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Fresnillo Plc - 4Q19 Production Report

RNS Number : 2207B
Fresnillo PLC
29 January 2020
 

                                                                                                        Fresnillo plc

21 Upper Brook Street

London W1K 7PY

United Kingdom

www.fresnilloplc.com

 

29 January 2020

FOURTH QUARTER PRODUCTION REPORT

FOR THE THREE MONTHS ENDED 31 DECEMBER 2019

 

Octavio Alvídrez, Chief Executive Officer, said:

 

"Silver and gold production is up on the previous quarter as we begin to see the impact of our performance improvement plan, which includes intensive infill drilling to improve the certainty of the geological model, dilution control and raising development rates, together with actions to address contractor productivity and equipment availability. Full year silver and gold production is in line with our updated guidance.

 

"As we set out at our capital markets day in December, we are determined to drive better performance from our core assets and we will continue to implement our mine improvement plan throughout the year. Though grades remain variable as we update and refine our geological models, we continue to process higher volumes of ore on a consistent basis, and as a result, our 2020 forecasts are unchanged."

  

 

TOTAL PRODUCTION

 

 

4Q19

3Q19

% Change

4Q18

% Change

FY 19

FY 18

% Change

Silver (koz)

 13,131

 12,624

4.0

 14,647

-10.4

 51,764

 58,079

-10.9

Silverstream  (koz)

 643

 659

-2.4

 860

-25.2

 2,850

 3,725

-23.5

Total Silver  (koz)

 13,775

 13,283

3.7

 15,507

-11.2

 54,614

 61,804

-11.6

Gold (oz)

 233,744

 209,752

11.4

 232,026

0.7

 875,913

 922,527

-5.1

Lead (t)

 14,997

 15,561

-3.6

 15,252

-1.7

 55,722

 53,181

4.8

Zinc (t)

 24,832

 25,340

-2.0

 24,531

1.2

 92,578

 88,520

4.6

 

 

HIGHLIGHTS

 

Silver

 

•     Quarterly silver production of 13.8 moz (including Silverstream), up 3.7% vs. 3Q19 driven by higher ore grades at both San Julián Disseminated Ore Body (DOB) and Saucito.

 

•     Quarterly silver production (including Silverstream), down 11.2% vs. 4Q18 due to the expected lower ore grade at Saucito, as well as a lower volume of ore processed and ore grade at San Julián Veins.

 

•     Full year silver production of 54.6 moz (including Silverstream), down 11.6% vs. FY18 as a result of the expected lower ore grade at Saucito as well as lower than expected ore grades at Fresnillo and San Julián Veins and DOB.

 

Gold

 

•     Quarterly gold production of 233.7 koz increased 11.4% vs. 3Q19 mainly driven by a higher volume of ore processed, ore grade and overall rate of recovery at Herradura, partially offset by a lower ore throughput and ore grade at Noche Buena.

 

•     Quarterly gold production remained flat vs. 4Q18 as increases in production at Herradura were offset by a lower volume of ore processed at Noche Buena and lower ore grade and volume of ore processed at San Julián Veins.

 

•     Full year gold production of 875.9 koz decreased 5.1% vs. FY18 due to the expected lower production from Noche Buena and a lower ore grade at San Julián Veins. This was mitigated by a higher ore grade at Fresnillo and a higher volume of ore processed and ore grade at Herradura.

 

By-Products

 

•     Quarterly by-product lead production decreased 3.6% vs. 3Q19 driven by a lower volume of ore processed and ore grade at Fresnillo, mitigated by higher ore grades at both Saucito and San Julián DOB.

•     Quarterly by-product lead production decreased 1.7% vs. 4Q18 due to a lower ore grade and recovery rate at Saucito, mitigated by a higher volume of ore processed and ore grade at Fresnillo.

•     Full year by-product lead production increased 4.8% vs. FY18 due to a higher ore grade at Fresnillo, higher recovery rate at San Julián DOB and a higher ore grade and recovery rate at Ciénega, offset by lower production at Saucito.

 

•     By-product zinc production decreased 2.0% vs. 3Q19 due to a lower volume of ore processed at Fresnillo and lower ore grades at Ciénega and San Julián DOB, mitigated by a higher ore grade at Saucito.

 

•     By-product zinc production increased 1.2% vs. 4Q18 mainly as a result of a higher ore grade and volume of ore processed at Fresnillo and a higher ore grade at Ciénega, offset by lower ore grades at both Saucito and San Julian DOB.

 

•     Full year by-product zinc production increased 4.6% vs. FY18 mainly due to a higher ore grade and recovery rate at Ciénega.

