Fresnillo : Annual General Meeting Statement

Fresnillo plc

21 Upper Brook Street

London W1K 7PY

United Kingdom

3 May 2016

Annual General Meeting Statement

Fresnillo PLC will hold its Annual General Meeting today at 12pm (noon) in London, and Mr. Alberto Baillères, Chairman, will make the following statement:

'Welcome all, and thank you for coming to the Fresnillo plc Annual General Meeting.

2015 saw continued pressure on precious metals producers, raising long-term strategic questions for the industry. I am happy to report that while external challenges continue, Fresnillo has maintained its strategy of balancing growth and returns, enabling us to deliver another solid operational performance and maintain a strong financial position. We have achieved this by maintaining our focus on five key pillars: a strong balance sheet that allows us to invest across precious metal price cycles, high quality assets, our flexible operations, a disciplined approach to development and a commitment to sustainable business practices.

In 2015, Fresnillo delivered record silver and gold production, demonstrating the quality of our asset portfolio and the strength of our operations. Our annual silver production of 47 million ounces was at the top end of our guidance and was driven primarily by the ramp-up at Saucito II, which was ahead of the original three year timeframe. Gold production was 762 thousand ounces, which surpassed our 2018 gold production target, and was achieved as we reached steady state at Herradura, combined with higher output at Saucito.

We experienced some operational challenges this year. Although we saw improvements in grade and production at the Fresnillo mine, we fell short of our targets due to development delays, as well as the natural and expected decline in silver ore grades. We are confident that we will see a turnaround in 2016 as a result of the measures we have implemented at the mine, and we are targeting a double digit increase in ore milled. We are pleased to report very good progress with our development project at San Julián, with minimal execution delays. The commissioning of the stage 1 leaching plant is now expected in the second quarter of 2016. We also continued detailed engineering at the pyrites project which is expected to increase silver and gold recovery rates by processing tailings, both historical and ongoing, from the Fresnillo and Saucito mines.

In our recent Production Report for the first quarter of 2016, we reported a solid start to the year, with production of 12 million ounces of silver and 230 thousand ounces of gold, and we remain on track to achieve our 2016 production guidance of 49 to 51 million ounces of silver, and 775 to 790 thousand ounces of gold. Furthermore, during the quarter we saw an improvement in grades and production at the Fresnillo mine as a result of the measures taken to increase operational flexibility and move gradually towards operating the beneficiation plant at full capacity once again.

Our 2015 exploration programme was mainly focused on areas of influence at our current operating mines and key exploration sites. While our investment in exploration was scaled back to safeguard our position during this period of cyclically low precious metal prices, we continued to invest in our longer-term growth with a total capex investment of US$475 million and exploration expenses of US$140 million. At Juanicipio, drilling showed positive results with a 10% increase in silver resources; production is expected to begin in 2018. We also saw increases in silver-gold resources at the Huizache, San Julián Sur, Guanajuato and Rodeo projects. Our high quality resource base remains strong, even with stricter criteria and lowered price assumptions. Gold resources increased 4.2%, while silver resources slightly decreased by 1.9%.

Despite the downward pressure on prices, Fresnillo's financial position remains strong; we ended the year with a healthy cash balance of US$500.1 million, and without impairments. We reported adjusted revenues of US$1,583.3 million, a 2.5% increase on 2014, and gross profit and EBITDA of US$433.1 million and US$547.5 million. The devaluation of the Mexican peso against the US dollar positively affected production costs, but it also resulted in non-cash charges to the income statement and affected the monetary position and value of certain assets and liabilities, resulting in increased deferred taxes. Total debt on the balance sheet was US$800 million, ensuring we maintain low leverage and continued financial flexibility.

Fresnillo remains a low cost producer, and given current and projected market prices for silver and gold, we remain confident in achieving our 2018 production targets. We believe that value creation requires sustainable growth through disciplined and ongoing investment in new projects and exploration. However, we must take current market conditions into account in order to optimise performance and continue delivering returns to shareholders. As such, we have reduced our exploration budget, and deferred certain capital expenditure in order to safeguard our financial position and maintain a strong balance sheet.

Following a thorough review of Fresnillo's current financial situation and future requirements, the Board declared an interim dividend of 2.1 US cents per share and a final dividend of 3.35 US cents per share, for a total of US$24.7 million. The Group's dividend policy takes into account the profitability of the business and underlying earnings, as well as its capital requirements and cash flows, all while maintaining an appropriate level of dividend cover.

Fresnillo's Health, Safety, Environment and Community Relations (HSECR) System continues to mature and we are continuously focused on meeting our 2016 target of a fully integrated HSECR system. Safety continues to be our highest priority, and so I am deeply saddened to report that following a reduction in fatalities over the past few years, we suffered one fatality in late 2015 and two in early 2016. Our goal is that every employee return safely home at the end of each day and we will continue to review our safety processes to ensure this goal is met. We are conducting extensive internal reviews with management and contractors; safety must be deeply embedded in our culture to safeguard our workforce and retain our licence to operate.

We saw improvements in other areas of our HSECR framework, most notably with the introduction of renewables in our energy portfolio, as we work to separate growth from increased carbon emissions. We also made substantial progress on our carbon emissions reporting transparency, earning 93 out of 100 from the Carbon Disclosure Project, which is a significant improvement on our initial rating in 2010. We have also been included as a top emerging markets performer by Vigeo, an international research group on environmental, social and governance issues. In addition, we increased our community investment, underscoring how critical social acceptance is to the success of our Company.

In 2015, the Board was able to devote considerable attention to long-term strategic considerations. We focused on the action plan resulting from the 2014 External Board Evaluation and the changes to UK Corporate Governance Code taking effect this year; significantly we conducted the assessment of viability for the preparation of the Viability Statement. The Board also continued to take an active role in setting strategy, reviewing progress against plan and ensuring management retains sufficient flexibility to respond to market dynamics and operational developments.

While we do not see an imminent end to the current volatility, we remain committed to our long-term strategic goals: to profitably and sustainably maintain the Group's position as the world's largest primary silver company and a leading gold producer in Mexico. We are well placed to weather these conditions as a result of our operational and financial flexibility. We are focused on value creation and will achieve this by seeking additional efficiencies at all our operating mines, investing in productivity and controlling costs to maintain our cost position and solid margins.

I would like to extend my appreciation and gratitude to each and every one of the employees of Fresnillo plc for their efforts and commitment to the Company. It is as a result of our combined efforts that Fresnillo is well positioned to deliver long-term value to our shareholders and meet our commitment to sustainable value creation.

Thank you.'

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