RNS Number : 0775M
Fresnillo PLC
26 July 2017
 

                                                                                                        Fresnillo plc

21 Upper Brook Street

London W1K 7PY

United Kingdom

www.fresnilloplc.com

 

26 July 2017

 

Production Report

for the three months ended 30 June 2017

Overview

 

·       Quarterly silver production of 14.5 moz (including Silverstream), up 11.7% vs. 2Q16 and up 7.3% vs. 1Q17, and first half silver production of 28.0 moz (including Silverstream), up 11.2% vs. 1H16, primarily due to the start of operations at San Julián (phase I), higher ore processed at Fresnillo and higher ore grade at Ciénega

 

·       Quarterly gold production of 223 koz, up 2.7% vs. 2Q16 as a result of the contribution of San Julián (phase I)

 

·       Construction of San Julián (phase II- flotation plant) completed on time and on budget with commercial production delivered in mid-July

 

·       The turnaround plan at the Fresnillo mine continues to show positive signs as volume of ore processed increased for the fourth consecutive quarter

 

·       On track to achieve 2017 production guidance of 58-61 moz silver (including Silverstream) and 870-900 koz gold

 

Octavio Alvídrez, Chief Executive Officer, said:

"I am pleased to report strong first half production results, with 28 million ounces of silver and over 445 thousand ounces of gold produced across our operating mines and from the Silverstream. The increase in silver production was primarily driven by the contribution of San Julián phase I and the higher ore processed at Fresnillo following the measures taken to increase production at the mine.

"Quarterly gold production also benefitted from the operations at San Julián (phase I), more than offsetting the expected lower production at Herradura and Noche Buena, and the lower gold ore grade at Saucito.

"We continue to advance our development projects. I am pleased to announce that the construction of San Julián (phase II) was concluded on time and on budget, and following tests with load in the second quarter, commercial production commenced in mid-July.

"Our short-term focus will be on ramping-up San Julián (phase II) to full capacity within the next two months and operating the Fresnillo mine once again at full capacity by year-end, whilst continuing to develop the infrastructure in order to prepare the mine for the future expansion. With this progress, we remain on course to meet our 2017 production guidance of 58-61 million ounces of silver and 870-900 thousand ounces of gold."

 

Total Production

 

 

2Q 17

2Q 16

% change

1Q 17

1H 17

1H 16

% change

Silver (koz)

13,328

11,777

13.2

12,424

25,752

22,824

12.8

Silverstream  (koz)

1,188

1,217

-2.4

1,105

2,292

2,388

-4.0

Total Silver  (koz)

14,515

12,994

11.7

13,529

28,044

25,212

11.2

Gold (oz)

223,479

217,645

2.7

222,290

445,769

447,569

-0.4

Lead (t)

11,385

11,585

-1.7

11,461

22,846

22,668

0.8

Zinc (t)

14,919

12,529

19.1

13,806

28,725

25,380

13.2

 

Quarterly and year to date silver production (including Silverstream) increased 11.7% and 11.2%, vs. 2Q16 and 1H16 respectively, mainly due to: i) the contribution of San Julián (phase I) following its commissioning in 3Q16; ii) higher ore processed at the Fresnillo mine, resulting from the increased access to the San Alberto area; and iii) higher silver ore grade at Ciénega due to the increased contribution from Taspana and San Ramón. These increases were partly offset by the expected lower ore grade and recovery rate at Saucito and, to a lesser extent, the lower volume from the Silverstream due to the lower silver ore grade at Sabinas.

Quarterly silver production increased 7.3% over 1Q17 as a result of a higher ore grade at Saucito, a higher ore grade and recovery rate at San Julián (phase I), and a higher recovery rate at Ciénega.

Quarterly gold production increased slightly vs. 2Q16 due to the contribution of San Julián (phase I), which more than offset the overall lower speed of recovery at Noche Buena and to a lesser extent, lower ore grades at Saucito, Herradura and Ciénega.

Quarterly and year to date gold production remained at similar levels (+0.5% vs. 1Q17 and -0.4% vs. 1H16).

Quarterly by-product lead production decreased slightly vs. 2Q16 due to the lower ore grade and recovery rate at Saucito. Quarterly and year to date by-product lead production remained at similar levels vs. 1Q17 and 1H16.

