Fresnillo production continues in line with forecasts

Fresnillo reported attributable silver production of 14.4 million ounces in its second quarter on Wednesday, up 8.1% from the first quarter thanks to a higher volume of ore processed and higher ore grades at Fresnillo and Saucito, and a higher ore grade at San Julián disseminated ore body (DOB).

The FTSE 100 miner said quarterly attributable silver production was down 3.6% on the same period last year, however, due to an expected lower ore grade and a decreased volume of ore processed at San Julián DOB.

That was mitigated by the increased contribution of ore from Juanicipio, the board said.

First half attributable silver production totalled 27.6 million ounces, in line with the first half of 2021, as the expected lower ore grade at San Julián DOB and lower volume of ore processed at Saucito was offset by the increased contribution of ore from Juanicipio.

Attributable gold production for the second quarter, meanwhile, rose 6.1% on the first quarter to 159,000 ounces, primarily due to the expected higher volume of ore processed at Herradura and Noche Buena.

It was down 20.6% year-on-year, however, mainly due to a lower recovery rate and the expected decrease in the volume of ore processed at Herradura.

First half attributable gold production totalled 308,800 ounces, down 27.9% on the first half of 2021, primarily due to a decrease in the volume of ore processed and lower ore grade at Herradura and Saucito.

“I am pleased to report a solid quarter of production, in line with our expectations,” said chief executive officer Octavio Alvídrez.

“We are making good operational progress, despite the ongoing impact of the pandemic and global supply chain bottlenecks, which are likely to persist in the second half.

“We continue to address the challenges presented by the Mexico labour reform which limits the use of contractors.”

Alvídrez said the company’s recruitment and training campaigns were “proving effective”, with the firm expecting to complete that process by the end of the year in its underground mines, while its open-pit mines were now fully staffed.

“We expect to achieve the tie-in of the Juanicipio plant, our next major growth project, to the national electricity grid over the coming weeks and to start commissioning and ramp-up of operations soon after.

“We remain on track to meet our full year guidance.”

At 0935 BST, shares in Fresnillo were up 1.24% at 652.6p.

Reporting by Josh White at Sharecast.com.