21st May 2019 09:06
LONDON (Alliance News) - Mexican precious metals miner Fresnillo PLC on Tuesday said it expects to meet its production guidance for 2019, despite first quarter production falling just short of expectations.
First quarter production, as expected, was below the comparative year ago period, but still came in "slightly weaker than anticipated," Chair Alberto Bailleres said in his annual general meeting statement.
In April, the company announced it had produced 13.1 million ounces of silver in first quarter ended March 31, 15% below the first quarter of 2018. This was attributed to a lower ore grade and throughput at the Fresnillo project. Gold production in the first quarter of 2019 was down 8.8% year-on-year at 211,100 ounces.
Nonetheless, the company expects to achieve its 2019 guidance for 58 million to 51 million ounces of silver and 910,000 and 930,000 ounces of gold as it realises the benefit from its operational investments.
In 2018, Fresnillo produced 61.8 million ounces of silver and 923,000 ounces of gold. The miner noted that it had not met its long-term silver target of 65 million ounces in 2018 and said it is "taking action to address this", including increasing infill drilling at its Fresnillo and Saucito mines in Mexico and investing in technology and contractors.
The company's Juanicipio project has moved to the development phase from the exploration phase - having been approved by the board in 2018. It is expected to contribute to production in the first half of 2021 after completing in late 2020.
Pre-operative capital expense for Juanicipio will be USD395 million - of which 56% or around USD221 million will be invested by Fresnillio with the remainder invested by partner Mag Silver. Fresnillo will be operator at the new mine.
In 2018, the company experienced five fatalities, with another at the start of 2019. To address this, the company has appointed Tomas Iturriaga to reinforce sustainability and community relations. Iturriaga Has more than 17 years' experience in the mining sector, having worked for Goldcorp and Captstone Mining Corp.
"To conclude, we do expect 2019 to be a more challenging year than 2018, with a number of industry variables potentially working against us. Nevertheless, internal conditions in the long-term remain sound," said Chair Bailleres.
"We maintain our confidence in Mexico and will keep investing in the projects under exploration," Bailleres added.
Shares in Fresnillo were up 0.8% at 743.00 pence each on Tuesday morning.
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