LSE-listed, Mexico-focused miner Fresnillo achieved record silver production, and strong gold production in 2018, despite it being a challenging year for the company.
Silver production for the year was 61.8-million ounces, including Silverstream, up 5.3% on 2017, mainly owing to the first full year of operations at Phase 2 of San Julián. Gold production for the year was 923 000 oz, up 1.3% compared with 2017, mainly owing to the higher ore grade and recovery rate at Saucito, the contribution of the new Pyrites plant at Saucito and the higher ore grade at Fresnillo.
“Record annual silver production and a very strong gold performance does not mask what was a challenging year for Fresnillo,” commented CEO Octavio Alvídrez in a statement on Wednesday.
Gold production surpassed the company’s expectations from the start of the year, and was in line with its upwardly revised guidance. However, despite the year-on-year increase in silver production resulting from a full year of operations at San Julián (Phase 2), the company reported lower silver production than anticipated.
This was mainly owing to lower-than-expected ore grades at the Fresnillo and Saucito mines, which persisted into the final quarter, together with operational issues.
“We are taking action to address this, not least by intensifying our infill drilling programmes, controlling dilution and further investment in equipment and infrastructure. The flotation plant to process historical and ongoing tailings at the Fresnillo mine is progressing and is expected to improve overall recoveries once completed in the first half of 2020.”
The company’s quarterly silver production of 15.5-million ounces, including Silverstream, remained flat on that of the third quarter, and decreased by 3.2% compared with the corresponding quarter of 2017, owing to lower volumes of ore processed and ore grade at Fresnillo and Saucito.
Quarterly gold production was 232 000 oz, in line with the prior-year quarter and up 3% when compared with the third quarter of 2018, mainly owing to higher ore grades and recovery rates at Herradura and San Julián (Phase I/Vein system).
Full year by-product lead and zinc production was up 10.4% and 35.6%, respectively, compared with 2017, representing 19.9-million equivalent ounces of silver.
In 2019, the company expects silver production to be slightly lower, in the range of 58-million to 61-million ounces. Gold production is expected to be flat in 2019, in the range of 910 000 oz to 930 000 oz.
The company has set a 2019 exploration budget of about $140-million (including capitalised exploration expenses).
Moreover, the company expects board approval for its Juanicipio project early this year.