Quarterly and year to date by-product zinc production increased vs. the comparable periods of 2016 and previous quarter principally as a result of the higher ore grades, recovery rates and ore processed at the Fresnillo mine.

 

 

Fresnillo mine production

 

 

2Q 17

2Q 16

% change

1Q 17

1H 17

1H 16

% change

Ore Processed (t)

645,479

574,489

12.4

613,012

1,258,492

1,189,637

5.8

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

Silver (koz)

4,491

3,997

12.4

4,439

8,930

8,285

7.8

Gold  (oz)

9,403

10,349

-9.1

11,325

20,728

20,631

0.5

Lead (t)

4,982

4,839

3.0

5,170

10,153

9,543

6.4

Zinc (t)

7,927

5,813

36.4

6,707

14,634

10,952

33.6

 

 

 

 

 

 

 

 

Ore Grades

 

 

 

 

 

 

 

Silver (g/t)

235

232

1.3

245

240

234

2.3

Gold (g/t)

0.59

0.72

-18.3

0.74

0.66

0.70

-5.0

Lead (%)

0.86

0.94

-8.4

0.92

0.89

0.89

-0.2

Zinc (%)

1.69

1.48

14.0

1.57

1.63

1.36

19.8

 

The turnaround plan at the Fresnillo mine continues to show positive signs as volume of ore processed increased for the fourth consecutive quarter.

 

Quarterly and year to date silver production increased 12.4% and 7.8% respectively over the comparable periods of 2016, remaining on track to deliver the expected 7-10% increase in silver production for the year. This was mainly as a result of higher volumes of ore processed and, to a lesser extent, higher ore grades from the increased access to the Candelaria and San Alberto areas following improvement in the maintenance process and increased operative supervision which allowed for the preparation of higher ore grade areas. These factors more than offset the lower recovery rate.

 

When compared to the previous quarter, quarterly silver production increased 1.2% due to higher volumes of ore processed, which offset the expected lower ore grade in accordance with the mining plan. Silver ore grade for the full year is still expected to average 230 g/t.

 

Quarterly by-product gold production decreased vs. 2Q16 and 1Q17 mainly due to the lower ore grade and, to a lesser extent, lower recovery rate. Year to date by-product gold production remained at similar levels compared to 1H16.  

  

Quarterly and first half by-product lead production increased vs. 2Q16 and 1H16 as a result of higher ore processed. However, quarterly by-product lead production decreased 3.6% vs. 1Q17 as a result of the lower ore grade and recovery rate.  

 

Quarterly and first half by-product zinc production increased vs. the comparable periods of 2016 and previous quarter due to higher ore grades, recovery rates and ore processed.

 

Saucito mine production

 

 

2Q 17

2Q 16

% change

1Q 17

1H 17

1H 16

% change

Ore Processed (t)

667,456

645,340

3.4

670,914

1,338,370

1,283,792

4.3

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

Silver (koz)

5,674

6,270

-9.5

5,147

10,821

11,706

-7.6

Gold (oz)

15,896

20,186

-21.3

17,964

33,859

41,823

-19.0

Lead (t)

4,688

5,164

-9.2

4,754

9,442

9,999

-5.6

Zinc (t)

4,923

4,718

4.3

5,139

10,062

10,795

-6.8

 

 

 

 

 

 

 

 

Ore Grades

 

 

 

 

 

 

 

Silver (g/t)

306

339

-9.5

279

293

318

-7.9

Gold (g/t)

1.05

1.36

-23.3

1.12

1.08

1.35

-19.6

Lead (%)

0.81

0.89

-9.2

0.87

0.84

0.89

-5.2

Zinc (%)

1.26

1.33

-5.5

1.26

1.26

1.42

-11.5

 

Quarterly and year to date silver production decreased vs. 2Q16 and 1H16 mainly due to the expected lower ore grade in 2017 compared to the exceptionally high ore grade from the development ore from the West and Central areas at the Jarillas vein in 2016. The temporary limited access to higher ore grade areas, due to the programmed anchoring activities aimed at enhancing safety, also impacted silver production. Additionally, a lower recovery rate resulting from the calibration of the cyclones at the vibrating screens also contributed to the decrease in silver production, though to a lesser extent. These effects however were partly mitigated by the increase in ore processed from the West and Central Jarillas areas and the increased capacity of the plants following the installation of the vibrating screens.

