TIDMFRES
RNS Number : 8236N
Fresnillo PLC
23 January 2019
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
23 January 2019
Production Report
for the three months and full year ended 31 December 2018
Overview
-- Record annual silver production of 61.8 moz (including
Silverstream), up 5.3% vs. 2017 mainly due to the first full year
of operations at San Julián (Phase II/ Disseminated ore body).
-- Quarterly silver production of 15.5 moz (including Silverstream) remained flat vs. 3Q18.
-- Quarterly silver production (including Silverstream) down
-3.2% vs. 4Q17 due to lower volumes of ore processed and ore grade
at Fresnillo and Saucito.
-- Annual gold production of 923 koz, up 1.3% vs. 2017 mainly
due to the higher ore grade and recovery rate at Saucito, the
contribution of the new Pyrites Plant and the higher ore grade at
Fresnillo.
-- Quarterly gold production of 232 koz, in line with 4Q17.
-- Quarterly gold production up 3.0% vs. 3Q18 mainly due to
higher ore grades and recovery rates at Herradura and San Julián
(Phase I/Vein system).
-- Full year by-product lead and zinc production up 10.4% and
35.6% respectively vs 2017, representing 19.9 million equivalent
ounces of silver.
2019 Outlook
-- Silver production expected to be slightly lower, in the range
of 58 to 61 moz, including the Silverstream.
-- Gold production expected to be flat, in the range of 910-930 koz.
-- 2019 exploration budget of approximately US$140 million
(including capitalised exploration expenses).
-- Board approval for Juanicipio project expected in early 2019.
Octavio Alvídrez, Chief Executive Officer, said:
"Record annual silver production and a very strong gold
performance does not mask what was a challenging year for
Fresnillo.
Gold production surpassed the expectations we had at the
beginning of the year and is in line with our upwardly revised
guidance, driven by a strong performance at Saucito, the successful
start of operations of the Pyrites Plant at Saucito and the higher
ore grade at the Fresnillo mine.
Despite the year on year increase in silver production resulting
from a full year of operations at San Julián (Phase II), we are
reporting lower silver production than anticipated. This was mainly
explained by the lower than expected ore grades at the Fresnillo
and Saucito mines which have persisted into the final quarter,
together with operational issues. We are taking action to address
this, not least by intensifying our infill drilling programmes,
controlling dilution and further investment in equipment and
infrastructure. The flotation plant to process historical and
ongoing tailings at the Fresnillo mine is progressing and is
expected to improve overall recoveries once completed in 1H20.
We will continue to conservatively invest in the business to
deliver sustainable growth and returns to shareholders. I fully
expect to be able to make a further positive announcement on our
Juanicipio development project in due course."
Total Production
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Silver (koz) 14,647 14,957 -2.1 14,738 58,079 54,238 7.1
-------- -------- --------- -------- -------- -------- ---------
Silverstream
(koz) 860 1,059 -18.8 796 3,725 4,435 -16.0
-------------- -------- -------- --------- -------- -------- -------- ---------
Total Silver
(koz) 15,507 16,015 -3.2 15,533 61,804 58,673 5.3
-------------- -------- -------- --------- -------- -------- -------- ---------
Gold (oz) 232,026 232,051 -0.0 225,202 922,527 911,132 1.3
-------------- -------- -------- --------- -------- -------- -------- ---------
Lead (t) 15,252 12,836 18.8 13,076 53,181 48,153 10.4
-------------- -------- -------- --------- -------- -------- -------- ---------
Zinc (t) 24,531 18,852 30.1 22,935 88,520 65,266 35.6
-------------- -------- -------- --------- -------- -------- -------- ---------
Silver
Annual silver production (including Silverstream) increased 5.3%
vs. 2017 principally due to San Julián (Phase II/Disseminated ore
body) operating for the full year, doubling production year on
year. The start-up of operations at the Pyrites Plant at Saucito
and a higher ore grade at Herradura also made a positive
contribution. These increases were partially offset by lower ore
grades at both Saucito and Fresnillo.
Quarterly silver production remained flat vs. 3Q18 as a higher
volume of ore processed and recovery rate at San Julián (Phase
II/Disseminated ore body) as well as a higher ore grade at Ciénega
offset a lower volume of ore processed and ore grade at
Fresnillo.
