4th Mar 2014 08:53
LONDON (Alliance News) - Fresnillo PLC Tuesday said its pretax profit fell 65% during its full year 2013 as explosion permit problems, lower metal prices, and revaluation of the company's Silverstream asset hit finances.
The precious metals miner, operating in Mexico, said its pretax profit fell to USD418.7 million from USD1.18 billion the previous year, as revenues fell 25% to USD1.62 billion from USD2.16 billion in 2012.
The company said its results were impacted primarily by a combination of lower precious metals prices, lower gold production - which arose from a dispute with the local community about explosives permits at its Minera Penmont operations - and a non-cash loss generated by its Silverstream asset revaluation.
However, the company recommended a special one-off dividend payment of USD50.1 million, equivalent to 6.8 US cents per share.
Fresnillo said in January that it made attributable gold production of 425,831 ounces in the full year 2013, a 10% fall when compared to its 473,034 ounces of gold produced in 2012 and slightly lower than its revised gold production guidance of 425,900 ounces.
However, the company achieved attributable silver production of 42.7 million ounces, a 4.3% increase on its 41.0 million ounces in 2012 and above its guidance of 41 million ounces.
In December, the company lowered its full year 2013 gold production estimates, mainly due to problems it has been having getting permission to use explosives at mines in Mexico.
Fresnillo has struggled with production in recent months as people living on the Ejido El Bajio agrarian land, the site of some Fresnillo's operations, achieved a temporary suspension of explosives use on the company's Herradura, Soledad and Dipolos mines.
In February, the company said that the Mexican Ministry of Defense granted a new explosives permit for the Herradura mining unit at Minera Penmont and Fresnillo immediately resumed operations at the mine.
Fresnillo also said its results were hit by a non-cash loss of USD54.0 million related to a revaluation of its Silverstream asset during the period.
Fresnillo said that in 2014 it expects silver production to remain stable at 43 million ounces but that attributable gold production is expected to rise to 450,000 ounces as a result of resumed operations at Herradura, continued ramp-up of production at its Noche Buena site, and the start up of operations at its dynamic leaching plant.
The company said that against a struggling backdrop it continues to be focused on operational efficiency and seeking the best performance and returns from its assets but that costs will further be impacted by new mining duties that will be levied in 2014 and payable in early 2015.
Fresnillo shares were down 8.1% to 892.25 pence, putting it top of the FTSE 100 fallers in early trading Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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