Fresnillo PLC (LSE:FRES), the Mexico-based silver and gold miner, said today that costs in the second half of 2022 had jumped by 20% due to inflation, labour reforms and higher waste stripping charges.
Production for the year to end-December was in line with guidance at 53.7mln oz of silver and 636,000oz of gold, which was down 15% from the previous year.
Octavio Alvídrez, chief executive, said the fourth quarter had seen a "solid performance" with the Fresnillo silver mine improving and a growing contribution from the new Juanicipio project, which is expected to ramp up further this year.
“During the year we have worked hard to minimise the impact of a very tight labour market and to mitigate the impact of the labour reform in Mexico,” he added.
Shares dropped 1.2% to 867.8p, which was predicted by JP Morgan in a gloomy preview ahead of the update.
The US broker cautioned Fresnillo was underestimating costs and overegging production forecasts as it downgraded its rating to ‘sell’. (read more)
For the current year, Fresnillo has forecast silver production in a range of between 57-64mln oz, down from 65mln previously, and gold of between 590,000-640,000oz.