Fresnillo sees FY production at lower end of range as Q3 output drops

Precious metals miner Fresnillo posted a decline in third-quarter silver and gold production on Wednesday as it said annual production would be at the lower end of its target range.

In the three months to the end of September, silver production fell 14.5% from the third quarter of last year to 13,283 kilo ounces and gold production was down 6.9% to 209,752.

Fresnillo said the drop in silver output was mainly due to expected lower ore grade at the Saucito mine and, to a lesser extent, lower ore grades at Fresnillo and San Julián. The fall in gold production was attributed to a lower grade and lower volume of ore processed at both Herradura and San Julián veins, and a lower volume of ore processed at Noche Buena.

The miner said it now expects silver and gold production for 2019 to be at the lower end of its guided ranges of between 55 to 58 million ounces and 880 to 910 koz, respectively.

Chief executive officer Octavio Alvidrez said: "We continued to implement the performance improvement plan for our Fresnillo District mines during the third quarter. This programme includes intensive infill drilling to improve the geological model, dilution control and raising development rates, whilst also taking actions to address maintenance performance, contractor productivity and equipment availability. As a result, while grades remain variable, we are now processing higher volumes of ore on a more consistent basis at Fresnillo.

"Our development pipeline is progressing well. Construction of our next major mine Juanicipio is moving forwards. The second phase of the pyrites plant project and the optimisation of the beneficiation plant to deal with higher lead and zinc grades at the Fresnillo mine remain on track. Both are due to be commissioned in the second half of 2020."

At 0850 BST, the shares were down 1.1% at 643p.