Quarterly silver production (including Silverstream) decreased
3.2% vs. 4Q17 as a result of the lower ore grade at Fresnillo, and
to a lesser extent, lower throughput. The lower ore grade and
throughput at Saucito, and lower grade at Sabinas also had an
adverse effect. However, these negative effects were mitigated by
the start of operations at the Pyrites Plant and the higher ore
grade at Ciénega.
Silver production for 2019 is expected to be in the range of 58
to 61 moz including Silverstream, owing to an anticipated reduction
in the silver ore grade at Saucito.
Gold
2018 full year gold production increased 1.3% vs 2017 as a
result of a higher ore grade and recovery rate at Saucito, the
start-up of operations at the Pyrites Plant at Saucito and a higher
ore grade at Fresnillo. This was partially offset by the lower
recovery rate at Noche Buena and the lower ore grades at Ciénega
and San Julián (Phase I/Veins).
Quarterly gold production increased 3.0% vs. 3Q18 due to the
higher ore grades and recovery rates at Herradura and San Julián
(Phase I/Veins). This was partly compensated for by the lower ore
grade and volume of ore processed at Noche Buena and lower ore
grade at Ciénega.
Quarterly gold production was in line with 4Q17 as the higher
ore grades and recovery rates at Saucito and Herradura offset the
lower ore grade and speed of recovery at Noche Buena and to a
lesser extent, lower ore grade at Ciénega.
Gold production in 2019 is anticipated to be in the range of
910-930 koz as a result of the contribution of the second Dynamic
Leaching Plant at Herradura, albeit with a decrease in the
inventory reduction at this same mine.
By-products
Full year and quarterly by-product lead production increased
10.4% and 18.8% vs. 2017 and 4Q17 respectively due to the higher
grade and recovery rate at Saucito. This more than offset the lower
ore grades and recovery rates at both Fresnillo and Ciénega.
Quarterly by-product lead production increased 16.6% vs. 3Q18
due to the higher ore grade at Saucito and to a lesser extent, a
higher ore grade and recovery rate at San Julián (Phase II /
Disseminated ore body). This was partially offset by the lower
volume of ore processed, lower ore grade and lower recovery rate at
Fresnillo.
Annual by-product zinc production increased 35.6% vs. 2017 due
to the first full year of operations at San Julián (Phase II /
Disseminated ore body) following its commissioning in July 2017,
and the higher ore grade and recovery rate at Saucito. This was
partially offset by the lower ore grade at Ciénega.
Quarterly by-product zinc production increased 30.1% vs. 4Q17 as
a result of the higher ore grade at Saucito and to a lesser extent,
higher volume of ore processed and ore grade at San Julián (Phase
II / Disseminated ore body). The aforementioned was partially
offset by the lower ore grade at Fresnillo.
Quarterly by-product zinc production increased 7.0% vs 3Q18 as a
result of a higher ore grade at Saucito and a higher volume of ore
processed, increased ore grade and higher recovery rate at San
Julián (Phase II / Disseminated ore body). These factors were
partly offset by a lower ore grade, decreased volume of ore
processed and lower recovery rate at Fresnillo.
Fresnillo mine production
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 571,330 592,358 -3.6 613,794 2,443,440 2,447,394 -0.2
-------- -------- --------- -------- ---------- ---------- ---------
Production
-------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 3,244 4,066 -20.2 3,745 15,117 16,512 -8.4
-------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 10,437 9,237 13.0 10,469 42,290 38,784 9.0
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 3,867 5,455 -29.1 4,917 19,619 20,514 -4.4
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 6,153 8,019 -23.3 8,096 31,094 30,021 3.6
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 199 236 -15.5 211 214 229 -6.9
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 0.76 0.64 19.9 0.68 0.70 0.64 8.7
-------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.79 1.01 -22.2 0.89 0.90 0.92 -2.7
-------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 1.52 1.94 -21.2 1.81 1.75 1.72 1.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Quarterly silver production decreased 20.2% and 13.4% vs. 4Q17
and 3Q18 respectively, mainly as a result of a lower than expected
ore grade due to: i) differences versus the geological model, ii) a
narrower than expected vein width which increased dilution and iii)
the limited access to higher ore grade areas at San Carlos and
Candelaria due to delays in preparation and development mainly
caused by issues with contractors. Quarterly silver production was
also affected, though to a lesser extent, by the decrease in
volumes of ore processed, resulting from lower equipment
availability given ongoing maintenance issues.
