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Fresnillo maintains 2019 guidance despite weaker-than-expected quarterly production

Fresnillo has started construction on the Juanicipio joint venture with MAG Silver Corp after the project received board approval

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Gold and silver output fell by more than expected in the first quarter

Fresnillo plc (LON:FRES) maintained its 2019 production guidance despite weaker-than-expected gold and silver production in the first quarter.

Silver output fell 14.8% to 13.1mln ounces in the three months to March 31 due to lower ore grade and throughput at the Fresnillo mine in Mexico.

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

Gold production dropped 8.8% to 211,100 ounces, reflecting a lower volume of ore processed at Noche Buena and a slower overall speed of recovery on the leaching pads at Herradura.

Fresnillo still expects full-year production to reach 58-61mln ounces of silver and 910,000-930,000 ounces of gold.

"First quarter production is down as expected on the same period last year, though slightly weaker than anticipated,” said chief executive Octavio Alvídrez.

“Full year guidance, however, remains unchanged as we expect to realise the benefits from the investments we have made into infrastructure, equipment and an extensive infill drilling programme, which will all have a positive impact on production in the second half.”

He said the construction of the tailings flotation plant at the Fresnillo mine is on track for completion in 2020 and the group is making good progress on its exploration pipeline and international exploration prospects.

Separately, the company announced that the Juanicipio development project, a joint venture with MAG Silver Corp in Mexico, has received board approval.

The project has a life of mine of 12 years and a total average annual anticipated production of 11.7mln ounces of silver and 43,500 ounces of gold.  

Fresnillo will be the operator of Juanicipio and holds a 56% majority stake with MAG Silver owning the rest.

Construction will begin immediately with completion expected in 2020.

As of January 1, the estimated pre-operative capital expenditure of the venture was US$395mln.

Quick facts: Fresnillo Plc

Price: 636 GBX

LSE:FRES
Market: LSE
Market Cap: £4.69 billion
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