the improved silver ore grade at the Saucito mine resulting from the access gained to the Jarillas vein. Furthermore, the increase in ore throughput and higher silver ore grade from San Ramón also benefited silver production. These positive factors more than offset the lower production at Fresnillo which resulted from the anticipated decline in ore grade and the temporarily lower efficiency achieved by contractors.

Year to date attributable gold production decreased by 5.2% due to the slower recovery rates and lower volumes of ore processed at Soledad-Dipolos, lower ore grade at Ciénega and lower recovery rates at Herradura. However, the increased production at Noche Buena partially mitigated this negative effect.

Year to date by-product zinc and lead production decreased by 11.9% and 3.3% respectively when compared to the first six months of 2012. Lead production decreased as a result of the lower ore grade and reduced volumes of ore processed at Fresnillo and to a lesser extent due to the lower ore grade at Ciénega. Meanwhile, zinc production decreased due to lower ore grades at Ciénega and Fresnillo.

Fresnillo mine production

Silver production for the first half 2013 decreased 16.2% when compared to the same period of 2012 as a result of: i) the anticipated lower ore grade as previously announced and ii) lower ore processed due to the delayed mining works and development activities carried out by contractors which resulted in a limited access to several stopes.

The silver ore grade is expected to be maintained at levels of around 300 g/tonne in 2013.

Additionally, we continue to evaluate the potential to expand the milling capacity at Fresnillo.

Year to date by-product lead, zinc and gold production decreased when compared to the first half 2012 as a result of lower ore grades and to a lesser extent, lower volumes of ore processed.

Saucito mine production

Year to date silver production increased by 73.3% when compared to the first half of 2012 due to: i) access to the rich Jarillas vein, where ore grades are higher than those at Saucito and Mezquite; ii) increased volumes of ore processed as a result of the expected ramp-up of the mine and iii) additional material processed from the development activities at Jarillas and Mezquite veins which were not available in 2012.

Gold production for the first half of 2013 slightly increased by 1.5% when compared to the same period of 2012 due to higher volumes of ore processed which was offset in part by the lower ore grade. Furthermore, by-product zinc and lead year to date production significantly increased by 202.5% and 125.2% respectively as a result of higher ore grade as well as ore milled and to a lesser extent, higher zinc recovery.

Saucito is on track to produce approximately 8.5 million ounces of silver and 40,000 ounces of gold in 2013.

Ciénega mine production

Year to date gold production decreased 8.7% when compared to the same period of 2012 due to the anticipated lower ore grade (-20.8%; 3.13 g/tonne 1H13 vs 3.96 g/tonne 1H12) and greater dilution in narrow veins. However, this effect was partially compensated by the increase in ore throughput as a result of the optimisation of the maintenance programme and milling process at Cienega's mine, and higher volumes of ore processed from San Ramón (215,495 tonnes).

As expected, silver production for the first six months of 2013 significantly increased by 83.9% when compared to the same period of 2012 as a result of the higher silver ore grade (+59.1%; 127.17 g/tonne 1H13 vs 79.94 g/tonne 1H12) from the San Ramón satellite mine and increased volume of ore throughput. This production profile will continue to the extent that Ciénega will primarily become a silver mine as gold ore grades steadily decrease until they reach the reserve level.

By-product zinc and lead year to date production decreased 35.8% and 10.7% respectively when compared to the first six months of 2012 as a result of lower ore grade.

Herradura mine production - Attributable

Attributable gold production for the six months of 2013 decreased 3.3% when compared to the same period of 2012 as a result of a slower recovery rate due to the higher height of the leaching pads which slowed the leaching process. Nevertheless, increased gold ore grades partially mitigated this effect. The recovery rate is expected to increase in the second half of 2013 once the first phase of the tenth leaching pad is concluded.

By-product silver production for the first half 2013 increased 33.3% when compared to the corresponding period of 2012 due to a higher recovery rate.

Encouraging results from the exploration activities at Centauro Deep were obtained, during the first half of 2013 diamond drilling reached 27,797 metres. Additionally, 3,254 metres of development works were also carried out. Furthermore, diamond drilling continued during the first half of 2013 in order to evaluate the expansion of the Centauro Pit (Mega Centauro project). Additional exploration will be needed to better determine the potential of this area.

Soledad-Dipolos mine production - Attributable

Attributable gold production decreased by 42.8% when compared to the same period of 2012 as a result of slower recovery rate due to low gold concentration in the solution resulting in a slower leaching process. However, the lower ore deposited but with higher gold ore grades partially compensated the aforementioned effects.

As previously noted in the Group's production report of 17 July 2013, the impact of the decision by the Court in Sonora on the El Bajío litigation is likely to result in a loss of gold production of 25,000 ounces from the overall expected production for the year of 490,000 ounces; this loss of production represents just 5.1% of the Group's total gold production. The difference between the net present value (NPV) of Fresnillo plc against the NPV of Fresnillo plc without Dipolos is less than 1%.

The local Magistrate in Sonora, who issued the order for Minera Penmont to vacate the land, has also issued requests to the Ministry of Defense which has resulted in a temporary suspension of Minera Penmont's explosives permits (not only at Dipolos but also at Soledad, Herradura and Noche Buena). Minera Penmont has presented legal proceedings before authorities requesting re-activation of its explosives permits outside Dipolos (at the Soledad, Herradura and Noche Buena mines). Minera Penmont is currently evaluating and implementing other legal routes to lift the suspension of explosives order and is of the opinion that the explosives suspension is excessive since it goes beyond the area of land pertaining to the original court order.

Minera Penmont expects to obtain relief for lifting the explosives suspension in the short term, although no assurances can be given.