Similarly, full year silver production decreased 8.4% when
compared to 2017 mainly due to the lower ore grade resulting from:
i) the limited access to higher ore grade areas at San Carlos and
Candelaria; and ii) differences vs. the geological model.
A number of initiatives have been implemented to address mine
performance, including: investing in infrastructure and equipment
to accelerate preparation and development; improving the
maintenance programme to increase equipment availability; and
conducting an infill drilling programme to improve the accuracy of
the geological model and provide greater certainty for short term
production estimates.
While 2018 was a challenging year at Fresnillo, we remain both
confident and determined we will return the mine to the positive
trend seen in previous years.
We expect silver ore grade to be between 21o-220 g/t in
2019.
Quarterly by-product gold production increased 13.0% vs. 4Q17 as
a result of a higher ore grade which entirely compensated for the
lower volume of ore processed and the lower recovery rate.
Quarterly by-product gold production remained broadly flat vs.
3Q18.
Full year by-product gold production increased 9.0% when
compared to 2017 mainly as a result of a higher ore grade.
Gold ore grade is expected to be around 0.60-0.65 g/t in
2019.
Quarterly and annual by-product lead production decreased
against all comparable periods as a result of lower ore grades and
lower recovery rates.
Quarterly by-product zinc production decreased 23.3% vs. 4Q17
due to a lower ore grade and a decrease in ore processed.
Similarly, fourth quarter by-product zinc production decreased
24.0% vs. 3Q18 as a result of lower ore grade, recovery rate and
volume of ore processed.
However, full year by-product zinc production increased 3.6% vs.
2017 as a result of a higher recovery rate and ore grade.
For 2019, lead and zinc ore grades are expected to be
1.15%-1.25% and 2.35%-2.40% respectively.
Saucito mine production
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 693,608 722,237 -4.0 713,441 2,792,057 2,753,876 1.4
-------- -------- --------- -------- ---------- ---------- ---------
Production
-------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 4,890 5,378 -9.1 4,897 19,781 21,215 -6.8
-------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 22,932 17,599 30.3 23,558 86,092 69,948 23.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 8,362 3,903 114.2 5,791 22,662 17,714 27.9
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 10,132 4,930 105.5 7,909 29,506 20,348 45.0
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 260 271 -4.0 250 257 280 -8.0
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 1.30 1.08 20.1 1.34 1.25 1.09 14.7
-------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 1.36 0.66 105.1 0.95 0.94 0.77 21.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 2.21 1.06 108.9 1.61 1.61 1.21 33.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Quarterly silver production decreased 9.1% vs. 4Q17 as a result
of a decrease in ore throughput and a lower ore grade attributable
to ore processed from the deeper areas of the mine.
Fourth quarter silver production remained broadly flat vs. 3Q18
as the higher ore grade extracted due to better mine planning
resulting from the improvement in the infill drilling programme was
offset by the lower volume of ore processed and a lower recovery
rate.
Full year silver production decreased 6.8% vs. 2017 due to lower
than expected ore grades at high grade stopes in the upper levels
of the mine and increased dilution. An infill drilling programme
continues to be conducted so as to enhance the accuracy of the
geological model.
However, the gradual depletion of higher ore grade areas is
anticipated to continue in 2019, therefore we expect the silver ore
grade to average 210-220 g/t in the year.
We will continue focusing on ensuring the availability of
contractors and increasing their productivity to gradually increase
development rates and deepen five main ramps at the Jarillas's
vein.
Quarterly by-product gold production decreased 2.7% vs. 3Q18 as
a result of a lower ore grade and volume of ore processed which
were partially offset by the higher recovery rate.
Full year and quarterly by-product gold production increased
23.1% vs. 2017 and 30.3% vs. 4Q17 as a result of a higher ore grade
and recovery rate.
Expected gold ore grade in 2019 will be roughly 1.30 g/t.
Full year and quarterly by-product lead production increased
against all comparable periods as a result of the higher ore grade
in the deeper areas of the mine and the higher recovery rate.
Similarly, annual and quarterly by-product zinc production
increased 45.0% vs. 2017 and 105.5% vs. 4Q17 mainly as a result of
higher ore grades and increased recovery rates.
