Fresnillo expects to produce more gold and less silver after third quarter

Fresnillo issued its production reports for the third quarter ended 30 September on Wednesday, reporting a 6.3% improvement in silver production to 15.5 moz including Silverstream.

The FTSE 100 company put that down to the contribution of the new Pyrites Plant, higher ore grades at Fresnillo, Herradura and Ciénega, and higher volumes of ore milled at San Julián phase II.

Third quarter silver production was said to have been in line with the second quarter.

Year-to-date silver production, including Silverstream, was ahead 8.5% to 46.3 moz, which was mainly the result of the start of operations of the second phase at San Julián JM in July last year.

Quarterly gold production fell 3.5% to 225 koz, as a result of higher-than-normal speed in the recovery rate at the leaching pads in the third quarter of 2017, and the lower grade and volume of ore deposited on the pads at Herradura in the third quarter of this year.

Quarterly gold production was down 3.7% compared to the second quarter, which the board said was mainly due to a lower speed in the recovery rate at the leaching pads at Herradura in the third quarter, and the lower ore grade and recovery rate at Noche Buena.

Year-to-date gold production was aehad 1.7% at 690 koz, which was put down to a to higher ore grade at Saucito and a higher volume of ore processed at Noche Buena.

Full-year consolidated production guidance was revised marginally, with total gold production increased to between 920 koz and 940 koz from 900 koz to 930 koz.

Total silver production was revised down to between 62.0 moz and 64.5 moz from a previous 64.5 moz to 67.5 moz, including Silverstream, due to continued challenges at the Saucito and Fresnillo mines, which the board said were currently being addressed.

“Gold production continues to beat expectations and we are once again revising our guidance upwards following another strong quarter, in particular at our Saucito and Noche Buena mines where volumes exceed targets,” said Fresnillo chief executive officer Octavio Alvídrez.

“Though silver production is up against all comparable periods, we are revising full year silver guidance following continued challenges at the Fresnillo and Saucito mines.

“These are world class, tier one silver assets, and we remain both determined, and confident, given the actions we are taking, that we will deliver a better performance in the last quarter and in 2019.”

In line with the company’s strategy, Alvidrez said the board was choosing to to keep “conservatively” investing in the business, to deliver sustainable growth and returns to shareholders.

“The Pyrites Plant in the Fresnillo district, which will improve overall recoveries of both gold and silver from the Fresnillo and Saucito mines, is progressing well.

“The first stage of the project, the leaching plant at Saucito, is now ramping up and already making a contribution to overall production.

“We expect to complete construction of phase two, the flotation plant at the Fresnillo mine, by the end of 2019.”