Minera Penmont has not been affected to date in its production from Herradura and Noche Buena given the fact that sufficient ore has been available for deposit on the leaching pads which has permitted continuance of operations. Sufficient inventory to maintain current operations will be available in the case of Herradura, until early August and in the case of Noche Buena, until late August. Production of doré will not be interrupted as both mines will continue processing ore that has already been deposited on the leaching pads.

See also note 15 to the Consolidated Financial Statements.

Noche Buena mine production - Attributable

The continued ramp-up at Noche Buena led to an increase in attributable gold production of 114.5% when compared to the first six months of 2012. This was due to the additional months of operation in 2013 compared to 2012, when commercial operations only began in March. Increased recovery rates also contributed to the increase in gold production.

The expansion of the Noche Buena mine was approved by the Executive Committee and is expected to increase average annual gold production to 75,000 attributable ounces once it reaches full capacity in 2014.

Growth Projects

Dynamic leaching plant at Herradura

In the first six months of 2013, further progress was made in the construction of the dynamic leaching plant, which is expected to begin operations in 4Q13. The components for the mill were already installed and the assembly of the milling building structure continued. The construction of the thickeners was finished as well as the foundations for the crusher. Additionally, some components of the crushing station were also installed.

The construction of the tailings dam progressed according to schedule with further installation of liners. Furthermore, the structure for the reagents warehouse was concluded and the sodium cyanide tanks were assembled.

Workers who will be operating this plant have been training at Saucito and Ciénega's beneficiation plants.

This project is expected to increase gold production by a total of 412,000 ounces over the 2013-2020 period.

Saucito II

Board approval of the expansion of the Saucito mine (Saucito II project) was granted in March 2013 and progress has been made in finalising the detailed engineering for the new plant. Permits for the construction of the tailings dam were obtained.

This US$235.0 million project is expected to be concluded in the first half of 2015. It will produce an average of 8.4 million ounces of silver and 35,000 ounces of gold per year at full capacity.

San Julián

Construction of the San Julián Project continued. Engineering progressed as expected with the conclusion of the diagrams for the leaching plant. The layout for the plant and location for the crushing station were defined. Additionally, diagrams for the mills were delivered to the engineering firm for their inspection

Construction of the landing strip was concluded in February 2013.

This project is expected to start production in the second half of 2014 and will produce an average of 9.6 million ounces of silver and 40,000 ounces of gold per year once at full capacity.

Exploration

The 2013 exploration budget was set at US$115 million (not including in mine exploration and new development), with US$57.4 million spent in 1H 2013 focused near our mining operations and advanced exploration projects. Approximately 65% of the expenditure was devoted to drilling, with 336,550 metres of core and reverse circulation completed using 40 rigs. Health, Safety, Environment, and Community Relations work progressed as planned, and no lost time accidents occurred in the period.

Exploration in the Herradura District continues to deliver good results. At Mega Centauro, gold grades intersected confirm continuity of the ore bodies, increasing both the open-pittable disseminated reserves and underground higher grades resources. Mine workings including crosscuts and ramps were advanced to 3.3 kilometers at Centauro Deep. Gold mineralisation has been confirmed both east and west of the current pit at NocheBuena and the drilling programme has been extended. Widespread low grade gold values near surface were obtained at the Tajitos prospect and metallurgical testing and a preliminary economic analysis are in progress.

At the Ciénega District, resources from Las Casas vein system were incorporated into the mine's medium-term development plan. Exploration results were positive at the San Ramón satellite operation, where good exploration potential remains to be tested in four ore-shoots within the vein system. Other gold and silver prospects in the region are being systematically evaluated with mapping and channel sampling.

Drilling continues at selected targets in the Fresnillo District, both east of the Saucito mine and northwest of the main Fresnillo operation. Encouraging results have been obtained by drill testing exploration targets developed using a multidisciplinary approach which includes alteration vectoring, geochemistry, geophysics, and structural geology. At the Juanicipio project infill and geotechnical holes are on schedule.

At the San Julián project, systematic drilling of blind targets in the north part of the district resulted in the discovery of two additional gold-silver bearing veins, currently under evaluation. Gold and silver mineralisation continues to be encountered in drilling at the Guanajuato district, where good results were obtained from the El Gigante, Opulencia, La Joya, and El Chorro vein systems. The rental contract to a third party of the Guanajuato Torres mining concessions and mill, including surface land, expired and Fresnillo plc has taken control of the property as planned. The installations and mining potential are being evaluated.

The 2013 drilling programmes at Orisyvo and Lucerito were successfully concluded and a new resource model for these localities will be developed in the second half of the year. At Orisyvo, metallurgical testing indicates acceptable gold recoveries from both oxide and selected sulphide ores; an exploratory adit in the north oxide zone advanced 260 meters and the lower adit was extended to 625 meters through the better grade sulphide core. At Lucerito metallurgical investigation is in progress and the results will be incorporated in a preliminary economic analysis to be commissioned. Drill programmes at the Coneto project, and at the Cebadillas prospect were concluded and follow-up drilling in 2014 at both of these prospects is warranted.

Geological work as well as social and environmental permitting are advancing at the Datil, Bellavista, Guazapares, and Guachichil prospects in México, and at Pilarica prospect in Perú, where drilling is planned in the second half of 2013. Regional prospection programmes and evaluations of selected properties continue in favorable precious metal belts both in México and Perú.

Health and safety, human resources, environment and community relations

During the first half of 2013 the Group has continued with the implementation and follow up of different health programmes to promote the wellbeing of our employees. The health campaigns, in coordination with health NGOs, have been carried out at operative and exploration sites; these have also been promoted in the schools of our local communities.

The "No More Accidents" programme includes five lines of action which focus on operational discipline, accidents and incidents investigation and improvement in behaviour around attitude to safety.

