Both are available at www. A number of holes completed have not been released at this time and assays are outstanding. The joint holdings have not been extensively tested in the area of this projection. Fresnillo completed an initial public offering in Europe in the Spring of

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Rising to challenges, moving forward with confidence was a year when several negative factors combined to drive down the performance of our mines and caused us to revise our guidance to the markets. We fell short of the high mine planning and operational execution standards that we have come to expect from our teams, which contributed to lower ore grades and tonnages than anticipated.

Delays to infrastructure projects, poor contractor performance, higher costs, new regulatory pressures in Mexico and low equipment availability were significant challenges faced during the year. None of these challenges is insurmountable in its own right - but what marks as an unusual year is that they coincided at several operations, indicating systemic failures that are now being addressed.

Having realised that we were going to miss our target for silver production, we revised our guidance in Q2 and introduced extensive corrective measures. Inevitably, it is taking time for these measures to have the desired effect and our overall operating performance for this year has therefore been adversely impacted.

We expect production to stabilise in , with results improving during In addition, although gold production was within the guidance provided at the Capital Markets Day in December, we failed to reach the revised target we had communicated in August, of koz.

This was primarily due to delays in the construction of the 13th leaching pad at Herradura. We had no alternative but to deposit ore at the top of existing pads, and this led to a slower recovery than initially forecast. Furthermore, the project to implement a Carbon-in-Column process at Noche Buena to increase gold recovery was delayed.

While this was successfully concluded later in , it contributed to further decrease gold production against expectation. Production highlights and price review In short, total silver production fell by At the Fresnillo mine, this was primarily due to decreasing vein width, increased dilution and greater ore variability, contractor underperformance and the need for additional infrastructure as we extend the mine to greater depths.

Gold production of There was a steady increase in gold and silver prices during the second half of the year, on the back of healthy demand and a slight reduction in supply.

In , average realised silver prices rose by 3. Average prices for zinc and lead decreased, by 9. A time to pause, reflect and prepare Despite the disappointments of , it is important to stand back and take stock of how far we have come, and how the work we are doing today will bear fruit in the future.

Following a decade where we consistently created value through growth and returns, these last 12 months have been a valuable time for us to pause, reflect and prepare ourselves in order to rise to the challenges we are facing. How are we going to deliver a performance that will regain the confidence of our stakeholders? This strategy has four pillars, and here I will outline our progress against each one. Maximising the potential of existing operations This is the key focus for and is central to our commitment to consolidate our achievements to date.

We are committed to working smarter and more efficiently in order to extract maximum value from our asset base. Our efforts during and for the coming year focus primarily on the Fresnillo district.

The Fresnillo Full Potential FFP project is already helping us to address the structural challenges posed by deeper operations, narrower veins and greater ore variability at the Fresnillo and Saucito mines.

At the same time, FFP addresses processing issues that include delayed development and preparation of mining areas, infrastructure, efficiency and productivity.

Designed specifically for the conditions at the Fresnillo mine and capable of boring at least metres per month, this is one of the first TBMs of its kind. Further investments in infrastructure at Fresnillo include a new pumping station to improve drainage as well as a new elevator that will cut the travel time of our teams by up to an hour. As planned, we have commenced the expansion of the flotation plant.

On track for completion by mid , this will complement the additional thickening capacity installed in Once the mine is developed and able to sustain a production rate of 9, tonnes per day, we will implement the third element in the plant optimisation project - the installation of additional vibrating screens, which will further increase the capacity of the plant.

Technology sits at the heart of initiatives to improve our processes. For example, we are currently implementing semi-automatic operations of long hole drills, in order to increase productivity and equipment utilisation. A total of 15 long hole stopes are being prepared at Fresnillo, with ten of these set for completion by the end of Q2 We also introduced a new communications system in , to improve planning and control processes at the mine.

This system provides management with real-time data on everything from manpower allocation to equipment availability - boosting productivity by making sure that we have the equipment and resources we need, when and where we need them. In addition, we have increased our focus on maintenance in order to improve the availability and reliability of critical equipment. We have also addressed the lack of reliability of our geological models by creating four specialised teams, each headed by senior operations and exploration specialists and supported by the executive team.

These teams are tasked with: improving sampling and geological mapping; ensuring greater quality assurance and control, including at our laboratories; enhancing our geological and resource modelling processes; and implementing measures such as full 3D cavity monitoring technology to improve dilution control and improving the conciliation of reserve estimates and actual tonnages and grades. Cost management is a key factor in maximising the potential of our existing operations. As Fresnillo has matured as a company, we have realised that our cost control processes have not always kept pace.

We are therefore introducing new initiatives to ensure that the fundamentals of sound accounting and cost management remain in place and continue to work effectively. Any developments will take time to feed through into the financial numbers, but we have already made a good start and will continue to focus on this important area through The Board approved the development of Juanicipio early in , and construction is now well underway with over 25 km of underground development already completed and processing of development ore currently expected to commence in mid , ahead of schedule.

Production at the Fresnillo mine will benefit from the new Pyrites Plant. On track for completion in , this 14, tonnes per day plant will increase the recovery of silver and gold from the current and historical tailings of Fresnillo. Once operating at full capacity, and including total production from the Saucito plant, it is estimated to produce an average of 3. Extending the growth pipeline Our commitment to exploration across the peaks and troughs of economic cycles has remained consistent since our IPO 11 years ago - and while our current priority is to focus on our existing operations, exploration will continue to be the cornerstone of our longer-term strategy.

During , our team of experienced geologists again worked hard to explore new opportunities, both in the areas around our operations and to a lesser degree in new districts. These are areas where we already have a deep understanding of the geology, and are confident in our ability to exploit new opportunities both quickly and cost-effectively.

However, we have decided to slow the pace of these projects to prioritise current operations, while continuing to de-risk them so we can move them forward when the time is right. During the year we continued to carry out further work in Peru and Chile, where we have a total of four projects showing good potential. In Peru we are concentrating our efforts on permits and drilling parametric holes, while in Chile our focus is on exploration options with well-established local partners.

As the audit of reserves and resources is a lengthy process, this year for operating mines we brought it forward to 31 May, compared to December in previous years. The earlier timing of the audit meant that costs considered in the estimation were taken from , and not from the most recent cost base. Silver resources stood at 2. Gold resources remained stable at Silver reserves rose slightly, by 1. Gold reserves decreased A key focus for will be tackling these issues and converting resources into reserves.

Advancing and enhancing the sustainability of our operations We will never compromise the safety of our employees or contractors. Our priority is that everyone goes home to their families at the end of their shift.

Safety is a never-ending challenge for the mining industry, and it is with great sadness that I have to report that despite our best efforts, we had two fatalities during the year. Although this is an improvement on the previous year, it is unacceptable. We are striving to create a working environment that protects all our people from harm, at all times. For example, our I Care, We Care programme brings together industry best practices, systems and behaviours, and was one of primary reasons that the year saw a reduction in our Lost Time Injury Frequency Rate.

Over the last 12 months, the programme has been rolled-out to all employees and contractors, focusing on engagement and accountability.



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