Fresnillo saw an 11% growth in revenues from $2.4bn to $2.7bn in 2021, with a 9% increase in adjusted revenues and a 20.5% reduction in treatment and refining costs.
Pretax profit increased by 10.9% to $611.5m in 2021 with the rise in silver prices.
Silver production grew 0.1% due to better mining results in Fresnillo and San Julián Veins. However the 16.9% rise in prices of silver had a direct impact on adjusted revenues, which were £2.8bn in 2021.
Staffing problems due to labour reforms and the pandemic stunted expected silver productions. With increased productivity from new equipment and training, along with recruitment campaigns, the staffing problem should be addressed by Q3 of 2022.
Gold production dropped 2.4% to 751,203 Oz due to geotechnical issues like depletion of resources and higher costs associated with the mining.
Fresnillo Projects
A $30m project was commissioned for plant optimisation to enhance the recovery of lead and zinc from the deeper levels of the Fresnillo mine. The mine is now delivering better quality concentrates at a higher rate without as many impurities.
The San Carlos shaft expansion project in Fresnillo is on schedule to be completed in 2022.
Power Grid Problems
Ongoing issues with connecting to the national power grid has caused delays across Fresnilo’s portfolio. The national power grid connection was refused by the government runned electrical company, Comisión Federal de Electricidad (CFE).
Despite Juanicipio power plant completing their construction in 2021, an additional 6 months were added on to the timeline for the mill in order to meet the requirements from Centro Nacional de Control de Energía (CENACE).
Once up and running, the annual silver and gold production expected to average at 11.7 moz and 43.5 koz respectively as a result of operations.
New pyrite plants at Fresnillo mines were completed on schedule however, the plant is yet to produce due to halts from national power grid.
The expansion of the Jarillas shaft to 1,000 metres in Saucito is in progress to be completed by 2025. Access to deeper levels of the mines will save on haulage costs.
At full capacity, a production of 3.5 moz of silver and 13 koz of gold per year on average is expected from total production from the new pyrite plants and Saucito.
Octavio Alvídrez, CEO, Fresnillo said, “we made good progress on our development projects. The new Juanicipio mine was completed at the end of 2021, as planned. However, approval to complete the tie-in to the national power grid was not granted by Comisión Federal de Electricidad, the state-owned electrical company, before year end as expected.”
“The mill commissioning timeline was therefore extended by approximately six months. Juanicipio will be an increasingly major influence in our operations, on average producing 11.7 moz silver and 43.5 koz gold a year for the life of mine. Similar covid-related delays related to energy inspection and new requirements also affected the start-up of the new Pyrites Plant at the Fresnillo mine.”
“Despite the challenges, we delivered a creditable performance. Silver production of 53.1 moz, was marginally below guidance, but flat vs. FY20. Gold production of 751.2 koz, was however ahead of guidance, down 2.4% vs. FY20.”
The total dividend is $0.33 including a final dividend of $0.23 as profits increased.
Fresnillo shares were up 9% to 806p per share with updates of resolving the staffing issue and increased expected productions.