Peñoles - Annual Report 2020

EXECUTIVE COMMITTEE

7 Directors elected by the Board
from among its members

Reviews, approves and monitors operational and strategic development
Recommends changes to the corporate and business strategy

Regularly reviews management on the company’s economic, operational, product, social, environmental, human development and safety, including related risks and opportunities.

Secretary

Chief Executive
Officer and
management team
Business management,
leadership and execution

BOARD OF DIRECTORS

15 proprietary Board members and
13 alternates

Defines vision and strategy
Establishes policies and guidelines
Oversees business operations
Approves the budget and financial results

The Board met five times in fiscal year 2020. In all the sessions there was a remarkably high quorum: 100% of the Directors attended three of these sessions, and 93% the remaining two.

In 2020, the total compensation to the relevant executives amounted to Ps. 139.5 million.

The Annual Shareholders Meeting held on April 23, 2020 authorized a remuneration of Ps. 130,000 to each Director for every session attended, as well as the amount of Ps. 90,500 to each member of the Audit and Corporate Governance Committee per session, and Ps. 110,000 to the President of said Committee.

AUDIT AND CORPORATE
GOVERNANCE COMMITTEE

3 independent Board
members

Reviews compliance with internal control policies and accounting guidelines
Monitors systems of Internal Control and Audit
Evaluates the performance of the external auditor

FINANCE AND PLANNING
COMMITTEE

7 Board members, experts in
financial matters

Reviews financial policies and projections
Evaluates investment projects and company’s financing

NOMINATION, EVALUATION AND
COMPENSATIONS COMMITTEE

3 Board members

Reviews the organizational structure
Validates the skills and experience of the Board and recommends their compensation
Evaluates the performance of senior executives
Defines the overall compensation policy and succession plans

BOARD OF DIRECTORS

CHAIRMAN
Alberto Baillères G.

DEPUTY CHAIRMAN
Alejandro Baillères G.

DIRECTORS

Alberto Baillères G. ^{(1) (2) (3) (8)}

Alejandro Baillères G. ^{(1) (3) (7)}

Juan Bordes A. ^{(1) (2) (3) (7)}

Fernando Senderos M. ⁽⁵⁾

Arturo Fernández P. ^{(1) (2) (3) (7)}

Raúl Baillères G. ⁽⁷⁾

José A. Fernández C. ⁽⁵⁾

Andreas Raczynski Von O. ^{(1) (3) (7)}

Juan Pablo Baillères G. ⁽⁷⁾

Juan Francisco Beckmann V. ⁽⁵⁾

Jaime Lomelín G. ^{(1) (3) (7)}

Tomás Lozano M. ^{(4) (5)}

Octavio Figueroa G. ^{(1) (3) (7)}

Ernesto Vega V. ^{(4) (5)}

Luis Robles M. ⁽⁵⁾

SECRETARY
Gerardo Carreto Chávez

ALTERNATE DIRECTORS

Ma. Teresa Baillères de H. ⁽⁷⁾

Leopoldo Alarcón R. ⁽⁷⁾

Gabriel Kuri L. ⁽⁷⁾

Dolores Martin C. ⁽⁵⁾

Alejandro Hernández D. ⁽⁷⁾

Luis M. Murillo P. ⁽⁷⁾

Francisco Javier Fernández C. ⁽⁵⁾

Sergio Fernando Alanís O. ⁽⁷⁾

Juan Carlos Escribano G. ⁽⁷⁾

Raúl Obregón Del C. ^{(4) (5)}

María Ocampo ⁽⁷⁾

Luis Aguilar y Bell ⁽⁵⁾

Roberto Palacios P. ⁽⁷⁾

Executive Committee
Secretary: Miguel Linares
Guest: Diego Hernández
Nomination, Evaluation and Compensations Committee
Finance and Planning Committee
Audit and Corporate Governance Committee
Independent Director*
A Director who performs his duties free from conflicts of interest and without being subject to personal, patrimonial or economic interests, and furthermore, a person who is excluded from restrictions provided by Article 26 of the Securities Market Law.
Shareholder Director*
A Director who has a 1% (one percent) direct interest or more in the equity capital of the Company.
Related Director*
A Director not being deemed as “Independent” or “Shareholder Director”.
Among others, Related Directors are those whom:
Serve as officers at some level of the Company and its subsidiaries, as well as officers at any level of the companies comprising the Grupo BAL consortium.
Have kinship to the fourth degree with other Directors, as well as the spouses and non-spouses a concubinage relationship
Shareholder and Related Director*
A Director who besides being “Related”, also has a 1% direct interest or more in the equity capital of the Company.
* Pursuant to the Corporate Policy that defines the qualification or category of Directors.

In accordance with the recommendations of the Corporate Governance Code, the Audit and Corporate Governance Committee reviewed accounting policies and criteria as well as internal control systems, and functioned in coordination with the External Auditors. In addition, the Board appointed Directors to make up the Nomination, Evaluation and Compensations Committee —which reviewed organizational structure and policies on compensations— and the Finance and Planning Committee, whose responsibility was to examine financial policies and projections and evaluate investment projects in order to ensure that they were consistent with the Company’s strategic plan and with its sources of financing. The Committees met regularly and reported to the Board on their activities; their reports and recommendations were attached to the minutes of the Board meetings.

The composition of the Board of Directors, as well as the profile of the members are available on our website: www.penoles.com.mx

CONTENTS

2020 brought us great challenges and lessons. Our Annual Report highlights the strengths that have allowed us to overcome difficulties while generating value to our stakeholders.

The following abbreviations will be used throughout the report:

oz =
lb =
Mm³ =
Ml =
Mlb =
Mlbe =
Moz =
koz =
t =
Mt =
kt =
MI =
US$B =
US$M =
US$/t =
US$/oz =
US¢/lb =
US¢/lbe =

ounces
pounds
million cubic meters
million liters
million pounds
million pounds equivalent
million ounces
thousand ounces
metric tons
million metric tons
thousand metric tons
million liters
billion dollars
million dollars
dollars per metric ton
dollars per ounce
dollar cents per pound
dollar cents per pound equivalent

PROFILE
We are a proud Mexican company, committed to our country, with presence in the international market.

FINANCIAL HIGHLIGHTS
In a complex environment, we focused on preserving liquidity, while continuing our priority investments.

MANAGEMENT REPORTS
We manage our business responsibly and prudently, with a long-term vision.

PERFORMANCE
Our operations faced great challenges during the year. We improved our processes and sought cost reduction.

ENERGY AND TECHNOLOGY
We incorporated new technologies to increase productivity and efficiency.

CORPORATE GOVERNANCE
Our corporate governance ensures transparency, the compliance with organizational values and accountability.

INFORMATION FOR SHAREHOLDERS
Contacts available for our shareholders

FINANCIAL STATEMENTS
We present our audited financial information in thousand US dollars.

DISCLAIMER

This Annual Report contains certain forward-looking information relating to Industrias Peñoles, S.A.B. de C.V. and its subsidiaries (Peñoles or the Company) that is based on assumptions made by its management. Such information, as well as the statements with respect to future events and expectations are subject to certain risks, uncertainties and factors that could cause the actual results, performance or achievements of the Company to be materially different at any time. Such factors include changes in general economic, governmental policy and/or business conditions nationally and globally, as well as changes in interest rates, inflation rates, exchange rates, mining performance in general, metal demand and quotations, and raw material and fuel prices, among others. Due to these risks and factors, actual results may vary materially from the estimates described herein, for which reason Peñoles does not assume any obligation with respect to such variations or to information provided by official sources.