Notwithstanding, we reported a fatal accident during this period at our Saucito mine and regrettably, another one at the dynamic leaching plant (Herradura District) in July of a worker who was under the supervision of an outsourced engineering and construction team. Both accidents resulted from a breach of safety procedures. We will continue to prioritise safety to achieve our zero fatal accident target with an emphasis on safety training, implementation of a behavioral change and adherence to the safety guidelines throughout the company.

For the first half of 2013, Fresnillo plc's workforce totalled 1,183 employees, 2,701 unionised workers and 3,327 contractors. We also concluded the annual wage negotiations with the mining union and agreed a 6.0% wage increase in Mexican pesos.

Our commitment to employee development continued with training programmes throughout the whole company. During the period the "Leaders with Vision" programme took place reinforcing the required abilities and skills to be a leader and promoting further knowledge of the company's processes. We have also continued with the follow up of our personnel performance evaluation to identify areas of opportunity and promote communication. In addition, the first generation of mining technicians from the CETEF graduated during this period.

As part of our sustainable growth strategy, our operating and exploration activities have always considered the environmental impact on the sites we operate. Therefore, we have always complied with the corresponding regulations suggested by the environmental authorities. In the first half of 2013 we have not suffered any environmental incidents.

As a result of our continuous efforts to operate with the best environmental practices, La Ciénega received the Environmental Leadership Award from the Mexican Federal Environmental Protection Agency (PROFEPA). This award was due to our participation as a leading Company in the "Environmental Leadership for Competitiveness" programme. In addition, the Saucito mine was authorised by the Environmental Authority to expand the tailings dam.

For the fifth year in a row, we received the ESR Distinction (social responsibility). Additionally, we have been notified that the company will receive the "Ethics and Values of the Industry 2013" award for the fourth consecutive year. We continued promoting education in several schools at the communities and reinforcing our "Let's read" programme at the community center of Caborca.

Related party transactions

Details of related party transactions that have taken place in the first six months of the current financial year are detailed in note 16 of the financial statements.

Financial Review

The interim consolidated financial statements of Fresnillo plc for the first half of 2013 and 2012 have been prepared in accordance with IAS 34 "Interim Financial Statements" as adopted by the European Union. Management recommends reading this section in conjunction with the Interim Financial Statements and their accompanying Notes.

Commentary on financial performance

In the first half of 2013, we continued to deliver on our operational metrics as planned. However, our financial performance reflected the underlying trends impacting the broader metals market. Gross profit, EBITDA and profit from continuing operations before net finance costs and income tax decreased by 27.0%, 29.1% and 35.6%, respectively.

Adjusted revenues of US$982.3 million decreased by 14.0% compared to the first six months of 2012 as a result of the significant drop in precious metal prices (silver -20.3%, gold -10.6%) and lower volume of gold sold (-4.4%) mainly at Soledad-Dipolos and Herradura.

Adjusted production cost in absolute terms increased by 29.4% over the first half of 2012 mainly as a result of: i) higher ore processed at our operating mines; ii) higher cost of contractors related to the additional volumes of waste and ore hauled through longer distances and increased development, shotcreting and scaling at our operating mines; iii) full six months of production from the Noche Buena mine, whereas in 2012 only four months were recorded as cost after its start-up of commercial operations in March, iv) increased electricity and diesel prices; and v) higher labour costs related to the 6.0% increase in wages in Mexican pesos and the increased number of personnel.

Another important factor affecting production costs was the 5.3% revaluation of the Mexican peso/US dollar exchange rate, which further increased costs denominated in Mexican pesos when converted to US dollars at a lower exchange rate. However, this was mitigated by the positive effect of the Group's exchange rate hedging contracts

In the first half of the year, Fresnillo management's focused its efforts towards implementing several cost cutting and efficiency initiatives such as optimisation of reagent dosage, recycling oils and lubricants and lower electricity consumption by monitoring demand of ventilation systems. Notwithstanding, the Group recognises the importance of remaining a low-cost producer in this challenging metals prices environment and will continue to implement more stringent cost control and invest in additional cost savings and efficiency projects. Management remains confident that these plans will contribute to maintaining our status as a low cost producer.

In the first six months of 2013, exploration expenses in the income statement increased by 10.3% over the same period of 2012 due to the higher pace at which we explored this year. Notwithstanding, risk capital invested in exploration for the full year, (including capitalised expenses), will be lower than the figure invested in 2012, which reflects our commitment to maintaining our exploration programme through metal prices cycles but at a lower cost.

The aforementioned factors resulted in a decrease of the EBITDA margin from 63.2% in the first half of 2012 to 52.5% in the first half of this year.

As anticipated, the fair of value of the Silverstream contract was considerably affected by the decline in silver prices. This resulted in a financial loss of US$112.5 million taken to the income statement, which further impacted the Group's profits.

Income tax decreased by 57.1% from US$170.0 million in the first half of 2012 to US$73.0 million in the same period of this year as a result of lower profits. The effective tax rate of 29.2% was in line with the 30% statutory tax rate.

Profit for the period of US$176.8 million decreased by 59.7% compared to 2012 due to the factors described above.

The Group continues to have a very strong balance sheet with no bank debt and US$570.8 million in cash and cash equivalents. On April 29 2013, Fresnillo plc agreed to issue 19,733,430 new ordinary shares to funds and accounts managed by First Eagle Investment Management, who has been a long term shareholder of the company since the IPO. By doing this, Fresnillo plc complied with the Ground Rules of the FTSE UK Index Series by maintaining a 25% free float; and received US$346.1 million, which are being used for general corporate purposes and working capital requirements.

Income Statement

Income Statement Key Line Items

Six months ended 30 June

(in millions of US$)

1 Adjusted revenue is revenue as disclosed in the income statement adjusted to exclude lead hedging and treatment and refining charges.

2 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as gross profit plus depreciation less administrative, selling and exploration expenses.

3 The weighted average number of shares was 736,893,589 (H1 2012: 717,160,159). See Note 7 in the Consolidated Financial Statements.

