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Fresnillo reveals drop in Q3 silver and gold production

Previously downgraded gold production guidance remains intact, but the company now reckons it will arrive at the lower end of the range.

Silver mine
The Mexican miner produced 13.28mln ounces of silver and 209,752 ounces of gold in the quarter

Fresnillo Plc (LON:FRES) highlighted a continuation of its ‘performance improvement plan’, whilst revealing silver output was down 14% year-on-year and gold was 7% lower.

The Mexican miner reported total silver production at 13.28mln ounces for the three months ended 30 September which marked a 7.9% decline versus the preceding three months while at 209,752 ounces gold output was down 5.2% on the second quarter. Year-to-date volumes were down 11.8% for silver and 7% for gold.

Lower ore grades from the Saucito and at San Julián silver deposits and the Herradura gold deposit were factors in the softer performance. Lead and zinc volumes, meanwhile, compared favourably up 19.3% and 22.7% respectively in the three months.

READ: Fresnillo posts sharp drop in first half sales and profits

Earlier this year, Fresnillo guided that construction delays and lower-than-expected ore grades at Herradura had contributed to a downgrade in gold production forecasts for 2019, to 880,000-910,000 ounces from 910,000-930,000.

That downgraded target remains intact, but Fresnillo told investors it now expected that it would arrive at the lower end of that range. Guidance for silver is pitched at 55-58 mln ounces.

For the fourth quarter, the company said it sees higher ore volumes processed at the Fresnillo mine plus improved grades at both Saucito and Fresnillo. As such it expects higher fourth-quarter silver numbers.

Meanwhile, the addition of a thirteenth leach pad at the Herradura site and quicker recoveries are expected to boost gold volumes in the final quarter of 2019.

Quick facts: Fresnillo Plc

Price: 700 GBX

LSE:FRES
Market: LSE
Market Cap: £5.16 billion
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