11th Apr 2019 08:19
LONDON (Alliance News) - Mexican gold miner Fresnillo PLC on Thursday reported a drop in first quarter output, while it has also approved the Juanicipio project.
Gold production in the first three months of 2019 was 211,100 ounces, 8.8% lower year-on-year and 9.0% down on the last quarter of 2018.
Fresnillo, the last remaining gold miner on the FTSE 100 after Randgold Resources departure, said gold output fell due to lower ore processing at the Noche Buena mine and a slow recovery of leaching pads at Herradura, as well as declines in output at other mines in Mexico.
Silver production for the quarter was 13.1 million ounces, 15% lower year-on-year and on the prior quarter.
Fresnillo attributed this to lower ore grades at throughput at the Fresnillo mine, as well as lower ore processing volumes and lower grades at the San Julian and Saucito mines.
Despite the fall in output, Fresnillo has reaffirmed 2019 production guidance of between 910,000 ounces and 930,000 ounces of gold, and 58 million to 61 million ounces of silver.
In 2018, it produced 922,527 ounces of gold and 61.8 million ounces of silver.
"First quarter production is down as expected on the same period last year, though slightly weaker than anticipated," said Chief Executive Octavio Alvidrez.
"Full year guidance however remains unchanged as we expect to realise the benefits from the investments we have made into infrastructure, equipment and an extensive infill drilling programme, which will all have a positive impact on production in the second half."
Construction of phase two of the plant at Pyrites is on track, Fresnillo added, with commissioning expected in the second half of 2020.
In a separate announcement, Fresnillo said it and joint venture partner MAG Silver Corp have approved the Juanicipio gold and silver project in Mexico's Zacatecas state.
Juanicipio, which Fresnillo will operate, is 56% owned by the miner and 44% owned by partner MAG Silver.
It has a life-of-mine of 12 years, producing 11.7 million ounces of silver a year and 43,500 ounces of gold. There are "considerable" opportunities to extend the operations, Fresnillo added.
Fresnillo expects pre-operations capital expenditure of USD395 million. Construction will start straight away, and be completed in late 2020.
Alvidrez commented: "The decision to approve Juanicipio reflects the extensive work the joint venture partners have done to de-risk the project to meet stringent development criteria. This decision to invest demonstrates our confidence in the long-term outlook for mining in Mexico.
"The new mine will create significant employment and highlights our commitment to sustainable growth for the benefit of all stakeholders."
Fresnillo shares were 1.9% lower on Thursday in early trade at 844.38 pence each.
Related Shares:
Fresnillo