4 2012 figures were adjusted to reflect the adoption of IFRIC 20 and IAS19R. Further information is provided in notes 2c and 19 to the Consolidated Financial Statements.

Fresnillo plc's financial results are, to a great extent, dependent on the Group's operational performance, asset quality, skilled personnel and management execution towards our strategic goals. Notwithstanding, there are certain macroeconomic variables affecting the financial results, which are beyond the Group's control. A description of these variables is provided below.

Precious metal prices

In the first half of 2013, the precious metals markets were affected by concerns about the reduction of the monetary stimulus programme announced by the U.S. Federal Reserve in light of more positive macro-economic data. These events prompted an aggressive selling trend of gold, including ETFs held by investors in North America, which affected both the price of gold and silver. As a result, the average realised silver price decreased by 20.3% from US$30.97 per ounce in the first half of 2012 to US$24.67 per ounce in the same period of 2013; whilst the average realised gold price decreased by 10.6% over the first half of 2012 to US$1,471.67 per ounce. Furthermore, gold and silver prices reached a low at US$1,192.00 per ounce and US$18.53 per ounce respectively, in June.

Zinc prices decreased by 4.0% when compared to the first half of 2012, however lead prices increased by 6.9%.

Hedging

Fresnillo plc remains fully exposed to volatility in precious metals prices in accordance with its policy of not hedging silver and gold production. However, the Group does not preclude entering into derivatives to minimise its exposure to changes in the prices of lead and zinc by-products.

In the first half of the year, 980 metric tonnes of lead were hedged through collar structures with floor and cap prices of US$2,205 per tonne and US$2,670 per tonne respectively, resulting in a US$0.1 million gain recorded in the income statement. The total outstanding position as of 30th of June is 1,470 metric tonnes with monthly settlements until December 2013.

Fresnillo plc continued to hedge foreign exchange exposure.

Foreign exchange rates

The average spot Mexican peso/US dollar exchange rate revalued by 5.3% from $13.26 per US dollar in the first half of 2012 to $12.56 per US dollar in the same period of 2013. This resulted in a negative effect estimated at US$9.1 million in the Group's production costs as costs denominated in Mexican pesos (approximately 2/3 of total costs) were higher when converted to US dollars at a lower exchange rate.

Inflation of key operating materials

Unit prices of key operating materials are starting to stabilise as a result of the challenging environment within the mining industry. This was reflected in the slight increase of 2.9% in the net weighted average unit prices of operating materials over the first half of 2012. Notwithstanding, demand for several items such as tyres and sodium cyanide continued to increase during the period, maintaining the upward trend that the unit prices of these operating materials have.

Electricity

In the first half of 2013, the electricity weighted average cost increased by 9.9% from US$10.1 cents per kw in the first six months of 2012 to US$11.1 cents per kw in the same period of 2013. Electricity rates are set by the national utility, Comisión Federal de Electricidad (CFE), based on their averaged generating cost.

Diesel

The weighted average cost of diesel for the first six months of 2013 was US$77.6 cents per litre, which represented an increase of 24.4% when compared to the weighted average cost of US$62.4 cents per litre in the first half 2012. This increase is based on the Mexican Government's decision to gradually align fuel and diesel prices with prevailing international rates. The revaluation of the Mexican peso/US dollar exchange rate further impacted the unit cost of diesel when converted to US dollars.

Treatment and Refining charges

The 2013 treatment and refining charges (TRCs) per tonne and per ounce are still being negotiated with Met-Mex in accordance with international benchmarks and will apply retrospectively from January. We are assuming that treatment charges per tonne of lead and zinc will not materially change compared to 2012, however refining silver charges are expected to decrease by approximately 9.1%. Including these assumptions, TRCs recognised in the first half 2013 income statement remained at the same level compared to the six months of 2012. The nil effect in absolute terms resulted from the lower silver refining charge per ounce which offset the increase in volumes of lead concentrate shipped to Met-Mex, mainly from the Saucito mine.

The effects of the above external factors, combined with the Group's internal variables, will be further analysed through the main line items of the income statement.

Revenues

Consolidated Revenues

(US$ millions)

1 Adjusted revenue is revenue as disclosed in the income statement adjusted to exclude lead hedging and treatment and refining charges.

Adjusted revenues of US$982.3 million decreased by 14.0% over the first half of 2012. This decrease is mainly explained by the estimated US$109.3 million adverse effect of the lower silver price, the negative impact of the lower gold price estimated at US$60.0 million and the reduction of US$24.1 million related to the lower volumes of gold sold from Soledad-Dipolos. These were partially mitigated by the US$36.5 million benefit from the higher volume of silver sold from the Saucito and Ciénega mines in the first half 2013.

Adjusted Revenues1 by metal

(US$millions)

*Estimated 

Silver, gold, lead and zinc participation in adjusted revenues remained unchanged over the period. Notwithstanding, the contribution by mine to the adjusted revenues did change in the first half of 2013. The lower silver production due to the anticipated ore grades at Fresnillo resulted in a lower participation, decreasing from 74.1% in the first half of 2012 to 58.5% in the same period of 2013. On the contrary, Saucito's contribution increased from 18.5% in the first six months of 2012 to 29.3% in 2013; whilst silver revenues from Ciénega represented 10.9% of the total silver revenues having increased its production from the San Ramón satellite mine (in 2012: 6.2%). Contribution to gold revenues also changed over the first half of 2013, with Noche Buena's participation increasing to 14.1% and Soledad-Dipolos's participation decreasing to 11.7%.

The contribution by metal and by mine to the adjusted revenues will continue to evolve as production in new mines continues to ramp up, new projects become operational and precious metal prices fluctuate.

