17th Jul 2019 08:00
(Alliance News) - Mexican gold miner Fresnillo PLC cut production guidance on Wednesday as it warned 2019 will continue to be a difficult year.
Fresnillo, the only gold miner on the FTSE 100, now sees 2019 gold output at between 880,000 ounces and 910,000 ounces from 910,000 ounces to 930,000 ounces before, and silver guidance has been lowered to 55 million to 58 million ounces from 58 million ounces to 61 million ounces before.
"As we have previously guided, we expected 2019 to be challenging and we remain cautious. We have therefore decided to reduce our full year production guidance, driven by lower-than-expected ore grades and ore throughput at the Fresnillo mine, a delay in the construction of a leaching pad at Herradura and the lower ore throughput at the dynamic leaching plant," said Chief Executive Octavio Alvidrez.
"However, we will continue to work hard to ensure the improvements we have seen this quarter are maintained in the second half of the year."
Fresnillo's second-quarter gold production rose 4.8% on the prior quarter to 221,307 ounces, but fell 5.4% on the year before, with first half gold down 7.1% year-on-year to 432,417 ounces.
For silver, second quarter output rose 9.7% to 14.1 million ounces, but fell 6.0% on the year, with first half production down 10% on the year prior to 27.6 million ounces.
"Production has continued to recover towards target levels since the first quarter as we begin to see the positive impact of operational measures and investments we have made into infrastructure, equipment and infill drilling, in particular at our Fresnillo and Saucito mines," said Alvidrez.
"The improvement and growth initiatives at all our operations, combined with the impact of the change to the accounting treatment of stripping costs at Herradura, have resulted in higher costs for the period."
Fresnillo has also said first half production costs will be USD135 million higher than the first half of 2018, which came in at USD429.9 million, due to cost inflation, increased contractor costs, investment, and accounting changes.
Elsewhere, the company is making good progress on engineering and early construction at the Juanicipio project, after Fresnillo approved the mine in April. Construction of the Pyrites plant near the Fresnillo mine is also on track.
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