Fresnillo plc

Good to see you again. How you been? Great.

Good morning, everyone. I’m Octavio Alvidrez, CEO of Fresnillo plc. It’s a privilege to be presenting to you today. But before I begin, I would like to draw your attention to the disclaimer. But I will quickly move into what I will be presenting on the company: an update on the financial and operational updates, but also a quick overview of what is very central to our strategy, which are the projects that we are developing, in order to finally conclude with some conclusions on the outlook for the company.

For those who are not familiar with the company, I will give a brief introduction to Fresnillo. We operate eight mines across our portfolio. Some of those are a good mix of underground and open pit mine operations, but also five midterm new advanced exploration projects. In this graph, I can tell you that one of our strategies is to operate, but not only operate, but develop along the lines in district mode. As you can see, the Fresnillo district with three operations, Fresnillo, Saucito and Juanicipio, developed along the time. But also on the northern part of Mexico, we do have the Herradura cluster that we have developed over the years with Herradura, Soledad-Dipolos and Noche Buena. This is central to our strategy, and those go along the lines of the acquisitions that we have recently done.

We are proud to be the largest silver producer worldwide and Mexico’s largest gold producer as well. Of course, this has to be coupled with a substantial amount of resources and reserves along the lines that we have in our operations, but also in our exploration portfolio. Let me give you also a quick look of what we’ve done over the years, developing our pipeline of projects. We do have and participate in all of the chain of mines and metallurgicals, identifying, discovering, developing the projects, and then efficiently operating our mines.

Just recently, we acquired also a Canadian company, which is Probe Gold. And this year, at the start of the year, we acquired a small percentage of a company, Sinda, which is strategic to our view in Mexico. We acquired a share of a nice silver project, high grade, and also sizable resources there. You see here the stringent process in which we have the risking the projects that we have, bringing them to operations and then efficiently operating those, as is more recent with our Juanicipio mine in the same Fresnillo district. And that will continue to be our focus, to be very orderly and bring all those projects that fit in our portfolio.

As I mentioned, Fresnillo, and we are proud to be the largest silver producer worldwide, but also the largest gold producer in Mexico. This is coupled with sizable resources and reserves, over 2 billion ounces of silver in our resource portfolio, and also 44 million ounces of gold in our resource base. We have strong EBITDA margins. We remain very focused on running our operations, controlling our cost, widening as much as possible our margins, and then generating the cash flow through our operations. Of course, with our long-standing dividend policy, we have returned over 2 billion in the last five years, but also investing in the growth and the future growth of our company.

We are proud, and we continue to advance in our sustainability performance and have a long-term record of consistent, committed engagement with our local communities. We have a strong balance sheet, a strong cash position, positive free cash flow, and an unchanged, consistent dividend policy.

Turning to some of our financial metrics. In the right upside chart, you can see the revenue growth as well, gross profit and gross profit margin almost doubling in the first six months. In particular, we saw also growing our EBITDA in this year, and that has allowed us to return via dividends to our shareholders, as I mentioned, more than five, two billion over the last five years. This also gives us a possibility, whenever we identify a project that makes sense in our portfolio, with the strength of our balance sheet to go and acquire something that makes sense in our company.

As to silver and gold markets, I would say we continue to be very positive on both metals. Gold very much supported on geopoliticals and macroeconomic events. And silver very much with a structural deficit that we’ve seen over the years, the recent years, and also the growth in various usages of this great metal of silver.

Then I will give you an update on our operations. Turning on to the Fresnillo district, we saw the three operations, Fresnillo, Saucito, and Juanicipio, operate as expected along the mine plan and also through the expected grades in each one of the mines. In Fresnillo, we’ve seen nice developments there in terms of maintaining the silver grade that we are expecting, but also producing more gold, as you can see in this graph, which is a nice combination. Also, to that, in our mines, we produce larger amounts of zinc and lead, which contributes to a nice cash cost position as well.

In Saucito, we continue to invest in the mine. We are about to connect the Jarillas shaft, which will give us the possibility to lower our cost per ton and continue producing the nice cash flows that we have seen in Saucito in recent years. And then in Juanicipio as well, the production rates have been above what we had planned. And also we are investing through a conveyor belt that will give us the possibility also to lower our cost per ton.

Turning into the northern region, Herradura, Ciénega, and San Julián continue to make solid operational progress during the first half. At Herradura, production reflected planned lower grades alongside important progress in key infrastructure and projects that will give us additional ounces in the near future. Ciénega was a particular highlight, with gold production up 15%, while San Julián, the vein system there, throughout mitigate the impact of lower grades.

