Fresnillo Plc (LON:FRES) have seen a quarterly rise in gold output, however annual production has fallen short of expectations.

As a result of the shortcoming, shares of Fresnillo have slipped on Wednesday morning.

Shares in the firm trade at 592p (-3.36%). 29/1/20 11:12BST.

Fresnillo, who were a former FTSE 100 listed firm told the market that they had produced 233,744 ounces of gold in the fourth quarter of 2019, 11% higher on the previous quarter and 0.7% higher year-on-year.

Whilst the firm has seen a production rise across this period, shareholder were not so optimistic as they were told that annual expectations had been missed, which was seen as shares slipped.

Looking on an annualized basis across 2019, Fresnillo saw gold production fall 5.1% to 875,913 ounces. In December, it had set guidance at 885,000 ounces, from previous guidance of 880,000 ounces to 910,000 ounces.

The Mexican gold miner said that fourth quarter results were boosted by better performance as the Herradura mine, offsetting lower throughput and grades at Noche Buena. Notably, production volumes fell due to lower output at Noche Buena and lower grades at San Julian.

Despite the slip in performance, Fresnillo forecasted as they expect total gold production for 2020 to be within the 815,000 ounces and 900,000 ounces range.

In the silver production sector, fourth quarter production was impressive standing at 13.8 million ounces.

Silver production did see a 3.7% climb from third quarter production, however this figure did represent an 11% fall on the figure on year ago. In 2019, the figure was 54.6 million ounces, 12% lower year-on-year.

Fourth-quarter production improved on the third quarter due to higher quarterly grades at San Julian and Saucito, but fell on the prior year due to a year-on-year fall in grades at Saucito and lower volumes at San Julian.

Fresnillo concluded by saying that that they expect silver production to be between 51 million and 56 million ounces.

Fresnillo remain determined

Octavio Alvídrez, Chief Executive Officer, said:

“Silver and gold production is up on the previous quarter as we begin to see the impact of our performance improvement plan, which includes intensive infill drilling to improve the certainty of the geological model, dilution control and raising development rates, together with actions to address contractor productivity and equipment availability. Full year silver and gold production is in line with our updated guidance.

“As we set out at our capital markets day in December, we are determined to drive better performance from our core assets and we will continue to implement our mine improvement plan throughout the year. Though grades remain variable as we update and refine our geological models, we continue to process higher volumes of ore on a consistent basis, and as a result, our 2020 forecasts are unchanged.”

Third Quarter results

In October, Fresnillo updated the market with their third quarter results which saw lower output and shares once again in red.

The precious metals miner reported that gold and silver production on an annual scale would be at the lower end of its target.

In the three months to the end of September, silver production fell 14.5% from the third quarter of last year to 13,283 kilo ounces and gold production was down 6.9% to 209,752.

Fresnillo said that the low production rates for silver was due to expected lower ore grade at the Saucito mine and lower ore grades at Fresnillo and San Julián.

Subsequently, the lower gold production was attributed to lower grade and volume of gold produced at both Herradura and San Julián veins, and a lower volume of ore processed at Noche Buena.

Fresnillo will be disappointed with their results looking on an annual scale. However, management have remained confident and an ensured effort to turn fortunes around does seem to be in place.