 

Quarterly silver production increased 10.3% vs. 1Q17 as a result of the gradual increase in access to the high grade stope at the Jarillas vein as anchoring activities continue and, to a lesser extent, a higher recovery rate.

 

Quarterly and first half by-product gold production decreased vs. 2Q16 and 1H16 due to lower ore grade and lower recovery rate, which were partly mitigated by the higher ore processed. Similarly, by-product gold production decreased 11.5% vs. 1Q17 due to lower ore grade and recovery rates.

 

By-product lead production for the second quarter and first half 2017 decreased when compared to the same periods of 2016 mainly as a result of the lower ore grade and recovery rate. Quarterly by-product lead production decreased slightly vs. 1Q17 due to lower ore grade and ore processed which were partly mitigated by the higher recovery rate.

 

Quarterly by-product zinc production increased over 2Q16 as a result of the higher recovery rate and ore processed. However, first half by-product zinc production decreased vs. 1H16 due to lower ore grade. Quarterly by-product zinc production decreased 4.2% vs. 1Q17 as a result of lower recovery rates.

 

 

Ciénega mine production

 

 

2Q 17

2Q 16

% change

1Q 17

1H 17

1H 16

% change

Ore Processed (t)

322,760

318,330

1.4

313,920

636,680

642,049

-0.8

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

Gold  (oz)

18,904

19,651

-3.8

17,453

36,358

36,896

-1.5

Silver (koz)

1,458

1,344

8.5

1,328

2,786

2,513

10.9

Lead (t)

1,715

1,582

8.4

1,536

3,251

3,125

4.0

Zinc (t)

2,070

1,998

3.6

1,960

4,030

3,633

10.9

 

 

 

 

 

 

 

 

Ore Grades

 

 

 

 

 

 

 

Gold (g/t)

1.89

1.99

-4.6

1.89

1.89

1.85

2.3

Silver (g/t)

161

149

7.8

160

161

139

15.7

Lead (%)

0.78

0.72

7.6

0.78

0.78

0.70

11.5

Zinc (%)

1.10

1.08

1.8

1.07

1.08

0.99

9.0

 

Quarterly gold production decreased vs. 2Q16 mainly due to the depletion of higher gold ore grade veins at Ciénega and lower grades at the Rosario and Las Casas areas and, to a lesser extent, a lower recovery rate. However, this was partly offset by higher ore processed.

Year to date gold production decreased slightly vs. 1H16 as a result of a lower recovery rate and, to a lesser extent, lower ore processed. However, these factors were partly offset by the higher ore grade from the West and East areas.

Quarterly gold production increased 8.3% over 1Q17 mainly due to higher volume of ore processed.

Quarterly and first half silver production increased over 2Q16 and 1H16 mainly due to the higher ore grade at the Taspana and San Ramón areas. Quarterly silver production increased 9.8% vs. 1Q17 mainly as a result of the higher volume of ore processed.

Quarterly and first half by-product lead production increased vs. 2Q16 and 1H16 mainly as a result of higher ore grade which was partly compensated for by the lower recovery rate. Quarterly by-product lead production increased 11.6% over 1Q17 due to a higher recovery rate and higher ore processed.  

Quarterly by-product zinc production increased 3.6% and 5.6% vs. 2Q16 and 1Q17 respectively, mainly due to higher ore grade and ore processed. Half year by-product zinc production increased vs 1H16 as a result of a higher ore grade and recovery rate.

 

Herradura total mine production

 

 

2Q 17

2Q 16

% change

1Q 17

1H 17

1H 16

% change

Ore Processed (t)

6,551,791

6,313,303

3.8

6,764,370

13,316,161

12,624,559

5.5

Total Volume Hauled (t)

31,063,542

30,965,379

0.3

30,908,154

61,971,696

60,763,938

2.0

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

Gold (oz)

116,267

119,445

-2.7

107,742

224,009

248,558

-9.9

Silver (koz)

104

161

-35.4

118

222

304

-27.0

 

 

 

 

 

 

 

 

Ore Grades

 

 

 

 

 

 

 

Gold (g/t)

0.66

0.70

-5.7

0.63

0.64

0.69

-6.3

Silver (g/t)

0.87

1.22

-28.5

0.95

0.91

1.11

-17.8

 

Quarterly gold production decreased slightly vs. 2Q16, as a result of the adverse effect of a lower ore grade, which was mostly offset by the increased volumes of ore processed and to a slightly higher reduction of gold inventories at the leaching pads.

