Peñoles - Annual Report 2020

MINING OPERATIONS: PRODUCTION AND RESERVES

Mine	Participation %	Ore processed (kt)		Total reserves (kt)		Average ore grades in reserves
Mine	Participation %	2019	2020	2019	2020	Average ore grades in reserves
PRECIOUS METALS:						Gold	Silver	Lead	Zinc
Underground						(g/t)	(g/t)	%	%
Fresnillo⁽¹⁾⁽²⁾	75	2,462	2,337	19,859	15,401	0.76	264.61	1.54	3.42
Ciénega⁽¹⁾⁽²⁾	75	1,329	1,318	5,248	4,523	2.36	231.84	1.11	1.65
Saucito⁽¹⁾⁽²⁾	75	2,753	2,767	12,993	14,323	1.33	303.06	1.55	2.44
San Julián Veins⁽¹⁾⁽²⁾	75	1,265	1,255	4,346	3,489	1.77	203.57
San Julián Disseminated⁽¹⁾⁽²⁾	75	2,227	2,230	12,073	7,953	0.09	167.31	0.46	1.14
Juanicipio^(1)(2)(3)	42		72		8,869	1.47	307.00	2.10	3.60
Open pit
Herradura⁽¹⁾⁽²⁾	75	22,927	19,797	267,492	250,578	0.76
Noche Buena⁽¹⁾⁽²⁾	75	12,167	6,683	28,984	20,054	0.51

BASE METALS:						Gold	Silver	Lead	Zinc	Copper
Underground						(g/t)	(g/t)	%	%	%
Velardeña⁽⁴⁾⁽⁵⁾	100	2,441	2,688	50,226	36,682	0.11	20.12	0.37	3.87	0.17
Sabinas⁽⁴⁾⁽⁵⁾	100	1,289	1,243	33,795	22,658		96.46	1.08	1.87	0.27
Tizapa⁽⁴⁾⁽⁵⁾	51	950	938	9,691	8,840	1.43	206.15	1.24	5.21	0.28
Capela⁽⁴⁾⁽⁶⁾	100	-	933	21,478	20,511	1.18	110.42	0.74	3.22	0.79
Madero⁽⁴⁾⁽⁵⁾	100	2,348	664	26,509	14,981		21.52	0.88	2.38	0.08
Bismark⁽⁴⁾⁽⁵⁾	100	653	374	1,237	426		11.54	0.07	5.50	0.24
Milpillas⁽⁴⁾⁽⁵⁾	100	2,474	694	14,286	4,299					0.89
Naica⁽⁴⁾⁽⁵⁾	100			10,939	9,791	0.01	73.61	2.58	10.29	0.03

As of May 31, 2020; proven and probable reserves in thousands of metric tons, on a 100% basis. Audited figures.
Metal price assumptions considered for the calculation of metal equivalent grades are: Gold US$/oz 1,600.00 for Mega Centauro, US$/oz 1,400.00 for all other properties, Silver US$/oz 17.50, Lead US$/lb 0.90 and Zinc US$/lb 1.05.
Mining unit under construction. Total reserves (kt) calculated on a 56% basis.
As of January 31, 2020; proven and probable reserves in thousands of metric tons, on a 100% basis.
Determination of 2020 reserves is based on the following metal prices: Gold US/oz$ 1,250.00 per ounce, Silver US$/oz 17.00 per ounce, Lead US$/lb 0.95, Zinc US$/lb 1.10 and Copper US$/lb 3.10.
Determination of reserves is based on the following metal prices: Gold US$/oz 950.00, Silver US$/oz 14.20, Lead US$/lb 0.90, Zinc US$/lb 0.95 and Copper US$/lb 3.07.

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.