Gold Adjusted Revenues by mine

Silver Adjusted Revenues by mine

Adjusted Revenues by mine

Volumes of metal in products sold

Six months ended 30 June

Cost of sales5

In the first half of 2013, cost of sales totalled US$407.0 million, an increase of 8.7% over the first half of 2012. The main reasons for the US$32.7 million increase are explained below:

·; Adjusted production costs of US$339.0 million rose by 29.4% when compared to the first half of 2012. However, 23.0% of the US$77.0 million increase, or US$17.7 million, corresponded to the additional two months of production at Noche Buena in 2013. The 5.3% revaluation of the average Mexican peso/US dollar exchange rate, which affected peso-denominated costs (approximately 2/3 of total costs) when converted to US dollars, further contributed to the increase in adjusted production costs by an estimated US$9.1 million. These items were factored out from each category to analyse the underlying operational and dollar-denominated unit cost changes, resulting in the effects described below:

§ Contractor costs rose by US$25.1 million as a result of: i) the additional volumes of ore and waste material hauled through longer distances at all our mines; ii) an increase in development works mainly at Saucito and the open pit mines to ensure continuous operations; and iii) an increased number of contractors hired for scaling mainly at the Fresnillo mine and for shotcreting and rock bolting at Saucito and Ciénega.

§ The cost of operating materials increased by US$10.2 million, mainly as a result of: i) higher consumption of sodium cyanide and lime at the open pit mines to irrigate a larger area and to increase recovery rates; ii) higher consumption of explosives and steel for drilling related to the increased development; iii) higher consumption of ball mills associated with the increased volumes of ore processed; iv) higher consumption of anchors due to the additional rock bolting activities; and v) the 2.9% weighted average increase in the unit price of operating materials.

§ The cost of energy increased by US$8.7 million due to: i) the higher unit prices of electricity and diesel, which increased by 9.9% and 24.4% respectively; ii) the higher consumption of diesel related to longer haulage distances and deeper pits; and iii) higher consumption of electricity associated with the increased production volumes.

§ The cost of personnel, excluding profit sharing, rose by US$3.2 million mainly due to: i) a 6.0% increase in wages in Mexican pesos; and ii) higher number of employees hired at the open pit mines to increase volumes of ore processed.

§ Maintenance costs increased by US$2.4 million as a result of: i) the maintenance provided to a higher number of equipment used to haul ore and waste material; ii) higher consumption of spare parts related also to the increased number of trucks and loaders; and iii) maintenance provided to pumps at Saucito.

§ Other costs increased by US$0.6 million mainly due to higher freight costs and information technology to support mining operations.

·; Change in work in progress rose by US$27.1 million as a result of the new phases of the leaching pads, which increased ore inventories at Soledad-Dipolos, Noche Buena and Herradura pads.

·; Profit sharing decreased by US$16.6 million due to the lower profits mainly at the Soledad-Dipolos and Fresnillo mines.

·; Depreciation increased by US$5.3 million mainly due to the higher depreciable capital base at Fresnillo, Herradura and Ciénega, which resulted from additional mining works. To a lesser extent, the increase also reflected the full six months of depreciation at Noche Buena, as compared to four months in the first half of 2012. These aspects were mitigated by the anticipated lower depreciation at Saucito, where depletion factors decreased due to the increased reserve base.

·; The Group enters into certain exchange rate derivative instruments as part of a programme to manage its exposure to foreign exchange risk associated with costs incurred in Mexican pesos. In the first half of 2013, the Group did not enter into any forward position, short or long, in respect of Mexican pesos. The outstanding net forward position as of June 30th 2013 was US$9.5 million short, with maturity dates throughout 2013 and 2014. However, the Group did enter into a combination of MXP/USD put and call options structured at zero cost (collars). In the first half of 2013, these derivatives were used to hedge US$97.0 million of costs denominated in Mexican pesos with average floor and cap exchange rates of $13.00 and $14.42 per US Dollar respectively, resulting in a US$4.1 million gain recorded in the income statement. The total outstanding position using collar structures as of 30th June 2013 was US$215.0 million with maturity dates throughout the second half of this year and 2014. These instruments guarantee a minimum exchange rate should the market fall below the floor exchange rate. Between the floor and cap exchange rates the Group sells US dollars at the market rate, and when the Mexican peso per US dollar exchange rate goes above the cap rate, the Company is obliged to sell US dollars at the contract rate.

The Group also enters into certain exchange rate derivative instruments as part of a programme to manage its exposure to foreign exchange risk associated with the purchase of equipment denominated in Euro and Swedish krona. The total Euro and Swedish krona outstanding net forward position at 31st of December 2012 was EUR 1.4 million and SEK 54.7 million respectively. In the first half of 2013, the Euro and Swedish krona positions increased by EUR 6.6 million and SEK 134.5 million respectively; in the same period EUR 4.08 million and SEK 154.60 million matured, leaving a final outstanding position of EUR 3.87 million and SEK 34.61 million, with maturity dates throughout the second half of this year and 2014.

Cost per tonne and cash cost per ounce

Cost per tonne, which is calculated as total production costs less depreciation, profit sharing and exchange rate hedging effects, is a key indicator to analyse the effects of mining inflation and the efficiency of the Group's cost controls. In the first half of 2013, management continued to closely monitor changes in cost per tonne.

**2012 cost per tonne at Noche Buena is not included as it started operations in March 2012 and may not be comparable to the full six months of operations in 2013.

There were several common factors impacting cost per tonne across the Group: i) the 6.0% rise in wages in Mexican pesos for unionised workers; iii) the 5.3% revaluation of the Mexican peso against the US dollar; iii) the higher unit prices of electricity (+9.9%) and diesel (+24.4%); and iv) the 2.9% increase in the weighted average unit cost of operating materials. Additional factors affecting cost per tonne at each particular mine are described below:

Cost per tonne at the Fresnillo mine was negatively impacted by the 2.5% decrease in ore processed as a result of the temporarily lower efficiency achieved by contractors which delayed mining works and development. Other factors affecting cost per tonne were higher diesel consumption related to the additional waste material hauled through longer distances and increased mechanised scaling activities which further impacted contractors and operating materials costs.