Quarterly by-product zinc production increased 28.1% vs. 3Q18 as
a result of a higher ore grade which more than compensated for the
lower recovery rate and the lower volume of ore processed.
For 2019, lead and zinc ore grades are expected to be
0.95%-1.05% and 2.0%-2.1% respectively.
Pyrites Plant (Phase I)
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 56,699 0 N/A 63,336 131,780 0 N/A
------- ------ --------- ------- -------- ------- ---------
Production
------- ------ --------- ------- -------- ------- ---------
Silver (koz) 470 0 N/A 434 977 0 N/A
------- ------ --------- ------- -------- ------- ---------
Gold (oz) 1,952 0 N/A 1,418 3,556 0 N/A
--------------- ------- ------ --------- ------- -------- ------- ---------
Ore Grades
------- ------ --------- ------- -------- ------- ---------
Silver (g/t) 348 0 N/A 423 393 0 N/A
------- ------ --------- ------- -------- ------- ---------
Gold (g/t) 2.5 0 N/A 2.9 2.8 0 N/A
------- ------ --------- ------- -------- ------- ---------
The leaching plant of the Pyrites Plant at Saucito contributed
977 koz of silver and 3,556 oz of gold during the year. In 4Q18,
ore processed decreased 10.4% vs. 3Q18 due to the depletion of the
stock pile that was built during the construction of the plant.
Quarterly silver production increased 8.4% vs. 3Q18 as a result of
the higher recovery rate, which was partly offset by the expected
lower ore grade. Similarly, quarterly gold production increased by
37.7% vs. 3Q18 due to a higher recovery rate which compensated for
the lower volume of ore processed and the lower ore grade.
As previously guided, lower ore grade material will be processed
in 2019 as a result of the depletion of the stock pile of iron
concentrate with high silver content. This is expected to be
between 190-210 g/t
Ciénega mine production
YTD
4Q 18 4Q 17 % change 3Q 18 18 YTD 17 % change
Ore Processed
(t) 340,529 339,347 0.4 332,493 1,323,908 1,302,409 1.7
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Production
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 15,588 18,194 -14.3 18,214 66,869 71,947 -7.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 1,703 1,272 33.9 1,539 5,999 5,394 11.2
-------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 1,007 1,541 -34.7 1,105 4,799 6,328 -24.2
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 1,767 1,336 32.2 1,889 5,892 7,048 -16.4
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 1.49 1.76 -15.6 1.79 1.65 1.82 -9.6
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 180 137 31.4 169 164 152 8.5
-------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.48 0.70 -30.8 0.57 0.60 0.74 -19.6
-------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 0.87 0.81 7.6 0.95 0.83 0.98 -15.3
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Full year and quarterly gold production decreased against all
comparable periods mainly due to the lower ore grade as a result of
the depletion of higher ore grade areas at Las Casas, Taspana and
Jessica areas. This was partly offset by the higher recovery rate
and a higher volume of ore processed due to the operating controls
and efficiency achieved in the maintenance programme, which have
reduced downtime.
Gold ore grade is expected to remain at 1.6-1.7 g/t in 2019.
Quarterly and full year silver production increased versus all
comparable periods due to the higher ore grade which resulted from
the increased access to higher silver ore grade areas at Taspana
and lower dilution; and to a lesser extent, a higher volume of ore
processed and recovery rate.
Silver ore grade is expected to be between 150-160 g/t in
2019.
Full year and quarterly by-product lead production decreased
24.2% vs. 2017 and 34.7% vs. 4Q17 as a result of a lower ore grade
and recovery rates, but mitigated by a higher volume of ore
processed. Quarterly by-product lead production decreased 8.9% vs.
3Q18 as a result of a lower ore grade which was partially mitigated
by a higher recovery rate and volume of ore processed.
Quarterly by-product zinc production increased 32.2% vs. 4Q17 as
a result of a higher recovery rate and increased ore grade.
However, quarterly by-product zinc production decreased 6.5% vs.
3Q18 as a result of a lower ore grade.
Full year by-product zinc production decreased 16.4% vs. 2017 as
a result of a lower ore grade and to a lesser extent, lower
recovery rate.
