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Record annual silver production for Fresnillo
Mexico-based precious metals mining company Fresnillo reported record annual silver production in its fourth quarter production update on Wednesday, totalling 58.7 moz including Silverstream.
The FTSE 100 firm said that was an increase of 16.6% over 2016, in line with guidance and primarily as a result of the first complete year of San Julián phase I operating at full capacity, and the start-up of operations at San Julián phase II.
Fourth quarter silver production for the three months to 31 December was 16.0 moz including Silverstream - an improvement of 20.3% over the fourth quarter of 2016, which the board put down to the startup of operations at San Julián phase II.
Quarterly silver production increased 10.5% over the third quarter, due to the first complete quarter of San Julián phase II operating at full capacity, higher ore grade at Fresnillo and higher volume of ore processed at Saucito.
Annual gold production of 911.1 koz exceeded guidance, the board revealed, principally as a result of the full year operations at San Julián phase I.
Gold production slightly decreased by 2.6% over 2016, however, due to the expected lower reduction of gold inventories and the anticipated lower ore grade deposited at the leaching pads at Herradura.
Quarterly gold production of 232 koz was down 13.4% compared to the fourth quarter of 2016, due to a lower reduction of gold inventories at Herradura.
Looking ahead to the current year, Fresnillo said silver production was expected to be in the range of 67 to 70 moz including the Silverstream, in line with the board's long term guidance.
Gold production was expected to be in the range of 870-900 koz.
Fresnillo said it was set to increase throughput and silver ore grades, adding that the start-up of the first stage of the Pyrites Plant with tailings from the Saucito mine was expected to be processed in the second quarter.
Historical and ongoing tailings from the Fresnillo mine would also be processed at that plant once the project is completed in 2019.
The start-up of the second dynamic leaching plant at Herradura - the Centauro Extension project - was also due to be commissioned in the second quarter of 2018.
Fresnillo's board confirmed the 2018 exploration budget was approximately $200m, including capitalised exploration expenses.
"I am pleased to report that Fresnillo has delivered a strong performance in 2017," commented chief executive Octavio Alvídrez.
"Record silver production of 58.7 moz was in line with guidance following the first complete year of San Julián phase I operating at full capacity and the start of operations at San Julián phase II.
"These major projects were once again delivered on budget reflecting our disciplined approach to investment."
Alvídrez explained that at the Fresnillo mine, the company increased silver production, although its turnaround plan was not yet complete.
"We have implemented a number of measures which resulted in increased access to the Candelaria and San Alberto areas which have improved throughput and silver ore grade at the mine.
"During the year ahead, we will remain focused on increasing throughput and ore grade at Fresnillo."
He also pointed out that the company achieved a "solid" gold production performance - exceeding its forecast range - due to the positive contribution from San Julián phase I.
"Gold production was down marginally on 2016 as expected, as a result of the lower reduction of gold inventories at Herradura," Alvídrez said.
"We are making good progress with our development projects. Construction of the Pyrites Plant project continued while further progress was achieved at the Dynamic Leaching Plant at Herradura.
"We expect to commission both projects in 2018 and to see them contribute to our 2018 production."
Alvídrez also said that as always, safety was the board's priority and he was "delighted" to report an improvement in safety performance across the business as a result of a number of initiatives established to further strengthen the safety culture at Fresnillo's mines.
"Looking ahead, our 2018 gold production is anticipated to be in the range of 870-900 koz whilst silver production is expected to be between 67-70 moz."