Cost per tonne at Ciénega slightly decreased when compared to the first half 2012 due to the favourable effect of the economies of scale which resulted from the 15.1% increase in ore processed. This was mitigated by higher contractor costs and greater consumption of diesel related to: i) the higher participation of ore extracted from the San Ramón satellite mine, which is further away; ii) increased haulage of waste material through longer distances; and iii) additional rock bolting activities to improve safety conditions.

Cost per tonne at Saucito mine decreased by 2.9% compared to the first half of 2012 as a result of the ramp up of production at this mine, whereby ore processed increased by 32.8% with its corresponding economies of scale. This favourable effect was mitigated by the higher maintenance costs associated with the purchase of spare parts for the additional in-mine equipment and maintenance provided to pumping stations.

Cost per tonne at the Herradura mine was affected by: i) the increased number of contractors and unionised workers hired to haul additional volumes of waste material through longer distances and a deeper pit; ii) higher consumption of sodium cyanide to improve recovery rates; iii) increased volumes of lime consumed to maintain the solution ph at the extended areas under irrigation; and iv) higher consumption of diesel associated with the longer distances.

Cost per tonne at the Soledad-Dipolos mine was negatively impacted by: i) the additional contractors hired to haul increased volumes of waste material; ii) dis-economies of scale resulting from the lower volumes of ore deposited at the leaching pads, which decreased by 19.2% compared to the first half of 2012; iii) increased maintenance costs due to the more intensive use of equipment; iv) higher diesel consumption per tonne as a result of longer distances; and v) higher consumption of sodium cyanide to increase the recovery speed at the leaching pads.

Cost per tonne at Noche Buena amounted to US$8.2 per tonne. This mine started operations in March 2012, thus there are no comparable cost per tonne figures.

CASH COST PER OUNCE7 **

7 Cash cost per ounce is calculated as total cash cost (cost of sales plus treatment and refining charges less depreciation) less revenues from by-products divided by the silver or gold ounces sold.

**The 1H12 cash cost at Noche Buena is not included as it started operations in March 2012 and is not comparable

The detailed changes in cash cost for each mine are explained below:

Cash cost per silver ounce at Fresnillo, increased by 7.3% mainly as a result of the lower volumes of silver sold, reflecting the 13.8% decline in silver ore grade. The higher mining costs and lower by-product credits also contributed to the rise in cash cost. However, this was partially mitigated by lower profit sharing and treatment and refining charges.

Cash cost per gold ounce at Ciénega considerably declined, to being negative in the first half of 2013, as a result of higher silver revenues credited to costs, which represented 34.3% of Ciénega's total sales as compared to 21.6% last year. This positive effect more than compensated for the reduced ounces of gold sold resulting from the expected lower grade and the higher treatment and refining charges.

Cash cost at the Saucito mine increased to US$2.2 per silver ounce due to lower gold revenues credited to costs. Income from this by-product represented 17.4% of Saucito's total income, whereas in the first half of 2012 it represented 25.2%. However, this negative effect was partially compensated by the higher silver ore grade from the Jarillas vein and lower mining costs.

Cash cost per gold ounce at Herradura increased by 12.1% as a result of the 14.8% increase in cost per tonne and lower ore grade. These negative effects were partially compensated by higher silver revenues credited and lower profit sharing.

Cash cost per gold ounce at Soledad-Dipolos increased by 20.6% mainly due to the decline in gold ounces sold, which resulted from the slower speed of recovery. Additionally, the higher mining costs related to the increased waste material hauled also contributed to the increase in cash cost. The higher ore grade partially compensated for these adverse effects.

Cash cost at Noche Buena for the first half of 2013 totalled US$896.1 per gold ounce. There is no comparable cash cost as an important part of the ore processed in 2012 was sourced from stockpiled material during the construction of the mine.

In addition to the traditional cash cost described above, the Group is reporting the all-in costs (AIC), in accordance with the guidelines issued by the World Gold Council.

This cost metric is calculated as traditional cash cost plus on-site general, corporate and administrative costs, community costs related to current operations, capitalised stripping & underground mine development, sustaining capital expenditures and remediation expenses.

Management considers that the all-in sustaining costs is a reasonable measure to monitor current production costs as well as sustaining costs as it includes stripping costs incurred to prepare the mine for future production.

Gross profit

Gross profit for operating mines, excluding hedging gains and losses, decreased by 28.5% to US$502.9 million when compared to the first half of 2012. The factors behind the US$200.2 million decrease in gross profit were: i) the significant decrease in silver, gold and zinc prices (-US$174.1 million); ii) lower production at Fresnillo, Soledad-Dipolos and Herradura (-US$109.6 million); iii) higher adjusted production costs, excluding Mexican peso/US dollar exchange rate effects, and new operations (-US$50.2 million); iv) the adverse effect of the revaluation of the average Mexican peso/US dollar exchange rate (-US$9.1 million); v) the expected lower ore grade at Ciénega (-US$4.3 million); and vi) higher depreciation (-US$1.9 million).

The factors described above were partially mitigated by: i) ramp-up of production at Saucito and Noche Buena (US$78.4 million); ii) favourable effect of the change in inventories and other (US$36.1 million); iii) the increased ore throughput from San Ramón, Ciénega's satellite mine (US$18.0 million); iv) lower profit sharing mainly at Soledad-Dipolos and Fresnillo (US$16.9 million); v) the contribution of Noche Buena corresponding to the additional two months of operations in 2013 (US$6.2 million); and vi) the increase in the price of lead by-product (US$1.5 million).