San Julián mine production
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Ore Processed Phase
I Veins (t) 337,428 325,032 3.8 332,836 1,270,781 1,273,129 -0.2
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Processed Phase
II Disseminated
ore body (t) 587,905 496,907 18.3 561,808 2,221,433 945,057 135.0
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Total production
at San Julián
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 23,003 20,032 14.8 19,452 82,344 84,533 -2.6
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 3,903 4,057 -3.8 3,626 14,630 10,534 38.9
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Production Phase
I Veins
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 22,065 19,248 14.6 18,458 79,218 82,782 -4.3
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 1,380 1,462 -5.7 1,347 5,434 5,936 -8.5
-------- -------- --------- -------- ---------- ---------- ---------
Production Phase
II
Disseminated ore
body
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 938 784 19.7 994 3,125 1,750 78.6
--------------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 2,524 2,595 -2.7 2,279 9,196 4,598 100.0
-------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 2,017 1,937 4.2 1,263 6,101 3,598 69.6
-------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 6,479 4,567 41.9 5,041 22,027 7,849 180.6
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades Phase
I Veins
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 2.11 1.92 9.9 1.84 2.01 2.10 -4.4
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 137.22 153.43 -10.6 137.19 144.06 157.21 -8.4
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades Phase
II
Disseminated ore
body
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 0.10 0.11 -3.7 0.11 0.09 0.12 -32.7
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 158.09 190.32 -16.9 155.54 154.37 180.33 -14.4
-------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.51 0.51 -0.6 0.40 0.43 0.52 -15.7
-------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 1.48 1.23 19.7 1.33 1.35 1.18 13.7
-------- -------- --------- -------- ---------- ---------- ---------
San Julián (Phase I - Veins System)
Quarterly silver production decreased 5.7% vs. 4Q17 as a result
of a lower ore grade due to the depletion of higher ore grade
areas. However, the higher recovery rate and increased volume of
ore processed mitigated this negative effect.
Quarterly silver production slightly increased 2.4% when
compared to 3Q18 due to the increase in volume of ore processed and
a higher recovery rate.
Full year silver production decreased 8.5% vs. 2017 mainly as a
result of the lower ore grade resulting from the depletion of
high-grade areas.
The expected silver ore grade for the full year 2019 is in the
range of 155-165 g/t.
Quarterly gold production increased 14.6% when compared to 4Q17
as a result of a higher ore grade, due to unusually low ore grade
extracted in 4Q17 and, to a lesser extent, the higher volume of ore
processed.
Quarterly gold production increased 19.5% vs. 3Q18 due to the
higher ore grade and improved recovery rate and, to a lesser
extent, the increased volume of ore processed once the shortage of
water reported in previous quarters was addressed.
Annual gold production decreased 4.3% vs. 2017 as a result of a
lower ore grade due to the depletion of higher ore grade veins.
Average gold grade for 2019 is expected to be around 1.6-1.7
g/t.
San Julián (Phase II - Disseminated ore body)
Quarterly silver production decreased 2.7% vs. 4Q17 as a result
of the expected lower ore grade, which was partially offset by a
temporary increase in the volume of ore processed as a result of
mineral size optimisation. Quarterly silver production increased
10.7% vs. 3Q18 due to a higher recovery rate and higher volume of
ore processed.
Annual silver production doubled vs. 2017 as a result of the
first full year of operations following initial start-up in July
2017.
Silver ore grade for 2019 is expected to be around 160-170
g/t.
Quarterly by-product gold production increased 19.7% vs. 4Q17
due to a higher volume of ore processed and higher recovery rate,
which more than offset the lower ore grade. Quarterly by-product
gold production decreased 5.7% vs. 3Q18 due to a lower ore grade
and recovery rate, mitigated by the higher volume of ore
processed.
Full year by-product gold production increased 78.6% vs. 2017 as
a result of a higher volume of ore processed, which more than
compensated for the lower ore grade and recovery rate.
Gold ore grade is anticipated to be around 0.09-0.10 g/t in
2019.
Annual and quarterly by-product lead production increased 69.6%
vs. 2017 and 4.2% vs. 4Q17 respectively, as a result of a higher
volume of ore processed which more than compensated the lower
recovery rate and lower ore grade. Quarterly by-product lead
production increased 59.8% vs. 3Q18 as a result of a higher ore
grade, recovery rate and volume of ore processed.
Full year and quarterly by-product zinc production increased
against all comparable periods as a result of the higher volume of
ore processed, ore grades and recovery rates.
