VANCOUVER (miningweekly.com) – LSE- and Mexican Stock Exchange-listed silver miner Fresnillo has pushed the Phase 2 plant expansion at its San Julián mine out to the second quarter of 2017, citing a combination of external factors.
The London-headquartered company said Wednesday that unusually high rainfall compared with 2015 - up 90% to 100%, a high rotation of construction contractor personnel owing to the project's remote location and security incidents, and delays in the delivery of certain equipment had resulted in slower progress in constructing the flotation plant.
As a result, this plant is now expected to be commissioned in the second quarter of next year, compared with previous plans for year-end 2016. However, Fresnillo pointed out that the assembly of the milling and filtration building continued and that further progress had been made at the thickener area of the plant, which would process ore from the disseminated orebody.
Fresnillo operates six mines in Mexico, producing silver and gold. The miner expects to hit its increased full-year 2016 guidance of 850 000 oz to 870 000 oz gold and 49-million to 51-million ounces of silver this year, with a long-term strategic goal of 65-million ounces of silver and 750 000 oz of gold by 2018.
Phase 1 of the San Julián mine has been processing ore and the leaching plant has been operating normally since mid-August, following the malfunctioning of the lubrication system of the mill. The company noted that the plant was operating at full capacity.
Q3 PRODUCTION
Fresnillo, the world's largest primary silver producer and Mexico's second-largest gold producer, reported total silver output for the third quarter ended September 30 of 11.8-million ounces, up 6.7% over the comparable period in 2015, mainly owing to the start-up of Phase 1 at San Julián, increased ore processed at Saucito and an increased contribution from the silver stream between Fresnillo and Peñoles, which entitles Fresnillo to receive all of the proceeds in respect of the payable silver produced at the Sabinas mine.
Quarterly silver output was down 9.4% quarter-on-quarter, mainly owing to expected lower ore grades and the lower recovery rate at Saucito.
So far this year, silver output stands at 37-million ounces, up 6.3% on the same period of 2015.
Gold output during the quarter rose 20.9% to 220 000 oz, owing to higher volumes processed and higher ore grades at both Herradura and Noche Buena. Year-to-date gold output of 667 000 oz is up 22.3% on the same period of 2015, on the back of higher recovery speeds at Herradura and Noche Buena, as well as higher volumes processed at Herradura.
Shares in the miner fell as much as 2.4% to £1.608 apiece on the LSE Wednesday afternoon.