Fresnillo plc (LON:FRES) achieved record annual silver production of 61.8mln ounces in 2018 as well as gold production of 923,000 ounces, but it wasn’t enough to placate an unforgiving market which had been expecting more.
Shares in Fresnillo had dropped by nearly 8% by mid-morning on the day of the announcement, down from 940p to 900p.
The company had previously guided for production to hit 65mln ounces of silver but was hampered by lower than expected grades at the Fresnillo and Saucito mines.
There were also some operational issues, including higher stripping rations at Herradura.
The company is now intensifying its infill drilling programmes in order to gain a better understanding of future ore grades and is looking to control dilution and put further investment into equipment and infrastructure.
The flotation plant to process historical and ongoing tailings at the Fresnillo mine is progressing and is expected to improve overall recoveries once completed.
It all meant that gross profit dropped by 15.6%, although the company was able to maintain a solid financial position, with US$560.8mln in cash and other liquid funds.
The board has recommended a final dividend of US$16.7 cents per share, bringing the total paid for the year to US$201.9mln.