Herradura total mine production
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 4,707,145 6,373,732 -26.1 5,859,579 22,156,792 26,027,466 -14.9
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Total Volume
Hauled (t) 26,592,044 34,620,672 -23.2 29,718,422 124,024,351 130,025,439 -4.6
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Production
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Gold (oz) 121,409 117,891 3.0 109,630 474,168 473,638 0.1
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Silver (koz) 427 172 148.6 492 1,523 551 176.4
----------- ----------- --------- ----------- ------------ ------------ ---------
Ore Grades
----------- ----------- --------- ----------- ------------ ------------ ---------
Gold (g/t) 0.88 0.68 30.9 0.76 0.76 0.68 12.6
----------- ----------- --------- ----------- ------------ ------------ ---------
Silver (g/t) 3.64 1.28 184.6 3.05 2.74 1.07 155.1
----------- ----------- --------- ----------- ------------ ------------ ---------
Quarterly gold production increased 3.0% vs. 4Q17 as a result of
a higher ore grade and a higher overall speed of recovery, due to
greater control over the reagents used in the leaching pads. This
was partly offset by the lower volume of ore processed following
heavy rainfall in October which impacted operations at the Merrill
Crowe plant as electrical lines were affected and caused a
temporary shutdown of the pit for safety reasons.
Similarly, quarterly gold production increased 10.7% vs. 3Q18
due to a higher ore grade and higher speed of recovery, partly
offset by the lower volume of ore processed.
Annual gold production remained broadly flat compared to 2017
due to a higher ore grade processed at the dynamic leaching plant
and a higher recovery rate as a result of the increase in
irrigation, which was offset by the lower volume of ore
processed.
Tests at the second line of the dynamic leaching plant were
concluded in December. As a result, this project contributed 21,266
ounces of gold during the year. This US$110 million project will
process high ore grade material from the Herradura pit.
As a result of the annual analysis (in line with IFRS) carried
out to identify the separate components of the ore bodies at
Herradura, and in light of the increase in reserves in 2017 and
further exploration conducted in the 1H18, it was concluded that
the number of components to which stripping costs are allocated
should be reduced from two to one. This change resulted in
recognising the entirety of the stripping in the income statement
as opposed to partially capitalising it, thereby increasing the
expensed stripping ratio to 4.56 in 2H18 (whereas the expensed
stripping ratio in 1H18 was 2.33, having considered it as two
components).
Gold ore grade for 2019 is expected to average 0.70-0.75
g/t.
Noche Buena total mine production
4Q 18 4Q 17 % change 3Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 4,395,527 4,445,313 -1.1 4,834,512 18,195,744 17,820,817 2.1
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Total Volume
Hauled (t) 17,220,712 20,921,653 -17.7 20,489,682 80,304,953 85,233,001 -5.8
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Production
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (oz) 36,705 49,098 -25.2 42,460 167,208 172,282 -2.9
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (koz) 9 12 -19.7 5 52 31 64.9
----------- ----------- --------- ----------- ----------- ----------- ---------
Ore Grades
----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (g/t) 0.50 0.54 -7.5 0.52 0.52 0.52 0.0
----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (g/t) 0.09 0.14 -33.0 0.05 0.13 0.10 34.4
----------- ----------- --------- ----------- ----------- ----------- ---------
Full year gold production slightly decreased 2.9% vs. 2017 as a
result of a lower speed of recovery, resulting from the higher
altitude of the leaching pads which increased the residence time of
the solution in the pads. This was mitigated by the higher volume
of ore processed. Quarterly gold production decreased 25.2% vs.
4Q17 as a result of a lower ore grade and lower speed of recovery
due to the factors mentioned above.
Quarterly gold production decreased 13.6% vs. 3Q18 due to the
lower ore grade and ore volume processed as a result of the heavy
rains in October.
Gold ore grade for 2019 is expected to be around 0.55 g/t.
Update on development projects
Pyrites Plant at the Fresnillo mine
Construction of the 14,000 tpd tailings flotation project to
process the historical and ongoing tailings from the Fresnillo mine
continued. This project is expected to be concluded by 1H20. This
facility is expected to incur a capex of US$51.4 million, which is
part of the total US$155 million capex authorised for the Pyrites
Plant project.
