Fresnillo shares down on Q1 output update

Fresnillo maintains 2021 guidance despite continued uncertainty

Fresnillo (LON:FRES), the world’s largest producer of silver, released a Q1 output update on Wednesday which said its production of silver had declined.

The FTSE 100 company’s attributable silver production was 12.6 moz, down by 2.4% from the quarter before.

The fall came about as a lower volume of ore processed as San Julián Disseminated Ore Body and a lower ore grade at Saucito and the Pyrites plant. This was partly mitigated by a higher development ore grade at Juanicipio.

Production of gold was up by 5.9% quarter-on-quarter to 228.2 koz, as a result of a higher ore grade at Herradura and Saucito. These results were counteracted by lower volumes of ore processed at Noche Buena and reduced ore output throughout and lower ore grade at San Julián Veins.

The company maintained 2021 guidance despite the continued uncertainty presented by the current coronavirus situation in Mexico.

Octavio Alvídrez, chief executive of Fresnillo, commented:

“The health and well-being of our people remains our first priority and we have maintained a range of measures to ensure their safety, while also continuing to support our local communities.”

“First quarter silver production was marginally below the previous quarter, with the encouraging contribution of development ore from our new Juanicipio project offsetting lower grades at Saucito. I am also pleased to report continued progress at the Fresnillo mine with development rates showing an improvement. Quarterly gold production was ahead of the last quarter driven by the higher than expected grade at Herradura. Construction of Juanicipio is making good progress and we are on track to commission the plant by the fourth quarter.”

“Though the pandemic continues to present certain operational challenges, Fresnillo has started 2021 well with Q1 operations in line with expectations and our full year guidance remains unchanged.”