The world’s largest silver producer Fresnillo’s (LSE:FRES) second quarter silver production jumped 5.7 percent year-on-year and 1.6 quarter-on-quarter, thanks to higher volume of ore processed at Saucito and the higher grades at Ciénega and San Julián mines, the company reported on Wednesday (July 25).
The Mexican-based company currently has seven mines in operation, which has allowed the company to produce 15.34-million ounces of the precious metal in the second quarter, taking half-year output to 30.76-million ounces.
“I am pleased to report a robust production performance in the first half. In line with our strategy, we continue to actively manage and strengthen our asset portfolio. In particular, during the period we have successfully ramped up our new San Julián JM mine to full capacity, which has made a significant contribution to overall production,” explained CEO Octavio Alvídrez.
“We have also made good progress with our development pipeline, with our two main projects now complete. The Pyrites plant has been commissioned and final testing at the Second Dynamic leaching plant is on track. Both projects will make a meaningful contribution to overall 2018 production,” he added.
Despite a successful second quarter, the company’s silverstream contribution was down 9.7 percent due to lower silver ore grade at the Sabinas mine.
Fresnillo also scaled back its silver production guidance from between 67-million and 70-million ounces to approximately 64.5-million and 67.5-million ounces. The decrease is the reflection of lower production from San Julian, which is the result of a temporary resequencing of the production plan and higher input of stockpile ore to deal with issues associated with less availability of processed water.
The company noted that the construction of the water reservoir, which is being assembled in order to provide a consistent source of water, has been delayed as a result of a longer-than-expected permitting process.
“We have adjusted our full year production guidance to reflect a better-than-anticipated gold performance due mainly to the ongoing reduction of inventories at Herradura and slightly lower than expected silver production due mainly to issues associated with less availability of process water at San Julián. Overall however, our full year consolidated guidance in silver equivalent ounces remains unchanged,” Alvídrez noted.
For its part, gold production rose by 4.6 percent year-on-year to 233,841 ounces, as a result of higher ore grade, volume of ore processed and recovery rate at Saucito and the higher grades at Noche Buena, Herrandura and Fresnillo.
The gold production guidance, however, was increased to between 900,000 ounces and 930,000 ounces, from a previous guidance of 870,000 ounces to 900,000 ounces. The consolidated production guidance, in equivalent silver ounces, remained broadly unchanged.
On Wednesday, Fresnillo’s share price closed down 7.32 percent at GBX 1,025.00.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
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