Update on exploration
The cumulative drilling for the year at our operating mines and
exploration projects was 579,000 and 346,000 metres respectively.
Resources and reserves (in the case of the operating mines) are
presently in audit by SRK and the results of which will be
disclosed in the first quarter of 2019 with our Preliminary
results. Resources were increased at the Guanajuato and San Juan
projects, while mapping identified new targets at the Fresnillo and
Herradura districts, and a geophysical survey detected areas for
follow up in the San Julián district. Further to this, and for the
first time in the Company's history, drilling began in Chile.
Exploration teams are working out of the Hermosillo, Chihuahua,
Zacatecas, Toluca, Lima-Peru and Santiago de Chile offices in
selected areas of favorable silver-gold belts in Mexico, Peru,
Chile and Argentina.
Juanicipio
Exploration, mine development and basic and detailed engineering
continued at this project. Minor details on the construction
agreement are being finalised and agreed, with Juanicipio's
approval expected soon.
Safety Performance
We deeply regret to report three fatal accidents during 4Q18;
one at the Fresnillo mine and two in Ciénega. Full investigations
were undertaken to identify the causes of these tragic incidents.
We continue to enforce the "I care, we care" programme to identify
risks, reinforce safety protocols and procedures, increase training
and promote a more visible leadership, as we seek to deliver a
continuous improvement in safety. We remain committed to our zero
fatalities target.
Full Year Financial Results
Fresnillo will announce its full year 2018 results on 26th
February 2019.
For further information, please visit our website
www.fresnilloplc.com or contact:
Fresnillo plc Tel: +44 (0)20 7399 2470
London Office
Gabriela Mayor, Head of Investor
Relations
Patrick Chambers
Mexico City Office Tel: +52 55 52 79 3206
Ana Belem Zárate
Powerscourt Tel: +44 (0)20 7250 1446
Peter Ogden
About Fresnillo plc
Fresnillo plc is the world's largest primary silver producer and
Mexico's largest gold producer, listed on the London and Mexican
Stock Exchanges under the symbol FRES.
Fresnillo plc has seven operating mines, all of them in Mexico -
Fresnillo, Saucito, Ciénega (including the San Ramón satellite
mine), Herradura, Soledad-Dipolos(1) , Noche Buena and San Julián
(Phase I and II), one development project - the Pyrites Plant at
Fresnillo, and four advanced exploration projects - Orisyvo,
Juanicipio, Las Casas Rosario & Cluster Cebollitas and Centauro
Deep, as well as a number of other long term exploration prospects.
In total, Fresnillo plc has mining concessions covering
approximately 1.8 million hectares in Mexico and 700 thousands
hectares in Peru.
Fresnillo plc has a strong and long tradition of exploring,
mining, a proven track record of mine development, reserve
replacement, and production costs in the lowest quartile of the
cost curve for silver.
Fresnillo plc's goal is to maintain the Group's position as the
world's largest primary silver company and Mexico's largest gold
producer.
(1) Operations at Soledad-Dipolos are currently suspended.
Forward Looking Statements
Information contained in this announcement may include
'forward-looking statements'. All statements other than statements
of historical facts included herein, including, without limitation,
those regarding the Fresnillo Group's intentions, beliefs or
current expectations concerning, amongst other things, the
Fresnillo Group's results of operations, financial position,
liquidity, prospects, growth, strategies and the silver and gold
industries are forward-looking statements. Such forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. Forward-looking statements are not
guarantees of future performance and the actual results of the
Fresnillo Group's operations, financial position and liquidity, and
the development of the markets and the industry in which the
Fresnillo Group operates, may differ materially from those
described in, or suggested by, the forward-looking statements
contained in this document. In addition, even if the results of
operations, financial position and liquidity, and the development
of the markets and the industry in which the Fresnillo Group
operates are consistent with the forward-looking statements
contained in this document, those results or developments may not
be indicative of results or developments in subsequent periods. A
number of factors could cause results and developments to differ
materially from those expressed or implied by the forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in regulation, currency fluctuations (including the
US dollar and Mexican Peso exchanges rates), the Fresnillo Group's
ability to recover its reserves or develop new reserves, including
its ability to convert its resources into reserves and its mineral
potential into resources or reserves, changes in its business
strategy and political and economic uncertainty.
LEI: 549300JXWH1UV5J0XV81
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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