Central, as I mentioned, to our strategy, we have a good set of projects. Not only the greenfield projects that we’ve been developing through the years, but also a nice combination with brownfield projects that will provide us with production in near times. This is in line with our priority to maintain cost, deliver efficiencies, while driving value out of our recent or existing assets.

We have Bayas, an underground project, close in the Herradura district, adjacent to the pit that we have had for many years. In this project, we are developing so that we have a more systematic approach to mining, and that will give us expected production between 50 to 90 thousand additional ounces per year. We have extended also in this process the mine life that we initially had, so this is a nice project that we’ll see first production probably by the end of this year.

Also, Noche Buena, which was in our portfolio of operating mines for many years, and what we thought was depleted: with the current price environment, but also with more exploration success, we’ve been able to extend the mine life for six, seven more years, and we are re-leaching the pads and also we will start with the stripping again so that we can have nice additional gold ounces in this mine.

Herradura Underground will come later on. It’s a long-term project, but one that highlights the considerable strength and longevity of these assets. Herradura this year is 29 years of operations, and we expect our production from this underground portion in the region of 120 to 160 thousand ounces, starting in 2032. And finally, although it’s a greenfield project, Tajitos, we get this together in the Herradura cluster, which is nearby our Herradura mine and Herradura operations. And we will be able to have additional efficiencies and synergies with this project, in which we have 1.1 million ounces of silver, of gold already.

Going into the greenfield projects. Rodeo, we continue to advance this project. This is one that is not difficult to develop, as it is sitting in a nice area in which we have infrastructure, energy, roads, and also water to develop this project. We advanced the PEA and almost completed confirming the mine, increasing expected production range from the 75 to 9 thousand ounces of gold to the range of 90 to 110 thousand ounces per year.

At Guanajuato, on the silver side, is a strong, I would say a very strong project, probably the strongest in our portfolio. Very high-grade silver grades. Also, exploration is still to be continued and open along the veins, but also at depth. And we are expecting to bring the first mining works in terms of a decline and also a shaft in the following months. As it is at a considerable depth, we believe we can bring this project starting in 2033. However, we are looking forward to bringing it before, probably developing a level in order to start production before those years.

Orisibo, we continue to develop it. We have seen a strong result from the metallurgical studies, as this was the main challenge in this project, and also advancing this project. And Novador, as I mentioned before, is one of those projects that we like to have in our portfolio. It not only comes with a nice resource of gold in the region of 10 million ounces of gold, but also a central project that we are developing and also a large exploration package that will allow us to bring our exploration expertise, already with some identified targets and also new operations to develop in this 180 thousand hectares of exploration ground that we have there.

This is the timeline to develop our projects. As you can see, before the greenfield projects come on stream, we do have a nice combination of brownfield projects on the Valles underground and also Noche Buena, which is back in operation again. And then the set of greenfield projects, Rodeo, Tajitos, Herradura underground in the same Fresnillo district, Novador, Orisibo, and Guanajuato.

I will now summarize what we have in our company. Safety and responsibility, central to all what we do in Fresnillo. We continue to have good results in safety, and this is the priority for all of us that work at Fresnillo. Operational discipline: as we have seen, we continue to operate our mines with this philosophy, trying to widen the margins, controlling the cost in this price environment, and generating the cash flow in order to further strengthen our balance sheet, our cash generation, and also the positive free cash flow that we are enjoying recently.

As I mentioned, cost focus, and even more now, is central. And I would like to mention that in 2024 and 2025, we ended up very much at the same consolidated total cost in our company, which speaks about what we do in order to maintain the quality ounces that we produce. Investing in our future is central to our company, as we have those five projects that we described in Mexico, and for the first time across our country in Canada with the Novador project and the Probe acquisition at the start of the year.

And therefore, when we have margins in our operations, when we have the sizable ounces that we produce, we do have the possibility to return to our shareholders, as we mentioned, over 2 billion over the last five years. And we will continue to do this business model with a strict criteria to what we do as investment and the best fit in our portfolio. And with that, Rob, I will turn into questions.

Thanks, Octavio. I think we have time for one quick question, and I’ll ask that question to Octavio. Maybe if we can touch on inflation, any kind of pressures in terms of labor for your current operations and also for your pipeline of very strong projects.

Yeah. Labor in Mexico, we enjoy to have a very good communication and interchange with our union. However, as most of the mining companies keep on developing projects or even increasing the production in some of their assets, labor and talent is a challenge. So we mostly develop our own people, our own personnel, with a good and healthy mix with contractors in all of the mines that we operate.

Great. Thanks, Octavio. I think that’s all the time we have, and thanks again for a very good presentation. [audience applauding]

Thank you.