 

 

Development Projects

 

•     Since the Capital Markets Day held in December last year, progress on projects continues.  A fuller update on our development projects and exploration programme will be provided alongside our preliminary results, due to be announced on 3rd March 2020.

 

2020 Outlook

 

•     Silver production expected to be in the range of 51 to 56 moz, including Silverstream.

 

•     Gold production expected to be in the range of 815 to 900 koz.

 

 

Full Year Financial Results

 

•     Fresnillo will announce its full year 2019 results on 3rd March 2020.

 

 

For further information, please visit our website www.fresnilloplc.com or contact:

 

FRESNILLO PLC     

London Office                        

Gabriela Mayor, Head of Investor Relations

Patrick Chambers

 

Tel: +44 (0)20 7399 2470

Mexico City Office

Ana Belem Zárate

Tel: +52 55 52 79 3206

 

POWERSCOURT

Peter Ogden

 

 

Tel: +44 (0)20 7250 1446

 

MINING OPERATIONS

 

FRESNILLO MINE PRODUCTION

 

 

4Q 19

3Q 19

% change

4Q 18

% change

FY 19

FY 18

% change

Ore Processed (t)

618,940

648,646

-4.6

571,330

 8.3

2,461,785

2,443,440

 0.8

 

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

 

Silver (koz)

 3,192

 3,408

-6.3

3,244

-1.6

 13,007

15,117

-14.0

Gold  (oz)

 11,723

 15,601

-24.9

10,437

 12.3

 52,259

42,290

 23.6

Lead (t)

 5,665

 7,037

-19.5

3,867

 46.5

 21,472

19,619

 9.4

Zinc (t)

 9,348

 10,225

-8.6

6,153

 51.9

 31,530

31,094

 1.4

 

 

 

 

 

 

 

 

 

Ore Grades

 

 

 

 

 

 

 

 

Silver (g/t)

181

183

-1.1

199

-9.0

185

214

-13.6

Gold (g/t)

0.82

0.99

-17.2

0.76

 7.9

0.89

0.70

 27.1

Lead (%)

1.08

1.24

-12.9

0.79

 36.7

 1.01

0.90

 12.2

Zinc (%)

2.10

2.14

-1.9

1.52

 38.2

 1.80

1.75

 2.9

 

Quarterly silver production was down 6.3% vs. 3Q19 due to unscheduled staff absences over the holiday period. This resulted in a lower volume of ore processed from both production stopes and development areas.

 

Full year silver production decreased 14.0% vs FY18 due to a lower silver ore grade resulting from higher dilution, differences with the geological model and limited access to higher ore grade areas caused by delays in development, all factors previoulsy described and being addressed with the mine improvement plan.

 

Quarterly silver production decreased 1.6% vs. 4Q18 driven by a lower ore grade for the reasons described above, mitigated by a higher volume of ore processed due to the improved operational continuity in 4Q19.

 

We continue to work on controlling dilution with the use of more efficient and accurate topographic scanners, improved blasting and drilling techniques enabling us to adjust to the narrower vein widths in the mine. We continued to implement initiatives to increase efficiency and reduce downtime to improve operational continuity. The infill drilling programme which will increase the certainty of the geological model is progressing well.

 

Development rates were up vs. 4Q18 to just over 2,900 metres per month in 4Q19 (4Q18: 2,500 metres), though down on the previous quarter (3Q19: 3,200 metres per month) for the reasons explained above. The tunnel boring machine was commissioned and began operations during the quarter. The machine will ramp up in 1Q20 which, together with a new contractor that was hired and began operating in January this year, will contribute to an increase in development rates to between 3,400-3,800 metres a month by the end of 2020.

 

Quarterly by-product gold production decreased 24.9% vs. 3Q19 driven by a lower ore grade, and to a lesser extent, lower volume of ore processed and recovery rate. Against 4Q18, quarterly by-product gold increased 12.3% due to a higher volume of ore processed and ore grade, offset by a lower recovery rate. Simillarly, Full year by-product gold production increased 23.6% vs. FY18 as a result of a higher ore grade. 

 

Silver ore grade in 2020 is expected to be in the range of 185 to 200 g/t, while gold ore grade is estimated to be between 0.85 to 0.90 g/t.

 

SAUCITO MINE PRODUCTION

 

 

4Q 19

3Q 19

% change

4Q 18

% change

FY 19

FY 18

% change

Ore Processed (t)

721,963

703,002

 2.7

693,608

 4.1

2,752,638

2,792,057

-1.4

 

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

Quick facts: Fresnillo Plc

Price: 711.2

Market: LSE
Market Cap: £5.27 billion
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