4th Mar 2015 07:44
LONDON (Alliance News) - Fresnillo PLC Wednesday reported a steep drop in profits in 2014, as it was hit by a drop in gold production, falling precious metals prices, higher production costs, and the strengthening of the US dollar against the Mexican peso.
The gold and silver miner forecast that its production would improve in 2015 and pledged to continue investing in growth products, even though its focus this year will be on improving efficiency and productivity and maintaining its cost position and margins.
Fresnillo reported a pretax profit of USD251.1 million for 2014, down 40% from USD418.7 million in 2013, as revenue dropped 12.5% to USD1.41 billion from USD1.62 billion and higher production costs helped push its earnings before interest, tax, depreciation and amortisation margin down to 40.1% from 45.2%. Its net profit dropped to USD108.4 million, from USD240.4 million.
It said silver production hit an annual record at 45 million ounces, up 4.9% on 2013 and above the 43.0 million ounce guidance it had given for 2014. That was down to increased ore processing at its Saucito mine and the contribution from the Silverstream contract. Still, average realised silver prices fell 18.4% on the year to USD18.6 per ounce.
"Silver grades at Fresnillo continued to decline but measures implemented to control dilution and improve contractor efficiency will deliver improved production in the second half 2015," it said in a statement.
Gold production dropped to 596,000 ounces, down 2.4% on the year due to a stoppage at Soledad-Dipolos. The average realised gold price fell 10.2% on the year to USD1,257.7 an ounce.
"For 2015 we have given priority to optimising output from the Fresnillo and Ciénega mines, ramping up Saucito II, delivering San Julián on time and on budget, advancing our assessment of Orisyvo, evaluating mine plan options for Mega Centauro as the natural evolution of Herradura's Centauro pit, and progressing our advanced exploration projects," the company said in a statement.
It said its current capital expenditure plan for 2015 is USD700 million, up from USD425.6 million in 2014.
Fresnillo said it will pay a final dividend of USD3.0 cents a share for 2014.
By Steve McGrath; [email protected]; @stevemcgrath1
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