Fresnillo narrows 2019 production guidance

The FTSE 100 company said that in 2020, it expected to produce around 54 million ounces of silver and 857,000 ounces of gold, and in 2021, it was anticipating 66 million ounces of silver and 785,000 ounces of gold.

In 2022, it said it expected to produce around 71 million ounces of silver and 665,000 ounces of gold.

Fresnillo, which was holding its capital markets day, said the increase in silver production was explained by operation improvements at the Fresnillo mine, the Pyrites plant, Juanicipio and San Julián.

The decrease in gold production, meanwhile, was driven by the planned Noche Buena closure and lower production from Herradura.

Looking at its capital expenditure, the company said the total for 2019 was expected to be $585m, with around $65m from Juanicipio being rescheduled into 2020.

It said sustaining and new project capital expenditure in 2020 was expected to be around $670m, due to further investment across its current operations, offset by the deferral of projects for approval - Orisyvo and the Ciénega Expansion - as it focussed on current operations.

Sustaining and new project capital forecast for 2021 was expected to be around $475m, it said while it also included a forecast for 2022 for the first time, at around $415m.

“Our priorities for 2020 are to stabilise production, and to unlock the full potential of our current mines and projects,” said chief executive officer Octavio Alvídrez.

“We will focus on operational improvement and efficiency, while de-risking and advancing our development pipeline, most notably the new Juanicipio mine.

“We are confident that with the proactive measures put in place at our mines, together with our consistent, focused strategy, we will deliver on these priorities and that we will continue to create sustained value for stakeholders in the long-term, balancing growth with returns and maintaining a solid financial position.”

Alvídrez said Fresnillo would also set out its broader environmental, social and governance (ESG) strategy in full, including its “enhanced approach” to safety, an update on its tailings dam management, how it worked with the indigenous groups and local communities, its commitment to reducing its carbon footprint through efficiencies, and the greater use of wind power, and an “extensive” water stewardship strategy.

At 0826 GMT, shares in Fresnillo were down 1.9% at 566.6p.