Fresnillo FY profits slump on lower grades, production

Miner Fresnillo reported a plunge in full year profits on Tuesday due to lower ore grades and a slowdown in production at its Noche Buena mine in Mexico.

Pre tax profits fell 63% $178.8m from $483.9 in 2018. Revenue for the period was almost flat at $2.12bn compared with $2.10bn.

A final dividend of 19.30 cents a share was declared, up from 16.70 cents.

The precious metals producer said total silver production fell by 11.6% to 54.6m ounces as a result of the expected lower ore grade at its Saucito mine as well as lower than expected ore grades at Fresnillo and San Julián Veins.

Gold production fell 5.1% to 875.9k ounces due to the expected lower production from Noche Buena and a lower ore grade at San Julián Veins.

Fresnillo forecast 2020 silver production was expected to be in a range of 51m – 56m ounces and gold production of 815,000 - 900,000 ounces.

“While the broader macro economic environment remains uncertain, we are confident on the outlook for mining in Mexico, where we have welcomed the on-going support of the Mexican government,” the company said.

"In the face of these challenges, our response has been to increase the pace and scale of investments in a series of projects and take corrective actions to bring production back to acceptable levels in the short term, and to achieve steady growth in future years."