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Fresnillo expects lower gold production after land slip and permit delays

Silver production was down 2.5% quarter on quarter, while gold was up 24.8%

Fresnillo PLC -
The Noche Buena mine in northern Mexico

Fresnillo PLC (LON:FRES) guided to lower gold production for 2021 after a land slip at its Noche Buena mine limited access to the deeper areas of the pit.

The Mexico-based miner also reported unearthing lower levels of silver in the final quarter of 2020, though gold production bounced back from a weak prior quarter.

The FTSE 100 group’s development pipeline made progress during the year, with a pyrites plant and optimisation of the beneficiation plant at the Fresnillo mine both completed in the last quarter on time and on budget.

But chief executive Octavio Alvídrez said while the optimisation plant, which will improve ability to process the higher lead and zinc content at the Fresnillo mine, is expected to start operations in February, electrical permitting delays will push back start of the pyrites plant into the third quarter.

Silver production of 13mln oz in the fourth quarter was down 2.5% compared to the third and down 6% year-on-year, meaning full year silver production reached 53.1mln oz, down 2.9% on the prior year.

Gold production was 215.6k oz in the fourth quarter, up 24.8% on the preceding quarter but 7.8% lower year-on-year, with the full-year total of 769.6 koz coming in 12.1% lower compared to 2019.

Attributable silver production is expected to be in the range of 53.5mln-59.5mln oz, which was said to be due to the Covid-19 related impact on the timings of development at the Juanicipio mine and delay to the start of operations of the pyrites plant at Fresnillo.

Gold production was guided to a range of 675k-725k oz, mainly due to the land slip at Noche Buena, but also a lower ore grade at the Ciénega mine.

Quick facts: Fresnillo PLC

Price: 965.8 GBX

LSE:FRES
Market: LSE
Market Cap: £7.12 billion
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