REG - Fresnillo Plc - Financial Results for the Year Ended Dec 2014 <Origin Href="QuoteRef">FRES.L</Origin> - Part 3

FresnilloAnnouncement

04/03/2015 07:24

- Part 3: For the preceding part double click  ID:nRSD4641Gb 

                                                                                                                                                consider the new Mining Law a         
                                                                                                                                                                                                                                 priority for politicians in the 2015   
                                                                                                                                                                                                                                 state elections.                      
                                                                                                                                                                                                                                 Stricter environmental protocols      
                                                                                                                                                                                                                                 could make it more difficult to       
                                                                                                                                                                                                                                 obtain and maintain environmental     
                                                                                                                                                                                                                                 impact permits. Increased sanctions   
                                                                                                                                                                                                                                 may vary from fines to permanent      
                                                                                                                                                                                                                                 suspension of mining concessions. We   
                                                                                                                                                                                                                                 also expect greater involvement and   
                                                                                                                                                                                                                                 pressure from the three levels of     
                                                                                                                                                                                                                                 government (federal, state and        
                                                                                                                                                                                                                                 municipal) for the conduct and        
                                                                                                                                                                                                                                 enforcement of environmental          
                                                                                                                                                                                                                                 affairs.                              
 5                                  Public perception against mining                                                                                                                         Low     High         High           The rise of social activism is a      
 (5)                                                                                                                                                                                                                             growing issue within the global       
                                                                                                                                                                                                                                 mining sector, with the potential to   
                                                                                                                                                                                                                                 impact all our strategic areas as     
                                                                                                                                                                                                                                 well as our ability to maintain the   
                                                                                                                                                                                                                                 social license to operate within the   
                                                                                                                                                                                                                                 communities near our operations.      
                                                                                                                                                                                                                                 There have been several examples      
                                                                                                                                                                                                                                 impacting other mining companies in   
                                                                                                                                                                                                                                 Mexico. In addition, an increasing    
                                                                                                                                                                                                                                 number of organisations and social    
                                                                                                                                                                                                                                 and academic groups against mining    
                                                                                                                                                                                                                                 are demanding the closure of certain   
                                                                                                                                                                                                                                 mining operations, including the use   
                                                                                                                                                                                                                                 of civil disobedience to pressure     
                                                                                                                                                                                                                                 authorities.                          
 6                                  Projects (performance risk)                                                                                                                              Medium  Medium high  Medium high    Our strict investment governance      
 (6)                                                                                                                                                                                                                             process and system of capital         
                                                                                                                                                                                                                                 project controls remain in place,     
                                                                                                                                                                                                                                 safeguarding our ability to deliver   
                                                                                                                                                                                                                                 growth through development projects   
                                                                                                                                                                                                                                 on time and on budget. Overall we     
                                                                                                                                                                                                                                 feel there is sufficient              
                                                                                                                                                                                                                                 availability of equipment, machinery   
                                                                                                                                                                                                                                 and contractors within the industry,   
                                                                                                                                                                                                                                 and with the information available    
                                                                                                                                                                                                                                 we do not expect additional cost      
                                                                                                                                                                                                                                 pressure.                             
 7                                  Safety                                                                                                                                                   Low     Medium high  Medium high    We have continued to reinforce our    
 (7)                                                                                                                                                                                                                             safety strategy while our major       
                                                                                                                                                                                                                                 accident indicators (including        
                                                                                                                                                                                                                                 fatalities) are improving; however,   
                                                                                                                                                                                                                                 we have not reached all our safety    
                                                                                                                                                                                                                                 goals for the remaining indicators.   
 8                                  Exploration                                                                                                                                              Medium  Medium       Medium         Continued investment in exploration   
 (8)                                                                                                                                                                                                                             puts this risk on a stable level,     
                                                                                                                                                                                                                                 and we foresee no change in status    
                                                                                                                                                                                                                                 based on available information.       
 9                                  Union relations                                                                                                                                          Low     na           Medium low     In August 2014, the Fourth            
 (previously included in HR risk)                                                                                                                                                                                                Collegiate Court of Criminal Law      
                                                                                                                                                                                                                                 determined that the warrant against   
                                                                                                                                                                                                                                 the leader of the 'National Workers   
                                                                                                                                                                                                                                 Union of the Mining, Metallurgic,     
                                                                                                                                                                                                                                 Steel and Similar of the Mexican      
                                                                                                                                                                                                                                 Republic' was unconstitutional and    
                                                                                                                                                                                                                                 he was fully acquitted. Fresnillo's   
                                                                                                                                                                                                                                 relations with the 'National Workers   
                                                                                                                                                                                                                                 Union of the Mining and Metallurgic   
                                                                                                                                                                                                                                 Napoleón Gómez Sada' could be         
                                                                                                                                                                                                                                 affected as a consequence of the      
                                                                                                                                                                                                                                 actions that the former leader might   
                                                                                                                                                                                                                                 take. Furthermore, 14,000 workers     
                                                                                                                                                                                                                                 have left the 'National Workers       
                                                                                                                                                                                                                                 Union of the Mining, Metallurgic,     
                                                                                                                                                                                                                                 Steel and Similar of the Mexican      
                                                                                                                                                                                                                                 Republic' and set up