First half gold production decreased vs. 1H16 due to the smaller decrease in gold inventories at the leaching pads compared to the larger one-off reduction in inventory level in 2016, and lower ore grade. We do not expect this to fall further, rather increase marginally over 2H17.  

Quarterly gold production increased 7.9% over 1Q17 as a result of a higher volume recovered due to the irrigation of new mineral layers being deposited on the leaching pads as well as a higher ore grade.

 

Noche Buena total mine production

 

 

2Q 17

2Q 16

% change

1Q 17

1H 17

1H 16

% change

Ore Processed (t)

4,399,136

4,349,088

1.1

4,613,684

9,012,820

8,586,222

5.0

Total Volume Hauled (t)

22,436,979

20,186,274

11.1

20,918,657

43,355,636

40,292,417

7.6

 

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

 

Gold (oz)

42,097

48,014

-12.3

47,678

89,774

99,661

-9.9

Silver (koz)

7

4

61.4

7

14

16

-10.9

 

 

 

 

 

 

 

 

Ore Grades

 

 

 

 

 

 

 

Gold (g/t)

0.51

0.48

6.2

0.51

0.51

0.49

3.0

Silver (g/t)

0.09

0.07

29.5

0.09

0.09

0.11

-17.0

 

Quarterly and first half gold production decreased vs. 2Q16 and 1H16 due to the lower overall speed of recovery in 2017 compared to the one achieved in 1H16, when new mineral layers were deposited at the leaching pads. This was partly mitigated by the higher volume of ore processed.

Quarterly gold production decreased 11.7% vs. 1Q17 mainly as a result of lower overall speed of recovery and ore processed due to increased stripping.

 

San Julián

 

 

2Q 17

1Q 17

% change

1H 17

Ore Processed (t)

308,342

306,082

0.7

614,423

 

 

 

 

 

Production

 

 

 

 

Gold (oz)

20,912

20,128

3.9

41,041

Silver (koz)

1,592

1,386

14.9

2,979

 

 

 

 

 

Ore Grades

 

 

 

 

Gold (g/t)

2.19

2.18

0.2

2.18

Silver (g/t)

171.58

156.68

9.5

164.16

 

Quarterly silver production increased vs. 1Q17 as a result of the higher ore grade and recovery rate at phase I (leaching plant). Gold production also increased vs. 1Q17 as a result of a higher recovery rate.

The construction of San Julián (phase II-flotation plant) has been completed on time and on budget. The milling facility was commissioned, tests with load were concluded and commercial production commenced in mid-July.

 

Update on development projects and exploration

An update on our development projects and exploration programme will be provided alongside our interim results, due to be announced on 1 August 2017.

 

Safety Performance

We are pleased to report that there were no fatal accidents at our operations during the second quarter of 2017. We continue to reinforce our safety measures in order to fulfil our zero fatalities commitment on an ongoing basis.   

 

For further information, please visit our website www.fresnilloplc.com or contact:

 

Fresnillo plc           

London Office                                  

Gabriela Mayor, Head of Investor Relations

Patrick Chambers

 

Tel: +44 (0)20 7399 2470

Mexico City Office

Ana Belem Zárate

Tel: +52 55 52 79 3206

 

Bell Pottinger

Liz Morley

Aarti Iyer

 

 

Tel: +44 (0)20 3772 2500

                                                          

 

 

 

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-Dipolos1, Noche Buena and San Julián (phase I and II), two development projects - the Pyrites plant, and second line of DLP at Herradura, 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.

Fresnillo plc has a strong and long tradition of 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, producing 65 million ounces of silver per year by 2018, having already surpassed the gold target of 750,000 ounces.

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.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
DRLQELFLDDFEBBX