The contribution by mine to the Group's gross profit, excluding hedging effects, continued to change during the period. The Fresnillo mine remained the largest contributor to this indicator, albeit decreasing its participation from 43.8% to 34.6% in the first half of 2013. As expected, Saucito's contribution significantly increased to 20.9% in the first six months of the year as a result of continuous ramp-up of production, whilst participation from Herradura, Ciénega and Noche Buena reflected marginal changes over the period. Gross profit at the Soledad-Dipolos mine significantly decreased compared to the first half of 2012, decreasing its contribution to the Group's gross profit from 8.9% to 3.6% in first half of 2013.

2012 figures were adjusted in accordance to IFRIC 20 and IAS19R to be comparable with presentation/criteria in 2012

Administrative expenses

Administrative expenses increased by 5.6% to US$28.6 million in the first half of 2013. This increase was driven by the 6.0% increase in salaries granted to employees, the additional administrative personnel hired to service the mines and projects, and training provided to new engineers at Soledad- Dipolos, Noche Buena and Herradura. This was mitigated by lower legal and advisory fees paid during the period.

Exploration expenses

Exploration expenses recorded in the income statement rose by 10.3% to US$114.7 million in the first half of 2013. The US$10.7 million increase resulted from the higher pace at which the drilling programme was conducted this year compared to the same period of 2012. The Group's exploration activities focused on the Herradura and Fresnillo Districts, as well as on the San Julián, Lucerito, Orisyvo, Guanajuato, Candameña, Guachichil and San Juan projects. In addition, US$1.7 million was capitalised related to the Juanicipio project. Expected risk capital invested in exploration for the full year, (including capitalised expenses) was revised and lowered to US$242.8 million from US$279.8 million (a 13.2% reduction).

EBITDA

EBITDA and EBITDA Margin

Six months ended 30 June

(in millions of US$)

2012 figures were adjusted in accordance to IFRIC 20 and IAS19R to be comparable with presentation/criteria in 2012

A key indicator of the Group's financial performance is EBITDA, which is calculated as gross profit plus depreciation, less administrative, selling and exploration expenses. In the first half of 2013, this indicator decreased by 29.1% to US$486.3 million as a result of the lower gross profit and the increase in exploration expenses during the period. Likewise, EBITDA margin declined from 63.2% in the first half of 2012 to 52.5% in the same period of 2013.

Silverstream revaluation effects

The Silverstream contract is accounted for as a derivative financial instrument carried at fair value. In the first half of 2013, a US$112.5 million loss was recorded in the Group's income statement mainly as a result of the decrease in the forward price of silver. This lowered the accumulated non-cash revaluation gains that have been recognised in the income statement since 2008 to US$376.3 million; whilst cumulative cash received from the Silverstream contract totalled US$377.3 million.

It was anticipated that the Group would record further unrealised gains or losses taken to the income statement in accordance with the cyclical behaviour of the silver price or changes in the assumptions utilised when valuing this contract. Further information related to the Silverstream contract is provided in the Balance Sheet section below and in notes 9 and 17 to the Consolidated Financial Statements.

Foreign exchange

In the first half of 2013, a foreign exchange loss of US$5.3 million was recorded in the income statement, which resulted from the slight devaluation of the Mexican peso against the US dollar at the end of the period. However, this loss was lower than the US$8.7 million loss recognised in the first half of 2012.

Taxation

In the first half of 2013 the income tax expense decreased by 57.1% when compared to the same period 2012 as a result of the lower profits earned by the Group. The effective tax rate for the first six months of 2013 was 29.2%, which was broadly in line with the 30% statutory tax rate; whereas in the first half of 2012, the effects of foreign exchange and inflationary adjustments decreased the effective tax rate to 27.9%.

Profit for the period

Profit for the period accounted for US$176.8 million, a 59.7% decrease when compared to the same period of 2012 as a result of the factors described above. Profits due to non-controlling interests decreased by 54.0% from US$69.7 million registered in the first half of 2012 to US$32.0 million in this period mainly as a result of the lower profits generated at Soledad-Dipolos. Profit attributable to equity shareholders of the Group decreased by 60.7% to US$144.8 million in the first half of 2013.

Excluding the adverse effects of the Silverstream valuation, profit for the period decreased by 37.5% to US$257.6 million in the first six months of 2013, whilst profit attributable to equity shareholders of the Group, declined by 34.2% to US$225.6 million.

Cash Flow

A summary of the key items from the cash flow is set out below:

Cash Flow Key Items

Six months ended 30 June

(in millions of US$)

2012 figures were adjusted in accordance to IFRIC 20 to be comparable with presentation/criteria in 2012

In the first six months of 2013, cash generated by operations before changes in working capital decreased by 30.7% to US$496.4 million mainly as a result of the lower profits generated at our mines, except for Saucito. In addition, the US$53.0 million increase in working capital also impacted Fresnillo plc's cash flow, and was the result of:

·; A US$57.2 million increase in ore inventories at the Soledad-Dipolos, Noche Buena and Herradura mines, which resulted from depositing ore on the new phases of the leaching pads.

·; Trade and other receivables which rose by US$10.0 million due to the increased recoverable value added tax; and mitigated by the decrease in receivables to Met-Mex Peñoles.

·; The US$13.1 million increase in trade and other payables.

Taxes and employee profit sharing paid decreased to US$254.5 million.

As a result of the above factors, net cash from operating activities for the first six months of 2013 decreased by 35.5% to US$188.9 million.

Fresnillo plc received proceeds totalling US$383.4 million as a result of: i) the placement of 19,733,430 new ordinary shares announced on 29 April 2013, which increased the Group's source of funds by US$346.1 million; and ii) the proceeds from the Silverstream Contract, which despite lower silver prices, accounted for US$37.3 million.

