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Fresnillo reports record annual silver production but expects output in 2019 to be slightly lower

The Mexico-focused precious metals miner said annual silver production was 61.8mln ounces, up 5.3% on 2017, mainly due to the first full year of operations at San Julián

Silver
It said annual gold production was 923,000 ounces, up 1.3% on 2017 mainly due to the higher ore grade and recovery rate at Saucito

Fresnillo PLC (LON:FRES) reported record annual silver production and a strong gold performance in 2018 but expects silver output in 2019 to be slightly lower, with gold seen flat.

In a production output for the three months and full year ended 31 December 2018, the Mexico-focused precious metals miner said annual silver production was 61.8mln ounces, up 5.3% on 2017, mainly due to the first full year of operations at San Julián.

READ: Fresnillo downgrades silver forecasts despite 6% rise in Q3 output

However, the FTSE 100-listed group added, quarterly silver production of 15.5mln ounces was remained flat versus the third-quarter of 2018 and down 3.2% year-on-year due to lower volumes of ore processed and ore grade at Fresnillo and Saucito.

The miner said annual gold production was 923,000 ounces, up 1.3% on 2017 mainly due to the higher ore grade and recovery rate at Saucito, the contribution of the new Pyrites Plant and the higher ore grade at Fresnillo.

It added that quarterly gold production of 232,000 ounces was in line with the fourth quarter of 2017 and up 3.0% versus the third quarter of 2018 mainly due to higher ore grades and recovery rates at Herradura and San Julián.

Looking ahead, Fresnillo said silver production is expected to be slightly lower for 2019, in the range of 58mln to 61mln ounces, while gold production is expected to be flat, in the range of 910,000-930,000 ounces.

Taking action to address operation issues  

Octavio Alvídrez, Fresnillo’s chief executive officer, commented: “Despite the year on year increase in silver production resulting from a full year of operations at San Julián (Phase II), we are reporting lower silver production than anticipated. 

“This was mainly explained by the lower than expected ore grades at the Fresnillo and Saucito mines which have persisted into the final quarter, together with operational issues.”

He added: “We are taking action to address this, not least by intensifying our infill drilling programmes, controlling dilution and further investment in equipment and infrastructure.

“We will continue to conservatively invest in the business to deliver sustainable growth and returns to shareholders. I fully expect to be able to make a further positive announcement on our Juanicipio development project in due course."

Quick facts: Fresnillo Plc

Price: 714.4 GBX

LSE:FRES
Market: LSE
Market Cap: £5.26 billion
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