Fresnillo plc (LON:FRES), today announced the interim results for the six months to 30th June.
Financial highlights (1H18/1H17 comparisons)
· Adjusted revenues[1] of US$1,189.9m, up 11.3%
· Gross profit and EBITDA[2] of US$502.2m and US$566.9m, up 9.2% and 8.5%,
respectively
· Silverstream valuation, a non-cash item, had an adverse effect on profit before income tax, which came down 16.6% to US$323.0m
· In addition, profit for the period of US$229.3m, down 26.1%, was adversely impacted by changes in the MXP/USD exchange rate and inflation rate on deferred taxes (non-cash item)
· Basic and diluted EPS from continuing operations of US$31.2 cents per share, adjusted EPS of US$33.3 cents per share, down 25.5% and 9.3%
· Cash generated from operations, before changes in working capital of US$575.9m, up 6.6%
· Net cash from operating activities of US$366.6m, up 3.5%
· Strong balance sheet with cash and other liquid assets as at 30 June 2018 of US$708.6m
· Interim dividend of US$78.8m (10.7 US cents per share)
Operational highlights (1H18/1H17 comparisons)
· Silver production of 30.8 moz (including Silverstream), up 9.7%, and gold production of 465 koz, up 4.4%
· Ongoing tests at the Herradura leaching pads have resulted in an increase of 98.9 koz of gold in inventory as of 1 January 2018
· Full year consolidated production guidance has been revised marginally: total gold production to 900 – 930 koz (previously 870 – 900 koz) and total silver production to 64.5 – 67.5 moz (previously 67 – 70 moz) including Silverstream
· Pyrites plant at Saucito commissioned with minimal delays and on budget
· Final testing of second line of the dynamic leaching plant is on track with commercial production expected in 3Q18.
Highlights for 1H18
|
US$ million unless stated |
H1 18 |
H1 17 |
% change |
|
Silver Production (koz) * |
30,764 |
28,044 |
9.7 |
|
Gold Production (oz) |
465,299 |
445,769 |
4.4 |
|
Total revenues |
1,115.0 |
995.8 |
12.0 |
|
Adjusted revenues1 |
1,189.9 |
1,069.5 |
11.3 |
|
Exploration expenses |
78.3 |
64.2 |
21.9 |
|
EBITDA2 |
566.9 |
522.5 |
8.5 |
|
Profit for the period |
229.3 |
310.1 |
(26.1) |
|
Cash generated by operations before changes in working capital |
575.9 |
540.3 |
6.6 |
|
Basic and Diluted EPS (US$)3 |
0.312 |
0.419 |
-25.5 |
|
Dividend per ordinary share (US$) |
0.107 |
0.106 |
0.9 |
* 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 costs and the effects of gold, lead and zinc 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 gross profit plus depreciation less administrative, selling and exploration expenses
3 The weighted average number of shares for H1 2017 and H1 2016 was 736.9m. See Note 8 in the Interim Consolidated Financial Statements.
Octavio Alvídrez, Chief Executive Officer of Fresnillo plc, said:
“I am pleased to report a robust performance in the first half, with silver and gold production both up in the period, and our new San Julián (phase II) mine making a strong contribution to overall production, while gold production at Herradura continues to outperform. We have marginally adjusted full year production guidance to reflect a stronger performance in gold and short term challenges at our silver operations though consolidated guidance remains unchanged.
In line with our strategy to actively manage and strengthen our asset portfolio, we are making good progress on the broader development pipeline which continues to provide a strong foundation for long term sustainable growth.
The Pyrites Plant at Saucito has been commissioned and final testing at the Second Dynamic Leaching Plant is on track. Both projects will make a meaningful contribution to overall 2018 production.
Once again we have maintained an extensive exploration programme during the first half and remain confident these proactive activities will provide a solid foundation on which our long term future growth will be built. We continue to believe the vast potential of our exploration pipeline is a core differentiators for Fresnillo.
Looking ahead, we remain confident in our full year expectations. We will continue to maintain this disciplined approach to investment, to support our strategy and deliver shareholder returns. We are focused on efficiency and controlling costs to underpin projects, while driving performance improvements at our mines.”
