16th Apr 2014 06:51
LONDON (Alliance News) - Fresnillo PLC Wednesday said total silver production increased in its first quarter as Silverstream production jumped but gold production fell compared to the previous year as a result of explosion permit problems and stoppages.
The precious metals miner, operating in Mexico, said its total silver production increased 3.5% to 10.4 million ounces for the three months ended March 31 from 10.1 million ounces including a 27.3% increase in production from its Silverstream operations and a 1.3% increase in its other operations.
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, and the increase in other operations was due to additional ore being processed from development activities on its Jarillas vein.
Fresnillo said that the silver production would have been higher if not for mechanical failures of some contractors' equipment and lower silver grades being recovered at its Cienega site.
The company said its attributable gold production for the period fell 29.7% to 82,653 ounces from 117,512 ounces as a result of a stoppage of operations at its Soledad-Dipolos sites following a court order regarding the Ejido agrarian community on site and the temporary suspension of its explosives permit at Herradura, which was newly permitted by the Mexican authorities at the end of February.
Fresnillo said that compared to the previous quarter its gold production increased 9.3% as a result of lifting the ban of the use of explosives at Herradura, which also allowed for the start-up of operations at its dynamic leaching plant.
The company noted that the new Herradura plant began commercial production successfully in the second week of March.
Fresnillo also noted that its lead production increased 10.4% to 6,363 tonnes from 5,764 tonnes and its zinc production increased 29.8% to 7,105 tonnes from 5,472 tonnes the previous year.
The company said in March that its pretax profit fell 65% during 2013 as explosion permit problems, lower metal prices, and revaluation of the company's Silverstream asset hit finances.
Fresnillo said in January that it made attributable gold production of 425,831 ounces in 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.
Fresnillo struggled with production at the final months of 2013 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.
The company reiterated on Wednesday 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.
Fresnillo shares closed at 901.50 pence on Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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