16th Jul 2014 07:44
LONDON (Alliance News) - Fresnillo PLC Wednesday said total silver production for its second quarter compared to the previous year was flat as increased Silverstream production offset lower production elsewhere, while its gold production rates continued to be low as a result of explosion permit problems and stoppages earlier in the year.
The precious metals miner, operating in Mexico, said its total silver production was flat at 10.9 million ounces for the three months ended June 30, as a 13% increase in its Silverstream production to 1.1 million ounces offset a 1.3% fall in its other silver operations to 9.8 million ounces.
The company said the increase from Silverstream was down to positive production at its Sabinas mine as a result of accessing stopes with higher ore grades, but its fall in normal production was generally due to lower grades from its Fresnillo mine which is naturally declining over time and saw some delays to operations due to mechanical failures.
However, Fresnillo said that when compared to its previous quarter, overall silver production increased 5% as higher silver grades were mined from the east area of its Fresnillo mine, higher volumes of ore were processed from its Caucito site, and increased ore was processed from its San Ramon site.
The company also said that when linked to first quarter production, the company's first half total silver production increased 1.7% from the same period a year before to 21.3 million ounces as a result of development at its Silverstream contract.
Fresnillo said its second quarter gold production fell 8.2% to 108,664 ounces from 118,315 ounces the previous year, as a result of a stoppage of operations at its Soledad-Dipolos sites following a court order secured by the Ejido agrarian community and the temporary suspension of its explosives permit at Herradura, which was newly permitted by the Mexican authorities at the end of February.
However, the company said its gold production increased 32% over the previous quarter after the restart of operations at Herradura and a subsequent increase in production towards normal levels. Despite this, half-year gold production was down 19% to 191,317 ounces from 235,827 ounces the previous year.
Fresnillo said that it remains optimistic on both silver and gold guidance for the full year 2014, and sees production rates of 43 million silver ounces and 450,000 attributable gold ounces over the year.
"Our portfolio of high quality assets and our operational expertise enables us to manage production over the quarters while focusing on addressing the lower grades at the Fresnillo mine, and therefore we remain confident of achieving our full-year production target," Chief Executive Officer Octavio Alvidrez said in a statement.
The company also said that construction of its Saucito II project remains on track to be completed in the fourth quarter, while construction of the leaching plant at its San Julian site has started and is on track to start production in the second half 2015.
Fresnillo shares were off 1.7% at 898.00 pence early Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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