In a third quarter production report Fresnillo (LON: FRES) CEO Octavio Alvídrez, said:
“We continued to implement the performance improvement plan for our Fresnillo District mines during the third quarter. This programme includes intensive infill drilling to improve the geological model, dilution control and raising development rates, whilst also taking actions to address maintenance performance, contractor productivity and equipment availability. As a result, while grades remain variable, we are now processing higher volumes of ore on a more consistent basis at Fresnillo.
“Our development pipeline is progressing well. Construction of our next major mine Juanicipio is moving forwards. The second phase of the pyrites plant project and the optimisation of the beneficiation plant to deal with higher lead and zinc grades at the Fresnillo mine remain on track. Both are due to be commissioned in the second half of 2020.”
TOTAL PRODUCTION
| 3Q19 | 2Q19 | % Change | 3Q18 | % Change | YTD 19 | YTD 18 | % Change | |
| Silver (koz) | 12,624 | 13,636 | -7.4 | 14,738 | -14.3 | 38,633 | 43,432 | -11.0 |
| Silverstream (koz) | 659 | 782 | -15.7 | 796 | -17.2 | 2,207 | 2,865 | -23.0 |
| Total Silver (koz) | 13,283 | 14,418 | -7.9 | 15,533 | -14.5 | 40,839 | 46,297 | -11.8 |
| Gold (oz) | 209,752 | 221,307 | -5.2 | 225,202 | -6.9 | 642,169 | 690,501 | -7.0 |
| Lead (t) | 15,561 | 13,039 | 19.3 | 13,076 | 19.0 | 40,725 | 37,928 | 7.4 |
| Zinc (t) | 25,340 | 20,654 | 22.7 | 22,935 | 10.5 | 67,746 | 63,989 | 5.9 |
HIGHLIGHTS
Silver
• Quarterly silver production of 13.3 moz (including Silverstream) down 7.9% vs. 2Q19 mainly driven by a lower ore grade at Saucito and at San Julián Disseminated Ore Body (DOB).
• Quarterly silver production (including Silverstream) down 14.5% vs. 3Q18 primarily driven by the expected lower ore grade at Saucito and, to a lesser extent, lower ore grades at Fresnillo and San Julián (veins and DOB).
• Year to date silver production (including Silverstream) down 11.8% vs. YTD18 due to lower ore grades at both Fresnillo and Saucito.
Gold
• Quarterly gold production of 209.8 koz, down 5.2% vs. 2Q19 mainly due to a lower ore grade at Herradura.
• Quarterly gold production down 6.9% vs. 3Q18 as a result of a lower grade and lower volume of ore processed at both Herradura and San Julián veins, and a lower volume of ore processed at Noche Buena.
• Year to date gold production down 7.0% vs. YTD18 driven by a lower volume of ore processed at Noche Buena, lower speed of recovery and volume of ore processed at Herradura and lower ore grade at San Julián Veins.
By-Products
• Quarterly by-product lead production increased 19.3% and 19.0% vs. 2Q19 and 3Q18 due to a higher ore grade and ore throughput at Fresnillo and a higher ore grade and improved recovery rate at Ciénega.
• Year to date lead production increased 7.4% vs. YTD18 due to higher recovery rate and ore grade at San Julián DOB and a higher ore grade at Saucito.
• Quarterly by-product zinc production increased 22.7% and 10.5% vs. 2Q19 and 3Q18 primarily driven by higher ore grade, volume of ore processed and recovery rate at Fresnillo.
• Year to date by-product zinc production increased 5.9% vs YTD18 due to higher grades and recovery rates at Ciénega and Saucito and higher ore grade at San Julián DOB, offset by a lower ore grade and rate of recovery at Fresnillo.
Development Projects
• Construction of the Juanicipio project continued, with development already reaching over 22 kms. A new contractor has been appointed to further accelerate development rates. We are concluding the detailed engineering.
• Construction of the Pyrites plant (phase II) in the Fresnillo district remains on track and on budget, with commissioning expected in 2H20.
• Fresnillo flotation plant optimisation to cope with higher content of lead and zinc is progressing according to plan and is expected to be concluded on time by 2H20.
Outlook
• FY 2019 silver and gold production likely to be at the lower end of the guided ranges of 55-58 moz (including Silverstream) silver and 880-910 koz gold respectively.
• Higher volume of ore processed at Fresnillo combined with higher grades at Saucito and Fresnillo expected to result in higher overall fourth quarter silver production.
• Completion of the 13th leaching pad at Herradura and faster speed of recovery expected to result in higher overall fourth quarter gold production.
CAPITAL MARKETS DAY
Fresnillo plc will host a Capital Markets Day on the 2nd of December, during which the senior management team will provide further information on the asset portfolio including initiatives to address near term performance, development projects, exploration and costs.