The Group purchased property plant and equipment for a total of US$324.1 million, a 34.8% increase over the first half of 2012. Capital expenditures for the first half of 2013 are further described below:

In the first half of 2013, dividends paid totalled US$304.1 million as a result of the final 2012 dividend of US$42.40 cents per share paid on 8 May 2013.

The sources and uses of funds described above resulted in a net decrease of US$43.8 million in cash and cash equivalents, which combined with US$613.8 million balance at the beginning of the year and the favourable effect of the exchange rate (US$0.8 million), resulted in a net cash position of US$570.8 million as at 30 June 2013.

Going concern

The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the reasonable future when considering the current levels of silver and gold prices. This assessment resulted from the Directors consideration of the Group's budget and cash flow projections for the period to December 2014, as well as the exploration and capital expenditure plans. In addition, Directors have considered the sensitivities around the cash flow forecasts to movements in prices as a result of the significant changes experienced in the first half 2013. Therefore, Fresnillo plc will continue to adopt the going concern basis of accounting in preparing the financial statements.

Balance Sheet

Fresnillo plc maintained its solid position with no bank debt.

Cash and cash equivalents as of 30 June 2013 of US$570.8 million decreased when compared to the year-end 2012 cash position of US$613.8 million, but increased by 16.3% when compared to the cash position as of 30 June 2012.

Trade and other receivables slightly increased to US$265.8 million mainly as a result of higher recoverable taxes related to value added tax generated by the increased purchases of operating materials.

In the first half of 2013, inventories accounted for US$254.8 million, a 28.7% increase over the 2012 year-end figure, reflecting mainly the higher gold inventories in the leaching pads of Soledad-Dipolos, Noche Buena and Herradura.

The change in the value of the Silverstream derivative from US$487.8 million at the beginning of the year to US$343.0 million as of 30 June 2013 reflects proceeds of US$32.3 million, (US$26.3 million in cash and US$6.0 million receivable)and the revaluation effects of US$112.5 million in the Group's income statement.

The net book value of property, plant and equipment was US$1,704.6 million at 30 June 2013, an increase of 14.3% over the US$1,490.7 at 31 December 2012. The US$208.8 million increase is explained by the progress made in the construction of the dynamic leaching plant and additional pads built at Herradura, Noche Buena and Soledad-Dipolos. Mining works at the San Julián project, Ciénega and Fresnillo and purchase of equipment at Herradura, Saucito further increased the asset base. Property, plant and equipment 2012 figure was adjusted to reflect the adoption of the IFRIC 20. Further information related to these adjustments is provided in note 19 to the Consolidated Financial Statements.

Fresnillo plc's total equity for the first half of 2013 was US$2,786.6 million, an increase of 6.8% when compared to the figure at the beginning of the year, reflecting the placement of the additional shares previously described.

The total number of ordinary shares issued by the Company is 736,893,589 and voting rights for the same amount as the Company does not hold any ordinary shares in treasury.

Dividends

The Board of Directors has declared an interim dividend of 4.90 US cents per share totaling US$36.11 million which will be paid on 10 September 2013 to shareholders on the register on 16 August 2013. This dividend is in linewith the Group's dividend policy which takes into account the profitability of the business, underlying growth in earnings and the capital and cash flow requirements to support future production and expansion.

The interim dividend will be paid in UK pounds sterling to shareholders, unless a shareholder elects to receive dividends in US dollars. The interim dividend will be paid in UK pounds sterling with the dividend being converted into UK pounds sterling on or around 19 August 2013.

Risks and uncertainties

In the first half of 2013, the Board and the Executive Committee continued to monitor Fresnillo plc's principal risks and the appetite for each of these risks as part of the strengthening of the risk management framework and execution towards achieving long-term objectives. During this period, two projects were undertaken: in the first, the risk management function identified specific activities which needed to be carried out by operating personnel with risk management responsibilities. These activities were discussed with the operating personnel and were presented to and approved by the Executive Committee. They have now been incorporated into the Human Resources Procedure Manual.

The second project started at the beginning of the year and involved the collection of data to calculate the Key Risk Indicators (KRIs). We now have two quarters of data which will be compared, analysed and presented to the Executive Committee on a quarterly basis. We currently monitor ten principal risks and have not changed from those set out in the Business Review section of the Annual Report for the year ended 31 December 2012. A copy of the Fresnillo's Group 2012 Annual Report is available at the Company's website at www.fresnilloplc.com. The principal risks are shown below:

·; Security

·; Impact of global macroeconomic developments

·; Projects

·; Access to land

·; Potential actions by the Government

·; Public perception against mining

·; Safety

·; Environmental incidents

·; Exploration

·; Human Resources

Directors

The names and functions of the current directors and senior management team of Fresnillo plc are as listed in the Fresnillo Group's Annual Report for 2012. A list of current directors is maintained on the Group website: www.fresnilloplc.com

Statement of directors' responsibilities

The Directors of the Company as listed on pages 113 to 114 of the Fresnillo plc 2012 Annual Report, hereby confirm that to the best of their knowledge:

(a) the condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit and loss account of the Fresnillo Group as required by DTR 4.2.4; and

(b) the interim management report includes a fair review of the information required by DTR 4.2.7 (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principle risks and uncertainties for the remaining six months of the year) and DTR 4.2.8 (being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period and changes since the last annual report).

On behalf of the board of directors of Fresnillo plc.

Octavio Alvídrez

Chief Executive Officer

INDEPENDENT REVIEW REPORT TO FRESNILLO PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 which comprises the interim consolidated income statement, the interim consolidated statement of comprehensive income, the interim consolidated balance sheet, the interim consolidated cash flow statement, the interim consolidated statement of changes in equity and the related notes 1 to 19. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2a, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

5 August 2013

Interim Consolidated Income Statement

Interim Consolidated Statement of Comprehensive Income

Interim Consolidated Balance Sheet

Interim Consolidated Cash Flow Statement

Interim Consolidated Statement of Changes in Equity