Fresnillo boosts gold production guidance after second quarter

Fresnillo posted a quarterly production update for the three months to 30 June on Wednesday, with silver production improving 14.5% year-on-year to 30 moz.

The FTSE 100 firm said silver production was up 6.3% over the first quarter, with first half silver production of 25.2 moz a 6.1% improvement year-on-year as a result of the increase in ore processed at Saucito, and higher ore grades at Cienega.

Quarterly gold production reached 218 koz, 19.6% improvement over the same period last year, with first half gold production rising 23% to 448 koz.

The company put this down to a higher speed or recovery and higher ore volumes processed at Herradura, and a higher speed of recovery at Noche Buena.

Gold production was down 5.3% against the first quarter of this year, however, due to a temporary decline in the flow of rich solution processed while maintenance work was carried out at the Herradura storage pond.

Fresnillo confirmed construction of the leaching plant at San Julian was completed on time and on budget, although a previously-indicated technical problem with the mill means regular production is now expected to resume by the first week of August.

The firm raised its full-year gold guidance to 850-870 koz, from 775-790 koz, and said full-year silver production remained on track for 49-51 moz, including Silverstream.

“I am pleased to report solid second quarter production, with 13 million ounces of silver and 218,000 ounces of gold produced from across our mines and the Silverstream contract,” said Fresnillo chief executive officer Octavio Alvidrez.

“We continue to progress the turnaround at our Fresnillo mine, consolidating the improvements already made.

“I am confident that we remain on track to return Fresnillo to a more satisfactory operating level, and expect full year silver production at this mine to show an increase of around 6% compared to 2015,” Alvidrez added.

He noted that construction of the leaching plant at the San Julian mine was completed on time and on budget at the end of the second quarter, and mentioned the lubrication issue at the mill as delaying the return to regular production.

“Our full year silver production guidance remains unchanged, as higher than expected volumes produced at Saucito will compensate for the shortfall in production at San Julián.

“Looking ahead, we are today raising our gold production guidance for the full year to 850-870 thousand ounces, and remain on track to meet our silver production guidance of 49-51 million ounces,” Alvidrez explained.