Fresnillo plc interim results
for the six months to 30 June 2021
Octavio Alvídrez, Chief Executive Officer, commented:
Our commitment to our purpose, to contribute to the wellbeing of people through the sustainable mining of silver and gold, drives our decisions as we navigate the on-going impact of the pandemic. The safety of our people, their families and our communities is our priority. We continue to engage extensively with our stakeholders to ensure we are playing our part as a large employer and long-standing community supporter, to contribute to the overall efforts to manage these challenges. Our connection to our local communities has only strengthened in the last 18 months, and the support we have offered including investment in local healthcare, employment and education programmes, has continued to increase.
“I am pleased to report a strong financial result in the first half. The combination of improved production performance and higher precious metals prices has seen a sharp increase in profitability during the period. This in turn, has enabled us to declare a dividend of US$73.0 million to shareholders, while continuing to invest in both our development and exploration projects. The Juanicipio mine remains on track, with commissioning of the processing plant expected by the end of the year, and we are making strong progress with our intensified exploration activities to convert resources into reserves.
“With a proven strategy, high quality assets, talented personnel, a very strong balance sheet and considerable development pipeline, we are well placed to continue generating value for all our stakeholders long into the future.”
First half highlights
Financial highlights (1H21/1H20 comparisons)
· Adjusted Revenues [1] of US$1,543.1m, up 37.1%; 75.8% of this due to higher metal prices and 24.2% due to increased volumes.
· Gross profit and EBITDA [2] of US$606.8m and US$747.0m, up 88.9% and 59.0%, respectively.
· Operating profit and profit before income tax of US$471.9m and US$445.4m, up 117.6% and 248.3%, respectively.
· Profit for the period of US$308.4m, up 445.8%.
· Basic and diluted EPS from continuing operations of US$41.0 cents per share, up 365.9%.
· Adjusted EPS[3] of US$41.4 cents per share, up 250.8%.
· Cash generated from operations, before changes in working capital, of US$750.4m, up 64.5%.
· Free cash flow [4] of US$305.1m in 1H21 (US$265.7m in 1H20).
· Strong balance sheet with cash and other liquid funds [5] as at 30 June 2021 of US$1,202.9m (31 December 2020: $1,070.4m); net debt/EBITDA of -0.02x [6] (31 December 2020: 0.08x).
· Interim dividend of 9.90 US cents per share, totalling US$73.0m (1H20: 16.9m).
Operational highlights (1H21/1H20 comparisons)
As disclosed in the 2Q21 production report on 28 July 2021:
· First half attributable silver production of 27.5 moz (including Silverstream), up 2.7% vs. 1H20.
· First half attributable gold production of 428.4 koz, up 12.3% vs. 1H20.
· Continued progress was achieved on the construction of the Juanicipio processing plant, with the assembly of flotation cells and filters concluded during the quarter. Commissioning of the plant in 4Q21 remains on track and on budget.
· As previously reported, the connection of the new circuit to the Fresnillo flotation plant was completed in 1Q21, and the programming of the control loop system was concluded in 2Q21.
· Ongoing focus on costs control and productivity.
Covid-19 update
We continue to prioritise the safety and welfare of our people and our local communities. Our teams have adapted very well and we have been able to contain the impact of the virus, though we remain vigilant around the continued evolution of the pandemic and its potential effect on our operations. Our various community health programmes are on-going, as are the safety measures we put in place last year.
Highlights for 1H21
|
US$ million unless stated |
H1 21 |
H1 20 |
% change |
|
Silver production (koz) * |
27,530 |
26,819 |
2.7 |
|
Gold production (oz) |
428,356 |
381,319 |
12.3 |
|
Total revenues |
1,466.8 |
1,054.2 |
39.1 |
|
Adjusted revenues1 |
1,543.1 |
1,125.1 |
37.1 |
|
Cost of Sales |
860.1 |
733.0 |
17.3 |
|
Exploration expenses |
60.9 |
50.7 |
20.0 |
|
EBITDA2 |
747.0 |
469.9 |
59.0 |
|
Profit for the period |
308.4 |
56.5 |
445.8 |
|
Cash generated by operations before changes in working capital |
750.4 |
456.2 |
64.5 |
|
Basic and Diluted EPS (US$)3 |
0.410 |
0.088 |
365.9 |
|
Basic and Diluted EPS, excluding post-tax Silverstream revaluation effects (US$) |
0.414 |
0.118 |
250.8 |
|
Dividend per ordinary share (US$) |
0.099 |
0.023 |
330.4 |
* Silver production includes volumes realised under the Silverstream contract
1 Adjusted revenues are the revenues shown in the income statement adjusted to add back treatment and refining charges and the effects of metals prices hedging. The Company considers this is a useful additional measure to help understand underlying factors driving revenue in terms of volumes sold and realised prices
2 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as profit for the year from continuing operations before income tax, less finance income, plus finance costs, less foreign exchange gain/(loss), less revaluation effects of the Silverstream contract and other operating income plus other operating expenses and depreciation.
3 The weighted average number of shares for H1 2021 and H1 2020 was 736.9m. See Note 8 in the Interim Consolidated Financial Statements.